EX-99.1 2 f50269exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(WIPRO LOGO)
FOR IMMEDIATE RELEASE
Contact: Sridhar Ramasubbu
Wipro Limited
408-242-6285
Wipro records 36% growth in Total Revenue
Revenues from IT Services — $ 1,110 million
Results for the quarter ended September 30, 2008 under US GAAP
Bangalore, India and East Brunswick, New Jersey, USA — October 22, 2008 — Wipro Limited (NYSE:WIT) today announced financial results under US GAAP for its second fiscal quarter ended September 30, 2008.
Highlights of the Results:
  Ø   Total Revenues were Rs. 64.10 billion ($1.38 billion1), representing an increase of 36% over the same period last year.
 
  Ø   Net Income was Rs. 8.22 billion ($177 million1) on a GAAP basis.
 
  Ø   Non-GAAP Adjusted Net Income (excluding impact of currency translation on foreign currency loan, related cross currency swap and India fringe benefit tax) was Rs. 9.47 billion ($204 million1), representing an increase of 17% over the same period last year.
 
  Ø   IT Services Revenues were Rs. 47.34 billion ($1019 million1), representing an increase of 36% over the same period last year.
 
  Ø   IT Services Earnings Before Interest and Tax (EBIT) was Rs. 9.59 billion ($206 million1), representing an increase of 26% over the same period last year.
 
  Ø   IT Services business added 28 new clients in the quarter.
 
  Ø   IT Products business recorded a 44% growth in Revenues over the same period last year and EBIT grew by 26%.
 
  Ø   Consumer Care and Lighting business Revenue grew 36% over the same period last year and EBIT grew 23%.
Performance for quarter ended September 30, 2008 and Outlook for quarter ending December 31, 2008
Azim Premji, Chairman of Wipro, commenting on the results said -
“For the quarter ended September 2008, we delivered an excellent performance with IT Services revenues at $1,110 million, significantly ahead of our guidance of $1,089 million. Retail & Transportation, Manufacturing & Healthcare and Financial Services businesses led the growth with strong performances during the quarter. Our differentiated Service lines of Technology Infrastructure Services, Testing Services and Package Implementation continue to show good growth. Our leadership in India & Middle East business was further re-emphasized with another quarter of strong year on year growth. We won six multi-year multi-million dollar deals during the quarter.
 
1.   For the convenience of the reader, the amounts in Indian rupees in this release have been translated into United States dollars at the noon buying rate in New York City on September 30, 2008, for cable transfers in Indian rupees, as certified by the Federal Reserve Bank of New York, which was US $1=Rs.46.45. However, the realized exchange rate in our IT Services business segment for the quarter ended September 30, 2008 was US$1=Rs. 42.65.

 

 

The global economic environment has deteriorated significantly over the past couple of months, and our outlook is cautious in the near term given the extent of strain on the global economy. However, we are confident on the resilience of our business model to tide over these challenging times. Looking ahead, for the quarter ending December 31, 2008, we expect our Revenue from our IT Services business to be approximately $1,121 million.”
Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said -
“The performance for the quarter is a strong reflection on our ability to deliver operational efficiencies. Rate Realization and Fixed Price Projects mix improved sequentially by 200 basis points and 100 basis points respectively. Our continued emphasis on driving Utilization through an integrated delivery model resulted in Utilization moving up by 240 basis points. These strong gains on operational front helped us improve our margins in the IT Services business in spite of effecting salary increases to our offshore employees during the quarter.”
Wipro Limited
Total Revenue for our quarter ended September 30, 2008 was Rs. 64.10 billion ($1.38 billion1), representing an increase of 36% over the same period last year. Net Income for our quarter ended September 30, 2008 on GAAP basis was Rs.8.22 billion ($177 million1), representing an increase of 1% over the same period last year. Net Income for our quarter ended September 30, 2008 on an Adjusted Non-GAAP basis (excluding impact of currency translation on foreign currency loan, related cross currency swap and India fringe benefit tax) was Rs. 9.47 billion ($204 million1), representing an increase of 17% over the same period last year. Earnings per Share on the GAAP basis for our quarter ended September 30, 2008 were Rs. 5.66 ($0.121), representing an increase of 1% over the same period last year. Non-GAAP Adjusted Earnings per Share (excluding impact of currency translation on foreign currency loan, related cross currency swap and India fringe benefit tax) for our quarter ended September 30, 2008 were Rs. 6.51 ($0.141), representing an increase of 16% over the same period last year.
In the current global environment of liquidity challenges, cash provides excellent flexibility to pursue strategic initiatives and business opportunities. With that objective, the Board has decided not to declare interim dividend.
Reconciliation between GAAP net income and non-GAAP adjusted net income (excluding impact of currency translation on foreign currency loan, related cross currency swap and India fringe benefit tax) is provided in the table on page 8.
IT Services Segment (74% of Total Revenue and 94% of Operating Income for our quarter ended September 30, 2008)
Our IT Services business segment recorded Revenue of Rs. 47.34 billion2 ($1019 million1) for our quarter ended September 30, 2008, representing an increase of 36% over the same period last year. EBIT for this segment was Rs. 9.59 billion ($206 million1) for our quarter ended September 30, 2008, representing an increase of 26% over the same period last year.
Our Operating Income to Revenue for this segment was 20.3% for our quarter ended September 30, 2008.
 
