MNCs acquire office space worth Rs 2,470 crore in India

NEW DELHI: Real estate consultant Cushman& Wakefield has claimed that multi-national companies (MNCs) have preferred to buy office space in India instead of leasing it and have invested close to Rs 2,500 crore in less than three years.

"MNCs have been increasingly showing keen interest in buying offices in India contrary to their traditional approach of leasing space a few years back for overseas operations," C&W said in a release.

As rents are going up in some of the prime markets where MNCs are operating, these companies have put in their profits to buy offices rather than taking on lease looking at the long term benefits, the consultant said.

According to information available, MNCs have contributed 43 per cent of the total sales value of commercial offices across the country recorded during January 2012 and March 2014.

During this period, the sales value of office space was recorded at Rs 5,730 crore, of which MNCs’ contribution was Rs 2,470 crore, C & W said, adding MNCs belonged to ITeS, BFSI, Pharma and FMCG sectors were the leading buyers of office spaces.

Among major office deals, Citibank India bought 0.3 million sq ft office space in Mumbai for Rs 1,110 crore and Bayer group bought 0.16 million sq ft in Mumbai for Rs 130 crore. GlaxoSmithKline also bought office space worth Rs 140 crore in Delhi-NCR while Cognizant acquired office space in Hyderabad for Rs 110 crore.

Sanjay Dutt

Reacting to the trend, C&W Executive Managing Director, South Asia SanjayDutt said: "Companies that are operating in India are confident of their projections and potentials in the country and are now tailoring their real estate requirement so that they can be more cost-effective.”

He further said, "Companies belonged to IT&ITes and pharma are looking to consolidate their research and development divisions with their front-end divisions in a single set-up and are looking for assets to purchase as it proves to be a cost effective strategy for companies."

"Capital values have also gone up moderately during the period. Hence firms stand to benefit financially if they deploy capital to buy the spaces to occupy," C&W added.

Fake products sale to touch over Rs 55,000 cr by 2013

The widespread sale of counterfeit products across various sectors such as electronic items, automotive components, consumer durables, pharma, herbal medicine & cosmetic has become so alarming as to capture a market size of Rs 55,000 crore through illegal channels by 2013, according to estimates made by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

  On account of increasing sale of fake products in the absence of regulatory mechanism, the revenue losses to the exchequer would have exceeded Rs. 5,000 crore for fiscal 2011-12, further reveal the ASSOCHAM estimates.

“Delhi is the hub of counterfeit products in India as nearly 75 per cent counterfeit products originate here. FMCG companies having maximum loss up to 45% and an average loss around 25% of their market share of their well known products”, added D S Rawat, Secretary General, ASSOCHAM.

The sale of contraband electronic items, consumer durables, automotive components, pharma, herbal medicine & cosmetic products, based of ASSOCHAM estimates for fiscal 2011-12 is Rs 25,000 crore. The current market size of fake products sale is around 45,000 crore, adds Rawat.        
The other areas in which spurious products sale is going unabated comprise vegetable oils, spices, ghee and even watch components. In these areas of large economic activities, the fake products sale has been estimated within the range of Rs 15,000 crore by 2013. In a paper on Fake Products Sale, prepared by ASSOCHAM, based on the feed back of its constituents, it has been stated that Electronic, Consumer durables and pharma  sectors have witnessed the highest sale of fake products with an estimated amount of Rs 20,000 crore in the current fiscal.

In pharma sector, fake medicines were sold off in rural and semi urban market the cost of which works out to be Rs 12, 000 crore with growth of over 100%, says Mr. Rawat while commenting on the ASSOCHAM paper.

 The chamber estimates also point out that Rs 8,000 crore worth of fake products were sold off in areas of vegetable oils, ghee, spices & watch components by 2011-12, of which the large chunk came from the sale of watch components which has been estimated at Rs 5,000 crore.  The genuine manufacturers of watches had to lose out heavily because of huge price differential.
Herbal Medicine & cosmetics sector alone registered a sale of Rs. another 10,000 Cr. in 2011-12, which did a great deal of damage to its consumers, says the ASSOCHAM paper on fake products sale. The most popular counterfeit market is clothing, followed by shoes, watches, leather goods, and jewelry.

The biggest concern is, however, the customers attraction towards these pirate products is directly proportional to price of these products which are sold at 40 to 45% lesser value than the original. A common man with limited knowledge falls for the counterfeit products due to its cheap or discounted prices. Enforcement of laws against counterfeiting is not so strict in India which is another big jolt for the brand industry.

Recently Dubai authorities also seized US$1.09m in counterfeit electric goods as part of a recent crackdown which included fake goods from leading brands LG, Panasonic, Sony, Sharp and Hitachi.  The seized goods weighed a total of 120 tonnes and included 5,300 television sets, 7,000 DVD players and various other devices including stereo sets, and home appliances.
The chamber is of the view that under the present dispensation, those indulging in sale of counterfeit fake, contraband or spurious products are least afraid of consequences arising from their being caught. The laws at present hardly provide for effective deterrence for the offenders either by way of monitory penalties, damages or criminal prosecution.

The ASSOCHAM, has therefore suggested that the government must immediately implement bar coding on medicines and electronic items to control fake products.