EX-99.4 5 d216158dex994.htm EX-99.4 EX-99.4

Exhibit 99.4

WIPRO LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS UNDER IFRS

AS OF AND FOR THE THREE MONTHS ENDED JUNE 30, 2016

 

1


WIPRO LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

( in millions, except share and per share data, unless otherwise stated)

 

          As of March 31,      As of June 30,  
     Notes    2016      2016      2016  
                        Convenience
translation into US
dollar in millions
(unaudited) Refer
Note 2(iv)
 

ASSETS

           

Goodwill

   5      101,991         103,491         1,533   

Intangible assets

   5      15,841         15,354         227   

Property, plant and equipment

   4      64,952         66,110         979   

Derivative assets

   13,14      260         212         3   

Investments

   7      4,907         4,985         74   

Non-current tax assets

        11,751         11,938         177   

Deferred tax assets

        4,286         4,125         61   

Other non-current assets

   10      15,828         16,166         239   
     

 

 

    

 

 

    

 

 

 

Total non-current assets

        219,816         222,381         3,293   
     

 

 

    

 

 

    

 

 

 

Inventories

   8      5,390         6,454         96   

Trade receivables

        100,976         102,072         1,512   

Other current assets

   10      32,894         34,607         513   

Unbilled revenues

        48,273         52,251         774   

Investments

   7      204,244         197,671         2,928   

Current tax assets

        7,812         8,292         123   

Derivative assets

   13,14      5,549         4,947         73   

Cash and cash equivalents

   9      99,049         124,435         1,843   
     

 

 

    

 

 

    

 

 

 

Total current assets

        504,187         530,729         7,862   
     

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

        724,003         753,110         11,155   
     

 

 

    

 

 

    

 

 

 

EQUITY

           

Share capital

        4,941         4,941         73   

Share premium

        14,642         14,642         217   

Retained earnings

        425,106         445,732         6,601   

Share based payment reserve

        2,229         2,557         38   

Other components of equity

        18,242         21,436         318   
     

 

 

    

 

 

    

 

 

 

Equity attributable to the equity holders of the Company

        465,160         489,308         7,247   

Non-controlling interest

        2,224         2,318         34   
     

 

 

    

 

 

    

 

 

 

Total equity

        467,384         491,626         7,281   
     

 

 

    

 

 

    

 

 

 

LIABILITIES

           

Long - term loans and borrowings

   11      17,361         17,225         255   

Deferred tax liabilities

        5,108         4,869         72   

Derivative liabilities

   13,14      119         123         2   

Non-current tax liabilities

        8,231         7,842         116   

Other non-current liabilities

   12      7,225         7,032         104   

Provisions

   12      14         18         —     
     

 

 

    

 

 

    

 

 

 

Total non-current liabilities

        38,058         37,109         549   
     

 

 

    

 

 

    

 

 

 

Loans, borrowings and bank overdrafts

   11      107,860         111,441         1,651   

Trade payables and accrued expenses

        68,187         70,997         1,052   

Unearned revenues

        18,076         15,436         229   

Current tax liabilities

        7,015         9,932         147   

Derivative liabilities

   13,14      2,340         1,331         20   

Other current liabilities

   12      13,821         14,056         208   

Provisions

   12      1,262         1,182         18   
     

 

 

    

 

 

    

 

 

 

Total current liabilities

        218,561         224,375         3,325   
     

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES

        256,619         261,484         3,874   
     

 

 

    

 

 

    

 

 

 

TOTAL EQUITY AND LIABILITIES

        724,003         753,110         11,155   
     

 

 

    

 

 

    

 

 

 

 

 

The accompanying notes form an integral part of these condensed consolidated interim financial statements

 

As per our report of even date attached   For and on behalf of the Board of Directors    
for B S R & Co. LLP   Azim H Premji   N Vaghul   Abidali Neemuchwala

Chartered Accountants

Firm’s Registration No: 101248W/W - 100022

 

Chairman &

Managing Director

  Director   Chief Executive Officer & Executive Director
Akeel Master   Jatin Pravinchandra Dalal   M Sanaulla Khan  

Partner

Membership No. 046768

  Chief Financial Officer   Company Secretary  

Mumbai

July 19, 2016

 

Bangalore

July 19, 2016

   

 

2


WIPRO LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME

( in millions, except share and per share data, unless otherwise stated)

 

            Three months ended June 30,  
     Notes      2015     2016     2016  
                        Convenience
translation into US
dollar in millions
(unaudited) Refer
Note 2(iv)
 

Gross revenues

     17         122,376        135,992        2,014   

Cost of revenues

     18         (84,787     (96,389     (1,428

Gross profit

        37,589        39,603        586   

Selling and marketing expenses

     18         (8,044     (10,141     (150

General and administrative expenses

     18         (6.893     (7,599     (113

Foreign exchange gains/(losses), net

        1,330        984        15   

Results from operating activities

        23,982        22,847        338   

Finance expenses

     19         (1,286     (1,336     (20

Finance and other income

     20         5,335        5,200        77   

Profit before tax

        28,031        26,711        395   

Income tax expense

     16         (5,958     (6,122     (91
     

 

 

   

 

 

   

 

 

 

Profit for the period/year

        22,073        20,589        304   
     

 

 

   

 

 

   

 

 

 

Attributable to:

         

Equity holders of the Company

        21,917        20,518        303   

Non-controlling interest

        156        71        1   
     

 

 

   

 

 

   

 

 

 

Profit for the period/ year

        22,073        20,589        304   
     

 

 

   

 

 

   

 

 

 

Earnings per equity share:

     21          

Attributable to equity share holders of the Company

         

Basic

        8.92        8.35        0.12   

Diluted

        8.91        8.33        0.12   

Weighted average number of equity shares used in computing earnings per equity share

         

Basic

        2,455,804,709        2,457,363,886        2,457,363,886   

Diluted

        2,460,584,039        2,463,397,368        2,463,397,368   

 

 

The accompanying notes form an integral part of these condensed consolidated interim financial statements

 

As per our report of even date attached   For and on behalf of the Board of Directors    
for B S R & Co. LLP   Azim H Premji   N Vaghul   Abidali Neemuchwala

Chartered Accountants

Firm’s Registration No: 101248W/W- 100022

 

Chairman &

Managing Director

  Director   Chief Executive Officer & Executive Director
Akeel Master   Jatin Pravinchandra Dalal   M Sanaulla Khan  

Partner

Membership No. 046768

  Chief Financial Officer   Company Secretary  

Mumbai

July 19, 2016

 

Bangalore

July 19, 2016

   

 

3


WIPRO LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

( in millions, except share and per share data, unless otherwise stated)

 

          Three months ended June 30,  
     Notes    2015     2016      2016  
                       Convenience
translation into US
dollar in millions
(unaudited) Refer
Note 2(iv)
 

Profit for the period

        22,073        20,589         305   

Items that will not be reclassified to profit or loss

          

Defined benefit plan actuarial gains/(losses)

        (660     72         1   
     

 

 

   

 

 

    

 

 

 

Items that may be reclassified subsequently to profit or loss

        (660     72         1   
     

 

 

   

 

 

    

 

 

 

Foreign currency translation differences

   15      1,603        1,550         23   

Net change in fair value of cash flow hedges

   13,16      (1,999     970         14   

Net change in fair value of financial instruments through OCI

   7,16      46        625         9   
     

 

 

   

 

 

    

 

 

 
        (350     3,145         46   
     

 

 

   

 

 

    

 

 

 

Total other comprehensive income, net of taxes

        (1,010     3,217         47   
     

 

 

   

 

 

    

 

 

 

Total comprehensive income for the period

        21,063        23,806         352   
     

 

 

   

 

 

    

 

 

 

Attributable to:

          

Equity holders of the Company

        20,882        23,712         351   

Non-controlling interest

        181        94         1   
     

 

 

   

 

 

    

 

 

 
        21,063        23,806         352   
     

 

 

   

 

 

    

 

 

 

 

 

The accompanying notes form an integral part of these condensed consolidated interim financial statements

 

As per our report of even date attached   For and on behalf of the Board of Directors    
for B S R & Co. LLP   Azim H Premji   N Vaghul   Abidali Neemuchwala

Chartered Accountants

Firm’s Registration No: 101248W/W - 100022

 

Chairman &

Managing Director

  Director   Chief Executive Officer & Executive Director
Akeel Master   Jatin Pravinchandra Dalal   M Sanaulla Khan  

Partner

Membership No. 046768

  Chief Financial Officer   Company Secretary  

Mumbai

July 19, 2016

 

Bangalore

July 19, 2016

   

 

4


WIPRO LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

( in millions, except share and per share data, unless otherwise stated)

 

                                  Other components of
equity
          Equity
attributable to
the equity
holders of the
Company
             

Particulars

  No. of Shares*     Share
capital
    Share
premium
    Retained
earnings
    Share
based
payment
reserve
    Foreign
currency
translation
reserve
    Cash
flow
hedging
reserve
    Other
reserves
    Shares
held by

controlled
trust
      Non-
controlling
interest
    Total
equity
 

As at April 1, 2015

    2,469,043,038        4,937        14,031        372,248        1,312        11,249        3,550        655        —          407,982        1,646        409,628   

Adjustment on adoption of IFRS 9 (net of tax)

    —          —          —          (782     —          —          —          (31     —          (813     —          (813
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balances as at April 1, 2015

    2,469,043,038        4,937        14,031        371,466        1,312        11,249        3,550        624        —          407,169        1,646        408,815   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

                       

Adjusted profit for the period

    —          —          —          21,917        —          —          —          —          —          21,917        156        22,073   

