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    India Inc happy, will show it with higher ad spends

    Synopsis

    Post Sitharaman's sops, companies are reworking their India plans to take advantage of the incentives.

    New Delhi: Media buying and selling agencies have received a barrage of calls from their clients wanting to review their advertising plans for the festive season, since finance minister Nirmala Sitharaman announced big cuts in corporate tax rate last week. The rate cut may boost the estimated ad-spend during the festive quarter by 5-7%, in addition to the ₹28,000 crore which India Inc was expected to spend before the announcement.

    “In India advertising tends to be based on sentiments. When sentiments are low, lot of clients are in wait and watch mode. This move has completely changed the sentiments and will make a positive impact,” said Ashish

    Bhasin, chairman, CEO, South Asia, Dentsu Aegis Network. He added that the positive impact will last beyond the festive season. “Corporates will definitely have some surplus money to spare with the corporate taxes going down,” Anita Nayyar, CEO, South East Asia, Havas Media group adding that this spare money can be used to incentivize employees, boost bottom line and promote the brands.

    The positive impact of tax reduction can be felt in the immediate impact on the stock market would certainly result in festive buoyancy and return of consumer sentiments, said Sivakumar S, president Revenue, Bennett Coleman & Co Ltd, which owns The Economic Times.

    “Corporates which were focused on cost cutting would do well to leverage this buoyancy and positive sentiments to shift focus from cost savings to top line growth. The reduction of corporate tax frees up cash flows to be deployed on costs which would boost revenue. Advertising is one such key input especially during festive season to maximise consumer share of wallet,” he added.


    (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)

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    10 Comments on this Story

    DisallowFrom P & L369 days ago
    Endorsement expenses often running in the range of few hundred crores and advertisement expenses running in to close to a crore DO NOT ADD ANY VALUE. As an example, Boost that costs about Rs.220 per half kg sachet imposes a 40 Re burden on buyer that is not cost of raw materials labour manufacturing expenses distribution expenses profit margin taxes. That money goes to entertainer parasites who destroy productive hours not add any net real positive value. IT IS ABSURD THAT COMPNAIES CAN CHARGE OFF SUCH HUGE WASTED MONEY IN PROFIT & LOSS ACCOUNT and reduce their tax burden. High time, companies are asked to charge off all advertisement, endorsement expenses from P&L appropriation account before payment of dividend.
    Kavi Tanna369 days ago
    Great news, of course negative comments. Such is Indian culture.
    Abhineshwar Jena369 days ago
    NOT convincing. Let''s see what she says after another quarter passes.
    The Economic Times