Rolta focused on lucrative, niche areas early on and today has created a mark in the spaces it operates in, and is also respected globally.
It takes plenty of grit and determination to break away from tried and tested ways and take on odds and challenges that the unknown brings. Rolta India displayed this courage when it became the first Indian company to venture into the geographical information systems (GIS) and computer aided design (CAD) space way back in 1986. This was during a time when most Indians hadn’t heard of computers, leave alone something as complicated as graphical design and digital images, or for that matter alien concepts like GIS or CAD/CAM. Of course, India has begun exporting software to the West—but back then for most companies software exports meant nothing more than body shopping.
But Rolta, under K K Singh, the company’s founder-cum-chairman and managing director, successfully navigated these challenges to emerge as India’s leading GIS and CAD/CAM player.
This foresight and perseverance was displayed again in 1999-2000, when the company forayed into the e-solutions space. While most ISPs, having burnt their fingers, were downing shutters, Rolta actually invested thousands of man-hours to develop Linux-based platforms from scratch, which replicated the Microsoft platform. The company can now offer clients Web solutions at dirt-cheap rates and today boasts of being a preferred service provider in Mumbai. This is only one among the many reasons for the company’s extraordinary success. There is a lot more to the company that Forbes Global listed among the top 200 best companies in the world for three consecutive years.
The Rolta story
Rolta came into being way back in 1982, when Singh set up a data processing centre to tap the growing requirements of the banking sector. In 1984, the company jumped on to the popular bandwagon when it started exporting software. Rolta also considered other niche areas like manufacturing PCs and CAD/CAM. Though the banking and software solutions space held the promise of huge revenues, Rolta felt that since there were too many players it would be beneficial to focus on a niche area. The GIS and design automation space were relatively untapped. In fact, Rolta was among the first to venture into this space. Also, and most importantly, the margins were good.
Intergraph, a leader in the CAD/CAM and GIS space was evaluating companies in India for likely partnerships. India was considered the eleventh largest economy in the world, and held huge promise for a player like Intergraph. Intergraph also manufactured workstations and software, and boasted expertise in the graphics space, which was a key area for the Indian market. Rolta entered into a technology tie-up with Intergraph in 1986, and became the distributor for its products and services.
But government regulations posed various restrictions on the free import of technology. This considerably reduced the market opportunity for the company, as it had to focus solely on companies that could acquire an import license. The break came when Rolta managed to land a contract from ‘Survey of India’ for an end-to-end GIS implementation. Engineers India also contracted the company for its plant design solution. Since both these clients were public sector units, getting an export license was a breeze.
But, according to K R Vaidyanathan, senior executive director—corporate sales and support for Rolta, the numbers were not huge. Also, Rolta wanted to make its offerings available in Indian currency. This prompted the company to try its hand at manufacturing the GIS units. So in 1988-89 Rolta ventured into manufacturing. And to finance its operations Rolta also went public at the same time.
Till then, Integra had refused to share its manufacturing technology with any partner. But realising the opportunity presented by the geographical vastness and diversity of India the company decided to make an exception. Integra decided to share the technology with Rolta. By this time Rolta had already gained implementation expertise from Integra.
In 1992-93 Rolta decided to exit body shopping, as it was not contributing much to the overall growth of the company. Instead it decided to provide services for CAD/CAM and GIS products globally. It was no easy going, as the company had to circumvent the lack of established credibility and capability. To overcome this Rolta did pilots for many clients, sometimes free of charge. But the strategy eventually paid off in the long run.
The major breakthrough for the company came in the form of a Saudi Telecom project worth $35 million. The project was actually landed by AT&T, which in turn had contracted Intergraph for the software and Rolta for the services part. “Says Vaidyanathan, “The order was completed in less than three years. But since then, thanks to additional service requirements, the project has provided us with more than $50 million in revenues.”
In 1997-98, Rolta decided to venture into plant design automation (PDA). Most industrial units in India had been erected without the aid of any computer design. Rolta decided to convert these plant designs into digital format. This would enable a company to carry out expansion activities and upgradation programmes without many hitches, as used to be the case with the traditional format.
