Nikhil Nehru, Managing Director, Ontrack Corporate Services

This economic slowdown is affecting everyone globally, But again, look at it dispassionately. India is not going to grow at 9-10 per cent. Let’s take a worst case scenario – 5-5.5 per cent or 6-7 per cent. But the rest of the world is in recession, so we are ahead of them. The wise companies are saying that this is the opportune moment to get in because at this time you will get valuations that are very attractive. Eventually, I believe this downturn in India will last for a maximum 18-24 months on the outside. We would be out of it faster than the rest of the world. The rest of the world many take more than two years.

e4m by exchange4media Staff
Updated: Jan 2, 2009 12:00 AM
Nikhil Nehru, Managing Director, Ontrack Corporate Services

This economic slowdown is affecting everyone globally, But again, look at it dispassionately. India is not going to grow at 9-10 per cent. Let’s take a worst case scenario – 5-5.5 per cent or 6-7 per cent. But the rest of the world is in recession, so we are ahead of them. The wise companies are saying that this is the opportune moment to get in because at this time you will get valuations that are very attractive. Eventually, I believe this downturn in India will last for a maximum 18-24 months on the outside. We would be out of it faster than the rest of the world. The rest of the world many take more than two years.

Nikhil Nehru has 40 years of experience in the communications industry, and has held senior positions in India’s largest advertising agencies.

He began his career at J Walter Thompson (London & India), where he spent 22 years, rising to Executive Vice–President, in charge of the North India operations. Nehru was responsible for setting up satellite operations of JWT Delhi as well as two diversification units –Thompson Social (responsible for social and developmental communications) and Design C (a specialist service for exhibitions and retail display).

He spent three and a half years at PubliGraphics (UAE) on the Board of Directors, where his primary responsibilities were the Oman, Bahrain and UAE operations and also the diversification units of the organisation, such as Public Relations and Direct Marketing.

He returned to India as Deputy Chief Operating Officer of the McCann Erickson World Group. He was appointed President of the company two years later. During his tenure of seven years, the company rose from rank 24 to 5 in the industry. At McCann, he was responsible for the entire India operations, including Nepal, plus the PR, Media, Healthcare and Direct Marketing divisions.

Nehru has handled launches, product diversification, corporate brand building and marketing and communications programmes for organisations such as WelcomGroup Hotels, Pepsi, Hero Group, Bacardi, General Motors, Microsoft, SmithKline Beecham, ITC Foods, Unilever India, Perfetti, Nestle, Virgin Atlantic, Maruti Suzuki, L’Oreal and Coca-Cola to name a few.

Currently, Nehru runs his own marketing and communications consultancy, Ontrack Corporate Services Pvt Ltd. He is engaged with Indian, MNC and Government of India projects in the financial, retail, FMCG, consumer durables and social sectors.

The range of services offered includes corporate branding, image & identity strategy, using the ‘Business Impact Model’ developed by Ontrack; brand communications including positioning, strategy and implementation of plans; corporate restructuring; product / brand extension development and training sessions on branding and communications strategy.

Ontrack also helps in the selection of communication partners on a turnkey basis. This involves identification of potential partners, visits to offices, personnel scrutiny, conflict of interest, remuneration agreements, etc.

Nehru’s current additional roles include: Independent Director on the Board of Aviva Life Insurance Company; Chairman of Results International Group (an international M&A organisation in the communications arena); Member, Governing Council of Plan International - India Chapter (an NGO for street children); Member, Advisory Panel of EMPI (a business school in New Delhi).

In a freewheeling conversation with exchange4media's Puneet Bedi Bahri, Nehru talks at lengths about Results International Group’s India plans, the M&A field in the country and the challenges and opportunities that India poses in this field.

Q. Please elaborate on your India strategy. What targets have you set for the year 2009?

I will not be able to give any numbers, but the way we outline our targets, what we do have are high probability, medium probability and low probability, and within the high probability, we already have clients who have signed on to the list. Others we are talking to, who are closer to signing the contract. When we talk of high probability, we say ‘okay, 90 per cent of that will happen’, the medium probability clients are the ones with whom we have established contact and are developing it since these things take three to six months. After all, the clients need to get clearance from their stakeholders and board of directors that they want to take a step like this, and then we say that ‘okay, there is a 50 per cent probability’, and the low probability ones are those that we believe are the long term ones with 10 per cent probability of that happening. The targets that we have set and are really talking about are challenging and do believe that opportunities do exist. Lots of people do not know about Results yet, what it stands for, and that it is now in India, and I’m talking in the Indian context. We are now in the process of marketing ourselves – writing to the agencies, telling them who we are.



Q. Results International commenced its India operations about three months back. Could you elaborate on some of the major transactions that you have done here so far?

I cannot elaborate on that, but what I would say is that we have got four enquires from international companies, and from India, we have got 6-7, who are signing up or are in the process of signing up.



Q. What would be the key drivers for Results International in India?

The most important driver would be establishing our reputation and professional skills and integrity that we bring to the table. For instance, there is a seller mandate and a buyer mandate. Results would never bring the two together for the reason of conflict of interest. Confidentiality is another factor that we have to be and are careful about as no company would want the word to spread around that they are being sold out.



