buyjunction connect - mar 2013

march, 2013

volume 2 issue 2

1

Vinaya VarmaVice President,buyjunction

from thedesk of 2012 has been a rather gloomy year. While Europe slipped into a double

dipped recession, the US witnessed a further slump in its markets. India too was plagued with its own share of economic problems like rising inflation and imports, along with a falling rate of industrial output which in turn slowed India’s growth rate and added to the increasing current account deficit. All these factors have had a negative impact on business confidence and operating margins.

To survive and to register growth and profit, an increasing number of businesses are now looking at optimising their operations to achieve maximum efficiency by outsourcing certain functions to specialist organisations. buyjunction’s array of procurement services aim at delivering immediate, measurable results that can lead to guaranteed savings and significant positive impact on profitability by freeing up the client’s bandwidth.

With the second issue of buyjunction connect we try and bring to you a synopsis of current industry trends, market analysis and an overview of what to expect in Q4, 2012. The issue offers tactical advice which should help you understand the key focus areas for your procurement needs, given the existing market situation. The newsletter also captures a few of buyjunction’s success stories in some core procurement categories that we specialise in.

We hope that this newsletter will help you understand how we add value to our client’s businesses through innovation and in-depth analysis of their requirements.We only strive to create win-win deals foryou.

Regards,

Vinaya Varma,Vice President, buyjunction

mjunction is the largest ecommerce company in India.It is a 50:50 venture promoted by the Steel Authority of India Limited (SAIL) and TATA Steel.

corporate officemjunction Services Limited Godrej Waterside Tower – I, 3rd Floor, Plot No. 5, Block – DP Sector – V, Salt Lake City, Kolkata – 700091, WB, IndiaTel: +91 33 6610 6100 Fax: +91 33 6610 6187/ 6179 / +91 33 6601 1719 / 1720

registered officeTATA Centre,

43 Jawaharlal Nehru Road,Kolkata 700 071

Tel: +91 33 6610 6100, 2288 2606 Fax: +91 33 2288 2078

[email protected] [email protected]

16

www.mjunction.inwww.buyjunction.in

The year 2012 has been a bumpy ride for economies globally. The World Economic Outlook Report (October 2012) stated that whilethere has been some recovery from the global economic meltdown, it will still take a while to stabilize.

While the growth of the US economy accelerated in Q3’12, the Eurozone entered a recession which is likely to deepen in the coming quarters. Britain experienced its own double-dip and is now in its slowest recovery in 100 years. Though the US economy is in better health than Europe’s, the pace of recovery has been slow with a probable growth rate between 2.5%-3% in 2013.

The Chinese economy continued to grow at a sustained rate of about 8%. While China is slowly rebalancing, Beijing is also moving towards financial liberalisation which would mean foreign capital coming to the rescue soon. East Asia remained the fastest growing segment. Indonesia clocking a growth rate of more than 6% may replace India as the “I” in the BRICS club.

Indiais likely to come out slowly but steadily from its current slowdown. The Asian Development Bank (ADB) cut its projection for India’s economic growth for the current financial year to 5.4% from 5.6% estimated earlier. It also cut its growth projection for India in 2013 to 6.6% from the earlier 6.7%.

However, the Reserve Bank of India (RBI), softening its stance on monetary policy, cut its key interest rates – repo rate and cash reserve ratio – by 25 basis points in January. This will result in releasing an additionalRs 18,000 croreof liquidity into the market. The intent is to perk up growth through eased liquidity and reduced cost of borrowing. These cuts have set the platform for financial institutions to lower their minimum lending rate, making loans to retail, micro, small and medium enterprises, and large corporate segments a tad cheaper.

Inflation

Inflation in India, a crucial factor in determining competitiveness of industries,has surprisingly eased over the last few months. Inflation, as measured by the Wholesale Price Index (WPI), stood at 7.18% in December, an 11-month low, down from 7.24% in November. This fall in the inflation rate is now a ray of hope in the gloomy economic scenario.

While inflation is still high, the worst seems to be over, with India's inflation expected to trend lower during January-March. After revising the projection upwards twice earlier this year, the RBI has forecast the WPI at 7.5% at March-end.

India Inflation Rate - Annual change on Consumer Price Index

Source: tradingeconomics.com | Ministry of Statistics & Programme Implementation

6.577.588.599.51010.5

9.47 9.54 9.68 9.749.36

9.78 10 9.879.46

7.74 7.56 7.69 7.5 7.45

9.56

7.23

6.577.588.599.51010.5

7.557.55 7.58

6.87

7.558.07

7.24

9.45 9.51

Jan/ 11 Jul/ 11 Jan/ 12 Jul/ 12

Economic Trends Appreciation from clients

Thank you very much and I on the behalf of TRF extend our heartiest wishes to you and your entire team for this new year -2013. The association so far, has yielded a very fruitful outcome and some of the output were beyond expectations.

The three main salient points for such magnanimous result are -

1) Time bound action and there had been no follow through - the pressure created by the system was so effective that the reflections and influences were minimized.

2) New vendors got ample scope to take part in fair atmosphere which to some extent were a part of discontent-ment earlier. Almost in all cases the order has been awarded to new vendors.

3) Process is so robust and comprehensive - there was little chance of error or dissatisfaction.

We would like enhance and explore more possible engagement avenues in future.

Mr. Kaushik Sarkar,AGM, CPCTRF

.............................................................................................................................................