Following this Rolta forayed into the mechanical design automation (MDA) space in 1999. The vast experience the company had gained in the GIS mapping arena provided it with the requisite confidence to venture into this space.
Services have become a major part of Rolta’s focus in the export market. Claims Vaidyanathan, “Today, any project done globally is not without our participation.” In fiscal 2002-03, the company achieved an export turnover of Rs 359 million.
Rolta’s international operations headquarters in based in Atlanta and the company also has fully-owned subsidiaries in the US, UK and Europe. The company also has boasts of a joint venture in Saudi Arabia.
The business has become complicated over the years, with the company venturing into many related areas. To smoothen operations the company undertook a major restructuring initiative in the last fiscal. Operational functioning has been divided into three strategic business groups—GeoEngineering and GIS, engineering design automation and eSolutions.
Strategy
In the early stages of the company’s growth Rolta advertised in the market to create mind share. This was important as the company was planning an IPO initiative. But today the company resorts to what it considers more effective methodologies. According to Vaidyanathan, the key issue in India is awareness. The company has adopted a strategy of holding technology seminars across the country to educate the user. Other than this, the company has continued to hold periodical road shows to demonstrate the company’s offerings.
One reason for maintaining a low-key media profile is that the purchase cycle for Rolta’s offerings is quite lengthy. The company has already identified potential customers and tailored its workshops to meet a prospective client’s needs. All regional offices conduct such workshops from time to time. Land records, forestry, utility services, etc, have become major areas of growth for the company. Rolta has also identified the power and communications businesses as the next growth avenue.
Rolta exited its manufacturing venture in 1996 when the systems were migrated to the Microsoft NT platform. Today, the company provides hardware only on demand. Rolta entered into business tie-ups with HP and IBM to fulfil this requirement. The company now uses its manufacturing facilities to carry out product repair and maintenance work.
Rolta is currently focused on marrying its eSolutions business with its GIS business. The company had correctly identified the Web as the next area of growth and has built expertise in this space. This is now proving beneficial in enabling the company to integrate its GIS offering with eSolutions.
Partnerships and alliances
Since the Intergraph partnership, the company has followed a successful model of partnering with leaders in a particular space to enter that market. The Intergraph partnership is responsible for Rolta’s leadership position in geospatial technology, plant design automation and product lifecycle management. Other than this the company has entered into partnerships with Z/I Imaging for photogrammetry and imaging technologies. This is the latest focus area for the company. The company has also partnered with PTC, a leader in the mechanical design automation segment, for MDA as well as product lifecycle management.
Microsoft, IBM, CA, Network Associates, Intel, Lucent, and Oracle are the other key players with whom Rolta has enjoyed successful and fruitful alliances. Most of these alliances have basically been in the area of e-business and network management.
Rolta also recently forged a strategic business alliance with Stone & Webster, a subsidiary of The Shaw Group and a leading engineering, procurement and construction (EPC) company. The partnership will be concerned with providing high-quality, engineering, design, and procurement services, primarily to support Stone & Webster’s international power, refinery and petrochemical EPC projects. The joint venture will be called Stone & Webster Rolta, and will leverage Rolta India’s infrastructure, facilities, and IT-enabled engineering capabilities in India and Stone & Webster’s extensive experience and expertise in executing complex global EPC projects.
The company’s first-mover advantage has also definitely paid off. The Department of Science & Technology (DST), a government of India undertaking, recently entered into an agreement with Rolta, to set up a planetarium and museum at New Delhi, for increasing the appreciation of GIS technology, and to produce digital map data in collaboration with the Survey of India.
Financials
The financial period 2002-2003 was extended to a period of 18 months up to June 30, 2003 for completion of Rolta’s restructuring initiatives. During this period, Rolta reported a turnover of Rs 3,835 million and a profit after tax (PAT) of Rs 1,122 million, compared to Rs 3,014 million and Rs 1,054 million respectively in 2001. The earning per share (EPS) on a fully diluted equity was Rs 17.6 in 2002-03 as against to Rs 16.6 for the corresponding period last year. The cash earning per share was Rs 30.7. The company continues to show robust growth rates of around 35 percent year-on-year.
