Mumbai: Advertising agency Rediffusion-Y&R has bypassed public relations (PR) companies that are part of the network of its stakeholder WPP and announced a strategic alliance with Edelman India to handle Tata group’s PR account.

The new unit, Rediffusion/Edelman, will be housed within Edelman India, according to a statement issued by the companies, and also manage PR accounts of other companies. Its mainstay, however, will be the Tata group’s account, which moved from the Niira Radia-founded Vaishnavi Communications. On Sunday, Radia announced her exit from the PR business; her name has been under a cloud for almost a year after transcripts of her phone conversations with politicians, bureaucrats, journalists and corporate executives were leaked. Some of the conversations pointed to her role in influencing government decisions.

Missing out: WPP chief Martin Sorrell. In recent years, Sorrell has tried and failed to convince Nanda to sell his stake in Rediffusion. Abhijit Bhatlekar/Mint

Details of the financial arrangement between the two companies and the size of the Tata business weren’t immediately available.

WPP owns a 26.7% stake in Rediffusion, Dentsu Inc., 13.3%, and Nanda and his partner Ajit Balakrishnan own 60%.

In recent years, WPP chief Martin Sorrell has tried and failed to convince Nanda to sell his stake.

“It’s not a secret any longer," said Ravi Kiran, former chief executive of Starcom MediaVest (part of Publicis Groupe) and a media consultant, referring to the deteriorating relationship between Rediffusion and WPP. “Even before the Airtel incident, there were reports of trouble between the partners, with WPP wanting a greater share in the agency and the Indian promoters not willing to sell."

Last year, Rediffusion lost two big accounts—Airtel and Colgate-Palmolive—to WPP agencies JWT India and Bates 141, respectively, in a move widely seen as the conglomerate turning the screws on the Indian agency that was holding out.

On Monday, Nanda, who founded Rediffusion along with Balakrishnan in 1973, said he had no plans of selling out. “We remain a majority Indian-owned company and have no plans of selling further stake," he added.

In the statement, Nanda was all praise for Edelman, which he described as one of the world’s finest PR companies.

“This will enhance our existing offerings in advertising, direct marketing through Rediffusion/Wunderman, media through TME/MPG and digital. We will be able to add greater value to our clients across their marketing and communications requirements," he said. Edelman India is part of Daniel J. Edelman Inc., an independent PR firm founded in Chicago over half a century ago.

Kiran said Edelman was a natural choice for Rediffusion because it is an independent PR company and not aligned to any advertising network.

Edelman India’s managing director Robert Holdheim said that the partnership was an ideal one because both agencies are independent and privately managed. “What’s more, Rediffusion has no ambition to be a PR firm and we have no ambition to be an advertising agency," he added.

Rediffusion wound up its PR business last year.