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Our MD, Mr Anand Kumar being quoted on corporate spends this Diwali season - 11 Oct 2011

Archana Agarwal, a Company Secretary in a big corporate house always looked forward to the corporate gifts given to her as a token of appreciation. She would be disappointed this year with her gift, as the dismal corporate results and economic slowdown has resulted in the cutting down of budget allocation.

Anand Kumar, Managing Director; Corp One; a firm specialising in corporate gifting and brand merchandising, agrees that corporates appear to be delaying gift purchases this festive season. "Though we do not depend on the festive season to meet our growth, we have seen almost 30 to 40 % budget cut this season. For example, if the employer used to spend Rs 500 per person earlier, this year he is spending just around Rs 250-300," said Kumar.

"We may see the sales picking up in the last 15 days of the Diwali season," he added.

Diwali gifts are a goodwill gesture which helps companies to develop stronger ties with both employees and associates – the two main keys to success for any organization. Diwali gifts also work as a brand building exercise for the company.

Over the years, the trend for corporate gifting in MNC's has been such that the responsibility for procuring gifts for different departments has been taken care by the respective HR departments who generally buy suitable gifts from various local retailers.

"However due to budgetary cuts this year, sales for corporate gifts amongst local dealers has declined. MNC's have taken a new and probably more feasible option; that is sending one of their employees to China to get gifts for every employee in the organization, for every department. By buying in bulk from China, MNC's save a good amount of money," says Ishween Anand, Owner and Director, Nyassa, a company which deals in handmade bath and body products.

But this is only limited to generic products like home decor, stationary, showpieces etc.

"Sales for perishable goods, bath, body and cosmetic products have remained consistent for the past few years and sales for generic home items, like furniture and accessories, have been on a downswing. Also, best selling items during Diwali have always been and will be home necessities as Diwali is a festival for the entire family and nothing can be better than adding beautiful things to your home," Anand said.

All is not lost for the companies dealing in the segment. "The budget for corporate gifts this year by top line corporate houses has gone down by 10-15% this year compared to last year. But it will not affect volumes as lots of small to mid size companies have also jumped into the market this year. Hence volumes will not get affected but margins will be," says Amit Nanda, CEO, Plus Branding Solution.

However, the trend, by the yet to be released Associated Chamber Of Commerce And Industry of India (ASSOCHAM) report on Diwali budgets of corporate, shows an upward curve indicating more spending by the corporate this year than the last year inspite of inflationary pressures. Corporate reportedly spent around Rs 3,500 crores on corporate gifts last year as against Rs 2,025 crore in 2009 as per the report.

"As a matter of fact sales have been brisk and on an upward swing, the so called recession or slow down haven't made any difference. I would peg the YOY figures at 17% more. As I have mentioned above the revenue is certainly better than last year. This season we should cross the Rs 5 crore mark on gifting, this month alone," Girish Khare, Chief Marketing Officer, RewardPort India, a Customized Movie Card manufacturer and distributor company.

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