Overview of ROLTA INDIA LIMITED

1. R.A. PODAR INSTITUTE OF
MANAGEMENT FINANCIAL
MANAGEMENT PROJECT
REPORT ON TECHNOLOGY
SERVICES OUTSOURCING
INDUSTRY
ROLTA INDIA LTD.
Submitted to: Mr. Prashant Sipani
Ravindra Singh Shekhawat
MBA (SM) II Sem
Roll no.: 43

2. 1
TECHNOLOGY SERVICES OUTSOURCING INDUSTRY
IT outsourcing is a phrase used to describe the practice of seeking resources -- or
subcontracting -- outside of an organizational structure for all or part of an IT
(Information Technology) function. An organization would use IT outsourcing for
functions ranging from infrastructure to software development, maintenance and
support. For example, an enterprise might outsource its IT management because
it is cheaper to contract a third party to do so than it would be to build its own in-
house IT management team. Or a company might outsource all of its data storage
needs because it does not want to buy and maintain its own data storage devices.
Most large organizations only outsource a portion of any given IT function.
According to an article in the Times of India, India’s liberalization was possible due
to its IT industry. In the 1990s, the industry started off with an export of nearly
$100 million with around 5,000 employees. Now it is an industry that thrives
globally and India’s IT exports are now around $70 billion with 2.8 million
employees working in this sector. The article states that the IT sector is one of the
top two industries in the country today.
TECHNOLOGY SERVICES OUTSOURCING SECTOR IN INDIA
A report by Ernst & Young states that the domestic IT demand in India is expected
to surpass US $90 billion in the next decade. This clearly shows that information
technology is a sector which will likely be one of the emerging MARKETS in the
days to come as India’s economy requires more hardware, software and other IT
services. In a NASSCOM-McKinsey report, India’s position in the global offshore IT
industry is based on five factors – abundant talent, creation of urban
infrastructure, operational excellence, conducive business environment and
finally, continued growth in the domestic IT sector.

3. 2
The IT industry is heavily influenced by factors like the global MARKET and
sustenance of its rate of growth. The recession in the United States also impacted
the IT community in India negatively. This segment is promising and has vast
potential, but there are concerns regarding the demand-supply gap, which is
widening. Some challenges which the industry is facing are inadequate
infrastructure, tax issues and limited preferential access for local firms. China and
Taiwan are examples of low cost destinations, and India needs to change its
current tax structure so that it can outdo competition from other countries.
One of the biggest benefits that the computer and IT industry provides in India is
the employment it can generate. Other benefits are export and Foreign Direct
Investments (FDI). New MARKETS have opened up in the Middle East, Africa,
Eastern Europe, and South and South East Asia. India is now a major destination
for IT outsourcing.
Some leading firms that offer JOB OPPORTUNITIES in this field are Tata
Consultancy Services (TCS), Wipro Technologies, Cognizant, Yahoo!, Google, Tech
Mahindra, Infosys Technologies, HP, iGATE Patni, Accenture, L&T, EY, Convergys,
MphasiS, Genpact, HCL Technologies and Godrej Infotech. Cities like Bengaluru,
Delhi, Noida, Gurgaon, Hyderabad, Chennai, Bombay and Cochin are some of the
key areas which have developed into potential IT hubs of the country and are key
players which contribute to the growth of the Indian economy through
telecommunication, software development, design, mobile commerce, e-
commerce, BPO and knowledge process outsourcing (KPO).

4. 3
The IT industry is one which is not limited to software development alone.
Technology can be applied in libraries, hospitals, banks, shops, prisons, hotels,
airports, train stations and many other places through database management
systems, or through custom-made software as seen fit.
Among other sectors, the IT industry has been driving growth for the last decade
and more, and has the potential to continue doing so for the next couple of years
if shortcomings are met and challenges are faced.

5. 4
ROLTA INDIA LIMITED
Rolta is an Indian company for CAD, CAM, business intelligence and big data
solutions, geographic information system (GIS) solutions, EBusiness and related
services[2][3][4] headquartered in Mumbai.
Rolta has executed projects in over 40 countries. Forbes Global ranked Rolta
amongst the “Best 200 under a Billion” four times in six years. Rolta was included
in the S&P Global Challengers ListTM, by Standard & Poor’s. The Company is listed
on the Bombay Stock Exchange and National Stock Exchange, and forms part of
various indices on BSE/NSE in India. The Company’s GDRs are listed on the Main
Board of London Stock Exchange.
The company was established in 1989. It employs around 5000 workers in India
and international subsidiaries. It is ranked No. 12 in IT companies and overall
ranked No. 365 in India in Fortune India 500 list in 2011.
The company's subsidiaries include Rolta International Inc. (RUS), Rolta Middle
East FZ Llc UAE (RME), Rolta Saudi Arabia Limited (RSA), Rolta UK Limited (RUK)
and Rolta Thales Limited (RTL) while the company owns a 50% stake in Shaw Rolta
Limited as of 30 June 2009, and acquired OneGIS, Inc. in April 2010. Rolta is also in
partnership with Intergraph to market and support its software in India.
The company has branches in various parts of India (Mumbai and Gurgaon) and
Canada.

