Financial Daily from THE HINDU group of publications
Saturday, Jul 20, 2002
Info-Tech - Software
Corporate Results - Software
Corporate - Mergers & Acquisitions
Wipro Q1 net drops to Rs 220 cr Buys majority stake in Spectramind for Rs 406.9 cr
Mr Azim Premji, Chairman, Wipro, and Mr Vivek Paul, Vice-Chairman, at a press conference in Bangalore on Friday.
BANGALORE, July 19
WIPRO Ltd, which announced its first quarter results today reported higher revenues for the quarter but lower PAT year-on-year. Revenues from operations were up by 19 per cent to Rs 930 crore year-on-year (excluding revenues of Rs 3.8 crore from the discontinued ISP business).
However, PAT year-on-year declined by 6 per cent to Rs 220 crore (before taking losses from the ISP business into account).
The company has decided to discontinue its Wipro Net ISP business and the cost has been recorded as an extraordinary loss of Rs 38.9 crore. "We defocused on a business in which we did not have long-term strategic commitment," Mr Azim Premji, Chairman, said.
Quarter on quarter, revenues showed a decline from Rs 940.6 crore in the fourth quarter of last year to Rs 930 crore this quarter. PAT was down from Rs 231.2 crore to Rs 220 crore. The company announced one more acquisition with an agreement to buy an additional 66 per cent stake in Spectramind, a BPO service provider for Rs 406.9 crore. With the existing 17 per cent stake and the conversion of preferential shares, the total holding in Spectramind will go up to 90 per cent, Mr Premji said. The total investment in Spectramind is $93 million.
Wipro Spectramind as the new company will be called, recorded revenues of Rs 50 crore in its first year of operations and a loss of Rs 11.5 crore. For the first quarter this year, it has recorded revenues of Rs 30.9 crore and a PAT of Rs 1.3 crore. The company has seven customers and over 2,700 employees.
Wipro has also bought 100 per cent stake in GE Medical Systems Information Technology Pvt Ltd for Rs 28 crore. Both deals were all cash deals. The company has cash reserves of Rs 1,600 crore. "This quarter we saw our strategic plans translate into business initiatives," Mr Premji said.
The drop in PAT was because of changes in law as applicable to software companies as well as the "disappearance" of the foreign exchange gain said Mr Premji. Surcharge has gone up to 15 per cent from five per cent, sending up the taxes one percentage point, said Mr Suresh Senapathy, Corporate Vice-President, Finance.
Both offshore and onsite rates fell by 5-6 per cent from the previous quarter, according to the Vice-Chairman, Mr Vivek Paul. The drop offset the five per cent growth that came from increased volumes and increased utilisation. However, the decline in prices year-on-year was only one per cent, he said.
Revenues from its global IT business (Wipro Technologies) increased to Rs 630 crore (Rs 588.4 crore last quarter). The APAC and Indian operations (Wipro Infotech) declined to Rs 190.7 crore from Rs 236 crore last quarter. Wipro Infotech added a net 150 people this quarter.
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