national ISPs struggle to make profits and news of some
closing down circulate. But, the market is not without
exceptions, ones that provide hope to a nascent industry.
One such ISP is Hyderabad-based Southern Online. In April
2000, this now-listed ISP surprised industry pundits by
announcing its fiscal 1999-00 results which showed a net
profit of Rs 40.71 lakh on a net sales of Rs 200.69 lakh.
If you call that a stroke of luck, the company's perfomance
for the half year ended September 2000 strengthens the
belief that this ISP has found a way to strike gold in
the so-called tough market. The company has already done
a revenue of Rs 205.06 lakh in the first half, twice its
revenue for the entire last fiscal. And guess what, cash
flow remains positive. This time, net profit for the first
half stands at Rs 96.57 lakh. How did it manage this?
Pat comes the reply: focus and overheads management.
company's focus was to be known as a friendly neighbourhood
ISP, the company operates only in Andhra Pradesh-presences
in Hyderabad, Vijaywada, Kakinada, Karimnagar, and Khammam.
By trying to be a one-stop shop for customers, it moved
ahead by delivering services to over 10,000 subscribers.
And what is significant is that Rs 140.82 lakh, which
is more than half of its sales for the first half of the
current fiscal, came from corporate services which includes
providing Internet access (leased lines, cable, microwave)
and other value added services. Web hosting and solutions
accounted for Rs 7.09 lakh while dial-up connections brought
in Rs 57.15 lakh. But, what actually takes the cake is
the way this company has managed its expenditure. Total
expenditure, including staff costs and other expenditure,
for the first half of the current fiscal was just Rs 86.09
Kumar, executive director of the company, is not cowed
down by the doubts raised over its performance. He attributes
success to, "One percent of luck and lots of hard
work". Kumar is an optimist. He puts the outlook
for ISPs in India as bright. While A-Category ISPs might
be feeling the crunch, B-category ISPs are making profits,
he says. For Southern Online, the key was to be not over
ambitious and to keep the operational overheads to a bare
minimum. Southern Online is a B-Category ISP that started
operations in Andhra Pradesh in May 1999. It is listed
on the Hyderabad and Bangalore Stock Exchanges.