The Hindu Business Line : Wipro sees steady operating margins

Mr Vivek Paul, Vice-Chairman, Wipro Ltd, and Mr Suresh Senapathy, Executive Vice-President, at a press conference in Bangalore on Friday. - - G.R.N. Somashekar

Bangalore , April 16

WIPRO Ltd expects to maintain its operating margins in the current financial year, tracking surging volumes, pricing stability, offshore drift and increasing utilisation.

The company reported a three per cent rise in its fourth quarter pricing realisation. ``Of this, 2.5 per cent was on effective yield and the remaining 0.5 per cent was actual increase,'' Mr Vivek Paul, Vice-Chairman of the company said.

``Pricing has been stable over the last few quarters, but in the quarter ended March there has been an improvement in billing rates, both offshore and onsite,'' the Chief Financial Officer, Mr Suresh Senapaty, said.

The company reported $4,113 per person per month offshore rates and $10,428 per person per month onsite rate.

The new client wins are coming in at a higher price point than the average price charged by Wipro.

The company managed to dampen the effect of a strong rupee through "significant increase in our hedging".

Wipro has hedged $900 million of its receivables as close to 70 per cent of its revenue is billed in dollars.

Such "proactive" hedging is likely to help the company stay insulated against further sharp rupee-dollar fluctuations in the first quarter of the current fiscal, Mr Senapaty said. Traditionally, for every one per cent gain of rupee against the dollar, Wipro's operating margin is shrunk by half a per cent.

Wipro's operating margin in the fourth quarter expanded to 23.7 per cent from 21.8 per cent in the previous quarter.

"The growth trajectory is very good. Telecom revival and revenue mix change were also very positive", technology analyst, Ms Sohini Andani of LKP Stock and Sharebroker, said.

Wipro expects to dilute the effect of rising wage costs through increasing productivity, managing selling and general administrative costs and through offshore push, Mr Paul said.

He noted that outsourcing backlash in the US was "political" and in the long run it would be "difficult to run a country isolated" against a global economy governed by free trade.

However, in the short term, "off shoring on the back of layoffs are going slow".