Adjusted other comprehensive income

    —          —          —          —          —          1,578        (1,999     (614     —          (1,035     25        (1,010
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restated comprehensive income for the period

    —          —          —          21,917        —          1,578        (1,999     (614     —          20,882        181        21,063   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transaction with owners of the company, recognized directly in equity

                       

Contributions by and distributions to owners of the Company

                       

Issue of equity shares on exercise of options

    257,763        1        89        —          (89     —          —          —          —          1        —          1   

Compensation cost related to employee share based payment transactions

    —          —          —          52        465        —          —          —          —          517        —          517   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    257,763        1        89        52        376        —          —          —          —          518        —          518   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Restated balances as at June 30, 2015

    2,469,300,801        4,938        14,120        393,435        1,688        12,827        1,551        10        —          428,569        1,827        430,396   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Convenience translation into US $ in million (Unaudited) Refer note 2(iv)

      78        222        6,187        27        202        24        —          —          6,741        29        6,770   

 

5


WIPRO LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

( in millions, except share and per share data, unless otherwise stated)

 

                                  Other components of equity           Equity
attributable to
the equity
holders of the
Company
             

Particulars

  No. of Shares*     Share
capital
    Share
premium
    Retained
earnings #
    Share
based
payment
reserve
    Foreign
currency
translation
reserve
    Cash
flow
hedging
reserve
    Other
reserves
    Shares held
by
controlled
trust
      Non-controlling
interest
    Total equity  

As at April 1, 2016

    2,470,713,290        4,941        14,642        425,735        2,229        16,116        1,910        505        —          466,078        2,224        468,302   

Adjustment on adoption of IFRS 9 (net of tax)

          (629           (289       (918     —          (918
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balances as at April 1, 2016

    2,470,713,290        4,941        14,642        425,106        2,229        16,116        1,910        216        —          465,160        2,224        467,384   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

                       

Profit for the period

    —          —          —          20,518        —          —          —          —          —          20,518        71        20,589   

Other comprehensive income

    —          —          —          —          —          1,527        970        697        —          3,194        23        3,217   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

    —          —          —          20,518        —          1,527        970        697        —          23,712        94        23,806   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transaction with owners of the company, recognized directly in equity

                       

Contributions by and distributions to owners of the Company

                       

Issue of equity shares on exercise of options

    —          —          —          108        (108     —          —          —          —          —          —          —     

Dividends

    —          —          —          —          —          —          —          —          —          —          —          —     

Compensation cost related to employee share based payment transactions

    —          —          —          —          436        —          —          —          —          436        —          436   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    —          —          —          108        328        —          —          —          —          436        —          436   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at June 30.2016

    2,470,713,290        4,941        14,642        445,732        2,557        17,643        2,880        913        —          489,308        2,318        491,626   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Convenience translation into US $ in million (Unaudited) Refer note 2(iv)

      73        217        6,601        38        261        43        14        —          7,247        34        7,281   

 

* Includes 14,829,824 and 14,535,675 treasury shares as of March 31, 2016 and June 30, 2016, respectively.

 

 

The accompanying notes form an integral part of these condensed consolidated interim financial statements

 

As per our report of even date attached   For and on behalf of the Board of Directors    
for B S R & Co. LLP   Azim H Premji   N Vaghul   Abidali Neemuchwala

Chartered Accountants

Firm’s Registration No: 101248W/W - 100022

 

Chairman &

Managing Director

  Director  

Chief Executive

& Executive Director

Akeel Master   Jatin Pravinchandra Dalal   M Sanaulla Khan  

Partner

Membership No. 046768

  Chief Financial Officer   Company Secretary  

Mumbai

July 19, 2016

 

Bangalore

July 19, 2016

   

 

6


WIPRO LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

( in millions, except share and per share data, unless otherwise stated)

 

     Quarter ended June 30,  
     2015     2016     2016  
                 Translation into
USS in millions
(Unaudited)
Refer note

2(iv)
 

Cash flows from operating activities:

      

Profit for the period

     22,073        20,589        306   

Adjustments:

      

Loss/(gain) on sale of property, plant and equipment and intangible assets, net

     (1     177        3   

Depreciation and amortization

     3,367        4,665        69   

Exchange loss, net

     703        (1,450     (21

Gain on sale of investments, net

     (413     (368     (5

Share based compensation expense

     482        425        6   

Income tax expense

     5,958        6,122        91   

Dividend and interest (income)/expenses, net

     (4,606     (4,420     (65

Changes in operating assets and liabilities; net of effects from acquisitions

      

Trade receivables

     (169     (761     (11

Unbilled revenue

     (3,921     (3,789     (56

Inventories

     113        (1,064     (16

Other assets

     (1,115     (1,452     (22

Trade payables, accrued expenses and other liabilities and provision

     5,092        2,907        43   

Unearned revenue

     280        (2,724     (40
  

 

 

   

 

 

   

 

 

 

Cash generated from operating activities before taxes

     27,843        18,857        282   
  

 

 

   

 

 

   

 

 

 

Income taxes paid, net

     (5,848     (4,421     (65
  

 

 

   

 

 

   

 

 

 

Net cash generated from operating activities

     21,995        14,436        217   
  

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

      

Purchase of property, plant and equipment

     (3,401     (4,683     (69

Proceeds from sale of property, plant and equipment

     95        48        1   

Purchase of investments

     (232,400     (165,023     (2,444

Proceeds from sale of investments

     181,019        174,665        2,587   

Interest received

     3,648        2,734        40   

Dividend received

     26        24        —     
  

 

 

   

 

 

   

 

 

 

Net cash (used in)/generated from investing activities

     (51,013     7,765        115   
  

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

      

Proceeds from issuance of equity shares/shares pending allotment

     1        —          —     

Repayment of loans and borrowings

     (28,979     (30,619     (454

Proceeds from loans and borrowings

     30,912        31,861        472   

Interest paid on loans and borrowings

     (409     (424     (6
  

 

 

   

 

 

   

 

 

 

Net cash generated from financing activities

     1,525        818        12   
  

 

 

   

 

 

   

 

 

 

Net increase/(decrease) in cash and cash equivalents during the period

     (27,493     23,019        344   

Effect of exchange rate changes on cash and cash equivalents

     731        866        13   

Cash and cash equivalents at the beginning of the period

     158,713        98,392        1,457   
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at the end of the period (Note 9)

     131,951        122,277        1,814   
  

 

 

   

 

 

   

 

 

 

 

 

The accompanying notes form an integral part of these condensed consolidated interim financial statements

 

As per our report of even date attached   For and on behalf of the Board of Directors    
for B S R & Co. LLP   Azim H Premji   N Vaghul   Abidali Neemuchwala

Chartered Accountants

Firm’s Registration No: 101248W/W- 100022

 

Chairman &

Managing Director

  Director   Chief Executive Officer & Executive Director
Akeel Master   Jatin Pravinchandra Dalai   M Sanaulla Khan  

Partner

Membership No. 046768

  Chief Financial Officer   Company Secretary  

Mumbai

July 19, 2016

 

Bangalore

July 19, 2016

   

 

7


WIPRO LIMITED AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

( in millions, except share and per share data, unless otherwise stated)

 

1. The Company overview

Wipro Limited (“Wipro” or the “Parent Company”), together with its subsidiaries (collectively, “the Company” or the “Group”) is a leading India based provider of IT Services, including Business Process Services (“BPS”), globally.

Wipro is a public limited company incorporated and domiciled in India. The address of its registered office is Wipro Limited, Doddakannelli, Sarjapur Road, Bangalore – 560 035, Karnataka, India. Wipro has its primary listing with Bombay Stock Exchange and National Stock Exchange in India. The Company’s American Depository Shares representing equity shares are also listed on the New York Stock Exchange. These condensed consolidated interim financial statements were authorized for issue by the Company’s Board of Directors on July 19, 2016.

 

2. Basis of preparation of financial statements

 

  (i) Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). Selected explanatory notes are included to explain events and transactions that are significant to understand the changes in financial position and performance of the Company since the last annual consolidated financial statements as at and for the year ended March 31, 2016. These condensed consolidated interim financial statements do not include all the information required for full annual financial statements prepared in accordance with IFRS.

 

  (ii) Basis of preparation

These condensed consolidated interim financial statements are prepared in accordance with International Accounting Standard (IAS) 34, “Interim Financial Reporting”.

The condensed consolidated interim financial statements correspond to the classification provisions contained in IAS 1(revised), “Presentation of Financial Statements”. For clarity, various items are aggregated in the statements of income and statements of financial position. These items are disaggregated separately in the Notes, where applicable. The accounting policies have been consistently applied to all periods presented in these condensed consolidated interim financial statements.

All amounts included in the condensed consolidated interim financial statements are reported in millions of Indian rupees ( in millions) except share and per share data, unless otherwise stated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.

 

  (iii) Basis of measurement

The condensed consolidated interim financial statements have been prepared on a historical cost convention and on an accrual basis, except for the following material items that have been measured at fair value as required by relevant IFRS:

 

  a. Derivative financial instruments;

 

  b. Financial instruments classified as fair value through other comprehensive income or fair value through profit or loss;

 

  c. The defined benefit asset/ (liability) is recognised at the present value of the defined benefit obligation less fair value of plan assets; and

 

  d. Contingent consideration.

 

8


  (iv) Convenience translation (unaudited)

The accompanying condensed consolidated interim financial statements have been prepared and reported in Indian rupees, the national currency of India. Solely for the convenience of the readers, the condensed consolidated interim financial statements as of and for the year ended June 30, 2016, have been translated into United States dollars at the certified foreign exchange rate of $ 1 = 67.51 (March 31, 2016: $ 1 = 66.25), as published by Federal Reserve Board of Governors on June 30, 2016. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United States dollars at such a rate or any other rate.

