AP irrigation tenders make C1 India the leader in e-Procurement

Company processed tenders worth Rs 15,000 cr in Andhra Pradesh

Irrigation tenders in Andhra Pradesh have made a big difference to the Delhi-based C1 India Limited, a company that specialises in providing end-to-end e-Procurement solutions.

For, the company has emerged as the largest e-Procurement platform in the world by processing tenders worth more than Rs 15,000 crore in Andhra Pradesh including high value irrigation tenders worth Rs 12,000 crore. The company handled tenders worth Rs 2,500 crore during 2003-04 on a pilot basis.

C1 India officials, however, did not comment on their revenues in Andhra Pradesh. The company earned total revenues of Rs 6 crore in 2004-05 with a substantial amount being contributed from the state.

According to government officials, C1 India was expecting to earn around Rs 4.5 crore in its first year of operations with a profit margin of 10 per cent.

The success of the company was despite a ceiling being freshly imposed by the government on the amount to be charged on each transaction. The owners of the e-market place were earlier allowed to collect Rs 4,500 as hosting fee for each contract and 0.24 per cent transaction fee on the agreement value of the work.

The transaction fee in terms of percentage of the value of a work has been further reduced. An upper limit of Rs 10,000 for a contract up to Rs 50 crore and Rs 25,000 for a contract worth more than Rs 50 crore has also been placed.

These charges are now being collected from the contractor, which was originally envisaged to be collected from the departments concerned.

"Our turnover is expected to double this fiscal," Vivek Agarwal, president and chief operating officer of C1 India, told Business Standard. Vivek's optimism appears reasonable going by the Rs 40,000 crore ambitious irrigation plans announced by the state government for a five-year period.

The state government has also saved a whopping Rs 1,000 crore due to the e-Procurement platform as it could avoid cartelisation. The bidders, therefore, had to quote competitive rates for various works, said K Bikshapathi, project manager of e-Procurement, government of Andhra Pradesh.

C1 India has developed its own software, which is an end-to-end internet-based electronic tendering solution called tender management software (TMS).

It automates the complete tender cycle followed by any government with the support of the state government's e-Procurement nodal agency that provides inputs from user departments.

As per the agreement, C1 India will have to hand over the e-Procurement software along with the hardware deployed for the purpose to the state government after a three-year period of implementation. The government will pay the cost of the product after taking into account the depreciation for the three-year period.

"The government may decide to handle the e-Procurement platform on its own under the supervision of Andhra Pradesh Technology Services Corporation (APTS) after the agreement period is over," Bikshapathi said.

C1 India is implementing e-Procurement projects in India for the Directorate General of Supplies and Disposal (DGS&D), the central procuring agency for the government of India.

Bharat Heavy Electricals Limited (BHEL), one of the largest heavy engineering companies in the country, has also selected C1 India as its exclusive partner for conducting reverse auctions at all its locations across India.

Gas Authority of India Limited, Indian Oil Corporation and Gujarat Fuel Management Company are some of the other companies that have been using the e-tendering framework developed by the company.

C1 India is also looking at entering into the American and European markets in 2005-06. "Our business plan and modalities are likely to be ready in the next couple of months," Agarwal said.