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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (8680)	10/20/1999 5:41:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

CompanyWatch: Logging on with Datapro Infoworld Ltd. dataproinfoworld.com Meet the Management dataproinfoworld.com Logging on *Datapro Information's strategic alliance with Verio could bring good returns to investors says Rakesh P Sharma* A turnaround story gives the risk-taking investors a good opportunity to make money. This is exactly the reason why the Datapro Information Technology (DITL) stock has caught fancy at the bourse. A change in business focus geared towards cashing in on the internet boom and a strategic tie-up with Verio, USA, the world's largest domain-based internet hosting company are the drivers for this stock. After this announcement, the stock has entered a new zone. Last week, it caught momentum hitting the upper end of the circuit filter for four days. The stock price has risen from the Rs 7 levels in August 1999 to the current Rs 28.80. Till now, DITL was providing value added E-mail services and complete corporate networking solutions. Both these businesses haven't been doing well. It reported a loss of Rs 0.05 crore on a turnover of Rs 8.24 crore for year ending March 1999. It has an accumulated loss of Rs 2.23 crore. It markets its value added e-mail service under the Xee-mail brand, which has been totally developed in-house. This business started declining after free e-mail services became available on the Internet and internet penetration increased throughout the country. The company came into the limelight in the second quarter of 1999 when Delhi-based SRG Infotec entered into an in-principle agreement with the Datapro group to pick up a stake in the Datapro group's five unlisted companies as well as the listed DITL. SRG Infotec has transferred its internet division to DITL and has got equity and fully convertible debentures in return. The consideration for this business was fixed at Rs 38 crore and SRG Infotec got a 44 per cent stake in DITL at Rs 15 per share. The equity portion works out to Rs 15 crore and FCDs take up Rs 23 crore. The FCDs will be converted within 16 months according to Sebi guidelines. This transfer brought the internet focus for the company. The next significant move for DITL was its strategic alliance with the world's largest domain-based hosting company Verio of the US, which has more than 260,000 sites hosted globally. Verio is a $120 million company growing at 162 per cent and has one of the broadest suites of products and services in the industry, including high speed connectivity, virtual private networks, managed security solutions, web hosting solutions and e-commerce. It also provides web-enhanced value added internet services like web-based faxing, unified messageing formats and voice e-mail at one point contact. Verio is listed on the Nasdaq and operates in 170 countries. Ashok Agarwal, director, Datapro and chairman, SRG, says, "The tie-up will allow DITL to act as the national distributor for all of Verio's products in India." As part of the tie-up, Datapro will offer Verio's web-related services such as domain registration, domain parking and web hosting on a shared or dedicated server as well as for managing commerce-enabled websites. The company plans to market Verio's services through its 900 channel partners and 215 education franchisee partners. Adds Rajeev Arora, chairman, DITL, "This is a phenomenal business area that will enable us to grow rapidly. We will be providing right from websites to merchant servers and bank servers with all the securities for e-trading and transaction processing." DITL is ready to provide all these web-based services on a short notice of less than 24 hours and in Indian rupees. These services are available in India but by the small entrepeneurs only. The market for web-designing is growing at a phenomenal rate. Arora says, "The revenue share with Verio will enable DITL to add a topline of around Rs 80-100 crore in the first year of operations." There are two concerns in this company. First, there are too many companies in the Datapro group, all in the information technology business. If this was not sufficient, SRG Infotec and its recent investment BITS are also in similar business. Agarwal says, "In order to bring synergies in its operations, the group plans to restructure and merge some companies. This process is expected to be completed in the next few months." This is an uncertainty. The second concern is DITL's current performance which isn't impressive. But these may not remain concerns if the company can successfully market the Verio services. Buy at declines. (Stock Select is a high-risk high-return investment). [Courtesy:The Small Investor- bs]