NovaSoft bets big on risk management solution

With its enterprise risk management solution, risk management compass (RMC), ISG Nova Soft, a Chennai-based IT products and services company, expects to establish a leading position in the emerging compliance solutions market in India.

The company is in discussions with six to seven companies to provide its compliance solution RMC, which provides a central information repository and reporting environment for managing all types of risks.

The company sees market for its solution not only in companies that need to comply with revised Clause 49 of Sebi listing agreement, but also in companies that want to adopt solutions for internal controls.

Revised Clause 49 of Sebi listing agreement has been necessitated by the regulatory authority to ensure effective corporate governance. It is mandatory for all listed companies to comply with the clause by December 31, 2005.

As per the revised norms, it would be necessary for chief executives and chief financial officers to establish and maintain internal controls and implement remediation and risk mitigation towards deficiencies in internal controls, among others. This has provided opportunities for the IT companies to provide compliance products and services.

Malli J Sivakumar, vice president "� marketing, ISG Novasoft said that about 10,000 companies, listed on various Indian stock exchanges, had to go for solutions to address compliance and to establish and maintain proper internal controls. The companies that wish to get listed and to go for an IPO too need to have proper internal cont rol systems, as prescribed by Sebi, since they are seeking public funds, he added.

The market size for the compliance products and services is estimated to be around Rs 100 crore, he said.

Ken Collins, product director told Business Standard that RMC would help Indian companies adopt global best practices in compliance and also provide business benefits that include providing visibility to support executive overview and promoting accountability throughout the organisation.

Companies in US and Europe are opting for compliance solutions to figure out the risk areas, besides regulations, he said. The 'rating' has become more important in the mergers and acquisitions process and good governed company will get a better rating, he added.

ISG Novasoft recently acquired 55 per cent stake in Ireland-based GMACCM Technology Europe Ltd (GTEL), which developed RMC. The acquisition enabled ISG Novasoft to own the intellectual property rights of RMC, which offers solutions for risk management and adherence to regulations such as Sarbanes-Oxley (SOX) in the US and also the Clause 49 regulation of SEBI.

ISG Novasoft expects its enterprise risk management business to account for 15-20 per cent of the total revenue, which is expected to be between $17-$20 million by the end of this fiscal.