6-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Issuer
Pursuant to Section 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the quarter ended December 31, 2003

Commission File Number 001-16139

Wipro Limited

(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s name into English)

Karnataka, India
(Jurisdiction of incorporation or organization)

Doddakannelli
Sarjapur Road
Bangalore, Karnataka 560035, India +91-80-844-0011
(Address of principal executive offices)

     Indicate by check mark registrant files or will file annual reports under cover Form 20-F or Form 40-F:

          Form 20-F x      Form 40-F o

     Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g 3-2(b) under the Securities Exchange Act of 1934.

          Yes o    No x

If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 2g 3-2(b).

Not applicable.

TABLE OF CONTENTS

EXHIBIT 99.1

EXHIBIT 99.2

EXHIBIT 99.3

EXHIBIT 99.4

EXHIBIT 99.5

EXHIBIT 99.6

EXHIBIT 99.7

EXHIBIT 99.8

EXHIBIT 99.9

EXHIBIT 99.10

DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     We hereby furnish the Commission with copies of the following information concerning our public disclosures regarding our results of operations for the quarter ended December 31, 2003. The following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

     On January 21, 2004, we announced our results of operations for the three months ended December 31, 2003. We issued press releases announcing its results under U.S. Generally Accepted Accounting Principles (“GAAP”) and Indian GAAP, copies of which are attached to this Form 6-K as exhibits 99.1 and 99.2.

     On January 21, 2004, we held a press conference to announce our results, which was followed by a question-and-answer session with those attending the press conference. The transcript of this press conference is attached to this Form 6-K as exhibit 99.3. On the same day, we also held two teleconferences with investors and analysts to discuss our results. Transcripts of those two teleconferences are attached to this Form 6-K as exhibits 99.4 and 99.5.

     Our officers held a question-and-answer session with analysts from CNBC India on January 21, 2004. The transcript of this question-and-answer session is attached to this Form 6-K as exhibit 99.6.

     Our officers gave interviews with Reuters, Dow Jones Newswires, and Economic Times concerning our results. Copies of the transcripts of these interviews are attached as Exhibits 99.7, 99.8, and 99.9 respectively, to this Form 6-K.

     Last, we placed advertisements in certain Indian newspapers concerning our results of operations for the three months ended December 31, 2003 under Indian GAAP. A copy of the form of this advertisement is attached to this Form 6-K as exhibit 99.10.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized.

	Wipro Limited
	/s/ Suresh C. Senapaty
	Suresh C. Senapaty
	Executive Vice President, Finance
Dated: January 27, 2004

-2-

INDEX TO EXHIBITS

Exhibits
99.1	U.S. GAAP Press Release
99.2	Indian GAAP Press Release
99.3	Transcript of January 21, 2004 Press Conference
99.4	Transcript of January 21, 2004 11:45 a.m. Earnings Call
99.5	Transcript of January 21, 2004 6:45 p.m. Earnings Call
99.6	Transcript of January 21, 2004 CNBC India Question-and-Answer Session with Company’s Officers
99.7	Transcript of January 21, 2004 Reuters Interview with Vivek Paul, Vice Chairman, Wipro Limited
99.8	Transcript of January 21, 2004 Dow Jones Interview with Suresh Senapaty, Executive Vice President, Finance of Wipro Limited
99.9	Transcript of January 21, 2004 Economic Times interview with Suresh Vaswani, President, Wipro Infotech
99.10	Form of Advertisement Placed in Indian Newspapers

-3- EX-99.1 3 f95907exv99w1.htm EXHIBIT 99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Contact:	Sridhar Ramasubbu
	Wipro Limited
	408-557-4402

Results for the Quarter Ended December 31, 2003 under US GAAP
WIPRO RECORDS 22% GROWTH IN NET INCOME

Bangalore, India and Mountain View, California – January 21, 2004— Wipro Limited (NYSE:WIT) today announced financial results under US GAAP for its third fiscal quarter ended December 31, 2003.

Highlights for the quarter ended December 31, 2003:

Ø	Net Income was Rs. 2.66 billion ($58 million), representing an increase of 22% over the same period last year.
Ø	Revenue was Rs. 15.62 billion ($343 million), representing an increase of 44% year over year.
Ø	Global IT Services & Products Revenue was Rs.11.47 billion ($252 million), representing an increase of 43% over the same period last year.
Ø	Global IT Services & Products Earnings Before Interest and Tax (EBIT) was Rs. 2.42 billion ($53 million), representing an increase of 11% over the same period last year.
Ø	Rs. 3.40 billion ($75 million) cash generated from continuing operations.
Ø	Global IT Services & Products added 24 new clients in the quarter (including 2 in its IT Enabled services operations)
Ø	Wipro awarded SVG1, the highest rating in Stakeholder Value Creation & Governance Practices by ICRA Ltd., a premier credit rating agency in India and an associate of Moody’s Investor Services of USA.

Outlook for the Quarter ending March 31, 2004

Azim Premji, Chairman of Wipro commenting on the results said “Sustained volume growth coupled with stable pricing environment and operational improvements resulted in Wipro posting its highest ever quarterly Profit after Tax. Revenue in our Global IT Services business was $250 million, ahead of the guidance of $241 million. Business momentum continues to be strong. Looking ahead, for the quarter ending March 2004, we expect our Revenue from our Global IT services business to be approximately $269 million.”

Vivek Paul, Vice Chairman, said “We continued to build a solid foundation for the future with the highest ever net addition of employees to our team in the IT services businesses on the back of multiple large customer wins. We witnessed double digit sequential Revenue growth for the second consecutive quarter. The broad-based nature of growth- 13% sequential growth in Technology and 10% in IT business – was particularly satisfying. In terms of service lines too, sequentially, BPO grew by 29%, Technology Infrastructure Services grew by 17% and Package Implementation grew by 14%, reflecting customer confidence in our ability to provide comprehensive solutions and our deepening domain strength.”

Suresh Senapaty, Corporate Executive Vice President - Finance said, “During the quarter, strong operational improvements helped us to absorb the impact of an increase in Offshore compensation and appreciation of the Rupee against the Dollar and improve the Operating Margin in our Global IT Services business. During the quarter, we were able to leverage the resources and skill sets in Wipro NerveWire to offer Consulting and Architecting solutions to customers in other verticals of our Global IT Services business. We believe that this integrated approach will continue and have therefore consolidated the business operations and resources of Wipro NerveWire into the results of our Global IT Services and Products segment.”

Wipro Limited

Total Revenues for the quarter ended December 31, 2003 were Rs.15.62 billion ($343 million), representing a 44% increase over the corresponding period in the previous year. Net Income was Rs. 2.66 billion ($58 million), representing an increase of 22% over the same period last year. Earnings per share was Rs. 11.52 ($0.25) for the quarter ended December 31, 2003, representing an increase of 22% over the earnings per share of Rs.9.43 for the quarter ended December 31, 2002.

Total Revenues for the nine months ended December 31, 2003, were Rs. 40.82 billion ($896 million), representing a 34% increase over the corresponding period in the last year. Net Income for the nine months ended December 31, 2003 was Rs. 6.74 billion ($148 million), representing an increase of 12% over net income for the same period last year. Earnings Per Share was Rs. 29.13 ($0.64) for the nine months ended December 31, 2003, representing an increase of 12% over the Earnings Per Share of Rs. 25.97, for the corresponding period last year.

Global IT Services and Products (74% of Revenues and 86% of Operating Income for quarter ended December 31, 2003)

Effective quarter ended December 31, 2003, the results of Wipro Nervewire have been consolidated with the results of Global IT Services & Products segment.

Our Global IT Services and Products business segment recorded Revenue of Rs. 11.51 billion¹ ($253 million) for the quarter ended December 31, 2003, representing an increase of 42% over the same period last year. EBIT was Rs.2.42 billion ($53 million) for the quarter ended December 31, 2003, representing an increase of 11% over the same period last year. Operating Income to Revenue for the quarter ended December 31, 2003 was 21%, representing a decline of 6% from the quarter ended December 31, 2002. This decline was primarily due to the appreciation of the Rupee against the Dollar, increase in compensation costs and a higher proportion of Revenues from onsite services; partially offset by lower Selling, General and Administrative costs and increased utilization of professionals. EBIT for the quarter includes acquisition related charges of Rs. 64 million ($1.4 million), representing 0.6% of the segment Revenue, from the amortization of intangibles.

We had 27,137 employees as of December 31, 2003, which includes 17,681 employees in IT Services business and 9,456 employees in IT Enabled services business. This represents a net addition of 2,872 people comprising of 1,908 in IT Services and 964 people in IT Enabled services business.