 

  (v) Use of estimates and judgment

The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the condensed consolidated interim financial statements is included in the following notes:

 

  a) Revenue recognition: The Company uses the percentage of completion method using the input (cost expended) method to measure progress towards completion in respect of fixed price contracts. Percentage of completion method accounting relies on estimates of total expected contract revenue and costs. This method is followed when reasonably dependable estimates of the revenues and costs applicable to various elements of the contract can be made. Key factors that are reviewed in estimating the future costs to complete include estimates of future labor costs and productivity efficiencies. Because the financial reporting of these contracts depends on estimates that are assessed continually during the term of these contracts, recognized revenue and profit are subject to revisions as the contract progresses to completion. When estimates indicate that a loss will be incurred, the loss is provided for in the period in which the loss becomes probable.

 

  b) Goodwill: Goodwill is tested for impairment at least annually and when events occur or changes in circumstances indicate that the recoverable amount of the cash generating unit is less than its carrying value. The recoverable amount of cash generating units is higher of value-in-use and fair value less cost to sell. The calculation involves use of significant estimates and assumptions which includes turnover and earnings multiples, growth rates and net margins used to calculate projected future cash flows, risk-adjusted discount rate, future economic and market conditions.

 

  c) Income taxes: The major tax jurisdictions for the Company are India and the United States of America. Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods.

 

  d) Deferred taxes: Deferred tax is recorded on temporary differences between the tax bases of assets and liabilities and their carrying amounts, at the rates that have been enacted or substantively enacted at the reporting date. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced.

 

  e) Business combinations: In accounting for business combinations, judgment is required in identifying whether an identifiable intangible asset is to be recorded separately from goodwill. Additionally, estimating the acquisition date fair value of the identifiable assets acquired, and liabilities and contingent consideration assumed involves management judgment. These measurements are based on information available at the acquisition date and are based on expectations and assumptions that have been deemed reasonable by management. Changes in these judgments, estimates, and assumptions can materially affect the results of operations.

 

9


  f) Expected credit losses on financial assets: On application of IFRS 9, the impairment provisions of financial assets are based on assumptions about risk of default and expected timing of collection. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, customer’s credit-worthiness, existing market conditions as well as forward looking estimates at the end of each reporting period.

 

  g) Measurement of fair value of non-marketable equity investments: These instruments are initially recorded at cost and subsequently measured at fair value. Fair value of investments is determined using the market and income approaches. The market approach includes the use of financial metrics and ratios of comparable companies, such as revenue, earnings, comparable performance multiples, recent financial rounds and the level of marketability of the investments. The selection of comparable companies requires management judgment and is based on a number of factors, including comparable company sizes, growth rates, and development stages. The income approach includes the use of discounted cash flow model, which requires significant estimates regarding the investees’ revenue, costs, and discount rates based on the risk profile of comparable companies. Estimates of revenue and costs are developed using available historical and forecast data.

 

  h) Other estimates: The stock compensation expense is determined based on the Company’s estimate of equity instruments that will eventually vest.

 

3. Significant accounting policies

Please refer to the Company’s Annual Report for the year ended March 31, 2016 for a discussion of the Company’s other critical accounting policies.

The company has early adopted IFRS 9 effective April 1, 2016, with retrospective application, accordingly the policy for financial instruments as presented in the Company’s Annual Report is amended as under:

Financial instruments:

 

  a) Non-derivative financial instruments:

Non derivative financial instruments consist of:

 

    financial assets, which include cash and cash equivalents, trade receivables, unbilled revenues, finance lease receivables, employee and other advances, investments in equity and debt securities and eligible current and non-current assets;

 

    financial liabilities, which include long and short-term loans and borrowings, bank overdrafts, trade payables, eligible current and non-current liabilities.

Non derivative financial instruments are recognized initially at fair value. Financial assets are derecognized when substantial risks and rewards of ownership of the financial asset have been transferred. In cases where substantial risks and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset.

Subsequent to initial recognition, non-derivative financial instruments are measured as described below:

A. Cash and cash equivalents

The Company’s cash and cash equivalents consist of cash on hand and in banks and demand deposits with banks, which can be withdrawn at any time, without prior notice or penalty on the principal.

For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Company’s cash management system. In the consolidated statement of financial position, bank overdrafts are presented under borrowings within current liabilities.

 

10


B. Investments

Financial instruments measured at amortised cost:

Debt instruments that meet the following criteria are measured at amortized cost (except for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition):

 

    the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows : and

 

    the contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

Financial instruments measured at fair value through other comprehensive income (FVTOCI):

Debt instruments that meet the following criteria are measured at fair value through other comprehensive income (FVTOCI) (except for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition)

 

    the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial asset; and

 

    the contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

Interest income is recognized in statement of income for FVTOCI debt instruments. Other changes in fair value of FVTOCI financial assets are recognized in other comprehensive income. When the investment is disposed of, the cumulative gain or loss previously accumulated in reserves is reclassified to statement of income.

Financial instruments measured at fair value through profit or loss (FVTPL):

Instruments that do not meet the amortised cost or FVTOCI criteria are measured at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in statement of income. The gain or loss on disposal is recognized in statement of income.

Interest income is recognized in statement of income for FVTPL debt instruments. Dividend on financial assets at FVTPL is recognized when the Group’s right to receive dividend is established.

Investments in equity instruments designated to be classified as FVTOCI:

The Company carries certain equity instruments which are not held for trading. The Company has elected the FVTOCI irrevocable option for these instruments. Movements in fair value of these investments are recognized in other comprehensive income and the gain or loss is not reclassified to statement of income on disposal of these investments. Dividends from these investments are recognized in statement of income when the Company’s right to receive dividends is established.

C. Other financial assets:

Other financial assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. These are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less any impairment losses. These comprise trade receivables, unbilled revenues, cash and cash equivalents and other assets.

 

11


D. Trade and other payables

Trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method. For these financial instruments, the carrying amounts approximate fair value due to the short term maturity of these instruments.

 

  b) Derivative financial instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations and forecasted cash flows denominated in foreign currency.

The Company limits the effect of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into derivative financial instruments where the counterparty is primarily a bank.

Derivatives are recognized and measured at fair value. Attributable transaction costs are recognized in statement of income as cost.

Subsequent to initial recognition, derivative financial instruments are measured as described below:

A. Cash flow hedges

Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognized in other comprehensive income and held in cash flow hedging reserve, net of taxes, a component of equity, to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in the statement of income and reported within foreign exchange gains/(losses), net within results from operating activities. If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the statement of income upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, such cumulative balance is immediately recognized in the statement of income.

B. Hedges of net investment in foreign operations

The Company designates derivative financial instruments as hedges of net investments in foreign operations. The Company has also designated a foreign currency denominated borrowing as a hedge of net investment in foreign operations. Changes in the fair value of the derivative hedging instruments and gains/losses on translation or settlement of foreign currency denominated borrowings designated as a hedge of net investment in foreign operations are recognized in other comprehensive income and presented within equity in the FCTR to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in the statement of income and reported within foreign exchange gains/(losses), net within results from operating activities.

C. Others

Changes in fair value of foreign currency derivative instruments neither designated as cash flow hedges nor hedges of net investment in foreign operations are recognized in the statement of income and reported within foreign exchange gains, net within results from operating activities.

Changes in fair value and gains/(losses) on settlement of foreign currency derivative instruments relating to borrowings, which have not been designated as hedges are recorded in finance expense.

New Accounting standards adopted by the Company:

The accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended March 31, 2016. The Company has elected to early adopt IFRS 9, Financial Instruments effective April 1, 2016 with retrospective application.

 

12


IFRS 9 – Financial instruments

IFRS 9 introduces a single approach for the classification and measurement of financial assets according to their cash flow characteristics and the business model they are managed in, and provides a new impairment model based on expected credit losses. IFRS 9 also includes new guidance regarding the application of hedge accounting to better reflect an entity’s risk management activities especially with regard to managing non-financial risks.

Application of the new measurement and presentation requirements of IFRS 9 did not have a significant impact on equity. The Company continues to measure at fair value all financial assets earlier held at fair value. All existing hedge relationships that were earlier designated as effective hedging relationships continue to qualify for hedge accounting under IFRS 9. As IFRS 9 does not change the general principles of how an entity accounts for effective hedges, there is no significant impact as a result of applying IFRS 9. The effect of change in measurement of financial instruments on the Company’s financial position has been applied retrospectively. The retrospective application did not have a significant impact on the financial position as at March 31, 2015.

