• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

G.K. Nair

KOCHI, May 18

THE Tea Trade Association of Cochin (TTAC) has alleged that the anomalies in division of tea lots at the auctions with five per cent premium on knocked down prices have `adversely' affected the trade.

Major tea traders here had raised this issue with the Tea Board, which had on May 9, clarified the matter. But, there were anomalies in the clarifications itself provided by the board, Mr Anil Kumar N. Prabhu, Chairman, TTAC, told Business Line. The clarifications of the board, he said, were that ``lots, which are divided, shall involve 5 per cent premium on the knocked down price and the division will be accepted only after the lot has been knocked down. The divisibility premium, whenever applicable, will be calculated only after the lot is knocked down. Once the buyer makes a bid and his bid is accepted by the auctioneer, the said buyer cannot reduce his bid on the same lot.''

According to the directive of the Tea Board, the rate of advance of bidding shall be Rs 0.50 for a price slab below Rs 50 and Re 1 for a price slab for Rs 50 and above but less than Rs 100. Once a buyer makes a bid in the auction he cannot reduce his bid on the same lot subsequently. Auction buyers can only bid upward. ``For example, if a buyer with the intention of dividing makes bid of Rs 50 then the next buyers can make a bid of Rs 51 or higher irrespective of the first buyer's intention of dividing the lot or not. The second buyer cannot be compelled to bid five per cent higher simply because the first buyer is interested in dividing the lot. Moreover, if buyer makes a bid at Rs 50 and has no intention of dividing the lot, the second buyer who intends to divide cannot bid lower than Rs 50 on the ground that the final price with the inclusion of premium of five per cent will be higher than Rs 50.

On this, Mr Prabhu said, divisibility has to be decided before the lot is knocked down as otherwise it will be going back on the lot already knocked down which is not permissible under the auction rules. Moreover, the auctioneer has to declare the names of bidders before a lot is knocked down, he pointed out.

Besides, if the buyer bids for Rs 50 and the auctioneer announces the division in the auction room, the seller will get Rs 52.50 (including five per cent premium), as the premium is also a part of the price. At the same time if another buyer bids for Rs 51 and if the auctioneer knocks down the lot to that buyer, the seller is loosing Rs 1.50 per kg, which is not in the spirit of the auction and the idea of TMCO 2003 to get higher price to the producers. ``In this respect, it is a penalty only to the sellers,'' he argued.

Therefore, the TTAC has suggested that if a buyer bids for Rs 50, till the auctioneer announces the division, a higher bid can be accepted. Once the auctioneer announces the division the next higher bid should be higher than that five per cent premium included price. On this the response from the Tea Board is awaited, he said.

Another problem encountered now is on filing proxies, he said. As per the present directive, buyers have to file proxies prior to each auction. They have expressed certain difficulties in this system as sometimes orders are received during auction through fax or telephone. Since proxies are not filed for these types of orders, which are likely to be received only on auction days, buyers are unable to purchase teas from the auction, they said. They, therefore, suggested ``buyers may be allowed to file proxies for a longer period like quarterly or half yearly instead of weekly basis which will avoid lot of difficulties''.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Squally weather hits banana growers

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line