FM Spectrum auction

A Presentation on

Our capability to conduct e-auction of FM Channels in FM Radio phase III

To

Ministry of Information & BroadcastingRef: RFP No . N-38014/5/2013-FM1ContentsAbout mjunction services limitedOur e-auction experience & capabilityOur proposed methodology for e-auction of FM ChannelsProposed Marketing PlanWhy we should be chosen as service provider2About mjunction services limitedOur e-auction experience & capabilityOur proposed methodology for e-auction of FM ChannelsProposed Marketing PlanWhy we should be chosen as service provider3mjunction- The CompanyA 50:50 JV promoted by SAIL & TATA SteelGenesisTurnoverGrowthTransacted cumulative value of Rs. 2,03,000 Crs since inception in 2001Grown at a CAGR of 67% in TV since 2001WorkforceClienteleInfrastructureServing 115 clients in 9 businessesHaving own Data Center, IT Team & Infrastructure600 professionals located at 12 locations in India4mjunction today Valued at Rs 800 cr as on 31st March 11 Strategic Business verticalsCrores invested in building office and I.T infrastructureRs 123 cr 115 clients from public and private sectorTV of Rs 94 cr in FY02 to Rs 43,108 cr in FY14Reserve & surplus of Rs 134 cr13 years CAGR of 67%9Indias largest eCommerce platformRs 118 crpaid as dividends to shareholders

BPM Organisation5About mjunction services limitedOur e-auction experience & capabilityOur experienceOur SuccessOur Technology teamOur IT InfrastructureE-Security aspects in design and conduct of the auctionOur proposed methodology for e-auction of FM ChannelsProposed Marketing PlanWhy we should be chosen as service provider6Capability to conduct e-auction : Our experienceIn the last 3 years, have conducted more than 1000 e-auction events for Rs 15,000 + crores worth of goods and services

Designed and conducted e-auction for diverse industries / sectors

Transformed Coal & steel supply chain in India

Have implemented various e-auction variants / methodologies

English No Ties / Single WinnerYankee / Multiple WinnersRank Based AuctionSealed Bid followed by auctionTemplate BiddingPremium & discount bidding

7Capability to conduct e-auction : Our SuccessIn 2005, Coal India Limited was facing serious challenge in selling their coal through e-auction in Indian market. The requirement of the coal e-market was Fair practicesTransparency ReachEfficiencyConvenience Market driven priceConventional e-auction had given poor result. The major drawbacks of the conventional e-auction model was : Inconvenient for BuyersInflexibility of Lot SizesMultiple lots for selling higher qtyEasy to Cartelize Scattered CompetitionCoal India appointed mjunction as the e-auctioneer8Capability to conduct e-auction : Our SuccessFollowing processes provided us the inspirationBook Building process (IPO of Equity Shares)Bidders bid for Quantity & Price (within a band)Yankee Rule used in US for sale of securitiesFirst preference to PriceIn case of Price Tie, preference to the bid for higher quantityIn case of Price & Quantity tie, preference to the bid received earlierThe innovative idea was to build upon the above 2 processes by making it Online & Dynamic

Since 2005, Coal India has adopted mjunctions model for selling coal through e-auction. Today Mjunction sell around 24 million ton of coal every year, sold around 200 milion ton of coal till date. More than 13,000 Buyers purchase coal through mjunctions web platform9Certified ISO 27001:2005 Primary Site & Backup/DR SiteOperational Disaster Recovery Site Since July 2008Certified ISO 9001:2000 (Head Office and Branches)Structured Software Engineering ProcessesProject ManagementSoftware Development Life CycleFollows SEI CMMBlade ServersStorage with RAID 5 Cisco ASA Firewall 5550, Cisco IPS 4260, Cisco ACE, Cisco CS-MARSMultiple ISP level switches (Radware)99.9% Uptime during Auction with Failover SystemCapability to handle 2000 Concurrent Users Response Time = 3 : 10%Demand Supply >= 1 : 5%Demand Supply = 0 : 2%Demand Supply < 1 : No incrementE-Auction : Round #2CityNo. of SlotsLast Round PriceAsk Price for current roundActivity point requiredActivity point blockedDecision (Yes)Silchar22002105050Agra1300300700Haldia31401403030Jalpaiguri2120123100Bidder name : XTotal Activity point available : 20Activity required : 80% VerifyClicking to Verify will show : REJECTION if Bids value more than available Activity point OtherwiseWARNING in case less lots bid for in this round could lead to lower than maximum lots allowed (point reduction) to be bid for in next round. Point(n+1)= Point(n)/(1/AR) ; eg Point(n+1) = 80/0.8=100EDIT or SUBMIT YOUR BID(AR: Activity requirement: varies from 80% to 100%)Decision Scenario CityAsking PriceNo. of SlotsNumber of Bids received Provisional AllocationNext round Asking Price Silchar21023 ( X,Y,Z)X,Y221Agra30010300Haldia14033 (A,B,C)X**, Y**, A154Jalpaiguri12322 (A,Z)A,Z126Z lost in overall bid value ( 333)X**, Y** were allotted based on the rule of earlier round bidding at same price. Price increment assumption ( decimal would be rounded)Demand Supply >= 3 : 10%Demand Supply >= 1 : 5%Demand Supply = 0 : 2%Demand Supply < 1 : No incrementE-Auction : Round #nCityNo. of SlotsLast Round PriceAsk Price for current roundActivity point requiredActivity point blockedDecision (Yes)Silchar25005205050Agra1280300700Haldia32202303030Jalpaiguri2200210100Bidder name : XTotal Activity point available : 20Activity required : 100% VerifyClicking to Verify will show : REJECTION if Bids value more than available Activity point OtherwiseWARNING in case less lots bid for in this round could lead to lower than maximum lots allowed (point reduction) to be bid for in next round. Point(n+1)= Point(n)/(1/AR) ; eg Point(n+1) = 80/0.8=100EDIT or SUBMIT YOUR BID(AR: Activity requirement: varies from 80% to 100%)Decision Scenario CityLast Round priceAsking PriceNo. of SlotsNumber of Bids received Final AllocationClosing PriceSilchar50052022 ( X,Y)X,Y520Agra28030010No BidHaldia22023032 (Y,Z)X,Y,Z220Jalpaiguri20021022 (Y,Z)Y,Z210Auction ClosesContentsAbout mjunction services limitedOur e-auction experience & capabilityOur proposed methodology for e-auction of FM channelsOur Marketing PlanWhy we should be chosen as service provider25Our Marketing planReach all the major cities and towns across India through advertisement in leading newspapersInsertions in both daily newspapers and Financial dailies to reach general and Business audienceNewspaper insertion in English, Hindi and vernacular languages to increase the reachAppoint expert Consultants to create favourable atmosphere for the auctionCreate awareness and buzz through visibility and participation in Seminar and Conferences through national and regional Trade bodies in different towns and cities in India

