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Wipro Q2 net up 10% at Rs 1,285 cr

Last updated on: October 22, 2010 10:51 IST

Wipro Q2 net up 10% at Rs 1,285 cr

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IT major Wipro on Friday reported 9.75 per cent increase in consolidated net profit at Rs 1,284.9 crore (Rs 12.84 billion) for the second quarter ended September 30.

On standalone basis, Wipro posted dip in net profit at Rs 1,172.1 crore (Rs 11.72 billion) for the second quarter ended September 30. It had a net profit of Rs 1,232.1 crore (Rs 12.32 billion) in Q2 FY'10.

For the third quarter ending December 31, Wipro expects revenues from IT services business to be in the range of $1,317-1,343 million, the filing added.

"We saw strong momentum in demand as customers tried to catch up with the under-investment in IT in the previous years. We continue to enhance our investments in transformational capabilities, client partners and domain solutions," Wipro Chairman Azim Premji said.

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Image: Azim Premji.

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Wipro Q2 net up 10% at Rs 1,285 cr

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While the macro-economic environment continues to remain uncertain, there is higher degree of confidence at the micro level, he added. Net income from sales rose to Rs 7,730.5 crore (Rs 77.30 billion) for the September quarter as against Rs 6,917.7 crore (Rs 69.17 billion) in Q2 FY'10, it said.

IT services business, which contributed 74 per cent of the total revenue during the reporting quarter, added 29 new clients, the company said. The company registered a forex loss of Rs 41.4 crore (Rs 414 million) during the July-September 2010 period against a gain of Rs 24 crore (Rs 240 million) in the same period previous fiscal.

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Image: Wipro campus.

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Wipro Q2 net up 10% at Rs 1,285 cr

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The company added 2,975 employees in this quarter taking the total headcount to 1.15 lakhs. It had cash and cash equivalents to the tune of Rs 3,784.4 crore (Rs 37.84 billion) as on September 30, 2010.

The net income from sales rose to Rs 6,556.9 crore (Rs 65.56 billion) in the September 2010 quarter.

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Image: Wipro's green building in Gurgaon.

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Wipro Q2 net up 10% at Rs 1,285 cr

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Highlights of the Results:
  • IT Services Revenue in dollar terms w as $1,273 million, a sequential increase of 5.7% and YoY increase of 19.5%.
  • IT Services Revenue on a constant currency (N on-GAAP) w as $1,26 1 million, compared to our guidance range of $1,253 million to $1,277 million.
  • Total Revenues wereRs. 77.31 billion ($1.73 billion1), representing an increase of 12% ov er the same period last y ear.
  • Net Income was Rs. 12.8 5 billion ($28 8 million1), representing an increase of 10% over the same period last y ear.
  • Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) w as Rs 12.76 billion ($28 6 million1), representing an increase of 10% over the same period last y ear.
  • IT Services Revenues were Rs. 57.4 7 billion ($1,290 million1), representing an increase of 15% over the same period last y ear.
  • IT Services Earnings before Interest and Tax (EBIT) w as Rs.12.75 billion ($28 6 million1), representing an increase of 7% over the same period last y ear. IT Services recorded a 6.6% volume grow th in the quarter.
  • IT Services added 29 new clients in the quarter.
  • Net addition of 2,975 employees in the current quarter in IT Services.
  • IT Products recorded sequential growth in revenues of 29% in the current quarter.
  • Consumer Care and Lighting Revenues grew 20% over the same period last y ear and EBIT grew 13%.

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Image: Wipro employees.
Photographs: Reuters.
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Performance for the Quarter ended September 30, 2010 and Outlook for the Quarter ending December 31, 2010

Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said "We saw a strong volume growth of 6.6% driven by higher offshore mix. The Operating Margins for IT Services declined during the quarter due to the impact of employee progressions, Restricted Stock, Units grants and lower foreign exchange realizations."

IT Services

Our IT Services business segment recorded Revenue of Rs. 57.47 billion ($1,290 million) for the quarter ended September 30, 2010, representing an increase of 15% over the same period last year. EBIT for this segment was Rs. 12.75 billion ($286 million1) for the quarter ended September 30, 2010, representing an increase of 7% over the same period last year.

