Business Line - 24 January 2002
India Inc barters problems away
IF you think the age-old rural barter system is dead
and gone, you're behind the times. Indeed, it has gone
ahead, entering the corporate world as well.
As in recession-ridden America during the early 1970s,
when companies facing a terrible cash crunch, excess
inventory and manufacturing capacity looked to the corporate
barter business to come out of the red, many in India
are doing the same today.
Corporate barter at that time essentially entailed buying
media space and time on radio, television, print and
outdoor in exchange for manufacturing products. Today,
it is far more sophisticated, offering anything and
everything a company wants to sell or buy.
"Name the product and we can buy or sell it for
you," says Mr Rakesh Bhatnagar, co-founder-cum-CEO
of Net4barter, a corporate barter outfit in the business
for just over a year and the only all-India player.
"And in this short period we have bartered a surfeit
of products — hotel rooms, printing capacities,
airline tickets, office furniture, watches, mobiles,
computers, kitchen equipment, cosmetics, corporate gifts,
electronic goods and are now going to start on hard
core industrial goods and commodities," informs
Mr Bhatnagar and his partner and COO, Mr Manish Datta.
They cite examples of some of their transactions: Timex,
for instance, faced a massive inventory problem on a
particular model of its watches.
Stuck with Rs 20 lakh worth of unsold stock, the company
was unsure if it could spend on its badly needed media
plan.
Enter Net4barter. The firm picked up Rs 15 lakh worth
of Timex watches at their full MRP value and in return,
gave Timex the opportunity to execute a new media plan,
that too without having to spend any hard cash.
The Archie's story is also interesting. Though Archie's
was doing well, its proprietor, Mr Mulchandani, was
in a dilemma. He needed massive media spend to keep
customers acquainted with his ever-changing list of
gift items, personal accessories, cards and utility
products.
And often when products bombed, he was stuck with inventory
as well as massive media bills.
Net4barter has helped him on both fronts. The company
no longer pays for media campaigns and their unused
capacities are also picked up in the bartering process.
How does it work and what is so different about it?
After all, are not companies bartering among themselves
all the time?
Mr Bhatnagar explains: "A corporate barter network
enables companies to buy and sell on barter without
the limitations of the one-to-one traditional barter
system. Here we serve as the exchange facilitators and
as a member you could sell to any business, earn Net4barter
credits and use them to buy products or services from
any business of your choice."
The other advantages of the system are that companies
can optimise their cash flow by purchasing all their
business needs despite low cash reserves.
You earn the equivalent value of credits, which can
be used for a number of purchase options.
Besides, excess or slow-moving stocks and capacities
can be used to full value.
For instance, when a popular film magazine in Mumbai
found that its special issue was ready to go to press
but couldn't cough up for its printing, Net4barter got
the job done at a facility with excess printing capacity
against media space in the publication.
"What is important to note is that we do not touch
the companies' existing cash clients, instead we help
them acquire new customers," says Mr Datta, citing
the example of a hospitality client who has bartered
hotel rooms for furniture and equipment for new offices
in two cities.
Though Net4barter is not doing anything unique, for
`reciprocal trading' and `leverage trade' have been
around for several years in the international scenario,
the company has the advantage of being the first large
player in India.
With a client base of 700 companies and deals worth
Rs 75 crore till date, it hopes to entrench itself in
the country before foreign competition catches up, particularly
as big players such as Australian Bartercard are eyeing
the Indian market.
