Comments
Rolta India has rejected a report issued by US-based Glaucus Research, which alleged the company’s reported capital expenditure was “fabricated”, as “baseless, erroneous and mala fide.” Following the report, the share prices of the IT solutions provider plummeted 12.13 per cent to close at ₹153.90 on Thursday.
“This report is mala fide, malicious and aimed at misleading investors with an ulterior motive — so that Glaucus Research Group can benefit from its short interest in Rolta’s bonds,” the Mumbai-based company said in a statement.
“This undated report is completely baseless and has factual errors and inconsistencies. The Glaucus Research Group has never contacted Rolta to verify any facts,” it said, adding the company is exploring all avenues including legal action.
AllegationsAccording to the research firm, Rolta India issued “junk bonds” totalling $500 million in 2013 and 2014. The bonds, which are due in 2018 and 2019, had attracted investor interest as they were offered with “tempting yields.”
“We believe that Rolta has fabricated its reported capital expenditure in order to mask that it has materially overstated its Ebitda (operating profit),” it added.
According to the report, Rolta spent ₹7,000 crore ($1.4 billion) on capital expenditure, an amount far in excess of the ₹4,300 crore in Ebitda that the company “supposedly earned over this period.”
Suspicious capex“Rolta’s reported capital expenditures are deeply suspicious, with much of the reported spending disappearing into phantom prototypes, mysterious construction projects and computer systems of questionable authenticity and utility. In our view, the preponderance of the evidence suggests that the vast majority of Rolta’s reported capital expenditures have been fabricated,” it said.
The California-based research firm also rubbished ratings given by Fitch, and alleged that the bondholders and ratings agencies have fallen for the “myth of Rolta.”
On Rolta’s plans to raise offshore bonds, Glaucus said it suspects the company was unable to borrow in India. The research firm also dismissed earlier news that the company jointly with Bharat Electronics Ltd has won a contract from the Ministry of Defence.
The companies are yet to win the contract, it said. In February, Rolta’s share prices rallied on news of the contract win.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.