CtrlS to invest Rs700 crore in cloud infrastructure and data centre business

Hyderabad: CtrlS Datacenters Ltd will invest ₹ 700 crore to set up cloud data centres as it seeks to expand its reach beyond the Indian shores to the under-tapped, developing markets of Southeast Asia, West Asia and Africa.

Much of the money will be invested in data centres branded Cloud4C. The Hyderabad-based company is expanding its cloud infrastructure to 17 countries over the next 6-8 months. It has opened offices in Dubai and Sri Lanka, and is expanding to Saudi Arabia, Bahrain, Kuwait, Qatar in West Asia.

The company’s overseas foray comes at a time global companies like Amazon Webservices Inc. and Microsoft Corp. are investing millions of dollars to set up large data centers dedicated to the Indian market. Amazon, which counts Tata Motors, redBus, PayTM and Future Group among its clients, said in July its data centre will be operational by 2016. Telecom operator Vodafone Group Plc last month said it would invest ₹ 1,000 crore to set up a tier-IV data centre in India to cater to domestic businesses and enterprises.

The Indian data centre infrastructure market is expected to grow 5.2% to $2 billion in 2016 while public cloud services revenue in India will grow 31.7% to $731 million in 2015, technology researcher Gartner Inc. estimates. Of this, spending on cloud infrastructure as a service (IaaS) will total $100 million, Gartner said predicting the cloud services market to touch $1.9 billion by 2019.

CtrlS’s public cloud service, Cloud4C is the only one in India to offer tier-IV cloud infrastructure with a built-in disaster recovery, Sridhar Pinnapureddy, chairman and managing director, said in an interview. Cloud4C stores four copies of everything on its servers.

CtrlS will fund its expansion primarily through internal accruals and some debt. The privately held company generates cash reserves of about ₹ 200 crore annually, and has a debt-equity ratio of 0.5. “We can leverage that for another 0.5,” B.S. Rao, vice president, marketing at CtrlS said.

The company is also talking to private equity investors to raise capital for its cloud services division, Pinnapureddy said, without disclosing any names.

Backed by hedge fund Och-Ziff Capital Management Group LLC, which invested Rs.250 crore in four tranches, CtrlS owns 10% of the world’s tier-IV data centres. Its data centre in Mumbai is Asia’s largest in the tier-IV category.