NFO Worldwide acquires MBL-RCG

Hyderabad-based market research (MR) agency MBL-RCG is now a 100 per cent subsidiary of NFO Worldwide, the third largest custom research company in the world. In 1993, the MBL Group Plc, (headquartered in London), bought a 40 per cent stake in MBL-RCG, India. In 1997, NFO Worldwide bought the MBL Group Plc and entered into an agreement with the subsidiaries of the MBL Group Plc to buy all outstanding shares over a period of three years. NFO Worldwide acquired MBL-RCG India in December 2000, following the completion of three years. From January 2001, MBL-RCG has been renamed NFO MBL.

This event assumes importance when seen against another interesting development in the market research industry in India. Earlier this year, Holland-based MR heavy-weight VNU acquired a majority stake in India's largest MR agency ORG-Marg when it bought out the 50.2 per cent stake held by the Business India group. With this, the $2.8-billion Dutch information services giant's stake in ORG-Marg went up from 35 per cent to 85.2 per cent. The remaining 14.8 per cent in the agency continues to be held by Titoo Ahluwalia, chairman and CEO of ORG-Marg.

Again in December, VNU bought out AC Nielsen internationally. What is interesting is that AC Nielsen is present as an independent entity in India and is fighting a pitched battle with ORG-Marg in television audience ratings. If and when ORG-Marg and AC Nielsen join forces in India, they would emerge as the biggest constellation of MR power in India, critics aver.

Talking about the implications of the new configurations arising in the Indian MR industry, John Abraham, managing director, NFO MBL India, said, "This would lead to a consolidation in the Audit and Media Measurement sector of the research industry. However, in the consultancy end of the research industry - where the bulk of the agencies operate - competition will increase. And there will be rapid growth as the Indian economy liberalises."

B. Narayanaswamy, executive director, Indica Research, has his own take. Contrary to the industry speculation that such developments will concentrate MR power in a few agencies, Narayanaswamy believes that consolidation does not necessarily cut down competition. "The industry is still in the embryonic stage and a lot of new sectors are opening up to research these days. The emergence of specialised research sectors like social research, finance, retailing and consumer zones which were never part on the research ambit, will abet competition."

While he said that mergers and acquisitions would result in localised consolidation, he agreed with Abraham that the entry of multinational companies as well as agencies would accelerate the growth of the industry. Abraham explained, "Progress in the industry depends on the type of technology and expertise that you can bring to the customers."

Talking about the benefits of the acquisition, he said, "With this, we can now access technology from the foreign partner and also leverage its relationship with multinational customers for further consolidation in India and outside." Will NFOW too benefit from the relationship? Of course, if one looks at the growth prospects.

Liberalisation has made the Indian market very lucrative for multinationals across the globe. The corollary: India has become a hub of data processing for market research. Even for NFO, growth in the region is of prime importance. Of the total research turnover last year from the Asia Pacific region, India contributed 80 per cent. The India operation also has a major stake in the Sri Lanka operation and overseas the NFO operation in Bangladesh. Thus the acquisition will allow NFOW greater penetration in MEAP (Middle East and Asia Pacific) region.

NFO MBL now plans to focus on three specific sectors in India - healthcare, IT/telecom and the financial services - to consolidate its position in the country. "A beginning has been made with IT/ telecom sector," says Abraham. "The company has been growing with at an annual rate of 35 per cent and we expect to maintain this pace." Hyderabad will remain the administrative headquarters of the agency although major investments will be made in Delhi, Mumbai, Bangalore and Madras as well.

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