For the third quarter ended September 30, 2003, on a sequential basis the net profit of the company has increased significantly by 402.6 percent. The total income for the quarter was Rs 650 million, against a total income of Rs 600 million during the corresponding quarter of the previous year, reflecting a growth of 8.2 percent. The net profit after depreciation and tax for this quarter stood at Rs 220 million against a net profit of Rs 200 million during the same quarter of the previous year, recording a growth of 9.6 percent. Also, for the third consecutive year Forbes Global has listed Rolta among the 200 best companies in the world having sales up to $1 billion.
The export market accounts for 26-27 percent of Rolta’s revenues.
GIS
Digital mapping hit the scene in the early 80s. But GIS actually took off only after the solution was offered on the Windows platform. The Survey of India, National Spatial Data Infrastructure (NSDI), National Remote Sensing Agency (NRSA) and the Forest Survey Department were among the various Indian agencies involved in the mapping of different regions. These agencies provide raw data from satellite images or paper maps. But there are government restrictions on the availability of data for security reasons.
There are three different aspects to this particular strategic business group (SBG). The GeoEngineering and GIS SBG is involved with technical support and services, production and the pre- and post-sales business. The production department is involved with map-making. Technology and software customisation is another major area for this group. This is currently being done for national telephone carriers, MTNL and BSNL. Rolta is also working on a project for the Dubai municipality. According to Lt Col M K Munshi (Retd), senior executive director, the efficient interfacing of these resources has enabled the company to complete various multimillion-dollar projects. Currently, the company boasts of an order book comprising more than one additional year of full capacity in the pipeline.
Photogrammetry is another area that Rolta is exploring in a big way. The company has already extended its partnerships strategy to this area to tap this burgeoning market. The company has also launched sophisticated change detection solutions for the imaging market, which are particularly relevant for defence applications.
Long term partnerships with industry leaders such as Z/I Imaging, Intergraph, Autodesk, ESRI and Smallworld have ensured that the company’s skills and knowledge base remain constantly updated. Add to this a skilled and dedicated team of more than 1,000 technical professionals and the company has all the necessary ingredients for successful implementation of GIS and mapping projects.
Another key reason for success has been the time invested by the company in documenting the services it can provide vis-à-vis customer expectations. The strategy adopted is to try and ensure that everything is clear to the customer prior to project implementation. Says Aloke Chakrabarti, director operations, “It is extremely important to deliver quality in a project and to introduce a quality control system. Our mantra for success has been good quality and low turnaround time.”
Team Rolta believes that the main component of the global information infrastructure is spatially referenced information. This makes GIS a decision-making tool for managements, ensuring that the group has only one way to go—up.
Engineering design automation
The Engineering Design Automation (EDA) business group comprises of divisions providing solutions and services in the plant design automation (PDA), mechanical design automation (MDA) and product lifecycle management (PLM) space.
In India, Rolta boasts of 89 percent market share in the PDA space. In partnership with Intergraph, Rolta offers plant design systems (PDS), 3D design and modelling tools for plant design. Rolta also has on offer INtools and Marian, the latter being an integrated lifecycle material procurement and supply chain management system.
For MDA Rolta has tied up with PTC to provide customers with tools for handling designing, modelling, simulation, detailing and tooling. The segment holds huge potential, especially with the emergence of India as a destination for auto parts. Today, even small auto ancillaries use design software for manufacturing auto components. Says S K Shirguppi, director—business operations and head of the engineering design automation business group, “When large manufacturing units adopt a design automation tool the smaller players have to follow if they want to survive. Rolta’s main focus is on the SME segment and the public sector.
Rolta also provides various services to the engineering industry, such as assistance in doing 3D modelling work; and customising software by adding more utilities and components.
Over the years Rolta also gained considerable expertise in the detail-engineering segment. The alliance with Stone & Webster is expected to enable the company to tap the growing petrochemicals market. As the demand for cleaner fuels rises, players in this space will need to upgrade their facilities the world over.
Rolta sees a huge opportunity in the power sector with the Asian market growing at a rapid rate. China is also opening up. Even India is a big market. The Middle East is another region that promises huge opportunities, especially with the reconstruction work being carried out in Iraq.