We are delighted to appreciate all those who were involved in making both these events successful and convey our special compliments to Mr. Srinivasan & Mr. Thirvalluvam at mjunction, Chennai for their timely suggestion with regard to Start Bid & Bidding Strategy.

Mr. V.S. Hedge Dy. Gen. ManagerSAIL VISP

.............................................................................................................................................

The auctions were conducted successfully on a very short notice by buyjunction.

Mr. Harpreet SinghAsst General Manager (Purchase)SAIL, Bhillai

.............................................................................................................................................

We recognize the efforts put in by Mr. Arijit Ghosh and Mr. Keshab Chandra Mondal of buyjunction, Burn-pur, fror the execution of Reverse Auction process with perfection and as a result, considerable savings was achieved in the procurement of Cold Rolled Steel Straps package.

Mr. Tapas ChottopadhyayDGM ProjectsSAIL. ISP Burnpur

“

“

“

“ “

“

“

“

2 15

Mr. Indranil Chaudhuri, Head - Account Management

buyjunction at IIMM meet in Durgapur

The Durgapur Branch of the Indian Institute of Materials Management (IIMM) organised a day-long seminar on 'Challenges in Indian Steel Industry - A Supply Chain Perspective' on Sunday, December 23, at Hotel Citi Residency, Durgapur.

The programme was inaugurated by the CEO of DSP, Mr P.K. Singh and was attended by senior leadership teams of different SAIL plants including Corporate Materials Management Group of SAIL. The MJ team actively participated in this seminar and was represented by executives of Durgapur Branch as well as Kolkata HO. Mr Indranil Chaudhuri, Head, Account Management, of

buyjunction, delivered a presentation to the audience titled 'Logistics in Steel Supply Chain - A Strategic Approach' which covered current trend of Indian Logistics industry, present challenges and how e-sourcing can help clients achieve tangible benefits in finalising logistics/transportation contracts.

Chairman of the Durgapur branch, IIMM, Mr Shantanu Chakravarty (also the executive director, MM, DSP) took keen interest in this programme and had a special word of praise for the MJ presentation. The MJ team also utilised this opportunity to engage themselves with many senior executives of SAIL who had assembled for this initiative.


Source: tradingeconomics.com | Director General of Commerce

-1200

-1000

-800

-600

-400

-200

0

-469.01

Jan/ 11 Jul/ 11 Jan/ 12 Jul/ 12

Trade Deficit- Balance of Trade

India’s trade gap increased to $17.7 billion in December from $14.7 billion a year earlier, but narrowed from $19.3 billion in November, even after exports fell for the eighth straight month.The trade deficit for April - December,

2012-13 was estimated at $147,172.11 million which was higher than the deficit of US $137,316.72 million during April -December, 2011-12.

-425.51

-173.15

-570.17

-830.08-644.03

-653.78-690.29

-628.52

-864.13-805.2

-670.97-757.82

-745.55-699.77

-698.75

-886.05

-577.03

-859.79-867.98

-987.29-1111.46

-1056.48-965.73

-1200

-1000

-800

-600

-400

-200

0

GDP

The forecast for the global GDP in 2013 is pegged at 3.2% growth. Though better than 2012,this would still be 0.3 points below the long-term average growth rate. Despite these figures, the economies in China and the U.S. are improving, including stronger housing demand and hiring in the U.S., and accelerating factory output and retail sales in China.

The Indian economy GDP growth slowed to 5.3% for the third quarter in 2012. Despite the instability, HSBC has forecasted the GDP growth at 5.4% in FY’13 (up from 5.1% projected earlier) and 6.2% (unchanged) in FY’14.

India GDP Annual Growth Rate - Percentage Change in Gross Domestic Product


7

8

9

109.4 9.6

2008

5

6

5

9.3 9.4 9.7

8.57.8

7.5

6.1 5.86.3

8.6

7.3

9.4 9.38.9

8.37.8

7.76.9

6.15.55.3 5.3

7

8

9

10

6

5

2010 2012

314

0

20000

30000

40000

50000

60000

54

For the first time since May, JPMorgan's Global Manufacturing Purchasing Managers Index (PMI) rose to 50.2 in December from November's 49.6.While U.S. and China PMI showed an upswing, the Eurozone sank deeper into recession with falling orders.

Services PMI surged to a 3-month high to 55.6 points in December as compared to 52.1 points in November. PMI for manufacturing jumped to 54.7 in December from 53.7 in November, its biggest monthly rise since January 2012. The HSBC composite PMI rose to a 10-month high of 56.3 points. In November, the index had posted 53.2.

The combination of an increase in new orders and the low inventory of finished goods suggest that the improvement in manufacturing output should continue through next year.

Purchase Manager Index

Owing to the government's reforms push, easing inflation, higher demand and better profit margins, India Inc's business confidence witnessed an improvement for the second consecutive quarter.

For the October-to-December quarter of 2012, on a scale of 100, the confidence level is was at 53.8, up from 52.4

in the previous three months, and well above the level of 49.3 it was in the three months before that.

In a bid to further increase investor confidence, the Finance Ministry initiated measures to improve infrastructure spending, asking the cash-rich PSUs to increase their spending and also removing the bottlenecks for private sector spending.

Val

2008 20092010 2011 2012

India attracted six per cent of total FDI inflows to the Asia-Pacific region. As per Department of Industrial Policy and Promotion (DIPP), India's FDI inflows grew by over 65% year-on-year to $1.94 billion in October.

