Rolta India Ltd.

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Rolta India Ltd.


Maker Tower F, 21st Floor
Cuffe Parade
Mumbai, 400 005
India
Telephone: (91 022) 2215 3984
Fax: (91 022) 2215 3994
Web site: http://www.rolta.com

Public Company
Incorporated:
1989
Employees: 3,800
Sales: $175 million (2007 est.)
Stock Exchanges: India Bombay London
Ticker Symbol: RLTA Y
NAIC: 541512 Computer Systems Design Services; 518111 Internet Service Providers

Rolta India Ltd. is a multinational public company based in Mumbai, India, and listed on the Bombay Stock Exchange and National Stock Exchange of India. In addition, the company's Global Depository Receipts (GDRs) are listed on the main board of the London Stock Exchange. Rolta offers information technology services in the GeoSpatial Information Systems (GIS) field, Engineering Design Automation (EDA), software development, advanced security, network management, enterprise resource planning (ERP) consulting and deployment, and eSolutions. Rolta has completed projects in more than 35 countries. It maintains 14 offices, including a U.S. subsidiary based near Atlanta, Georgia, and seven subsidiaries around the world. Some 70 support offices in India perform the bulk of the work generated by the international offices, although Rolta also does a great deal of business in India itself. Moreover, Rolta has teamed up with other companies to form joint ventures, including with Stone & Webster, a Massachusetts engineering, construction, and environmental services firm to provide the power, oil, and gas industries with engineering, procurement, and construction management services. In addition, Rolta Thales Limited is a joint venture with Thales, France, to develop command, control, communications, computers, intelligence, surveillance, target acquisition, and reconnaissance (C4ISTAR) information systems. The company was founded by its chairman and chief executive officer Kamal K. Singh.

FOUNDER CHOOSES BUSINESS OVER HARVARD: 1970

Singh was born in India to a line of prominent physicians, his father the dean of Indore Medical College for more than 30 years. When Singh was a child his father was eager to groom him to carry on the family tradition but his mother objected because doctors, as she well knew, had little time to spend with their families. Instead he was urged to pursue a profession. After Singh received an engineering degree in 1970, he earned a coveted slot to attend Harvard University Business School to earn a master of business administration degree. While waiting for the school year to commence, however, he decided to earn some money by supplying ingots to a steel plant owned by a family friend, a venture funded by his father and through commercial loans. He became so immersed with the operation of his rolling plant that when the time came for school to begin he forfeited his chance to attend Harvard.

Singh's rolling operation turned into a small steel plant and prospered for several years until hard economic times hit in 1977. Unable to meet the increasing capital demands of the steel industry, Singh sold the business. In 1980 he moved to Mumbai to launch a second business, one that relied more on intellectual capital. He decided to launch a computer company called Rolta. In a 2003 interview with GIS Development he explained the origin of the name: "My father's name is Dr. R. P. Singh. My grandfather's name is Dr. Lekhraj Singh. I took R and L from their names. T stands for technology. Given all the factors, somehow, the word ROLTA clicked to me." After giving the company a name, Singh also began hiring the core of the management team. Perhaps the most important new hire was A. P. Singh, a former IBM employee. Another 15 to 20 people were hired as well and Rolta opened a data center in 1981. Singh told GIS Development, "The data center used to import large databases to provide services. We decided to allow people of ONGC [Oil and Natural Gas Corporation Limited], etc. to use our computers. We also started develop special packages for financial accounting and the like. By 1982 we started providing turnkey solutions. We developed software for various banks. We started developing software for various customers' needs. In 1984, we started exporting software."

Rolta reached reached a turning point as Singh and his team considered their next step. The idea of opening a training center was rejected, considered too low-end, as was personal computer manufacturing, which they correctly concluded would eventually become a commodity-based business offering low margins. Instead they decided to enter the fields of computer-aided design (CAD), computer-aided manufacturing (CAM), and geographic information system (GIS). It was a bold step given that the technologies were not yet available in India. Nevertheless, Rolta established a CAD/CAM/GIS division and became a pioneer in the domestic market.

