Technology major Wipro Limited on Wednesday announced its results approved by the board of directors for the quarter ended June 30, 2006.
Highlights of the Results
- Wipro Limited Profit After Tax grew by 45% year on year (yoy) to Rs. 6.20 billion (Rs. 620 Crores), Total Revenue increased by 39% yoy to Rs. 31.43 billion (Rs. 3,143 Crores)
- Global IT Services & Products Revenue was Rs. 24.51 billion (Rs. 2,451 Crores), a 42% increase yoy
- Global IT Services & Products Profit before Interest and Tax (PBIT) was Rs. 6.02 billion (Rs. 602 Crores) and grew by 45% yoy; Operating Margin was at 24.6%, an improvement of 60 basis yoy.
- Global IT Services & Products added 62 new clients in the quarter.
- Wipro's India, Middle East & Asia Pac business records 62% growth in PBIT yoy; Revenue grew 35%
Outlook for the Quarter ending September 30, 2006
Azim Premji, Chairman of Wipro, commenting on the results said "The results for the quarter were quite satisfying; we enhanced our strategic investments to sustain long term growth even as we continued solid execution leading to improvements in operating performance.
"Our Global IT Services business continued to witness broad based growth, across Verticals, Geographies and Service lines. The external environment remains buoyant - we see Offshoring at the center-stage of IT Strategy of Global Corporations. In these exciting times, we are well-positi oned to benefit from our diversified service portfolio and deep industry expertise.
"Looking ahead, for the quarter ending September 2006, we expect Revenue from our Global IT services business to be approximately $ 577 million"
Suresh Senapaty, Chief Financial Officer, said "During the quarter ended June 2006, our Global IT Services Revenue at $ 539.3 M was ahead of our guidance of $ 533 M. Revenue of Global IT Services segment included $3.2 M from Enabler, our acquisition announced and consummated during the quarter.
"Continuing strong momentum, our Financial Solutions and combined Technology Business delivered 60% and 40% year on year growths respectively. Among service-lines, Testing Services grew 86% year on year while our Technology Infrastructure Services grew 67% year on year.
"On margin front, improved price realizations, higher utilization, continued improvements in BPO profitability helped in partially offsetting the additional investments in sales and marketing and acquisition related pressures on profitability".
- Total Revenue for the Quarter ended June 30, 2006, was Rs. 31.43 billion, representing a 39% increase YoY.
- Profit after Tax for the quarter was Rs. 6.20 billion, an increase of 45% YoY.
Global IT Services and Products
Global IT Services & Products reported Revenue of Rs. 24.51 billion for the Quarter ended June 30, 2006, representing an increase of 42% YoY and PBIT of Rs. 6.02 billion, an increase of 45% YoY. Operating Margin for the quarter was 24.6%, an increase of approximately 60 basis points over the previous year.
The Technology Business contributed 33.3% of the Revenue of Global IT Services. Enterprise Business contributed 58.3% of Revenue with the balance 8.4% being contributed by Business Process Outsourcing (BPO) services.
We had 56,435 employees as of June 30, 2006, which includes 40,496 employees in our IT Services business and 15,939 employees in our BPO business. Compared to quarter ended March 31, 2006, this represents a net addition of 2,693 employees which included additional 409 employees from our completed acquisitions.
During the quarter, we added 62 new customers, including 8 Fortune 1000 or Global 500 companies. This includes 24 customers in our Technology business, 36 in Enterprise business and 2 in our BPO business.
The Global Command Center which offers a unique delivery model for outsourced infrastructure services - won the Marico Foundation and BusinessWorld's "Innovation for India" award under the Business Model category in June 2006. Also, Wipro was the only Indian company to figure in Business Week IN 25 Champions of Innovation listing in June 2006.
During the quarter, Wipro made three acquisitions in this segment - Enabler Informatica - a Retail Solutions provider based in Europe, Saraware Oy- an Engineering & Design services provider based in Finland, and Quantech Global Services - a Mechanical Design Services firm based in US and India.
