Sreekant Khandekar
PlainSpeak with Sreekant

Madan Bahal: The improbable pioneer of India’s PR business

It is a Saturday afternoon. I am interviewing Madan Bahal in the 51,000 sq ft, three-storey head office of Adfactors PR in central Mumbai. The halls are deserted barring the security guards at the reception. It seems almost as if only Madan is at work.

We are sitting at one end of a 25-seater conference table. “Our office in Fort (downtown Mumbai) in 1984 was quite small.” Madan outlines a portion of the long table: “It was about this big – 78 sq ft for which we paid Rs 1,500 per month.”

To use a cliché, Madan Bahal, the Co-founder and Managing Director of Adfactors PR, has come a long way – and what a way it has been.

With a topline of Rs 352 crore in 2021-22 (as per ROC data), his company dominates the PR business. It is as large – or possibly larger - than the next four rival PR companies put together. Its profit before tax is a solid Rs 135 crore. Its topline has grown by 44 per cent over the previous year – a nice way to celebrate its 25th anniversary.

At an overall level, the advertising business is way bigger but it is a measure of Adfactors PR’s position that it is also larger than almost all creative ad agencies. Madan and his agency have also received a slew of Indian and international awards and recognitions in recent years.

Audacity and obstinacy, which would serve Madan well later, prevented him from getting a job. When he interviewed for a pharma salesman’s post, he refused to wear a tie, an absolute must-have in those days.

Life for Madan, now 66, began in Govandi, a village then, on the outskirts of Bombay. His father, a crane operator on the docks, used to counsel him, ‘Don’t take a job; do your own business.’ Even today, Madan clearly recalls the strong sense of community: “The whole village was my home. I would get a meal in whichever home I was playing.”

Madan describes himself as an average student who did all kinds of jobs in his growing years to supplement the family income. At age 10, he even sat at the counter of a tiny grocery store the family had set up.

While graduating in chemistry he worked at a chemist’s store. Audacity and a certain obstinacy that would serve him well later got in the way of his landing a job.

Three top pharma companies he interviewed with wouldn’t make him an offer because he turned up for the interview without a tie – then an essential part of a pharma salesman’s attire. It seemed colonial and silly to Madan who was adamant that he wouldn’t wear one.

Nearly all the top agencies in those days were part of international ad networks. He couldn’t get in there, either. Why not, I ask him. Looking back, Madan thinks it was his “irreverence”, a certain reluctance to accept authority which made employers wary.

Madan was intensely driven by curiosity. “And if you are curious, it costs very little to learn.”

When he worked as a field researcher with a market research company for over a year, he’d sit after office hours and run through tabulated data from earlier surveys just for the joy of it. And when he interned for six months at a local agency, Jaisons, he similarly devoured the files of all the work done in the past for clients. “At the end of my stay, I knew more about all the work done for the clients than anyone else at the agency,” he grins.

I have always wondered why the name of India’s biggest PR agency begins with ‘Ad’ (as in Advertising). Here is how it happened.

Fed up with trying to break into one of the big multinational agencies, in 1981, at only 25, Madan heeded his father’s advice and started an agency of his own.

In 1981, at the age of 25, Madan set up an ad agency in a trucking godown located outside the municipal limits of Thane. The startup capital was Rs 450. “We were India’s only village-based agency,” he laughs.

The first office of Adfactors (the suffix ‘PR’ would appear only in 1997) was in a trucking godown beyond the municipal limits of Thane, near Mumbai. Startup capital: Rs 450. “We were India’s only village-based agency,” he laughs.

Today the firm employs 1,380 people.

The 78 sq ft office in Fort, Mumbai. (Madan is on the right)
The 78 sq ft office in Fort, Mumbai. (Madan is on the right)

Like a pucca salesman, Madan went from door to door, knocking at shops and offices in Thane pitching for work. His first client was the local Moni’s Restaurant (which still exists, incidentally). The marketing challenge: increase footfalls at lunchtime. Madan suggested a buffet at lunch and broadcast this fact locally by distributing pamphlets to companies nearby.

“When I work for a client,” says Madan, “I turn into a maniac. I become obsessed with solving his problem.”

