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April 10, 2008

Profile of Rural IT-focused Comat Tech

Outlook Business has a profile of the Avigo Capital- and Intel Capital-backed Comat Technologies which is taking technology to rural India.
According to Raghavan, the company invests Rs 1-1.5 lakh to set up an RBC—which means breakeven takes less than a few months! And that’s why the company is already making profits. "We should end the year with a couple of million dollars," is all Raghavan is willing to say on the subject. Future expansion is likely to be funded by a stake sale to VCs (Hughes and Intel Capital reportedly invested $5.5 million in the first round and negotiations are on for the second round of funding).

Comat plans to expand its portfolio of services. It recently tied up with insurance major LIC to offer rural insurance services. A similar tie-up has also been finalised with ICICI Lombard for general insurance. According to Pranav Prashad, Head, Rural & Agriculture business, ICICI Lombard: "The tie-up with Comat ensures a reach and at a cost of delivery that is impossible to replicate otherwise." While Comat is not the lone player in the e-governance space, it scores over bigger names like Reliance Infocomm, Wipro-Srei and Priya Informatics because of its business model.

But things haven’t been easy. The foremost challenge has been dealing with the government, which is a slow mover at the best of times. There are also challenges at the local level. "There have been instances of middlemen instigating villagers against our employees; fires partially destroyed a couple of our RBCs; on occasion we have to deal with a local politician... you learn to live with these things," says Raghavan philosophically.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.