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Preeti Mehra

NEW DELHI, Jan. 23

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.

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