In order to launch the new venture, Rolta sought a technology partner. After considering Computer Vision and Intergraph Corporation, Rolta teamed up with Intergraph, a major provider of GIS systems, plant design systems, and CAD products, entering into an exclusive manufacturing and distribution agreement in April 1986. Intergraph then provided equipment and personnel to educate Rolta on the technology. Domestically, Survey of India (SOI) also played a key role. Many on the Rolta team were retired from SOI, which was also interested in digitizing its surveying information. In 1987 the two companies began working together to create a Digital Mapping Center.

IPO: 1990

In 1989 Singh formed Rolta India Limited to house the information technology (IT) group. A year later the company was taken public, raising $15 million in an initial public offering (IPO) of stock that was oversubscribed by 15 times. The money was then used to open a plant to manufacture Intergraph workstations, a move deemed necessary in order to grow the CAD/CAM/GIS unit further in India. Next, in 1992, Rolta established its own development center in Mumbai, eliminating the need to send people abroad for training. The company also began offering its CAD/CAM/GIS services abroad, focusing on the telecom and electrical utilities markets.

Part of Rolta's Engineering Software Export Project called for the establishment of a subsidiary in the United States, Rolta International, Inc. In 1992, Rolta India dispatched A. P. Singh to establish the new unit's headquarters in Huntsville, Alabama, a logical choice because it was also Intergraph's home. Rolta International served municipalities and utility companies in GIS and automated mapping, offering data conversion and other services. The U.S. operation maintained a sales force and project managers while data conversion and other work was performed by a large workforce in India at a new 50,000-square-foot facility. The low cost of Indian employees provided Rolta International with a competitive edge in a field that was highly pricesensitive. In 1995 Rolta India formed another international subsidiary, this one located in Saudi Arabia, called Rolta Saudi Arabia Ltd. It performed data conversion services for the Saudi Ministry of Post, Telegraph and Telephones.

COMPANY PERSPECTIVES


Rolta will be the preferred choice for providing knowledge-based IT solutions through pioneering efforts to meet market demands and exceed customer expectations, achieved by an empowered team of Roltaites, for maximizing value to its stakeholders.

Rolta had been reliant on Intergraph's Unix-based workstations using a RISC processor, but in the early 1990s it became apparent that the market was heading toward a less expensive combination of Intel processors and Microsoft's Windows NT operating system. Intergraph solutions became available on this platform, and Rolta, in order to protect its position in the Indian market, sought to offer less expensive solutions and struck a deal with Dell Computer Corp. in 1996 to distribute personal computers in India. Rolta considered establishing a chain of dealerships but in the end elected to go a less expensive route by relying solely on a direct sales force. In addition to gaining a position in the down-market segment of the CAD/CAM market, the Dell relationship allowed Rolta to become involved in office automation, networking, and Internet/intranet markets. For the first time in its history Rolta's net worth topped the INR 1 billion mark (about $25 million) in 1996. Revenues for the year were INR 760 million (about $18 million) and net income totaled INR 200 million (about $5 million).

NEW OFFICE OPENS: 1997

In 1997 Rolta International expanded its U.S. operation, opening regional offices in Los Angeles and Philadelphia, while the parent company moved into the European market by establishing Rolta Europe in the Netherlands. In the ensuing years the European Union business would grow and be allocated to several subsidiaries: Rolta Benelux, covering Belgium, the Netherlands, and Luxembourg; Rolta UK Limited; and Rolta Deutschland Gmbh. Rolta Canada Limited was also formed.

By the start of the new century Rolta added Rolta-Net, an Internet infrastructure services divisions serving India, and a new division offering eBusiness solutions for eCommerce, eSecurity, and network management was able to forge strategic partnerships with the likes of Microsoft, IBM, and Computer Associates, with whom Rolta would provide high-end consulting for IT infrastructure and network security projects around the world. The company's growth at the end of the 1990s through 2000 was so strong that its growth rate topped many better known Indian companies, including Reliance Industries, Hero Honda Motors, UTI Bank, and Sun Pharmaceuticals. The company's workforce increased from 750 to about 2,500, while revenues increased to about INR 2.4 billion in 2000. Rolta was doing business in 20 cities in India and throughout North America, Europe, and the Middle East.

