Date:18/04/2003 URL: http://www.thehindu.com/2003/04/18/stories/2003041802431600.htm

Business

Wipro's net profit dips

By Our Staff Reporter

Azim Premji

BANGALORE APRIL 17 . Despite rupee appreciation and pricing pressures, Wipro today posted a 24 per cent growth in revenues for the year ended March 31, 2003. The company logged revenues of Rs. 4,338.30 crores during 2002-03 compared to Rs. 3,492.60 crores the previous year. For the fourth quarter-ended March 31, 2003, the IT goliath showed a 32 per cent increase in revenues at Rs.1,237 crores vis-a-vis Rs. 927 crores recorded during the corresponding quarter last year.

The board of directors recommended a dividend of Rs.1 per share subject to shareholders' approval in the annual general meeting scheduled for July. Earnings per share (EPS) maintained an almost flat rate with (undiluted) EPS at Rs.38.33 for 2002-03 due to a squeeze in margins, according to Vivek Paul, Vice Chairman, Wipro.

Profits fell short of market expectations of a 5 per cent growth over the corresponding quarter. The net profit for the fiscal 2002-03 showed a decrease of 7 per cent at Rs. 820.50 crores over Rs. 885.40 crores in the previous year. Wipro's net profit for Q4 of this year stood at Rs. 225.4 crores, up by 2.5 per cent (Rs. 220 crores).

"The software industry is going through some eruption and the market is correcting certain variables shown in (financial) results. Fundamentally, the market is strong and the volume growth is high,'' Azim Premji, Chairman, Wipro, said. According to Mr. Premji, the correction has already commenced and would make market expectations more realistic.

Wipro's operating margins saw a 4 per cent decline due to the rupee appreciation, acquisition costs and increase in headcount of marketing and sales personnel. Overall, Wipro suffered losses of Rs. 37.10 crores on account of its share of losses in Wipro GE Medical Systems Limited (Wipro's joint venture in medical systems) and a minor loss due to rupee appreciation "which has added to fall in profits,'' explained Suresh Senapathy, Corporate Executive Vice President-Finance, Wipro.

For the fourth quarter, Wipro Tech's revenues amounted to Rs. 22.80 crores and a loss of Rs. 7.30 crores due to the energy and utilities consulting division acquisition from AMS Inc.

Wipro has completed acquisition and integration of Spectramind, Global Energy Practice of AMS Inc. and R&D Labs of Ericsson. The Consumer Care and Lighting Group has entered into a definitive agreement with Hindustan Lever Limited for the acquisition of the Glucovita brand.

"We are prudentially evaluating acquisitions on an ongoing basis,'' remarked Mr. Premji. Wipro gained 44 new customers during Q4 of 2002-03 including 16 added consequently to the integration of the AMS energy practice.

According to Mr. Vivek Paul, Vice-chairman, the strategic initiatives enabled the company to close the last fiscal with the highest ever growth in billed man-months.

Commenting on the outlook for the first quarter between April and June 2003, Mr. Premji said, "We expect our revenues from Wipro Technologies and Wipro Spectramind to be about $172 million and $16 million respectively.''

While both SARS epidemic and Iraq war have not had any impact on Wipro's business, since March 15, "the company has seen 40 customer prospects, of which 18 visits got cancelled.''

As the company does not have a large exposure to the East Asian markets, there has been no affect on business due to the SARS virus.

Wipro Infotech, the APAC, India and Middle East IT Services and Products business is "looking at Iraq. We have already consolidated our presence in the Middle East and once the post-war (rehabilitation) efforts commence and the infrastructure in place, we will look at providing IT services in Iraq,'' Suresh Vaswani, President, Wipro Infotech, told The Hindu. Wipro Infotech is also looking at further exploring the Australian market. It has bagged a large offshoring contract from an Australian insurance firm.