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Mjunction e-auctions vintage cars, factories; plans to help retailers

Mjunction e-auctions vintage cars, factories; plans to help retailers
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First Published: Mon, Mar 23 2009. 11 59 PM IST
Updated: Mon, Mar 23 2009. 11 59 PM IST
Kolkata: When mjunction services ltd was started in 2001 to conduct e-auctions to sell steel and coal, the firm never thought it would end up auctioning vintage cars, aircraft and fertilizer factories.
But an economic slowdown throws up opportunities from unlikely quarters.
Mjunction—a 50:50 venture of state-owned Steel Authority of India Ltd (SAIL) and Tata Steel Ltd—has in the past one year emerged as a specialist in selling idle assets. In that time, it has sold a wide variety of assets worth around Rs300 crore through electronic auctions, according to managing director and chief executive officer Viresh Oberoi.
“Though our core business of selling steel and coal was hit by the downturn in the economy, we exploited the situation to firmly establish a new line of business,” he said.
The Indian Steel and Wire Products Ltd (ISWPL), a subsidiary of Tata Steel, decided to sell two US-made aircraft in July last year, and asked the online commerce firm to find buyers.
A few months earlier, mjunction had managed to sell seven vintage cars, which included a 1940 Buick, a 1948 Chevrolet and a 1956 Mercedes owned by ISWPL. It had approached collectors from across the country, and conducted an electronic auction, which attracted some 60 buyers. The sale of the car fleet fetched around Rs43 lakh.
“The online auction of vintage cars was very innovative. It created access to some very valuable cars for people sitting far and wide,” said Ravi Prakash, secretary of the Karnataka Vintage and Classic Cars Club, who bought four of the seven cars.
When ISWPL asked mjunction to sell the two small planes, the auctioneer took the same route. Five flying schools took part and it managed to sell the planes for Rs61.6 lakh, far more than what they would have fetched had they been sold as scrap, which ISWPL had mulled at some stage.
Mjunction, which charges 1-5% of sale proceeds as commission from sellers, recently sold a fertilizer unit of Rourkela steel plant of SAIL for around Rs38 crore—its biggest deal till date. Though most of its clients, so far, were steel firms, mjunction has now been approached by several companies from other sectors, too, and is soon going to hold auctions to sell a glass factory in Andhra Pradesh and a chemical factory in Bangalore.
Enthused by its success with sale of idle assets, mjunction is about to launch a new business aimed at helping retailers clear inventory and free-up working capital. The company has been approached by apparel and consumer goods retailers to create an electronic platform to auction unsold stocks.
“Rack space is expensive. So is working capital. So, retailers can’t hold on to stocks beyond a point. Because there is no organized market, people are selling their inventory at ridiculous prices,” said Oberoi. “Our job is to find buyers for the unsold stuff, who would buy them through auction, and, in turn, take them to new markets, say rural markets, where the stuff could be sold at a discount.”
Mjunction has already tied up with retailers, who Oberoi refused to name. It is currently building a database of potential buyers, and if all goes well, will launch the new business in May.
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First Published: Mon, Mar 23 2009. 11 59 PM IST