The total impact on the Company’s retained earnings due to classification and measurement of financial instruments is as follows:

 

     Effect on
retained earnings
     Effect on
other reserves
 

Reported opening balance as at April 1, 2015

    372,248       655   
  

 

 

    

 

 

 

Impact on adoption of IFRS 9

     

Reclassification of investments from AFS to FVTPL (refer note a)

     55         (55

Expected credit losses on financial assets (refer note d)

     (1,243      —     

Deferred tax impact on the above

     406         24   
  

 

 

    

 

 

 

Total impact on adoption of IFRS 9

     (782      (31
  

 

 

    

 

 

 

Adjusted balance as at April 1, 2015

   371,466       624   

Reported balance as at March 31, 2016

     425,735         505   

Impact of adoption of IFRS 9 for the year ended March 31, 2016

     

Reclassification of investments from AFS to FVTPL (refer note a)

     375         (375

Expected credit losses on financial assets (refer note d)

     (161      —     

Deferred tax impact on the above

     (61      117   
  

 

 

    

 

 

 

Adjustment on adoption of IFRS 9 for the year ended March 31, 2016

     153         (258
  

 

 

    

 

 

 

Cumulative impact on adoption of IFRS 9 as at March 31, 2016

     (629      (289
  

 

 

    

 

 

 

Adjusted balance as at March 31, 2016

   425,106       216   
  

 

 

    

 

 

 

 

  (a) Reclassification of investments from available for sale (AFS) to FVTPL

Certain investments in liquid and short-term mutual funds and equity linked debentures were reclassified from available for sale to financial assets measured at FVTPL. Related fair value gains were transferred from other comprehensive income to retained earnings on April 1, 2015. During the year ended March 31, 2016, fair value gains related to these investments amounting to 258 was recognized in statement of income, net of related deferred tax expense of 117.

 

  (b) Reclassification of investments from AFS to FVTOCI

The Company on initial application of IFRS 9 has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading. Such investments and certificate of deposits were reclassified from available for sale to financial assets measured at fair value through other comprehensive income (FVTOCI). The fair value movements on these investments continue to be recorded through other comprehensive income. This reclassification did not have any impact on the carrying value of the said assets as at April 1, 2015.

 

13


  (c) Reclassification of loans and deposits to financial instruments at amortised cost

Certain inter corporate and term deposits along with related interest accruals were reclassified from loans and receivables reported as part of other assets to financial assets measured at amortised cost. This reclassification did not have any impact on the carrying value of the said assets as at April 1, 2015.

 

  (d) Impairment of financial assets

The Company has applied the simplified approach to providing for expected credit losses on trade receivables as described by IFRS 9, which requires the use of lifetime expected credit loss provision for all trade receivables. These provisions are based on assessment of risk of default and expected timing of collection. A cumulative impairment provision of ` 918 has been recorded as an adjustment to retained earnings as at April 1, 2015.

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

New accounting standards not yet adopted:

A number of new standards, amendments to standards and interpretations are not yet effective for annual periods beginning after April 1, 2016, and have not been applied in preparing these condensed consolidated interim financial statements. New standards, amendments to standards and interpretations that could have a potential impact on the consolidated financial statements of the Company are:

IFRS 15 – Revenue from Contracts with Customers

IFRS 15 supersedes all existing revenue requirements in IFRS (IAS 11 Construction Contracts, IAS 18 Revenue and related interpretations). According to the new standard, revenue is recognized to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 establishes a five step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligation; changes in contract asset and liability account balances between periods and key judgments and estimates. The standard permits the use of either the retrospective or cumulative effect transition method. In September 2015, the IASB issued an amendment to IFRS 15 deferring the adoption of standard to the period beginning on or after January 1, 2018. The Company is currently assessing the impact of adopting IFRS 15 on the Company’s Consolidated Financial Statements.

IFRS 16 - Leases

On January 13, 2016, the International Accounting Standards Board issued the final version of IFRS 16, Leases. IFRS 16 will replace the existing leases Standard, IAS 17 Leases, and related interpretations. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. The Standard also contains enhanced disclosure requirements for lessees. The effective date for adoption of IFRS 16 is annual periods beginning on or after January 1, 2019, though early adoption is permitted for companies applying IFRS 15 Revenue from Contracts with Customers. The Company is currently assessing the impact of adopting IFRS 16 on the Company’s Consolidated Financial Statements.

 

14


4. Property, plant and equipment

 

     Land      Buildings     Plant and
machinery*
    Furniture
fixtures and
equipment
    Vehicles     Total  

Gross carrying value:

             

As at April 1, 2015

    3,685        24,515       79,594       12,698       830       121,322   

Translation adjustment

     5         72        647        63        4        791   

Additions

     —           124        2,415        189        2        2,730   

Disposal / adjustments

     —           —          (450     (311     (16     (777
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at June 30, 2015

   3,690       24,711      82,206      12,639      820      124,066   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation/impairment:

             

As at April 1, 2015

    —          4,513       56,629      10,636       809      72,587   

Translation adjustment

     —           23        370        42        —          435   

Depreciation

     —           193        2,558        294        8        3,053   

Disposal / adjustments

     —           (39     (455     (217     3        (708
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at June 30, 2015

    —         4,690      59,102      10,755      820      75,367   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital work-in-progress

              7,039   
             

 

 

 

Net carrying value including Capital work-in-progress as at June 30, 2015

               55,738   
             

 

 

 

Gross carrying value:

             

As at April 1, 2015

   3,685       24,515      79,594      12,698      830      121,322   

Translation adjustment

     10         209        1,720        79        (1     2,017   

Additions

     —           1,799        15,424        1,791        62        19,076   

Additions through business combination

     —           105        4,462        162        34        4,763   

Disposal / adjustments

     —           (539     (1,620     (615     (336     (3,110
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at March 31, 2016

   3,695       26,089      99,580      14,115      589      144,068   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation/impairment:

             

As at April 1, 2015

   —         4,513      56,629      10,636      809      72,587   

Translation adjustment

     —           73        1,113        80        —          1,266   

Depreciation

     —           861        11,381        1,094        19        13,355   

Disposal / adjustments

     —           (103     (962     (492     (324     (1,881
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at March 31, 2016

    —         5,344      68,161      11,318      504      85,327   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital work-in-progress

              6,211   
             

 

 

 

Net carrying value including Capital work-in-progress as at March 31, 2016

              64,952   
             

 

 

 

Gross carrying value:

             

As at April 1, 2016

   3,695        26,089       99,580      14,115       589      144,068   

Translation adjustment

     3         61        691        44        8        807   

Additions

     —           351        3,765        334        2        4,452   

Disposal / adjustments

     —           —          (1,889     (54     (11     (1,954
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at June 30, 2016

   3,698       26,501       102,147      14,439      588      147,373   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation/impairment:

             

As at April 1, 2016

    —          5,344       68,161      11,318       504      85,327   

Translation adjustment

     —           26        385        34        3        448   

Depreciation

     —           250        3,478        261        6        3,995   

Disposal / adjustments

     —           —          (1,680     (41     (8     (1,729
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at June 30, 2016

    —         5,620      70,344      11,572      505      88,041   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital work-in-progress

               6,778   
             

 

 

 

Net carrying value including Capital work-in-progress as at June 30, 2016

              66,110   
             

 

 

 

 

*  Including computer equipment and software.

 

5. Goodwill and intangible assets

The movement in goodwill balance is given below:

 

     Year ended
March 31,
2016
     Three months
ended June 30,
2016
 

Balance at the beginning of the period

   68,078        101,991   

Translation adjustment

     3,421         1,405   

Acquisition through business combination, net/adjustements

     30,492         95   
  

 

 

    

 

 

 

Balance at the end of the period

    101,991       103,491   
  

 

 

    

 

 

 

 

15


     Intangible assets  
     Customer
related
     Marketing
related
     Total  

Gross carrying value:

        

As at April 1, 2015

   10,617       905        11,522   

Translation adjustment

     345         33         378   
  

 

 

    

 

 

    

 

 

 

As at June 30, 2015

    10,962        938        11,900   
  

 

 

    

 

 

    

 

 

 

Accumulated amortization and impairment:

        

As at April 1, 2015

    2,936        655       3,591   

Translation adjustment

     —           31         31   

Amortization

     277         18         295   
  

 

 

    

 

 

    

 

 

 

As at June 30, 2015

    3,213        704        3,917   
  

 

 

    

 

 

    

 

 

 

Net carrying value as at June 30, 2015

   7,749       234       7,983   

Gross carrying value:

        

As at April 1, 2015

   10,617       905        11,522   

Translation adjustment

     292         120         412   

Disposal/ adjustment

     —           189         189   

Acquisition through business combination

     7,451         1,373         8,824   
  

 

 

    

 

 

    

 

 

 

As at March 31, 2016

   18,360       2,587       20,947   
  

 

 

    

 

 

    

 

 

 

Accumulated amortization and impairment:

        

As at April 1, 2015

   2,936       655       3,591   

Translation adjustment

     —           70         70   

Disposal/ adjustment

     1,228         217         1,445   
  

 

 

    

 

 

    

 

 

 

Amortization and impairment

   4,164       942       5,106   
  

 

 

    

 

 

    

 

 

 

As at March 31, 2016

        

Net carrying value as at March 31, 2016

    14,196        1,645        15,841   

Gross carrying value:

        

As at April 1, 2016

   18,360       2,587        20,947   

Acquisition through business combination, net/adjustements

     (62      —           (62

Translation adjustment

     219         1         220   
  

 

 

    

 

 

    

 

 

 

As at June 30, 2016

    18,517        2,588        21,105   
  

 

 

    

 

 

    

 

 

 

Accumulated amortization and impairment:

        

As at April 1, 2016

    4,164        942       5,106   

Translation adjustment

     —           1         1   

Amortization

     535         109         644   
  

 

 

    

 

 

    

 

 

 

As at June 30, 2016

    4,699        1,052        5,751   
  

 

 

    

 

 

    

 

 

 

Net carrying value as at June 30, 2016

   13,818       1,536       15,354   

Amortization expense on intangible assets is included in selling and marketing expenses in the condensed consolidated interim statement of income.

 

6. Business combination

Designit AS

On August 6, 2015, the Company obtained control of Designit AS (“Designit”) by acquiring 100% of its share capital. Designit is a Denmark based global strategic design firm specializing in designing transformative product-service experiences. The acquisition will strengthen the Company’s digital offerings, combining engineering and transformative technology with human centered-design methods.