In the mechanical design automation space Rolta boasts a market share of 60-65 percent. PDA today accounts for 70 percent of the SBG’s revenues while MDA accounts for the rest.
Rolta recently also invested several millions in establishing a technical centre of excellence in Mumbai, boasting the latest workstations and state-of-the-art software.
eSolutions group
Rolta was among the first to get a license to become an ISP in 1999. RoltaNet was launched in the same year. The motive was not to provide Internet services but gain hands-on experience in an upcoming technology likely to touch every aspect of life, including CAD/CAM.
Rolta entered into business tie-ups with Microsoft, IBM, Computer Associates (CA) and other technology majors for implementing best-of-breed infrastructure at its data centre in Mumbai. Rolta also doubled up as the service provider for all its partners, including CA, Microsoft and IBM.
The company laid out optic fibre lines for telephone connections at its own cost, as the prevalent cabling was copper. Thanks to this, Rolta boasts that it hasn’t had a single hour of downtime in the last four years.
Competition brought in aggressive pricing not making it viable to continue providing ISP services. Many companies without well thought out plans dropped out. This was when Rolta’s traditional grit and determination came into the fray. The company wanted to offer three basic services—Web services with back-end database, network management and security. But pricing pressure was tremendous. The per-license fee charged by Microsoft accounted for a major portion of the cost.
Rolta’s system software personnel were put on a programme to migrate from the Microsoft portal platform to a Linux-based platform. Considerable effort was put into selecting the correct tools, integrating them, and also developing GUIs. Says Dr S R Bhot, director business operations and head of eSolutions business group, “We crafted the entire Linux platform parallel to the Microsoft platform. But the tricky part was to move 50,000-odd subscribers without losing any e-mail in a live environment from the Microsoft platform to our indigenously developed platform. Seamless migration took seven months but the benefits were worth it.” Thanks to the initiative the company has been able to cut down on costs by more than 50 percent.
This experience saw the company venturing into a new area. Having seen how cost-effective the Linux platform was, Rolta created Linux-based firewalls, VPNs, intrusion detection systems, e-mail solutions and various other solutions and offered them to end-customers. Rolta also created a Radius server on Linux for government organisations. The point solutions the company developed have today become its products.
The company has developed a network management system that it considers equivalent to CA’s solution. Rolta’s own WAN and LAN consists of more than 2,500 workstations, numerous servers and other networking components.
A major area of focus for the company is its security solutions. The company sees huge potential in this space, especially in mission-critical business operations—from financial operations to SCM to product sales and customer service—moving on to the network internally and to the Internet.
The enterprise applications and smart card solutions division develops, integrates and provides complex enterprise applications and smart card solutions. Dr Bhot sees a huge opportunity for its smart card venture in the e-governance space. The company is all set to tap business that will be generated with most state governments deciding to replace the current system of driving licences with smart cards. The company also sees a huge opportunity in the corporate segment with authentication, physical access and security becoming a major area of concern.
Road ahead
In keeping with its move to consolidate operations the company recently brought its software development units under one umbrella. Till this point each of Rolta’s business units had its own separate software development divisions. All these units have now been consolidated under the projects and products development division.
Support is a major issue if any project has to become productive. Customers have to see value in a proposition. But with more than 20 offices spread across the country and fully-owned subsidiaries in North America, Middle East and Europe, Rolta appears to be more than geared to handle the load.
With GIS becoming a commodity today, the future certainly appears bright. HLL, for instance, is using GIS for retail distribution. Organisations in India are realising the benefits of CAD/CAM. They have realised the benefits of doing away with complicated prototypes and are instead using simulations.
Prices for products have come down drastically thanks to falling prices in the hardware sector. Even customs duties have been cut drastically, from 130-140 percent a few years back it has come down to less than 50 percent. Rolta is now looking at providing add-on products to complement its existing range of products. The company will follow its strategy of entering into partnerships and alliances. But the company is clear that all expansion activities would be based on core strengths. Rolta is also open to the idea of acquisitions for faster growth. At the moment the company is nursing dreams of acquiring CMM Level 5 on the fast track.
This article first appeared in Express Computer
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