Shubha Madhukar

mjunction has transformed supply chain mechanics in India’s steel industry to become the world’s largest e-marketplace for steel and coal

In 2001, what came to be called the dotcom bubble — the mad worldwide frenzy to set up internet-based businesses — had already burst, and billion-dollar bankruptcies littered the World Wide Web. e-commerce had become a bad word, and conventional wisdom dictated that websites were neither the preferred nor the trusted way to do business.

But this did not prevent the setting up of metaljunction.com, (now mjunction services) — a 50:50 joint venture between Tata Steel and SAIL — which has become an unprecedented success story in online commodity selling. As one of the world’s largest e-marketplaces for steel and coal, it has transformed the supply chains of both these industries in India, ushering in efficiency, transparency and convenience.

On time; online
mjunction’s unique selling proposition (USP) is that its online service is backed by a strong offline presence. The company’s logistics network transports materials to buyers across the country efficiently, securely and on time. This clearly differentiates it from the competition, whose online services offer only partial solutions.

mjunction handles both sides of the supply chain — selling and sourcing — metaljunction.in does e-selling, while buyjunction.in deals in e-sourcing.

E-selling on metaljunction.in allows access to two distinct services. Sale of standard commodity products — where price discovery is the priority — is through forward auction. Where delivery and convenience are more important than price discovery, the catalogue based-online retail store is the way to go.

Forward auction or e-auction changed the way steel was sold. It offered a transparent and efficient price discovery mechanism that improved things all round. Automation enabled huge quantities of material to be more easily broken up into smaller, more marketable lots, ensuring a much wider participation of end-users, giving them an equal opportunity to compete with big buyers. Tedious manual processes like tenders, scrutiny and negotiations were no longer required, and the entire selling cycle was simplified, both time-wise and procedure-wise.

Discovering better prices
E-auctions also brought about significant improvements in supply chain management, by significantly reducing inventory at steel plants, apart from impressive reductions in overheads, as well as in manpower and transaction costs. The price discovery mechanism in e-auctions enabled better price realisations, straightaway translating into better revenues.

On the e-sourcing side, buyjunction.in enabled clients to rationalise spend management and streamline their procurement processes. It encompasses the entire spectrum of supply chain management, through reverse auction, aggregate rate contract, a sourcing BPO and an enterprise procurement system.

Together, the two divisions address nearly all the requirements of both selling and sourcing, making mjunction an unqualified success. At any given time, two separate teams of professionals are working to provide the best possible solutions to customers; the selling team gets the best price for its clients’ products, while the sourcing team works to reduce the total cost of raw materials and other purchases by clients for manufacturing operations.

Money machine
mjunction’s success story goes even further. Its logistics and financial services make it an end-to-end solution provider. Managing director Viresh Oberoi explains, "We ensure that the buyer does not need to move out from behind his computer; not only to place the order, but all the way through delivery.” For the manufacturers, it has eliminated the cumbersome chain of middlemen that nibbled away at economies and margins.

The logistics service transports materials to buyers across the country, securely and on time. Started in late 2006, it has moved 85,000 tonnes of material in 2006-07. The target for FY08 is 150,000 tonnes.

The financial services division has tie-ups with several banks, and its integrated system provides online finance to clients on a 24x7x365 basis, at competitive terms. Oberoi says, “We have arranged finance of over Rs2,000 crore in 2006-07, against Rs1,200 crore in 2005-06. The
figure is likely to cross Rs3,500 crore in FY08.”

Other handy financial services include e-bill presentation and payment collection for faster realisation of payments. Buyer finance provide buyers financial assistance at competitive rates, helping them to increase their buying capacity, while the eCash management system enables clients to view payments due to them and print pay-in slips.

New ventures
In 2005, the company moved beyond metals to launch coaljunction.in, a B2B website that sells coal on behalf of seven Coal India subsidiaries and Singareni Collieries, catering to 5,500 coal buyers in India. It has sold more than 19 million tonnes of coal online, and made ‘coaljunction’ into a successful brand.

Next came automobile portal autojunction.in, launched in September 2006. It provides B2B online auction services for sale of repossessed vehicles on behalf of leading Indian banks and non-banking finance companies (NBFCs). Still in its very first year, it has already sold 2,000 vehicles. The target for FY08 is 11,000.

The launch of straightline.in, in October 2006, has broken new ground, taking mjunction into the B2C space. Builders can now directly order branded goods — TMT bars, GC sheets, pipes, etc — online from
straightline.in, to be delivered at their doorstep. All goods come with an assurance of quality and fixed price. There are plans to offer complete online home solutions, including cement, paints, tiles and sanitaryware.

The company aims for exponential growth rates in its new businesses, with its financial and logistics divisions working closely with banks as well as logistics and warehousing companies to provide end-to-end fulfillment services.

What’s in a name?
In January 2007, the company changed its name from metaljunction.com to mjunction services to reflect its wider businesses beyond metals. Its new mission statement, to ‘transform the supply chains of selected industries, to bring about efficiency and transparency to the way goods are bought and sold’, reflects the fact that mjunction has transacted business worth a staggering Rs20,517 crore since its inception.

Fast forward
The numbers hide more than they reveal; from FY03 to FY07, the company has grown at a CAGR of 79 per cent, its economic value added (EVA) has shot up at a CAGR of 195 per cent, and it has paid over 270 per cent cumulative dividend to its promoters.

But Oberoi is far from smug, “For our mature businesses like metaljunction, buyjunction and coaljunction, we need to focus on increasing customer satisfaction and building more robust processes. We want to achieve the highest quality standards and actively seek clients outside India,” he says.

mjunction hopes to successfully implement SAP R/3 in FY08, to help eliminate wasteful expenditure and to increase business with profitable clients and supply chains.

In the next five years, the company hopes to take its success story to the global online arena. With a strong footprint in the domestic market, mjunction is already the undisputed leader in the world of e-commerce in India; beyond is the world.

Uploaded in December 2007