SIFY: Better Times Ahead

Growth & Profitability
The profitability, which Vegesna and his team are pitching for, hinges on the company's three key divisions-enterprise, access media and portals. On the enterprise side, hosting and Network services is expected to power Sify's growth. For instance, the company has some significant wins for its hosting services in Q2 of this fiscal year as it signed enterprise customers like Royal Sundaram, NSE, SBI among others.

'People chose to move on in a market that is exploding... I did not initiate any changes in management'
-Raju Vegesna, CEO and MD, Sify

A well know Silicon Valley entrepreneur, Raju Vegesna is currently Sify's CEO and MD. His investment company, Infinity Capital Ventures, picked up 40% stake in Sify for about $100 mn in November 2005 and subsequently Vegesna was named as chairman of the Board. In July 2006, he became MD and CEO of Sify after a major top management overhaul. Six months have elapsed since Vegesna took control of Sify; how did things pan out during this time and what's in store for Sify? In an exclusive interview to Voice&Data, Raju Vegesna puts things in perspective. Excerpts:

On the company
Sify is a great company, started and built over the years by its management with many pioneering as well as industry leading standards and services. I invested in the company as a strategic investor interested in contributing to its growth and success, and brought many new ideas to the table. With about a 40% ownership, my interest lay in helping steer the company to further growth and profitability by direct involvement.

On the priorities
Now that we have grown Sify to a certain size, scale and spread, our priorities are to expand and grow profitably while continuing to invest in technology capabilities and infrastructure such as our network reach, capacity and data centers.

The first priority is profitable growth. The second is to grow with greater synergies across businesses. The focus was more on growth in the past, but now we intend to ensure greater synergies to unlock the full potential of Sify's integrated business model. The third priority is to take Sify's business international. We have businesses and capabilities across corporate and consumer services that can be offered internationally and which is something we will actively explore.

On the last six months
Over the last six months or so, we have worked to synergize teams in enterprise, engineering support and customer care to better serve our customers across consumer and enterprise. This has also brought a new focus on the market with better cross-selling capabilities. We have also taken some hard decisions to clean up the books financially so that we have a clean slate going forward. We have a very capable chief operating officer, CVS Suri and a CTO with international experience, S Bhaskar. I believe that we will complete this process by the end of this financial year and will then focus on accelerating our growth and expansion.

On the challenges
The Indian market continues to be hot, expanding at a very robust rate across manufacturing and services. So, attracting and retaining the right kind of talent will continue to be a challenge going forward for some time to come. The second challenge will be to scale fast, as this is a time of rapid growth, and I believe size will matter. The last is the regulatory challenge for I do not think the government has done enough to unleash the full potential of the Internet for India and Indians, despite its strides in fostering e-Governance.

On global expansion plans
We have also accelerated our international offerings in infrastructure management services and will continue to focus on increasing our revenues and customer base from this business. We are also looking at how we can take the iWay chain to other countries with a similar low PC penetration profile as well as how we can contribute to the development of e-Governance services, both in India and other countries.

Meanwhile, its iWay branded cyber cafes (3,559 cafes) are spread across 154 Indian cities. The company is also working towards making iWays as an e-commerce hub. For instance, the company has tied up with IRCTC to facilitate iWay users to book railway e-tickets on cash payments in iWays. On the high speed Internet space, Sify's broadband users crossed two lakh subscribers during the JAS quarter of this fiscal. Company sources claim a healthy growth on the portals' side.

While the results were good and indicate the company is on the growth path, much depends on the company's continued acceleration in areas like enterprise and broadband access. It also needs to counter the growing competition looming from competitors like BSNL and Airtel in the broadband space. Looking at the Sify's profitability patterns in the first two quarters of FY 2006-07, it indicates the new management's continued focus on the existing business lines. Analysts expect more defined changes after the end of this fiscal and if Sify was able to post a net profit for the whole year, then it means all these changes have worked in the company's favor. With lots of expectation, Sify is all set to graduate to the next orbit full of challenges and new growth opportunities.

Shrikanth G
shrikanthg@cybermedia.co.in