High billing, buys spur Wipro net 39 per cent

BS 200 SCORECARD

Riding high on strong business growth and acquisition of key clients, Wipro registered a net profit of Rs 856 crore for the quarter ended March 2007, up 39 per cent compared with the last year's corresponding quarter.

"During the quarter ended March 2007, we delivered a revenue of $690.7 million ahead of our guidance of $685 million. We continue to see robust growth momentum in our differentiated services, including BPO, enterprise application services and technology infrastructure services," said Wipro CFO Suresh Senapaty. Increase in billing rates and improved profitability in acquisitions and BPO significantly offset the adverse impact of onsite wage hike and exchange rate movement.

The operating margin was affected, as compensation was raised by 3 per cent to 4 per cent as on January 31. "Besides, we have been investing in sales and marketing (which affected the margin by 80 basis points). The overall operating margin for the whole financial year fell by 30 basis points," he added.

For the quarter ended March 31, 2007, Wipro's consolidated revenues at Rs 4,333 crore grew by 39 per cent over the revenues during the year-ago period. Revenue from Wipro's global IT services and products (Wipro Technologies) in the quarter was Rs 3,048 crore, up 32 per cent Y-o-Y.

Incidentally, for the first time, in 2006-07, the combined IT businesses of the company (Wipro Technologies and Wipro Infotech) crossed the $3 billion revenue mark to reach Rs 13,579 crore (about $3.25 billion).

Of this, Wipro Technologies contributed Rs 11,095 crore and Wipro Infotech contributed Rs 2,484 crore. Wipro Infotech recorded a 38 per cent Y-o-Y growth in revenues to Rs 784 crore.

Dismissing speculations of a slowdown in the US, the company expects strong growth to continue during the first quarter of 2007-08. "There is nothing in the US, which is a cause for concern. Our US business continues to grow at the same speed as it had been doing the last year. This apart, the domestic market and the markets in Japan and Europe look exciting," said Chairman Azim Premji.

On the rupee-dollar rate, Premji said: "It was anticipated...perhaps more than anticipated. However, looking at the areas the company was addressing, it would have short-term effect. We will continue to watch for the next two to three weeks if the rupee stabilises."

The profit after tax (PAT) for the financial year grew by 42 per cent to Rs 2,942 crore compared with that in the previous year.

The company posted a revenue of Rs 15,000 crore for the financial year ended March 31, 2007, up 41 per cent compared with the revenues in the year-ago period.

"All our business segments contributed to the strong growth in revenues and profits during FY07.

"During the year, we completed strategic acquisitions, expanded local sales footprint, built deeper domain skills and sharpened our account management focus.

"We look forward to 2007-08 and beyond with excitement. For the quarter ending June 2007, we expect our revenue from global IT services business to be about $711 million," Premji said.