2   IT Services business segment Revenue was Rs. 47.5 billion for the quarter ended September 30, 2008 under the Indian GAAP. The difference of Rs. 165 million ($3.55 million1) is primarily attributable to differences in accounting standards under Indian GAAP and US GAAP.

 

 

We had 97,552 employees as of September 30, 2008, which includes 75,748 employees in our IT business unit and 21,804 employees in our BPO business unit.
Our IT Services business added 28 new clients during the quarter.
Key Wins
Wipro entered into a large multi-million dollar deal with one of the largest financial services group in the EMEA region to provide Testing as Managed Services (TMS) ™. Wipro is managing end-to-end testing ownership for the entire Testing Environment (Testing operations, Applications and Infrastructure support) for the Retail Banking platform. Wipro’s competence in the financial services testing domain was the key differentiator.
Wipro Technologies won a five year, multi-million dollar deal with a global consumer apparel company headquartered in the United States. In this engagement, Wipro will manage application development and support for application portfolio spanning areas such as supply chain, go-to-market, collaboration, distribution and warehouse management, retail and legacy systems. Wipro’s focus on business transformation, with a risk mitigated solution was the key differentiator.
Wipro also entered into a multi-year strategic engagement with a major French Telecom company. Wipro will leverage its core competence in the areas of Application Development and Maintenance, superior quality processes and delivery innovation in this engagement. This is a testimony to Wipro’s growing importance in the French market.
In a landmark co-innovation partnership with Harman International, Wipro launched a joint embedded engineering center in India. The new Harman India Development Center will operate from Wipro’s existing Bangalore and Chennai facilities, complementing an earlier agreement which outsourced Harman’s global IT infrastructure services to Wipro.
Wipro entered into an engagement with a German electrical systems company for an ERP rollout project which will integrate their global operations bringing in significant system standardization and process integration business benefits.
Wipro has been chosen for a multi-year engagement by a large UK based Water and Waste-water service utility to provide managed hosting services.
In the India geography, a large contact centre upgrade and managed services contract was won for a leading Telecom Services provider. This 5 year multi-million dollar outsourcing contract will see Wipro providing highest system availability to several million subscribers. Another key win was the implementation of an Integrated Risk Management System (IRMS) at Vijaya Bank, a project that relates to integration of multiple risk solutions. IRMS will help the bank assess the risk involved while lending and informs the bank on re-pricing the loan, among many other solutions.
Green IT
This quarter Wipro strengthened its suite of Green IT offerings which includes Consulting, Green Data Centers, Carbon Accounting, Paperless Office and Freight Management solutions. The green suite of offerings saw traction both in terms of deals as well as industry recognition.
Wipro embarked on a first of its kind initiative for a leading Telecom Service provider in India which involves construction of a completely “green” National Data Center for the company’s nationwide IT and Telecom requirements. The project will not only ensure visible environmental benefits but will also bring potentially huge cost savings in terms of power, water and lighting ensuring natural resources are optimized to the

 

 