In November, FDI inflows declined to a nearly two-year low of $1.05 billion. In November 2011, India had attracted FDI worth $2.53 billion.For the April-November period 2012-13, the inflows have declined by about 31% to $15.84 billion, from $22.83 billion in the year-ago period.

-

The government expects to receive more FDI in 2013 with liberalised FDI policy in sectors like multi-brand retail, single-brand retail, commodity exchanges, power exchanges, broadcasting, non-banking financial institutions (NBFCs) and asset reconstruction companies (ARCs).The new reforms passed now allowed 51% FDI in multi-brand retail and 49% investment by foreign airlines in the aviation sector.

Investment Confidence

Indian Economy – 2012 Flashback & 2013 Outlook

India, Asia's second largest economic powerhouse after China, is experiencing a growth rate of just around 6%, the lowest in 10 years. The deteriorating global economy, serious financial trade deficit, falling business confidence, and the continuously depreciating rupee have directly

pulled down India’s growth. The International Monetary Fund (IMF) in its "World Economic Outlook" report released in October this year predicted that the India's whole year economic growth would fall to 4.9%.

10.00

20.00

30.00

Logistic/TranspotationService

FDI & Capital Investment

Worst is behind usThe post reforms confidence has grown (Oct-Dec, 2012)

Hope in the

New year42

21 6

20

11

Moderately worse

Substantially worse

Moderately Better

Substantially Better

Same/no change

Economic Prospects

Financial AvailabilityA Third felt Business Finance was easily available

Substantially Worse

Moderately Better

Moderately Worse


Same/No Change

41053294

HSBC India Manufacturing PMI50 = no change on previous month, S. Adj.

Increasing rate of growth

Increasing rate of contraction

65

60

55

50

45

402006 2007 2008 2009 2010 2011 2012

Source: Markit, HSBC.

The Appreciation Received

Mr. Viresh Oberoi,

The award is a most coveted one and has been won due to dedication, perseverance, devotion and immense service. I offer my heartiest congratulations and hope your service of transforming processes of “buy and sell” of the supply chain in India go on with undiminished vigour!

- N. Nagori, Sr. Jt. President (Proj & Mktng), Birla Corporation

Managing Director, mjunction services limited

0

20000

30000

40000

50000

60000

Val




10.00

20.00

30.00


Hope in the

New year42

21 6

2011

Moderately worse

Substantially worse

Moderately Better


Same/no change

Economic Prospects


Substantially Worse

Moderately Better

Moderately Worse


Same/No Change

41053294

512

OverallEconomic

ConditionsNearly half the

respondents feltthe situation had

improved over theprevious quarter

35 36

14123

Subs

tant

ially

Wor

se

Mod

erat

ely

Wor

se

Subs

tant

ially

Be

tter

Mod

erat

ely

Bette

r

Sam

e/N

o C

hang

e

Substantially Worse

Moderately Worse


HiringConditionsMajority felt hiring

levels stayedthe same

9

6

24

57

4

Same/No Change

Moderately Better

Demand ConditionsMajority saw Improvement

1132

4

41

12 Substantially Better

Substantially Worse

Moderately Worse

Same/No Change

Moderately Better

Profit MarginsThe Overwhelming majority felt profit margins had stayed the same or improved.

Substantially Worse

Moderately Better

Moderately Worse


Same/No Change

412

383511

.................................................................

.................................................................

.................................................................

.................................................................

Figures indicate percentage of respondents

Case study 3: Cover Assembly for Slabbing Mill of SAIL, Bokaro

Sourcing vendors for drawing based items is a challenge as many details like material specification, grade and dimension are a trade secret. This leads to a monopoly, wherein organisations may end up paying higher prices for their purchase requirements or may not get the material as per delivery schedule.

Pit Cover Assembly for Slabbing Mill is one such item where SAIL, Bokaro Steel Plant had a single vendor.buyjunction brought in RDCIS, Ranchi for assessment and development of drawing of the required items. The drawing developed by the Research and Development Cell addressed the basis features of the

requirement. Based on the eligibility criteria, buyjunction sourced vendors who were able to match the technicalities, metallurgical properties and QAP for the said requirement. By the substitution processbuyjunction initiated for SAIL- Bokaro, they benefitted by getting new vendors, breaking the existing monopoly.

The online on-line price negotiation conducted by buyjunction got the client approximately7.52% savings from client estimate / Start bid price for a transaction value of INR 84.9 lacs.

The Indian Institute of Materials Management (IIMM) has adjudged Mr Viresh Oberoi, founder CEO and managing director of mjunction services ltd, the “The Chief Executive of the Year”.

The award was conferred by the National Headquarters of the Institute in recognition of his valuable contribution in building mjunction services ltd as the largest e-commerce company in India and the impact that it has had on society by transforming procurement and selling processes into transparent, efficient and convenient services.

Viresh Oberoi named “CEO of the Year”

The award was presented by Mr Partha Chatterjee, Honorable Minister of Commerce & Industry, government of West Bengal, on behalf of the IIMM.

Some past winners of this award include Mr B. Muthuraman of Tata Steel, Mr Rajiv Bajaj of Bajaj Auto, Mr Baba Kalyani of Bharat Forge and Mr Naveen Jindal of Jindal Steel & Power.

Events

116

The table below shows the various items in the MRO category we help our PSU clients procure.

