Rediff.com bucks trend with top line growth

In 2000, when internet companies across the world were shutting shop, this start-up refused to join the crowd and continued with its operations despite the losses "� a move that defied conventional business logic at that time.

Seven years later, Rediff.com has recorded a net profit of $2 million (Rs 8.82 crore) in the fourth quarter ended March 31, 2007, an increase of 278 per cent from $0.53 million (Rs 2.33 crore) posted during the same period of the previous financial year.

Its earnings more than tripled to $0.07 per American Depository Share (ADS) on a 66 per cent top line growth, beating the expectations of Wall Street analysts who had projected Rediff.com's earnings at $0.05 per ADS with 61 per cent growth in revenues.

Its online revenues, which included advertising and fee-based revenues, totalled $6.30 million (Rs 27.89 crore) in the fourth quarter, an increase of 76 per cent compared with the same quarter in the previous year. This is more than the industry average of 71 per cent. The number of companies advertising on Rediff's website totalled 177 "� a year-on-year increase of 13 per cent. However, analysts feel that the company depends a lot on its top clients. For the fourth quarter, the company's top-10 advertisers contributed around 55 per cent of the advertisement revenue for the Indian online advertising business.

According to Rediff.com vice-president (marketing) Manish Agarwal, the company's business model has matured, which is reflected in the confidence of advertisers and users.

"This is a result of Ajit's (Ajit Balakrishnan, CEO) conviction. From day one, he used to stress on the fact that we have a sustainable revenue model and are here to stay," he said.

Agarwal says the company has also been able to shed the earlier label that it was mainly targeting the Indian diaspora. "Now we are an Indian company, and our users are mainly Indian, both in the country and across the world," he said.

Agarwal is confident of continued growth. "That is because of internet business models like ours, once the basic platform set-up costs are incurred, you can keep growing with only small additions to manpower. For example, our headcount at the end of March 2007 was 293 people, an increase of just 19 people during the year. Viewed another way, our revenue per employee is about $100,000, which is roughly double that of Infosys' $50,000," said Agarwal.

To increase its email users, the company last month revamped its website and announced free unlimited storage space. The company had then said that they wanted users to make Rediffmail as the first preference.

The company also launched a new platform Predict and Win. This platform uses neural network concepts to generate odds and allows users to predict the outcomes of various events. Last year it also acquired a start-up. "We strongly believe that Indian start-ups have the ability to produce world-class products. Our partnership with Tachyon is to help in making Rediff popular among the youngsters," said Agarwal.