Rolta India, which is among the leading IT and geospatial companies of the world, is in dire financial straits. The company’s strategy to make itself debt free in India by divesting its global products and solutions business has failed, reported Hindu Business Line.
Rolta planned to raise $25 billion(INR 25,000 crore) by divesting to restructure bonds. In the wake of this terrible blow, the mass layoffs have begun in the company and many top executives have been asked to resign. The company has a massive workforce of 3,000 employees around the globe. It owes more than 10,000 crore INR to investors and banks and has to complete payment of bonds worth $350 million
Rolta is in a financial imbroglio for some time now. Its loss for Q1 FY-19 stood at 36.70 crore INR against loss of 225.32 Crore INR in Q4 FY-18, showing a marginal improvement over last quarter. Its scrip has been falling steeply for the past four years – from 69.50 INR on the Bombay Stock Exchange in January 2014 to INR 7.80 on January 18, 2019. Its highest was 177.40 INR on April 10, 2015. The consolidated net loss of Rolta in the September 2018 quarter was 58.13 crore INR.
In the past, Rolta has been ranked among the ‘Best 200 under a Billion’ company four times in six years by Forbes.
In 2018, the international credit rating agency Fitch downgraded Rolta India to RD(restricted default) category, which denotes that the company has experience higher financial obligation. Fitch also said that Rolta was not being transparent in providing details about its liquidity to investors and credit rating agencies. During the same period, Fitch also lowered the recovery rating on Rolta’s bonds to ‘RR5’. An ‘RR5’ recovery rating indicates a recovery of 11-30 percent of the principal amount.
Current status
What precipitated the crisis was Rolta defaulting on the payment of its bonds. It holds bonds worth $200 million maturing in 2018 and $300 million maturing in 2019.
Rolta also attempted to sell its assets worth 2.5 billion dollars to companies including Tech Mahindra, but the deal didn’t take place due to protests by investors who have taken the company to NCLT (National Company Law Tribunal) to begin insolvency proceedings. Rolta has a debt of around 10 billion dollars( 10,000 crore INR).
Hindu Business Line quoted KK Singh, Executive Chairman, Rolta, as saying in a letter to his employees, “During late 2017, we decided to look for disinvesting some assets consisting of our IPs and solutions which had heavy demand worldwide. From early 2018, these efforts started bearing fruits, and in fact, we received a firm Letter of Intent from a reputed international company valuing our offered products and solutions at about ₹2,500 crore.
At the time of closure of this transaction in the first week of August, we, unfortunately, could not fulfill certain pre-conditions and, therefore, the deal fell through. This was a big blow to our efforts to deleverage the company completely by paying off all Indian debts and completing the restructuring agreement of bonds which the company had entered in mid-July 2018. As of today, our efforts on disinvestment are still on. We are also pursuing our debtors. But all this will take some time, and there is no solution for the immediate cash crunch which we are facing.”
KK Singh is among the pioneers of geospatial technology in India and Rolta has been among the geospatial heavyweights. Founded in 1989, Rolta deals in geospatial, IT and business analytics.
