Wipro Records 21% YoY Growth in Profit After Tax in Q4 FY10

BANGALORE, India and EAST BRUNSWICK, N.J., April 23 /PRNewswire-FirstCall/ -- Wipro Limited (NYSE: WIT) today announced financial results under International Financial Reporting Standards (IFRS) for its fourth fiscal quarter and year ended March 31, 2010.

Highlights of the Results:

Results for the Quarter ended March 31, 2010

• IT Services Revenue in constant currency was $1,180 million, with a sequential increase of 4.7%. On a YoY basis, the constant currency revenue increase was 7.8%.
• Total Revenues were Rs. 69.83 billion ($1.55 billion(1)), representing an increase of 8% over the same period last year.
• IT Services Revenue in dollar terms was $1,166 million, a sequential increase of 3.5% and YoY increase of 11.5%.
• Net Income was Rs. 12.09 billion ($269 million(1)) on a GAAP basis, representing an increase of 21% over the same period last year.
• Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) was Rs. 12.12 billion ($270 million(1)), representing an increase of 21% over the same period last year.
• IT Services Revenues were Rs. 52.60 billion ($1,170 million(1)), representing an increase of 7% over the same period last year.
• IT Services Earnings Before Interest and Tax (EBIT) was Rs. 12.72 billion ($283 million(1)), representing an increase of 20% over the same period last year.
• IT Services added 27 new clients in the quarter.
• Net addition of 5,325 employees in the current quarter.
• Local Nationals overseas have increased by 10% to 39% over the same period last year.
• IT Products recorded a 2% growth in Revenues over the same period last year.
• Consumer Care and Lighting Revenue grew 27% over the same period last year and EBIT grew 16%

Results for the year ended March 31, 2010

• Total Revenues were Rs. 271.24 billion ($6.03 billion(1)), representing an increase of 6% over the same period last year.
• IT Services Revenues were $4,390 million, an increase of 1.6% YoY and 1.8% in constant currency.
• Net Income was Rs. 45.93 billion ($1.02 billion(1)), representing an increase of 18% over the same period last year.
• Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) was Rs. 45.86 billion ($1.02 million(1)), representing an increase of 18% over the same period last year.
• IT Services Revenues were Rs. 202.49 billion ($4.50 billion(1)), representing an increase of 6% over the same period last year.
• IT Services Earnings Before Interest and Tax (EBIT) was Rs. 47.41 billion ($1.05 Billion(1)), representing an increase of 18% over the same period last year.
• IT Services added 121 new clients in the year.
• IT Products Revenue grew 11% over the same period last year and EBIT grew by 29%.
• Consumer Care and Lighting Revenue grew 17% over the same period last year, and EBIT grew 19%.
• Our Board of Directors recommends a final cash dividend of Rs. 6 per share/ADS, subject to shareholder approval at the Annual General Meeting scheduled in July 2010.
• Board of Directors recommends issue of bonus shares to shareholders (including to ADS holders) in the ratio of two additional shares for every three shares held subject to shareholder approval in the Annual General Meeting scheduled in July 2010.

Performance for the year ended March 31, 2010 and Outlook for our Quarter ending June 30, 2010

Azim Premji Chairman of Wipro, commenting on the results said –

"We have seen another strong quarter of broad based, volume led growth. We saw good recovery in our challenged verticals of Technology and Telecom.  The business environment is returning to normal.  For the quarter ending June 30, 2010, we expect revenues from our IT Services business to be in the range of $1,190 million to $1,215 million.*"

Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said –

"We had a satisfying quarter. We delivered close to the upper end of our guidance with revenues of $1,180 million in constant currency. We have driven up margins by 60 basis points despite headwinds of wage increases, rupee appreciation and the impact of cross currency."

* Guidance is based on the following constant currency exchange rates: GBP/USD at 1.54, Euro/USD at 1.36, AUD/USD at 0.91, USD/INR at 45.60

Wipro Limited

Total Revenue for our year ended March 31, 2010 was Rs. Rs. 271.24 billion ($6.03 billion(1)), representing an increase of 6% over the same period last year. Net Income for our year ended March 31, 2010 was Rs. 45.93 billion ($1.02 billion(1)), representing an increase of 18% over the same period last year. Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) for the year ended March 31, 2010 was Rs. 45.86 billion ($1.02 million(1)), representing an increase of 18% over the same period last year. Earnings Per Share for our year ended March 31, 2010 was Rs. 31.52 ($0.70(1)), representing an increase of 18% over the same period last year. Non-GAAP Adjusted Earnings Per Share (excluding the impact of accelerated amortization of stock based compensation) for our year ended March 31, 2010 were Rs. 31.5 ($0.7(1)), representing an increase of 18% over the same period last year.