maximum. The scope of the project includes futuristic design, supply, installation, commissioning and operations for Data Center and NOC.
Wipro technologies and a leading Retail organization in the US recently collaborated to win Oracle’s ‘Empower the Green Enterprise’ award for Implementation of Oracle I-Expenses module with integration to Peoplesoft payroll. Wipro helped the client organization move their legacy travel expense system to Oracle I-expenses platform and significantly reduced the consumption of paper, making the process more eco-friendly.
As Enterprises world-wide are beginning to consciously reduce their contribution to Global Warming by reducing emissions of Green House Gases, Wipro has introduced a Carbon Accounting Tool, that will help enterprises to measure, manage, monitor and monetize their Carbon Di-oxide emissions resulting from their operations globally.
Awards and Recognition:
Wipro has been recognized as a winner of the Asian MAKE Awards, 2008. Wipro was ranked first in the ‘Transforming enterprise knowledge into shareholder value’. Wipro was also ranked high in the ‘Developing knowledge workers through senior management’ and in the ‘Managing customer knowledge’ categories. This is the sixth time in a row that Wipro has been recognized as an Asian MAKE winner.
Wipro received ‘strong positive’ rating in leading Analyst firm, Gartner of its “Market Scope for Business Intelligence and Performance Management Services, Western Europe, 2008”.*
Wipro has been quoted as a specialized consulting partner in application delivery for clients seeking cross-enterprise food supply chain tracking by leading independent research firm AMR†.
IT Products Segment (14% of Total Revenue and 2% of Operating Income for our quarter ended September 30, 2008)
Our IT Products business segment recorded Revenue of Rs. 9.14 billion ($197 million1) for our quarter ended September 30, 2008, representing an increase of 44% over the same period last year. EBIT for this segment was Rs. 201 million ($4 million1) for our quarter ended September 30, 2008, representing an increase of 26% over the same period last year.
Our Operating Income to Revenue for this segment was 2.2% for our quarter ended September 30, 2008.
Return on Capital Employed (ROCE) for our IT Services and Products segment was 40% for our quarter ended September 30, 2008, compared to 42% for the same period last year.
Consumer Care and Lighting Segment (8% of Total Revenue and 5% of Operating Income for our quarter ended September 30, 2008)
Our Consumer Care and Lighting business segment recorded Revenue of Rs. 4.83 billion ($104 million1) for our quarter ended September 30, 2008, representing an increase of 36% over the same period last year. EBIT for this segment was Rs. 518 million ($11 million1) for our quarter ended September 30, 2008, representing an increase of 23% over the same period last year.
 
*   “Market Scope for Business Intelligence and Performance Management Services, Western Europe, 2008,” by Susanne Karlsson. 1 July 2008.
 
†    AMR Alert, September, 2008, How Safe Is Your Food Supply Chain?

 

 

Our Operating Income to Revenue for this segment was 10.7% for our quarter ended September 30, 2008. ROCE for this segment was 11% for our quarter ended September 30, 2008, compared to 15% for the same period last year.
About Non-GAAP financial measures
The Company provides Non-GAAP adjusted net income (excluding impact of currency translation on foreign currency loan, related cross currency swap and India fringe benefit tax) to supplement reported GAAP results. Non-GAAP adjusted net income excludes the impact of translating specific foreign currency borrowing, the impact of periodic fair value measurement of related cross currency swaps used in combination for hedging net investments in foreign operations and stock-based fringe benefit tax expense paid in India.
The Company believes that the presentation of this non-GAAP adjusted net income (excluding impact of currency translation on foreign currency loan, related cross currency swap and India fringe benefit tax), when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its results of operations. The Company believes that foreign currency borrowing and its swaps are in substance economic hedges of net investment, though for GAAP reporting the impact of translation and fair value measurements are recorded in the Income statement. In addition, our stock-based fringe benefit tax expense is fully reimbursed by our employees, but for GAAP reporting, the reimbursement is recorded in stockholders’ equity. Therefore, making available an adjusted net income number that excludes the impact of these items from net income we believe provides useful supplemental information to both management and investors about our financial and business trends.
For our internal budgeting process, our management uses financial statements that do not include impact of periodic translation of specific foreign currency borrowing, fair value re-measurement of cross currency swaps and stock-based fringe benefit tax expense. The management of the Company also uses non-GAAP adjusted net income, in addition to the corresponding GAAP measures, in reviewing our financial results.
A material limitation associated with the use of non-GAAP net income as compared to the GAAP measures of net income is that it does not include costs which are recurring in nature and may not be comparable with the calculation of net income for other companies in our industry. The Company compensates for these limitations by providing full disclosure of the effects of non-GAAP measures, by presenting the corresponding GAAP financial measure in this release and in the Company’s financial statements and by providing a reconciliation to the corresponding GAAP measure.
Our results for the quarter ended September 30, 2008, computed under Indian GAAP and US GAAP, along with our individual business segment reports, are available in the Investor Relations section of our website at www.wipro.com.
Quarterly Conference Calls
We will hold conference calls today at 11:45 a.m. Indian Standard Time (2:15 a.m. US Eastern Time) and at 6:45 p.m. Indian Standard Time (9:15 a.m. US Eastern Time) to discuss our performance for the quarter and answer questions sent to email ID: sridhar.ramasubbu@wipro.com. An audio recording of the management discussions and the question and answer session will be available online and will be accessible in the Investor Relations section of our website at www.wipro.com.
About Wipro Limited
Wipro provides comprehensive IT solutions and services, including systems integration, information systems outsourcing, package implementation, software application development and maintenance, and research

