Wipro Q3 net up 19% at Rs 274 crore

Wipro Ltd registered a 37 per cent increase in revenue to touch Rs 1,521 crore in the third quarter ended December 31, 2003, compared with the corresponding period last year.

The company has also registered its highest ever quarterly net profit, which touched Rs 274 crore, an increase of 19 per cent from the corresponding period last year.

On a sequential basis, Wipro registered 11 per cent and 19 per cent increases in revenue and net profit, respectively. The company has added 24 new clients in the quarter, including two clients by the BPO subsidiary, Wipro Spectramind.

Revenues from Wipro's global IT services business was $250 million for the quarter, ahead of the guidance of $241 million. With strong business momentum ahead, the company has provided a guidance of $269 million for global IT services business for the quarter ending March 2004.

The operating margin for global IT services and products was 22 per cent, an increase of 1 percentage point over the quarter ended September 30, 2003.

For the nine-month period ended December 31, 2003, Wipro clocked Rs 4,095 crore in revenues, an increase of 32 per cent over the previous year. The net profit for the same period was Rs 710 crore, representing an increase of 19 per cent.

Charterising the quarter as "India Shining", Vivek Paul, vice-chairman, Wipro Ltd and president of Wipro Technologies, said: "We continued to build a solid foundation for the future with the highest ever net addition of employees to out team in the IT services business on the back of multiple large customer wins."

We witnessed a double-digit sequential revenue growth for the second consecutive quarter. The stability in pricing reflects the market circumstances as we predicted last time."

The late adopters of offshoring are now coming to India and are moving in big numbers."

Commenting on profitablity, Azim Premji, chairman of Wipro Ltd, said, "Improvement in productivity and increased cost efficiencies offset the impact of offshore compensation increase, rupee appreciation and marginal decrease in utilisation, resulting in an expansion in our operating margin as compared to the quarter ended September 30, 2003."

"Looking ahead," Premiji added, "offshoring continues to gain momentum. We expect volume growth across business segments to sustain and expect pricing environment to be stable. However, there may be quarterly aberrations due to mix of customers and service. Further, continued appreciation of the rupee continues to put pressure on business profitablity."

Wipro Spectramind, the BPO unit of Wipro, has posted a sequential growth of 29 per cent. With a net addition of two customers in the quarter, the unit currently services 19 customers and handles 68 different processes for them.

"Nearly 75 per cent of our pursuits are jointly done with our IT division. We are very bullish about growth and see a huge traction by overseas customers," Raman Roy, chairman and managing director, Wipro Spectramind, said.

Wipro added 2,872 staff in the quarter, which included 964 in Wipro Spectramind. However, the utilisation rates saw a marginal decrease because of increased campus hiring at 30 per cent of the net addition. Wipro Spectramind posted an attrition rate of 17 per cent.

According to Suresh Senapaty, corporate executive vice-president (finance), Wipro Ltd: "Strong operational improvements helped us to absorb the impact of an increase in offshore compensation and appreciation of the rupee against the dollar and improve the operating margin of our global IT services business. We were able to leverage the resources and skill sets in Wipro NerveWire to offer consulting and architecture solutions to customers in other verticals of our global IT services business. We believe that this integrated approach will continue and have therefore consolidated the business operations and resources of Wipro NerveWire into the results of our global IT services and products segment."