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Rolta ready to log into more cities

The Rs1,000 crore company offers services in the niche areas of engineering design and geospatial information systems (GIS).

Rolta has initiated talks for buying properties in the Delhi and NCR region for building software development and knowledge process outsourcing (KPO) centres.

It is also likely to buy land in south India for similar projects. Each project would soak in an investment of Rs 250-300 crore.

Such projects will not only give it the necessary scale to go the next level up, but also help tap the local talent pool in each city.

Hiranya Ashar, CFO, Rolta India told DNA Money that by going to cities where talents are readily available, rather than bring them to Mumbai, the company can lower the attrition level and hiring costs.

The company expects a total headcount of 5,000 in the next four quarters and has been able to maintain attrition rates at 9%.

It has already acquired land in Rajarhat area (East Kolkata) to set up a software development and KPO centre. In the first phase of the Kolkata project, Rolta will employ 1,000 people and push up the count to 5,000 by next fiscal.

Analysts said the company is positioned to take advantage of the growth in infrastructure spending in India and also to leverage the country’s strengths in niche IT and engineering services.

What makes Rolta more attractive than the IT biggies is its lower dependence on the US market and thus, lesser exposure to a possible recession in the US economy. Rolta earns around 24% of its revenues from the US, but it also spends in dollar terms in the US, which acts as a natural hedge against the weak dollar.

The company’s order book, as at the end of the last quarter, stood at a robust Rs1,250 crore, including Rs 510 crore in GIS and Rs 210 crore in the internet and ebusiness solutions space.

It had revenues of Rs 622 crore in FY07. Around 60% of its revenues came from the domestic market with a high proportion from the defence sector.

Macquarie Research analysts Suveer Chainani and Shashi Bhusan said in a February 1 research report that Rolta offers niche high-margin services to sectors poised for substantial growth, including infrastructure, power, oil & gas and defence.

Analysts Viju George, Kunal Sangoi and Nikhil Chakrapani of Edelweiss Research said in a note to clients on February 1 that Rolta had over Rs 400 crore in cash and cash equivalents as at the end of the last quarter.

Rolta has software and marketing offices in the US, Canada, UK, Germany, Netherlands, Saudi Arabia and UAE. It added 200 people in the current quarter, taking the total manpower to 3,800.