Rolta India held a conference call to discuss second quarter results for FY09 and future prospects. Mr Hiranya Asher, Director – Finance, addressed the call.
Highlights of the call
- The order book at the end of December 2008 was marginally up at Rs 1590 crore executable over 12-18 months: Geospatial Information services Rs 710 crore, Engineering Design services Rs 500 crore and Enterprise – ICT Rs 380 crore. Though the growth was marginal, the company expects the order book to grow for both domestic and international. Currently about 56-57% is domestic order book. The company is hopeful of Government projects in India to be awarded in March 2009 quarter.
- The company is seeing slowdown in capex from Oil & Gas EPC. However, the management believes that the Piocon IPR will help regain the lost business. About 12-13% of the current order book accrues from Oil & Gas.
- The net profit was impacted by MTM losses of Rs 22.66 crore on revaluation of FCCBs worth US$ 150 million due June 2012 with conversion price of Rs 368 per share. For the first 6 months, the forex loss is Rs 61.35 crore. On maturity the company would have to pay about US$ 208 million. The closing rate was Rs 48.45/US$ against closing of Rs 46.94/US$ at the end of sequential quarter. The Company has got in-principle approval from board for buyback of FCCBs.
- The PBIDT margins for GIS segment dipped 180bps at 41.4%, for EDA segment improved 80bps at 39.4% and for e-Solutions segment dipped 1250bps at 16.4%. For e-Solutions the PBIDT would be about 14-15%. The volume growth in e-Solutions was 1.1.5% on like-to-like basis.
- The Thales JV is going as per plan. It takes time for transfer of technology. The first few orders should materialize in CY09. The company has invested US$ 500000 towards capital of the JV.
- Computer Associates contract which was due for renewal has been renewed. The purview of services has increased. Currently, about 15-20% of E-ICT business revenues come from CA.
- Rolta did not add much in the quarter with employee strength of about 5500 employees. The Company would now be recruiting at higher levels. The Company has decided to outsource low-level work and due to security reasons, the sub-contractors would be placed at Rolta’s own premises. The recruitment would be flat for the year.
- Time & Material constitutes about 18-20% of the revenues.
- Capex for the first half was Rs 300 crore and for FY09 was Rs 450 – 480 crore. The company has set up SEZ facility in Mumbai for 1500 seats and a facility in Delhi – NCR with 1500 seats. Currently, 60-70% capex in expansion capex.
- The effective tax rate for FY09 and FY10 would be 14-14.5%. For FY11, the tax rate could go up to 18-19%.
- For FY09, on consolidated basis, the company has maintained its guidance of operating revenues at Rs 1480 – 1500 crore growth of 38-39.9% over FY08 and PAT guidance of Rs 325-330 crore (before MTM losses or gains), growth of 40.9-43.1% over FY08. Excluding MTM losses of Rs 30.18 crore, the growth would be 23.2 – 24.0%.
- Debtor days at the end of the quarter stood at 142 days against 143 days at the end of sequential quarter. By end FY09, the Company is targeting 120-125 days and thereafter 105 days in 1-1 ½ years.
- Cash in books stands at Rs 252.29 crore. Debt is about US$ 25 million of ECB partly used for Piocon acquisition.
- The Shaw JV contributed US$ 6.5-7 million with margins of 28%.