Bombay boom

India’s fledgling PR business is riding high on the crest of the country’s liberalisation wave. Amanda Hall reports

India’s fledgling PR business is riding high on the crest of the

country’s liberalisation wave. Amanda Hall reports



When Tony Good started India’s first independent public relations

business, colleagues in the UK would greet him with, ‘How’s India going,

dear boy? Do go and sit in the shade, I’m sure it’ll pass’.



In 1988 the idea that India needed a PR sector was beyond belief. After

all, this is a country where Rajput palaces sit incongruously alongside

dire poverty, over-population, a poor infrastructure and the perils of

‘Delhi belly’. And even if it did need it, just how exactly do you do PR

in India? I mean, do they have phones that work over there? And can you

actually make any money, never mind getting it out of the country?



Things are somewhat different now. Good Relations has fees of over

pounds 1 million and aspirations to float on the Indian stock market.

And as Shandwick’s reported interest and impending deal with the

Bangalore-based agency Corporate Voice shows, the Indian market is fast

carving out a place for itself on the global PR map.



While the multi-nationals Hill and Knowlton and Burson-Marsteller have

long established links with India, in the past 18 months interest over

here in what’s going on over there has emanated largely from the

financial PR agencies (see panel.)



The domestic agency scene is booming, although it is nascent and

probably has no more than 15 established agencies, as opposed to one-man

bands.



In terms reminiscent of the 1980s PR boom in the UK, agencies talk of

growth rates of 30 per cent, profit margins of 25-50 per cent, and

predict that the sector will grow by as much as 300 per cent in the next

three to five years. Advertising agencies, used to throwing in a bit of

free PR alongside ad campaigns, are cashing in on the boom by setting up

their own PR subsidiaries.



And why is this happening? In a word, liberalisation. In 1991, India’s

governing Congress party began a process of legislative change which is

designed to create a free economy, probably by 1998. Pre-1991, foreign

imports were more or less banned, getting money out of the country was

almost impossible and anyone wanting to run a business needed a

government licence.



Decisions about who got such licences were regularly based on influence

and payment of backhanders to government officials, rather than on

merit. ‘All business creativity and drive went into getting a licence

rather than on producing decent goods,’ says John Moore, head of Barings

banking operation in Bombay which he opened last year. Under the licence

Raj system, PR was then as much about greasing the right palms in the

appropriate ministry to get the licence in the first place, says Vinod

Nair, head of Clea’s new PR business in Bombay.



‘Ten years ago PR in India meant press and political work and a PR man

was seen as a fixer, someone a company would call in when they had a

problem and someone who would pay kickbacks to fix deals. Things started

changing as companies like IPAN and Good Relations set up as

professional communication businesses.’ With multi-nationals now lining

up to access the massive pool of middle-class Indians - around 250

million people out of a total population of 900 million - competition is

being thrust on to domestic businesses. Five years ago, if you wanted to

buy a car, there were just three Indian makes to choose from; within the

next 12 months, the streets of Delhi, Bombay and Calcutta will be jammed

with Fiats, Peugeots and Mercedes.



Good Relations India is the country’s largest PR firm with 56 staff and

three main offices in New Delhi, Bombay and Bangalore. Chief executive

Ravi Dubey attributes the boom to the arrival of competition.



‘Allowing market forces to operate has thrown up several new demands;

one is for the services of PR professionals,’ he says. ‘Indian companies

were living in a protected environment. Now traditional family-owned

businesses are feeling the pinch and are having to diversify, find new

partners and compete,’ says Dubey.



Much of the PR demand is from US and UK multi-nationals with the largest

agencies generating over half their income from foreign investors. Good

Relation’s client list, for instance, includes a host of familiar

brands, including United Distillers, Levi’s, Compaq and ING Bank. IPAN

works for BT, DHL and Goldman Sachs; and B-M Roger Pereira’s clients

include Cadbury, Citibank, Motorola and Seagram.



