Riding On E-Com

Rediff

The Indian internet sector which saw hectic activity during the dotcom boom,
has been treading the path of a slow recovery unlike the West where recovery has
been much faster. This is primarily due to the low penetration of Internet in
India as well as the lack of B2B and B2C e-commerce in India. With strong
domestic economic growth and a slow but increasing acceptability of e-commerce
in India, we believe this sector is poised for better times ahead.

Incorporated in January 1996 as Rediff Communication Private Limited, it
subsequently changed its name to Rediff.com India in February 2000.
Rediff.com is headquartered in Mumbai with offices in New Delhi and New York.
The company is a provider of on-line news, information, communication,
entertainment and shopping services mainly in India and Indians overseas. In
addition to his, Rediff offers the Indian American community India Abroad, an
Indian weekly newspaper, which keeps them updated of the happenings back home.
Rediff.com came out with IPO in the year 2000 at $12 per share and the company
raised $63.5 million through the offering and commenced trading on the Nasdaq in
June 2000.

ublishing. India Online services comprises of services offered to the Indian
community in India, which includes services like ringtone downloads,
subscription services, mobile services and e-commerce. US Publishing consist of
Rediff's weekly newspaper India Abroad and online services provided to
US-based users. During the year, Rediff entered into a strategic alliance with
Yahoo to jointly promote online shopping and mobile content across both portals.
While Rediff would power the Yahoo India shopping channel, the agreement will
allow Yahoo! India to showcase its content like ringtones, polyphonic tunes,
wallpapers and Java games on the Rediff website. Rediff sold its long distance
phone card business, Valuecom to an internet telephony company, WorldQuest
Networks stating that it decided to exit this business segment in order to
concentrate on growing and consolidating its India Online and US Publishing
businesses. Rediff.com entered into a year-long advertising engagement with
WorldQuest Networks through which the latter would have exclusive rights to
online advertising space on the former's US website.

For the second quarter ended September 2004, Rediff reported healthy revenues
of Rs 13.4 crore, up 29% as compared to Rs 10.4 crore in the same quarter last
year. Revenues from India Online amounted to Rs 6.2 crore registering a 73%
y-o-y growth, contributing 46% of the total quarterly revenues. The balance 54%
of the quarterly revenues were contributed by US Publishing, earning Rs 7.2
crore, 5% growth over the same quarter for the last fiscal. The company reported
a net loss of Rs 1.8 crore as compared to a loss of Rs 6.6 crore y-o-y.
Registered users of Rediff.com grew 19% compared to the same quarter last year
to 33.3 million. The company also launched 'Pay4Clicks, a portal in India that
offers an advertising solution on the automated pay for performance platform,
which allows small merchants with little or no web presence to advertise on the
Rediff.com website with the option to receive enquires from Internet users on
emails or mobile phones as an SMS. As of September 30, 2004 Rediff.com had
a total of 220 employees in its operations in India and the US. Rediff currently
trades at $8.04 per share.

Sify

Sify Limited is the largest network and e-Commerce services company in
India, offering end-to-end solutions with a comprehensive range of products
delivered over a common Internet backbone infrastructure. This internet backbone
reaches 72 points of presence in India. A significant part of the company's
revenue is derived from corporate services, which include corporate
connectivity, network and communications solutions, security, network management
services and hosting. With global network operations at Chennai employing more
than 1,400 people, Sify provides consumer services that include broadband home
access, dial up connectivity and the iWay cyber cafe chain across 72 cities. The
company has over 900 corporate customers with national and international
operations in providing network services, data center operations and customer
relationship management.

Sify got listed on NASDAQ after its successful IPO of 4.18 million ADRs at
$18 per ADS. The stock, which was split into 4 ADS and re-converted into 1 ADS
trades at $XXX (compared to the offer price of US$18). In January 2003, the
company changed its name from Satyam Infoway to Sify Limited. Satyam holds 32%
of the stake with institutional investors holding 20%, the public holding 45% by
way of ADRs and the balance 3% by others.

The company reported revenues of Rs 86.07 crore as compared to Rs 66.37 crore
in the same quarter last year, registering an impressive 30% growth. Revenues
from corporate services rendered during the second quarter ended September 2004
amounted to Rs 48.20 crore contributing a major chunk of 56% of the total
quarterly revenues followed by revenues from more than 2000 cyber cafes in 67
cities contributing 25% amounting to Rs 21.5 crore. The broadband and the dialup
business activities of the company earned revenues of Rs 6.0 crore and Rs 5.2
crore, contributing 7% and 6% respectively. Revenues from the portals business
along with Sify's international business activities contributed 3% apiece
amounting to Rs 2.6 crore each. During the quarter, Sify acquired EAP Global, a
provider of information assurance consulting solutions globally. The company
claims that it would provide a comprehensive set of services in the emerging
area of information assurance by addressing both the domestic and global market
through Sify Assure, a newly formed business line poised to help Indian
enterprises strike the right balance between proactive and reactive approaches
to Information Assurance. The share of Sify is currently trade at $6.