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Our Bureau

Bangalore , Jan. 21

IMPROVEMENT in price realisation for onsite and offshore projects, proactive hedging and continued operational improvements helped significantly mitigate the impact of currency appreciation and employee compensation on the operating margins in Wipro's global IT business.

Mr Suresh Senapaty, Corporate Executive Vice-President, said rising rupee had adversely impacted Wipro's operating margins by 30 basis-points (0.3 per cent) quarter-on-quarter of Wipro Technologies' revenues of $352 million.

Year-on-year, the impact on operating margins has been 0.6 per cent of revenues. "Although there has been a 2 per cent drop in dollar spot rates, because of proactive hedging, the impact on our margins has been minimised.

Since Wipro started following the cash flow hedging strategy in March 2004, it has brought down its outstanding forward cover from $1 billion in March 31, 2004 to about $614 million at the end of December 31, 2004," Mr Senapaty said.

"This cover is for deliverables for the next 12-15 months but we will be hedging incrementally each quarter. We want to ensure the greatest predictability for the immediate quarters and have a high per cent of coverage for the first three months ahead and 60-80 per cent for the next 12 months. Wipro will hedge according to the market in succeeding quarters," Mr Senapaty said.

Wipro expects the rupee to strengthen in the medium term and move both ways in the near term, according to him.

Although it has got an ADS listing, the company does not need any funds right now and an issue is not top priority, Mr Senapaty indicated.

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