The operating results of Enabler have been consolidated into Wipro's operating results effective June 1, 2006 resulting in additional Revenue of Rs. 149 million ($3.2 million) and PBIT of Rs. 27 million. Saraware Oy has been consolidated into Wipro's operating results with effect from June 30, 2006.
Global IT Services and Products accounted for 78% of the total Revenue and 90% of the PBIT for the quarter ended June 30, 2006.
Wipro Infotech - India, Middle East & Asia Pacific IT Services & Products business For the quarter ended June 30 2006, Wipro Infotech recorded Revenue of Rs.4.56 billion, representing a growth of 35 %YoY. PBIT grew by 62 % YoY to Rs. 353 Mn. Services business contributed 35% to total Revenue during the quarter. Middle East and Asia Pacific business grew by 28% YoY.
It won 42 contracts across Consulting, Solutions and Infrastructure Management in this quarter across India, APAC and Middle East. The marquee wins included an SAP implementation including IS Retail for Tamimi, a supermarket chain based in Saudi Arabia ,third party testing services to Centurion Bank for its core banking solution implementation and a Consulting assignment for defining an e-governance road map for Govt of Sikkim.
Wipro Infotech has been rated as the No. 1 Network Integrator and No.1 Network Security Services Provider by Voice & Data Magazine, June, 2006.
Wipro Infotech accounted for 15% of total Revenue and 5% of the PBIT for the quarter ended June 30, 2006 Wipro Consumer Care & Lighting For the quarter ended June 30, 2006, Wipro Consumer Care and Lighting business recorded Revenue of Rs 1.77 billion with PBIT of Rs. 231 million contributing 6% of total Revenue and 3% of the PBIT for the quarter.
Operating Margin was 13.1% for the quarter. During the quarter, Wipro acquired switches business from North-West Switchgear Limited, a company in the business of electrical products, in this segment. Wipro also entered into a manufacturing agreement with the seller for a period of five years .
For the quarter ended June 30, 2006, the Retu rn on Capital Employed in Global IT Services and Products was 63%, Wipro Infotech was 50% and Consumer Care and Lighting was 54%. At the Company level, the Return on Capital Employed was 38%, lower due to inclusion of cash and cash equivalents of Rs. 35.41 billion in Capital Employed (47% of Capital Employed).
For Wipro Limited, Profit after Tax computed in accordance with US GAAP for the Quarter ended June 30, 2006, was Rs. 6.14 billion, an increase of 44% YoY. The net difference between profits computed in accordance with Indian GAAP and US GAAP is primarily due to different Revenue recognition standards, different accounting standards for treatment of stock options, deferred taxes, accounting for forward contracts and amortization of intangible assets.
Global IT Services & Products segment's Revenue was Rs. 24.5 billion for the quarter ended June 30, 2006, under US GAAP. The difference of Rs. 29 million is primarily attributable to difference in accounting standards under Indian GAAP and US GAAP.
Quarterly Conference call
Wipro will hold conference calls today at 11:45 AM Indian Standard Time (2:15 AM US Eastern Time) and at 6:45 PM Indian Standard Time (9:15 AM US Eastern Time) to discuss the company's performance for the quarter and answer questions sent to email ID: email@example.com An audio recording of the management discussions and the question and answer session will be available online and will be accessible in the Investor Relations section of the company website at www.wipro.com shortly after the live broadcast.
About Wipro Limited
We are the first PCMM Level 5 and SEI CMM Level 5 certified IT Services company globally. We provide comprehensive IT solutions and services, including systems integration, information systems outsourcing, package implementation, software application development and maintenance, and research and development services to corporations globally.
In the Indian market, we are a leader in providing IT solutions and services for the corporate segment in India offering system integration, network integration, software solutions and IT services. In the Asia Pacific and Middle East markets, we provide IT solutions and services for global corporations. We also have a profitable presence in niche market segments of consumer products and lighting.