A ₹2,500-crore deal to divest the products and solutions business that failed to materialise and the inability to restructure bonds have landed India’s top information technology company Rolta India in some deep trouble. To give itself some room for financial maneuverability, the company has announced downsizing of its global workforce of 3,000 employees and has asked many to resign.

The crises started for Rolta when its group company defaulted on the payment of bonds – it hold bonds worth $200 million maturing in 2018 and $300 million maturing in 2019 — last year and sought restructuring. Certain bond holders started demanding upfront cash. Rolta later tried to pursue an asset sale worth ₹2,500 crore and was engaged in talks, first with the UK-headquartered Spectris and then with Germany-based ABB. It was in talks with Tech Mahindra too. The deal did not go through as some of its domestic lenders did not give their assent, and instead, dragged the company to the NCLT for initiating insolvency proceedings.

The company, which was ranked among the “Best 200 under a Billion” four times in six years by Forbes Global , said in a letter to its employees dated January 3 that it suffered a ‘major blow’ recently in its efforts to deleverage completely by paying off the entire debt in India and completing the bond restructuring agreement.

Rolta, which claims to have executed projects in 40 countries and was included in the S&P Global Challengers List, has a total debt of around ₹8,000- 10,000 crore, it is learnt. Union Bank of India has filed a petition against the company in the Mumbai bench of the NCLT, making it one of the first major IT companies to be dragged into insolvency proceedings.

Letter to employees

“We will downsize the present strength of Roltaites worldwide to form a core team of competent and dedicated Roltaites who will look after the various functions of the company to protect its hi-tech assets and technology, service its existing customers and enable it to come out of the current crises. All Roltaites who have already resigned will be released on or before January 31, 2019,” KK Singh, Executive Chairman, Rolta, said in his letter.

“During late 2017, we decided to look for disinvesting some assets consisting of our IPs and solutions which had heavy demand worldwide. From early 2018, these efforts started bearing fruits, and in fact, we received a firm Letter of Intent from a reputed international company valuing our offered products and solutions at about ₹2,500 crore. At the time of closure of this transaction in first week of August, we, unfortunately, could not fulfil certain pre-conditions and, therefore, the deal fell through. This was a big blow to our efforts to deleverage the company completely by paying off all Indian debts and completing the restructuring agreement of bonds which the company had entered in mid-July 2018. As of today, our efforts on disinvestment are still on. We are also pursuing our debtors. But all this will take some time, and there is no solution for the immediate cash crunch which we are facing,” Singh further wrote in the letter.

Singh said though the promoter companies led by him have injected more than ₹500 crore, the conditions continued to deteriorate, particularly after the lenders approached the NCLT.

The company, which offers technology solutions, won a ₹50,000-crore battlefield management project jointly with Bharat Electronics in 2015. Rolta claims the project, when implemented over the next 10 years, has a revenue potential of more than ₹10,000 crore. It is expecting payments from the government from 2020.