SL NO ITEM CLIENTS SERVED

1 PIPES & FITTINGS MIEL, RSP, DSP, BSP, BSL, ISP, BHEL, NSPL

2 CONVEYOR BELTS RSP, ISP

3 MECHANICAL CONSUMABLES, SPARES ASP, BSL, BSP, DSP, TRF, TGS, NINL, MIEL, JSPL, RDCIS, BHEL

4 MECHANICAL EQUIPMENT BSL, BSP, DSP, NINL, MIEL, JSPL, BHEL

buyjunction brings quality vendors and adopts the correct strategy. The reverse auction conducted on buyjunction’s online procurement platform gets the best deal in the market for the tendered material. Thecase studies demonstrate how buyjunction went about procuring items in the MRO category for their clients, ensuring that they got the best deal.

Significant Buying:

Case study 1: Conveyor Belt Procurement for SAIL, RSP

Cartel formation among vendors is common when it comes to procurement of Conveyor Belts. New vendor sourcing is required to break this cartel. This is not an easy task if the client has an extensive list of vendorsalready.

To overcome this problem, buyjunction sourced credible vendors on ‘TRIAL’ basis. These were quality vendors who were into export of different conveyor system parts. Once these vendors were approved by SAIL, Rourkela Steel Plant, they took part in the reverse auction held online on buyjunction’s procurement platform, leading to better price discovery. In many events, the new vendors even emerged as L1 (lowest bidders) and were awarded the contract.

Case study 2: Spindle for 900 Mill for SAIL, ASP

buyjunction has also procured Spindle for 900 Mill for SAIL, Alloy Steel Plant. Though this event was not significant not in terms of value, it was a first in terms of new initiatives that the client accepted to adopt.

For this tender, ASP did not go ahead with the ‘hard price’ bid submission that is generally taken in the case of many PSU tenders. They opted instead for ‘on-line sealed bids’ from vendors that were submitted through buyjunction’s online procurement platform which was kept open for vendors till due date of TC bid submission. This was an open tender where buyjunction sourced vendors globally. On techno-commercial evaluation, 7 bidders were accepted by the client. The final price negotiation amongst these bidders was conducted through template bidding.

buyjunction processed a transaction value of INR 9.9 crores in procuring conveyor belt systems for SAIL, RSP. New vendor discovery helped break the cartel, bringing RSP an average saving of 16% from the start bid price.

This event was a success, with a transactional value of Rs. 38.2 lacs. The client not only got the best deal but also got toadded new vendors.

Overall Financial SituationOver 70% believe conditions will not worsen

While there was complete policy paralysis in the government for the first nine months of the year, the passing of the Retail FDI bill combines with the Free Trade Agreements should provide a stimulus to the economy.

With the recent cut in subsidies on diesel, fertilizer and LPG, the roadmap has been set for a drastic reduction in under-recoveries. These subsidies, which have traditionally

been a drain on the country’s finances, have made it difficult for the government to bring the fiscal deficit within a target of 5.3% of gross domestic product. The move to raise the prices of subsidised diesel alone is expected to bring an additional $ 2.4 billion annually.

Substantially Worse

Moderately Better

Moderately Worse


Same/No Change

52243219

Availability of Finance

Substantially Worse

Moderately BetterModerately Worse


Same/No Change

6 20 31 32 11

Production LevelsThree quarters expect either no changeor improvement

Substantially Worse

Moderately BetterModerately Worse


Same/No Change

456 19 21 9


710

98

buyjunction has been helping many organisations save considerable cost, improve cash flow, gain efficiency in operations and inventory and achieve flexibility by shortening cycle times.

With its services like Category Management, Assisted Sourcing, Reverse Auctions, Managed Sourcing, buyjunction has handled over Rs. 9,317 crores of procurements in GY'12, a total of Rs. 30,817 crores since inception.

Top 10 Category in terms of Transaction Value

.

0

10000

20000

30000

40000

50000

60000

Coals & Coke

Ferro Alloys

Mechanical Consumables/Spares Projects

Logistic/TranspotationService Refractories

ElectricaEquipments

ContractServices

Minerals & By-products

InorganicChemicals

Sum of Auction TV (Rs. Lacs)

Data Range: October 2012 – December 2012

.

Items forConstruction Valves

Pipes andFittingsProjects Services

ElectricalEquipments

ElectricalSpares andMaintenance Packaging

Savings%

Top 10 Category in terms of Savings

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

MechanicalEquipment


The Maintenance, Repair & Operations (MRO) category is a procurement category that cuts across all industries. MRO largely consists of categories like Mechanical Consumables & Spares, Mechanical Equipment, Pipes & fittings, Cabled & Accessories, Conveyor Systems and Valves etc. They come in a wide variety and are non-generic. Hence each order has critical material intricacies

and technical parameters. Therefore, keeping track of the market price for such items though the price trend of the raw materials used in MRO items gives an idea of the basic market price. Below is the report by the Ministry Of Commerce, Government of India which gives a glimpse of price index movement.

0

10000

20000

30000

40000

50000

60000

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

MONTH STEEL PIPES & TUBES

STAINLESS STEEL & ALLOYS

STEEL STRUCTURES

RAW RUBBER RUBBER CHEMICALS

SYNTHETIC RUBBER

Oct-12 127.8 156.3 146.5 332.8 177.3 137.3

Nov-12 126.9 156.4 147.8

Dec-12 127.8 156.6 141.2 289.9 170.5 136.0

311.7 173.2 137.3

Savings% in MRO

Source: tradingeconomics.com

17.08%

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%16.00%18.00%

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%16.00%18.00%

Pipes andFittings

ValvesMechanicalEquipment

MechanicalConsumables/Spares

Savings %

13.89% 13.33%

4.45%

buyjunction has been partnering with organisations to help them cut down their MRO costs. In Oct-Dec 2012, goods & services in the MRO Category worth Rs. 33526.66 lakhs were transacted through buyjunction's auction platform which brought about an average saving of 4.53% for the clients.

