NCDFI emarket. National Cooperative Dairy Federation of India Limited.

Transcription

1 NCDFI emarket National Cooperative Dairy Federation of India Limited

2 NCDFI emarket National Cooperative Dairy Federation of India Ltd (NCDFI) with the technical support of NCDEX emarkets Ltd (NeML) developed the NCDFI emarket The portal can be accessed at

3 Structure of the NCDFI NCDFI is the apex body of all dairy cooperatives in India. Membership include: National Dairy Development Board (NDDB) as an Institutional Member 26 State Cooperative Dairy Federations 198 District Cooperative Milk Unions are affiliated to State Dairy Federations 1.44 lakh Village Cooperative Societies affiliated to the District Milk Unions 150 lakh Milk Producer Farmers affiliated to these Village Cooperative Societies (75% of membership comprise of small, marginal and landless farmers. 29% is women membership)

4 Structure of the NeML NCDEX emarkets Ltd (NeML) is Wholly Owned Subsidiary of NCDEX. Share holding pattern of NCDEX is given below: Category of Shareholders % Held GoI Institutions Indian Institutional Shareholders Indian Private Shareholders International Shareholders Total

5 Need for eauction Platform Sellers & Buyers: To deal at fair market price To curtail cumbersome and expensive procedure Reduced time cycle of trade Wider reach and Tool to manage price volatility

6 Objectives Objectives of eauction platform To discover fair market price To provide fully transparent and automated system To transform way of trading dairy / agri commodities

7 NCDFI emarket Model NCDFI Advisory Board NCDEX e-markets Ltd Internet Development Staging Operations Management Auction Portal Centralized hardware Application Software Buyer 1 PCs LAN Seller 2 PCs LAN Seller 3 PCs LAN Buyer 2 PCs LAN Buyer 3 PCs LAN Seller 1 PCs LAN

8 Phase I Commodities Skimmed Milk Powder Butter Ghee

9 Phase II Commodities Sugar Cattle Feed Maize DORB

10 Sellers (Dairy Products) Organization Gujarat Coop Milk Marketing Federation Brand(s) Amul / Sagar Karnataka Coop Milk Producers Federation Nandini Rajasthan Coop Dairy Federation Saras Bihar State Milk Coop Federation Sudha Punjab State Coop Milk Producers Fedn Verka Continued.

11 Sellers (Dairy Products) Organization Tamilnadu Coop Milk Federation Brand(s) Aavin Mother Dairy, Delhi Mother Dairy Jalgaon Milk Union Vikas Maahi Milk Producer Company Ltd Maahi Shree Warana Milk Union Amrut / Warana

12 Sellers (Dairy Products) Organization Kolhapur Milk Union Brand(s) Gokul Coimbatore Milk Union Aavin

13 Auction Types Forward Auctions (Ascending) SMP Butter Ghee Reverse Auctions (Descending) DORB Maize Sugar Cattle Feed

14 Forward Auctions How Forward Auctions would function

15 Auction Process Overview PRE- AUCTION Selected by Seller SELLERS Quantity offered, initial price e-portal Information, auction setup BUYERS AUCTION SELLERS Can observe process e-portal Places bid quantity (In lots) BUYERS POST AUCTION SELLERS Info of winning bidder & price e-portal Winning bidder sees his winning price & quantity BUYERS

16 How does auction work? The trading event managed by NCDFI The trading process is an Ascending Price Forward Auction Base price and offered quantity is announced Bidders bid the volume, bidders do not bid price The system increases price round by round if demand exceeds supply

17 Flow Chart of Auction Activities Development of participants, Rules, Auction set up Pre auction Fix auction date, Round time, Lot size, Product type, Contract period Display of information pertaining to concluded contracts Post auction

18 Forward Auctions Price Discovery Mechanism

19 How price would be discovered? 1200 NCDFI follows fundamental concepts of economics: Supply vs. Demand If Demand > Supply, price increases If Demand < Supply, price does not increase Offer Qty (MT) 0 Round 1 (Rs 200) Round 2 (Rs 203) Round 3 (Rs 206) Demand

20 Auction Terminology Base Price: Minimum price seller willing to sell Maximum Offer Quantity (MOQ): Maximum quantity seller willing to sell Minimum Match Quantity (MMQ): Minimum quantity seller needs to sell in auction

21 Scenario 1 Round 1 Price : Rs 200 per kg MOQ = 2500 MT MMQ= 500 MT Demand (MT) Demand = 400MT in Round Demand < MMQ 500 MMQ 500 MT Auction Failed 0 R 1 (Rs 200 ) Demand (MT)

22 Scenario 2 Demand = 1000 MT in Round 1 Demand > MMQ Demand (MT) MOQ 2500 MT Demand < MOQ 1500 Clearing price Rs 200 Clearing Qty 1000 MT MMQ 500 MT 0 R 1 (Rs 200 ) Demand (MT)

23 Scenario 3 Demand = 2000MT in Round 3 Demand < MOQ Value R3 2000MT * Rs 202 = 4,04,000/ Demand (MT) MOQ 2500 MT Value R2 2500MT * Rs 201 = 5,02,500/- Clearing price Rs 201 & 2500 MT Qty Round MMQ 500 MT R1 (Rs 200) R2 (Rs 201) R3 (Rs 202)

24 Scenario 3 Allocation 1. Full allocation to Round 3 bidders. i.e 2000 MT 2. Allocation of 500 MT remaining quantity Allocate remaining quantity to round 3 bidders in descending order until 500 MT exhaust Remaining quantity to be allocated in descending order to bidders who have participated till round Demand (MT) MMQ 500 MT MOQ 2500 MT R 1 (Rs 200 ) R 2(Rs 201 ) R 3(Rs 202 )

25 Auto bids Auto bid is a safe way to ensure a bid is placed if you are unable to participate during trading hours or if your internet connection is unreliable. You specify the maximum quantity that you want to bid for and the maximum amount that you are prepared to pay for that quantity.

