coaljunction was born on a Delhi-Kolkata flight
e-auction of coal was an innovative solution which was born more out of identified opportunity and a need to diversify rather than a business challenge. As a matter of fact, the solution, so to speak, was born more out of the business challenge faced by the prospective client. Of course the then metaljunction.com was quick to sniff out the opportunity from the client’s challenge.
It was a time when both e-selling of steel as well as e-procurement of goods and services had taken off and metaljunction.com was looking for opportunities of diversification.
At this juncture, the founder CEO and MD, Mr Viresh Oberoi, once met the then chairman of the Bharat Coking Coal Limited (BCCL) Mr P.S. Bhattacharyya, on a flight from Delhi to Calcutta. This chance meeting led to the conception and birth of coaljunction, the business unit which conducts e-auction of coal.
In Mr Bhattacharyya’s own words, "I met Viresh Oberoi on a flight and we talked. I mentioned to him that after joining BCCL in 2003, I had found that the production had been falling since 1998 at the rate of 1 million tonnes per annum. The annual losses hovered around Rs 600 crore, out of which Rs 300 crore were cash losses. As a result, in the last five years, the losses had amounted to Rs 3,300 crore, including Rs 1,800 crore cash losses. The company was paying only net salaries to employees."
Talking about corrupt practices, he said, "Around 5 million tonnes of coal was annually given away at the notified price fixed by the government, much of which was possibly moving into the grey market. In Dhanbad, for example, there was a [private coal] exchange, where delivery orders issued to some of the non-core consumers would change hands and at every stage some money was being made by some middlemen, and the end consumer had to pay a much higher price than the notified price.
"The difference between the notified price for coal and its actual market price was being misappropriated by a chain of middlemen. This was our (Coal India Limited) money. It was a very painful thing, as on the one hand, the new consumers did not have access [to low-priced coal] and on the other, the old consumers were doing black marketing. The company was losing money and there was no transparency or efficiency in the system."
"When Viresh expressed willingness to help, we quickly had a meeting with the dynamic Secretary, Coal, Mr P.C. Parakh, who understood our proposal and supported us. Thereafter, special approval was obtained from the Prime Minister’s office for e-auction as a trial, and ever since then, the policy has been adopted and implemented."
"Recollecting how it all started, Mr Oberoi said, "As part of our strategy for diversification, we were always looking at all possibilities after metaljunction.com was fully established. We considered selling paper, aluminium or other non ferrous alloys also. We found that we could add very little to their existing process since the selling cycle time for these commodities was very short and prices of these commodities were already known. Then the opportunity to help the coal industry arrived when I met Partha. coaljunction was conceived during a flight."
coaljunction’s objective was simple. It wanted all coal consumers to have equal opportunity to buy coal. On the other hand, the client, the coal companies, wanted the sales process to be free of the shackles of middlemen which did not allow for optimum price discovery. It was a symbiotic need and the solution catered to both parties optimally. For the last 10 years, this process has reaped tremendous benefits for the entire coal supply chain.
(Reproduced in parts from "Intrapreneurs@mjunction," published by Rupa)