The income and cash flow has been in serious stress in the last month and unless there is some intervention, many businesses will either file for bankruptcy or will have to undersize considerably.
Everyone has been witnessing with growing alarm the spread of the coronavirus across the globe and in India. Our Country has been on a lockdown for a few weeks now and Governments, both Central and the States, have taken many effective steps to reduce the impact of this pandemic.
But all this is coming at a huge economic cost. The Advertising Agency business, like many other businesses have been seriously affected. The bulk of the agency’s costs are fixed in nature, be it Salaries, Rent, Electricity, Communication, Upkeep, Media Audience measurement reports, etc. The income and cash flow has been in serious stress in the last month and unless there is some intervention, many businesses will either file for bankruptcy or will have to undersize considerably.
INS and IBF, the media associations representing the interest of Print and TV respectively, have been kind enough to permit AAAI members to pay monies they have collected from their clients and not insist on what is due to them on the due dates. But the continuity of the Agencies business cannot be for long without the help of the Government of India. In this regard, Ashish Bhasin, president of AAAI has sent a detailed set of recommendations on behalf of the members of AAAI, to the Union Minister of Information & Broadcasting Prakash Javadekar. In this he has stressed the importance of advertising industry for the accelerated revival of the economy.
“What we have asked the Government is very reasonable. We want principally money that is owed to us by way of IT & GST refunds, and dues from Government & PSUs for our advertising bills to be settled immediately. We have also said that any payment made to us should not suffer any TDS deduction going forward, since there is unlikely to be any significant profit for the year. Further we have sought a direction to banks and our debtors that they provide the much needed cashflow to pay salaries and meet other essential expenses, etc,” said Ashish Bhasin. “These do not lead to any revenue loss to the Government. They just need to show a kind heart. The timely help they will provide actually is the help they are providing to the people of India, since advertising is a critical input that can provide a ripple effect in reviving many sectors of the economy,” added Bhasin.
One other recommendation made is to treat advertising expenses as an investment and have this cost amortised over the next three years. AAAI believes this will encourage larger advertising outlay which will help revive the economy faster. In the same vein, AAAI also suggested that advertising expenses could be given weighted deduction while computing taxes. The suggestion was that every Rs 100 spent on advertising, should be treated as Rs 200, while computing the taxable income.
AAAI hopes that the Government looks at the requests made with full earnest and urgency.
The Advertising Agencies Association of India (AAAI) is the official, national organization of advertising agencies, formed in 1945, to promote their interests. The Association promotes professionalism, through its founding principles, which uphold sound business practices between advertisers and advertising agencies and the various media. The AAAI today is truly representative, with a very large number of small, medium and large-sized agencies as its members, who together account for almost 80% of the advertising business placed in the country. It is thus recognized as the apex body of and the spokesperson for the advertising industry at all forums – advertisers and media owners and their associations and Government.