labels: advertising/branding
No managment changes in Lintas India at present: Prem Mehtanews
11 May 2007

Prem Mehta, chairman and managing director, Lowe in India, better remembered by generations of ad professionals as Lintas India, talks about the agency''s stake sell-off to its partner, US-based IPG. CNBC-TV18 shares with domain-b its exclusive interview with Mehta:

One of India''s oldest advertising agencies is not Indian anymore. Lintas, the agency that created memorable campaigns like Surf''s Lalitaji and Liril has now been sold out to the US-based IPG.

After selling off the balance 51 per cent in Lintas India to its American partner, IPG, Prem Mehta, chairman and manging director of Lintas India, said it will be business as usual and there will be no management changes, at least for now.

Over the years, the stake of the American holding company IPG in Lintas India has increased from 40 per cent to 49 per cent in 2001 and now its 100 per cent. The size of the deal meanwhile remains in suspense.

According to sources, the stake sale is pegged at between $60 million to $80 million. There are reports that it could be between $100 million to $300 million.

Lintas India has a total strength of 800 employees. But only 550 of those are permanent employees or members of the ''employees welfare trust'', who stand to benefit the most. CNBC-TV18 shares with domain-b its ''s exclusive interview with Mehta:

Can we expect management changes, going forward? What is your role going to be?
I have been advised that there will be no change at all.

You said the decision to integrate was based on the changing servicing needs of global clients requiring fully integrated management and creative teams. That''s been true for the last two-three years. What was the trigger to approve the deal at this point of time?
That''s been true but the process has also been evolving as far as our clients are concerned. It has been a major consideration in the discussion and like all democratic discussions these take time to conclude.

Over the last five-seven years we have developed below the line service offerings in the shape of about eight companies, eight businesses. All of these need to get to the next stage as far as expertise, resources and client business are concerned. In these areas IPG has some major brands and assets and leaders worldwide.

We believe that the deal was pegged at between $60 and $80 million and there are media reports that it is between $100-$300 million. Who has got it correct?
I think all of them are interesting thoughts; none of them reflect the reality.

Would you want to comment on the size?
As a macro policy we cannot do that.

We spoke with Alyque Padamsee earlier, who worked here for nearly 37 years and is also a former director on the board; he believes the employees were not consulted despite the fact that 51per cent of this stake is owned by the ''employees welfare trust''?
I have a lot of respect for Alyque Padamsee, but I think his knowledge of this industry and business is restricted to what it was 15 years ago.

From a hot shop that you ran at that time, things have changed substantially. The reality is a business, and the imperatives and challenges that are faced today are very different. The relevance of this decision can be best judge by the directors on the trust board.

How does this deal really benefit IPG? We know that Lowe India is one of the most profitable offices in the entire Lowe global network, so what are the advantages of having the entire stake?
So far, IPG could not consolidate this company because of a minority holding in their global results, this will help them to consolidate fully. Part of this exercise is all about training and developing managers and building knowledge in the developing world.

This is where they intend to use the resources locally in terms of our developed training and career development systems and all of that will fall into the kitty to help them build in areas in which there are strengths here.

Lintas is really the last of the top three Indian agencies to completely sell off. Do you think IPG has been a little too late to consolidate its presence in India?
It was also an issue of the local shareholder; believing that a time had come when such a shift would be in the interest of the company and its employees. And, because the Indian shareholder believes that the time is now, that''s why the decision is taken.

We believe that you were approached by holding companies like Omnicom and WPP. Could you have sold this stake to any one of them?
Any successful organisation has many suitors and we were not an exception.

We have had a very successful relationship with IPG over the last 35 years and there was no reason for us to discuss any possibility with anybody else. Therefore we did not open any discussion with anybody.

We believe that the continuity of this relationship is a benefit and an advantage to the company. It needs to be sustained into the future because there is a very strong culture built up here and that culture, method and process needs to continue and the best way to do it is to consolidate with the partner, who respects what''s happened here, and therefore IPG.

We have seen the name of the ad agency changed from Ammirati Puris Lintas to Lowe Lintas to Lowe finally. Is it just a matter of time that all the other services could be brought under parallel IPG names?
The other businesses are brands that are offshoots of Lintas and therefore are branded accordingly. Lintas in this country is a highly respected brand for 60-70 odd years. Going forward in the IPG system there would be linkages. What manner the branding would be handled is a matter to be discussed because we must remember that the deal is not complete yet.

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No managment changes in Lintas India at present: Prem Mehta