How to avoid an overhyped company
- by admin
An overhyping company can be a real risk.
And that is exactly what happened with Internet service provider BSNL, which was caught in the middle of a massive software and software-related market-clash.
It sold a number of software products that its users liked and that are sold to large corporates, but it has struggled to compete in the sector.
A BSNl subsidiary that is owned by Tata conglomerate, Birla, was sold to a rival for $1.6 billion in 2015.
It has now lost its market share to rival Reliance Jio Infocomm, and now faces a much tougher challenge from competitors such as Reliance Communications, the parent company of Vodafone India and Idea Cellular.
On Friday, the company said it was planning to sell the company’s software to a consortium of technology players in the Indian market, and was seeking approvals from regulatory bodies in various states for the deal.
It also said it would continue to sell software to other customers in the market.
BSNll, which has about 2,600 employees and has revenues of about $5 billion, has been the victim of a sharp drop in the number of customers it has attracted in the past five years.
Birlas software had a positive return on equity of almost $1 billion in its last financial year, but has slumped in the last two years, said Satish Bhushan, a partner at law firm Cravath Swaineham Lambert.
“It is an underperforming business,” he said.
“The industry is overhypering these companies.
They have no product and are not profitable.
If you look at the revenue growth rate, the companies are not doing well.”
Birlast has sold software for companies including Nokia and Vodacom, which were bought by Indian telecoms firm Reliance and its rival Idea.
Bishnu Prasad, an analyst at the consultancy firm EY, said that Birlams software has been sold by companies that had never been successful in the industry, like BSN, and by smaller players that were not even close to the size of Birlam’s revenues.
“They are not big enough to compete with a big corporates in the world market,” Prasads said.
The biggest loser in the software-software market is Tata Consultancy Services, which is owned mainly by India’s largest company, Tata.
The company is a big player in the global smartphone and internet market.
It had about 30% of the market in the year ending March, according to industry analysts.
Bipartisan coalition, not just industry: Industry analysts say the industry has been in a state of collective paralysis.
“A government has to step in and step up,” said Prasans.
The country is in a political stalemate that could mean the end of any government.
And in an industry that has been fragmented and in a fragmented market, it could mean that there is no one company with the right product or strategy, he said, adding that this could mean no one can compete.
“What will happen if there is a disruption?” he asked.
The battle over the Birlames software was triggered when Tata Consultant Services bought Birlax, an Indian software company that was bought by Birlapedia, an online marketplace that is an arm of BSN.
Bancor, a software-and-services platform for startups, had a long-term deal with Birlabazaar.
Binnabhai Patel, the founder and chief executive of Binnapedia said that while Birlashos software has a very good track record, Bancorus software has had problems.
“There are certain problems with the Bancoras software,” he told the Indian business publication Techstar.
“Birla and Bancabhai have decided to sell their software, and that is not going to be good for Bancorum,” he added.
A spokesperson for Birlampedia said the company would continue selling Bancoran software.
Biddebi Kothari, a managing director at Bhusha, said Bancorp was not going down without a fight.
“We are going to fight it out, and if we lose, it will be because we are not willing to accept Birlos software,” Kothar said.
And he said Birlar was in talks with Bancora about buying its software.
“And we are in talks to buy Birlarbaz”, he said with a smile.
The latest Birlobes software, called Birlacom.com, is still on sale in India.
Biju Bhanav, a co-founder of Biblios, said the deal was an unfortunate situation, but that the company was not interested in buying the software.
It would be better for the users to stay with Biblos.
“I don’t think it will change our strategy,” he suggested.
And Birlo said that the deal with Tata Consultancies
An overhyping company can be a real risk.And that is exactly what happened with Internet service provider BSNL, which was…