Corrigendum: It was erroneously mentioned by us that Ziddu is also on sale. According to the filing, while Northgate has received interest related to both Ziddu and Bharatstudent, is it seeking a buyer only for Bharatstudent. The error is regretted.
Update: In an emailed response to MediaNama, Reliance Entertainment President Rajesh Sawhney has said that the premise that they’re looking to acquire Bharatstudent.com is “Incorrect”. We’re awaiting a response from Deccan Chronicle and Northgate Technologies.
Original Story: Struggling digital company Northgate Technologies, which owns the social networking site Bharatstudent.com, Advertising network Axill and VoIP company Globe7, looking to offload Bharatstudent, according to a filing (zip) with the Bombay Stock Exchange. The company had said that they’ve been approached by interested parties for acquiring the website.
WATblog reports that the Reliance ADAG Group and Deccan Chronicle Holdings (DCHL) are in preliminary talks for acquiring Bharatstudent. No sources have been quoted, and MediaNama is awaiting a response from DCHL. DCHL, which doesn’t have much of a social media presense, operates out of Hyderabad, where Bharatstudent is also based. Reliance Entertainment President Rajesh Sawhney could not be reached for comment at the time of filing this report, while BigAdda COO Shivanand Pare declined to comment. Update: Sawhney has said that the premise that they’re looking to acquire Bharatstudent is incorrect.
ADAG sources told MediaNama that they are regularly approached by companies, being a large media and entertainment group. There had been initial discussions with Bharatstudent, but it is nowhere close to the transacton stage. Readers should keep in mind that “talks” don’t necessarily result in a sale: Reliance Entertainment was believed to be in talks with Clickjobs last year, but nothing came of it.
One can understand the need for Northgate to sell Bharatstudent and Ziddu, but not really the need for the ADAG Group to acquire the company when they’ve already got BIGAdda. Low cost acquisition of traffic and a user base may not be a bad idea, though.
Bharatstudent Restructuring? FYO8 Loss
According the filing with the NSE, Bharatstudent.com is identified as the web property of Globe7 Pte Ltd, a wholly owned Northgate subsidiary. According to previous filings from Northgate, Bharatstudent had been a property of Social Media India Ltd, which was set up to promote Bharatstudent in August 2007. There appears to have been an internal change in ownership of Bharatstudent. It’s also important to note that Northgate had bought back the promoters stake of 4% in Bharatstudent last quarter of the 2008-09 (FY09) fiscal, for Rs. 10 million.
Bharatstudent can hardly be called a success from a revenue perspective: For the year ending March 31st 2008, Social Media India, which owned Bharatstudent, had reported revenues of Rs. 9.85 crores, and a net loss of Rs. 3.96 crores.
Things started falling apart for Northgate with the advent of the global downturn. Over the last 3 quarters, the company
Jan 30 2009: Shut its Singapore branch and wrote off Rs. 20.8 million in assets, and reported a 44% decline in net profit
Feb 13 2009: Globe 7 Shuts Down Beijing, San Francisco Offices
May 17 2009: Suffered a Rs, 3.5 Billion loss, shutting down offices in Hong Kong, Singapore and Beijing, leading to fixed assets of Rs. 13,75.36 million, debt amounting to Rs.475.12 Million and gaming engines deployed on gaming portal Egglad.com having net book value of Rs. 226.43 million having been written off.