S4 Capital reported its latest quarterly financial results earlier this week. Given the pandemic, the results were impressive with a 6.5% like-for-like organic revenue (reported as net revenue) last quarter.
Its year-on-year growth accelerated through the quarter, with organic revenue up 3% in April, 5% in May and 11% in June. It also posted a strong start to Q3, with 18% like-for-like revenue growth. We caught up with its director of operations in India, Poran Malani to learn about how its operations in the country have progressed over the last year.
The last time we spoke in November last year, it was difficult to set a time because of your busy travel schedule. Now, that travel has gone out of the window, what's keeping you busy at S4C?
The last time we spoke, we were looking at setting up. We had to set up MediaMonks and MightyHive. We had one employee which was me. Since then we have merged with White Balance and that took our count to 50 people. Our overall team strength is now at around 100. We are in the process of hiring another 130 and by October we should be around 230-250 people.
We are looking to hire another 130 by October we should 230-250 people. Despite the horrendous year that this has been, overall we have managed to hit more than our targets were.
70% of our business comprises of domestic clients and 30% comes from outside the country. We have seen huge, exponential growth and are very pleased at where it's going.
What have been the changes you’ve seen in the Indian market in the last six months versus the first six months of operations?
Going back six-seven months ago, we thought of social and mainline within digital; now it's more of UX, e-commerce and the likes. Now you also have to show your clients how do they work on Adobe, Google, Amazon etc., and so we are creating content likewise.
Clients are opening up and actually questioning what they have been doing in the past and moving from their comfort zone.
The GDP of the country was down close to 24%. Has this impacted advertising and when do you foresee this to change?
Advertising has been hit - there's no question about it. Brands are having to redefine their relations with consumers. Now, we have Diwali coming up and brands are wondering how they can create that feeling, expressions of the festive season. Work has been delayed as they figure it out and budgets have also been cut.
But the space, we are in – we are seeing brands needing more technology. For the big holding companies it's been a bloodbath. The retainers have been cut back. While they have been cost cutting, we are focusing on growth and have grown exponentially during this time.
Last year you mentioned you were looking at partners. Since then we've seen the merger of S4C and White Balance. Can we expect more announcements?
Not at the moment. Moving forward to 2021 we look at growth coming through content production. There are many parts of our network from around the world that can help us grow here. We are a single P&L, and we can use teams from outside of the country to bring in them here.
Having said that, I’m not ruling out any acquisitions at the same time.
There was also a problem of firms overpricing themselves. Has the pandemic changed that? Are we seeing more realistic valuations?
We haven't revisited any of those firms to find that out. But, my hypothesis would be yes there's a wake-up call because there are lesser buyers out here. There are a lot of companies in the Rs 10-15 crore level, very few are above Rs 30 crore. So, we have to look at the Rs 10-15 crore companies and see if they're scalable.
What kind of clients is S4 Capital working with in India – are we seeing clients on retainers or projects?
It’s a mix of retainers and projects. You price accordingly per project but where there's constant work you get retainers. Projects have a defined time.
Editor's note: This interview has been edited for clarity and brevity.
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