Organizations primarily require buyjunctionto source the required material with right techno-commercial specifica-tions at the best possible price and in the minimum possible time. The other value added activities that buyjunction does for its clients are:

Preparation of tender documents using the industry’s best practices.

Sourcing quality vendors to suit the requirement.

Inviting techno-commercial bids from vendors, where ever applicable.

Mapping of markets and strategizing for best event outcome.

Mapping of vendors against market segments.

Product substitution where ever applicable.

On-line commercial negotiation among approved vendors.

Streamlining the existing processes

Outsourcing functions/processes which can free bandwidth

Bandwidth management- Improving productivity and re-allocating resources where necessary

Taking help of consultants/experts to learn best practices

Due to the increasing pressure on profit margins, it is necessary for organizations to cut costs and optimise their processes to increase efficiency. While organisations cannot directly impact the macro-economic or external factors, they must bring control where they can. This includes:

Reducing cycle time

Ensuring the best deal to ensure savings

MRO Sourcing: Q4 Glimpses The buyjunction Solution

buyjunction & MRO


buyjunction has been helping many organisations save considerable cost, improve cash flow, gain efficiency in operations and inventory and achieve flexibility by shortening cycle times.

With its services like Category Management, Assisted Sourcing, Reverse Auctions, Managed Sourcing, buyjunction has handled over Rs. 9,317 crores of procurements in GY'12, a total of Rs. 30,817 crores since inception.

Top 10 Category in terms of Transaction Value

.

0

10000

20000

30000

40000

50000

60000

Coals & Coke

Ferro Alloys

Mechanical Consumables/Spares Projects

Logistic/TranspotationService Refractories

ElectricaEquipments

ContractServices

Minerals & By-products

InorganicChemicals

Sum of Auction TV (Rs. Lacs)


.

Items forConstruction Valves

Pipes andFittingsProjects Services

ElectricalEquipments

ElectricalSpares andMaintenance Packaging

Savings%

Top 10 Category in terms of Savings

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

MechanicalEquipment


The Maintenance, Repair & Operations (MRO) category is a procurement category that cuts across all industries. MRO largely consists of categories like Mechanical Consumables & Spares, Mechanical Equipment, Pipes & fittings, Cabled & Accessories, Conveyor Systems and Valves etc. They come in a wide variety and are non-generic. Hence each order has critical material intricacies

and technical parameters. Therefore, keeping track of the market price for such items though the price trend of the raw materials used in MRO items gives an idea of the basic market price. Below is the report by the Ministry Of Commerce, Government of India which gives a glimpse of price index movement.

0

10000

20000

30000

40000

50000

60000

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

MONTH STEEL PIPES & TUBES

STAINLESS STEEL & ALLOYS

STEEL STRUCTURES

RAW RUBBER RUBBER CHEMICALS

SYNTHETIC RUBBER

Oct-12 127.8 156.3 146.5 332.8 177.3 137.3

Nov-12 126.9 156.4 147.8

Dec-12 127.8 156.6 141.2 289.9 170.5 136.0

311.7 173.2 137.3

Savings% in MRO

Source: tradingeconomics.com

17.08%

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%16.00%18.00%

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%16.00%18.00%

Pipes andFittings

ValvesMechanicalEquipment

MechanicalConsumables/Spares

Savings %

13.89% 13.33%

4.45%

buyjunction has been partnering with organisations to help them cut down their MRO costs. In Oct-Dec 2012, goods & services in the MRO Category worth Rs. 33526.66 lakhs were transacted through buyjunction's auction platform which brought about an average saving of 4.53% for the clients.

Organizations primarily require buyjunctionto source the required material with right techno-commercial specifica-tions at the best possible price and in the minimum possible time. The other value added activities that buyjunction does for its clients are:

Preparation of tender documents using the industry’s best practices.

Sourcing quality vendors to suit the requirement.

Inviting techno-commercial bids from vendors, where ever applicable.

Mapping of markets and strategizing for best event outcome.

Mapping of vendors against market segments.

Product substitution where ever applicable.

On-line commercial negotiation among approved vendors.

Streamlining the existing processes

Outsourcing functions/processes which can free bandwidth

Bandwidth management- Improving productivity and re-allocating resources where necessary

Taking help of consultants/experts to learn best practices

Due to the increasing pressure on profit margins, it is necessary for organizations to cut costs and optimise their processes to increase efficiency. While organisations cannot directly impact the macro-economic or external factors, they must bring control where they can. This includes:

Reducing cycle time

Ensuring the best deal to ensure savings

MRO Sourcing: Q4 Glimpses The buyjunction Solution

buyjunction & MRO

98

1110

The table below shows a few items in the MRO category we help our PSU clients procure.

SL NO ITEM CLIENTS SERVED

1 PIPES & FITTINGS MIEL, RSP, DSP, BSP, BSL, ISP, BHEL, NSPL

2 CONVEYOR BELTS RSP, ISP

3 MECHANICAL CONSUMABLES, SPARES ASP, BSL, BSP, DSP, TRF, TGS, NINL, MIEL, JSPL, RDCIS, BHEL

4 MECHANICAL EQUIPMENT BSL, BSP, DSP, NINL, MIEL, JSPL, BHEL

buyjunction brings quality vendors and adopts the correct strategy. The reverse auction conducted on buyjunction’s online procurement platform gets the best deal in the market for the tendered material. Thecase studies demonstrate how buyjunction went about procuring items in the MRO category for their clients, ensuring that they got the best deal.

