With industries and government waking up to piracy and counterfeits, the business of holograms has a promising future

Piracy regularly eats into the profits and reputation of big businesses. So much so that goods worth $600 billion are counterfeited every year.

International alcohol brands lose approximately $300 million a year due to piracy. In 2006, India lost $1,250 million to software piracy. This has made several businesses sit up and take steps to protect their interests. The use of holograms is one such measure.

Although the use of holograms in developed countries started in 1947, it started to gain popularity in India in the early 1990s. Brand identification and security were the main reasons behind their use. Each hologram is unique and one cannot recreate the same even with the same manpower and machinery. A hologram cannot be replicated, scanned, photocopied, or printed. That makes it an excellent security proof for brands. Holograms, thus, assure consumers about the quality of the brand. The government of India is one of their biggest users in the country. Voter ID cards, driving licenses, and passports carry security holograms; and with car theft on the rise, holographic security number plates are likely to be used for new vehicles.

The Indian hologram market is growing at 20 percent per annum and has more than 40 players. According to Manoj Kochar, MD, Holoflex, “The hologram has become the first point of the sale verification feature. People are looking for a hologram on documents, bank notes, and products. But that alone is not sufficient. It is important to educate the customer about the special features that one ought to look for in a hologram.”

Earlier, the biggest challenge of this business was educating the brand owners about what a hologram could do for their brand. I actually had to spell out a hologram to a customer. Now, the challenge is to meet the cost expectation of the customer because now he has options. Manoj Kochar Holoflex

There are three types of holograms — security, packaging, & promotional.

Security: Security holograms have a market size of Rs. 150 crore. It is a technology-driven segment that needs constant innovation. Around 35 players in India are manufacturing this type of hologram. It is a low-volume high-margin business. Very high volume orders of security holograms become non-viable as the cost of manpower security is very high.

Packaging: This category has a Rs. 250 crore market, and is a high-volume, low-margin business. Here, the price competition is greater as the customer buys the hologram not for its security feature, but just to ensure the presence of a hologram. Hence, the customer looks for the cheapest option.

Promotional: Promotional holograms are a popular phenomenon abroad, but the trend does not seem to be catching on in India. There are hardly any makers of such holograms, and its market is less than Rs 1 crore. In the past, promotional holograms have come in the form of tazzos in potato chips packets, but it has never shown any growth. The reason being that Indian companies have still not identified it as a promotional vehicle.

Manufacturing holograms
There are two ways to go about manufacturing holograms. The most important process of holography is mastering, that is, creating the “master copy.” From the master copy, one can replicate holograms. Creating masters is an expensive as well as a highly technical process and only a few in India are equipped with a mastering lab. An entrepreneur can acquire all the latest technology and mastering machinery with an investment to the tune of a few crores of rupees. Alternatively, one can outsource the master and invest about Rs 50 lakh in other machineries to emboss holograms. And after a few years of experience and a little more cash in his kitty, one can start creating one’s own masters.

The moment I see a threat, I upgrade my technology immediately. It is a big race where you are running and the counterfeiters are running along with you. You have to be one step ahead of them. U.K. Gupta Holostik India

Holography starts with preparing the artwork. It includes the name of the company, logo, and other brand information. Then a master is created by recording a laser image on the glass using optical technology. According to U.K. Gupta, CMD, Holostik India, “Mastering requires a very calm environment as even a slight change in the temperature of the room can change the outcome of the image. Also, one cannot create the same master again in case it is damaged.”

After preparing the master, the next step is electroforming. In this process one has to replicate this image from glass to a nickel plate. From that, again, various copies are created. In holography language, the first copy is called the “grand mother.” One cannot replicate numerous holograms from the first copy as it will damage it. A second copy is made that is called the “mother” and then various “daughters” are produced from it. The daughter is used in the embossing machine to produce holograms.

The entire process requires a number of machines, including a master origination machine, silvering machine, mechanical recombination machine, electroforming tanks, embossing machine, coating lamination, die-cutting, and numbering machine.

Why can’t a hologram be duplicated?
A hologram cannot be duplicated unless one has access to the original master. Of course, a counterfeiter can always order similar holograms from a manufacturer by paying a bit extra. But the stakes are too high for any manufacturer to take the risk. As Kapil Bajaj, MD, Bajaj Holographics says, “In case the manufacturer is caught, his machinery can be frozen. No manufacturer will take the risk, as the cost of his machine is too high as compared to the size of the order. It is suicidal, almost as if you are smoking in a storage where all ammunitions are kept.” Moreover, the manufacturer can also be sued under the Copyright Act for creating similar artwork.

To prevent illegal duplication of a hologram, the Hologram Manufacturers’ Association of India (HoMAI) has a security hologram roster. According to C.S, Geena, Sectretary, HoMAI, “Each hologram producer registers the holograms it produces on behalf of its customers. Each member before making a new hologram searches it with the roster to prevent accidental copying of an image. Once we are sure that the new image is purely authentic, a certificate is issued to the hologram producer.”

If a person can keep upgrading technology, this business promises a lot of potential. The government of India requires very high security markings. Counterfeiting is also growing very fast and brand owners would also want to ensure that the credibility of their brands is not damaged. G.S. Dhillon Alpha Lasertek

Challenges
According to Gupta, “Anyone can start a holographic company. The challenge, however, is to keep upgrading the technology.” He states that he spends at least Rs. 5 crore annually in just technology upgrades. “Even if you locate the technology abroad, it is not as if they will give it to you. They will research the background of your company and will make sure that you don’t misuse it,” he adds.

“The Indian market is growing in terms of volume, but not in terms of value. The players don’t understand the market. They think that by reducing prices they can get more sales. At the end of the day they don’t have enough money to do R&D. It is not a print and packaging business wherein you just buy the machine and expect money. You have to constantly upgrade technology,” says Rohit Mistry, Founder, Holographic Security Marking Systems, who has had exposure to the holographic industry in European markets as well.

As not many companies are yet aware of the benefits of a hologram, the market has still not grown to the size it can.

The future
The future of this business depends a lot on the acceptability of holograms. With an alarming rate of counterfeiting, brand owners are becoming increasingly security conscious.

Holograms on currency notes: A few manufacturers have been consistently trying to convince the government to start using holograms on currency notes, something that currently more than 100 countries are doing. According to a study on Canadian currency notes, after the introduction of holograms the counterfeiting rate dropped to 60 ppm (parts per million) in 2008.

Technology integration: According to Kochar, “If one is thinking of entering this business, then one must carefully assess the industry and try to find out a gap that one can fill. Holograms as a standalone would not be the solution. Merging various technologies is clearly the way.”

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Consultant
written by Kamal Sood, June 23, 2010

I am willing to venture into the business of production of Holograms. Any person interested and having latest technology is welcome

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Im really Impressed!!!!!!!!!!
written by Andrew Yurchesyn, October 01, 2009

This article is great. It details the main use of the technology in business application and the viability of the technology. I am a BBA student at Cape Breton University, and am studing IT. Right now my professor has assigned me to right a paper of the viability of holographic technology in the workplace(mainly business related). I need 2-3 examples of how business's can use this technology to improve the overall way they do their operations and improve their owverall state. It would help if you could write something convincing me(or a informed audience) that Holographic technology is a good idea to integrate into a business.

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