In an exclusive chat with Campaign India, AAAI president Madhukar Kamath spoke about the road ahead for the industry body and why many of the old rules regarding AAAI’s membership may need to be rewritten as the industry prepares itself for the challenges ahead.
On achievements of AAAI till date:
-The Service Tax issue
When we took charge, we were confronted by the activities of the government and regulatory issues. We have issues on stamp duty, particularly in Maharashtra, with far-reaching implications. A number of agencies have received rather alarming notices and it has serious implications because if the Government of Maharashtra went ahead and imposed these duties, then many of us might have to organize our businesses out of Mumbai, in terms of releases, and contracts.
We've managed to rally around the ISA, the IBF, the INS and have filed petitions in the Supreme Court which advised us to approach the High Court. As we speak, a petition is being filed. That is of great importance to all of us because, otherwise, most of us will be hit with backdated stamp duties.
If you went into service tax issues, recently, agencies in Chennai were issued notices. They sought help from us, because they were hit with service tax demands from the local commissioner which said you need to pay service tax on 85% of the print billing.
A great effort was made, and again, we used the ISA's help in going up to various authorities. Finally, Sundar Swami represented us and we got a clarification from the Centre, that the 85% is not liable to service tax. On the regulatory front, BARC is meeting again today to formulate our formal reply to the TRAI recommendations.
-Tripartite agreement with INS and IBF
On the INS front, we're working on a tripartite agreement between INS, IBF and AAAI which is essentially aimed at checkmating errant clients. Clients who leave outstandings in one medium and then go into other mediums.
- Association Membership between industry bodies
We are also moving towards an association agreement with INS. In the case of the IBF, a AAAI member gets accreditation to IBF automatically. We believe, that in an association to association membership, the AAAI members will benefit because there will be differential credit period for AAAI member agencies and non AAAI member agencies. So that way we're strengthening our organization. It's better, because the membership of AAAI will be higher valued, and we'll be able to deal one-on-one.
The INS came up with a rather alarming demand for a bank guarantee of around Rs. 25 – 35 lakhs and two of our members have actually written to INS, withdrawing the INS accreditation. This is an alarming trend as it would mean that most of the smaller agencies would suffer. When they're doing Rs 100 lakhs of business, what is the rationale of a Rs. 35 lakh bank guarantee, depleting their cash flows? We are talking to INS about a differential rate for larger and smaller agencies.
-On dialogue with IBF
On the IBF front, it has been a question of mending fences, getting various people on board and putting behind the unfortunate episode of the surcharge.
More important than getting the agreement through, it is the task of aligning all the agencies to the new clauses in the agreement. I must compliment Jawahar Goel for this. Ever since he's become the chairman of the JWC, he has facilitated smoother and friendlier joint committee meetings.
- AAAI-ISA Joint working committee set up
On the ISA front, it's been a symbiotic relationship for a long time, as far as ISA and AAAI are concerned, but there's never been anything formalized. So the ISA-AAAI joint working committee has been set up. The steps we have taken augur well for the future because we've discussed the IBF request to reduce credit from 65 to 60 days. We've discussed various ways in which we can streamline the credit period process better. We're also discussing with them the question of agency remuneration.
-Discussions with IAMAI
We've initiated a discussion with IAMAI. It is an interesting mix there, because the governing body there is constituted of agencies as well as publishers, whereas technically we believe there should only be publishers. Ever since Ajit Balakrishnan took charge there, he has understood the dynamics, and he has indicated as to how that association will represent only publishers as it rightly should.
-All round representation in AAAI
We have not begun anything on outdoor and radio yet. But the long term objective is, that if all these media options form their own associations, and have an association to association relationship with AAAI, we'd be able to get back to back agreements with everybody, so that a client need not take any media or agency for a ride.
Now all this has happened during the year. Unfortunately people only see the Goafest, but look at what the entire executive committee and various members have been working on. The amount of time that people have been giving this, I must appreciate everybody on their investment of time, whether it's Lynn de Souza, or Vikram Sakhuja or Shashi Sinha or Sam Balsara or various others.
For the entire interview, read Campaign India’s issue dated 1 August 2008