Rolta sees volumes staying low but better bottomline ahead

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Rolta sees volumes staying low but better bottomline ahead

KK Singh, chairman and managing director, Rolta India said, the company is hopeful of seeing a reversal of mark-to-market (M-T-M) losses of FCCBs in the third quarter

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Rolta See previous management interviews See what other Experts & Brokerages are saying about Rolta

Rolta India reported a consolidated net profit of Rs 65 crore in the second quarter of FY12, a growth of 4.8% as compared to Rs 62 crore in the previous quarter.

It posted a forex loss of Rs 13.4 crore against a loss of Rs 26 crore quarter-on-quarter. KK Singh, chairman and managing director, Rolta India in an interview to CNBC-TV18 said, the company is hopeful of seeing a reversal of mark-to-market (M-T-M) losses of FCCBs in the third quarter.

Its consolidated net sales slipped 2.9% to Rs 472 crore in October-December quarter from Rs 486 crore in the earlier quarter.

Singh said, Rolta is undergoing a change in the business model, so volume growth can be lower going ahead. However, the bottom-line is expected to improve going ahead . 

"We have gone from a service company to a solution company. The change in this model certainly means higher margins for us. Our overall volume growth maybe lower, but we are focusing on the bottom line."

Below is the edited transcript of Singh's interview with CNBC.TV18. Also watch the accompanying video.

Q: There is news that some of the international banks are looking to cut down their budget spends. What is the feedback you are getting from your clients at this point in time? Are they indicating any improvement in confidence particularly after the move in these risk assets or is the commentary still the same that you had about a couple of months ago?

A: We don't find much change. We are not much affected now. In any case, BFSI business for us is a much smaller business. It does not matter much in our case.

Q: We want to hear first about your mark-to-market losses on account of the FCCBs. Could you reverse something? What is this item in the P&L this time?

A: This time it is around Rs 13 crore or so which is lower than last quarter. As we go forward, we provided at the rate of about Rs 53 at December 31 and it is less than Rs 48.8 as on today. We will be able to reverse reasonably well in the current quarter itself. So, it should certainly help us as we go forward.

Q: How revenue growth will pan out in the current quarter?

A: We are undergoing some change as a matter of fact for that. We have gone from a service company to a solution company. We are a very IP centric company now. We are providing a lot of our own IPs and services related to that, earlier we used provide pure services. The change in this model certainly means higher margins for us and we can go up the value chain.

But we have to have conscious decision to cut down the pure services, which were at a lower end of the value chain. Our overall volume growth maybe lower than what would be in the normal circumstances. But we are focusing on the bottom line and our bottom line is certainly getting better. We believe that we should be getting better results for that. We are doing that very consciously to improve our bottomline and go up the value chain.