Business Daily from THE HINDU group of publications
Friday, Jul 20, 2007
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Business Daily from THE HINDU group of publications Friday, Jul 20, 2007 ePaper |
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Financial Performance Corporate Results - Software Info-Tech - Financial Performance
Braving headwinds: Mr Azim Premji (right), Chairman, Wipro, and Mr Suresh Senapaty, Chief Financial Officer, at a press conference in Bangalore on Thursday. —
Our Bureau Bangalore, July 19 Wipro’s net profit grew 17 per cent in the first quarter ended June, curtailed by the rupee’s steep appreciation, and falling short of street expectations. The company reported net profit of Rs 725.6 crore for the period compared to Rs 620.4 crore in the corresponding previous period. Total revenues rose by 34 per cent to Rs 4,203.3 crore (Rs 3,142.5 crore). However, on sequential basis, the first-quarter net profit and revenues declined by 15 per cent and three per cent respectively. Post-results, the Wipro stock hit an intra-day low of Rs 494 on Thursday and later recovered to hit an intra-day high of Rs 509 before closing at Rs 505.40, a gain of 0.19 per cent. Revenues from global IT and products business grew in dollar terms but declined in rupee terms. Global IT revenues grew ahead of the company’s guidance of $711 million to $726.1 million, a 35 per cent rise. However, in rupee terms revenues were up 20 per cent at Rs 2,950 crore, but below street expectations. 
“The results are satisfying considering the strong headwinds faced by us in the form of an appreciating rupee,” said Chairman Mr Azim Premji. “Growth in revenues was primarily driven by strong volume growth across all business units.” The strong rupee impacted Wipro’s operating profit margins by 3.4 per cent. “Operational improvements helped us to offset the pressure on profitability and contain the sequential impact on margins to less than 2.5 per cent,” said Mr Suresh Senapaty, CFO. Expressing disappointment over management of rupee against the dollar during the quarter, he said: “The Ministry of Finance and the Reserve Bank of India talk about managing volatility, and it seems that hasn’t happened.” Wipro has hedged about to $400 million as of June-end. Commenting on the outlook, Mr Premji said that the demand environment continues to be robust. “We see good traction with our existing customers. For the quarter ending September, we expect revenues from global IT business to touch $777 million.” On the business outlook in the US, Mr Senapaty said that irrespective of the weakness of dollar, demand continues to be strong in the US, Europe and Japan. Global IT business accounted for 70 per cent of total revenues of Wipro, which added 39 clients during the quarter; it also bagged a $130-million multi-year deal from a European utility firm. Wipro added 4,319 people on net basis – 2,719 employees in IT services and products and 1,600 employees in BPO. Overall headcount has risen to 72,137 – 53,073 in IT services and 19,064 in BPO. 
Wipro Infotech, the India, Middle East and Asia Pacific business, grew 64 per cent and accounted for 18 per cent of total revenues. The consumer care and lighting business grew 33 per cent to Rs 235 crore and accounted for six per cent of the revenues. It acquired Unza, a leading personal care company in South-East Asia, during the quarter. “This is an important step for us as we see large opportunities in the emerging Asian economies,” Mr Premji said.
Related Stories: More Stories on : Financial Performance | Software | Financial Performance | Wipro Ltd
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