RK Swamy bets on strategy amid shrinking ad spends

When RK Swamy Limited launched its Brand and Marketing Consulting Group last week, the move signalled more than just the addition of a new vertical. It was a calculated pivot by one of India’s only listed integrated marketing services firms, aimed at sustaining relevance and profitability in a climate where many marketing budgets are in retreat, and global competitors continue to outmuscle local players with deeper pockets.

Founded over five decades ago, RK Swamy Hansa Group has evolved alongside the Indian marketing landscape. With its listing on the main board of the NSE and BSE in March 2024, it became the first Indian-owned, integrated marcomms firm to go public—an outcome of both legacy and necessity. But public scrutiny has its costs.

The company’s Q2 FY25 results revealed a 63.6% drop in EBITDA, alongside declining revenues and profits. For a company that raised INR 423 crore in its IPO and emerged debt-free, such numbers invite deeper inquiry into how it plans to future-proof itself and weather the sector’s cyclical slowdowns.

Understanding the Q2 Miss

Talking to Campaign, RK Swamy’s executive group chairman, Srinivasan K Swamy, attributes the sharp drop to a “one-off project” from the previous fiscal year that was not renewed. “We had a major project in 2023-2024, which was a one-off project, which caused a spike for the year. That project did not come the following year,” he explains.

The impact of this gap will be fully visible when the company releases its Q4 FY25 results on May 21. “But the fact of the matter is that the company is going to do many things… We will catch up,” Swamy says, while staying within the legal confines of the company’s silent period.

The near-term revenue shortfall also coincides with a challenging macro-environment. From FMCG and retail to auto and BFSI, many of the industry's top advertising categories have reported subdued earnings and marketing pullbacks over the past six months. For a company like RK Swamy, which services over 400 clients through its group companies Hansa Customer Equity and Hansa Research, this environment demands not just operational resilience but strategic reinvention.

Investing to compete with the giants

A significant part of RK Swamy’s strategic reinvention revolves around prudent capital deployment. According to Swamy, three clear priorities guide the use of IPO proceeds: technology architecture, market infrastructure, and content production capabilities.

“Our business is moved from one-to-many to one-to-one. Our focus is going to be around developing infrastructure for these one-to-one projects,” says Swamy.

Some of these investments have already materialised. The group opened a customer experience facility in Navi Mumbai, expanded its Computer-Aided Telephone Interview (CATI) stations from 400 to 746, and continued investing in digital content production. “We created over 4,000 films in the last year, including short-form videos. Short form video is very prevalent, and we have no industry infrastructure,” he explains.

According to the company’s FY2023-24 annual report, INR 21.74 crore was earmarked for expanding customer experience centres and CATI infrastructure. While these investments have created a temporary drag on resources, Swamy notes they are essential groundwork.

“This year, we have invested in market infrastructure, which can create a drag on resources for the current year. But next year, we only should be able to see results to some extent,” he points out.

Beyond infrastructure, the company is also eyeing acquisitions to level the playing field with global holding companies. “Publicly listed companies have the flexibility to go ahead with mergers by issuing shares. I’m not saying we’re doing it, but that option is there,” he says.

He also underscores the agility of being a homegrown company: “We don’t need to worry about getting approvals from bosses sitting in New York or London… We took a decision about launching the brand and marketing consultancy group within a couple of months.”

A local lens for local brands

The newly launched ‘Brand and Marketing Consulting Group’ is being envisioned as a culturally nuanced alternative to global consultancies. Helmed by VV Vijay Gopal, the new CEO of the vertical, the group will combine brand strategy, digital experience, communication, data analytics, and consumer insight capabilities—all of which the group has deep experience in.

“We have a defined set of solutions to address specific brand and marketing situations,” Gopal explains. These range from entering new markets and raising competitive barriers to refreshing brand identities and optimising marketing spends. “We will offer our new service to [our existing 400-plus clients] and to the broader market. We intend to build a robust practice and put a strong foundation for the future of Group.”

Shekar Swamy, managing director and group CEO, adds, “We are vested deeply in the Indian market… The new Consulting Group will dive deep and produce practical solutions; this is what we commit to delivering for clients.”

This indigenous approach, according to Srinivasan Swamy, is what differentiates them. “I am really proud that we are an Indian company which understands the market and has the flexibility to do what we do,” he says. While global brands may look at India through a macro lens, RK Swamy believes it can leverage decades of local insight to craft more grounded and effective brand strategies.

Positioning for strategic conversations

Where the new division truly aims to shift the needle is in reframing the agency-client relationship. “The first starting point is to go engage with them more as a marketing partner than an advertising partner,” Swamy says. “Today, when you go as an agency some of the thoughts that we express generally, we don’t charge for it. Now, we can say that we have this expert group who can actually deep dive into this as a marketing partner and tell you exactly where you can make more money.”

He offers an example involving a cement brand. “We advised a cement brand that it need not to price itself as a commodity to compete with Ultratech, but can price themselves as Ultratech+10. That helped them increase 20% of their revenues… Because of the profitability they will have for 20% of the portfolio, the stock market also treated them well.”

Such demonstrable business impact is what the company hopes will help it compete with the likes of McKinsey, BCG, and the Big Four consultancies, who often dominate boardroom discussions. “Clients often say, ‘run it past RK Swamy,’ which reflects a level of trust, so our credibility level is relatively high. Sometimes the board of directors get taken in by some of the big names, but at the MD level, they want to take our views, which is more rooted in reality.”

Given the dominance of MSMEs in India’s economic fabric, it would be natural to expect RK Swamy’s consulting arm to tap into this market.

But Swamy is candid about the challenges. “The problem with SMEs is that they don’t have the scale and money… The entrepreneur of any company with less than INR 100 crore turnover is themselves the consultant. They are very smart people and don’t need us,” he notes.

That said, the company may still find opportunity among mid-sized enterprises, especially those seeking to scale. However, creating scalable, cost-effective consulting formats for this segment will require a rethink of traditional service delivery models.

Future outlook: Not in words, but in actions

RK Swamy is in its legally mandated silent period until May 21, ahead of its Q4 FY25 earnings. This means it cannot make any forward-looking statements, revenue projections, or speculative remarks on business performance.

However, its recent moves—including doubling down on infrastructure, repositioning itself as a marketing partner, and creating indigenous solutions for Indian brands—are indicative of a company in active transformation.

For now, the group’s ability to stay agile, build for the long haul, and reposition itself beyond the transactional agency-client dynamic will determine how it weathers both cyclical headwinds and competitive pressures. The success of its new consulting vertical, in particular, could be a bellwether for how India’s homegrown firms compete in a consulting world still heavily influenced by multinational dominance.

With the launch of its Brand and Marketing Consulting Group, RK Swamy has thrown its hat in the ring—not just as a service provider, but as a strategic partner. Whether India Inc. bites remains to be seen. But in a market where agility and cultural context often trump pedigree, the Swamy-led firm might just have a few advantages its global competitors lack.