Total Revenue for our quarter ended March 31, 2010 was Rs. 69.83 billion ($1.55 billion(1)), representing an increase of 8% over the same period last year. Net Income for our quarter ended March 31, 2010 was Rs. 12.09 billion ($269 million1), representing an increase of 21% over the same period last year. Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) for our quarter ended March 31, 2010 was Rs. 12.12 billion ($270 million(1)), representing an increase of 21% over the same period last year. Earnings Per Share for our quarter ended March 31, 2010 were Rs. 8.29 ($0.18(1)). Non-GAAP Adjusted Earnings Per Share (excluding the impact of accelerated amortization of stock based compensation) for our quarter ended March 31, 2010 were Rs. 8.3 ($0.18(1)), representing an increase of 21% over the same period last year.

Reconciliation between IFRS net income and Non-GAAP adjusted net income (excluding impact of accelerated stock based compensation) is provided in the table on page 9.

IT Services (75% of Total Revenue and 92% of Operating Income for our year ended March 31, 2010)

Our IT Services business segment recorded Revenue of Rs. 202.49 billion(2) ($4.5 billion(1)) for our year ended March 31, 2010, representing an increase of 6% over the same period last year. EBIT for this segment was Rs. 47.41 billion ($1.05 billion(1)) for our year ended March 31, 2010, representing an increase of 18% over the same period last year.  

Our Operating Income to Revenue for this segment was 23.4% for year ended March 31, 2010.

Our IT Services business segment recorded Revenue of Rs. 52.60 billion(2) ($1,170 million(1)) for our quarter ended March 31, 2010, representing an increase of 7% over the same period last year. EBIT for this segment was Rs. 12.72 billion ($283 million(1)) for our quarter ended March 31, 2010, representing an increase of 20% over the same period last year.  

Our Operating Income to Revenue for this segment was 24.2% for our quarter ended March 31, 2010.

We had 108,071 employees as of March 31, 2010, an increase of 5,325 people this quarter.

Wipro's capability to be a transformational partner to our clients coupled with global domain expertise helped us secure several large deals this quarter.

In the insurance space, Wipro entered into a seven year strategic agreement with The Main Street America Group, a leading provider of commercial, personal and surety insurance products exclusively sold through independent agents to individuals, families and small businesses in 24 US states. Wipro will supplement Main Street America's IT organization in its endeavor to support its present and future business needs.

Wipro has signed a multi-year, strategic partnership with consumer electronics retailer Best Buy Co., Inc. As part of the deal Wipro will provide a comprehensive range of technology and business services to the retailer across the globe. The expansion of the relationship aims to leverage mutual strength and make this a very strategic and large relationship for both parties. As part of the relationship, Wipro will also setup a lab store focused on innovation and enhancing customer experience.

Wipro signed a 6-year deal with a large Consumer Product company. As part of this strategic deal Wipro will manage end to end Infrastructure for setting up centralized Global IT operation that includes data center consolidation, hosting, assets, contracts and human capital within an overarching service management framework across 15 countries in Americas, Europe, LATAM and Asia Pacific.

A large US-based pharmaceutical company is leveraging Wipro's understanding of the pharmaceutical domain and it's proven delivery capability in the application management space for their strategic initiative aimed at process standardization across the various units and help them achieve significant benefits.

Awards and Recognition

Wipro's innovative application services model, CIGMA (Centre for Integrated Global Management of Applications) won the NASSCOM IT Innovation Award in the Process Innovation category for the year. This award recognizes innovation in a company's business processes, models, inputs, go-to-market strategies, delivery models to realize significant business value.

Strategy and globalization

In recognition of our efforts to create job opportunities in the local community in Atlanta, we received the 2010 Global Impact Award from Metro Atlanta Chamber of Commerce under the category of Economic Development - Foreign Direct Investment - for success in job creation and positive impact on Atlanta's economy in 2009.

