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Sify achieves cash break-even

By Our Special Correspondent

CHENNAI APRIL 17. Sify has reported a cash profit of $ 0.29 million (at $1 = Rs. 47.53) for the quarter ended March 2003. This the first time since its inception and 12 quarters after it went operational that Sify is reporting positive earnings before interest, tax, depreciation and amortisation (EBITDA). During the same quarter last year, it reported a negative EBITDA of $5.50 million. In the third quarter ended December 2002, it had announced a negative EBITDA of $2.95 million.

The cash profit situation, according to R. Ramaraj, Managing Director, has helped Sify to see a net generation of cash of $0.7 million, a far cry from a cash burn of $3.5 million in the same quarter in 2001-02. At the end of March 2003, the company has $22.6 million cash on hand.

The cash break-even situation has enthused the top management to announce investment of an unspecified quantum in aggressive market development initiatives in the coming months. George Zacharias, President and Chief Operating Officer, admitted that the proposed investment would result in an increase in `cash burn'. He, nevertheless, said that these were required to take Sify on a higher growth orbit. With a revenue generation of around Rs. 60 crores every quarter, Sify, he said, had acquired some respectability in terms of size.

Mr. Ramaraj indicated to presspersons that the proposed investment would come from internal generations only and flow significantly into broadband and cybercafes. The objective, he explained, was to make iway brand of cybercafes a better recognised one in the marketplace. To a query, he hoped that "Sify will be alright from the operational point of view in the coming quarters.'' Yet, he added, "there will, of course, be cash burn''.

The MD defended the franchisee model of cybercafes by Sify. The idea was to spread the iway to more cities. About the moves by the franchisees to organise themselves, Mr. Ramaraj said that should help better appreciation of each others position and result in greater co-ordination. The iway, he said, was modelled on Starbucks. He said the corporate services business would continue to be the key component of Sify, fetching 50 per cent of its total revenue. Sify ended 2002-03 with a revenue of $41.96 million, up from $33.18 million. The net loss was $27.96 million, down $151.53 million in the previous year.

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