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It's sensors next in Rolta's defence line-up

December 24, 2007 16:14 IST

Rolta India is planning to set up a sensor manufacturing plant even as it aims to touch the Rs 1,000 crore (Rs 10 billion) turnover mark by the end of financial year 2007-08. The plant, to be set up in Mumbai, is expected to have around Rs 400 crore (Rs 4 billion) worth of production capacity to begin with.

"The manufacturing plant is synergised with our defence forays wherein the military use unmanned ground sensors, which include seismic, magnetic and optronic sensors," said Rolta India CMD, K K Singh. The sensors will be priced between Rs 1.5 lakh (Rs 150,000) and Rs 25 lakh (Rs 2.5 million).

Singh aims to make Rolta a $1 billion firm by 2010. The Rs 1,000 crore turnover expectation will be a 38 per cent jump from the last financial year's revenue. The $1 billion mark, thus, would imply a quantum jump.

Singh says this ambitious prediction implies strategic changes in his current focus areas -- the defence and homeland security business (estimated to account for around 50 per cent of this fiscal's turnover); engineering design business group (around 38-40 per cent); and software development and e-security services (around 10-12 per cent).

Almost 60 per cent of its business comes from India, providing a natural hedge against currency fluctuations while 20 per cent comes from the US. Indian defence and homeland security is expected to spend $100 billion over the next five years. Rolta has already entered into a 59:41 joint venture (JV) with the Thales group of France last August to target $500 million defence deals.

Rolta provides solutions based on Remote Sensing data from aerial/ space platforms for a range of defence applications. The company's top client is already the ministry of defence in India, and it expects Thales' expertise in mission critical information systems for the defence, aerospace and security markets to increase its share of business from the Indian government.

Its product range for the defence forces includes advanced image exploitation, image analysis, photogammetry solutions, visualisation, and simulation-based on customised geospatial applications. These meet the specific requirements of operations, intelligence and logistics. Sophisticated change detection solutions for the imaging market are particularly relevant for defence intelligence applications.

Research firm Macquarie expects the JV to report revenues of Rs 120 crore (Rs 1.20 billion) in the next financial year, ending June 2009 (adding about 12 per cent to the firm's top-line).

The oil, gas and conventional power sectors are expected to generate investments of over $100 billion in India. Rolta, through its JV with Stone & Webster, expects to capitalise on this opportunity too.

Further, Rolta's expertise and understanding of the geospatial and engineering domains helps it to tailor enterprise resource planning (ERP) solutions for customers across these segments.

It has also created a portfolio of games and animation content, which covers areas such as Game Environment modelling (using GIS data and imagery), Object Modelling (vehicles, weapons, props, etc), and models of characters such as soldiers, sports personalities and film stars.

"As we go forward, defence would account for around 40 per cent of our revenues; the engineering design business contribution too will reduce to around 35 per cent. However, the IT software and services business contribution will increase to around 25 per cent," says Singh.

Meanwhile, Rolta India was rumoured to enter the real estate business via Rolta Infrastructure. It was a bidder at the BKC land auction. It also recently announced its intention to set up an IT park in Kolkata for around Rs 250 crore (Rs 2.50 billion), which can accommodate around 5,000 employees.

When asked about these forays, Singh said: "We are not in the realty business. The strategy will be to acquire, develop and use this land for captive purposes as we expand. Till then, the surplus land and building (valued at around Rs 2,000 crore) will be leased."

Rolta is also open to acquisitions. It recently acquired Orion Technology, Canada, which gives it additional GIS capability. The company currently has cash and cash equivalents amounting to around Rs 800 crore (Rs 8 billion).

Leslie D'Monte in Mumbai