Wipro Ltd will see its net income for the quarter ended December 2002 decline by 42 per cent after adjusting for compensation cost in a manner consistent with the fair value approach described in the Statement of Financial Accounting Standard (SFAS) No 148 recently. The norm replaced SFAS 123 laid down by the Financial Accounting Standards Board (FASB) of the US.
The company declared a Rs 600.44 crore net income for the period ended December 2002. This will be restated at Rs 344.48 crore. Income for the previous corresponding period will be restated from Rs 621.47 crore to Rs 485.74 crore, a 21 per cent adjustment under SFAS 148.
Basic earnings per share (EPS) as a result will ease from Rs 25.97 till December 2002 to Rs 14.90 under the fair value approach. EPS for the previous corresponding period will also fall to Rs 21.02 from Rs 26.89 as declared earlier.
Diluted EPS, which stood at Rs 25.93 under the intrinsic value-based method, will decline to Rs 14.89. Similarly the corresponding previous accounting period will see the diluted EPS fall to Rs 21.02 against Rs 26.86.
In December last year, FASB issued SFAS No 148, Accounting for Stock-Based Compensation-Transition and Disclosure, amending FASB Statement No 123. Accounting for stock-based compensation was redefined to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.
In addition, SFAS No 148 amended the disclosure requirements of SFAS No 123, requiring prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure provisions of SFAS No 148 are now applicable for fiscal periods beginning after December 15, 2002.
The company would continue to use intrinsic value-based method to account for employee stock-based compensation plans. Analysts, however, said there were possibilities that FASB could make it mandatory for companies to account for their compensation cost under the fair value approach.
This will force most large Indian companies listed on any exchange in the US to restate their incomes. This could effect their bottomline in proportion to stock options issued over the past years.
Meanwhile, the e-procurement consultancy arm of Wipro, Wipro01markets, today announced the launch of procurement intra net and supplier extranet solutions.
This follows Wipro01markets