During this quarter, Wipro also announced the launch of two cloud based strategic retail solutions, Digital Customer Experience Platform and Loss Prevention Platform at the National Retail Federation Conference. These solutions help integrate social media, community features and personalization to provide an engaging customer experience and help retailers cut "time to value" by half with minimal capital spend and a pay-by-drink model.  We also launched IT Cloud Advisory and Assessment Services for customers to help them leverage the adoption of Cloud Computing into their IT environments.

Thought Leadership

Wipro and Knowledge@Wharton teamed up to conduct a global "Innovation Tournament", a tournament which concluded during this quarter and received over 120 nominations from across the globe. The tournament conducted in three phases ended with the selection of 10 finalists through a voting system. A panel of eminent judges selected three winners for developing and presenting the most innovative managerial "tools" that companies could use to improve their business by increasing revenues, reducing expenditures and improving customer experience.

Wipro also released its second 'Sustainability Report', detailing various sustainability-related activities and achievements through financial year 2008-09. The report is prepared in line with the GRI framework (Global Reporting Initiative) and has been rated A+ by GRI and audited by Det Norske Veritas (DNV).  Highlights include a 19% improvement in energy efficiency over the last 5 years and 32% of water requirements met through water recycling and harvesting.

IT Products (14% of Total Revenue and 3% of Operating Income for our year ended March 31, 2010)

Our IT Products segment recorded Revenue of Rs. 38.21 billion ($850 million(1)) for our year ended March 31, 2010, representing an increase of 11% over the same period last year. EBIT for this segment was Rs. 1.76 billion ($39 million(1)) for our year ended March 31, 2010, representing an increase of 29% over the same period last year.

The ratio of Operating Income to Revenue for this segment was 4.6% for our year ended March 31, 2010

.

Return on Average Capital Employed (ROCE) for our IT Services and Products segment was 39% for our year ended March 31, 2010.

Our IT Products segment recorded Revenue of Rs. 8.90 billion ($198 million(1)) for our quarter ended March 31, 2010, representing an increase of 2% over the same period last year. EBIT for this segment was Rs. 262 million ($6 million(1)) for our quarter ended March 31, 2010.

The ratio of Operating Income to Revenue for this segment was 2.9% for our quarter ended March 31, 2010.

Return on Average Capital Employed (ROCE) for our IT Services and Products segment was 41% for our quarter ended March 31, 2010

Consumer Care and Lighting (8% of Total Revenue and 6% of Operating Income for our
year ended March 31, 2010)

Our Consumer Care and Lighting business segment recorded Revenue of Rs. 22.58 billion ($502 million(1)) for our year ended March 31, 2010, representing an increase of 17% over the same period last year.  EBIT for this segment was Rs. 3,080 million ($69 million(1)) for our year ended March 31, 2010, representing an increase of 19% over the same period last year.

Our Operating Income to Revenue for this segment was 13.6% for our year ended March 31, 2010. ROCE for this segment was 16% for our year ended March 31, 2010, compared to 14% for the same period last year.

Our Consumer Care and Lighting business segment recorded Revenue of Rs. 6.08 billion ($135 million(1)) for our quarter ended March 31, 2010, representing an increase of 27% over the same period last year.  EBIT for this segment was Rs. 807 million ($18 million(1)) for our quarter ended March 31, 2010, representing an increase of 16% over the same period last year.

Our Operating Income to Revenue for this segment was 13.3% for our quarter ended March 31, 2010. ROCE for this segment was 16% for our quarter ended March 31, 2010, compared to 15% for the same period last year.

About Non-GAAP financial measures

This press release contains non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. Such non-GAAP financial measures are measures of our historical or future performance, financial position or cash flows that are adjusted to exclude or include amounts that are excluded or included, as the case may be, from the most directly comparable financial measure calculated and presented in accordance with IFRS.

The table on page 9 provides our Adjusted Net Income for the period, which is a non-GAAP measure that excludes the impact of accelerated amortization in respect of stock options that vest in a graded manner.

This Non-GAAP financial measure is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, the most directly comparable financial measure calculated in accordance with IFRS, and may be different from non-GAAP measures used by other companies. In addition to this non-GAAP measure, the financial statements prepared in accordance with IFRS and the reconciliation of this non-GAAP financial measure with the most directly comparable IFRS financial measure should be carefully evaluated.

