If you are under the impression that the ancient
barter system has
vanished, then it is time to correct your view. Says Ganesh
V, director, Trax Barter Network, Chennai, "The Fortune
500 companies had concluded barter deals worth $12 billion last
year."
In India, Chennai, and to some extent Bangalore, are witnessing active barter
trading.Given the difficulty in finding double coincidence of wants in a market place
filled with a plethora of goods and services, one may wonder how barter trading is being
done now.Answers Ganesh, "That is where we come in. Call me a middleman, a broker.
But I call myself as a barter banker."
According to him, the advent of monetary economic systems did not prevent corporates from
continuing with barter in an informal and one-to-one basis. He cites the hotel, airlines
and media sectors, who do bartering on a major scale. "Now barter bankers like me are
in place to bring barter trading to an organised platform."
Modern barter trading revolves around the simple premise that all companies have surplus
capacity that they would like to encash. Similarly, corporates love to save on cash
outflows while sourcing some of their requirements. This is what barter bankers
facilitate. Trax Barter's business is to help in exchange of goods and services amongst
those who are in need but are not willing to shell out cash.
The system is simple. "We contact business houses to offer their wares to our
network, in return for products/services that are already available with us," says
Ganesh. In other words, Trax Barter asks the corporates to offer what they have and take
what Trax Barter has. And care is taken to list only those products/services which are
much sought after.
The exchanges are done at the maximum retail price (MRP). The advantage, Ganesh says, is
that the users of the system realise higher sums at a low cost. This is because the
products/services that come for barter on the network are generally slow moving/surplus
stocks and except for their production cost, don't involve any other overheads. This
surplus stock, in turn, enables the parties to source their needs without paying cash.
Says Ganesh, "Once a person enters the barter network, he would think twice before
going in for cash purchases." Though barter trading has several advantages, ideally
corporates should offer only up to 10 per cent of their total capacity, as anything higher
than that figure would impact their cash flows.
Speaking on the ethics, Ganesh says that a barter banker should scrupulously see that
transactions are done at MRP; kill the encashment temptation; see that the supplier gets
the first right on any other product that is being offered on the barter network; and
invoice the products/services.
So what does Trax Barter get for its services? "We charge a transaction fee of 10 per
cent on the value of the exchange," says Ganesh. According to him, barter trading is
currently more popular with the hospitality, travel, media, and corporate event management
industries.
"I have even real estate listed on my network," Ganesh claims. According to him,
Trax Barter has about Rs 1.5 lakh worth of plots in Chennai suburbs for bartering. The
other credits that Trax Barter possess are spot time on satellite channels like Vijay TV,
Jaya TV and other such channels.
Sensing the potential in bartering in industrial products, Ganesh
has now opened his network to listing industrial products. Side
by side, he is expanding his network throughout India by appointing
agents.
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