Q. Could you tell us about the key people who have joined Results International in India in the recent past?

We have just set up our operations here, right now it’s just me and Sunil. There is a research company called A&A Research Fusion, which Results has appointed to do a lot of work that is required by us in India and internationally. A&A Fusion is the one who gets our databases for us, gets information from the Internet, gets the facts for us. In this business, it is not that much about the number of people, but the quality and the standing of the individuals that you have, in order to have some standing in the fraternity and for people to look up to you and listen to you.



Q. Who are your target company categories?

Anyone in communications, when I say communications, I mean the advertising agencies to PR agencies to digital. In fact, digital and online are the big things within the country, and internationally people are looking for opportunities. That is the future. In this country, we do have expertise and growth in the digital and online sector, the skill development and our manpower development can improve a great deal.



Q. What is the greatest potential that India presents Results International?

India is one of the emerging and fastest developing markets. Notwithstanding the current economic downturn – the whole world is witnessing it – India will continue to grow, in fact, the markets that will continue to grow are India and China. Results also needs to grow, afterall they have a global presence, so it has to be present in these two markets. International clients have asked them in the past of their presence in these markets. The other aspect is that in India, there are close to 1,000 communication agencies, people who are in the advertising space, in PR space, digital and online space. You have got a whole host of these who would want to grow; some people want to cash out, so we provide them that opportunity. While others would want their skills to be developed to a greater extent with international tools, which international partners can provide them. Also, there are some companies, which we are talking to, who have been attractive to international buyers, because when international agencies come in they are interested in agencies that have bits of pan-India presence or are present in at least 2-3 of the metros.

Now what we are looking at are these small agencies and see if we can find chemistry between these agencies and try and merge them and form a new entity. We would then work with them and develop the communication skills to make their valuations over a period of time more desirable for international partners. So, all these guys who are small and are actually eating into each other have this opportunity. In that again one has to be very careful as in there are individual egos of these people that have to be taken care of. That is why Sunil (Gupta, Managing Partner, Results International) and I continue to remain with them for some time to see that there are no problems.



Q. What are the unique opportunities and challenges that India poses for M&A transactions?

I think the challenges are the first. One is that people have got to be ready to accept the fact that if they really want to make a mark, they have to look at formal assistance from international firms or even larger Indian companies. The other challenge is finding the right partner as our success is dependent on the success of the merger. Another challenge is checking out the efficacy of the data that is provided to us, which include not only the financial details, but also details of their client history, company vision, and a lot of other details. Another challenge in India is that the egos are high, someone who has been in business for 15 years, finds it difficult to take suggestions from another. But, at one point, I do believe that they will come back and say that we do need expert advice.



Q. Which Indian cities are you targeting to set up your offices in?

We are just going to be Delhi based for now. We don’t believe in increasing the cost ahead of the revenue, and that is the biggest danger you can get into, and particularly in the situation you are in. About connectivity, I don’t really need an office. I can connect with anyone anywhere and fly down and meet that person. Though, we are at this point in time targeting four metros – Delhi, Mumbai, Bangalore and Chennai. That’s our first phase, where we have started out our communications. Once we feel that we have exhausted the potential in these cities, we then move on to other cities, as we feel there is no point in spreading ourselves too thin, because at the end of the day when you spread too much, all you are doing is becoming more vulnerable.



Q. How far do you think the current economic slowdown will affect M&A transactions in India? Your personal mantra for surviving tough economic times...

This economic slowdown is affecting everyone globally, But again, look at it dispassionately. India is not going to grow at 9-10 per cent. Let’s take a worst case scenario – 5-5.5 per cent or 6-7 per cent. But the rest of the world is in recession, so we are ahead of them. Worldwide, international companies – and I do know because I have talked to some of the networks within India – say that this is a slowdown and that they want to get into acquiring companies. However, at the same time, the wise companies are saying that this is the opportune moment to get in because at this time you will get valuations that are very attractive. Eventually, I believe this downturn in India will last for a maximum 18-24 months on the outside. We would be out of it faster than the rest of the world. The rest of the world many take more than two years.

In India, what is happening is that clients who didn’t want to sell out and are suddenly seeing an erosion in their revenues, are saying that is this the right time for them to try selling out. But they are absolutely right with their apprehensions and the concerns that they have, but when you sell out, it is not that you come this morning and you are done by the next day. The entire process takes 4-8 months, because the entire process is most important. The one thing that has to be remembered is that at any point if they do not want to sell out, we will not put them into it. We ask them to work and see what happens. Some of them have asked whether rather than selling out they could get international partners who would take some minority stake and help them out in work and development.

I don’t see there being a huge shake out as far as this aspect is concerned. But, largely advertising will suffer and is suffering. I think this is where the true mettle of the industry is going to come out. It is very easy to go from the rooftop, where things are easy and going well. It is when the chips are down that the real mettle and strength of the company and people come out.



Q. What brings Results International to India?

Opportunity, there is a tremendous amount of opportunity as there are a lot of international clients looking to expand their footprints in India. Since Results International is the largest M&A company, they want to expand here in India to look at possible clients. Also, there are a number of India companies who want to expand and have a global presence. They are on the lookout for opportunities to buy internationally as well. We do the scouting around for such companies to find them the right partners. Complete due diligence is done by results. There has to be a chemistry between the two companies in terms of vision.

When Results did not have a presence in India and Andrew (Kefford, President, Results International) would come down to meet a few clients, all of them would ask when we are setting up base here. We were told that they needed someone with our experience and expertise. That is what led Results to set up base in India.


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