The Hindu Business Line : Wipro clocks 56 pc rise in Q3 net at Rs 427 cr

WIPRO Ltd posted a 56-per cent growth in net profit and a 39-per cent increase in revenue for the third quarter ending December 2004, beating expectations.

Third-quarter net profit in fiscal 2005 stood at Rs 426.8 crore on revenues of Rs 2,110 crore, as against a net of Rs 274.3 crore on revenues of Rs 1,521 crore in the previous corresponding period. On a sequential basis, net profit and revenue grew by 3.5 per cent and 6.6 per cent, respectively.

"Our strategy of offering an integrated solution continues to pay off as demonstrated by the healthy sequential growth in all our key verticals and service lines during the quarter," the Wipro Chairman, Mr Azim Premji, told a post-earnings press conference on Friday.

Revenue from global IT services and products business for the third quarter increased 38 per cent, year-on-year, to Rs 1,589 crore, accounting for 75 per cent of the company's total revenue.

The domestic IT business, Wipro Infotech's revenues grew 45 per cent to Rs 342 crore, making up 16 per cent of total earnings.

The consumer care and lighting business, which contributed 6 per cent of total earnings, clocked revenues of Rs 129 crore for the quarter.

The Wipro Vice-Chairman, Mr Vivek Paul, said the company saw a 1-per cent sequential improvement in price realisation for both offshore and onsite projects.

"In terms of verticals, finance solutions, telecom equipment firms and manufacturing businesses grew double-digit sequentially. Service lines such as technology infrastructure services and testing services continued their momentum, with double-digit growth," Mr Paul said.

Despite better price realisations, the operating margins for Wipro Technologies saw a marginal decline on a sequential basis to 26.1 per cent, mainly due to a hike in wages and a stronger rupee.

Wipro effected a wage hike of between 15 and 18 per cent for its offshore and select onsite employees during the quarter.

"Improved price realisation, proactive hedging and continued operational improvements helped significantly mitigate the impact of wage hike and currency appreciation on operating margins," said the Corporate Executive Vice-President (Finance), Mr Suresh Senapaty.

"Operating margins before a non-cash charge of 1 per cent due to expensing of restricted stock units was 27 per cent," he added. Some 2,500 senior employees have been covered under the company's restricted stock units scheme.

"Looking ahead, the environment we see is of strong volume growth with prices moving in a narrow band," Mr Premji said.

"However, the rupee appreciation will be an additional challenge in sustaining the profitability," he added.

For the quarter ending March 2005, Wipro expects revenue from its global IT services business to be around $370 million.

During the third quarter, the company's attrition came down to 12 per cent from 16 per cent on an annualised basis.

The company added 26 new customers, comprising 14 in R&D services and 10 in enterprise services. Wipro added some 947 people to its IT services business, increasing total headcount to 24,997.

WiproSpectramind, the business process outsourcing outfit, added 1,327 people to increase its headcount to 14,340.

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