Infibeam to make cloud services play after Rs 450 cr IPO

Infibeam may go the Amazon route of betting on cloud services and logistics to bring in profits. Vishal Mehta, managing director of Infibeam, at a press conference unveiling the company's IPO plans, said more than Rs 75 crore would be spent on building a data centre soon.

The company, which struggled to break into the black until FY15, recorded a Rs 6.4 crore profit after tax in the first half of September 2015. Mehta said that the profits came in as the company started relying more on its services. "In cases where Infibeam is the seller on record, we have a gross margin of about 1 per cent," Mehta said. However, after logistics and some discounts it may drop back into the red.

Infibeam, which started out as a customer-facing e-commerce company, diversified to listing B2B suppliers as well. Infibeam, which typically, targeted customers in India said it will now start looking at Europe and West Asia as well to increase its customer base.

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The company also said that it invites sellers on board and asks them to list on its platform by using the BuildaBazaar (BaB) platform. BaB provides a customizable online storefront solution, which can manage everything from inventory to payment.

"This service has an open API, which means the merchant, if he wants, can list not only on Infibeam but also on other marketplaces," said Mehta.

The other part of the business, where Infibeam primarily relies on external agents, is logistics. And like Amazon, the company will be strengthening its logistics footprint to get a better hold of its customers.The company, currently, has 12 logistics centres across 11 cities and six warehouses in the country. Infibeam plans to increase its footprint and will look to connect 75 additional cities soon.

Also, taking a leaf out of Amazon's playbook, Infibeam said it had established a joint venture with Sony Entertainment to provide streaming video content, which will be called Indent. Sony Entertainment will hold a 26% stake in the service. The company is also opening its doors to live audio streaming with a product called Jive.

Infibeam had announced plans for Rs 450 crore IPO, which should list on the bourses on March 21. The e-commerce part of its business has been valued at Rs 2,200 crore. Just above 55% of the company is held by promoter and promoter groups, the rest is held by employees and their families. The company plans to issue fresh shares and said that there will be no major exits during the IPO.

The company expects to list at a price range of Rs 360-Rs 432.