During the quarter, we added 24 new customers comprising 8 customers in R&D Services, 14 customers in Enterprise Services and 2 new customers in the IT Enabled services business.

Annualized Return on Capital Employed (ROCE) for the nine month period ending December 31, 2003 was 44% compared to 70% for the nine months ended December 31, 2002.

India and Asia-Pac IT Services and Products (17% of Revenue and 7% of Operating Income for quarter ended December 31, 2003)

Our India and Asia-Pac Services and Products business segment (Wipro Infotech) recorded Revenue of Rs. 2.70 billion ($59 million) for the quarter ended December 31, 2003, representing an increase of 60% over the quarter ended December 31, 2002. EBIT for the quarter ended December 31, 2003, was Rs. 185 million ($4 million).

¹ Global IT Services & Products segment Revenues were Rs. 11.47 billion for the quarter ended December 31, 2003 under the Indian GAAP. The difference of Rs. 36 million ($0.8 million) is attributable to different revenue recognition standards under Indian GAAP and US GAAP.

Operating Margin for the quarter ended December 31, 2003 was 7%, representing an increase of 4% compared to the quarter ended December 31, 2002. Annualized Return on Capital Employed (ROCE) for the nine month period ending December 31, 2003 was 38% compared to 31% for the nine months ended December 31, 2002.

Consumer Care & Lighting (6% of Revenue and 5% of Operating Income for quarter ended December 31, 2003)

Our Consumer Care & Lighting business segment recorded Revenue of Rs. 935 million ($21 million) for the quarter ended December 31, 2003, representing a 27% increase over Revenue of Rs. 739 million for the quarter ended December 31, 2002. EBIT was Rs. 137 million ($3 million) for the quarter ended December 31, 2003, representing a 63% increase over EBIT of Rs.84 million for the quarter ended December 31, 2002. Annualized Return on Capital Employed (ROCE) for the nine-month period ending December 31, 2003 was 92% compared to 65% for the nine months ended December 31, 2002.

Our results for the quarter ended December 31, 2003, computed under Indian GAAP and US GAAP, along with individual business segment reports are available in the Investor Relations section of our website at www.wipro.com.

Quarterly Conference call

Wipro will hold conference calls today at 11:45 AM Indian Standard Time (1:15 AM Eastern Time) and at 6:45 PM Indian Standard Time (8:15 AM Eastern) to discuss the company’s performance for the quarter and answer questions sent to email ID: lakshminarayana.lan@wipro.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 P CMM 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.

Our ADSs are listed on the New York Stock Exchange, and our equity shares are listed in India on the Stock Exchange - Mumbai, and the National Stock Exchange, among others. For more information, please visit our websites at www.wipro.com and www.wipro.co.in

Forward-looking and cautionary statements

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which we make strategic investments, withdrawal of fiscal governmental incentives, political instability, war, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.
# # #

(Tables to follow)

WIPRO LIMITED & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)

					Three Months Ended December 31									Nine Months Ended December 31
					2002			2003			2003			2002			2003			2003
											Convenience									Convenience
											translation into									translation into
											US$									US$
					(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues :
		Global IT Services and Products
				Services	Rs.	8,022		Rs.	11,449		$	251		Rs.	21,513		Rs.	30,832		$	677
				Products		19			24			1			145			87			2
		India and AsiaPac IT Services and Products
				Services		564			860			19			1,585			2,118			47
				Products		1,125			1,836			40			4,041			3,829			84
		Consumer Care and Lighting				739			935			21			2,175			2,579			57
		Others				402			517			11			1,115			1,374			29
				Total		10,871			15,621			343			30,574			40,819			896
Cost of Revenues:
		Global IT Services and Products
				Services		4,736			7,461			164			12,568			19,822			435
				Products		16			16			0			102			58			1
		India and AsiaPac IT Services and Products
				Services		290			463			10			820			1,133			25
				Products		1,030			1,668			37			3,629			3,425			75
		Consumer Care and Lighting				521			591			13			1,489			1,650			36
		Others				262			364			8			809			976			22
				Total		6,855			10,563			232			19,417			27,064			594
Gross profit						4,016			5,058			111			11,157			13,755			302
Operating expenses :
		Selling, general, and administrative exp				(1,661	)		(2,176	)		(48	)		(4,396	)		(6,351	)		(139	)
		Research and development expenses				(42	)		(57	)		(1	)		(120	)		(168	)		(4	)
		Amortization of intangible assets				(48	)		(67	)		(1	)		(95	)		(223	)		(5	)
		Foreign exchange gains, net.				81			25			1			321			201			4
		Others, net				13			17			0			81			69			2
Operating Income						2,359			2,800			62			6,948			7,283			160
Loss on direct issue of stock by subsidiary									(30	)		(1	)					(206	)		(5	)
Other income, net						234			202			4			626			550			12
Equity in Earnings / (losses) of affiliates						(48	)		43			1			(259	)		(5	)		0
Income before income taxes and minority interest						2,545			3,015			66			7,315			7,622			167
Income taxes						(337	)		(334	)		(8	)		(876	)		(851	)		(18	)
Minority interest						(18	)		(18	)		0			(30	)		(33	)		(1	)
Income from continuing operations						2,190			2,663			58			6,409			6,738			148
Discontinued operations:
	Loss from operations of discontinued corporate					(12	)		—			—			(564	)		—			—
		Internet services division (including loss on disposal of Rs. 246 for the nine months ended December 31, 2002 and gain on disposal of Rs. 3 for the three months ended December 31, 2002)
		Income tax benefit				3			—			—			159			—			—
				Net income	Rs.	2,181		Rs.	2,663		$	58		Rs.	6,004		Rs.	6,738		$	148
Earnings per equity share: Basic
			Continuing Operations			9.47			11.52			0.25			27.72			29.13			0.64
			Discontinued operations			(0.04	)		—			—			(1.75	)		—
				Net income		9.43			11.52			0.25			25.97			29.13			0.64
Earnings per equity share: Diluted
			Continuing operations			9.45			11.45			0.25			27.68			29.00			0.64
			Discontinued Operations			(0.04	)		—						(1.75	)		—
				Net Income		9.41			11.45			0.25			25.93			29.00			0.64
Additional Information
Operating Income
Global IT Services & Products					Rs.	2,180		Rs.	2,416		$	53		Rs.	6,261		Rs.	6,340		$	139
India & AsiaPac IT Services & Products						56			185			4			264			380			8
Consumer Care & Lighting						84			137			3			320			411			9
Others						51			91			2			141			220			5
Reconciling Item						(12	)		(29	)		—			(38	)		(68	)		(1	)
Total					Rs.	2,359		Rs.	2,800		$	62		Rs.	6,948		Rs.	7,283		$	160

WIPRO LIMITED & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share data and unless stated otherwise)

				As of December 31,
				2002			2003			2003
										Convenience
										translation into
										US$
				(unaudited)			(unaudited)			(unaudited)
			ASSETS
Current assets:
		Cash and cash equivalents		Rs.	5,345		Rs.	1,801		$	40
		Accounts receivable, net of allowances			6,864			9,394			206
		Costs and earnings in excess of billings on contracts in progress			1,235			1,964			43
		Inventories			1,463			1,517			33
		Investments in liquid and short-term mutual funds			8,449			19,429			427
		Other investment securities			530			—			—
		Deferred income taxes			164			219			5
		Property, plant and equipment held for sale			34			—			—
		Other current assets			2,097			2,872			63
			Total current assets		26,181			37,196			817
		Property, plant and equipment, net			6,825			8,628			188
		Investments in affiliates (Note 5)			631			524			12
		Deferred income taxes			196			193			4
		Intangible assets, net (Note 2)			390			314			7
		Goodwill (Note 2)			4,069			5,427			119
		Purchase price pending allocation			1,038			—			—
		Other assets			924			760			17
Total assets				Rs.	40,254		Rs.	53,042		$	1,164
			LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
		Borrowings from banks		Rs.	61		Rs.	1,591		$	35
		Current portion of long term debt			20			28			1
		Accounts Payable			1,763			2,067			45
		Accrued expenses			1,881			2,349			52
		Accrued employee cost			1,079			2,367			52
		Advances from customers			915			920			20
		Other current liabilities			933			1,109			24
			Total current liabilities		6,652			10,431			229
		Long-term debt, excluding current portion			8			—			—
		Other liabilities			203			280			6
			Total liabilities		6,863			10,711			235
		Minority interest			84			385			8
Stockholders’ equity
Equity shares at Rs. 2 par value: 375,000,000 shares authorized; Issued and outstanding: 232,547,145 and 232,628,554 shares as of December 31, 2002 and 2003					465			465			10
			Additional paid-in capital		6,930			7,008			154
			Deferred stock compensation		(75	)		(12	)		—
			Accumulated other comprehensive loss		(2	)		(74	)		(2	)
			Retained earnings		25,989			34,559			759
	Equity shares held by a controlled Trust: 1,302,410 and 1,313,010 shares as of December 31, 2002 and 2003				*			*			*
			Total stockholders’ equity		33,307			41,946			921
			Total liabilities and stockholders’ equity	Rs.	40,254		Rs.	53,042		$	1,164
* Equity shares held by a controlled trust				Rs.	75,000		Rs.	75,000		$	200

EX-99.2 4 f95907exv99w2.htm EXHIBIT 99.2

EXHIBIT 99.2

Results for the Quarter ended December 2003 under Consolidated Indian GAAP
Wipro records highest ever quarterly Profit After Tax
Global IT business posts 11% sequential Revenue growth and sequential Operating Margin expansion

Bangalore, January 21, 2004 – Wipro Limited today announced its audited results approved by the Board of Directors for the quarter ended December 2003.

