We ain’t gonna burn (cash): Rediff

Rosemary Arackaparambil

MUMBAI: Rediff.com, the leading India-focused Internet portal saw its income

surge 31 per cent last quarter, does not foresee a slowdown in advertising

revenue.

In fact, its chairman says the US Nasdaq-listed company expects to turn

profitable within the year.

Yet, should it need, the company also has $57 million in cash, enough to

finance another decade of operations at its current "burn rate,"

chairman Ajit Balakrishnan indicated during an interview with Reuters from New

York late Wednesday.

"Our cash burn in the last quarter was $1.5 million and we have $57

million in the bag, so that should see us through several years,"

Balakrishnan said.

Rediff.com's cash burn rate - a closely watched figure at money-losing

companies since it indicates how long they can operate without going bust - has

slowed from $1 million per month previously.

On Wednesday, Rediff reported that revenue jumped in October-December, and

its operational loss per American Depositary Receipt fell 24 per cent from the

previous quarter.

It also said page views soared to 670 million during the period, up 69 per

cent from the previous quarter, even as marketing expenses dropped 21.5 per

cent. The page view number is closely watched as it strongly influences the

advertising rates a portal can charge.

Radically different



Balakrishnan said the Indian on-line market situation was radically different
from the United States.

Global portal Yahoo! Inc. and Sina.com have both warned of a bleak business

outlook because advertising revenues were likely to shrink as many dotcom

advertisers go out of business.

"But in India, we are in a nascent market. People are just getting into

the Internet space," he said.

Rediff, which collects 30 per cent of its advertising revenue from dotcom

companies, is seeing a rise in Internet advertising by brick and mortar

companies, Balakrishnan said.

"People like Hindustan Lever Ltd. and Coke are setting aside amounts for

advertising on the Net for the first time," he said.

Focus on e-commerce revenue



Balakrishnan also said Rediff was working on increasing its revenue from
electronic commerce, instead of just chasing eyeballs.

Advertising revenue contributed 90.6 per cent to total revenue in the

October-December quarter and e-commerce the rest.

"In the next 4-5 years, the whole equation will reverse. Ninety per cent

will be from e-commerce and 10 per cent from advertising," he said.

Rediff, which acquired two portals last year, continues to scout for

acquisitions to enhance its product, he said.

Its Web site offers comprehensive content aimed at Indians both in India and

abroad and offers e-mail, online shopping and a search facility.

Though a leader in the Indian Internet portal space, Rediff is facing serious

competition from some international and domestic portals, Balakrishnan said,

mentioning Yahoo!, MSN, Lycos and Altavista in particular.

Satyam Infoway, the only other Indian Internet firm besides Rediff listed on

the Nasdaq, is also a stiff competitor, as are 123india.com, indiatimes.com and

indya.com.

Rediff raised about $55 million through an initial public offering in the

United States in June last year.

Its ADRs closed at $3-/ after the result on Wednesday, up $0-= over the

previous day.

(C) Reuters Limited 2001.