* U.S. research firm alleges Rolta India fabricated its capex
* Rolta India CFO calls report "completely baseless"
* Rolta India shares down as much as 11.1 pct in Mumbai (Adds Rolta CFO's comments and background on Glaucus)
HONG KONG - California-based Glaucus Research, well known for shorting stocks, issued a "strong sell" report on software firm Rolta India, saying the company does not produce free cash flow and cannot repay offshore bondholders without refinancing.
Rolta's shares fell as much as 11.1 percent on Thursday in Mumbai, while its bonds due 2019 were down 11 points at 87.5/88.5.
"In our opinion, bondholders and rating agencies have fallen for the myth of Rolta," Glaucus said in its report, advising investors to sell the company's bonds due 2018 and 2019.
It has set a price target of 16 cents on the dollar for the 2019 bonds and those due in 2018 which had raised $500 million in aggregate.
Rolta Chief Financial Officer Hiranya Ashar rejected the Glaucus report as "inaccurate and completely baseless."
"We have done a lot of investments over the last five years, and all those investments have contributed to our assets ... and these assets are very much there," Ashar told Reuters.
The Glaucus report alleges Rolta - a Mumbai-based information technology firm with operations in India and North America - fabricated its reported capital expenditures.
In particular, it described the company's reported spend on office furniture and buildings in Mumbai as "highly suspicious".
Ashar said Glaucus had not contacted the company or inspected its properties.
"Buildings are not something one can hide," he said, adding that Rolta would issue a detailed response to the report to exchanges on Thursday.
Last May, Taiwan's Financial Supervisory Commission said it would file a suit against California-based Glaucus for "maliciously spreading rumours" against Asia Plastic.
Glaucus had initiated coverage of Asia Plastic in late April with a "strong sell" rating, saying its financial reports were inflated.
In 2013, Hong Kong-listed shares of Chinese child skincare products producer Prince Frog International slid after Glaucus took issue with the company's sales figures.
Singapore-listed Chinese company Minzhong Food Corp Ltd came under fire in 2013 when Glaucus alleged the company misled investors about sales. Minzhong rejected the allegation.