‘No more pure-play Net ventures for me’

THE foray made by the Microland group into the Internet media space has not produced the desired result. Quick to see the writing on the wall the company managed to exit from Internet media space by selling its flag ship Indya.com and converting IT Space into an event management venture. Microland is now on a path of consolidation, with renewed interest in the technology/networking services business. With a refocused strategy in place, the company is set on a path to streamline business and build revenues. The company’s revenues this year are estimated to be in the range of $40-$45 million. Microland Group chairman Pradeep Kar shared some of his plans in an interview with Kavita Vivek. Excerpts:

Microland seems to have come a full circle in terms of business interests. Now with Inner Frame, Microland has moved into the networking segment from which you moved out in 1998-99. What is your comment on this?

In March 1998 we were a hardware company with close to Rs 181 crore in revenues. However, in a two-year span starting 1998-2000 we exited from hardware to move into 100 per cent services as part of our international market focus with the launch of Planetasia. You must remember that at the point of exit from the hardware business, our revenues needed to be built up from scratch. Planetasia brought on investors including ICICI, JP Morgan and strategic investors. The revenues of Planetasia last year stood at $14.5 million.

The period also saw the company’s entry into the Internet economy with IT Space, Indya.com, Media2India and Net Brahma technologies. Starting May 2000 onwards, Microland has moved into the third phase, with an aim to consolidate and rewrite certain business plans owing to market conditions.

What have been some of the key changes in the company structure?

The Internet market did not take of as anticipated and therefore the premise with which we entered the market fell short of estimates. The changes include the merger of Media2India with Euro RSCG and eVentures-promoted Media Turf, the complete sale of Indya.com and our business of organising India Internet World show moving into IT Space.

The IIW show last year brought in revenues of Rs 7-8 crore. This year it is expected to be slightly under last year’s figure. Net Brahma continues to be a player in the software space with focus on building next generation products. Our focus has also shifted from technology media segment to technology services.

With Inner Frame you seem to have come back to the networking segment.

We moved out of networking hardware business in 1998. We have always had Microland.net, which was focused on the enterprise infrastructure, security services and web infrastructure space. We transformed the business to become a player in the emerging technology services and we are one of the large players in the remote technology services segment.

What are your plans for IT Space? Can you sharerevenue projections of the group companies?

Currently the IIW business has moved into IT Space. But we may look at an option of a strategic investor/buy-out if an opportunity arises. On the revenue front we estimate total revenues of $40-45 million this year. Planetasia is expected to contribute $18 million, Inner Frame $14 million, Net Brahma $5 million, Micro Univ $3 million. As per our strategy, it is back to basics for the company at the moment. Clearly this fiscal will see us rationalising business to obtain sustained revenues.

Indya.com and the Star Buy-out. Was this a deal based on getting out of the Internet game or was it a value proposition?

Indya was a company that was valued at $180 million prior to its launch. The brand it built up was excellent. Star was our investor and had acquired 32.2 per cent of the stake earlier. Star was looking at launching its online operations through its iStar initiative which was dropped. So it made a lot of sense for it to buy-out Indya for its online presence.

For us the market conditions were changing. The question we had to answer was whether we could create more synergy for Indya (with or without Microland), with the help of Star.

The answer was yes. We sold out in a deal that gave back money to all the 10 investors who had holdings in Indya. The company has learnt a lot through the entire cycle of change. But I will not get into anymore pure-play Internet ventures again.