Sify Shuts Down India World

Sify Ltd has announced that India World Communications was shut down last fiscal as there was no business for the last three years. It has also shut down Globe Travels Inc. Iowa, US and Sify Americas Inc, US for the same reason.

India World Communications acquisition was India’s biggest internet deal in dot com boom when Mr Rajesh Jain sold it to Satyam Infoway (now Sify Technologies Ltd) for Rs 499 crore.This deal was done at an historic high valuation which indeed Sify could never recover.

It has since then remained 100 per cent subsidiary of the company and ran popular Web sites such as Khel.com, Khoj.com and Samachar.com at the time of acquistion.

The closing down will not affect the services ran by India World Communications Ltd as Sify has merged various channels of erstwhile India World into Sify.com post acquisition. This includes Samachar.com, which continues to be the preferred India focused news site for the global Indian, as well as Bawarchi.com which has carved a position for itself as one of the most extensive repositories of Indian recipes on the Net.

The company for FY2008-09 reported Net Loss of $16.85 million against a Net Profit of $0.5 million in the previous year whereas Revenue was 3 per cent higher at $122 million.

The Enterprise business registered growth of 13% over the previous year, while the consumer business was 26 % lower than the previous year.The international business ended the year with an increase of 29 % over the previous year.

This clearly puts serious doubts about Sify’s operational efficiency as they continued to operate a company without any business. It might be that they had an option to merge there other web subsidiaries at a later date into the company and try to extract inflated valuation due to acquisition amount put in it by them.

Sify might be looking at similar strategy to bring its other subsidiaries under the parent company as market these days is more favourable for big internet conglomerates.