Significant Buying:

Case study 1: Conveyor Belt Procurement for SAIL, RSP

Cartel formation among vendors is common when it comes to procurement of Conveyor Belts. New vendor sourcing is required to break this cartel. This is not an easy task if the client has an extensive list of vendorsalready.

To overcome this problem, buyjunction sourced credible vendors on ‘TRIAL’ basis. These were quality vendors who were into export of different conveyor system parts. Once these vendors were approved by SAIL, Rourkela Steel Plant, they took part in the reverse auction held online on buyjunction’s procurement platform, leading to better price discovery. In many events, the new vendors even emerged as L1 (lowest bidders) and were awarded the contract.

Case study 2: Spindle for 900 Mill for SAIL, ASP

buyjunction has also procured Spindle for 900 Mill for SAIL, Alloy Steel Plant. Though this event was not significant not in terms of value, it was a first in terms of new initiatives that the client accepted to adopt.

For this tender, ASP did not go ahead with the ‘hard price’ bid submission that is generally taken in the case of many PSU tenders. They opted instead for ‘on-line sealed bids’ from vendors that were submitted through buyjunction’s online procurement platform which was kept open for vendors till due date of TC bid submission. This was an open tender where buyjunction sourced vendors globally. On techno-commercial evaluation, 7 bidders were accepted by the client. The final price negotiation amongst these bidders was conducted through template bidding.











buyjunction processed a transaction value of INR 9.9 crores in procuring conveyor belt systems for SAIL, RSP. New vendor discovery helped break the cartel, bringing RSP an average saving of 16% from the start bid price.

This event was a success, with a transactional value of Rs. 38.2 lacs. The client not only got the best deal but also got toadded new vendors.

Events

OverallEconomic

ConditionsNearly half the

respondents feltthe situation had

improved over theprevious quarter

35 36

14123

Subs

tant

ially

Wor

se

Mod

erat

ely

Wor

se

Subs

tant

ially

Be

tter

Mod

erat

ely

Bette

r

Sam

e/N

o C

hang

e

Substantially Worse

Moderately Worse


HiringConditionsMajority felt hiring

levels stayedthe same

9

6

24

57

4

Same/No Change

Moderately Better

Demand ConditionsMajority saw Improvement

1132

4

41

12 Substantially Better

Substantially Worse

Moderately Worse

Same/No Change

Moderately Better

Profit MarginsThe Overwhelming majority felt profit margins had stayed the same or improved.

Substantially Worse

Moderately Better

Moderately Worse


Same/No Change

412

383511

.................................................................

.................................................................

.................................................................

.................................................................












Events

116

The Appreciation Received

Mr. Viresh Oberoi,

The award is a most coveted one and has been won due to dedication, perseverance, devotion and immense service. I offer my heartiest congratulations and hope your service of transforming processes of “buy and sell” of the supply chain in India go on with undiminished vigour!

- N. Nagori, Sr. Jt. President (Proj & Mktng), Birla Corporation

Managing Director, mjunction services limited

0

20000

30000

40000

50000

60000

Val




10.00

20.00

30.00


Hope in the

New year42

21 6

20

11

Moderately worse

Substantially worse

Moderately Better


Same/no change

Economic Prospects


Substantially Worse

Moderately Better

Moderately Worse


Same/No Change

41053294

512

For the first time since May, JPMorgan's Global Manufacturing Purchasing Managers Index (PMI) rose to 50.2 in December from November's 49.6.While U.S. and China PMI showed an upswing, the Eurozone sank deeper into recession with falling orders.

Services PMI surged to a 3-month high to 55.6 points in December as compared to 52.1 points in November. PMI for manufacturing jumped to 54.7 in December from 53.7 in November, its biggest monthly rise since January 2012. The HSBC composite PMI rose to a 10-month high of 56.3 points. In November, the index had posted 53.2.

The combination of an increase in new orders and the low inventory of finished goods suggest that the improvement in manufacturing output should continue through next year.

Purchase manager Index

Owing to the government's reforms push, easing inflation, higher demand and better profit margins, India Inc's business confidence witnessed an improvement for the second consecutive quarter.

For the October-to-December quarter of 2012, on a scale of 100, the confidence level is was at 53.8, up from 52.4

in the previous three months, and well above the level of 49.3 it was in the three months before that.

In a bid to further increase investor confidence, the Finance Ministry initiated measures to improve infrastructure spending, asking the cash-rich PSUs to increase their spending and also removing the bottlenecks for private sector spending.

2008 20092010 2011 2012

India attracted six per cent of total FDI inflows to the Asia-Pacific region. As per Department of Industrial Policy and Promotion (DIPP), India's FDI inflows grew by over 65% year-on-year to $1.94 billion in October.

In November, FDI inflows declined to a nearly two-year low of $1.05 billion. In November 2011, India had attracted FDI worth $2.53 billion.For the April-November period 2012-13, the inflows have declined by about 31% to $15.84 billion, from $22.83 billion in the year-ago period.

-

The government expects to receive more FDI in 2013 with liberalised FDI policy in sectors like multi-brand retail, single-brand retail, commodity exchanges, power exchanges, broadcasting, non-banking financial institutions (NBFCs) and asset reconstruction companies (ARCs).The new reforms passed now allowed 51% FDI in multi-brand retail and 49% investment by foreign airlines in the aviation sector.

