India's Hottest Web Site Eyes U.S. Listing
Bloomberg News, May 19, 1999

Rediff.com, India's biggest Web site, which serves up everything from the hottest new Hindi movie soundtrack to recipes for chicken masala to about one million users each month, has its sights set on a Nasdaq listing.

The company, which allows users to shop for Indian music and books and even look for a mate, has yet to make a profit and doesn't expect to for at least three years. Still, it's looking to ride Nasdaq's Internet mania, which has seen other loss-making companies like Amazon.com Inc. chalk up a market capitalization of more than $21 billion.

"The Indian user base is growing dramatically, (and) we may be ready later next year to do a simultaneous listing on the Nasdaq and the Indian markets," Chairman Ajit Balakrishnan said in an interview.

The move could help propel India's Internet market and raise the numbers of visitors at Rediff.com, which counts Intel Corp. and New York-based venture fund Warburg Pincus & Co. among its shareholders.

The company says that while the number of Internet users is still small in India, it's expected to increase five-fold to five million in the next two years. Also, more than half of Rediff's users are Indians living overseas, who are more likely to plug into the Net. About 45 percent of Indians on line visit the site created three years ago, Balakrishnan said.

Rediff will join other Asian companies such as Travel.com.au, a travel site in Australia, and Pacific Internet Ltd., a Singapore Internet service provider, that have capitalized on the Internet craze in the stock market. The companies have good stories to tell, with demand for services, entertainment and communication on the Internet soaring as the world's most populous region gets wired.1/3

The number of Internet users in Asia outside of Japan will expand 35 percent a year until 2003 to reach 57.5 million customers, market researcher International Data Corp. or IDC said. IDC estimates that the Internet commerce market in Asia excluding Japan will climb to $32.6 billion by 2003 from $724 million last year.

Among the region's markets, Australia is the biggest with $432 million in Internet commerce transactions last year, said Richard Jacobson, an IDC analyst in Kuala Lumpur. IDC predicts that China and India will lead the market in 2003 with the number of Internet users.

To be sure, Rediff can expect competition from similar sites aimed at Indians like the employment site Naukri.com and indiaworld.com, not to mention global net leaders such as Yahoo!, which plans to launch a site for Indians. Also, with only two phone lines for every 100 people and only one Internet user for every 950 people in the country of about a billion, India is still only a tiny part of the World Wide Web.

What's more, "computer penetration in a lot of Asian countries is relatively low and in some markets, the Internet industry has been quite protected," said David Leow, associate director at HSBC Securities (Singapore) Pte.

Still, investors are willing to bet that profits for the likes of Rediff may not be too far away. With more than 80 million hits a month and growing revenue from advertising and on- line product sales, investors say they would like to buy a piece of Rediff's potential.

"We'd be interested," if the price is right, said Simon Holdsworth, who helps manage more than 500 million rupees ($12 million) as the managing director of ITC Threadneedle AMC Ltd. in Mumbai.

The vote of confidence from foreign investors Intel, the world's biggest computer microprocessor maker, Warburg Pincus, and a company called Draper, which together own as much as 39 percent of Rediff, is also likely to help.

Rediff said it will continue to get more than 40 percent of the Indians on the web to visit its site by giving them information, products and services they want.

That means Rediff's sports pages and chat rooms highlight the country's No. 1 sport, cricket, not soccer. It means payments for cassette tapes or movie tickets ordered on line are made by checks, not by credit cards. And it means that if someone finds the right Hindu partner through personal ads on the site they can ask the on-line astrologer to choose an auspicious day for a wedding.