 

16


The acquisition was executed through a share purchase agreement for a consideration of 6,540 (EUR 93 million) which includes a deferred earn-out component of 2,092 (EUR 30 million), which is linked to achievement of revenues and earnings over a period of 3 years ending June 30, 2018. The fair value of the earn-out liability was estimated by applying the discounted cash flow approach considering discount rate of 13% and probability adjusted revenue and earnings estimates. This earn-out liability was fair valued at 1,287 million and recorded as part of preliminary purchase price allocation.

The following table presents the allocation of purchase price:

 

Description

   Pre-acquisition
carrying amount
     Fair value
adjustments
     Purchase price
allocated
 

Net assets

    586       —         586   

Customer related intangibles

     —           597         597   

Brand

     —           638         638   

Non-compete agreement

     —           103         103   

Deferred tax liabilities on intangible assets

     —           (290      (290
  

 

 

    

 

 

    

 

 

 

Total

   586        1,048         1,634   
  

 

 

    

 

 

    

 

 

 

Goodwill

           4,046   
        

 

 

 

Total purchase price

          5,680   
        

 

 

 

Net assets acquired include 359 of cash and cash equivalents and trade receivables valued at 392.

The goodwill of 4,046 comprises value of acquired workforce and expected synergies arising from the acquisition. Goodwill is not deductible for income tax purposes.

During the year ended March 31, 2016, the Company concluded the fair value adjustments of the assets acquired and liabilities assumed on acquisition.

Cellent AG

On January 5, 2016, the Company obtained control of Cellent AG (“Cellent”) by acquiring 100% of its share capital. Cellent is an IT consulting and software services company offering IT solutions and services to customers in Germany, Switzerland and Austria. This acquisition is expected to provide Wipro with scale and customer relationships, in the Manufacturing and Automotive domains in Germany, Switzerland and Austria region.

The acquisition was executed through a share purchase agreement for a consideration of 5,800 (EUR 80.4 million).

The following table presents the provisional allocation of purchase price:

 

Description

   Pre-acquisition
carrying amount
     Fair value
adjustments
     Purchase price
allocated
 

Net assets

    852       —         852   

Customer related intangibles

     —           1,001         1,001   

Brand

     —           317         317   

Deferred tax liabilities on intangible assets

     —           (391      (391
  

 

 

    

 

 

    

 

 

 

Total

   852       927         1,779   
  

 

 

    

 

 

    

 

 

 

Goodwill

           4,021   
        

 

 

 

Total purchase price

          5,800   
        

 

 

 

Net assets acquired include 367 of cash and cash equivalents and trade receivables valued at 1,389.

The goodwill of 4,021 comprises value of acquired workforce and expected synergies arising from the acquisition. Goodwill is not deductible for income tax purposes.

 

17


The purchase consideration has been allocated on a provisional basis based on management’s estimates. The Company is in the process of making a final determination of the fair value of assets and liabilities. Finalization of the purchase price allocation may result in certain adjustments to the above allocation.

Healthplan Services

On February 29, 2016, the Company obtained full control of HPH Holdings Corp. (“Healthplan Services”). HealthPlan Services offers market-leading technology platforms and a fully integrated Business Process as a Service (BPaaS) solution to Health Insurance companies (Payers) in the individual, group and ancillary markets. HealthPlan Services provides U.S. Payers with a diversified portfolio of health insurance products delivered through its proprietary technology platform.

The acquisition was consummated for a consideration of 31,069 (USD 454.1 million) which includes a deferred earn-out component of 1,115 (USD 16.3 million), which is linked to achievement of revenues and earnings over a period of 3 years ending March 31, 2019. The fair value of the earn-out liability was estimated by applying the discounted cash flow approach considering discount rate of 14.1% and probability adjusted revenue and earnings estimates. This earn-out liability was fair valued at 536 million (USD 7.8 million) and recorded as part of preliminary purchase price allocation.

The following table presents the provisional allocation of purchase price:

 

Description

   Pre-acquisition
carrying amount
     Fair value
adjustments
     Purchase price
allocated
 

Net assets

   368        1,604       1,972   

Technology platform

     1,087         1,904         2,991   

Customer related intangibles

     —           5,853         5,853   

Non-compete agreement

     —           315         315   

Deferred tax liabilities on intangible assets

     —           (3,066      (3,066
  

 

 

    

 

 

    

 

 

 

Total

    1,455       6,610         8,065   
  

 

 

    

 

 

    

 

 

 

Goodwill

           22,425   
        

 

 

 

Total purchase price

          30,490   
        

 

 

 

Net assets acquired include 47 of cash and cash equivalents and trade receivables valued at 2,449.

The goodwill of 22,425 comprises value of acquired workforce and expected synergies arising from the acquisition. Goodwill is not deductible for income tax purposes.

The purchase consideration has been allocated on a provisional basis based on management’s estimates. The Company is in the process of making a final determination of the fair value of assets and liabilities. Finalization of the purchase price allocation may result in certain adjustments to the above allocation.

 

7. Investments

Financial instruments consist of the following:

 

     As at  
     March 31, 2016      June 30, 2016  

Financial instruments at FVTPL

     

Investments in liquid and short-term mutual funds (1)

    10,578        18,485   

Others

     816         829   

Financial instruments at FVTOCI

     

Equity instruments

     4,907         4,985   

Commercial paper, Certificate of deposits and bonds

     121,676         105,929   

Financial instruments at amortised cost

     

Inter corporate and term deposits (2) (3)

     71,174         72,428   
  

 

 

    

 

 

 
    209,151        202,656   
  

 

 

    

 

 

 

Current

     204,244         197,671   

Non-current

     4,907         4,985   

 

(1)  Investments in liquid and short-term mutual funds include investments amounting to  111 (March 31, 2016:  109) pledged as margin money deposits for entering into currency future contracts.
(2) These deposits earn a fixed rate of interest and mature within 12 months.
(3) Term deposits include deposits in lien with banks amounting to  2,400 (March 31, 2016:  300).

 

18


8. Inventories

Inventories consist of the following:

 

     As at  
     March 31, 2016      June 30, 2016  

Stores and spare parts

    871       866   

Raw materials and components

     2         2   

Finished goods and traded goods

     4,517         5,586   
  

 

 

    

 

 

 
    5,390        6,454   
  

 

 

    

 

 

 

 

9. Cash and cash equivalents

Cash and cash equivalents as of March 31, 2016 and June 30, 2016 consists of cash and balances on deposit with banks. Cash and cash equivalents consists of the following:

 

     As at  
     March 31, 2016      June 30, 2016  

Cash and bank balances

   63,518        95,437   

Demand deposits with banks (1) (2)

     35,531         28,998   
  

 

 

    

 

 

 
    99,049        124,435   
  

 

 

    

 

 

 

 

(1) These deposits can be withdrawn by the Company at any time without prior notice and without any penalty on the principal.
(2)  Demand deposits with banks include deposits in lien with banks amounting to 125 (March 31, 2016: 3).

Cash and cash equivalents consists of the following for the purpose of the cash flow statement:

 

     As at  
     June 30, 2015      June 30, 2016  

Cash and cash equivalents

    132,937        124,435   

Bank overdrafts

     (986      (2,158
  

 

 

    

 

 

 
    131,951       122,277   
  

 

 

    

 

 

 

 

10. Other assets

 

     As at  
     March 31, 2016      June 30, 2016  

Current

     

Prepaid expenses and Deposits

     14,518         15,577   

Due from officers and employees

     3,780         3,831   

Finance lease receivables

     2,034         1,734   

Advance to suppliers

     1,507         3,072   

Deferred contract costs

     3,720         3,713   

Interest receivable

     2,488         2,788   

Balance with excise, customs and other authorities

     1,814         1,842   

Others(1)

     3,033         2,050   
  

 

 

    

 

 

 
    32,894        34,607   
  

 

 

    

 

 

 

Non-current

     

Prepaid expenses including rentals for leasehold land and Deposits

    8,534        9,133   

Finance lease receivables

     2,964         2,974   

Deferred contract costs

     3,807         3,691   

Others

     523         368   
  

 

 

    

 

 

 
   15,828        16,166   
  

 

 

    

 

 

 

Total

   48,722        50,773   
  

 

 

    

 

 

 

 

(1)  Others include Nil (March 31, 2016: 418) representing assets held for sale

 

19


11. Loans and borrowings

A summary of loans and borrowings is as follows:

 

     As at  
     March 31, 2016      June 30, 2016  

Short-term borrowings from banks

    105,661        108,321   

External commercial borrowings

     9,938         10,130   

Obligations under finance leases

     8,963         9,191   

Term loans

     659         1,024   
  

 

 

    

 

 

 

Total loans and borrowings

    125,221        128,666   
  

 

 

    

 

 

 

 

12. Other liabilities and provisions

 

     As at  
     March 31, 2016      June 30, 2016  

Other liabilities:

     

Current:

     

Statutory and other liabilities

    3,871        3,451   

Employee benefit obligations

     5,494         6,014   

Advance from customers

     2,283         2,855   

Others

     2,173         1,736   
  

 

 

    

 

 

 
    13,821       14,056   
  

 

 

    

 

 

 

Non-current:

     

Employee benefit obligations

   4,618        4,477   

Others

     2,607         2,555   
  

 

 

    

 

 

 
   7,225        7,032   
  

 

 

    

 

 

 

Total

   21,046        21,088   
  

 

 

    

 

 

 

 

     As at  
     March 31, 2016      June 30, 2016  

Provisions:

     

Current:

     

Provision for warranty

   388        383   

Others

     874         799   
  

 

 

    

 

 

 
    1,262        1,182   
  

 

 

    

 

 

 

Non-current:

     

Provision for warranty

   14       18   
  

 

 

    

 

 

 

Total

   1,276       1,200   
  

 

 

    

 

 

 

Provision for warranty represents cost associated with providing sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 to 2 years. Other provisions primarily include provisions for tax related contingencies and litigations. The timing of cash outflows in respect of such provision cannot be reasonably determined.