Highlights:
Results for the Quarter ended December 31, 2003

• Revenue for the quarter was Rs. 15.21 billion, an increase of 37% year on year. Profit Before Interest & Tax (PBIT) grew by 15% year on year to Rs.2.86 billion.

• Profit After Tax grew by 19% year on year to Rs. 2.74 billion

• Global IT Services & Products Revenue increased 41% year on year, at Rs. 11.47 billion.

• Global IT Services & Products PBIT was Rs. 2.51 billion, contributed by volume growth and productivity improvements

• Global IT Services & Products Operating Margin was 22%, an increase of 1% over the quarter ended September 30, 2003

• Global IT Services & Products added 24 new clients in the quarter (including 2 in IT Enabled services business)

• Wipro awarded SVG1, the highest rating in Stakeholder Value Creation & Governance Practices by ICRA Ltd., a premier credit rating agency in India and an associate of Moody’s Investor Services of USA.

Outlook for the Quarter ending March 31, 2004

Azim Premji, Chairman of Wipro commenting on the results said “Sustained volume growth coupled with stable pricing environment and operational improvements resulted in Wipro posting its highest ever quarterly Profit after Tax. Revenue in our Global IT Services business was $250 million, ahead of the guidance of $241 million. Business momentum continues to be strong. Looking ahead, for the quarter ending March 2004, we expect our Revenue from our Global IT services business to be approximately $269 million.”

Vivek Paul, Vice Chairman, said “We continued to build a solid foundation for the future with the highest ever net addition of employees to our team in the IT services businesses on the back of multiple large customer wins. We witnessed double digit sequential Revenue growth for the second consecutive quarter. The broad-based nature of growth- 13% sequential growth in Technology and 10% in IT business – was particularly satisfying. In terms of service lines too, sequentially, BPO grew by 29%, Technology Infrastructure Services grew by 17% and Package Implementation grew by 14%, reflecting customer confidence in our ability to provide comprehensive solutions and our deepening domain strength.”

Suresh Senapaty, Corporate Executive Vice President - Finance said, “During the quarter, strong operational improvements helped us to absorb the impact of an increase in Offshore compensation and appreciation of the Rupee against the Dollar and improve the Operating Margin in our Global IT Services business. During the quarter, we were able to leverage the resources and skill sets in Wipro NerveWire to offer Consulting and Architecting solutions to customers in other verticals of our Global IT Services business. We believe that this integrated approach will continue and have therefore consolidated the business operations and resources of Wipro NerveWire into the results of our Global IT Services and Products segment.”

Wipro Limited

Revenues for the quarter ended December 31, 2003, were Rs.15.21 billion, representing a 37% increase over the previous year. Profit after Tax was Rs. 2.74 billion, representing an increase of 19% over Profit after Tax for quarter-ended December 31, 2002. Revenues for the nine-month ended December 31, 2003, were Rs. 40.95 billion, representing a 32% increase over the previous year. Profit after Tax for the nine-month period was Rs. 7.1 billion, a growth of 19%.

Global IT Services and Products

Effective quarter ended December 31, 2003, the results of Wipro Nervewire have been consolidated with the results of Global IT Services & Products segment.

Global IT Services & Products grew its Revenue by 41% over Revenue for corresponding quarter last year to Rs. 11.47 billion and PBIT increased by 13% to Rs. 2.51 billion. Operating Income to Revenue at 22% increased by 1% sequentially and declined by 6% year on year. R&D Services contributed 32% of the Revenue of Global IT Services. Enterprise Business contributed 57% of Revenues with the balance 11% being contributed by IT Enabled services.

We had 27,137 employees as of December 31, 2003, which includes 17,681 employees in IT Services business and 9,456 employees in IT Enabled services business. This represents a net addition of 2,872 people comprising of 1,908 in IT Services and 964 people in IT Enabled services.

During the quarter, we added 24 new customers comprising 8 customers in R&D Services, 14 customers in Enterprise Services and 2 new customers in the IT Enabled services business.

Global IT Services and Products accounted for 75% of the Revenue and 88% of the PBIT for the quarter ended December 31, 2003.

Wipro Infotech – Our India, Middle East & Asia Pacific IT Services & Products business

For the quarter ended December 31, 2003, Wipro Infotech recorded Revenues of Rs.2.4 billion representing an increase of 28% over the same period last year. Profit before Interest and Tax grew by 45% to Rs.161 Million. Services business contributed to 32% of total Revenue during the quarter. Services revenues grew by 53% compared to the previous year, fuelled by growth in Infrastructure Management Services, System Integration, Software Solutions and Consulting.

Key India wins include Infrastructure Management Services at Henkel SPIC & Bharti Cellular, Remote Management Services for Xerox, core banking application deployment and Infrastructure Management Services at Vijaya Bank, Application development for Karnataka State Police, Data warehousing solution for a large Insurance company in India and an Information Security Consulting project from DCM Shriram Consolidated Ltd. Our Middle East & Asia Pacific wins include a Technology Consulting project with Qatar Petroleum and Application sustenance for a large petroleum company as well as a leading Bank, both based in Saudi Arabia.

Wipro Infotech accounted for 15% of Revenue and 6% of the PBIT for the quarter ended December 31, 2003.

Wipro Consumer Care & Lighting

Wipro Consumer Care and Lighting business recorded Revenue of Rs. 949 million with PBIT of Rs.141 million contributing 6% of total Revenue and 5% of the Profit before Interest and Taxes for the quarter. PBIT to Revenue was 15% for the quarter.

Wipro Limited

For the quarter ended December 31, 2003, the annualized Return on Capital Employed in Global IT Services was 52%, Wipro Infotech was 47%, Consumer Care and Lighting was 107%. At the Company level, the Return on Capital Employed was 27%, lower due to inclusion of cash and cash equivalents of Rs. 21.3 billion in Capital Employed (49% of Capital Employed).

For Wipro Limited, Profit after Tax from continuing operations computed in accordance with US GAAP for the quarter ended December 2003 was Rs. 2.66 billion, an increase of 22% over the profits for the corresponding quarter ended December 2002. The net difference between profits computed in accordance with Indian GAAP and US GAAP is primarily due to different Revenue recognition standards, accounting for deferred stock compensation expenses and amortization of intangible assets.

Global IT Services & Products segment Revenues were Rs. 11.51 billion for the quarter ended December 31, 2003 under US GAAP. The difference of Rs. 36 million ($0.8 million) is attributable to different Revenue recognition standards under Indian GAAP and US GAAP.

Quarterly Conference call

Wipro will hold conference calls today at 11:45 AM Indian Standard Time (1:15 AM Eastern Time) and at 6:45 PM Indian Standard Time (8:15 AM Eastern) to discuss the company’s performance for the quarter and answer questions sent to email ID: lakshminarayana.lan@wipro.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.

Our ADSs are listed on the New York Stock Exchange, and our equity shares are listed in India on the Stock Exchange - Mumbai, and the National Stock Exchange, among others. For more information, please visit our websites at www.wipro.com and www.wipro.co.in

US GAAP financials on website

Condensed financial statements of Wipro Limited computed under the US GAAP along with individual business segment reports are available in the Investor Relations section at www.wipro.com.

Contact for Investor Relation	Contact for Media & Press
K R Lakshminarayana	Sandhya Ranjit
Corporate Treasurer	Manager-Corporate Communications
Phone: +91-80-844-0079	+91-80-844-0056
Fax: +91-80-844-0051	+91-80-844-0350
lakshminarayana.lan@wipro.com	sandhya.ranjit@wipro.com

Forward looking and cautionary statements

Certain statements in this release concerning our future growth prospects are forward looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Wipro has made strategic investments, withdrawal of fiscal governmental incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission. These filings are available at www.sec.gov. Wipro may, from time to time, make additional written and oral forward looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. Wipro does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company.