By the time Adfactors moved to Fort in 1984, Madan had decided to focus on retail and industrial advertising. He soon changed his mind. In the late 1980s, the IPO (Initial Public Offering) market had begun to boom. The promotion of a share issue was largely unregulated and companies spent vast sums of money advertising it in a short burst of time. It was Madan’s desire to get a piece of this action that would ultimately lead him into PR.

A clutch of specialised ad agencies had cornered the share issue market. Adfactors broke into it with difficulty. It failed with the first IPO it handled but did well with the next three. Still, compared to the other financial ad agencies, it was a fledgling. It was in the share issue market that Madan realised just how large a role PR – as opposed to advertising – can play in changing public perceptions.

Madan’s conversion to PR was nearly completed when, in 1993, Konkan Railway, under the legendary railwayman E Sreedharan, was trying to raise Rs 330 crore through a tax-free bond issue. Adfactors was not one of the agencies invited to help promote the issue. Madan says he badgered officials until, finally, they reluctantly gave him a 30-minute slot at the end of pitch-day. The presentation to the seven-member committee lasted 2 hours and 45 minutes. The next day Adfactors received a letter sealing the deal.

“There is a larger context to every assignment and PR firms often don’t get that. Especially these days I find that executives are so obsessed with quickly making a PowerPoint presentation with bullet points that they don’t see or show the larger picture.”

In his long career, Madan seems proudest of the work he and his team did on the Konkan Railway bond issue. “The innovations we tried out could become the subject of a book,” he says with satisfaction.

Madan realised that an Indian ad agency could never compete with MNC ad networks. Public relations, on the other hand, had a local context. That is why he launched a second agency, Adfactors PR, exactly 25 years ago.

Meanwhile, the share issue environment was changing. In 1988, the Securities and Exchange Board of India (SEBI) had been set up. Gradually, stringent guidelines were coming into force with regard to the nature of share-issue advertising. The wild boom days were coming to an end.

Seeing the possibilities that PR offered, Madan was faced with a big choice: Advertising or PR? Which was the right path to growth?

Madan reasoned that Adfactors could never beat the multinational agency networks when it came to advertising. It would always be a peripheral player. “It would have been like going into the Battle of Panipat with a small army. We would have been crushed,” he reasons.

PR, however, was a different matter. The context was almost entirely local: multinational agencies did not enjoy the same advantages as they did in advertising. And that is how in 1997, exactly 25 years ago, a new company, Adfactors PR was launched. (The original entity, Adfactors, still exists as an ad agency and has about 90 employees.)

Soon after the PR firm’s launch, however, Madan was consumed by the dotcom frenzy which hit India. Between 1999-2003 he launched 10 businesses simultaneously. Six of them never got off the ground. In the process, Madan burnt through most of the money he had made in two decades.

Looking back, what went wrong, I ask.

“The basic problem was that I was not a techie,” he sums up pithily. Not that all his ventures failed. Four of them are still around and are profitable but none of them attained the size he had hoped for. (It was around this time that Adfactors PR invested in brand consultancy Chlorophyll which was set up by Kiran Khalap together with the late Anand Halve and Nalesh Patil. Chlorophyll is a subsidiary.)

2003, the year he returned to Adfactors PR, marked a new phase. Since then (topline about Rs 5 crore) until now, Madan says, the company has grown at a CAGR (compound annual growth rate) of more than 25 per cent. That’s an extraordinary performance.

Madan is a great believer in focus. Adfactors PR concentrated on reputation management and financial communication in sectors like infrastructure, BFSI, energy, pharma and infotech. He consciously decided to stay away from consumer-facing businesses. “It has to do with my personality,” he explains. “I am comfortable with reason-based challenges. So sectors like pharma and infrastructure are up my street. I just don’t get fashion and lifestyle.”

“I have built this business on hard work and common sense. I have never been a networker. I have never taken a client out for a drink. The last time I hosted a party for our clients and for the media was in 2004.”

That approach changed in 2008 when the financial crisis that began in the US made its impact felt around the world. Adfactors PR lost 30 per cent of its topline. Madan reluctantly decided to enter consumer services.

Today, the firm has reached the size it has because it handles some of India’s biggest corporates at a group level: Mahindras, Aditya Birla, Godrej, Hinduja and Piramal among them.

