Exited JV with Shaw to focus on nuclear power: Rolta

Rolta has announced that it has sold 50% of its stake in Shaw Rolta to its joint venture partner Stone & Webster Inc, a subsidiary of The Shaw Group. The company has been able to unlock substantial value in Shaw Rolta.

The sale agreement provides for an immediate receipt by Rolta of USD 27.5 million or about Rs 125 crore. In addition, it will also receive USD 8 million or about Rs 36 crore over the next two years for certain defined services taking the total amount to about Rs 160 crore. Rolta has exited the JV after six years. In 2004 it had invested Rs 50 lakh in the JV with Shaw Group. In an interview with CNBC-TV18, KK Singh, CMD, Rolta India threw light on the stake sale. Below is a verbatim transcript. Also watch the accompanying video. Q: Can you confirm if you are selling your stake in Shaw Rolta and why this move and how much would you be booking? A; We are selling this stake primarily because we want to monetize the value of our holding in this company. At the same time our partners have not been very enthusiastic about the growth story about nuclear power in the country because they still find some impediments regarding the liability laws and other things. So to avoid the exclusivity issues, we have decided that we will separate out at this moment because we have other parties also which are talking to us for doing nuclear power business in India. And we already are doing nuclear power business through our business group within our own company. Q: What exactly has the sale amounted to that you have made in the Shaw Rolta JV and which quarter it will be booked in and whether it will be booked in full? A: The total amount is about Rs 160 crore, out of which we will be getting Rs 125 crore immediately and the remaining amount will come over a period of two years, on a quarterly basis. So as far as booking is concerned this has been effective 31 December so this would be into this quarter, the quarter which went by December. So we should be able to book into that. We are very pleased that we have been able to monetize the value and we have a first right of refusal with Shaw that in case they have to come back to India for doing any nuclear business they have to come back to us and we would be able to jointly address the market.
In the meantime we are looking at many other parties who are interested to work with us. For example in oil and gas we have already tied up with company like Mustang with whom we will be doing work in India exclusively. So there are good advantages. We believe that the value has been unlocked for a turnover which we were putting about Rs 20-30 crore in our books and profit of Rs 5-6-7 crore for a dividend of about Rs 1 crore what we have got is a very good value for that. And all the options are still open with us. This is a good deal which we believe we have been able to do. Q: What is the plan with the FCCBs, the outstanding USD 100 million dollar FCCBs particularly in the context of you probably moving to IFRS by the next quarter, how are you dealing with that? A: FCCBs will be due somewhere in July 2012. So we have created reserves for them and we have enough funds to be able to redeem them on the due dates and we will be able to handle that quite sensibly as they come and become due. Q: For the rest of the calendar year any fund raising plans for you and what instrument would it be? A: We have been taking enabling resolution from the General Body about doing a GDR or QIP etc for USD 150 million. That is only an enabling resolution we don't know when we will actually be doing it. This resolution is valid till November of 2011. So within this period somewhere we would be able to use that depending on when the conditions are right and when the board approves it.