Cbs India To Offer $-Based Esop

Complete Business Solutions (India), a 100 per cent subsidiary of CBS Inc, USA, is offering an operational dollar stock option to its employees for the first time in the country.

The scheme, as envisaged in its current form, will enable employees to have dollar denominated stocks of CBS Inc., an actively traded stock on Nasdaq within a few weeks.

The company has already announced the scheme, and is in the process of putting the "mechanics" in place.

Employees in India who are entitled to the stock option will be owners of CBS stock without involving any forex outgo. However, when the option to sell is exercised, employees will benefit from a net positive cash flow - the difference between actual price at which the stock was bought by the employee and the price at which it is sold.

 

Given the policy constraints which are ambiguous about Indian investors holding dollar denominated stocks, CBS India has come out with this unique solution as worked out by consulting major, Arthur Anderson.

The company does not envisage any conflict of its stock option plan with the existing policy framework as there is only a net positive cash flow of foreign exchange into the country.

We are still working on the tax aspects of the issue, says V V Sundaram, president, Complete Business Solutions (India) Pvt. Ltd.

CBS India currently employs about 1100 people, and about 20 per cent of its employees will benefit from the scheme. An integrated IT systems\solutions provider, the company offers the stock option to employees from programmer\analyst onwards who have been with CBS for atleast six months.

As CBS Inc went public only a year back, a certain portion of the capital has been set aside specifically for the purpose, and hence there will be no dilution of equity. The company may even buy stock from the market, and offer it to the employees at the option price with the difference in costs being borne by the company, says Sundaram.

According to him, the company prides in its manpower, and points out that in the last four years, hardly four employees have left the company - a record of sorts in an industry well known for its high employee turnover.

CBS is headed toward the $250 million mark in terms of turnover in 1998. The Indian operations is expected to contribute around Rs 80 crore.

At present, India operations are only an offshore arm of CBS Inc., and caters to business garnered by the US office. Existing resources do not permit us to look at domestic opportunities," says Sundaram.

However, he does not rule out the possibility of CBS India generating business of its own in the future.

Given the tremendous competitive edge that CBS India brings to the parent company, CBS Inc has drawn up a $8 million expansion plan for the current year to include expansion in terms of manpower, infrastructure and management tools.