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Coal india limited coil and many buyers

Coal eauction: business marketing assignment

E-Auction has become a preferred mode of selling for coal, lignite and other minerals, due to its various advantages spanning from transparency of the selling process to fair market price realization, and more and more companies are adopting this mechanism for the sale of their products. Auction System: Auction is a market mechanism by which buyers make bids and sellers place offers; hardhearted by the competitive and dynamic nature by which the final price is reached. Electronic Auctions or E-Auctions are those which are conducted online.

In the case of coal the scenario is of a single seller I. E. Coal India Limited (COIL) and many buyers. This type of auctioning is known as forward auctioning. See: Exhibit 1 Another form of auctioning is called the reverse auction. This is the scenario where there are many potential sellers and Just one buyer. The buyer places an item for bid (tender) on a request for quote (REF) system, potential suppliers bid on the Job, with he price reducing sequentially, and the lowest bid wins; used mainly in BIB and BIB e-commerce.

See: Exhibit 4 The above innovative methodology was put to test on February 19, 2005. The results were fantastic: * Price realization was 54% over the floor price * Forced the breakup of cartels. Enabled small consumers to participate due to smaller lot sizes. * Bidders were extremely satisfied with the simple and user friendly screen. * The methodology was adopted as the standard methodology for sale of coal, across all the subsidiary companies of COIL. * The earlier service provider was asked to adopt this methodology. 10 Million Tons of coal was initially earmarked by Ministry of Coal to be sold in FYI 06, which was subsequently revised to 20 Million Tons. * Consumers could buy coal of their choice directly in small lots – efficiently, conveniently & transparently. * Disappearance of middle men. * Stoppage of black marketing. Sill’s average realization above the notified price during April – November 2005 was around 54. 2%. For the first time since the nationalization of the coal industry and the formation of COIL, the public sector behemoth looked set to report a net profit of more than 6, 000 core.

E-auction growth opportunities in India: With the fast growing technology along with the tremendous growth in Internet, the E-auction has more opportunities to grow with innovations by branching itself across various sectors in India. Some of the sectors where the E-auction can grow are: Telecoms: The auctioning of the telecoms spectrum earlier this year was severely reductive by Major Service providers such as Birth Airtime and Idea Cellular. There is a huge opportunity in this sector which is still yet untapped. Power: E-Auctioning in electricity kicked off in India in June 2008.

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