Home News Business Rolta India eyes homeland security market

Rolta India eyes homeland security market

India: “Owing to the ongoing economic situation, the next one to two years will remain challenging. That said, since 68 percent of our focus is on the domestic front, we believe new defence areas like homeland security represent a big business opportunity and a large market, which will help improve our penetration in local market, and will provide an increase in domestic revenues,” stated Kamal K Singh, Chairman and Chief Executive Officer of Rolta in an Interview with DNA India
Singh predicted 12-14 percent range of growth in (fiscal year) 2012-13, as compared to the 25-30 percent growth two years ago. Thus, the company sees top-line and bottom-line growth being affected negatively due to the global economic slowdown.
Recently, the company was accused of offering its services to Indian defence forces well after its software licensing contract had expired. Singh delineated the company’s stance on the issue and the way forward. He said that the statements against the company are false, baseless claims, created with malicious intent, possibly by our competitors, since defence is a very sensitive space. He added that the company received updated letters of appreciation regarding upgrades received till April 2011, and all its licensing contracts are up to date.
About Indian defence modernisation, Singh opined, “The Indian government has taken a very conscious decision in the last five to seven years to support Indian industry. Thus, from global projects, large defence programmes have now been renamed as ‘Make India’ programmes. An India-led consortium can get an international technology partner to aid in transfer of technology and knowhow, to customise global equipment for Indian needs. One of the main areas of focus under this would be homeland security, which has come into great relevance, especially after 26/11. For the next ten to 15 years, this will be our main focus area. In five to seven years, we believe this space will generate very good results. Another area of focus will be ‘Digital Soldier’, which aims to transform the Indian army, making it intelligent and well-equipped to meet 21st century requirements which are very IT-centric and knowledge-based.”
About acquisition of several intellectual properties (IPs), Singh explained, “Our business model has changed – we are using lots of IP solutions today. These are leading our revenues. The combination of IP and traditional services has improved profit margins, visibility and value chains. According to our estimates, the IPs have increased our profit margins by 300-400 basis points, and currently 20-25 percent of our revenues come from IPs. In two to four years, we expect IPs to contribute to a 40-50 percent increase in revenues.”
About business opportunities in nuclear sector, Singh said, “We are working very closely with nuclear power plants like the Nuclear Power Plant Organisation, BARC (Bhabha Atomic Research Centre) and others, where we provide design and manufacturing of components and units at various levels. We are also one of the companies working on an international nuclear power programme. Owing to the non-disclosure agreement, I cannot say more on this now. Going forward, we view this space as a good revenue opportunity, but it will take five to ten years to pick up in India, due to various concerns. However, when it does, we expect it to contribute approximately INR 50 crore to 100 crore to our annual revenues and it will become a major focus area.”
About the company’s FCCB (foreign currency convertible bonds) repayment position, Singh said, “FCCBs are due in June 2012. Meanwhile, we are organising ECBs (external commercial borrowings) through a consortium of banks. We are confident that we will tie it up by mid-January 2012, according to the due date of redemption, without any hassles. Due to the weakening rupee, we expect our foreign exchange borrowings to be hit in the next quarter, resulting in this amount being the same as last quarter – that is, INR 25 crore. However, this will not have any effect on our operating margins or cash outflows. As the rupee becomes better, this short-term forex loss will be converted to profits.”
Source: www.dnaindia.com