 

13. Financial instruments

Derivative assets and liabilities:

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency and net investment in foreign operations. The Company follows established risk management policies, including the use of derivatives to hedge foreign currency assets / liabilities, foreign currency forecasted cash flows and net investment in foreign operations. The counter parties in these derivative instruments are primarily banks and the Company considers the risks of non-performance by the counterparty as non-material.

 

20


The following table presents the aggregate contracted principal amounts of the Company’s derivative contracts outstanding:

 

     As at  
     March 31, 2016      June 30, 2016  

Designated derivative instruments

     

Sell

   $ 922       $ 941   
   £ 248       £ 236   
   278       268   
   AUD 139      AUD 129   
   SAR 19       SAR 19   
   AED 7       AED —     

Interest rate swaps

   $ 150       $ 150   
  

 

 

    

 

 

 

Non designated derivative instruments

     

Sell

   $ 1,298       $ 1,395   
   £ 55       £ 55   
   87       88   
   AUD  35      AUD  56   
   ¥ 490       ¥ 490   
     
   SGD  3      SGD  3   
   ZAR  110      ZAR  289   
   CAD  11      CAD  11   
   CHF  10      CHF  10   
   SAR  58       SAR  58   
   AED  7       AED  7   

Buy

   $ 822       $ 818   

The following table summarizes activity in the cash flow hedging reserve within equity related to all derivative instruments classified as cash flow hedges:

 

     As at June 30,  
     2015      2016  

Balance as at the beginning of the period

   4,268       2,367   

Deferred cancellation gain/(loss)

     47         (11

Changes in fair value of effective portion of derivatives

     (1,462      1,945   

Net (gain)/loss reclassified to statement of income on occurrence of hedged transactions

     (977      (1,005
  

 

 

    

 

 

 

Gain/(loss) on cash flow hedging derivatives, net

   (2,392    929   
  

 

 

    

 

 

 

Balance as at the end of the period

   1,876       3,296   
  

 

 

    

 

 

 

Deferred tax asset/(liability) thereon

   (325    (416
  

 

 

    

 

 

 

Balance as at the end of the period, net of deferred tax

   1,551       2,880   
  

 

 

    

 

 

 

As at March 31, 2016, June 30, 2015 and 2016, there were no significant gains or losses on derivative transactions or portions thereof that have become ineffective as hedges, or associated with an underlying exposure that did not occur.

 

14. Fair value hierarchy

Financial assets and liabilities include cash and cash equivalents, trade receivables, unbilled revenues, finance lease receivables, employee and other advances and eligible current and non-current assets, long and short-term loans and borrowings, finance lease payables, bank overdrafts, trade payable, eligible current liabilities and non-current liabilities. The fair value of financial assets and liabilities approximate their carrying amount largely due to the short-term nature of such assets and liabilities.

Investments in liquid and short-term mutual funds, which are classified as FVTPL are measured using the net asset values at the reporting date multiplied by the quantity held.

 

21


The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 – Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents fair value of hierarchy of assets and liabilities measured at fair value on a recurring basis:

 

     As at March 31, 2016     As at June 30, 2016  

Particulars

   Fair value measurements at reporting
date using
    Fair value measurements at reporting
date using
 
   Total     Level 1      Level 2     Level 3     Total     Level 1      Level 2     Level 3  

Assets

                  

Derivative instruments:

                  

Cash flow hedges

   3,072      —         3,072      —        3,662      —         3,662      —     

Others

     2,737        —           2,179        558        1,497        —           939        558   

Investments:

                  

Investment in liquid and short-term mutual funds

     10,578        10,578         —          —          18,485        18,485         —          —     

Other investments

     816        —           816        —          829        —           829        —     

Investment in equity instruments

     4,907        —           —          4,907        4,985        —           —          4,985   

Commercial paper, Certificate of deposits and bonds

     121,676        —           121,676        —          105,929        1,575         104,354        —     

Liabilities

                  

Derivative instruments:

                  

Cash flow hedges

     (706     —           (706     —          (355     —           (355     —     

Others

     (1,753     —           (1,753     —          (1,099     —           (1,099     —     

Contingent consideration

     (2,251     —           —          (2,251     (2,341     —           —          (2,341

The following methods and assumptions were used to estimate the fair value of the level 2 financial instruments included in the above table.

Derivative instruments (assets and liabilities): The Company enters into derivative financial instruments with various counter-parties, primarily banks with investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are mainly interest rate swaps, foreign exchange forward contracts and foreign exchange option contracts. The most frequently applied valuation techniques include forward pricing, swap models and Black Scholes models (for option valuation), using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, interest rate curves and forward rate curves of the underlying. As at June 30, 2016, the changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.

Investment in commercial papers, certificate of deposits and bonds: Fair value of these instruments is derived based on the indicative quotes of price and yields prevailing in the market as at June 30, 2016.

 

22


Details of assets and liabilities considered under Level 3 classification:

 

     Investments in
equity
instruments
     Derivative
Assets –
Others
     Liabilities –
Contingent
consideration
 

Opening balance as on April 1, 2015

   3,867       524       (110

Additions/adjustments

     1,016         —           (1,908

Gain/loss recognized in statement of income

     —           34         —     

Gain/loss recognized in foreign currency translation reserve

     —           —           (95

Gain/loss recognized in other comprehensive income

     24         —           —     

Finance Expense recognized in statement of income

     —           —           (138
  

 

 

    

 

 

    

 

 

 

Closing balance as on March 31, 2016

   4,907       558       (2,251
  

 

 

    

 

 

    

 

 

 

Opening Balance as on April 1, 2016

   4,907       558       (2,251

Additions/(Deletions)

     78         —           —     

Gain/loss recognized in foreign currency translation reserve

     —           —           (23

Finance Expense recognized in statement of income

     —           —           (67
  

 

 

    

 

 

    

 

 

 

Closing balance as on June 30, 2016

     4,985         558         (2,341
  

 

 

    

 

 

    

 

 

 

Description of significant unobservable inputs to valuation:

 

Item

  

Valuation
technique

  

Significant
unobservable inputs

   Movement
by
    Increase
(
)
    Decrease
(
)
 

Unquoted equity investments

  

Discounted cash flow model

   Long term growth rate      0.5     57        (53
      Discount rate      0.5     (95     103   
  

Market multiple approach

   Revenue multiple      0.5     182        (187

Derivative assets

  

Option pricing model

   Volatility of comparable companies      2.5     31        (32
      Time to liquidation event      1 year        60        (69

Contingent consideration

  

Probability weighted method

   Estimated revenue achievement      1     36        (36
      Estimated earnings achievement      1     37        (37

 

15. Foreign currency translation reserve

The movement in foreign currency translation reserve attributable to equity holders of the Company is summarized below:

 

     As at  
     June 30, 2015      June 30, 2016  

Balance at the beginning of the period

   11,249       16,116   
  

 

 

    

 

 

 

Translation difference related to foreign operations, net

     1,757         1,663   

Change in effective portion of hedges of net investment in foreign operations

     (179      (136
  

 

 

    

 

 

 

Total change during the period

   1,578       1,527   
  

 

 

    

 

 

 

Balance at the end of the period

   12,827       17,643   
  

 

 

    

 

 

 

 

23


16. Income taxes

Income tax expense / (credit) has been allocated as follows:

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Income tax expense as per the statement of income

   5,958       6,122   

Income tax included in other comprehensive income on:

     

Unrealized gain on investment securities

     (78      326   

Gain / (loss) on cash flow hedging derivatives

     (393      (42

Defined benefit plan actuarial gains / (losses)

     (187      21   
  

 

 

    

 

 

 

Total income taxes

   5,300       6,427   
  

 

 

    

 

 

 

Income tax expense consists of the following:

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Current taxes

     

Domestic

   4,833       4,742   

Foreign

     1,170         1,643   
  

 

 

    

 

 

 
   6,003       6,385   
  

 

 

    

 

 

 

Deferred taxes

     

Domestic

   (85    (241

Foreign

     40         (22
  

 

 

    

 

 

 
   (45    (263
  

 

 

    

 

 

 

Total income tax expense

   5,958       6,122   
  

 

 

    

 

 

 

Income tax expense is net of reversal of provisions recorded in earlier periods, which are no longer required, amounting to  355 and  189 for the three months ended June 30, 2015 and 2016 respectively.