 

 

and development services to corporations globally. Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services company globally. Wipro’s IT Services business was assessed at Level 5 for CMMI V 1.2 across Offshore and Onsite development centers.
In the Indian market, Wipro is a leader in providing IT solutions and services for the corporate segment in India offering system integration, network integration, software solutions and IT services. Wipro also has a profitable presence in niche market segments of infrastructure engineering, and consumer products & lighting. In the Asia Pacific and Middle East markets, Wipro provides IT solutions and services for global corporations.
Wipro’s ADS are listed on the New York Stock Exchange, and our equity shares are listed in India on the Stock Exchange — Mumbai, and the National Stock Exchange. For more information, please visit our websites at www.wipro.com, www.wiprocorporate.com and www.wipro.in
Forward-looking and Cautionary Statements
Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in our earnings, revenue and profits, our ability to generate and manage growth, intense competition in IT services, our ability to maintain our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which we make strategic investments, withdrawal of fiscal governmental incentives, political instability, war, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property, and general economic conditions affecting our business and industry. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.
# # #
(Tables to follow)

 

 

WIPRO LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(in millions, except share data)
                                 
    As of September 30,     As of March 31,  
    2007     2008     2008     2008  
                    Convenience          
                    translation          
                    into US$          
NOTE   (unaudited)     (unaudited)     (unaudited)          
ASSETS
                                
Current assets:
                                
Cash and cash equivalents
   Rs. 20,266       20,157     $ 434     Rs. 39,270  
Restricted cash
     33       —       —       —  
Investments in liquid and short-term mutual funds
     23,060       39,888       859       14,808  
Accounts receivable, net of allowances
     32,130       48,008       1,034       38,908  
Unbilled Revenue
     7,800       12,523       270       8,305  
Inventories
     6,296       9,790       211       7,172  
Deferred income taxes
     506       1,836       40       790  
Other current assets
     13,798       23,878       514       19,092  
                 
Total current assets
     103,888       156,080       3,360       128,345  
Property, plant and equipment, net
     33,626       46,270       996       39,822  
Investments in affiliates
     1,379       1,521       33       1,343  
Investments securities
     358       356       8       355  
Deferred income taxes
     230       377       8       —  
Intangible assets, net
     12,296       15,679       338       12,480  
Goodwill
     37,589       43,773       942       38,943  
Other assets
     5,591       4,571       98       3,214  
                 
Total assets
   Rs. 194,957       268,627     $ 5,783     Rs. 224,502  
                 
 
                                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                
Current liabilities
                                
Borrowings from banks and foreign state instituitions
   Rs. 24,762       36,259     $ 781     Rs. 28,804  
Current portion of long-term debt
     981       411       9       406  
Current portion of obligations under capital leases
     320       331       7       323  
Accounts payable
     14,226       18,142       391       13,082  
Accrued expenses
     8,786       12,202       263       8,110  
Accrued employee costs
     4,611       5,870       126       5,160  
Advances from customers
     1,620       3,009       65       2,136  
Unearned Revenue
     2,485       5,846       126       4,162  
Other current liabilities
     14,391       30,011       646       12,519  
                 
Total current liabilities
     72,182       112,081       2,413       74,702  
Long-term debt, excluding current portion
     2,335       15,893       342       14,522  
Obligations under capital leases, excluding current portion
     806       795       17       701  
Deferred income taxes
     1,843       3,136       68       2,098  
Other liabilities
     2,290       3,474       75       3,011  
                 
Total Liabilities
     79,456       135,379       2,915       95,034  
                 
 
                                
Minority interest
     97       169       4       114  
Stockholders’ equity:
                                
Equity shares at Rs. 2 par value: 1,650,000,000 shares authorized; Issued and outstanding: 1,461,453,320, 1,434,563,895 and 1,463,003,208 shares as of March 31, 2008, September 30, 2007 and 2008
     2,919       2,926       63       2,923  
Additonal paid-in capital
     25,223       27,502       592       26,441  
Accumulated other comprehensive income
     (237 )     (7,939 )     (171 )     (1,076 )
Retained earnings
     87,499       110,590       2,381       101,066  
Equity Shares held by a controlled Trust:
     —       —       —       —  
7,961,760, 7,961,760 and 7,961,760 shares as of March 31, 2008, September 2007 and 2008
                                
