The Hindu Business Line : Wipro Q4 net stays flat on negative billing rates

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Wipro Q4 net stays flat on negative billing rates

Remains cautious about near-term prospects

G R N Somashekar

Growth in verticals: Mr Azim Premji, Wipro Chairman, flanked by Mr Girish Paranjape (left) and Mr Suresh Vasvani, Joint CEOs, at a meeting in Bangalore on Friday. —

Our Bureau

Bangalore, April 18 Wipro Ltd posted a muted 2.8 per cent growth in net profit for the latest quarter, partly hurt by negative billing rates, and it is cautious about near-term prospects.

The company posted a net profit of Rs 880 crore for the fourth quarter compared with Rs 856.1 crore in the same period of the previous fiscal. Its revenue grew 32 per cent to Rs 5,700.3 crore (Rs 4,319.1 crore) and the global IT services business revenue for the period was $959.9 million, marginally higher than its estimate of $955 million, Wipro said.

Mr Azim Premji, Chairman, said the company sees fiscal 2009 with “cautious optimism.” The market situation is changing rapidly, which has a bearing on Wipro’s immediate business dynamics, he said. The company remains cautious but resilient of its prospects, he added.

Conservative forecasts

With uncertainty in the business environment, the company is conservative about forecasts. For the first quarter of fiscal 2009, it said, it expects revenue from combined IT services to be $1,060 million.

For fiscal 2008, Wipro reported earnings of Rs 3,282.9 crore compared with Rs 2,42.1 crore in the previous fiscal. Its revenue grew 33 per cent to Rs 19,957.5 crore.

Mr Suresh Senapaty, Chief Financial Officer, said billing for the current quarter was a “little negative.” In the next few quarters, discretionary projects might get re-evaluated on spend and priority and get delayed, he said.

The company said growth for fiscal 2009 would be back-ended. Decision-making may get delayed due to the uncertain situation and Wipro expects most of the fructification (of deals) to happen after three to six months, Mr Senapaty said.

In the current quarter, the company saw strong growth in verticals such as energy and utilities, financial solutions and retail. Investments in Europe yielded good results too, the company said. In the global IT business, revenue from Europe grew 36 per cent, compared with 4.3 per cent growth in the US.

Global IT services and products revenue rose 26 per cent to Rs 3,833.4 crore. Wipro Infotech revenue (India, West Asia and Asia Pacific IT services and products business) grew 41 per cent to Rs 1,096 crore. Revenue from BPO services increased by 23 per cent to Rs 322 crore.

Good show

Wipro Consumer Care and Lighting showed good growth led by the Santoor brand, said Mr Vineet Agrawal, President, Wipro Consumer. “Santoor moved up from the fifth position to third, in value terms in the toilet soap category, after Lux and Lifebuoy.” Revenues for the quarter grew 111 per cent to Rs 480.8 crore.

As of March 31, 2008, Wipro had 82,122 employees — 61,844 in IT services and 20,278 in BPO business. This is a net addition of 2,290 employees, 1919 in IT services and 371 in BPO business, the company said.

“We gave salary hikes to onsite employees, which had an impact of 100 basis points on our margins. We improved utilisation, margin expansion in acquisitions and other operating parameters, which significantly offset the adverse impact of onsite salary increase,” said Mr Senapaty.

Wipro said its board recommended a final cash dividend of Rs 4 a share on shares of face value of Rs 2, subject to shareholder approval. This, coupled with interim dividend of Rs 2 a share, will take total dividend to 300 per cent at Rs 6 a share, the company added.

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