# Tables to follow

WIPRO LIMITED – Consolidated
AUDITED SEGMENT WISE BUSINESS PERFORMANCE FOR THE THREE MONTHS PERIOD ENDED DECEMBER 31, 2003 (Rs. in Million)

	Three months ended December 31,									Year ended
Particulars	2003			2002			Growth %			March 31, 2003
Segment Revenue
Global IT Services & Products		11,472			8,133			41	%		30,487
India & AsiaPac IT Services & Products		2,355			1,836			28	%		8,395
Consumer Care & Lighting		949			745			27	%		2,991
Others		438			365						1,468
Continuing Operations		15,214			11,079			37	%		43,341
Discontinued ISP Business		—			4						42
TOTAL		15,214			11,083			37	%		43,383
Profit before Interest and Tax (PBIT)
Global IT Services & Products		2,514			2,234			13	%		8,451
India & AsiaPac IT Services & Products		161			111			45	%		557
Consumer Care & Lighting		141			90			57	%		436
Others		48			69						240
Continuing Operations		2,864			2,504			14	%		9,684
Discontinued ISP Business		—			(14	)					(182	)
TOTAL		2,864			2,490			15	%		9,502
Interest income		187			220						634
Profit Before Tax		3,051			2,710			13	%		10,136
Income Tax expense		(330	)		(345	)					(1,276	)
Profit before extraordinary items		2,721			2,365			15	%		8,860
Discontinuance of ISP business		—			(1	)					(263	)
Profit before equity in earnings / (losses) of Affiliates and minority interest		2,721			2,364			15	%		8,597
Equity in earnings of affiliates		43			(48	)					(355	)
Minority interest		(21	)		(10	)					(37	)
Profit after tax		2,743			2,306			19	%		8,205
Operating Margin
Global IT Services & Products		22	%		27	%					28	%
India & AsiaPac IT Services & Products		7	%		6	%					7	%
Consumer Care & Lighting		15	%		12	%					15	%
Continuing Operations		19	%		23	%					22	%
TOTAL		19	%		22	%					22	%
CAPITAL EMPLOYED
Global IT Services & Products		19,163			14,722						18,536
India & AsiaPac IT Services & Products		1,496			1,199						1,075
Consumer Care & Lighting		520			612						682
Others		22,552			16,578						15,082
Continuing Operations		43,731			33,111						35,375
Discontinued ISP Business		—			(150	)					(7	)
TOTAL		43,731			32,961						35,368
CAPITAL EMPLOYED COMPOSITION
Global IT Services & Products		44	%		44	%					52	%
India & AsiaPac IT Services & Products		3	%		4	%					3	%
Consumer Care & Lighting		1	%		2	%					2	%
Others		52	%		50	%					43	%
TOTAL		100	%		100	%					100	%
Return on average capital employed from continuing business
Global IT Services & Products		52	%		75	%					62	%
India & AsiaPac IT Services & Products		47	%		33	%					54	%
Consumer Care & Lighting		107	%		66	%					60	%
Continuing Operations		27	%		31	%					31	%
TOTAL		27	%		32	%					31	%

	Note to segment report:
1.	The segment report of Wipro Limited and its consolidated subsidiaries and associates has been prepared in accordance with the Accounting Standard 17 “Segment Reporting” issued by the Institute of Chartered Accountants of India.
2.	The Company has three geographic segments: India, USA and Rest of the World. Significant portion of the segment assets are in India. Revenue from geographic segments based on domicile of the customers is outlined below:

Geography	December 31, 2003		%			December 31, 2002		%
India		3,506		23	%		3,046		27	%
USA		8,276		54	%		5,200		47	%
Rest of the World		3,432		23	%		2,837		26	%
Total		15,214		100	%		11,083		100	%

3.	For the purpose of reporting, business segments are considered as primary segments and geographic segments are considered as secondary segment.
4.	Effective April 1, 2003, Wipro Spectramind is included in the Global IT Services segment. Wipro Nervewire, the business acquired in May 2003, has been included in Global IT Services segment.
	In April 2003, the Company restructured the HealthScience business segment. The HealthScience business which addresses the IT requirement of clients in healthcare and life sciences sector and Wipro Healthcare IT, the Company acquired in August 2002, will now form part of the Global IT Services and Products segment. Wipro Biomed, a business segment that was reported as part of the HealthScience segment has now been reported as part of Others’. Segment data for previous periods has been reclassified to make it comparable.
5.	In accordance with Accounting Standard 21 “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India, the consolidated financial statements of Wipro Limited include the financial statements of all subsidiaries which are more than 50% owned and controlled.
6.	The company has a 49% equity interest in Wipro GE Medical Systems Limited (WGE), a joint venture with General Electric, USA. The joint venture agreement provides specific rights to the joint venture partners. The rights conferred to Wipro are primarily protective in nature. Therefore, WGE is not considered as a joint venture and consolidation of financial statements are carried out as per equity method in terms of Accounting Standard 23 “Accounting for Investments in Associates in Consolidated Financial statements”.
7.	In accordance with the guidance provided in Accounting Standard 23 “ Accounting for Investments in Associates in Consolidated Financial Statements” WeP Peripherals have been accounted for by equity method of accounting.

WIPRO LIMITED – Consolidated
AUDITED SEGMENT WISE BUSINESS PERFORMANCE FOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2003 (Rs. in Million)

		Nine months ended December 31,									Year ended
Particulars		2003			2002			Growth%			March 31, 2003
Segment Revenue
Global IT services & Products			31,026			21,795			42	%		30,487
India & AsiaPac IT Services & Products			6,096			5,945			3	%		8,395
Consumer Care & Lighting			2,629			2,210			19	%		2,991
Others			1,198			1,014						1,468
Continuing Operations			40,949			30,964			32	%		43,341
Discontinued ISP Business			—			42						42
	TOTAL		40,949			31,006			32	%		43,383
Profit before Interest and Tax (PBIT)
Global IT services & Products			6,573			6,322			4	%		8,451
India & AsiaPac IT Services & Products			393			316			24	%		557
Consumer Care & Lighting			415			329			26	%		436
Others			158			115						240
Continuing Operations			7,539			7,082			6	%		9,684
Discontinued ISP Business			—			(182	)					(182	)
	TOTAL		7,539			6,900			9	%		9,502
Interest income			530			527						634
Profit Before Tax			8,069			7,427			9	%		10,136
Income Tax expense			(922	)		(894	)					(1,276	)
Profit before extraordinary items			7,147			6,533			9	%		8,860
Discontinuance of ISP business			—			(289	)					(263	)
Profit before equity in earnings / (losses) of Affiliates and minority interest			7,147			6,244			14	%		8,597
Equity in earnings of affiliates			(5	)		(259	)					(355	)
Minority interest			(35	)		(34	)					(37	)
Profit after tax			7,107			5,951			19	%		8,205
Operating Margin
Global IT services & Products			21	%		29	%					28	%
India & AsiaPac IT Services & Products			6	%		5	%					7	%
Consumer Care & Lighting			16	%		15	%					15	%
Continuing Operations			18	%		23	%					22	%
	TOTAL		18	%		22	%					22	%
CAPITAL EMPLOYED
Global IT services & Products			19,163			14,722						18,536
India & AsiaPac IT Services & Products			1,496			1,199						1,075
Consumer Care & Lighting			520			612						682
Others			22,552			16,578						15,082
Continuing Operations			43,731			33,111						35,375
Discontinued ISP Business			—			(150	)					(7	)
	TOTAL		43,731			32,961						35,368
CAPITAL EMPLOYED COMPOSITION
Global IT services & Products			44	%		44	%					52	%
India & AsiaPac IT Services & Products			3	%		4	%					3	%
Consumer Care & Lighting			1	%		2	%					2	%
Others			52	%		50	%					43	%
	TOTAL		100	%		100	%					100	%
Return on average capital employed from continuing business
Global IT Services & Products			46	%		72	%					62	%
India & AsiaPac IT Services & Products			41	%		39	%					54	%
Consumer Care & Lighting			92	%		64	%					60	%
Continuing Operations			25	%		32	%					31	%
	TOTAL		25	%		31	%					31	%

	Note to segment report:
1.	The segment report of Wipro Limited and its consolidated subsidiaries and associates has been prepared in accordance with the Accounting Standard 17 “Segment Reporting” issued by the Institute of Chartered Accountants of India.
2.	The Company has three geographic segments: India, USA and Rest of the World. Significant portion of the segment assets are in India. Revenue from geographic segments based on domicile of the customers is outlined below:

								(Rs. in Million)
Geography	December 31, 2003		%			December 31, 2002		%
India		9,479		23	%		9,081		29	%
USA		22,131		54	%		13,846		45	%
Rest of the World		9,339		23	%		8,079		26	%
Total		40,949		100	%		31,006		100	%

3.	For the purpose of reporting, business segments are considered as primary segments and geographic segments are considered as secondary segment.
4.	Effective April 1, 2003, Wipro Spectramind is included in the Global IT Services segment. Wipro Nervewire, the business acquired in May 2003, has been included in Global IT Services segment.
	In April 2003, the Company restructured the HealthScience business segment. The HealthScience business which addresses the IT requirement of clients in healthcare and life sciences sector and Wipro Healthcare IT, the Company acquired in August 2002, will now form part of the Global IT Services and Products segment. Wipro Biomed, a business segment that was reported as part of the HealthScience segment has now been reported as part of Others’. Segment data for previous periods has been reclassified on a comparable basis.
5.	In accordance with Accounting Standard 21 “ Consolidated Financial Statements ” issued by the Institute of Chartered Accountants of India, the consolidated financial statements of Wipro Limited include the financial statements of all subsidiaries which are more than 50% owned and controlled.
6.	The company has a 49% equity interest in Wipro GE Medical Systems Limited (WGE), a joint venture with General Electric, USA. The joint venture agreement provides specific rights to the joint venture partners. The rights conferred to Wipro are primarily protective in nature. Therefore, WGE is not considered as a joint venture and consolidation of financial statements are carried out as per equity method in terms of Accounting Standard 23 “Accounting for Investments in Associates in Consolidated Financial statements”.
7.	In accordance with the guidance provided in Accounting Standard 23 “Accounting for Investments in Associates in Consolidated Financial Statements” WeP Peripherals have been accounted for by equity method of accounting.

EX-99.3 5 f95907exv99w3.htm EXHIBIT 99.3

EXHIBIT 99.3

Press conference

Addressed by: Azim Premji- Chairman, Vivek Paul- Vice Chairman and President Wipro Technologies, Suresh Senapaty – CFO, Suresh Vaswani-President, Wipro Infotech, Vineet Agarwal-President, Wipro Consumer Care and Lighting and Raman Roy-Chairman, Wipro Spectramind

Vijay: Welcome to Wipro. We begin with a statement by Azim Premji. After that we throw open the floor for Questions. Mr. Premji...

Azim Premji: At the outset, let me wish you all a very happy new year. The detailed results for the quarter ended December 31, 2003 are with you in the press docket. Let me share with you some of our thoughts on our performance and prospects.

Business traction in our Global IT Services business continues to be robust. In the quarter ending December 31, 2003, we recorded Revenues of $250 million and Operating Profits of over Rs. 250 crores ($55 million), a sequential growth of 13% and 17% respectively. Combined With the encouraging performance of our other businesses, we posted our highest ever quarterly Profit after Tax.

Within Global IT business, our Technology business grew sequentially by 13% and the Enterprise business by 10%. If we were to look at different service lines, Technology Infrastructure Services grew sequentially by 17%, Business Process Outsourcing by 29% and Package Implementation by 14%.

On the profitability front, improvement in productivity and increased cost efficiencies offset the impacts of Offshore compensation increase, Rupee appreciation and marginal decrease in utilization, resulting in an expansion in our Operating Margin as compared to the quarter ended September 30, 2003.

In terms of business operations, the results have been encouraging as well. Robust growth was evident across all verticals, all service lines and all geographies. We continued to be successful in selling new and enhanced services to our existing customers and to new customers. We significantly improved our ability to leverage the consulting skills from our acquisitions across all business segments. We were also successful in selling IT enterprise solutions to our Technology clients.

Looking ahead, Offshoring continues to gain momentum. We expect the volume growth across business segments to sustain and expect pricing environment to be stable. However, there may be quarterly aberrations due to mix of customers and service. Further, continued appreciation of the Rupee continues to puts pressure on business profitability.

In summary, we have had a quarter of satisfactory achievements and our Whole team in Wipro Limited is congratulated. Opportunities are enormous in the current environment, but these opportunities come with their own challenges. We are as much focused on leveraging near term opportunities as we are on building a long term global organization. We believe that doing both are critical to create sustainable shareholder value. And we are confident that we will achieve our goals on this.

Vijay: You can ask questions now, and we request you to speak into the mike. There are mikes available with the gentleman over there and a person over here.

Journalist: Mr. Paul, can you give an indication on the demand and supply side in the last nine months and in terms of large orders how does that look like now since the volumes have picked up. What is your view on that?

Vivek: First of all, I think that I characterize this quarter as a India shining quarter because not only that We continue drive forward in our IT export business, We also saw Indian businesses really come to full potential as the Indian market took off both on the Indian IT side as Well as on the consumer care side. So, we had strong profit growth across the board. If you look at on the global IT and IT enabled services export scenario, last quarter was very heartening for many reasons. One is, we had wide spread growth. Our technology businesses grew sequentially 13% and within that telecom actually grew even faster at 15%, and telecom for example for the quarter versus year on year was up 56%. So, we are seeing telecom actually lead the way out of the technology recovery. So, I think that we continue to see that do well. We also saw IT do well. IT grew double digits sequentially, 10%, and we also saw the business process outsourcing business grow at about 29%+.

The second was two quarters in a row we had not only double digit but 13% sequential growth. So again a nice curve. We have had volume growths now in terms of man-months for many quarters now, and finally as you look at the pricing picture, we are beginning to see stability. So as a result, you put all this together and you see that it reflects the market that we described last time. Customers are willing to spend more; customers have accepted the offshore model as being necessarily the way to go. If you look at the traditional penetration curve, we have the innovators and the early adopters today. Now you have the late adopters. We feel the adopters are coming to India Wanting fully established qualified process in a scale that benefits companies like Wipro, and they Want to move in big numbers. That also is to our benefit. So as a result, this quarter we have closed many bigger deals than we have in a long time. The one difference from the last time we were feeling was that these customers don’t want us to talk about it publicly.

Journalist: Mr. Senapaty, with this statement about the rupee appreciation, I was trying to find out — the rupee kind of gained just about 0.5% or something in the third quarter. Can you quantify how much did that impact the operating margins, which you said was obviously offset by other cost efficiencies that you obtained.

Suresh Senapaty: We had in the last quarter an impact of about 50 basis points on account of foreign exchange, in terms of rupee appreciation. And we think going forward rupee in the short term will continue to appreciate and therefore we will have impact of that felt in the current quarter also.

Journalist: If I am not mistaken there is mention of utilization coming down, is it correct? And could you explain when the demand is robust, why is this happening to utilization?

Vivek: I think that two elements happened. One is that our percentage of campus hires went up significantly and campus hires you cannot put straight to projects right away, you have a longer gestation period. And the second is that we had the highest amount of IT hiring in a long time.

Suresh Senapaty: IT hiring was about 1900 in the last quarter, which has been the highest ever. If you take an average and if the addition has been towards the later end, they have not been put through billing. Similarly in the BPO side we had an add of about 960+.

Journalist: We are very keen to know at least something about the clients. You can tell us about the latest client.

Vivek: I think that we have to respect their request for confidentiality. Frankly, we are entering into an emotional period in the United States with the elections coming up there and you know this could well be an election topic, and really no client wants to find themselves caught in somebody else’s bad book. So, I think that they have requested confidentiality and we have to respect that.

Journalist: There is a difference of 8 crores in the Indian GAAP and the US GAAP. Why is it?

Suresh Senapaty: You are supposed to go by the Indian GAAP for India, and US GAAP for US.

Journalist: You need to explain the difference also. If you can tell where exactly this 8 crores difference comes from. The 19% under Indian GAAP, it is 274 crores, where as it is 22% but it is 266 million, that is why?

Suresh Senapaty: There are few heads on which this particular difference arises. I mean, US GAAP numbers are about 97% of the Indian GAAP numbers in the last quarter. The differences are on some stock options where you have to take a hit into the P&L in US GAAP but not under Indian GAAP. There is small difference on account of that. Two is that, you know, there has been some vesting of options in the Wipro Spectramind, and when you do the vesting of those particular options, the employee pays for the money and get the conversion, but when you take the carrying cost under US GAAP, it is booked as a loss and it is not so in the Indian GAAP. Similarly third thing is in revenue recognition. We have some differences both in terms of the Indian products as well as in the global IT services. There are some principle changes but they are not very significant, they are about 2 to 3 crores with a GAAP. So, combination of all this is about a 3% lower US GAAP numbers.

Journalist: You have been able to cover that difference because of the rupee appreciation. How much hedging have you done?

