Sify's got a catch again - this time a real good one. The company has struck a deal to acquire indiaplaza.Com Inc., a US-based online shopping mall, for a valuation of more than $8.1 million, which will be paid through the issue of 4.80 lakhs American Depository Shares (ADS) to the promoters. The online shopping mall is popular amongst the Non Resident Indians (NRIs) and has a reach in the U.K., U.S., and India. This is a very important aspect since the present cyber business is mainly non-Indian, considering the internet awareness and the fear of online payment at home. The product list covers music, movies, food and grocery items, gift articles, fashion jewelry and other small items like rakhis. In the domestic market, indiaplaza.com sells more than 50,000 products, which makes it the largest shopping mall domestically.

Considering the established network of sellers and distributors indiaplaza.com has, Sify has got a good deal. The latter has been on an acquisition spree for the last few months. The latest acquisition will definitely be a good revenue model to Sify and also complementary to the indiaworld acquisition.

The company has been planning well to launch itself in the world of e-commerce, where infrastructure is the biggest bottleneck. Sify has an alliance with Verisign, a US-based company that provides digital certification service. For the banking networks, Sify is planning to make the most of its existing tie-ups with Citibank, ICICI and other banks.

As regards indiaplaza.com, the company is a good revenue earner and had recorded a revenue of $0.5 million in the quarter ending June 30, 2000. Post-deal, the company's manpower will be retained completely.

While the acquisition is a good one, hope Sify has not paid a heavy price. The reaction of Sify's investors may be an indicator of the same. Moreover, though indiaplaza.com's revenues are good, there is no mention about the net profits. Let's not forget that Sify's increase in revenues by 300 percent is as much as the fall in its net profit in percentage terms.

Tanuja R Nemivant