|
|
            
|
ACQUISITION Small Is Beautiful The acquisition of upstart auctionindia.com is another step forward in Gopal Srinivasan's bid to tap small and micro businesses. By R. Sridharan
The deal-believed to have cost about Rs 1 crore plus some stock of Auctionindia Pvt Ltd-has a special significance for Srinivasan, since it signals his manufacture-intensive group's maiden foray into the internet space. ''(Auctionindia.com) is very small in size, but it makes a fit with what we want to do,'' Srinivasan told BT. For about two years now, TVS Electronics has been trying to remodel its business focus on to 'the middle pyramid' of Consumer India. Reason: margins in its computer peripherals business are under tremendous pressure and, therefore, it must build up volumes to fatten the bottomline. About three months ago, TVS Electronics came out with a Net-enabled point of sale automation product, Sprint, targeted at kirana stores. The sub-$1,000 machine will help suppliers manage their inventory, with TVS e-Shop (a new company) managing the service for a nominal monthly fee. The first lot of such machines are under field trial in Chennai, and by June, TVSE hopes to go commercial with it. ''There's a staggering number of small and micro businesses in India, but nobody is doing anything to tap them as customers,'' says Srinivasan. Auctionindia.com, a joint venture between Cybernet Software Solutions (CSS) of the US and C.E. Karunakaran (former Managing Director of ITCOT, a state-owned consultancy), will help TVSE do just that. The virtual exchange offers a range of services, including forward auction, reverse auction, asset exchange, and auction hosting. So far, its team of 32 engineers has done about 50 auctions, generating a turnover of Rs 10 crore. Among its 10,000-odd registered users are Hindustan Lever Ltd, Bharat Heavy Electricals Ltd, and HMT. In fact, R. Shiv Kumar, Vice-President of CSS, says that the site-which charges a transaction-based fee ranging from 2.5 per cent to 6 per cent- will break even in a few months. If that's so, why sell? ''We don't have the kind of value proposition it needs to grow,'' says Kumar. What get transacted on the auction site are commodity items like electrical products, machine tools or industrial scrap. The strength that TVSE brings is, one, its brandname and, two, access to a wide range of group companies, which raked in about two billion dollars of business last year. ''Theoretically, even if we divert online just 10 per cent of what these group companies buy and sell offline, auctionindia's business could soar,'' says L. Subramanyan, TVS Finance's point man for the deal. The hard part of the deal could be in putting that theory to work. |
|
Issue Contents Write to us Subscriptions Syndication INDIA TODAY | INDIA TODAY PLUS | COMPUTERS TODAY
| TEENS TODAY
© Living Media India Ltd |
 |
 |
It took
the TVS Finance team less than 48 hours to make up its mind about the
deal. Everything was as expected: the operations were shoestring, the
headcount was just right, technology was sound and, what's more, the
three-year-old b2b auction site, auctionindia.com, was on its way to
breaking even in a few months. Therefore, on a late Wednesday evening
recently, Gopal Srinivasan, TVS Electronics' low-key Director, announced
the acquisition of auctionindia.com, a Chennai-based company that
specialises in business-to-business auction.