Suresh Senapaty: Because of rupee appreciation in the last quarter we had a operating margin hit of about half a percent.

Journalist: You have not said how much you hedged.

Suresh Senapaty: As of 31^st December, we have a hedge for about next two quarters’ net inflow.

Journalist: How much?

Suresh: For our next two quarters, we have covered out exchange inflow.

Journalist: Mr. Paul, What is the impact of the Lehman Brothers is it only a stop gap or is it gone completely?

Vivek: I think that the Lehman-Wipro relationship continues to bed very strong. What we have to recognize is that not everything works the way that it was initially expected. The fact is that Charlie Cortese, the Director from Lehman in a press conference in the United States said that he expected their outsourcing to India to practically double and Wipro will gain a significant share. So, what happened is that one element which represented a single digit percentage of the overall application outsourcing did not go up to the expectations of both sides, and it is not that it was bad one side or the other. Though much has been made of this, in fact it is only in today’s highly charged environment that it is even news.

Journalist: I have a supplementary to that because right now the flavor of the season seems to be that within the BPO sector there is a strong scope for higher value-added, more analytical and higher skill work, and the Lehman deal as we see it was involved with investment banking help desk, which would have probably required a higher degree of skills. Where as on the BPO side Wipro seems to be focused on What We could call a more vanilla side of the business. Is there is a strategic view or perspective you have on this aspect?

Vivek: I would like to differentiate the two. I think that the Lehman issue is frankly a very tactical issue. There was no strategic withdrawal from their help desk business by Wipro nor was there a withdrawal by Lehman from their offshoring initiative from Wipro. In fact, in some way that is really interesting that if a year ago what made the news was what big deals we have won. Today

what makes news is that a small deal is lost. People expect wins to come any way, but if there is a loss, people are surprised. So I think it is interesting that the World has changed so much over the last year. But any ways, I want to differentiate the two topics. I will ask Raman to make a couple of comments specifically on the topic of doing more value-added Work on the business process outsourcing side.

Raman: If you take value add, it is the aspect of the relativity to what is not value add to what is value add. If you look at the break up of which way the revenues of Wipro Spectramind are going, there is an increase because with the higher value add services your realization also goes up, the cost also goes up because you need a different quality of resource. That has been our focus area. For customers who are tenured and who have experienced India and understand the gains that they are getting, we continue to see them driving up the value chain looking at more complex and more value added activities. So, our business continues to be a mix of those high value add activities and relatively lower value add activities, and our focus continues to be on both segments of the business.

Journalist: I wanted a simple straight answer. Mr. Paranjpe has gone on record saying that you know Wipro is doing absolutely help desk outsourcing with Lehman, what is status of that outsourcing?

Vivek: We will try it. The Lehman relationship with Wipro comprises a vast spectrum of applications that we develop and manage. One of the projects is the technical help desk. For reasons that go much beyond, the Lehman team and the Wipro team decided that it was not something we wanted to continue. That does not in any way mean that Lehman is not interested in doing more work with Wipro. They are very satisfied. They have gone on record to the press to say that they are going to double their relationship with Wipro. That does not happen if they are unhappy. By the same token, it does not mean that Wipro is unhappy with Lehman. We have gone on record to say that this relationship is going great. We are particularly happy about the kinds of work that we are doing with them, and together there is absolutely no strategic shift either on their part or on our part. So, I would like to state to you that we have spent more time on sub 10% of one client engagement than perhaps it matters.

Journalist: Mr. Premji, recently the US security set up has started profiling all the expatriates coming into US, finger printing, picture and all. Do you foresee any problem if this kind security measures coming up.

Azim Premji: Not really. I think they are just tightening up their security in terms of the processes which were there. I have not been to the US after the security profiling of finger printing has started. I am going to be there next Week. This will require about 10 more minutes in immigration to be sure that one has a safe journey. We have to accept it as part of security arrangement, like we accepted the previous security arrangement.

Journalist: Earlier also the kind of stringent securities, you had a problem in terms of time and then the line of questions and other things you are asked. Brazil has protested against it. What you think the Indian stand should be?

Azim Premji: The Indian stand should be to cooperate. Why should we be taking stands with United States Government on areas which they think are relevant areas to fight against terrorism. I don’t think as a country we should be empathizing with terrorism. Even in our country we have security hurdles, which are fairly significant. So we cooperate with the authorities on those security hurdles, and where they thought that the security hurdles in our country were redundant, they have tried to reduce them and reduced them also to random checks. Don’t you want to feel safer in the plane? At the end of the day, that is what it comes out to, doesn’t it?

You know you can look at it as an asset. If they have profiled you and you have been passing profile time after time, the subsequent times you are a privileged citizen there. That is another way of looking at it.

Journalist: I want to know what the outlook for the margins is and another question to Mr. Roy would be on, if you look at the number of clients which you have added this quarter, and could you also talk to us about the pipeline, how is it shaping? What is the kind of customers that are interested? Added to that also would be the cross selling opportunities, are you getting any kind of, has that increased between technologies and the BPO opportunity side?

Vivek: Let me first take the latter part of the question. We have added three customers in this quarter, one of those customers was an existing Wipro Technology customer so there is a net addition of two customers. We are up to 19 customers and we now handle 68 different processes for these 19 customers that we have in production. 26% of our customer base, that is 5 out of the 19 customers, are existing Wipro Technology customers. In terms of pipeline, 75% of the pursuits that Wipro Spectramind is doing, or the BPO arm of Wipro is doing, are joint pursuits where we are offering to our customers not only BPO opportunities but also IT services. In terms of the robustness of the pipeline, we are very bullish; we see a huge traction and a huge need or the requirement for our services by the overseas customer.

Journalist: On the margins..?

Vivek: On the margin front, we see cost pressures as well as some improvements on the utilization, our offshore, etc. I think bottom line is we expect to be able to maintain the existing operating margin but for the correction that may be required for the exchange.

Journalist: Mr. Paul, what is the customer churn. I understand you added about 24 new clients but how many have you lost?

Vivek: I don’t think we have released that number yet, but I think that we continue to have a very healthy client addition and revenue growth.

Journalist: But you know in the last seven to eight quarters that we have seen, there has been an intense customer churn across the industry. So clearly as SG&A expenses increase you are investing more on getting new clients Who may not stay With you for more than a quarter, is it healthy?

Vivek: I think that you have to understand the drivers for the customer churn. I think one is when we do an intellectual property deal that is onetime purchase. The second is when we do project oriented work where you are doing a specific implementation. Let us say a global SAP roll out, once the project ends, it is not a necessity that the very next day that customer will ask for the next project. So, when we reduce the number of customers, it is not that we lose those customers. It is that there is no active project at that time. Particularly as we enter into the consulting space where there are many such projects, I think we will have this issue. So I would not get it is as a weak indication, if any, in terms of future revenue growth, etc.

Azim Premji: You know we are also seeing strong demand getting generated in the domestic IT market both in services, solutions, as well as product. It will be worthwhile for Suresh Vaswani, President of Wipro Infotech to say a few words about this.

Suresh Vaswani: This has actually been a very good quarter for us. We have grown in revenue terms by 28% year on year and more importantly we have grown on the profitability front by 45%, which is good. The other notable thing about our performance is typically Q3, is a lower quarter in the domestic context compared to Q2. However, we found better results in Q3 than what we did in Q2 with the revenue growing up by 10% sequentially and the profit going up by 15% sequentially. I just want to give a perspective on the services and software business. Over the

last two years we have been continuously investing in our services and software business. The software business is a new growth area for us in the domestic and Asia-Pac markets. Our services and solutions business has grown 53% year on year and 28% sequentially which is fueled by the growth in our software business which sounds high; It is 200% year on year and 50% sequentially on may be a small base. Professional IT services business, which is the main stay of our business in India, has grown 41% year on year. Consulting business has grown 126% year on year. In the Middle East and Asia-Pac markets, we are doing reasonably well. Especially in the Middle East market where we have got good growth of 200% year on year and a sequential growth of 75%. The products business also has performed reasonably well with the growth ahead of market of 23%. So both our PC business and enterprise product business have done well.

All in all I think this is a good quarter. Investments that we have made over the last two years are paying off, and again the market in India is beginning to look up. So I think it is happy times ahead for Wipro Infotech in the domestic, ME, and A-Pac market.

Azim Premji: I would also request Vineet Agarwal, President of our Wipro Consumer Care and Lighting, to say a few words. The good thing is that we are back to a growth phase in our Consumer Care and Lighting Business, and the good monsoon this year and the generation of good rural demand also is auguring well for the market.

