The size of the Indian geospatial market will change exponentially if the policies encourage creation of data and use by a common person in a free manner, as is happening in the rest of the world
Chairman & Managing Director
Rolta India Limited
Rolta is increasingly becoming solution-centric. What are the latest developments in this direction?
In a way, Rolta has always been solutioncentric and has been delivering the ultimate user experience. While this process involved third party products earlier, we have now realised that the priorities for our customers in India are very endemic and different from customers in other parts of the world. In being dependent on global software, we cannot fully address the needs of our customers in India. This realisation was the beginning of the journey that has transformed Rolta. Today, we have intellectual property rights (IPRs) not because we can own an IPR but because we can use it in a more focussed manner to address the needs of the Indian customer. We have expanded horizontally, in terms of creating IPRs, we have expanded vertically in terms of focussing on certain segments of the industry and we have built up the IPRs for those segments.
In the backdrop of slowing economic scenario globally, we see a moderation of growth in India. Inflationary trends and falling rupee are adding fuel to the fire. How, according to you, are these factors affecting geospatial industry in India?
These factors surely affect the geospatial industry, since they impact the budget. Certain parameters of projections for the budget are unlikely to be met this year. This implies pressure on the government and therefore lower spending by the government. This can defer some projects and less number of new projects coming up.
The growth projection for the country which was earlier put at an optimistic 8.5 percent for this year has gone down to 7 percent. For the next year (2012-13), it is projected to be lower than 7 percent. So obviously there are a lot of challenges in the domestic market. These challenges are being faced by all concerned – the geospatial industry faces the same constraints as everyone else.
In such a scenario, what would be the growth prospects for Rolta this year?
At Rolta, we are looking at a growth of 12-14 percent for our fiscal year ending June 2012, covering both the domestic and international markets. Homeland security and defence, our key sectors on the domestic front, are less affected by the factors mentioned earlier as they have their own priorities and budgets. We are bullish about this target despite the prevailing conditions.
A section of the media attributes slowdown to the ‘policy paralysis’ within the country. Do you think geospatial sector has been affected with this?
I fully agree with that. There are policy paralyses on many fronts. Consider the example of FDI. In spite of the good intentions of the government, where the government acted proactively and introduced a comprehensive, forward looking FDI policy in retail, there was tremendous opposition. Such things become inevitable in a democratic set up where there are always opposing views.
What according to you are the top three policy initiatives that would accelerate geospatial industry in the country?
A simple analogy is that of real estate market where the top three criteria are location, location, location. For geospatial industry, it would be a comprehensive and open geospatial policy. That is the 1,2,3 of it. This will open up the sector like nothing else. We have seen the impact of policies on the telecom sector. The telecom sector opened up due to the government bringing out enabling policies. Conversely, the sector suffered when these policies got paralysed due to various controversies. Coming back to the geospatial industry, there should be an open geospatial policy with minimal restrictions in terms of creating and using maps and related data. Such things are hardly an issue in the geospatial industry globally. This is what will make the difference. We are one of the largest nations in the world. In the geospatial arena, we are much below the developed world, only because we don’t have enabling, open policies while all other ingredients are in place including technology, manpower, will and investment.
The size of the Indian market will change exponentially if the geospatial policies encourage creation of data and use by a common person in a free manner, as is happening in the rest of the world. Take the example of automobile navigation. India has the second or third largest number of cars in the world but there are no navigation systems in cars here. Majority of cars are being manufactured here but the navigation case is blank. How is navigation possible without maps? And how would maps come unless somebody is allowed to create them? This doesn’t need investment, it just needs permission and policy.
You have recently said that about 68 % of Rolta’s focus is on the domestic front. What are the sectors that hold promise for Rolta in the next 2-3 years?
Our key sectors are defence and homeland security. In the last 8-10 years, defence has opened up significantly as a sector due to policies. It is undertaking a large strategic programme called Make India Programme. Under the programme, only Indian companies that fulfill certain criteria are allowed to participate in various projects, though they are allowed to have technology partners of their choice. These partners will supply their products and technologies to the local companies who in turn will make value additions. Those value additions – localised, customised, Indianised, will then be with the government.
In the process, the dependence of the country on a foreign technology reduces. This arrangement can be beneficial in times of war when a situation can become problematic if the country owning the technology bars us from using it. Doing away with this kind of dependence is therefore of paramount importance. A nation can’t afford strategic programmes to be hampered in times of war just because a particular country has the power to do it since they do have the authority to put certain restrictions in certain circumstances in their supply contracts.
Strategic programmes are therefore becoming Make India programmes, and these are very large programmes. The tactical communications system is a USD 4-5 billion (or INR 20-30 thousand crore) programme; battlefield management system is an INR 30-40 thousand crore programme and another programme for soldier systems is an INR 30-40 thousand crore programme. What we have is a market worth USD 20-30 billion over the next ten years. And as I mentioned earlier, only select Indian companies that meet the stringent criteria can be a part of these programmes. So we see this as a sector with tremendous opportunity and growth.
How is Rolta planning to capture this opportunity?
