Southern Online Services

Score: Below average

Krishnan Thiagarajan

GIVEN the price war which has been unleashed in the ISP business by both the national and state-level players and heightened competition in e-commerce and software development, the IPO of Southern Online Services may not offer adequate scope for capital appreciation.

Southern Online Services is making a public offer to part-finance its project to set up facilities for ISP operations with international gateway and for e-commerce and software development.

According to the offer document, the company's turnover is slated to rise from Rs. 8.90 crores in 2000-01 to Rs. 13.90 crores in 2002-03. The profitability projections for the same period is expected to rise from Rs. 4.16 cores to Rs. 6.38 crores. Both the turnover and profitability projections appear optimistic, given the price war which has already broken out in the ISP business (both Category-A and Category-B ISPs). Although volume growth may be assured, the forecasted margins may not fructify, as the revenue model for advertisements and commission on sale of products is still diffused.