Chennai: R Ramaraj (56) quits Sify Limited as its managing director and chief executive in pursuit of other interests. The abrupt announcement took everybody by surprise. However its timing - when the company for the second quarter in succession had hit the profitability road - and the manner in which it was made, raised many an eyebrow… a bit like citing the phrase that every company law student first learns, 'men may come and men may go; but the company goes on for ever'.

With 40-per cent stakeholder Infinity Capital Ventures wanting its representative at the helm, it was obvious that there could not be two swords in one scabbard.

Though one research report welcomes the top management changes, Indian internet industry watchers would readily agree that Ramaraj is synonymous with Sify. For he is one of Sify's co-founders and had contributed 10 per cent of the initial capital when it was started in 1995.

"In many ways we laid the path for others to travel. We were the second Indian company to get listed in Nasdaq. The first was Infosys Technologies Limited. After that it was easy for others," he recalls.

At that time there were no role models for the company to follow. The industry was new and was getting readymade managerial talent to manage the internet business was a challenge.

"We brought in achievers from different fields. They learnt the internet business and built Sify. The work environment was fantastic and the result is the brand you see today," he adds.

When one looks back the path that Sify has traversed, the IndiaWorld deal in 1999 would be the major milestone. The company acquired 13 websites for a whopping Rs500 crore. With the dotcom industry going bust, the deal didn't result in any major gains for the company. Till last fiscal, the company's turnover hadn't touched the Rs500-crore mark. Besides, many of the IndiaWorld websites do not exist.

In retrospect, was the deal a mistake? Ramaraj says it was not. "If the circumstances are the same, I would do a similar deal again." According to him, the internet at that time was a new industry and had new metrics that were different from traditional businesses.

According to him, he would refocus his energies. "The experience gained over the years has to be shared with others. I am part of the Micro Credit Foundation that helps the underprivileged. I also attend Vedanta classes conducted by Swamy Parthasarathy and in my free time will continue to play tennis and golf."

His wife Kamala teaches in Ananya, a school run by the Madras Dyslexia Association and their only son Kiron is works with one of the top three software houses in the country.

Ramaraj looks back at his reign at Sify. Excerpts:

Looking back at your tenure at Sify, what would you term as the most challenging period and how did you manage that?
The most testing period was the dotcom bust. Employees who were proud to be associated with the company started feeling a little inadequate to be associated with the internet industry. It was like plummeting from heroes to zeroes.

Further, customers too turned sceptical about the internet medium. It was a challenge to boost the morale internally as well as externally while at the same time expanding the business.

Coming to the IndiaWorld deal, how did it help the company and the investor?
If the circumstances were similar, I would do the IndiaWorld deal all over again. People saw what the IndiaWorld promoter got. One should look at what Sify gained.

When we first tapped the market, we raised $75 million by diluting 20 per cent of our equity in 1999. Soon after the deal, we were able to raise $120 million by diluting just 1.5 per cent. The issue proceeds were used to set up infrastructure and expand our business.

An original allotee of Sify's ADR at $80 who continues to hold the scrip since 2000 must have lost a lot. The market value has come down (now the scrip changes hands at the $8 band) and there has been no dividend.
Not so. Immediately after the IndiaWorld deal the market capitalisation went up to $1 billion. Further no investor holds on to his stock that long. All those who had invested have averaged their losses.

Addressing the investors, Raju Vegesna the present chairman, managing director and chief executive said that company would focus on overseas markets. Why didn't the company think of the overseas market all these years?
Our initial strategy was to build market leadership in India. The accent was on building capacity - physical as well as the human resource. And we did that. For instance, during the early days, computer penetration was very low in India. Hence we came out with the cyber café chain. Today, just 18 people manage the entire cyber café infrastructure. Now that the capacity has been built, it is just a question of scaling up.

It is also said the all these years Sify lacked aggression.
Being aggressive is a relative term. At the beginning there were around 600 internet service provider licensees. Now there are only a 100. And Sify is the clear market leader and has good brand equity. I would call that aggressive - becoming a leader in a tough market without exiting the business like most of the others.

What would you consider a major mistake during your tenure at Sify?
I would say that the management could have raised its stake in the company. But finding adequate cash was the one major constraint with the professional managers.