Financial Daily from THE HINDU group of publications
Saturday, Apr 20, 2002
Corporate Results - Software
Info-Tech - Software
Wipro net profit up 32 pc; Q4 revenues down 6 pc
BANGALORE, April 19
WIPRO on Friday issued a cautious guidance after posting a lower-than-expected fourth-quarter profit and a 32 per cent growth in net profit for the year ended March 31, 2002.
The annual profit stood at Rs 885.4 crore on revenues of Rs 3,492.6 crore, which rose 12 per cent. For the fourth quarter, the company's revenues were Rs 940.6 crore, down 6 per cent over the previous quarter, and net profit Rs 231.2 crore (up 7 per cent). The company's board of directors has recommended a dividend of Re 1 per share subject to shareholders' approval.
Wipro shares fell after the country's second-largest software services exporter issued a revenue forecast for only the current quarter and said revenues from telecom equipment makers would drop.
The company Chairman, Mr Azim Premji, forecast revenue from just the global IT business segment at $123 million for the April-June quarter. That means a mere 2.2 per cent rise from the $120.3 million booked last quarter by that segment, which accounted for 63 per cent of total revenues and 83 per cent of profit before tax.
The company expects revenue from clients that make telecom equipment to fall 10 per cent this quarter.
The global IT services division, Wipro Technologies, remained the largest contributor to the group's kitty, bringing in Rs 2,290.9 crore, accounting for 66 per cent of the revenues. Wipro Technologies made a net profit of Rs 785.1 crore.
Wipro Infotech, the India and Asia Pacific IT business, made revenues of Rs 740 crore, while the consumer care and lighting group posted revenues of Rs 301.2 crore and others (including Wipro Net) accounted for Rs 165.4 crore for the year 2001-02.
The company's profit before interest and tax grew by 17 per cent for the year, the growth coming mainly from the global technology business (Wipro Technologies), which grew by 28 per cent. The profit before interest and tax of the India and Asia-Pacific IT business (Wipro Infotech) was down by 28 per cent from last year and consumer care and lighting fell by 14 per cent.
Explaining the fall in Wipro Infotech revenues, Mr Suresh Vaswani, President, said that a large part of the Indian market was hardware-centric. "The decline in the revenues is because of the softness in the hardware market,'' he said. The share of revenues from services was up from 22 per cent last year to 28 per cent this year.
However, he said that the division had bagged seven systems integration orders including two from the Indian telecom sector and 15 infrastructure management contracts. The telecom orders were together worth Rs 60 crore, he said.
Wipro Technologies added 107 new customers during the year, contributing 15 per cent of total revenues.
New initiatives such as systems integration, package implementation and strong growth in the financial services offset the telecom meltdown and a planned exit from the largest enterprise account, Nortel, according to the company.
Nortel, which accounted for 37 per cent of the revenues, is now down to 1 per cent. The five largest customers were Transco, Warehousing, Lattice, Nortel and Alcatel.
Wipro Technologies plans to focus on areas such as insurance, and is looking at asset management with strong emphasis on package implementation. Embedded systems business and home networking, launched last year, will continue to be focus areas.
Even in a tough market situation, billing rates went up by 12 per cent for offshore and 15 per cent for onsite operations, Wipro's Vice-Chairman, Mr Vivek Paul, said.
However, this was offset by lower margins on product revenues and a 5 per cent decrease in IT professional utilisation as compared to the previous year.
Wipro Technologies made a saving of Rs 92 crore by adopting Six Sigma initiatives.
Wipro Technologies said it would be ``aggressive'' in hiring professionals with specialised skills.
``We will hire. We are seeing volume recovery. We look forward to people with specialised and advanced skills. We will be aggressive,'' Mr Paul said.
Wipro Technologies, he said, would look for project managers, functional experts in the area of package implementation and process consultants and also on the technology side, among others.
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