The Company believes that the presentation of this Non-GAAP Adjusted Net Income, when shown in conjunction with the corresponding IFRS measure, provides useful information to investors and management regarding financial and business trends relating to its Net Income for the period. The Company considers a stock option award with the graded vesting schedule to be in substance a single award not multiple stock option awards. Further, the Company considers the services of the employee in each year covered by the stock option award to be equally valuable and accordingly believes that the straight line amortization reflects the economic substance of the stock awards. However, the Company records the related stock compensation expenses on an accelerated amortization basis for IFRS reporting. Therefore, we believe that making available an adjusted net income number that excludes the impact of accelerated amortization from net income provides useful supplemental information to both management and investors about our financial and business trends.

For our internal budgeting process, our management also uses financial statements that exclude the impact of accelerated amortization relating to stock options that vest in a graded manner. The management of the Company also uses Non-GAAP Adjusted Net Income, in addition to the corresponding IFRS measure, in reviewing our financial results.

A material limitation associated with the use of Non-GAAP Adjusted Net Income as compared to the IFRS measure of net income is that it does not include costs which are recurring in nature and may not be comparable with the calculation of Net Income for other companies in our industry. The Company compensates for these limitations by providing full disclosure of the effects of this non-GAAP measure, by presenting the corresponding IFRS financial measure and by providing a reconciliation to the corresponding IFRS measure.

Our results for the year ended March 31, 2010, computed under Indian GAAP and IFRS, along with our individual business segment reports, are available in the Investors section of our website at www.wipro.com.

Quarterly Conference Calls

We will hold conference calls today at 02:00 p.m. Indian Standard Time (04:30 a.m. US Eastern Time) and at 6:45 p.m. Indian Standard Time (9:15 a.m. US Eastern Time) to discuss our performance for the quarter and answer questions sent to email ID: [email protected] or [email protected]. An audio recording of the management discussions and the question and answer session will be available online and will be accessible in the Investor Relations section of our website at www.wipro.com.

About Wipro Limited

Wipro provides comprehensive IT solutions and services, including systems integration, information systems outsourcing, package implementation, software application development and maintenance, and research and development services to corporations globally.   Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services company globally.  Wipro's IT Services business was assessed at Level 5 for CMMI V 1.2 across Offshore and Onsite development centers.

Wipro also has a strong presence in niche market segments of Infrastructure Engineering and Consumer Products & Lighting.  

Wipro's American Depositary Shares (ADSs) are listed on the New York Stock Exchange, and our equity shares are listed in India on the Stock Exchange - Mumbai, and the National Stock Exchange.  For more information, please visit our websites at www.wipro.com, www.wiprocorporate.com and www.wipro.in

Forward-looking and Cautionary Statements

In addition to historical information, this press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein represent Wipro's beliefs regarding future events, many of which are, by their nature, inherently uncertain and outside Wipro's control.  Such statements include, but are not limited to, statements regarding Wipro's growth prospects, its future financial operating results, and its plans, expectations and intentions.

Wipro cautions readers that the forward-looking statements contained herein are subject to risks and uncertainties that could cause actual results to differ materially from the results anticipated by such statements.  Such risks and uncertainties include, but are not limited to, risks and uncertainties regarding fluctuations in our earnings, revenue and profits, our ability to generate and manage growth, intense competition in IT services, our ability to maintain our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which we make strategic investments, withdrawal of fiscal governmental incentives, political instability, war, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property, and general economic conditions affecting our business and industry.  Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission, including, but not limited to, Annual Reports on Form 20-F.  These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company's filings with the Securities and Exchange Commission and our reports to shareholders.  We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.

(1) For the convenience of the reader, the amounts in Indian rupees in this release have been translated into United States dollars at the noon buying rate in New York City on March 31, 2010, for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New York, which was US $1=Rs.44.95. However, the realized exchange rate in our IT Services business segment for the quarter ended March 31, 2010 was US$1=Rs.45.11

(2) IT Services business segment Revenues were Rs. 202.4 billion ($4.5 billion) for the year ended March 31, 2010 under the Indian GAAP. The difference of Rs.21 million ($0.47 million(1)) is primarily attributable to differences in accounting standards under Indian GAAP and IFRS.

IT Services business segment Revenues were Rs. 52.63 billion ($1.2 billion) for the quarter ended March 31, 2010 under the Indian GAAP. The difference of Rs. 33 million ($0.73 million(1)) is primarily attributable to differences in accounting standards under Indian GAAP and IFRS.

(Tables to follow)

SOURCE Wipro Technologies

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