The second factor which has fuelled the PR boom is media. Between 1984

and 1993 the number of daily newspapers in India more than doubled to

3,740, and the market for business magazines took off. Satellite TV

arrived in 1991 in the form of Rupert Murdoch’s Star TV continues to

expand.



Of the main agencies, most have operations in the political centre of

New Delhi, Bombay, the financial centre and, increasingly, Bangalore in

the south, dubbed the Silicon Valley of India and Asia’s fastest growing

city.



Rajiv Desai, president of IPAN and one-time press secretary to the

former prime minister Rajiv Gandhi, says lack of skilled employees is

cramping agency growth. ‘Every man and his dog is setting up a PR agency

and there will be a shake-out. This year we’ll grow 116 per cent. But

we’re saying, let’s get our infrastructure right first: we’re investing

in phones, IT networks and training.’



Desai operates a McKinsey-style ‘up or out’ system of staff promotion

and while he agrees that the quality of young people coming into the

business is improving, there is a dearth of talent at more senior

levels.



While the potential of the Indian economy is enormous, in the medium and

long term, the country is beset by massive infrastructure problems.



Demand for power in Bombay is outstripping supply. Office space in the

main urban centres is severely limited and of poor quality. Even the top

notch financial houses like Barings and Jardine Fleming are based in

office blocks that wouldn’t look out of place on a derelict building

site and there’s the added entertainment of the occasional cow wandering

up and down the road outside. However, space is not cheap: Bombay boasts

some of the world’s highest property prices and rents are four times

Mayfair rates.



While old hands like Roger Pereira may choose the location for his

Bombay office based on inside information about which phone exchange is

next up for modernisation, in some areas simply getting a phone

installed can take up to four months. ‘That’s good,’ says Good Relations

director Shridhar Naik, ‘it used to be three to four years.’



Occupational hazards like these, combined with current political

uncertainty due to an impending General Election next spring, concern

foreign investors, but not enough to stop them coming. With skilled

labour costing a tenth of western world prices, it is easy to see the

attraction.



Multi-nationals will keep on coming. To keep up, Indian companies will

be forced to promote themselves and communicate with a growing foreign

investment community.



The Indian PR business will benefit from all this, as will international

financial agencies which win mandates from Indian companies looking to

raise capital overseas. Growth, and specialisation, seem assured, but

margins will be eroded by rising property and salary costs and progress,

as in the UK, will be dogged by a lack of quality staff at middle and

senior levels.



When the history of the Indian PR business is written, Tony Good will go

down as one of its founding fathers. He was the first to take PR to the

UK stockmarket when he floated Good Relations in 1981. The same route is

now on the cards in India.



‘We were the first to come to the market in the UK and prove that a PR

company could be a serious and profitable business,’ he says. ‘It gave

us a credibility we didn’t have before. What that did in the UK, I

believe we could repeat here and give the Indian market the same shot in

the arm.’



AGENCIES: Media Focus



Media relations is the predominant name of the PR game in India and

among the more established players, it’s not just media relations on the

run, but as much about strategy and issues management as selling

stories.



While all the familiar terms -- employee relations, crisis management,

communications audit - trip lightly off the tongues of many agency

operators, it is difficult to tell just how much of this sort of work is

really being carried out.



The better organised multi-nationals are tending to buy agency services

months before they launch. ‘Multi-nationals hire us as much for ‘ear to

the ground’ information, help in identifying joint venture partners and

follow up with government for licences to operate, as to create the

right corporate image for them when they enter the market,’ says Good

Relations’ chief executive, Ravi Dubey.



It is partly this wider issues-related service that is allowing PR firms

to boom at the expense of ad agencies. ‘You can’t introduce a company

to India through advertising,’ he says. ‘Advertising will help only

when you’ve established your basic credentials.’



Promotional events like sponsored rock and fashion shows and product

launches have become immensely popular, largely because the boom in

satellite TV has lead to demand for footage to fill business and

society programmes.



