AP Government starts procurement of Sugar through NeML eAuctionMarket (NAM)

Mumbai, January 19, 2015: NCDEX e Market Limited (NeML), (formerly known as NCDEX Spot Exchange Limited), the leading Indian Commodity Spot Auction market, has facilitated PDS-Sugar procurement for Andhra Pradesh Government in December 2014. Using NAMand leveraging the electronic platform of NeML, Andhra Pradesh Government procured 7000 MT sugar, worth Rs.20.3 Crore and helpeing them deliver quality sugar to the PDS-consumers on time at a very competitive price ahead of Sankranti.

The price competitiveness was a result of enhanced participation and increased number of bids. During the price discovery, 20 active bidders from 6 states participated to supply Sugar to the Government, which received a total of 331 bids during the process. The state government attracted competitive bids as compared to market prices by adopting the modern electronic spot market and saved precious resources.

Encouraged by the experience in December, the government has decided to employ NAM and further increase the efficiency of PDS procurement by seeking district-wise bids for the month of February 2015. On January 13 and January 14, 2015, the state corporate body- AP State Civil Supplies Corporation Ltd. (APSCSCL) used reverse e-auction mechanism to procure sugar for the month. The Weighted Average Price discovered in the auction was Rs. 2759/- per quintal. The application of electronic markets has earnedsaving of over Rs. 7 Crore approximately to the state exchequer. Use of NAM enabled the state government to split the quantity district-wise, giving opportunity to Small and Medium Millers and Traders to bid as per their capacity and local strengths. The process has also paved way for entry of Cooperative Sugar Mills which could not participate earlier. NeML played a key role in enrolling cooperative mills and small millers to participate in the process and thus increasing the competitiveness of the price discovery.

NEML started its initiative to enhance participation and increase the competitiveness of the price discovery using its unique NeML e-Auction Markets (NAM) in June 2014. Beginning with the State of Maharashtra, the mechanism has been adopted by the states of Haryana, Gujarat and Karnataka. In the last six months almost 100,000 MT (One lakh Metric Tonnes) of Sugar worth Rs. 334 Crore (Rupees three hundred and thirty four crore) have been procured using NAM. 

NeML e-Auction Markets (NAM) is a comprehensive electronic spot market platform providing online, real-time, transparent, competitive price discovery and trade fulfillment mechanism with complete audit trail. NAM has more than 300 sugar market participants ready to supply sugar to the state governments. This year the market has added more than 180 sugar value chain participants including Sugar Millers and traders from different states. Anonymous real time bidding is followed which leads to shortening of tender cycle enhancing the participation of sugar traders and manufacturers. On this platform the monthly auctions are scheduled for 15 Minutes with an extension of 15 minutes, where sugar traders and manufacturers are eligible to participate subject to fulfilling the eligibility criteria of the given state government. 

This platform simplifies the trade fulfillment process including commodity delivery tracking and payment procedure. The market participants can see the data online. Deliveries are tracked daily through various reports, thereby timely delivery to the Government is ensured. 

Samir Shah, Director, NeML said “NCDEX believes in innovation and NeML e-Auction Market (NAM) is a unique mechanism to make procurements for the governments more efficient in a transparent and competitive mechanism. This makes the procurement process seamless, easy to use and enables competitive price discovery. Thus, creating new opportunities for the Sugar millers and helping government save precious resources in a transparent manner. NCDEX is happy to contribute in helping Government fulfill its food security needs using NAM. We look forward to more states joining the platform”.