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NetAcross plans US subsidiary

The subsidiary will assist the parent market its products in the US and carry out research and development. It will also enable NetAcross to issue attractive employee stock option schemes.

T O D A Y

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The overseas subsidiary is expected to be in place by the end of March and NetAcross Managing Director Manish Modi has plans to list it on the NASDAQ.

"Having a subsidiary in the US will enable us to transfer employees from India to the US and vice-versa. This will not only aid their personal and professional development, but will also go a long way in ensuring greater employee loyalty. Besides, we will offer employees stock options in the US based subsidiary as an additional sop," Modi said.

"It is difficult to have a proper employee stock option scheme in India as our laws do not allow a company to buy-back its own shares. But we have instituted a trust called the NetAcross Stock Option Trust for the purpose. Affairs of the trust are managed by the employees themselves," he added.

To a question as to how the current stock option scheme will benefit the company's employees since its shares are not listed, Modi said, "In the absence of a stock market price, the trust will buy an employee's shares at the prevailing book value of the company. However, by the time such an eventuality arises, we may be listed on an Indian bourse. We are likely to have an investing partner soon, who would be allocated equity at a substantial premium. Since this partner would want an exit in say, three to four years, we may decide to go public before that. When that happens, I am sure NetAcross will enjoy high valuations and employees would stand to benefit immensely."

On the need to establish an US-subsidiary, Modi said, "As the US accounts for over 70 per cent of our revenues, it is essential for us to have a sizeable presence there. It is important from the point of view of marketing our products effectively. Besides, it is best to have an R&D facility where the domain knowledge is. While the facility will also carry out development work, its most important role would be in ensuring a successful transition of a product from its beta-stage."

The beta-stage is the phase in the lifecycle of a software product where it is ready to be tested by its users.

Though the overseas market will continue to contribute the bulk of the company's revenues, it is also concentrating on consolidating its position in the domestic market.

NetAcross is the pioneer in providing Internet and intranet business solutions in the country and is the only such company with a product focus. The company has identified four segments to focus on. These are banking and finance, travel and tourism, media and entertainment and distribution and logistics.

Its Bombay office should be operational by the end of February.

- Compiled from the Indian media

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