METAL JUNCTION

INTRODUCTION
• It all started with the dream of a person • Viresh Oberoi,The MD and CEO of METAL JUNCTION • Before starting this venture he spent his entire career with TISCO • India being the 10th largest producer of steel in the world adding to the advantage • SAIL and TISCO contributing over 60% of total steel production

• A time during the Dot-Com boom where there were many domestic and international players at that time. • A perfect situation showed up when SAIL and TATA set up internal teams to evaluate • How their respective companies could take advantage of Internet and E-commerce • After months of speculation both the companies, which were located in the same geographical space decided to fuse ultimately to form METAL JUNCTION in 2001, soon to be named as the largest B2B E-Commerce website platform in the world.

• The basic functions or the activities that they deal are related to selling second hand steel –Which they are a big dealers at. • Followed by a systematic procees of Auctioning (Forward and Reverse) • Ultimately they undertake both the functions of E-Sourcing and E-Selling • To further continue, Metal Junction has included logistic services, finance services, metal and mineral auctions and ecash management services in the site.

Coming to company analysis and their presence
• It began operations by Selling ‘to-be-disposed idle assets’ and ‘secondary steel’ of its two promoters. • In 2011, mjunction completed 10 years, with FY’11 revenue of approximately INR 1 billion • Earned from online transactions worth INR 248.5 billion that were consummated on its electronic Trading Platforms

• A large B2B transaction that exist between industrial manufacturers, partners, and retailers or between companies

Structure of Indian steel industry

Reach
I

Buyer base

products

SERVICES PROVIDED BY THE COMPANY

• Auction services • Financial services • Rebar sevices

AUCTION SERVICES
• With e-Sales process, steel consumers whether small or large, are assured of the quality delivered to them in the most simple, efficient and transparent manner anywhere in the country. Ensure that buyers remain not more than a click away from fulfilling their steel requirements. No time wasted in negotiations with company executives Transparent pricing based on market situation, totally free of bias Value added services like inspection and finance Reliable information on availability and quality of material Logistics and Inspection Service to deliver material anywhere in India

• •
• • •

E-AUCTION

• The process of an auction aims to find a fair price for the goods by identifying buyers who need them the most. Such auctions are called forward auctions, where buyers compete with each other by placing bids for the goods to be sold. • Metal Junction pioneered the concept of eAuctions for steel by moving the entire process of auctions to the Internet.

• Metal Junction users have the independence of bidding via is desktop online platform or through our mobile application. • Assistance is provided by tele-executives during the e-auction if faced by any issues

Advantages
• No time wasted in negotiations with company executives • Transparent pricing based on market situation, totally free of bias • Value added services like inspection and finance • Reliable information on availability and quality of material • Logistics and Inspection Service to deliver material anywhere in India •

Financial sevices
Buyer finance • Collateral Free Finance for selected bidders • To help raise capital for bidding, metal junction has forged partnership with many leading Indian banks. Channel Finance • An exclusive offer from metaljunction to the sellers, in association with leading foreign and private sector banks in the country to enable client organization to sell to their Distributors Dealers on cash basis and eliminate debtors from the books altogether.

Buyer Finance: How it works
• Customer Provides Expression of Interest with application form and documents to metaljunction • Metaljunction will discuss with bank & once approved, set up over draft limit. • Customer sends Finance Request for approved lots • Bank processes request & directly makes RTGSpayment to the plant or issues Pay Order* • Customer Lifts Material and makes payment to bank within due time limit**

Who's eligible for buyer finance
• Only for bidders associated with SAIL, Tata Steel (Welspun and JSPL as well for TATA Capital Ltd.) and metaljunction for more than 3 years. • Minimum 12 successful bids on metaljunction auction platform • Sales Turnover Rs. 2 crs/Year • Positive PAT for last 3 years • Dependency on MJ should be 40 - 50% of the total turnover • No delay in payment to MJ / Tata Steel & SAIL in the preceding 24 months. • Name of the buyer/promoters should not appear under the RBI's/CIBIL Defaulters List.

