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Two auto web sites & One promoter

Shyam G. Menon

MUMBAI, Feb. 13

INTRIGUING are the ways of the Web. Quite so if last week's equity structure shifts at two automotive Web sites are looked into.

A few days back, the Mahindra & Mahindra Ltd (M&M)-promoted Automartindia.com decided to divest 20 per cent of its equity to the Mumbai-based vehicle dealership, Sah & Sanghi, for an as yet undisclosed amount. On Thursday, the Web site followed it up wit h a `strategic alliance' with Rediff.com, considered to be India's most visited portal.

The move gives Automartindia.com two main benefits. As Mr. Nikhil Raghavan, CEO of Automartindia.com said, the Web site which went online last September hosting used vehicles transactions, will add new vehicles to its range. That shift could be difficult if the site was closely identified with a manufacturer.

Sah & Sanghi, on the other hand, are automobile dealers (not M&M dealers). They bring distribution expertise, which M&M lacks. And what is the site's long-term goal? Mr. Raghavan said that any Indian who wants to do an automotive transaction on the Net s hould want to do that at Automartindia.com.

About the time the site revealed its 20 per cent divestment to a dealership and alliance with Rediff.com, another automotive site, Indiacar.com, was undergoing similar flux.

Promoted and kept going with an initial investment of Rs. 1.25 crores by Mr. Ashwin M. Sanghi, Director & CEO, Vitesse Ltd, it divested 30 per cent of its equity to Kotak Mahindra Finance Ltd (KMFL).

Mr. Sanghi belongs to the M.K. Sanghi group, cousins of Sah & Sanghi's promoters, and both families are related to Mr. Motilal Sanghi who began the family business in Jodhpur.

Like Sah & Sanghi, Vitesse is a vehicle dealership. But what Automartindia.com seeks through tie-up, Mr. Ashwin Sanghi claims to have already brought to Indiacar.com with his dealer-oriented thinking.

The site is backed by links to over 500 dealers (the more online dealers and financiers, the higher a customer's bargaining power) and incorporates features such as surround video gallery that allows surfers to see a vehicle from all angles and even expe rience its insides.

However, unlike the Rs. 4,225-crore M&M's parentage for Automartindia.com, Mr. Sanghi admits that he was facing a tough time after sinking over a crore of rupees from his own kitty into the site. KMFL entered at the right time.

Yet both he and Mr. Deepak Gupta, Executive Director, KMFL, say that Indiacar.com is not handicapped by its lack of tie-up with a large portal.

Riding a large portal's huge traffic with its share of casual visitors is not what Mr. Sanghi seeks. He is after visits that hold promise for transactions. High visibility is secondary. Mr. Gupta, whose company spent Rs. 2.7 crores to pick up the 30 per cent stake, is comfortable with that.

``It is a very commerce-related model,'' he said of Mr. Sanghi's effort to create a vertical portal that is horizontal within.

Mr. Sanghi added that he too had a chance to tie-up with Rediff.com, but preferred not to as the investment required was better spent on his site itself.

KMFL's investment was cleared at the board level, sources said. Originally Kotak Capital Management Finance Ltd, KMFL got the `Mahindra' in its name when Mr. Harish Mahindra and Mr. Anand Mahindra joined its promoters in early 1986.

With Mr. Anand Mahindra now Managing Director of M&M and Chairman of KMFL (since mid-December 1999), the Automartindia.com versus Indiacar.com story is interesting for the contrasting Web views of two companies, sharing the same promoters. ``It is just a coincidence,'' sources said.