Arvind Kajaria, Managing Director, Intrasoft Technologies Ltd. Aged 45 years, he is a resident Indian national. Mr. Kajaria graduated with a Bachelors Degree in Commerce from Calcutta University and graduated with a Bachelors Degree in Business Administration from Adelphi University, New York. He has over 20 years of experience in finance, accounting, marketing and management. Prior to joining the company, he was engaged in his family business of providing financial services and manufacturing. He has been a member of the Board of Intrasoft Technologies Ltd. since 1999. His current responsibilities include providing strategic inputs for the growth of the company. He is a member of the international fraternity of Delta Sigma Pi, an award winner of Dale Carnegie Training and the former president of the Young Entrepreneurs’ Organization, Kolkata.
Since inception in 1997, Intrasoft Technologies Ltd.’s strong foundation in human expressions has enabled it to understand people, emotions, cultures, religions and all that lies therein. This in turn has enabled the company to extend its creative line of offerings to a whole new array of expressional deliverables. Intrasoft Technologies sees opportunities in relationships. It aims to provide content that capture expressions identifiable with various cultures, values, religions and emotions. Human Expressions is the soul of 123Greetings. Backed by the flexibility of next generation technologies, Intrasoft Technologies’ strategy is to develop advanced global delivery models that are simple and secure whilst enabling it to deploy newer services to meet the needs of a rapidly expanding website.
Speaking with Hemant P. Maradia of India Infoline, Mr. Kajaria says: "Part of the IPO proceeds is going to be deployed in pursuing inorganic growth and alliances."
When do you expect to hit the market with IPO?
That has not been decided as yet. We are still waiting for the SEBI approval. We propose to issue 37 lakh shares at a dilution of 25%.
How do you intend to use the IPO proceeds?
The company expects to invest about Rs351.56mn in FY10, FY11 and FY12 in order to establish a corporate office in Kolkata, branding and promotion, and in technology infrastructure.
We expect to invest Rs95.8mn for branding and promotion initiatives through online advertisements, Rs88.14mn for television advertisements and Rs17.63mn for radio advertisement. The company proposes to purchase hardware from about 5.5% of the net amounts allocated towards the identified objects of the IPO. Hopefully, we should get the SEBI clearance in a few days.
What will be Intel’s stake in the company post the IPO?
12.20% of the Equity Shares after the Issue will be held by Intel Capital (Mauritius) Ltd., a FVCI registered with SEBI. Its shareholding would be exempt from the lock-in requirements in respect of pre-IPO equity share capital under the SEBI Regulations and the SEBI (Venture Capital Funds) Regulations, 1996 and would be freely transferable.
Are you exploring any other source of revenue?
We believe that our substantial user base, and our emphasis on enabling social expressions on celebratory and social occasions, makes online gift giving and related e-commerce activities a logical next step for our Website.
We are therefore exploring the possibility of offering online gift giving services on our Website. From this year, we will attach gifts along with the e-cards. For e.g. Gift certificates can be attached with your birthday card.
What is the profile of your customers in terms of nationality?
About 50-60% of the visitors are from the US; 10-20% is from India. We also have high traffic coming in from the Middle East, Europe and South East Asia.
Are you open to inorganic growth?
Part of the IPO proceeds is going to be deployed in pursuing inorganic growth and alliances. If the traffic comes in, revenues will naturally rise. That’s the whole premise of our organic growth. Going ahead, we will also have some inorganic growth.
Are you planning any new innovation?
We are continuously looking for ways to increase traffic on our web site. We think the Studio Model will boost our traffic. The Studio Model will change the way 123greetings does business. We will allow artists to post their content on our web site and compete directly with 123greetings.
The phenomenon on the web is the user-to-user contact. For e.g. people want to know what others say about 123greetings. This model will allow me to source localized universal content virtually free of cost. Local content will bring in local Ads. The product is ready. We have Beta tested it for a year. We should be able to launch the Studio Model by the end of April or in the first week of May. We always launch our products after Mothers Day in the US, which is the third Sunday because there is a lean period of three months after that. This gives us time to sort out any software-related discrepancies.
Do you provide your content to others?
We have an affiliate model. One can pull content from our web site and show it like it is your e-card. In fact, we have more than 1,000 web sites doing that with us. We split the Ad revenue 50:50. I sell my Ads, you sell your Ads.
Do you have any existing ties-ups with other websites?
In order to increase the reach of our services, we have, over the last two years, associated with popular online networking and software and portals, including Facebook and Twitter by using applications and accounts which link to our Website.