I recall that at the height of the Tatas’ imbroglio with former chairman Cyrus Mistry four years ago, the PR mandate for the entire group was handed to Adfactors PR. Tata Motors, however, was not part of this package deal since the PR agency had had a longstanding relationship with the Mahindras. “Besides, Anand Mahindra has been a mentor since a long time,” explains Madan. However, the agency did have to let go of the Infosys business because of the direct conflict with TCS. (The only big groups missing entirely from the agency’s kitty are Ambani and Adani.)

The very term ‘public relations’ conjures images of wining and dining, doesn’t it? Madan would certainly have bristled at the suggestion had I made it. “I have built this business on hard work and common sense. I have never been a networker. I have never taken a client out for a drink. The last time I hosted a party for our clients and for the media was in 2004.”

That’s odd, isn’t it, coming from India’s top PR man?

Blunt as ever, Madan explains: “I am transactional by nature. I don’t invest in relationships.” A transactional attitude in a business that is about relationships?

That is where his partner Rajesh Chaturvedi comes in. “It is hard not to like Rajesh,” thinks Madan. “He is a natural master at building relationships. The relationship capital that he can create with clients or anyone else is at a level all of its own.”

Madan with his co-founder Rajesh Chaturvedi - the relationship man.
Madan with his co-founder Rajesh Chaturvedi - the relationship man.

I look at the roster of clients and marvel at how Adfactors PR manages the numerous conflicts that must sure arise. How does it?

“Managing conflicts has become an area of expertise for us,” says Madan. “We enter only those industries which are large and fragmented. Here, clients are less sensitive to our picking up another account than they would otherwise be if two or three players dominated the space.”

Many things have changed in the reputation management space but many others have not. Most businesses consider hiring a PR firm only at times of crisis or disruption – an impending IPO, a merger or a scandal, perhaps?

Madan equates the reputation of a corporate with the health of an individual: “They approach a PR specialist when a heart attack is imminent or has already hit them.” He is dismayed that, after all these years, “the value of reputation as a strategic differentiator is not appreciated.”

He is excited by the possibilities that the rise of online offers to the business. “There is an exponential increase in the ways in which I can target an audience. There is a higher degree of science now and you could tailor the message to, say, even a specific WhatsApp group.

That may be true in theory, I respond, but are firms like his crafting such specific communication for each channel or target segment? Is it even viable?

“To be honest, we are far from exploiting the full potential that online offers our business,” he readily admits.

He uses the example of the Pune-based YouTube sensation, financial analyst Rachana Ranade, to make his point about the limitless possibilities that online offers. “With more than four million subscribers she has thrice the reach of all the Indian business publications in print,” he says with a wicked grin: “I am no longer dependent on any one media vehicle to deliver my message.”

As for Covid, it has created a demand explosion for PR. Whenever there is change or disruption, a company’s need to communicate increases. Be it an airline wanting to tell the public about new guidelines or schedules or another company wanting to talk about its response to climate change.

The PR business is suffering a crisis of leadership, thinks Madan. It is left with many mid- and senior-level managers who have become redundant. Many executives are living 10 years in the past. “This isn’t a business of issuing press releases,” he says scathingly.

Could Adfactors PR continue to maintain its scorching pace of growth, I ask.

The challenge is not the demand for PR services but the quality of people that the PR business attracts, thinks Madan. “We are losing thousands of junior and mid-level executives to startups.” On the other hand “the PR business is left with many mid- and senior-level managers who have become redundant.”

He says that “the business is suffering from a crisis of leadership. We don’t have enough intelligent leaders with a data orientation. Only people like these can help us find the solutions that our clients need.”

The world has moved on and PR folks are stuck 10 years in the past, he believes: “If we want clients to take us more seriously, we should be able to define their problems in more strategic terms. This business is not about issuing press releases. That is only a small part of what we do.”

Do he and Rajesh consider exiting the business? They would undoubtedly get a fabulous valuation for the company.

“Whatever we do, we are not going to sell to an international network,” Madan declares emphatically. “If you look at the entire marcomm space, all the large agencies have been bought out by MNCs. It is so sad that in a country of 140 crore people, there is hardly any major Indian player left.”

So what are your options, I insist on knowing.

“We will run the company for as long as we can and when we think we can’t do it any longer, maybe we will hand over the keys to the people who run the place.” He says he has done something similar with some of his dotcom ventures and may well do it with his greatest creation.

If this does come about, Madan Bahal’s exit will be no less dramatic than the manner in which he built up Adfactors PR.

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