Glaucus report baseless; no merit in it: Rolta India

The research report said the company does not produce free cash flow and cannot repay offshore bondholders without refinancing and advised investors to sell the company's bonds due 2018 and 2019.

A report from Glaucus Research indicated that Rolta India fabricated its reported capital expenditures in order to mask materially overstated EBITDA.

The research report said the company does not produce free cash flow and cannot repay offshore bondholders without refinancing and advised investors to sell the company's bonds due 2018 and 2019.

Hiranya Ashar, Joint MD of International Operations & Group CFO, Rolta says the report is completely baseless and all the facts mentioned in the same are totally incorrect.

Below is the verbatim transcript of Hiryana Ashar's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.

Latha: Did you read the Glaucus research blog and what have you got to say?

A: I did go through this report and this seems to be absolutely baseless report. The facts which are given in this report are not correct and also the way it has been compared is also not, the right comparison is apples to oranges. For us this report is completely baseless and as you said, coming from someone organisation which is not even heard of. So, we completely decline whatever is written in this report.

Latha: Did they reach out to you? What is the basis of whatever they have said? Have you spoken to them at all?

A: No. It has just come about less than hour ago. We have just gone through the report and have not been able to go through the report in totality. But, on the prima facie whatever they have written seems to be absolutely baseless.

Sonia: I am just going through the report at this point and they put a really serious allegation where they are saying that Rolta fell into a predictable pattern of acquiring computer systems and then disposing such systems at a loss. So, you disposed off about Rs 21 billion; that is close to USD 400 million of computer system and in exchange received only Rs 77 million. This resulted in wasted cash or cash loss exceeding more than USD 490 million. What would your own response be to this?

A: At the end, the same thing; the facts are not correct. First of all, these are computer systems and it has a life. So, a computer system after three or four years will certainly be sold. But what they have written is we have sold at a loss which is incorrect because what they are comparing is the original purchase price with the sell price but not the book value with the sell price and there is no loss which has been incurred. In fact if you see these some of these systems have been sold at a minor, very small loss and in fact sometimes even a profit because the book value is being completely depreciated. The facts are not correct.

Rolta stock price

On April 16, 2015, at 11:10 hrs Rolta India was quoting at Rs 156.40, down Rs 18.75, or 10.71 percent. The 52-week high of the share was Rs 196.80 and the 52-week low was Rs 72.40.

The company's trailing 12-month (TTM) EPS was at Rs 50.68 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 3.09. The latest book value of the company is Rs 122.95 per share. At current value, the price-to-book value of the company is 1.27.

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