Vineet Agarwal: We have grown now almost four quarters in succession, with a very strong quarter this time. This quarter our sales were up 27% over last year. Quarter two was up 20% over last year. So, last four quarters have been good, given the fact that FMCG industry is still struggling to come out into a growth phase. Our profits have been up, actually 57% this year, but that is largely because last year we had one time Write off because of some VRS given. Even if I take that out, we have grown about 26% on operating income in this quarter versus quarter two growth of about 16%.

So it has been a good quarter both for sales as well as profits. Our return on the capital employed is over 100% for this quarter. This has been largely driven by growth in toilet soaps. Santoor has grown by over 30% this quarter in terms of value. It is basically underlying the fact that if you give good value to the consumer, the consumer would come back time and again to you. Santoor has become one of the strongest brands in the country today with revenues crossing about 250 Crores. Our commercial institution business, which is the project business for lighting has also grown very well. It has grown 51% this quarter, and cumulatively for this year, we have grown about 40%, largely because a lot of industry is now investing back in projects in terms of infrastructure as well as lighting. The Pharma industry and the IT industry both have done very well for the commercial institution segments. Our acquisition - Glucovita, the first one which we made in April is on track. The second one is Chandrika which we have made recently. These will be on track in terms of distribution that we have started in various states. The agreement will get finalized by the end of this year, probably in March. Hopefully we will be distributing all India for Chandrika by March or April.

Journalist: Have you finalized the plans for Bhatti?

Vineet Agarwal: Yes, we have finalized the Himachal plan, we have taken the land there. We are going to set up our toilet soap plant there. It should be in operational by June of this year.

Vineet Agarwal: It will be a reasonable investment. We are not putting in the exact figures, because we are in a two phase situation. We will be starting our finishing line first. It should be operational in June, and then we will put up a fatty acid plant. That should be operational by end of this year.

Journalist: Mr. Vaswani, you mentioned Bharti Cellular as a new win. What I would like to know is how big this deal is? Given the size and scope of Bharti’s expansion, what does this mean for

you? Is it being entirely outsourced given that their own business also includes infrastructure and equipment?

Suresh Vaswani: We are not in a position to really reveal the size of the deal. We are doing a lot of telecom Work in the domestic market and Bharti is one of our large customers both in so far as hardware is concerned as well as software integration in the OSS space is concerned. Telecom is a big thrust area for us in the domestic market. We are working with most telecom service providers. I am not in a position to give you the size of the deal. It is a critical implementation, which we are doing for Bharti in the area of MPLS roll out.

Journalist: So it is an implementation not of recurring revenue, not an infrastructure management as the release suggests?

Suresh Vaswani: We do both - infrastructure management and system integration for Bharti.

Journalist: Okay. And I have one question for Mr. Agarwal. Chandrika, is this a brand lease as opposed to a wholesale buy out? Or is there something in the clause that gives you a buying rights because if you invested in the brand and if you don’t get to buy it at the end of the day what is the strategic value?

Vineet Agarwal: It is a long-term lease. It is a perpetual lease that we have. It is largely because we found value on both sides in terms of the Chandrika family wanting to have some sort of emotional attachment to it, but from our point of view, they will continue to manufacture for a certain limited period of time. After that we will review the relationship, but it is a long-term lease and it is a perpetual lease.

Journalist: Yeah, but the brand would be owned by a company which will be majorly owned by Wipro. Basically it is like Coke and Thumps Up deal.

Azim Premji: Almost 60% of land, which we buy in this country, is a long-term lease, including for your homes, please keep that in mind. It is a long-term lease from the Government of India or the State Government.

Journalist: There is no transparency of the deal, we have not known how much it has been bought for. Because last time also the amount paid did not come out. At least in this quarter, it should come.

Suresh Senapaty: We will do that once the whole transaction gets consummated fully.

Journalist: That is by when?

Vineet Agarwal: We expect it to be by the end of this quarter.

Journalist: Mr. Premji, I have a question for you. During last quarter and this quarter, you have been very quiet on the acquisition front actually, what is happening? Is it the mood of not looking out?

Azim Premji: No, no, we continue to work on acquisitions. But we do not make intermediate statements on acquisitions we are working on. As and when we consummate our next acquisition, we will make announcements on it. But acquisition is very much a part of our strategy and we have recently announced the Chandrika acquisition also.

Journalist: No, I am talking With respect to global IT services.

Azim Premji: Even global IT, we continue to work on it. It is an integrated part of our strategy. We have nothing last quarter to particularly announce on Wipro Technologies.

Vivek: And if I may just add to that, I think it is dangerous to expect an acquisition a quarter. I think that, we should not get any mental mind set on how many acquisitions we will make because frankly that is dangerous. If you look at the success track record of the acquisitions so far - Raman already talked about how much we share already between the technology business and the IT enabled services business in terms of customers and projects. If you look at Energy and Utility consulting business we acquired from American Management Systems, already today seven of their 12 customers have been penetrated with offshore services. We are already finding that we are adding one customer a month in that business, so that is doing Well.

If we look at the NerveWire, many of our large financial services customers have been able to upgrade the relationship. In fact our financial services vertical showed very strong growth. Of course, NerveWire from a financial perspective has been disappointing. It had a loss. Good thing was that it was a small loss this quarter than last quarter, and we are sort of getting ourselves out of the woods on that one. So, if we look at our overall experience with acquisition, it has been generally positive. So we want to continue to do those. They are part of our strategy but we are absolutely not going to get ourselves into one a quarter pace.

Vivek: And if I can supplement, I think some of the moves taken by the Government of India also is fairly encouraging in this respect. You know, particularly the foreign exchange regulation changes that has happened in terms of having enhanced the automatic root-based acquisition and creating subsidiaries overseas. Similarly, we have seen lot of changes that has happened in terms of the duty structures for our hardware component. It is again very encouraging from a point of view that there will be more demand, there will be more penetration in the country, and there will be lot of not only the hardware sales, but all the service that is around that, there will be a lot of demand for that.

Journalist: You have not capitalized on all these kind of Government initiatives?

Vivek: We will, we will. All I am saying is, do not, like we said, do not expect us to do an acquisition every quarter. I am saying our objective remains that we will approach inorganic growth as a strategy to be able to get our leadership position, and will continue to do. The experience so far has been good, external environment is more conducive. So, it is a function of getting the right kind of an opportunity to be able to encash.

Journalist: Last question, what is the stand on the ADS?

Suresh Senapaty: No decision with respect to that has been taken, and we will let you know as soon as it gets taken ever. The option always exists and as and when we want to take that option we will let you know.

Journalist: Mr. Paul, what has been the campus hires this quarter? You said there has been heavy campus hire, and could you also speak something on the attrition. How is it and at what levels?

Vivek: Sure. If I look at the sort of overall people picture, we had said last quarter that we were going to give a salary increase this quarter and that would cost us about 1.3% of sales as an incremental cost. The good news is that we did what we said, which is we absorbed that cost of the salary increase, and still were able to turn out the higher operating margin. The second is that if you look at the number of hires we had on the IT side, 2,600 is the gross hires. So, of the 2,600 gross hires, 30% were campus. If you look at the attrition going forward, what we are seeing is that our salary increases in the junior employees were not as high and that is creating some attrition. It is interesting that the area where people were most concerned about attrition which is senior and middle management rank, that attrition rate is actually almost a third less than the attrition rate in the more junior employees. We are going to try and address that but I think that that is where our attrition sits right now. So, it is an issue but it is not a non-manageable issue.

Journalist: How much was the attrition at various levels?

Vivek: I do not think we want to break it as a trend going forward, but I think on an overall attrition basis, we are at about 17%. That is on the IT side on an annualized basis.

Suresh Senapaty: That includes the involuntary attrition too.

Journalist: Mr. Paul, how does, rate negotiations work now, especially for your global clients if they have operations across the globe? Is pricing centralized, does it make it more difficult for you?

Vivek: I would say that in terms of that particular context, I think that the only time when we have an issue in terms of global pricing contracts is if Wipro Infotech is working with our global customer in India or their Indian subsidiary is doing work at a different rate than what we are charging at the global level. Those situations are few and far between. They do not fundamentally affect the situation. But I think generally speaking, more and more contracts are negotiated centrally and in fact we try and do that much more so that if we can get one single frame contract for an entire large corporation, that essentially gives us a hunting license through the entire company. It is in our best interest as well that the higher the level the purchase agreement is, the better off we are in terms of the potential we can tap without having to worry about commercial negotiations again and again.

Vijay: We close the conference then. I want to thank all of you for joining us and I would request you now join us for tea and some snacks. Thanks a lot.