ContentsAbout mjunction services limitedOur e-auction experience & capabilityOur proposed methodology for e-auction of FM channelsOur Marketing PlanWhy we should be chosen as service provider27ContentsAbout mjunction services limitedOur e-auction experience & capabilityOur proposed methodology for e-auction of FM channelsOur Marketing PlanWhy we should be chosen as service provider28Why should we be chosenTransacted more than INR 2 Lakh Crore worth of goods and services since 2001Associated with prestigious clients like SAIL, Tata Steel, Coal India Limited, Ordnance Factory Board, etc World class infrastructure to conduct e-auction. Own data Centre hosted in our own premise backed by Disaster site recovery site. Strong association with Industry bodies which will help us to promote the e-auction eventExperience in designing & implementing varied e-auction methodologies. Certified with ISO 27001 for Information securityCertified with CMMI Level 5 for software development process

ISO 27001 certification

29Thank youChiranjib Datta ChaudhuriE-mail : chiranjib.chaudhuri@mjunction.inContact : 033-66106323 / 9163348140Annexure : Auction Rules Auction Rules : Ascending StageThere will be simultaneous bidding for generic frequencies in each of the 249 cities where FM Channel is available. Event shall be conducted in multiple phases. Set of cities would be selected in each phase mutually through discussion with MIB.

The ascending stage will consist of a number of rounds for a specified duration. The first round will begin with all FM Channels in all cities being offered at the reserve priceFor each city, bidders will be asked to state whether they wish to bid for one frequency. The ability to make bids is subject to the number of eligibility points held by bidders and activity rules When the first round finishes, the bids in each city will be ranked Where there are n frequencies available in a city, the bidders ranked 1 to n will be declared provisional winning bidders. The lowest winning bid will determine the common winning price for all winners in that cityClosure of rounds :Every round will have a start time and planned time duration. Time extension would be triggered automatically if any eligible bidder has not bid. Each bidder will have a pre-defined quota of extension time. How to identify provisional winner: At the end of a round, and for each city, each bidders highest bid made so far in any round is taken and these bids are ranked by the following criteria (listed in precedence):value of bid in that city ( Highest bid get preference over carry-forward bid)round in which bid was made (earlier ranked higher)total value of bids across all cities randomlyThe relative ranking of any bids carried over from previous rounds will be preservedWhere there are n frequencies available in a city, bidders ranked 1 to n will be declared provisional winning biddersThe provisional winning price associated with these bids will be equal to the lowest round price at which the provisional winning bidders submitted their bids. (All provisional winners / final winners for a city will be at one price.)How to finalise price incrementExcess demand in a city is defined as the total demand for slot/frequencies in that city at the price in the last completed round minus the number of slot/frequencies available in that cityIf excess demand is negative, the asking price in the following round will remain unchanged. If excess demand is zero or positive, the asking price set for the following round will be the current round price plus a price increment related to the level of excess demand. Exact price increment may be finalised in consultation with MIBWhen the Auction closesThe final round will be the first round in whichfor each city, the number of bids at the current round price is less than or equal to the number of frequencies available in that city; andthe auction activity requirement is 100%. (The auction will continue even if one bidder has unexpired points available.)This rule means that a current provisional winner is not guaranteed to become a winner unless:it raises its bid to the next ascending price; orthere is another provisional winner with a strictly lower bid.(In the latter case, there is no excess demand and the next round will have the same asking price as the current round.)Eligibility StructureEach city/lot will be assigned a specific number of eligibility points, based on the reserve price of licences in that city.Each bidder will have an initial number of eligibility points in the first round based on its approved bidder application and associated Earnest Money Deposit. A bidder will maintain or lose part or all of its eligibility to bid in subsequent rounds depending on its bid in the current round and on the auction activity rules. Activity rules allow bidders flexibility to switch between cities, except if they are currently a provisional winner in any city, in which case, they can switch from that city only after they are overbid. Activity rules based on eligibility structureA bidders activity in a round is the sum of:the number of eligibility points associated with cities in which the bidder has been determined to be a provisional winner at the end of the last completed round; andthe eligibility points associated with cities where the bidder has made new bids (i.e. bids where it was not a provisional winner in the previous round)A bidder must demonstrate bid activity in each round that equals or exceed a certain percentage of its eligibility; otherwise its eligibility will be reduced proportionately in the following round. This percentage (the auction activity requirement) increment over the duration would be finalised after discussion with MIBThese increases will be made by the auctioneer as overall bidding activity across all cities declines. End