Sify's R. Ramaraj: Needs to pull in profits ASAP

Every dark cloud has a silver lining, and for Satyam Infoway (Sify) that streaking ray of hope is its corporate services business, which includes VPNs (Virtual Private Networks), network management, VOIP, and web hosting, among others. According to IDC, Sify is the ''clear leader in vpns'', and recently the company acquired Wipro's corporate internet customers. In fact, with an operating income of Rs 22 crore for the year ended March 31, 2002, corporate services is the only profitable segment in Sify's fold. Therefore, if Sify does manage to find a buyer-BT learns several companies have been spoken to, including Reliance Infocomm, AOL-Time Warner, and General Atlantic Partners-it will be courtesy corporate services.

Still, if Sify's suitors aren't exactly eager to strike a match, it's because of the company's other businesses. Its home internet access and portal businesses, for example, lose gobs of money each year, and last year totted up operating losses of Rs 67 crore. Says T.R. Santhanakrishnan, CFO, Sify: ''Our average revenue per user (in internet access) has not grown significantly in the last three years, besides which bandwith prices haven't fallen as much as we expected.''

Sify's cash burn has come down significantly over the years (down from Rs 111.10 crore in Q1, 1999-2000 to Rs 16.4 crore in Q4, 2001-02), but there's only Rs 60 crore of cash left. If some real money doesn't start flowing in this fiscal, Sify may have to start borrowing-at high interest rates, given its financial health-next year. And that may make finding a buyer harder than ever.

-Nitya Varadarajan

EXECUTIVE TRACKING
The Big Thaw
Carrier Aircon hires some big guns in an effort to reclaim its leadership position.

V.K. Dasari (top) and N.P. Moss: The American connection

Ever since it lost its leadership position in the air-conditioner market to LG in 2000, Carrier Aircon has been quietly planning an offensive: first, in July 2001 it brought in G. Raghavan from its international ops as president (this was after the abrupt departure of former managing director Anil K. Srivastava). The buzz in headhunting circles is that the company is now hiring Neville P. Moos. Remember him? He used to head Goodyear's Indian operations before he quit in 2000 and returned home to the US.

Another exec coming back to India is Vinod Kumar Dasari, the former managing director of Timken India. Parent Timken was so impressed with Dasari that it moved him to the US to head its railway business (trains need bearings too). Now Dasari is to come back and join Cummins India as President. The company has been without a head since J.L. Deshmukh left in early 2001. With the US rail equipment market in the midst of a slowdown, Dasari is likely to find more action here.

P.S: The Wipro-Spectramind deal must have chairman Azim Premji really excited. Placement firms claim the man has taken it upon himself to find fresh (senior) talent for the firm. And he seems to have found it: Rahul Chopra, number two to N.V. 'Tiger' Tyagarajan at GECIS, is to move to Spectramind as number two to CEO Raman Roy.

-Seema Shukla

Q&A
"It's Too Early To Foresee A Gold Rush In India"

CRITICAL SUCCESS FACTORS • Access to real estate • Format • Store location • Speed of entry • Local partnership • Timing to enter specific geographic segment • Ability to dis-intermediate fragmented supply chain.

First, the good news: India comes in a respectable sixth in AT Kearney's recent Global Retail Development Index. BT's Seema Shukla spoke to Paris-based Jean Piquet, the man behind the index and a vice-president at AT Kearney to understand just what that means to organised retail in India. Excerpts:

Your study speaks of the importance of timing in retail investments. Can you give us some examples of timing that went horribly wrong?

There are numerous instances of retail investments made at the wrong time. The wrong time is in itself a combination of 'an absolute wrong time' (high risk factor, or poor economic situation), and a relative notion (an inappropriate timing for this specific retailer). When Wal Mart decided to enter the Mexican market, despite a favourable environment, it suffered tough times for the first two-three years. Why? Because it wasn't a right time for Wal Mart: one of its first attempts outside the US, inexperienced teams, and store-formats that were driven by non-food categories.

Is it time for retailers to invest in India?

It's somewhat too early to foresee a sort of gold rush in India. Investors are still frightened by geopolitical events, and there is a need for a larger platform of middle-class clients. However, based on our experience in similar environments, and based on our discussion with some retailers, it's clear that the next 18-24 months will witness the arrival of some very large global retailers in India. In summary, when isn't next Monday.

The role of our Global Retail Development Index is not to say, ''Mr Retailer, you have to go now,'' but to tell him, ''You have just enough time to prepare your arrival in India because in the next 18-24 months, India will be among the top 10 countries to be in''.

Which retail formats have the best chance of success in developing markets?

The hypermarket: 6,000 to 12,000 square metre, 60 per cent food, 40 per cent non-food, 15,000 to 30,000 stock keeping units, and aggressive pricing. That's the traditional format used by Carrefour, which is generally ranked the most successful global retailer while going overseas-ahead of Wal Mart, Ahold, and Metro. However, there are some interesting success stories around smaller formats, such as supermarkets (greater emphasis on food) that shows that the winning strategy for the future is a multi-format one.

Retail is a very local kind of business. Do you think that has marred the success of global retailers?

Retailers are generally very simple and pragmatic people. They understand that they have to adopt local behaviour and understand the local culture while entering a new market.