Rolta was established in 1982. The company identified CAD/CAM as its niche area. It's software business has a strong backing of Intergraph Corporation, USA, which is its technical collaborator. Intergraph is the worldwide leader with in this field with a 90 per cent market share in the development of interactive graphic systems. This has given Rolta a clear monopoly in the domestic market for CAD/CAM products and also rights for selling Intergraph machines.

Rolta also manufactures/markets computer hardware. Historically, Rolta growth rate has been low as it wasinitially in the computer hardware business and was slow in tapping the software business. The scene is now changing fast. Rolta does not enjoy a good investor confidence as the promoters have been involved with various finance companies during the stock market boom. But the valuations are attractive as the company has a huge potential for growth. Lack of investor understanding of the business is also another reason for the company's low rating. Entry into the ISP business has also affected valuations as it is likely to put pressure on margins in the near future.

For the six-month period ended June 30, 1999, the company posted a 36 per cent jump in sales turnover, while net profit increased by 46 per cent. Due to the improved performance in the first-half of 1999, annualised earnings per share has increased from Rs 7.42 to Rs 10.64. Long-term prospects are encouraging as the company is in a niche area, which is growing at a fast pace. The company is giving a thrust to exports of CAD/ CAM/ GIS solutions,which have higher margins and better prospects. Competition, especially from local players, is minimal. As far as the hardware business is concerned, the margins will continue to be under pressure as there is major undercutting in the price of hardware products.

Fifty per cent of the company's revenue comes from government and PSUs. The defence and forest department are highly dependent on the company's CAD/ CAM/GIS products. Rolta has also entered into mapping and data conversion in a big way for the export market. This involves building sophisticated mapping systems for telecommunication, power, gas and government utilities and linking them to intelligent databases on various platforms.

The company has collaborated with ALLTE, a US-based telecom company, to convert telephone exchange records into Unix/Oracle database. This has helped Rolta to receive orders from Hong Kong Telecom and the Government of Saudi Arabia.

With the launch of its Internet services, RoltaNet in Mumbai Rolta will join the fastsaturating ISP market, already dominated by MTNL and VSNL. The latter has 40 per cent of the market with a subscriber base of one million. Private players include Satyam, with a base of 40,000 subscribers.

Rolta has alliances with Microsoft, Computer Associates, Integraph, Lucent, Intel and Cisco for acquiring the necessary infrastructure for this service. Initially, the company will use VSNL's gateway, but plans to set up its own gateway by next year. However, on the price front, it could be tough for the company to take on state-owned entities like VSNL and MTNL. It will need a subscriber base of 30,000-40,000 to break-even.