 

17. Revenues

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Rendering of services

   113,866       129,321   

Sale of products

     8,510         6,671   
  

 

 

    

 

 

 

Total revenues

   122,376       135,992   
  

 

 

    

 

 

 

 

18. Expenses by nature

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Employee compensation

   59,007       65,977   

Sub-contracting/technical fees

     14,561         20,304   

Cost of hardware and software

     8,190         6,555   

Travel

     5,657         5,529   

Facility expenses

     4,065         5,044   

Depreciation and amortization

     3,367         4,665   

Communication

     1,278         1,288   

Legal and professional fees

     980         1,282   

Rates, taxes and insurance

     660         537   

Advertisement

     433         769   

Provision for doubtful debt

     259         289   

Miscellaneous expenses

     1,267         1,890   
  

 

 

    

 

 

 

Total cost of revenues, selling and marketing and general and administrative expenses

   99,724       114,129   
  

 

 

    

 

 

 

 

24


19. Finance expense

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Interest expense

   316       412   

Exchange fluctuation on foreign currency borrowings, net

     970         924   
  

 

 

    

 

 

 

Total

   1,286       1,336   
  

 

 

    

 

 

 

 

20. Finance and other income

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Interest income

   4,803       4,732   

Dividend income

     26         24   

Unrealized gains/losses on financial instruments measured at fair value through profit or loss

     93         76   

Gain on sale of investments

     413         368   
  

 

 

    

 

 

 

Total

   5,335       5,200   
  

 

 

    

 

 

 

 

21. Earnings per equity share

A reconciliation of profit for the period and equity shares used in the computation of basic and diluted earnings per equity share is set out below:

Basic: Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period, excluding equity shares purchased by the Company and held as treasury shares.

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Profit attributable to equity holders of the Company

   21,917       20,518   

Weighted average number of equity shares outstanding

     2,455,804,709         2,457,363,886   

Basic earnings per share

   8.92       8.35   

Diluted: Diluted earnings per share is calculated by adjusting the weighted average number of equity shares outstanding during the period for assumed conversion of all dilutive potential equity shares. Employee share options are dilutive potential equity shares for the Company.

The calculation is performed in respect of share options to determine the number of shares that could have been acquired at fair value (determined as the average market price of the Company’s shares during the period). The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Profit attributable to equity holders of the Company

   21,917       20,518   

Weighted average number of equity shares outstanding

     2,455,804,709         2,457,363,886   

Effect of dilutive equivalent share options

     4,779,330         6,033,483   
  

 

 

    

 

 

 

Weighted average number of equity shares for diluted earnings per share

     2,460,584,039         2,463,397,368   
  

 

 

    

 

 

 

Diluted earnings per share

   8.91       8.33   

 

22. Employee benefits

 

  a) Employee costs include:

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Salaries and bonus

   57,342       63,855   

Employee benefit plans

     

Gratuity

     186         291   

Contribution to provident and other funds

     997         1,406   

Share based compensation

     482         425   
  

 

 

    

 

 

 
   59,007       65,977   
  

 

 

    

 

 

 

 

25


  b) The employee benefit cost is recognized in the following line items in the statement of income:

 

     Three months ended  
     June 30, 2015      June 30, 2016  

Cost of revenues

    49,947        55,681   

Selling and marketing expenses

     5,748         6,726   

General and administrative expenses

     3,312         3,570   
  

 

 

    

 

 

 
    59,007        65,977   
  

 

 

    

 

 

 

The Company has granted 2,747,400 and Nil options under RSU option plan and 1,487,700 and 7,500 options under ADS option plan during the three months ended June 30, 2015 and 2016.

 

23. Commitments and contingencies

Capital commitments: As at March 31, 2016 and June 30, 2016, the Company had committed to spend approximately 10,734 and 11,565 respectively, under agreements to purchase property and equipment. These amounts are net of capital advances paid in respect of these purchases.

Guarantees: As at March 31, 2016 and June 30, 2016, performance and financial guarantees provided by banks on behalf of the Company to the Indian Government, customers and certain other agencies amount to approximately 25,218 and 26,585, respectively, as part of the bank line of credit.

Contingencies and lawsuits: The Company is subject to legal proceedings and claims (including tax assessment orders/ penalty notices) which have arisen in the ordinary course of its business. Some of the claims involve complex issues and it is not possible to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of such proceedings. However, the resolution of these legal proceedings is not likely to have a material and adverse effect on the results of operations or the financial position of the Company. The significant of such matters are discussed below.

`In March 2004, the Company received a tax demand for year ended March 31, 2001 arising primarily on account of denial of deduction under section 10A of the Income Tax Act, 1961 (Act) in respect of profit earned by the Company’s undertaking in Software Technology Park at Bangalore. The same issue was repeated in the successive assessments for the years ended March 31, 2002 to March 31, 2011 and the aggregate demand is 47,583 (including interest of 13,832). The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by the second appellate authority for the years up to March 31, 2007. Further appeals have been filed by the Income tax authorities before the Hon’ble High Court. The Hon’ble High Court has heard and disposed-off majority of the issues in favor of the Company up to years ended March 31, 2004. Department has filed a Special Leave Petition (SLP) before the Supreme Court of India for the year ended March 31, 2001 on certain issues allowed in favor of the Company.

On similar issues for years up to March 31, 2000, the Hon’ble High Court of Karnataka has upheld the claim of the Company under section 10A of the Act. For the years ended March 31, 2008 and March 31, 2009, the appeals are pending before Income Tax Appellate Tribunal (Tribunal). For years ended March 31, 2010 and March 31, 2011, the Dispute Resolution Panel (DRP) allowed the claim of the Company under section 10A of the Act. The Income tax authorities have filed an appeal before the Tribunal.

For year ended March 31, 2012, the Company received the draft assessment order in March 2016 with a proposed demand of 4,241 (including interest of 1,376), arising primarily on account of section 10AA issues with respect to exclusion from Export Turnover. Company has filed an objection before DRP within the prescribed timelines.

Considering the facts and nature of disallowance and the order of the appellate authority / Hon’ble High Court of Karnataka upholding the claims of the Company for earlier years, the Company believes that the final outcome of the above disputes should be in favor of the Company and there should not be any material adverse impact on the financial statements.

The contingent liability in respect of disputed demands for excise duty, custom duty, sales tax and other matters amounts to 2,654 and 2,500 as of March 31, 2016 and June 30, 2016.

 

26


24. Segment information

The Company is organized by the following operating segments; IT Services and IT Products.

IT Services: The IT Services segment primarily consists of IT Service offerings to customers organized by industry verticals. Effective April 1, 2016, we realigned our industry verticals. The Communication Service Provider business unit was regrouped from the former GMT industry vertical into a new industry vertical named “Communications”. The Media business unit from the former GMT industry vertical has been realigned with the former RCTG industry vertical which has been renamed as “Consumer Business Unit” industry vertical. Further, the Network Equipment Provider business unit of the former GMT industry vertical has been realigned with the Manufacturing industry vertical to form the “Manufacturing and Technology” industry vertical.

The revised industry verticals are as follows: Finance Solutions (BFSI), Healthcare, Lifesciences & Services (HLS), Consumer (CBU), Energy, Natural Resources & Utilities (ENU), Manufacturing & Technology (MNT), Communications (COMM). IT Services segment also includes Others which comprises dividend income and gains or losses (net) relating to strategic investments, which are presented within “Finance and other income” in the statement of Income. Key service offerings to customers includes software application development and maintenance, research and development services for hardware and software design, business application services, analytics, consulting, infrastructure outsourcing services and business process services.

Comparative information has been restated to give effect to the above changes.

IT Products: The Company is a value added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to the above items is reported as revenue from the sale of IT Products.

The Chairman and Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by IFRS 8, “Operating Segments.” The Chairman of the Company evaluates the segments based on their revenue growth and operating income.

Assets and liabilities used in the Company’s business are not identified to any of the operating segments, as these are used interchangeably between segments. Management believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.

Information on reportable segment for the three months ended June 30, 2015 is as follows:

 

     IT Services      IT
Products
     Reconciling
Items
    Company
total
 
     BFSI      HLS      CBU      ENU      MNT      COMM      Others      Total          

Revenue

     31,020         12,988         18,700         17,577         26,963         8,525         —           115,773         8,174         (241     123,706   

Segment Result

     6,947         2,754         3,082         3,587         5,833         1,248         —           23,451         103         (102     23,452   

Unallocated

                          530         —           —          530   

Segment Result Total

                          23,981         103         (102     23,982   

Finance expense

                                  (1,286

Finance and other income

                                  5,335   

Profit before tax

                                  28,031   

Income tax expense

                                  (5,958

Profit for the period

                                  22,073   

Depreciation and amortization

                                  3,367   

 

27


Information on reportable segment for the three months ended June 30, 2016 is as follows:

 

     IT Services     IT
Products
    Reconciling
Items
    Company
total
 
     BFSI      HLS      CBU      ENU      MNT      COMM      Others      Total        

Revenue

     33,630         19,931         20,725         17,356         29,538         9,912         —           131,092        5,930        (46     136,976   

Segment Result

     6,994         2,856         3,775         3,025         5,954         1,502         —           24,106        (368     (54     23,684   

Unallocated

                          (837     —          —          (837

Segment Result Total

                          23,269        (368     (54     22,847   

Finance expense

                                (1,336

Finance and other income

                                5,200   

Profit before tax

                                26,711   

Income tax expense

                                (6,122

Profit for the period

                                20,589   

Depreciation and amortization

                                4,665   

The Company has four geographic segments: India, Americas, Europe and Rest of the world. Revenues from the geographic segments based on domicile of the customer are as follows:

 

     Three months ended  
     June 30, 2015      June 30, 2016  

India

   13,354       12,799   

Americas

     61,061         70,256   

Europe

     30,006         33,581   

Rest of the world

     19,285         20,340   
  

 

 

    

 

 

 
   123,706       136,976   
  

 

 

    

 

 

 

Management believes that it is currently not practicable to provide disclosure of geographical location wise assets, since the meaningful segregation of the available information is onerous.

No client individually accounted for more than 10% of the revenues during the three months ended June 30, 2015 and 2016.

Notes:

 

  a) Effective April 1, 2016, CODM’s review of the segment results is measured after including the amortization charge for acquired intangibles to the respective segments. Such costs were classified under reconciling items till the year ended March 31, 2016. Comparative information has been restated to give effect to the same.