We also seek to use our knowledge of search engine optimization techniques to try and ensure that our Website is amongst the top few results for relevant search queries on search engines like google.com and bing.com.
What about marketing?
We do our own marketing. We have tied up with information brokers and intermediaries for marketing, as we can’t have a physical presence in all the nations. Local consultants do marketing for us and bring in Ads
How are you placed in terms of technology?
We have a scalable web site on Cloud Computing. We have 20,000 proprietary designs on the web. We have a big edge over any competitor. We cover the largest seasonal and everyday festivals in the world.
Do you have any plan to offer multi-linguistic products?
Currently, most of our content is in English and we believe that our new feature, 123Greetings Studio, which is currently being tested by a limited number of developers by invitation, will help us expand our reach into new geographies and new user groups since it will enable new content in other languages created by our users.
Tell us about your revenue sources?
Revenues are derived from online advertisers. Our company does not earn any subscription-based or membership-based revenue from our users.A significant proportion of our revenues are derived from overseas advertisers. In the three month period ended June 30, 2009 and in Fiscal Year 2009, 58.13% and 68.42% of our operating income were derived from overseas advertisers of which the US constituted 57.29% and 67.26%, respectively.
Our online advertising revenues are derived from the sale of advertising space on our Website, email based advertisements and through advertisements included within our newsletters to our subscribers.
How many advertisers have you tied up with?
Around 78 advertisers advertised with us during the three month ended June 30, 2009 and 149 advertisers advertised with us during FY09. These advertisers have entered into advertising contracts with us for periods ranging from one month to a year.
Is there any delay in payments?
We collect revenues from advertisers on a 30 to 60 days basis. There have been instances of delays and defaults in the past and delays may arise in the future as well. It is like the TV channels. Any time you switch on the TV you will see an advertisement and the channels get paid for that. Similarly, every time you see an Ad on our web site we get paid for it. So, 100% of the traffic contributes to the topline, which is why we feel the need to go for inorganic growth now to accelerate.
What kind of advertising model do you follow?
Our advertising model derives revenues mostly on fixed fee models based on price per every thousand times that an advertisement appears on our Website with the remaining through cost-per-click model and cost-per-action model.
How much of your revenue comes from online advertising?
We derived 89.91% of our revenues from our online advertising activities in FY09 and 81.92% during the three month ended June 30, 2009.
How much do you intend to spend on brand building?
We spend significant money and resources on advertising and publicizing websites. We intend to continue spending significant resources on advertising and brand-building, including about Rs201.56mn from the net proceeds of this IPO.
We also propose to seek strengthening our distribution partnerships with major internet content and service providers through integration, co-branding and joint marketing programs.
Who are your competitors?
We face competition from traditional greeting card companies in addition to electronic greeting card companies. Some of our competitors are engaged in providing paper and traditional greeting cards and similar services.
Give us an idea about the popularity of your web site?
According to comScore Media Metrix, our Website was the largest (by number of Unique Visitors) in India with a total of 1,46,08,169 Unique Visitors during the 12 month period ended August 2009. Our website received a total of 22,56,11,000 page views and 19,31,99,000 minutes during this period, according to comScore Media Metrix.
According to comScore Media Metrix, our Website was the second largest (by number of Unique Visitors) in the world with a total of 9,14,02,238 Unique Visitors, with an average of 3,94,167 daily visitors and a total of 16,00,53,509 visits during the 12 month period ended August 2009.
Our Website was listed as the fourth fastest gaining website in the world by comScore MediaMetrix in March 2008. We were also ranked second in the "Movers & Shakers" section of Alexa.com in December 2006 ranked in accordance with increase in unique users.
Brief us about your financials?
The company had consolidated total income of Rs149.36mn in FY05 while the Profit After Tax in FY05 was Rs21.95mn. In FY09, our consolidated revenue increased by 15.72% and our consolidated and restated net profit increased by 32.84% as compared to FY08.
In the three month period ended June 30, 2009 our consolidated revenue was Rs44mn and our consolidated profit after tax was Rs8.62mn. In the three month period ended June 30, 2009, we earned Rs3.22mn from advertisement and development services through the operation of 123india.com.
What is the outlook going forward?
We should be able to achieve a revenue growth similar to last year. We expect healthy growth as a lot has happened in the last 12 months. Studio has given us a lot of confidence. We have moved to the Cloud Computing concept. We are one of the leading clients of Amazon Web Services, which is a leader in Cloud Computing technology.
What is your staff strength?
We are about 90 people, including musicians, artists, visualizes, copy writers, programmers, etc. All of them are on full-time payroll. We have not outsourced our content. Every single design is owned by 123greetings.