Around 75 per cent of the population watch the State-run channel,

Doordarshan; although this is as much a reflection of groups of viewers

gathering around the village TV set as it is of TV ownership.



The quality of work done is highly variable, with the better firms

disparaging the so-called gift cheque culture which dominates the

financial PR market. One agency source says: ‘Journalists can go to four

or five press conferences a day and pick up a gift cheque [voucher] of

around 250-500Rs,’ - equivalent to around pounds 50 to pounds 80 in UK

purchasing terms.



FINANCIAL PR: Medium Term Market



Given the interest shown by UK financial PR firms in India - Ludgate,

Citigate and Dewe Rogerson have all ventured there in the past 18 months

- you would expect this to be a booming sector. In fact, the opposite

is true.



Last year’s boom in new issues slowed down towards the end of 1994.

Nick Butt, head of investment banking at Jardine Fleming, blames this on

rising interest rates, a lack of liquidity in the market and the

political uncertainty in the run-up to next spring’s General Election.

Financial PR has largely been issues-driven and until recently was done

for free by financial advertising agencies. The big five in this area,

which all have their main operations in Bombay, include Pressman, Clea,

Concept, Adfactors and Sobhagya. Of these only Pressman, which formed a

joint venture with Ludgate last year, operates a separate financial PR-

only subsidiary.



Pressman chairman Dr Niren Suchanti says the company’s income this year

will be between pounds 150,000 and pounds 200,000. ‘Two years down the

line it’ll be making good profits. At the moment we’re building

business.’



Traditionally the Indian stockmarket is heavily driven by retail

investors. Share ownership has been split roughly 80/20 in favour of

retail investors rather than institutions; the reverse of share

ownership in the UK.



As a result, investor relations are virtually non existent. However, the

arrival of foreign institutional investors or FIIs is changing that.



Dewe Rogerson, which has an affiliate relationship with financial ad

agency Options Trikaya Grey in Bombay, surveyed investor attitudes to

India this summer; 61 per cent of the 79 face-to-face interviews with

fund managers and analysts responsible for portfolio investment in

India, said Indian companies were not making sufficient efforts to

communicate. Among India-based FIIs this rose to 73 per cent.



Dewe Rogerson director Rosie Catherwood says India will be a good market

for IR services in two or three years. The other potentially lucrative

area is privatisation.



The head of Barings India office, John Moore, says the Government will

be a major issuer of stock, which it will look to sell both at home and

overseas. Judging by the Government’s recent unsuccessful disinvestment

programme- target Rs7,000 crore, actual raised Rs 1.6 crore - it looks

like it could do with all the marketing help it can get.



------------------------------------------------------------------------

PLAYING ABROAD: The Big Names

------------------------------------------------------------------------

Main players                       Parent

Burson-Marsteller Roger Pereira    Joint venture with B-M

Clea PR                            Clea Advertising

Corporate Voice PR                 MAA Communications

Enterprise PR                      Enterprise Advertising

Genesis                            Independent

Good Relations India               Cox and Kings India

IPAN                               Hindustan Thompson Advertising

LinOpinion                         Lintas India

Mudra PR                           Mudra Advertising

Ogilvy and Mather PR               Ogilvy & Mather

Perfect Relations                  Independent

Rediffusion                        Rediffusion-Dentsu, Young & Rubicam

Sampark                            Independent

------------------------------------------------------------------------



------------------------------------------------------------------------

COSTS: Wages

------------------------------------------------------------------------

Typical monthly wages

Director            22-24,000Rs    (pounds 440-pounds 480)

Account director    18-20,000Rs    (pounds 360-pounds 400)

Account manager     12-14,000Rs    (pounds 240-pounds 280)

Executive             7-9,000Rs    (pounds 140-pounds 180)

pounds 1 in India is equivalent to pounds 5/pounds 8 in the UK in terms

of spending power.

------------------------------------------------------------------------



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