Centurion Bank has earmarked Rs 200 crore towards financing and funding transactions on this site.
Centurion Bank director V S Srinivasan said that teauction.com is the bank's launch pad for its e-com foray. The bank is keen to go in for a second round of funding for the portal and also to execute its IPO as a co-promoter.
Srinivasan said the annual tea market auctions reached roughly Rs 5,000 crore. The bank has offered a credit line of Rs 200 crore set up for various tea companies, brokers buyers and sellers.
He explained that the bank was not just an equity investor but also partners in business growth through large trade financing lines for exchange participants, availability of payment gateways and on-line banking. A joint committee for credit appraisal comprising members from the bank, teauction.com and a leading credit rating agency has been formed, he said.
The credit offered would help speed up tea transactions from about 8 weeks to 4 weeks and also reduce the volatility in the prices of tea. Besides, the payment gateway would increase the float for the bank since all payments would be done with the bank as the acting intermediary. The bank would also have cross selling opportunities and fee-based earnings. the throughput is expected at Rs 700 crore from 2003.
Teauction.com was launched in March 2000 with a capital of Rs 2 crore. The current value of the portal is estimated at Rs 210 crore, Srinivasan said.
The company is promoted by the B M Khaitan group, the Apeejay group both holding 10 per cent each, the Hanuman tea/Dhunseri Tea companies owning 54 per cent and Centurion bank which has taken a 26 per cent stake.
The portal aims to bring the community of buyers, sellers, suppliers, brokers, associations and substitutes of tea 'on-line'.
The tea markets in Sri Lanka and Bangladesh are expected to be on-line within a month and Indonesia, Kenya and Vietnam will be rolling out in the next 4 months, company officials said.
