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Rolta bullish on Indian defence contracts

India: Rolta India expects to return to a profit growth this year on increased demand for its products from India’s military. Net income may rise 15 percent in the year ending March 31, said Hiranya Ashar, chief financial officer, Rolta. The company’s profit fell 13 percent last year, according to data compiled by Bloomberg.

Rolta makes software for India’s battlefield management system, tactical communication system and the digital soldier program, according to the company’s annual report. The geospatial and geographic information software, that is used to make digital maps and defence systems, accounts for more than 50 percent of the revenue.

“The growth in geospatial and geographic information, including defence, and Rolta’s decision to stop sourcing software from third party vendors will help boost its profit,” said Vikas Jain, analyst at Shah Investor’s Home Ltd. in Mumbai. “Revenue from software licensing and maintenance will also start getting reflected.”

India’s defence spending on technology may triple to USD 3 billion in the next seven to 10 years, said Ashar. “India’s defence budget may increase by up to 10 percent each year and most of the money will be spend on upgrading technology.”

The south Asian nation will spend 1.47 trillion rupees (USD 32 billion) on defence this year, triple its 2000 outlay. India’s defence procurement budget is forecast to reach USD 42 billion by 2015, according to a report by Deloitte LLP.

India contributes 59 percent of Rolta’s total revenue and North America follows with 29 percent. Vikas added.

Source: Bloomberg