Financial Daily from THE HINDU group of publications
Saturday, Jun 26, 2004
E-Commerce & E-Business
Industry & Economy - Steel
Corporate - Corporate Disputes
SAIL, Tata Steel ties strained over Metaljunction portal
New Delhi , June 25
TENSION seems to be brewing up between the two largest steel producers in the country, namely, the Steel Authority of India Ltd (SAIL) and Tata Steel , over their Internet joint venture - Metaljunction Private Ltd - a steel-trading portal.
The two big players of the Indian steel industry seem to be headed for a showdown over one company accessing market sensitive data of the other company through the joint venture.
Metaljunction is a 50:50 joint venture between SAIL and Tata Steel. The company runs the steel-trading portal called metaljunction.com.
The portal sells steel for the two promoter companies and also helps source all centrally procured raw materials for SAIL such as limestone, dolomite and ferro alloys.
SAIL officials told Business Line, "We are paying one per cent of the sale value to metaljunction as commission whereas the industry rate is 0.5 per cent. But still we often have the feeling that we should have got a better price."
Senior SAIL officials said, "Some of our officials had joined metaljunction on lien. But they didn't find the working environment proper and so have come back to SAIL."
The main concern of SAIL is that "Tata officials working on lien with metaljunction are having access to SAIL's sensitive marketing data which we are afraid could be used by the private sector company to poach our customers."
This sensitive marketing information include list of SAIL customers, their demand potential as well as the actual realised price at which the last deal was made.
This realised price, according to SAIL officials, is sensitive information.
"Recently, around six months back, there was a question in Parliament seeking information on SAIL's actual price realisation for various products for the past three years. The Ministry of Steel had refused to disclose the data even to Parliament on grounds that these are market sensitive information for the company and could not be disclosed. But metal junction organises reverse auctions and so has our data," SAIL officials said.
SAIL, officials said, had already taken up the issue with metaljunction which has stated that whatever information SAIL is providing to metaljunction is the latter's property and no such sharing of information is taking place.
In spite of this, senior SAIL officials say, "there are good reasons to be apprehensive. But it could be difficult to prove but various circumstantial evidence can be spotted."
They cite a number of examples where buyers have complained that their bids came up in reverse auctions organised by metaljunction in which they have not actually participated.
"Metaljunction people have come up with the explanation that some employees may have used the participants' password for which the company is not involved." When contacted, metaljunction spokesman, Mr Linus Lobo, said, "Our clients do not give us any data other than a catalogue of materials which they would like us to sell. Most of the materials that they offer to sell are secondary materials bunched into lots and sold on an as is where is basis. These catalogues are in the public domain."
SAIL officials, however, insisted that various clients' data have been provided to metaljunction in the initial days. These data are still with them, he said.
On the issue of confidentiality of information, Mr Lobo said, "Metaljunction recognises that this maybe an area of concern not only as far as our first clients were concerned (SAIL & Tata Steel) but also new clients that we plan to work with in the future. Incidentally today our client list sans our promoters is in double digits and growing."
He also said that executives in metaljunction have no access to information related to clients other than those they serve and they also do not have access to operational data which is the sole preserve of the operations group.
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