Investment Confidence


FDI & Capital Investment

HSBC India Manufacturing PMI50 = no change on previous month, S. Adj.

Increasing rate of growth

Increasing rate of contraction

65

60

55

50

45

402006 2007 2008 2009 2010 2011 2012

Source: Markit, HSBC.

There was a CRM Meet held in mjunction Head Quarters at Godrej Waterside on 22nd & 23rd of November '12 to discuss the Service Delivery Automation. This was a discussion headed by buyjunction in-house experts Akash Ahluwalia, Vikash Gilra, Saikat Barman and Sandeep Banerjee.

The topics discussed were General Features of Service Delivery Module, Uploading RA request, Uploading MR request, Uploading RFQ request, Uploading Vendor Sourcing & Market Making Request, and Downloading RA Report through SDA Module.

CRM Meet

buyjunction participates in NATCOM 2012

buyjunction participated in NATCOM 2012, an annual logistics & supply chain conference organised by the Indian Institute of Materials Management (IIMM) which was held in Kolkata on November 23 & 24, 2012.

Mr Ashish Goel, Account Manager- Private Clients, buyjunction, spoke in the conference on the emerging trends in the sourcing industry.

buyjunction also participated in the exhibition which was part of the conference where it showcased its publications and reports. It also screened a short film on how buyjunc-tion is changing the face of the procurement industry by bringing in innovation and transparency which brings about savings for the clients and ensures fair competition for the vendors.

Mr Partha Chatterjee, Honorable Minister of Commerce & industry, Govt of West Bengal at the

buyjunction exhibition stall

134

Mr. Indranil Chaudhuri, Head - Account Management

buyjunction at IIMM meet in Durgapur

The Durgapur Branch of the Indian Institute of Materials Management (IIMM) organised a day-long seminar on 'Challenges in Indian Steel Industry - A Supply Chain Perspective' on Sunday, December 23, at Hotel Citi Residency, Durgapur.

The programme was inaugurated by the CEO of DSP, Mr P.K. Singh and was attended by senior leadership teams of different SAIL plants including Corporate Materials Management Group of SAIL. The MJ team actively participated in this seminar and was represented by executives of Durgapur Branch as well as Kolkata HO. Mr Indranil Chaudhuri, Head, Account Management, of

buyjunction, delivered a presentation to the audience titled 'Logistics in Steel Supply Chain - A Strategic Approach' which covered current trend of Indian Logistics industry, present challenges and how e-sourcing can help clients achieve tangible benefits in finalising logistics/transportation contracts.

Chairman of the Durgapur branch, IIMM, Mr Shantanu Chakravarty (also the executive director, MM, DSP) took keen interest in this programme and had a special word of praise for the MJ presentation. The MJ team also utilised this opportunity to engage themselves with many senior executives of SAIL who had assembled for this initiative.


Source: tradingeconomics.com | Director General of Commerce

-1200

-1000

-800

-600

-400

-200

0

-469.01

Jan/ 11 Jul/ 11 Jan/ 12 Jul/ 12

Trade Deficit- Balance of Trade

India’s trade gap increased to $17.7 billion in December from $14.7 billion a year earlier, but narrowed from $19.3 billion in November, even after exports fell for the eighth straight month.The trade deficit for April - December,

2012-13 was estimated at $147,172.11 million which was higher than the deficit of US $137,316.72 million during April -December, 2011-12.

-425.51

-173.15

-570.17

-830.08-644.03

-653.78-690.29

-628.52

-864.13-805.2

-670.97-757.82

-745.55-699.77

-698.75

-886.05

-577.03

-859.79-867.98

-987.29-1111.46

-1056.48-965.73

-1200

-1000

-800

-600

-400

-200

0

GDP

The forecast for the global GDP in 2013 is pegged at 3.2% growth. Though better than 2012,this would still be 0.3 points below the long-term average growth rate. Despite these figures, the economies in China and the U.S. are improving, including stronger housing demand and hiring in the U.S., and accelerating factory output and retail sales in China.

The Indian economy GDP growth slowed to 5.3% for the third quarter in 2012. Despite the instability, HSBC has forecasted the GDP growth at 5.4% in FY’13 (up from 5.1% projected earlier) and 6.2% (unchanged) in FY’14.

India GDP Annual Growth Rate - Percentage Change in Gross Domestic Product


7

8

9

109.4 9.6

2008

5

6

5

9.3 9.4 9.7

8.57.8

7.5

6.1 5.86.3

8.6

7.3

9.4 9.38.9

8.37.8

7.76.9

6.15.55.3 5.3

7

8

9

10

6

5

2010 2012

314

The year 2012 has been a bumpy ride for economies globally. The World Economic Outlook Report (October 2012) stated that whilethere has been some recovery from the global economic meltdown, it will still take a while to stabilize.

While the growth of the US economy accelerated in Q3’12, the Eurozone entered a recession which is likely to deepen in the coming quarters. Britain experienced its own double-dip and is now in its slowest recovery in 100 years. Though the US economy is in better health than Europe’s, the pace of recovery has been slow with a probable growth rate between 2.5%-3% in 2013.

The Chinese economy continued to grow at a sustained rate of about 8%. While China is slowly rebalancing, Beijing is also moving towards financial liberalisation which would mean foreign capital coming to the rescue soon. East Asia remained the fastest growing segment. Indonesia clocking a growth rate of more than 6% may replace India as the “I” in the BRICS club.