26 Rules for bidder Bidder have to join from round 1. When price increase in next round bidder can only maintain or reduce his bid volume.

27 Rules for Price Increase Tick amount proposed to be in nearest 50 paise. Demand/Supply Ratio Number of ticks for price increase >=5 5 >=4 and <5 4 >=3 and <4 3 >=2 and <3 2 <2 1

28 Seller Activities 1 Registration Upload product specification subject to minimum parameters set by NCDFI Product specification should comply with BIS and FSSAI 2 To enter Minimum and Maximum offered quantity, base price and all relevant details 1 day prior to auction date To select participant bidders 3 Invoice to winning bidder Delivery of goods

29 Bidder Activities 1 2 Registration View product specification of the offered product Verify the additional charges such as freight charges, insurance, taxes, etc. Select lot size Enter the Bid quantity for each round or Auto bid Bidder can modify their bids any number of times during round. Only latest bid considered 3 After auction make payment to seller Take delivery of goods within specified time

30 Continuous Markets From the next day of the auction date, sellers will have an option to offer the declared commodities till next auction date. Sale price for the products would be highest of offered Base Price or Concluded Price at previous auction. Buyers will have an option to buy the offered commodities on any working day (Monday to Friday between 1100 to 1700 hours). Sellers will have an option to withdraw, increase or decrease the quantities any time without altering other parameters. Sellers will also have an option to increase the prices at any time.

31 Post Auction Seller contact bidders after the trading event to confirm the deal. Payment will be released by the buyers while seller will deliver the commodities. eauction results shall be final and cannot be renegotiated.

32 Reverse Auctions How Reverse Auctions would function

33 Auction Process Overview PRE- AUCTION BUYERS Required Quantity, Location, Delivery Period e-portal Information, auction setup SELLERS AUCTION BUYERS Can observe process e-portal Bids FOR price SELLERS POST AUCTION BUYERS Info of winning seller & price e-portal Winning seller sees his winning price & quantity SELLERS

34 How does auction work? The trading event managed by NCDFI The trading process is Descending Price Reverse Auction Required quantity, specifications, place of delivery and delivery period will be entered by the buyer Sellers bid an all inclusive FOR price for entire required quantity Lowest quoted price will be communicated to Buyer and if accepted contract will be awarded

35 Flow Chart of Auction Activities Development of participants, Rules, Auction set up Pre auction Fix auction date, Quantity, Product specifications, Delivery period Display of information pertaining to concluded contracts Post auction

36 Registered Sellers Wide seller base spread across the country. Approximate number of registered sellers for the commodities in Reverse Auction are: Sugar 400 Maize 350 Rice & DORB 400

37 Reverse Auctions Price Discovery Mechanism

38 Contract Conclusion During an auction session, bidders may modify their bids downwards as compared to existing bids. In case a bid is received 3 minutes prior to the auction closing time, the auction schedule shall be extended for 5 more minutes. There shall be maximum 3 such extensions. If the lowest bid received is acceptable to the Buyer, the contract will be concluded.

39 Buyer Activities 1 Registration Upload product specification and requirements 2 To provide quantity, delivery location details and all relevant details 1 day prior to auction date 3 Payment and accept delivery

40 Seller Activities 1 Registration View product specification and quantity requirements of the offered product Work out the freight charges, insurance, taxes, excise etc. 2 3 Enter the bid price (an all inclusive FOR price) Bidder can reduce their bids any number of times during the session. Only latest bid considered After auction, initiate delivery as per specified time Invoicing the buyer

41 Help Desk NCDFI emarket helpdesk has been set up to support bidders prior to and during a trading event.

42 Payment Gateway All the payments are routed through ICICI Bank on real time basis. Members will make the payments using virtual account number confirmed to them through RTGS/NEFT. Trading limit will be assigned to the members on receipt of payment. Refunds will be made immediately on completion of the auction/delivery.

43 Registration & Transaction Fees Registration Rs 5,000 Annual Maintenance Fees Rs 5,000 Transaction Fees Upto Rs 20 Crores 0.20% (SMP, Butter & Ghee) Rs 20 to Rs 40 Crores 0.15% Above Rs 40 Crores 0.10% Reverse Auctions Flat 0.40% only from Seller Security Deposit (EMD and Advance Transaction Fee) SMP & Butter : Rs 4,000/- per MT Ghee : Rs 6,000/- per MT DORB : Rs 600/- per MT for Buyers 5% of the contract value for Sellers These fees are excluding applicable taxes. Fees on Dairy Commodities are on combined transaction value of all commodities during a financial year.

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