                 
Total stockholders’s equity
     115,404       133,079       2,865       129,354  
                 
 
                                
                 
Total liabilities and Stockholder’s equity
   Rs. 194,957       268,627     $ 5,783     Rs. 224,502  
                 

 

 

WIPRO LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except share data)
                                                 
    Three months ended September 30,     Six months ended September 30,  
    2007     2008     2008     2007     2008     2008  
                    Convenience                     Convenience  
                    translation                     translation  
                into US$                 into US$  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Revenues:
                                                
Services
   Rs. 34,760     Rs. 47,523     $ 1023       66,787       92,127       1983  
Products
     12,521       16,571       357       22,326       31,590       680  
 
                                    
Total
     47,281       64,094       1,380       89,113       123,717       2,663  
 
                                    
 
                                                
Cost of Revenues:
                                                
 
Services
     23,344       31,924       687       44,544       61,319       1320  
Products
     9,822       13,299       286       17,891       25,304       545  
Total
     33,166       45,223       974       62,435       86,623       1865  
 
                                    
Gross Profit
     14,115       18,871       406       26,678       37,094       799  
 
                                    
 
                                                
Operating Expenses:
                                                
Selling and marketing expenses
     (3,288 )     (4,552 )     (98 )     (6,049 )     (8,985 )     (193 )
General and administrative expenses
     (2,655 )     (3,452 )     (74 )     (4,715 )     (6,706 )     (144 )
Amortization of intangible assets
     (99 )     (495 )     (11 )     (204 )     (722 )     (16 )
Foreign exchange gains / (losses), net
     58       (321 )     (7 )     (794 )     (1,010 )     (22 )
Others, net
     32       118       3       112       250       5  
 
                                    
Operating Income
     8,163       10,169       219       15,028       19,921       429  
 
                                    
Other income, net
     743       (789 )     (17 )     1,734       (1,061 )     (23 )
Equity in earnings/(losses) of affiliates
     84       106       2       171       213       5  
 
                                    
Income before income taxes and minority interest
     8,990       9,486       204       16,933       19,073       411  
 
                                    
Income taxes
     (865 )     (1,240 )     (27 )     (1,704 )     (2,676 )     (58 )
Minority interest
     (3 )     (22 )     (0 )     (3 )     (34 )     (1 )
 
                                    
Net income
   Rs. 8,122     Rs. 8,224     $ 177       15,226       16,363       352  
 
                                    
Earnings per equity share
                                                
Basic
                                                
Net income
     5.60       5.66       0.12       10.50       11.26       0.24  
Diluted
                                                
Net income
     5.57       5.65       0.12       10.45       11.23       0.24  
Weighted average number if equity shares used in computing earnings per equity share:
                                                
Basic
     1,450,036,475       1,453,493,031               1,449,964,665       1,453,064,597          
Diluted
     1,457,139,183       1,456,763,428               1,457,512,260       1,456,739,353          
 
                                                
Additional Information
                                                
Segment Revenue
                                                
IT Services
     34,879       47,335       1019       66339       91268       1965  
IT Products
     6,359       9,144       197       10911       16101       347  
IT Services & Products
     41,238       56,479       1216       77,250       107,369       2311  
Consumer Care and Lighting
     3,549       4,831       104       5770       9577       206  
Others
     2,494       2,785       60       6093       6771       146  
Total
     47,281       64,095       1380       89,113       123,717       2663  
Operating Income
                                                
IT Services
     7,592       9,591       206       14,133       18,411       396  
IT Products
     160       201       4       345       506       11  
IT Services & Products
     7,752       9,792       211       14,478       18,917       407  
Consumer Care and Lighting
     421       518       11       726       1,123       24  
Others
     (10 )     (141 )     (3 )     (177 )     (119 )     (3 )
Total
     8,163       10,169       219       15,027       19,921       429  
 
                                                
Reconciliation of Non-GAAP adjusted net income to comparable net income
                                                
 
                                                
Net Income as per GAAP
   Rs. 8,122       8,224     $ 177       15,226       16,363       352  
 
                                                
Adjustments:
                                                
Translation loss on foreign currency loan and changes in fair value of cross currency swap
     —       1,156       25       —       1,816       39  
Fringe benefit tax
     —       86       2       —       132       3  
 
                                                
 
                                    
Non-GAAP adjusted net Income
   Rs. 8,122       9,466     $ 204       15,226       18,311       394