Channel Finance: Improving process efficiency & convenience
• Benefits: As a seller • 100% secured payment • 100% timely payment • Single window in terms of online visibility of transactions • Increased buying power for your channel partners • 24 x 7 x 365 basis transactions • Without any recourse (financial or otherwise)

As a distributor/dealer • Competitive cost of fund (better than existing working capital cost) • No security or collateral attached (Clean credit) • Hassle free documentation • Over and above existing credit line • Flexible tenure available (30 to 90 days) for repayment to banks •

Rebaring services
• Estimation & Detailing • Delivering a diverse range of reinforcement solutions to the civil, commercial and residential construction industries, MetalJunction offers clients with several options of services to suit their individual needs on Estimation & Detailing. They communicate with the client to determine the client's needs for each job. • Benefits • · Quality estimators & Rebar detailers • · Civil Engineers are always there to assist the estimation and detailing team • · Quality draughtsman are there to draw the necessary drawings • · Engineers are there to handle the 'Error management' on preliminary drawings • · As a value added service structural design advice can be provided in case it is needed

Classifieds

Industry info and news:

Besides this they also provides subscription to their on magazines which contain latest news and trends in industry

Analysis of Business model

MetalJunction.com
Re-engineering of the buying and selling

Business model

Value proposition
Transforming (digitising) the marketplace by increasing connectivity for participants and reducing reliance on paper documents.

1. 2. 3. 4. 5. 6.

Better prices (price discovery) – (flip side) Better process efficiency Time saving simplicity Transparency Value added services like inspection,rebar services and financing

Better process efficiency
• To understand this we need to look at traditional system.

DEMERITS OF TRADITIONAL MARKETING • The catalogue should be changed every time it requires huge expenses in marketing and advertisements for the competition of quality, price and availability. • The market place is limited to a geographical area. • In traditional marketing, there is a need of lot of phone calls, emails and personnel meetings for the sale of the products. • the transaction cost is very high -Cost of inventory, employee salary, order-processing cost and the administrative cost Traditional marketing requires a middle man for the transaction. • Chance of error.

• • • • • •

Enhanced customer Focus Reduced Transaction Cost Integration of Supply Chain Focus on Core Business Vital Information available to customers Reduced Cycle time.

Inspection & finance services to buyers
Metaljunction offer logistic and inspection service to its buyers. The buyers can avail this service which is located anywhere in India. delivered to the customers on time at their door steps without any extra cost.

• • • •

Reliable information on availability and quality. Systematic approach and coordination. Pre determined transportation rate. Shorter lead time.

Finance services
online finance which is available 24X7, 365 days a year. Metaljunction provide this service at a competitive interest rates. Thus the public holidays and the Sundays are no more a constraint for business and commerce. Metaljunction has a integration with client ERP and the bank server for a smooth transaction.

Better price? how?
• Eliminating intermediaries

• Reduced transaction cost

For sellers
• Process efficiency • Revenue enhancement:
– – – – Market determined price Increased profit margin(no middleman) Opportunistic selling Focused selling- of excess inventory

Transparency

Revenue model
1. Transaction Fees.
– Transaction fees have become a primary revenue stream Transaction fees are a charge on a percentage of the gross amount of each buy-sell transaction. Generally range from 0.5% on the transaction to 8% or more on more complex transactions.

2. Advertising on magazines 3. Classified subscription 4. Alliances with financiers

Market opportunity

• Diversification
Mjunction collabration of: buyjunction,autojunction,valuejunction,coaljunction,financejunction,
mjunctionedge,ejunction

• Expanding globally • India – emerging as BPO HUB • Highly skilled,low cost work force-MJ can offer india based offshore eauction service • B2C segment- staightline.com

Marketing strategy
• Viresh oberoi’s key formula for marketing: • Creating / unlocking value is of prime importance and not getting eye balls. • The deal must get consummated on the electronic platform and not offline. If value is • actually being created, customers will have no problem in paying. • Offering a service for free would not work. • Starting small and ramping up fast is better than launching big

• Use lead management. • Maximize the value for each lead. -

• • • •

Focus on the existing customers. Spend less on the new customers. lead nurturing campaignsIn case of secondary steel sales, the bidder groups were usually traders who were unfamiliar with ‘computer/internet-based trading systems’ (Traditional bania families dominated this trade.) The initial task of market-making was to get this bidder group on-line.

• “‘mental-Junction’….Internet mein auction hoga – dibbe mein yeh sab kam nahin hoga – app ka dukaan bandh ho jayega”
• Mjunction organized extensive training of traders.

• Content for later in the buying cycle.
– Make sure that the buyer finds you rather than you finding the buyer. Focus on the content which the buyer is looking for.

• Aligning sales and marketing team.
– Metaljunction interacts marketing and sales teams to create a single pipeline for revenue.