We have made tremendous investments in the last five years. We have acquired technologies and also developed the requisite technologies. Any technology is like raw material. One needs to make additions on top of it based on customer requirements. This is our approach – customising technology based on requirements of customers in India. So whether they are geospatial technologies, homeland security technologies or defence technologies, we have acquired all kinds of technologies and invested in taking them to the next level. Our investments have been towards strengthening our capabilities to take part in the programmes that I earlier mentioned. We have already started participating in these programmes since we are one of the shortlisted companies. We are bullish on being part of more such programmes.
Till recently, we were just focussed on the very specific geospatial aspect of the defence market, catering to a market size of INR 200-400 crore. Now with the expansion of our focus and capabilities, we are playing into a field where we are seeing opportunities worth USD 20 billion in the next ten years. In this market, even if we are playing with four other players, everybody stands to gain at least 15-20 percent of the market.
Homeland security market is also witnessing similar trend. This market has also opened up significantly. There is a tremendous need to upgrade our homeland security systems which includes modernisation of police force. Government is carefully putting in place programmes for this purpose. Let’s take an example from Mumbai, India. Mumbai police uses emergency dispatch solutions. But these have been land-based emergency dispatch solutions which are quite different from that of coastline security. There are different companies developing these solutions. We offer a blended solution. We acquired two different technologies – one for land-based homeland security solutions and one for the coastline. We integrated the technologies so that we now offer an integrated solution where land and coast systems can work in synergy with each other.
In this market, we are at the forefront in providing all kinds of solutions. These solutions are based on technologies developed by us – solutions for police modernisation, maritime security, critical infrastructure and border security. These markets themselves are worth billions of dollars over the next ten years. Even if there are ten players in this market including us, there is still enough business for everybody.
Rolta has a unique business model in acquiring intellectual property rights of cutting edge technologies. How has been the experience? How are these being leveraged with the existing capabilities of Rolta?
When we started strengthening our solution-centric model four-five years ago, it was very impractical and imprudent to build it from a scratch to meet customer demands quickly. Therefore we identified the software we required and acquired them from the source level to serve us.
One of the USPs of Rolta is that we understand the customer needs very well. We have people driving the technology not from a technologist point of view, though of course it would be great to add that feature, but from a very focussed user and workflow point of view. Earlier, our services involved other software where we added value and customised, now we are starting from raw material all the way up. Of course we do use third party software as and when there is a need for it.
Rolta has been quite selective in acquiring companies and intellectual property. What is the guiding principal for Rolta for these acquisitions?
Here, I would like to draw on two aspects. The first is our strong focus on defence and homeland security. We have been offering solutions in this vertical for the last twenty years and are aware of what the gaps are in terms of technology. We strengthened ourselves and filled in these gaps by acquiring those technologies and making the investments that I earlier mentioned.
The other aspect is, we as a company are classified into an IT company. But we are not into mainstream IT. We were mainstream geospatial, engineering, etc, using IT as a technology. So we decided that we will venture into mainstream IT as well. This market holds huge potential as about USD 100 billion worth of outsourcing is taking place from India. To venture into this market, we required front-end companies with experience, track record, customers and manpower. Having these companies as front-end would allow us to interface with the customer and get us the market so that we are able to create the back-end which will bring value to the customer. For this purpose, we needed to acquire companies that would give us that kind of track record and that kind of positioning. This has been our philosophy.
So is Rolta also positioning itself as a front-end IT company through acquisitions?
We are positioning ourselves as a mainstream IT company through these acquisitions. This is evident from the fact that we have also specialised in business intelligence. We have developed our business intelligence suite of software for operational excellence in various sectors including chemicals, fertilisers, petrochemicals, oil, gas, refinery and power. Traditionally, these companies have already invested in Oracle or SAP for business processing. But they don’t have the intelligence, KPIs or the data models to tell them what they need, quickly, so that they can make informed decisions. So we have built comprehensive data models and KPIs on the same platforms.
Apart from India, what are the countries/regions of interest for Rolta?
Our main focus has been US, given our acquisitions there. We also have presence in Europe and the Middle East. In the latter two, we have gone the organic way for growth, while US has been inorganic growth.
Are you also looking at the BRIC countries other than India?
BRICS countries do not offer the kind of IT opportunities that are in our domain. For example, there is not much scope for IT outsourcing business in Brazil. BRIC companies also have tremendous labour advantage, so it won’t be prudent to establish IT outsourcing business in these countries. Of course where geospatial business is concerned, these countries do offer possibilities. But we want to tap the tremendous opportunities that are around us first. We believe that India is the last frontier for geospatial and will open up tremendously. We are positioning ourselves to take advantage of it. We have made tremendous investments which are, to some extent, very high in respect to the size of our company. We believe that as we move forward, we will get benefits and dividends out of that investment.
India has a vast pool of talent. Is Rolta looking at harnessing this pool of talent or creating more research facilities in India?
In 2008, we started building our product development division and engaged people who had worked on product development – not services, not customisation, not implementation. From 2008 to now, we have witnessed a tremendous maturity in that team. Our product development team in based not only in Mumbai but we also have R&D offices in Gurgaon and Hyderabad. Through these offices, we endeavour to tap into talent that is present across the country. I feel there is a need for much more innovation in India because of the talent here. India has been a services hub but not really a product hub. This is what makes product development exciting at Rolta.