Tea sellers criticise e-auction after ~167-cr payment hold-up
The Tea Board of India’s initiative to generate direct interactions between buyers and sellers across the country through e-auctions has hit a roadblock after a payment of ~167 crore was held up. Sources said the amount, paid by buyers to sellers or brokers for sale no. 37, was locked up in a settlement account of the Bank of India. Sellers are yet to receive any payment. The problem has occurred because of cataloguing of the tea in the lot. Along with the name of the garden where it is produced, the permanent account number (PAN) of the garden also needs to be mandatorily mentioned. In this case, the number of the seller’s account (the company selling the tea) was mentioned — resulting in the payment getting stuck in an intermediary account.
Sources said there was some confusion about which PAN needed to be mentioned. Though the board has claimed it intends to make the process of auctioning and selling tea more transparent, teething problems such as this has made the sector doubtful.
Santosh Sarangi, chairman, Tea Board of India, told Business Standard: “Sellers had doubts over higher taxes, since the names of the gardens — and not the companies concerned — were reflected with the sales. The PAN needs to be quoted to keep track of taxes.”
He added that the board had taken stock of the situation and was trying to address it. The purpose of the e-auction was to assist owners of smaller gardens who do not own processing units. Brokers usually purchase the tea stock from these sellers on credit and sell the stock at a profit. “The tea board intended to do away with brokers and facilitate a direct buyer-seller interaction,” said a source in the sector. However, things had not gone according to plan.
During the sale of lot no. 25, the maiden deal in the e-auction, the server had snapped, holding up the process for over an hour. Now, payment for sale no. 37 has encountered a problem of different stature. “The process is at a formative stage. It takes time to get things running smoothly,” said Sarangi.
The sector players, however, are miffed as the hiccups have been encountered during the first few days of the auction, when 60 per cent of the stock for the year goes under the hammer.