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Rediff.com  » Business » In India, social networks get users, not money

In India, social networks get users, not money

June 22, 2014 16:17 IST

Facebook, LinkedIn, Twitter had 160 mn users but made less than Rs 100 cr in 2012-13
Carlos Barria/ReutersSocial networking sites Facebook, LinkedIn and Twitter, which together have close to 160 million users in India, generated a combined revenue of less than Rs 100 crore in 2012-13, according to data available with the Registrar of Companies.

These companies do not reveal financial data for their Indian operations separately but they have to submit balance sheets to the Registrar of Companies.

Facebook India Online Services Pvt Ltd, the Indian arm of Facebook Inc that was incorporated on May 7, 2010, has about 100 million users in India. It reported a turnover from services of Rs 75.64 crore (Rs 756 million) during 2012-13, 67.86 per cent higher than Rs 45.06 crore the previous year.

LinkedIn Technology Information Ltd, the Indian arm of LinkedIn Corporation, reported a profit after tax of Rs 4.7 crore (Rs 47 million) during 2012-13, up from Rs 1.9 crore (Rs 19 million) the previous year. The company did not furnish its revenue figures but its reserves and surplus were Rs 7.14 crore (Rs 71 million) in 2012-13, against Rs 2.43 crore (Rs 24 million) in 2011-12. According to the auditors’ report, LinkedIn Technology Information Ltd’s assets in India were valued at Rs 39.75 crore (Rs 397 million) at the end of March 2013, up from Rs 33.91 crore (Rs 339 million) a year earlier.

Twitter Communications India Pvt Ltd, with around 33 million users in the country, has not submitted its balance sheet to the Registrar of Companies because it was incorporated on February 20, 2013.

Key executives of all three companies have repeatedly said India is a priority market. Facebook expects India to overtake the US in number of users. These companies have not made any inroads into China, the country with the world’s largest population.

Google, with many other businesses besides social networking, reported Google India Pvt Ltd’s revenue at Rs 2,076.79 crore (around $331 million at that time) during 2012-13. This was a jump of 78.7 per cent from Rs 1,162.19 crore (Rs 11.62 billion) the previous year, according to filings with the Registrar of Companies.

“India is still a nascent market in terms of revenue for these companies. Restrictions in China make India a priority market, and the user base here helps them increase valuation. Over the years, these companies hope to generate revenue in India. To date, most of their revenue comes from developed markets like North America and western Europe. India is a market of the future for them,” said Jaideep Ghosh, a partner at tax and audit consultancy KPMG India.

However, existing revenue streams of social networking companies might not be useful in India. According to Mohammad Chowdhury, telecom leader at another tax and audit consultancy, PricewaterhouseCoopers India, new services like those related to voice traffic might work for Facebook. And Facebook would start generating revenue once it monetised WhatsApp, he added.

“Most of them are not worried about not making money in India. This is a market that these companies believe will pay them back in coming years. Given the size and untapped opportunities, India will most likely be a revenue market for them,” said Chowdhury.

Sounak Mitra in New Delhi
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