6. 5
Services provided include geospatial engineering design such as plant design and
mechanical design solutions and services, plant information management services
and engineering design services for ship building and other applications, eSecurity
services and solutions[8] along with software development services such as video
games development and software testing. The company recently entered into a
joint venture with French company Thales to establish Rolta Thales Ltd.
Rolta is listed on the Indian National Stock Exchange (NSE) in the cash and futures
and options segments, and forms part of CNX IT, Nifty Midcap 50 and CNX 500
indices. The company is also listed on the Bombay Stock Exchange (BSE) 'A' group
and forms part of the BSE Midcap, BSE 200, BSE 500, BSE IT and BSE TECk indices
while its Global Depositary Receipts (GDRs) are listed on the Main Board of the
London Stock Exchange and its foreign currency convertible bonds on the
Singapore Stock Exchange.

7. 6
CAPITAL BUDGETING POLICY
FIXED ASSETS-
PARTICULARS AS ON MARCH 31,2015 AS ON MARCH 31,2014
FIXED ASSETS:
(in crores.)
TANGIBLE ASSETS 4458.10 4177.09
INTANGIBLE ASSETS 393.58 339.91
CAPITAL WORK IN
PROGRESS
153.68 19.60
TOTAL 5005.36 4536.6
a. Fixed assets are stated at carrying amount i.e. cost less accumulated
depreciation.
b. Cost includes freight, duties, taxes and other expenses incidental to acquisition
and installation.
c. Depreciation on Fixed Assets has been provided on straight line method in
terms of life span of assets specified in Schedule II of the Companies Act, 2013.
d. Patents and trademarks are being amortized over the period of ten years on
straight line basis.
e. Softwares are being amortized over the period of five years on straight line
basis.
f. For New Projects, all direct expenses and direct overheads (excluding services
provided by employees in company’s regular payroll) are capitalized.

8. 7
g. Capital Subsidy received against fixed capital outlay is deducted from gross
value of individual fixed assets, forming part of subsidy scheme granted, by way of
proportionate allocation of subsidy amount thereon. Depreciation is charged on
net fixed assets after deduction of subsidy amount.
h. On sale of fixed assets, any profit earned towards excess of sale value over
gross block of assets (i.e. balancing charge) is transferred from profit & loss
account to capital reserve.
ANALYSIS
ROLTA INDIA LTD has maintained the same policy regarding Fixed Assets i.e. they
are stated on cost of acquisition or construction, less accumulated depreciation
and impairment, if any. Cost includes expenses like acquisition and installation
cost.
Impairment of Assets
The fixed assets are reviewed for impairment at each balance sheet date. In case
of any such indication, the recoverable amount of these assets is determined, and
if such recoverable amount of the asset or cash-generating unit to which the asset
belongs is less than its carrying amount, the impairment loss is recognized by
writing down such assets to their recoverable amount. An impairment loss is
reversed if there is change in the recoverable amount and such loss either no
longer exists or has decreased.
ANALYSIS
Rolta India Ltd. has unchanged its policy regarding assets impairment. An
impairment loss, if any, is recognized in the period in which the impairment takes
place.

9. 8
DEPRECIATION AND AMORTISATION
Depreciation and amortisation is applied to the Company’s property, plant and
equipment at the rates set out in the notes to the financial statements. The principal
depreciation costs relate to the Company’s computer systems and, increasingly, the
Company’s buildings. The Company has made extensive investment in development
facilities both in its SEZ and other units in India on account of the fact that the
Company’s business model is oriented towards an offshore model. Almost 75 percent of
the engineers / software professionals are located in India, which in turn requires
continuous addition to specialized computer systems and solutions. This offshore
business model entails large investment in gross block. The Company‘s increased focus
on developing new products and upgrading the Company’s IP to enhance its value
proposition to customers has led to increased investment in Research and Development
centers in the last three years.
NINE
MONTH
PERIOD
ENDED
MARCH
31,2015
% TO
SALES
NINE
MONTH
PERIOD
ENDED
MARCH
31,2014
% TO
SALES
FINANCIAL
YEAR
YEAR
ENDED
JUNE
30,2014
% TO
SALES
DEPRECIATION
AND
AMORTISATION
363.64 14.5 283.71 18.1 372.61 17.1
a. Increase in depreciation is mainly on account of impact of the revised
depreciation policy during previous year.
b. Depreciation on tangible fixed assets is provided using straight line method on
pro rata basis over their estimated useful life.