• Marketing should not be a cost center.
– The conception sales deliver revenue and marketing as a cost center should change. Investments in marketing should be justified on why they are investing and ROI

competitors
• operates in a space which has very low barriers of entry and where there are a number of competitors • Traditional trading

• • • •

Globalplayers www.e-steel.com Metalspectrum – not functional www.metalsite.com
– One of the pioneers in b2b ,despite keeping careful tabs on the budget, like so many other dot-coms, simply ran out of cash.

Competitive advandage
• • • • • TISCO being the 2nd cheapest producer on steel. Dynamic and innovative management team Transparency Simplicity Flexibility- listen to our customers, identify pain points and redesign processes to allay these pain points. • services are built on a common platform– thereby allowing to take advantage of common technology and technology infrastructure

• • • •

Operates both on the buy and sell side of value chain Customer orientation Value added services like financing and inspection,rebar services Certificates for standard

Certifications and awards

. Metaljunction also received ISO 9001:2000

Management team
• 1.Viresh Oberoi, MD & CEO
Education: Business and Management Programmes IIM - Ahmedabad, INSEAD - CEDEP - Fontainebleau, France and Harvard Business School, Boston, USA

• Joined TATA Steel in 1978 as a Sales Trainee • youngest Chief Sales Manager of Tata Steel. • the implementation of SAP in Tata Steel for which Viresh was the Project Manager • 2000, Viresh was selected to be the CEO of Tata Steel's latest joint venture with SAIL - metaljunction.com to etransform the steel supply chain

2.Ujjal Bhattacharya, Vice President, metaljunction, valuejunction & autojunction

Ujjal is a Metallurgical Engineer from Institute of Technology – BHU and an MBA from XLRI • started his career with TATA Steel in July '84 • mjunction since Nov'01. • 10 years of experience in sales at TATA Steel. • Business Process Re-design in TATA Steel

• 4.Soumya Sanyal, Head - Financejunction Soumya
leads the emerging practice area for Financial Solutions which provides strategy, design and implementation for B2B market places.

• 5.Rajarshi Chattopadhyay, Company Secretary &
Head - Finance

• 6.Deepak Bhattacharyya, Head - Coaljunction, mjunction services limited
• Work Profile: Deepak has over 16 years of extensive experience in the areas of e-commerce, sales and marketing, business development and key account management

SWOT ANALYSIS

strength
• The beautiful principle- ‘aggregation’
– the aggregation of buyers and suppliers, demand and supply on a common platform

• entry barrier in terms of costs high • Value added services • Loyal customers

weakness
• Not always been able to differentiate themselves as an auction service provider from other small players – it brings in pressure on margins • Digitization did not embrace the whole steel trade ecosystem.
– Except for a few who buy steel from SAIL or Tata Steel, mJunction initiative has not touched the bulk of the trade sector. has not also been successful in embracing the primary steel sales

• Didn’t think beyond auction model of e-c
– for instance, online negotiations, online e-financing and market-making?

opportunity
• Diversification • Primary steel- (they have already ventured into)
• Going global- scalability issue
– to expand globally and is on the lookoutfor suitable mergers and acquisitions Ithas already invested over US$ 8.5 millioni n technology and office space this yearand next year’s investment target is over

• B2C segment- staightline.com • C2C segment
– The firm is now gearing up to conductauctions for retail surplus. Next year,it plans to launch a new integratedauto e-commerce portal catering to allthree segments – business-to-business(B2B), business-to-consumer (B2C) andconsumer-to-consumer (C2C) by offeringspecialised services such as e-auction,e-classifieds, e-retailing

• public offer (IPO)

Threats
• Expansion into b2c,c2c, is it good for mjunction?
– additional investment – Low volume in b2c-cost issues – Risk of crash-like other pioneers

• Bulk of mjunction business right now is based on e-auctions that unbundles the process of price discovery from other trading processes. This unbundling, to the extent that it is achieved on the ground, along with the reach afforded by internet based technologies allow a more intense competitive market to spring up around the auctions

• International players– scalability issues – Logistic support – partners??- cost? – competition

“Thank you GOD”
Thank u everyone

questions
• Questions for Discussion: 1. How has an Indian e-commerce company like Metaljunction Services Ltd., which primarily procures and sells commodities like steel and coal, managed to become the largest e-market place for steel in the world? 2. ‘Metaljunction should restrict its activities to the steel sector. Its expansion into varied sectors will have a negative impact on its core competency sector i.e. Steel.'Discuss. What measures should the company take to expand its operations globally and become a global e-marketplace like alibaba.com, ariba.com or worldwideretailexchange.com

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.