 

  b) “Reconciling items” includes elimination of inter-segment transactions, dividend income/ gains/ losses relating to strategic investments and other corporate activities.

 

  c) Segment result represents operating profits of the segments and dividend income and gains or losses (net) relating to strategic investments, which are presented within “Finance and other income” in the statement of Income.

 

  d) Revenue from sale of traded cloud based licenses is reported as part of IT Services revenues.

 

  e) For the purpose of segment reporting, the Company has included the impact of “foreign exchange gains / (losses), net” in revenues (which is reported as a part of operating profit in the statement of income).

 

  f) For evaluating performance of the individual operating segments, stock compensation expense is allocated on the basis of straight line amortization. The differential impact of accelerated amortization of stock compensation expense over stock compensation expense allocated to the individual operating segments is reported in reconciling items.

 

  g)

The Company generally offers multi-year payment terms in certain total outsourcing contracts. These payment terms primarily relate to IT hardware, software and certain transformation services in

 

28


  outsourcing contracts. Corporate treasury provides internal financing to the business units offering multi-year payments terms. The finance income on deferred consideration earned under these contracts is included in the revenue of the respective segment and is eliminated under reconciling items.

 

25. List of subsidiaries as of June 30, 2016 are provided in the table below.

 

Subsidiaries

  

Subsidiaries

  

Subsidiaries

  

Country of
Incorporation

Wipro LLC (formerly Wipro, Inc.)          USA
   Wipro Gallagher Solutions, Inc.       USA
      Opus Capital Markets Consultants LLC    USA
      Wipro Promax Analytics Solutions LLC    USA
   Infocrossing, Inc.       USA
  

Wipro Insurance Solutions LLC

Wipro Data Centre and Cloud Services, Inc.

Wipro IT Services, Inc.

     

USA

USA

USA

      HPH Holdings Corp. (A)    USA
Wipro Overseas IT Services Pvt. Ltd          India
Wipro Japan KK          Japan
Wipro Shanghai Limited          China
Wipro Trademarks Holding Limited          India
Wipro Travel Services Limited          India
Wipro Holdings (Mauritius) Limited          Mauritius
   Wipro Holdings UK Limited       U.K.
      Wipro Information Technogoty Austria GmbH(A)    Austria
      Wipro Digital Aps (A)    Denmark
      3D Networks (UK) Limited    U.K.
      Wipro Europe Limited (A)    U.K.
      Wipro Promax Analytics Solutions (Europe) Limited    U.K.
Wipro Cyprus Private Limited          Cyprus
   Wipro Doha LLC#       Qatar
   Wipro Technologies S.A DE C.V       Mexico
   Wipro BPO Philippines LTD. Inc       Philippines
   Wipro Holdings Hungary Korlátolt Felelősségű Társaság       Hungary
   Wipro Technologies SA       Argentina
   Wipro Information Technology Egypt SAE       Egypt
   Wipro Arabia Limited*       Saudi Arabia
   Wipro Poland Sp. Z.o.o       Poland
   Wipro IT Services Poland Sp. z o. o       Poland
   Wipro Technologies Australia Pty Ltd.       Australia
   Wipro Corporate Technologies Ghana Limited       Ghana

 

29


Subsidiaries

  

Subsidiaries

  

Subsidiaries

  

Country of
Incorporation

   Wipro Technologies South Africa (Proprietary) Limited       South Africa
      Wipro Technologies Nigeria Limited    Nigeria
   Wipro Information Technology Netherlands BV.       Netherland
      Wipro Portugal S.A.(A)    Portugal
      Wipro Technologies Limited, Russia    Russia
      Wipro Technology Chile SPA    Chile
      Wipro Solutions Canada Limited    Canada
      Wipro Information Technology Kazakhstan LLP    Kazakhstan
      Wipro Technologies W.T. Sociedad Anonima    Costa Rica
      Wipro Outsourcing Services (Ireland) Limited    Ireland
      Wipro IT Services Ukraine LLC    Ukraine
      Wipro Technologies Norway AS    Norway
      Wipro Technologies VZ, C.A.    Venezuela
      Wipro Technologies Peru S.A.C    Peru
   Wipro Technologies SRL       Romania
   PT WT Indonesia       Indonesia
   Wipro Australia Pty Limited       Australia
   Wipro (Thailand) Co Limited       Thailand
   Wipro Bahrain Limited WLL       Bahrain
   Wipro Gulf LLC       Sultanate of Oman
   Rainbow Software LLC       Iraq
   Cellent AG       Germany
      Cellent Mittelstandsberatung GmbH    Germany
      Cellent AG Austria(A)    Austria
Wipro Networks Pte Limited          Singapore
   Wipro (Dalian) Limited       China
   Wipro Technologies SDN BHD       Malaysia
Wipro Chengdu Limited          China
Wipro Airport IT Services Limited*          India

 

* All the above direct subsidiaries are 100% held by the Company except that the Company holds 66.67% of the equity securities of Wipro Arabia Limited and 74% of the equity securities of Wipro Airport IT Services Limited
# 51% of equity securities of Wipro Doha LLC are held by a local share holder. However, the beneficial interest in these holdings is with the Company.

The Company controls ‘The Wipro SA Broad Based Ownership Scheme Trust’ and ‘Wipro SA Broad Based Ownership Scheme SPV (RF) (PTY) LTD incorporated in South Africa.

 

30


(A) Step Subsidiary details of Wipro Information Technogoty Austria GmbH, Wipro Portugal S.A, Wipro Europe Limited and Wipro Technologies Canada limited are as follows:

 

Subsidiaries

  

Subsidiaries

       

Subsidiaries

  

Country of Incorporation

Wipro Information Technogoty Austria GmbH             Austria
   Wipro Technologies Austria GmbH          Austria
   New Logic Technologies SARL          France
Wipro Europe Limited             U.K.
   Wipro UK Limited          U.K.
Wipro Portugal S.A.             Portugal
   Wipro Retail UK Limited          U.K.
   Wipro do Brasil Technologia Ltda          Brazil
   Wipro Technologies Gmbh          Germany
   Wipro Do Brasil Sistemetas De Informatica Ltd          Brazil
Wipro Digital Aps    Designit A/S   

Designit Denmark A/S

Designit MunchenGmbH

Designit Oslo A/S

Designit Sweden AB

Designit T.L.V Ltd.

Designit Tokyo Ltd.

Denextep Spain Digital, S.L

     

Denmark

Denmark

Denmark

Germany

Norway

Sweden

Israel

Japan

Spain

         Designit Colombia S A S    Colombia
Cellent AG Austria    Frontworx Informationstechnologie AG         

Austria

Austria

HPH Holdings Corp.   

Healthplan Holdings, Inc.

Healthplan Services Insurance Agency, Inc.

Healthplan Services, Inc.

Harrington Health Services Inc.

        

USA

USA

USA

USA

USA

 

26. Bank balances

Details of balances with banks as of June 30, 2016 are as follows:

 

Bank Name

   In Current
Account
     In Deposit
Account
     Total  

Citi Bank

   52,414       575       52,989   

Axis Bank

     271         14,366         14,637   

HSBC

     5,649         1,525         7,174   

Yes Bank

     —           5,900         5,900   

ICICI Bank

     45         2,910         2,955   

Wells Fargo Bank

     2,769         —           2,769   

Corporation Bank

     —           2,000         2,000   

ANZ Bank

     88         999         1,087   

Bank of Montreal

     661         —           661   

BMO Harris Bank

     407         —           407   

Saudi British Bank

     210         180         390   

HDFC Bank

     262         123         385   

Kotak Mahindra Bank

     11         264         275   

Uni Credit bank

     186         —           186   

Indian Overseas Bank

     1         155         156   

Standard Chartered Bank

     151         —           151   

Bank of Columbia

     98         —           98   

Funds in Transit

     30,519         —           30,519   

Others including cash and cheques on hand

     1,695         1         1,696   
  

 

 

    

 

 

    

 

 

 

Total

   95,437       28,998       124,435   
  

 

 

    

 

 

    

 

 

 

 

31


27. Events after the reporting period

The Board of Directors of the Company approved a proposal for buyback of equity shares at its meeting held on April 20, 2016. Further to the said approval, the Company completed buyback of 40 million shares of 2 each (representing 1.62% of total paid up equity capital) on July 8, 2016, from the shareholders on a proportionate basis by way of a tender offer at a price of 625 per equity share for an aggregate amount of 25,000 million in accordance with the provisions of the Companies Act, 2013 and the SEBI (Buy Back of Securities) Regulations, 1998.

At the annual general meeting of the shareholders held on July 18, 2016, the shareholders of the Company approved the final dividend of 1 ($ 0.02) per equity share and ADR (50% on an equity share of par value of 2).

Previously, the Company had announced, on December 23, 2015, the signing of a definitive agreement to acquire Viteos Group. However, due to inordinate delays in completion of closing conditions that exceeded the target closing date and expiration date under the terms of the agreement, both parties have decided not to proceed ahead with the acquisition.

 

 

As per our report of even date
attached
   For and on behalf of the Board of Directors     
for B S R & Co. LLP    Azim H Premji    N Vaghul    Abidali Neemuchwala

Chartered Accountants

Firm’s Registration No:

101248W/W- 100022

  

Chairman

& Managing Director

   Director    Chief Excecutive & Excecutive Director

Akeel Master

Partner

Membership No. 046768

  

Jatin Pravinchandra Dalal

Chief Financial Officer

  

M Sanaulla Khan

Company Secretary

  

Mumbai

July 19, 2016

  

Bangalore

July 19, 2016

     

 

32