Hard-selling itself as a 'precision marketing' company, distinct from multi-level marketing firm and those running ponzi schemes, Singapore-based Speakasia on Wednesday said it would start operations in India by opening three subsidiaries by August with a total paid-up capital of $21 million.
For this purpose, the company will open a permanent establishment at Goregaon in Mumbai, the first outside Singapore, and will apply to registrar of companies, the Reserve Bank of India (RBI) and the Foreign Investment Promotion Board (FIPB). The company will also look at acquiring knowledge-based and logistic firms.
Although clear that the business that it runs is allowed automatic foreign direct investment (FDI) in India, the company, fresh from the wounds of all-round attacks, will still apply to FIPB. The attacks came because the company's model is quite new and is mistaken as multi-level marketing or ponzi schemes, explained Speakasia (India) CEO Manoj Kumar at a press conference.
He said the company basically sends profile of customers to Singapore-based survey magazine Ezine through online surveys and earns revenue out of the commission, advertisement on its site etc. Its model precisely depends on sending varied profile of customers, so that manufacturers could precisely know who could be their specific targets.
To expand its operations in India, the company will also sell products of manufacturers to customers online. It will also bring content work of Ezine magazine, with which it has licensee agreement, to India. To handle these three operations — content, survey, and selling of products online — the firm will set subsidiaries. As much as 75 per cent stake in these subsidiaries will be owned by promoters of Speakasia Pte Singapore and 25 per cent by the Indian management. The company is promoted by Singapore-based Harinder Kaur.
Kumar said in multi-level marketing firms, subscribers of the company has to store products and sell them. But in their model, Speakasia will sell products to its subscribers.
As such, it will be a business to consumer model, unlike business-to-business model of multi-level marketing firms. Also, the model will differ from online marketing firms since Speakasia will also give profile of customer to companies, he said.
Currently, the company makes members by asking them to fill a form of subscribing to Ezine which costs a subscriber Rs 11,000. For every survey form that the company gives to its subscriber, it also gives them Rs 500. The forms are given twice in a week. So, 104 forms could be filled by a customer in a year, which could fetch a subscriber Rs 52,000, much higher than the cost of becoming a member of the company.
This made many think that the company is running a ponzy scheme, which is basically to give more money to a member than receiving from him by expanding the membership without any other revenue model.
The company has around two million customers right now and is eying 10 million by the end of the year. The company started operating through its online surveys in India in May last year and has earned $80.5 million in the first three quarters.
The company has been charged with duping investors and not registering itself with any authority in India. Kumar said web-based model does not require the company to register unless it has permanent establishment in India.
As to whether the company will talk to head of Investors Grievances Forum Kirit Somaiya, also a BJP leader, who has charged the company with duping the investors, Kumar said the company's model is precision marketing and not related to investors.
He said the company will cooperate with any investigative agency, but no one has approached it.