The board of directors of Hyderabad based Northgate Technologies, which own online businesses like social networking site, document sharing portal, Internet telephony business Globe7 and ad network Axill, have approved a plan by the company to raise Rs. 250 million through equity offerings, and/or borrowing. Remember that Northgate has been seeking a buyer for, an a couple of quarters ago, reported to have been speaking with 3 potential buyers.

While the reasons for this fund raising have not been disclosed, Northgate’s financial results for the quarter ended December 31st 2009 make for interesting reading, particularly when you look at the performance of online advertising:

Northgate reported a loss of Rs. 795.73 million for the period, largely on account of its online advertising business. Revenues derived from online advertising declined 97.82 percent for the company year-on-year, to Rs. 32.34 million from Rs. 1.48 billion for the corresponding quarter the previous year. The segment reported a loss of Rs. 770.27 million for the quarter, compared to a profit of Rs. 212.45 million reported a year ago.

However, please note that the company has scaled down its operations in online advertising, and believes that it has reached a sustainable scale of operations now in order to meet operating expenses.

Perhaps a services business might be better for them: Earlier in March 2010 (pdf), their subsidiary Social Media India, had launched the JNTU Kakinada University Information System and email service in Hyderabad, providing email to 200,000 students and staff.

— Three Potential Buyers For Bharatstudent; Net Loss At Rs. 170M
Updated: Northgate Looks To Sell Bharatstudent; ADAG Denies Acquisition Plans