Press Review >>> March 2001




SOL : A Profilable ISP - Voice & Data

Even 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.

The 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 lakh.

Satish 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.