Indiais likely to come out slowly but steadily from its current slowdown. The Asian Development Bank (ADB) cut its projection for India’s economic growth for the current financial year to 5.4% from 5.6% estimated earlier. It also cut its growth projection for India in 2013 to 6.6% from the earlier 6.7%.

However, the Reserve Bank of India (RBI), softening its stance on monetary policy, cut its key interest rates – repo rate and cash reserve ratio – by 25 basis points in January. This will result in releasing an additionalRs 18,000 croreof liquidity into the market. The intent is to perk up growth through eased liquidity and reduced cost of borrowing. These cuts have set the platform for financial institutions to lower their minimum lending rate, making loans to retail, micro, small and medium enterprises, and large corporate segments a tad cheaper.

Inflation

Inflation in India, a crucial factor in determining competitiveness of industries,has surprisingly eased over the last few months. Inflation, as measured by the Wholesale Price Index (WPI), stood at 7.18% in December, an 11-month low, down from 7.24% in November. This fall in the inflation rate is now a ray of hope in the gloomy economic scenario.

While inflation is still high, the worst seems to be over, with India's inflation expected to trend lower during January-March. After revising the projection upwards twice earlier this year, the RBI has forecast the WPI at 7.5% at March-end.



6.577.588.599.51010.5

9.47 9.54 9.68 9.749.36

9.78 10 9.879.46

7.74 7.56 7.69 7.5 7.45

9.56

7.23

6.577.588.599.51010.5

7.557.55 7.58

6.87

7.558.07

7.24

9.45 9.51

Jan/ 11 Jul/ 11 Jan/ 12 Jul/ 12

Economic Trends Appreciation from clients

Thank you very much and I on the behalf of TRF extend our heartiest wishes to you and your entire team for this new year -2013. The association so far, has yielded a very fruitful outcome and some of the output were beyond expectations.

The three main salient points for such magnanimous result are -

1) Time bound action and there had been no follow through - the pressure created by the system was so effective that the reflections and influences were minimized.

2) New vendors got ample scope to take part in fair atmosphere which to some extent were a part of discontent-ment earlier. Almost in all cases the order has been awarded to new vendors.

3) Process is so robust and comprehensive - there was little chance of error or dissatisfaction.

We would like enhance and explore more possible engagement avenues in future.

Mr. Kaushik Sarkar,AGM, CPCTRF

.............................................................................................................................................

We are delighted to appreciate all those who were involved in making both these events successful and convey our special compliments to Mr. Srinivasan & Mr. Thirvalluvam at mjunction, Chennai for their timely suggestion with regard to Start Bid & Bidding Strategy.

Mr. V.S. Hedge Dy. Gen. ManagerSAIL VISP

.............................................................................................................................................

The auctions were conducted successfully on a very short notice by buyjunction.

Mr. Harpreet SinghAsst General Manager (Purchase)SAIL, Bhillai

.............................................................................................................................................

We recognize the efforts put in by Mr. Arijit Ghosh and Mr. Keshab Chandra Mondal of buyjunction, Burn-pur, fror the execution of Reverse Auction process with perfection and as a result, considerable savings was achieved in the procurement of Cold Rolled Steel Straps package.

Mr. Tapas ChottopadhyayDGM ProjectsSAIL. ISP Burnpur

“

“

“

“ “

“

“

“

2 15

march, 2013

volume 2 issue 2

Vinaya VarmaVice President,buyjunction

from thedesk of 2012 has been a rather gloomy year. While Europe slipped into a double

dipped recession, the US witnessed a further slump in its markets. India too was plagued with its own share of economic problems like rising inflation and imports, along with a falling rate of industrial output which in turn slowed India’s growth rate and added to the increasing current account deficit. All these factors have had a negative impact on business confidence and operating margins.

To survive and to register growth and profit, an increasing number of businesses are now looking at optimising their operations to achieve maximum efficiency by outsourcing certain functions to specialist organisations. buyjunction’s array of procurement services aim at delivering immediate, measurable results that can lead to guaranteed savings and significant positive impact on profitability by freeing up the client’s bandwidth.

With the second issue of buyjunction connect we try and bring to you a synopsis of current industry trends, market analysis and an overview of what to expect in Q4, 2012. The issue offers tactical advice which should help you understand the key focus areas for your procurement needs, given the existing market situation. The newsletter also captures a few of buyjunction’s success stories in some core procurement categories that we specialise in.

We hope that this newsletter will help you understand how we add value to our client’s businesses through innovation and in-depth analysis of their requirements.We only strive to create win-win deals foryou.

Regards,

Vinaya Verma,Vice President, buyjunction

mjunction is the largest ecommerce company in India.It is a 50:50 venture promoted by the Steel Authority of India Limited (SAIL) and TATA Steel.

corporate officemjunction Services Limited Godrej Waterside Tower – I, 3rd Floor, Plot No. 5, Block – DP Sector – V, Salt Lake City, Kolkata – 700091, WB, IndiaTel: +91 33 6610 6100 Fax: +91 33 6610 6187/ 6179 / +91 33 6601 1719 / 1720

registered officeTATA Centre,

43 Jawaharlal Nehru Road,Kolkata 700 071

Tel: +91 33 6610 6100, 2288 2606 Fax: +91 33 2288 2078

[email protected] [email protected]

116

www.mjunction.inwww.buyjunction.in

buyjunction connect - mar 2013

Documents

probable growth rate

slowed indias growth

us economy

sustained rate

procurement needs

market analysis

clients businesses

pace of recovery