Operating Income to Revenue for this segment was 22.2% for the quarter ended September 30, 2010. We had 115,900 employees as of September 30, 2010, an increase of 2,975 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.

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Image: Suresh Senapaty, CFO, Wipro.

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In the Energy & Utilities space, Wipro has entered into a multi-year strategic partnership with a major electricity distribution network owner and operator in UK to deliver transformational services including enhancing and consolidating the business applications landscape and transitioning the IT systems to an end-to-end managed services framework.

Wipro has entered into a contract with an electricity network owner and major supplier within Northern Ireland. Wipro will upgrade and implement the market registration, customer care and billing solutions across the client's businesses.

Wipro won a multi-year contract with a global banking major. Wipro's engagement includes management of IT and BPO services for the customer with a goal to transform the current services model to a shared services model and deliver the ITO BPO synergy benefit beyond the cost savings.

Wipro entered into a multi-year engagement with a leading global ship classification society for deploying next generation services through business-IT alignment and implementing a future-ready IT architecture in accordance with industry standards and global best practices.

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Image: Wipro campus.

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As part of this engagement, Wipro will manage IT applications catering to the requirements of surveyors, engineers, business users, business owners and end customers of this society with a goal to make their business more efficient.

During the quarter, the India, Middle East & Africa regions continued to post robust growth and had a good set of wins including two large multiyear outsourcing deals with the Central Bank of India and UCO Bank for their Regional Rural Bank roll outs.

We entered into a multi-year strategic multimillion dollar outsourcing deal from one of the largest global telecom service providers to create and manage their enterprise networks in India. Other key deals secured in the quarter include projects from the UID authority for the critical enrolment process for 2 states in India. In the African region, Wipro secured a multiyear contract as a strategic partner with a wireless telecom player in West Africa to manage their core IT systems.

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Awards and Recognition

Our continued focus on Cloud Computing technology gained momentum with Wipro winning engagements in this space with two large utility companies and a global insurance company.

Wipro also launched Comprehensive Cloud Services Portfolio for ISVs (Independent Software Vendors), an integrated framework that can help companies to strategize and accelerate the Cloud / SaaS transformational journey.

The highlight of this offering is the patent pending 'Quick SaaS Enablement'

which helps in faster time to market. Apart from Enablement, it also provides Engineering, IT & Hosting Services making it a One-Stop SaaS offering.

As testament to our continued focus on productized services, Network Products Guide, a leading information technology research and advisory guide named Wipro's Enterprise Data Masking Solution and Software Assurance Center, as winners of the 2010 Best Products and Services Award.

Wipro's commitment to continuous innovation and driving business value for its customers in the consumer packaged goods industry received further acknowledgement when two of its solutions Sub-Daily Planning and Scheduling (iSDPS) and Third Party Ordering (iTPO) became SAP endorsed business solutions.

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Image: Cloud Computing.

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IT Products

Our IT Products segment recorded Revenue of Rs. 10.69 billion ($240 million1) for the quarter ended September 30, 2010, representing a decline of 10% over the same period last year. EBIT for this segment was Rs. 533 million ($12 million1) for the quarter ended September 30, 2010, representing a decrease of 13% over the same period last year.

The ratio of our Operating Income to Revenue for this segment was 5.0% for the quarter ended September 30, 2010.

Return on Average Capital Employed (ROCE) for the IT Services and Products segment was 40% on an annualized basis for the quarter ended September 30, 2010

Consumer Care and Lighting (9% of Total Revenue and 6% of Operating Income for the quarter ended September 30, 2010) Our Consumer Care and Lighting business segment recorded Revenue of Rs. 6.65 billion ($149 million1) for the quarter ended September 30, 2010, representing an increase of 20% over the same period last year.

EBIT for this segment was Rs. 831 million ($19 million1) for the quarter ended September 30, 2010, representing an increase of 13% over the same period last year.

Operating Income to Revenue for this segment was 12.5% for the quarter ended September 30, 2010. ROCE for this segment was 16% on an annualized basis for the quarter ended September 30, 2010, compared to 16% for the same period last year.


Image: Wipro logo.

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