NetSol Hopes to Modernize Pakistani Textile Industry By CARLOS MARTINEZ Staff Reporter Calabasas-based NetSol International wants to be the IT company to a growing textile industry in Pakistan, a country associated more often these days with power blackouts and desert warfare than automated manufacturing plants and markets for sophisticated software makers. The company has announced plans to blanket the country with its new Enterprise Resource Planning software and hardware system to streamline and improve that country’s textile manufacturing plants, many of which produce brand name apparel that winds up in U.S. malls and shopping centers. “There are 3,000 textile factories in Pakistan, and 300 are medium to large size that we are going to target,” said NetSol CEO Naeem Ghauri, noting the American IT industry has yet to focus on the country’s textile business. Howard I. Finelt, a veteran apparel licensing executive who has worked with Asian manufacturers, said few apparel plants on the continent have either the technical sophistication or the computer equipment to assist them in their day-to-day operations. Consequently, NetSol could have quite a challenge ahead of it in a country where rolling power blackouts are common and telephone service never mind DSL lines is often unreliable and always at a premium. “You have to go to the large volume plants to see modern equipment and state-of-the-art computers,” Finelt said, adding that the IT industry has bypassed Central Asia so far. However, he said, Pakistan could be a boon to NetSol if its equipment is well marketed to the hundreds of medium to large factories there. The information technology service provider and software maker plans to license its ERP package for $50,000 apiece, not including fees for customization, support and maintenance. Ghauri won’t say how much NetSol hopes to make with its effort in Asia. The ERP package allows its users to keep track of manufacturing processes like number of finished units, deadlines and shipping information, as well as payroll, manufacturing costs and other related information. “Once in place, ERP will vastly improve production and efficiency,” Ghauri said. Since few plants have computer automation and related manufacturing processes, Ghauri said his firm will not only work with companies to obtain computer equipment, but will also aid them in customizing the ERP software to their needs. The focus on the Asian market is in keeping with a companywide restructuring after NetSol spent much of the summer in receivership due to a proxy battle with a group of shareholders that unsuccessfully tried to take control of the company in May. The controversy drew media attention when a group of shareholders, accompanied by armed guards, took over the company’s Calabasas headquarters. NetSol’s locked-out management was granted a restraining order to force the opposition group of shareholders back out again, but not before two rival boards of directors both claimed they represented the company at the same time. Eventually, on July 19, a Nevada judge ruled against the opposition shareholder group and the company was taken out of receivership. During the quarter ending June 30, the company’s fourth quarter, NetSol was unable to conduct business due to the dispute, Ghauri said. For its 2001 fiscal year, the company reported a $14.1 million loss on $6.7 million in revenue, compared to a $3.4 million loss on $7 million in revenue a year earlier. The company’s stock has been trading at about 30 cents a share in recent weeks, with a 52-week high of $9.87 and a 52-week low of 13 cents. “We have a presence in Asia that we’re growing, so textiles is a market that we feel has a lot of potential,” Ghauri said. Arun Gollapudi, CEO of Glendale-based IT services firm Systech Solutions Inc., said Pakistan and other Central Asian countries are prime markets for the growing IT industry. “There is tremendous opportunity out there with a lot of manufacturing and other businesses in need of business solutions,” said Gollapudi, whose company has expanded into India and Sri Lanka. Ghauri said the fact that there are about 3,000 textile factories in Pakistan exporting $1.9 billion in goods to the U.S. is just one reason the company is making its push. “It’s a market that is growing and becoming more modern with computers, automated systems and sophisticated communications equipment,” he said. According to the American Textile Manufacturers Association, the U.S. has closed about 300 textile plants and lost 600,000 jobs in the past 20 years, while manufacturing in Pakistan and the rest of Asia has skyrocketed due to high demand in developed countries for cheap textile goods.