10. 9
c. The useful life is taken as prescribed in Schedule II to the Companies Act, 2013,
except where estimated useful life is shorter.
d. Intangible Assets are amortised on straight line method.
CONCLUSION-
Riding on these initiatives, ROLTA INDIA LIMITED drove demand and generated
volume-led growth even though the environment remained challenging. The
highlights of ROLTA India Ltd’s are decribed above.

11. 10
WORKING CAPITAL MANAGEMENT POLICY
INVENTORIES-
Inventories are valued at the lower of cost or net realizable value. Basis of
determination of cost remains as follows:
a. Raw material, Packing Material, Stores & Spares : Moving Weighted Average
Basis
b. Work-in-progress : Cost of input plus overhead upto the stage of completion
c. Finished Goods : Cost of input plus appropriate overhead .
ANALYSIS
ROLTA India Ltd management has the policy of valuing the inventories at lower of
costs and net realizable value. Inventory has decreased as compared from the last
financial year, which shows that sales has been increased that is the reason the
inventory maintained is decreased.
PARTICULARS AS ON MARCH 31,2015 AS ON MARCH 31,2014
Raw materials 159.67 169.78
Packing materials 65 95
Work-in progess 77 88
Finished goods 201.33 187.3
Stock in trade 45.78 42.90
Stores and spares 0.78 0.86
TOTAL 549.56 583.84

12. 11
PARTICULARS DETAILS
AS AT MARCH
31,2015
DETAILS
AS AT MARCH
31,2014
TRADE RECEIVABLES
UNSECURED:
Debts outstanding
for a period
exceeding six
months since due
date for payment
Considered good 6.37 15.17
Considered doubtful 15.16 13.41
21.53 28.58
Less:provision for
doubtful debt
15.16 6.37 13.41 15.17
Other debt:
considered good
332.42 307.95
TOTAL 338.79 323.12
ANALYSIS-
ROLTA INDIA LIMITED has increased the value of its receivables as compared to
previous year (2013-2014). The reason is that the collection period has increased
due to which the value of receivables has increased in the current financial year
(2014-2015).

13. 12
TREASURY MANAGEMENT-
CASH & BANK BALANCES:
PARTICULARS AS AT MARCH 31,2015 AS AT MARCH 31,2014
A.cash and cash equivalents
Cash in hand 0.82 0.39
Cheques/draft in hand 1.91 4.20
BALANCES WITH BOOKS
Current accounts 22.90 73.95
Term deposit maturing within
3 months
5.0 63
Unpaid dividend account 5.20 4.80
TOTAL(A) 35.83 146.34
B.other bank balances
Term deposits maturing after 3
months but before 12 months
88.11 151.13
TOTAL (B) 88.11 151.13
C. fixed deposits maturing after
12 months
2.00
TOTAL(A+B+C) 125.94 297.47
TOTAL CASH AND BANK
BALANCES
125.94 297.47
ANALYSIS
The value of Cash & Bank amount in the current financial year has decreased as
compared to previous financial year.

14. 13
INVESTMENTS:
Investments that are readily realizable and are intended to be held for not more
than one year at the point of acquisition are classified as “Current investments”.
All other investments are classified as “Non-current investments”.
Current investments are stated at the lower of cost and fair value. Long term
investments are stated at cost. A provision for diminution is made to recognize a
decline other than temporary, if any, in the value of Non current investments.
Investments in Subsidiaries, Joint Ventures and Associates are held for long term
and valued at cost reduced by diminution of permanent nature therein, if any. No
profit or losses of subsidiaries are accounted for.
LEVERAGE
FINANCIAL LEVERAGE-
It measures the percentage change in EPS for a unit change in earnings before
interest and taxes (EBIT). It is calculated as under:
FINANCIAL LEVERAGE (FL) = EBIT/(EBIT- Interest)
PARTICULARS 2014-2015 2013-2014
Profit before tax(PBT) 976.53 861.33
Add:interest 5.14 11.42
Earning before interest
and tax(EBIT)
981.67 872.75
FINANCIAL LEVERAGE 981.67/ 976.53 872.75/ 861.33
1.01 Times 1.01 times

15. 14
Degree of Financial Leverage = % change in EPS
% change in EBIT
= 12.99
12.48
= 1.04
This means that for every 1% change in EBIT or operating income, EPS would
change by 1.04%.

16. 15
BIBLIOGRAPHY
WEBSITES
i. www.rolta.com
ii. https://en.m.wikipedia.org
iii. www.ibef.org
BOOKS AND REFERENCES
i. Financial Management – M.Y. Khan And P.K. Jain
ii. Financial Management – M.R. Agrawal