Despite poor economic conditions Rolta India and its subsidiaries performed well in the early 2000s. While other IT companies were trimming their payrolls, Rolta continued to hire. Rolta International outgrew its Huntsville headquarters by 2001 and began scouting around for a new home, electing to leave Alabama but not to stray too far from Intergraph. In the end, the subsidiary moved its operation to large accommodations in Alpharetta, Georgia, near Atlanta. The parent company was also honored in 2001, named in October of that year as one of the 200 best companies in the world, according to Forbes magazine.

Difficult economic conditions persisted in 2002 and 2003, and to remain competitive Rolta was forced to engage in some restructuring of its operations. Further, the company reworked its debt structure by taking advantage of low-cost foreign currency loans. Rolta also had little difficulty in finding new strategic partners. To maintain growth in the plant engineering software field, Rolta and the Massachusetts-based engineering firm of Stone & Webster, Inc., formed a joint venture, Stone & Webster Rolta Limited, to provide integrated project services, including engineering, design, procurement, and construction management, primarily for Indian oil companies and Stone & Webster Process & Power projects around the world.

With business conditions improving, Rolta India undertook a major expansion in late 2004, constructing a pair of new facilities in Mumbai that opened in the spring of 2005 to house more than 1,000 new employees. All told, the company hoped to hire as many as 10,000 more people over the next few years. At the same time Rolta expanded its longtime partnership with Intergraph to offer GeoSpatial services to users in the United States.

By this time an established international player, Rolta India looked to international equity markets as a source of funds to fuel further expansion. In 2006 Rolta India made a public placement of Global Depository Receipts (GDR) underwritten by Lehman Brothers and Canter Fitzgerald, raising $103.5 million and gaining a listing on the main board of the London Stock Exchange, the first Indian company to achieve that distinction.

KEY DATES


1981:
Rolta founded.
1985:
Company enters CAD/CAM/GIS fields.
1989:
Rolta India Ltd. formed.
1990:
Initial public offering of stock.
1992:
U.S. subsidiary formed.
1995:
Rolta Saudi Arabia Ltd. formed.
1997:
Rolta enters European market.
2001:
U.S. operation moves to Atlanta area.
2006:
Listing gained on London Stock Exchange.

With revenues that topped the $100 million mark, Rolta India continued to look to partnerships to support further growth. In August 2006 the company formed a joint venture with France's Thales Group, called Rolta Thales Limited, to serve the worldwide defense, aerospace, and security markets with command, control, communications, computers, intelligence, surveillance, target acquisition, and reconnaissance (C4ISTAR) information systems. Rolta India also grew through acquisitions. In July 2007 it acquired the Canadian software and integration company Orion Technology Inc., a specialist in enterprise web-GIS solutions. Rolta had plenty of cash on hand to complete the deal, having raised $150 million a month before from the placement of Zero Coupon Foreign Currency Convertible Bonds (FCCBs) in the international markets. The company also announced the results for fiscal 2007, which revealed a 35.6 percent increase in net profits over the prior year. There was every reason to expect that Rolta India and its subsidiaries would continue to enjoy robust growth in the near term.

Ed Dinger

PRINCIPAL SUBSIDIARIES

Rolta International, Inc.; Rolta Canada Limited; Rolta UK Limited; Rolta Benelux BV; Rolta Deutschland GmbH; Rolta Middle East FZ-LLC; Rolta Saudi Arabia.

PRINCIPAL COMPETITORS

Avineon Inc.; Minecode Corporation; Micro Documents India Pvt. Ltd.

FURTHER READING

Langhenry, Marcia, "Job Migration Helps Indian Firm," Atlanta Journal-Constitution, February 19, 2004, p. JH3.

"A Non-Conformist Entrepreneur," GIS Development, August 2003.

"Rolta India: Is Investor Perception Undergoing a Change?" Fortune India, October 15, 2006.

"Rolta India Ltd: Success Mapped," Data Quest, May 15, 1997.

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Rolta India Ltd.

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