Ajit Balakrishnan, chairman and chief executive officer (CEO) of Rediff.com, an Internet company based in Mumbai, made a presentation at the Asia Society on Sept 13. The meeting presented jointly by Asia Society and The Indus Enterpreneurs-New York, was part of a CEO Forum the society conducts each year.

Balakrishnan's company operates an Internet portal site, Rediff On The Net, that it claims reaches 45 percent of all online users in India. He previously co-founded an advertising agency, Rediff usion Dentsu Young and Rubicam, which has alliances with global advertising agencies. Balakrishnan also is the single largest shareholder in PSI Data Systems, a publicly listed computer consulting company headquartered in Bangalore.

Rediff.com has investments from the venture capital firm of Draper International, chip maker Intel and investment bankers Warburg Pincus. Together, the three own 40 percent of Rediff.com, Balakrishnan said. The portal Website offers a variety of features including news, entertainment, e-commerce, free e-mail, free web pages and chat rooms.

About 40 percent of the Website's users come from U.S., 40 percent from India, and the rest from all over the world, according to Balakrishnan. In May, Rediff On The Net started a U.S. edition.

In a 45-minute presentation, Balakrishnan presented the potential of the Internet in India. At the end of the presentation, he took questions. Excerpts from the Q & A:

Q : Who are your competitors?

A: The first class of competitors are traditional media organizations such as The Times of India and Hindustan Times. A second group is the Internet service providers who may want to relive the AOL life. But I believe that AOL was an historical accident. A third class is the `techies', who can put up competing sites. The fourth class is Yahoo! India and Lycos India which are expected to come up sometime soon.

Q: How soon do you propose to do the IPO?

A: I would like to put off the IPO as far away as possible, until the company stabilizes revenues in each quarter and meets all financial obligations that go with it. But there are also other reasons which make it neccessary to do an IPO sooner. In any case, it is still being decided.

We are also examining if we should do an IPO in India, or relocate the company in the U.S. and do an IPO here, or do IPOs in both countries. We should decide in the next six or nine months.

Q: Why does Rediff seek to do an IPO (initial public offering)?

A: The investment bankers, I meet give me several reasons. I myself think there are three reasons for it. Firstly, large investments are required to develop a portal site. Secondly, the company needs a currency to make acquisitions which is really the quick way to grow; and thirdly, we need to give stock options to our staff to retain top-class talent.

Q: What is Rediff's business model?

A: Right now, we get about 70 percent of our revenue from banners (advertisements) and 30 percent from e-commerce. But as we go along, I think up to 95 percent of our revenue will come from e-commerce. An acid test that we have applied to ourselves is the revenue generated per online user. Currently, it is six cents per quarter compared to about $2 per quarter for Yahoo! (based on one million unique users a month the company has claimed, Rediff's annual revenue translates to $720.000).