REDF

Rediff.com India Limited (REDF)

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Rediff.com India Limited (REDF)
F2Q07 Earnings Call
November 7, 2006 8:30 am ET

Executives

Ajay Menon - IR & Corporate Affairs
Ajit Balakrishnan - Chairman and CEO
Joy Basu - CFO

Analysts

Ashish Thadhani - Gilford Securities
Sameet Sinha - Kaufman Brothers
Louis Corrigan - Kingsford Capital

Presentation

Operator

Good morning, and welcome to the Rediff.com Conference Call declaring the Earnings Results for the Second Quarter ended September 30, 2006. During the call, all telephones are in a listen-only mode. After the call, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to introduce your host for the conference, Mr. Ajay Menon, Investor Relations and Corporate Affairs Contact, Rediff.com India Ltd.

Ajay Menon

Thank you, April, and wish you all a very good morning and thank you for being with us to discuss Rediff.com’s financials for the second quarter ended September 30, 2006. I would now like to introduce you to the members of management present on this call who will take you through the highlights of our company’s performance.

We have with us Mr. Ajit Balakrishnan, Chairman and CEO; and Mr. Joy Basu, our Chief Financial Officer. As mentioned earlier, all of you are currently on a listen-in mode only. This conference call will last for about 20 minutes, and then we will be glad to answer any questions you may have.

For your immediate and ready reference, we have also posted the earnings release for the second quarter ended September 30, 2006, on our website at http://investor.rediff.com. You may well also call me at our office in India at 91-22-2444-9144, extension 202, and we will be glad to fax or email you a copy during the course of this call.
Before proceeding, I would like to mention that during this conference call, except for the historical information and discussions contained herein, statements may constitute forward-looking statements for the purposes of the Safe Harbor provision and under the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties, and other factors that can cause actual results to differ materially from those that may be projected by these forward-looking statements. These risks and uncertainties include, but are not limited to, a slowdown in the economies worldwide and the sectors in which our clients are based; a slowdown in the Internet and IT sectors worldwide; competition; the success or failure of our past and future acquisitions; attracting, recruiting and retaining highly skilled employees; technology, legal and regulatory policies; managing risks associated with customer or products; the widespread acceptance of the Internet; as well as other risks detailed in the latest annual report on Form 20-F filed by Rediff.com with the SEC.
Rediff.com and its subsidiaries may from time to time make additional written and oral forward-looking statements, including statements contained in the company's filings with the SEC and our reports to shareholders. Rediff.com and its subsidiaries do not undertake any obligation to update any forward-looking statements that may be made from time to time, by or on their behalf. These reports are available with the SEC or are available on request by emailing Rediff.com at investor@rediff.co.in.

I would now like to introduce you to Ajit Balakrishnan, our Chairman and CEO.

Ajit Balakrishnan

Thank you, Ajay, and good morning to all of you. To begin with, I would like to share some highlights in the environment in which we operate. According to the Indian government's Central Statistical Organization, the Indian economy performed strongly during the first quarter of financial year 2006-07 with real GDP growth placed at 8.9%, as against 8.5% in the same quarter a year ago. The government forecast the GDP growth will be around 8% for the current year.

Our total registered user base stood at 47.7 million users at the end of September 30, 2006, which is a 21% increase over the number of registered users during the same quarter in the prior fiscal year. Growth in the Indian mobile phone subscriber base remains steady with the addition of 24 million subscribers during the second quarter according to the Telecom Regulatory Authority of India. This takes the total mobile subscriber base to 150 million as of end September 2006. According to the same authority, the number of wireless subscribers grew by 139% during the first six months of the current fiscal year, compared to the corresponding period of financial year 2005-06.

Turning to our own performance for the quarter ended September 30, 2006, our revenues totaled $6.66 million, an increase of 53% compared to the same quarter last fiscal year. This was broken into two broad segments; India Online revenues, which grew 71% to $4.71 million; revenues from US Publishing, which increased 23% to $1.95 million.

Gross margins for the quarter increased to 80% compared to 70% for the same quarter last year. Net income for the quarter was $1.5 million, or $0.0514 per ADS, compared to net income of $51,000, or $0.0119 per ADS, during the same quarter last fiscal year.

On product innovation -- on the product innovation front, during the quarter we added a number of features to range a local search product. Fare Search, which allows users to search for and compare the lower airfares across the numerous domestic airlines, which has started, showed 41% increase in the number of searches compared to the quarter ended June 30, 2006, which was the previous quarter. To enable better travel planning for travelers with flexible dates, we added a "Lowest Fare Finder" tool to find the lowest price points for up to 90 days and for the future.

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