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EX-99.4 6 f95907exv99w4.htm EXHIBIT 99.4

EXHIBIT 99.4

WIPRO LIMITED Q3 03-04 EARNINGS INVESTOR CALL (MORNING CALL)
JANUARY 21, 2004

Moderator: Good morning ladies and gentlemen, I am Prathibha the moderator for this conference. Welcome to Wipro’s Q3 earnings call. For the duration of the presentation all participants’ lines will be in the listen-only mode. I will be standing by for the question and answer session. I would now like to hand over to the Wipro management. Thank you and over to Wipro.

Lakshminarayana: Thank you Prathibha. Ladies and gentlemen, a very good morning to you in America and a good day to you in all other parts of the world. At the outset, we at Wipro wish you all a very happy and successful new year. My name is Lakshminarayana and I am based in Bangalore, along with Sridhar in Mountain View and Anjan in Bangalore, we handle the investor interface for Wipro. We thank you for your interest in Wipro, it is a great pleasure that I welcome you to Wipro’s teleconference post our results for the third quarter of fiscal 2003-04, which is the quarter ended December 31, 2003.

We have with us Mr. Azim Premji, Chairman and Managing Director, Mr. Suresh Senapaty, Chief Financial Officer, who will comment on the results of Wipro for the quarter ended December 31, 2003. They are joined by Mr. Vivek Paul, Vice Chairman, Suresh Vaswani President Wipro Infotech, Mr. Vineet Agarwal, President Wipro Consumer Care and Lighting, Mr. Raman Roy, Chairman Wipro Spectramind, and other members of company’s senior management who will answer questions that you may have. This conference call will be archived and a transcript will be available on our website www.wipro.com. Before Mr. Premji starts his address let me draw your attention that during the call we might make certain forward-looking statements within the meaning of Private Securities Litigation Reforms Act of 1995. These statements are based on management’s current expectations and are associated with uncertainty and risks, which could cause the actual results to defer materially from those expected. These uncertainties and risk factors have been explained in detail in our filings with the SEC of the USA. Wipro does not undertake any obligation to update forward-looking statements to reflect even or circumstances after the date of filing therefore. Ladies and gentlemen, Mr. Azim Premji, Chairman and Managing Director Wipro.

Azim Premji: Good morning to all of you. At the start, let me wish you all a very happy and a very successful new year. Your board of directors in the meeting held this morning approved the accounts for the quarter ended December 31, 2003. Our results have been mailed to those registered with us and are also available on our website. Let me share with you some of our thoughts on our performance and on our prospects. Business traction in our global IT services business continues to be robust. In the quarter ended December 31, 2003, we recorded revenues of $250 million and operating profits of over Rs. 2.5 billion, equivalent of about $55 million, a sequential growth of 13% and 17% respectively. Combined with the encouraging performance of our other businesses, we posted a highest ever quarterly profit after tax. Within global IT business, our technology business grew sequentially by 13% and the enterprise business by 10%. If you were to look at different service lines, Technology Infrastructure Services grew sequentially by 17%, Business Process 0utsourcing by 29%, and Package implementation by 14%. On the profitability front, improvement in productivity and increased cost efficiencies offset the impacts of offshore compensation increase, offset the impact of rupee appreciation, and marginal decrease in utilization, resulting in an expansion in our operating margin as compared to the quarter ended September 30, 2003. In terms of business operations, the results have been encouraging as well. Robust growth was evident across all verticals, all service lines, and all geographies. We continued to be successful in selling new and enhanced services to our existing customers and to our new customers. We significantly improved our ability to leverage the consulting skills from our acquisitions across all business segments. We were also successful in selling IT enterprise solutions to our technology clients. Looking ahead, offshoring continues to gain momentum. We expect the volume growth across business segments to sustain and expect price environment to be stable. However, there will be quarterly

aberrations due to mix of customers and mix of services. Further, continued appreciation of the rupee put significant pressure on business profitability.

In summary, we had a quarter of satisfactory performance. Opportunities are abundant in the current environment, but these opportunities come with their own challenges. We are as much focused on leveraging near-term opportunities as we are on building a long-term global organization. We believe that doing both are critical to create sustainable shareholder value and we are confident that we will achieve our goals on this. I will now request Suresh Senapaty, our CFO, to comment on financial results before we take questions.

Suresh Senapaty: A very good morning to all of you ladies and gentlemen. Wish you a very happy new year. Mr. Premji shared our thinking on the business environment. I will touch upon a few aspects of financial and operational significance. During the quarter ended 31^st December 2003, we had sequential revenue growth of 13% in our IT global services and product segment, which was comprised of 11% revenue growth in the IT service component of the segment and 29% growth in the IT enabled services business component of that segment. The 11% growth in the services component was driven by a 9% growth in the volume combined with a 2% increase in our realization rates for work performed offshore, partially offset by a 2% decrease in our realization rates for worked performed onsite at our clients’ offices. The growth in our IT enabled services business was primarily due to growth in the volume of business coupled with marginal improvement in price realization. During the quarter ended 31^st December 2003, we leveraged the skill sets of and resources in Wipro Nervewire to offer services to our customers in other verticals in technology as well as enterprise business. Consequent to this integrated approach, we believe that a consolidated representation of the segment results represents the appropriate presentation of operating results. We have therefore consolidated the business operations of the Wipro Nervewire resources into the results of our global IT services and products segments. Rupee appreciation continues unabated and the forward premiums have shown a negative trend. We have minimized the impact of this appreciation on our financial results by proactive hedging and as of December 31st we have forward covered for inflows for about the next two quarters at rates that are slightly better than the prevailing spot rates. For the quarter ending 31st March 2004, we anticipate that we will continue to see volume-led growth with prices moving in a narrow band. We expect to retain operating margins at current levels excluding the probable impact of appreciation of the rupee. We will now be glad to take questions from here.

Moderator: Thank you very much sir. We will now begin the Q&A interactive session. Participants who wish to ask questions may please press *1 on your touchtone-enabled telephone keypads. On pressing *1, participants will get a chance to present their questions on a first in line basis. Participants are requested to restrict to one question in the initial round of Q&A session. To ask a question please press *1 now.

Our first question comes from Mr. Chetan Shah of Quantum Securities.

Chetan Shah: Yeah, good morning to you all and sincere appreciation for the great performance for latest quarter. This was in connection with the bill rate increase in the offshore work. Whether it is coming through the existing client or the new clients and whether it is across the verticals and geographies, if you can comment on that?

Balki: It is primarily based on the mix of services and we had some small prices increases in our existing clients and the new clients are getting added for offshore at much higher rate than our existing average.

Chetan Shah: And whether it is across all verticals or specific verticals are there?

Balki: It is across the verticals.

Chetan Shah: Okay, thank you sir.

Moderator: Thank you very much sir. Our next question comes from Mr. Mahesh Vaze of SSKI Securities.

Mahesh Vaze: Yeah hi, congratulations on a great results. Your onsite volume growth has been quite strong in this quarter, so is this some sort of structural shift or it should be considered just as lots of project starts; and secondly, your gross recruitment for the BPO side of the business is lowest in last four quarter, so what should one be reading into that? Thanks a lot.

Raman: Let me first settle the BPO side of the question. The recruitment that we are doing is based on what is the training time that is required to fulfill the needs of the customers that we have, and particularly for processes that are already in production where we have got the training we sort it out, it is a function of just in time recruitment and just in time training. I do not think there is anything more than that that needs to be read into the number of people that we have recruited. As on 31st December we have more than 2,000 people in training that as the training finishes will move into production.

Rich Garnick: And on the capital side or on the onsite mix, I would like to just highlight why we see an onsite increase percentage primarily driven by two factors. One, as you pointed out the new starts of the new engagements. We have won quite a few new customers and are seeing good volume growth, but during the knowledge acquisition phase of those engagements we sent significant resources onsite for that aspect of the engagements. And then the second factor describing it is the segment of our consulting aspect of our business where we do have moved up the value chain, onsite consultants, whether we are package implementation business or our high-end consultancy practices, even in the high-tech arena or the IT services arena.

Mahesh Vaze: So would it be fair to assume that there would be some movement offshore next time of this project starts and offshore volume should grow higher than at a rate higher than onsite in this quarter?

Rich Garnick: Yeah going forward, yeah those projects it goes and waits as these projects move to maturity, those engagements will move offshore, given our outlook for trying to drive continuous new engagements that mix may be a function of timing and the cycle of those engagements.

Mahesh Vaze: Okay, thanks a lot.

Moderator: Thank you very much sir. Next in line, we have Mr. Ananthanarayana from Morgan Stanley

Ananthanarayana: Thank you and good afternoon everyone. Mr. Premji you have spoken about operational improvements in your press release, could you elaborate a bit more on that, and also can you update us on the status of some of the fixed-priced projects that had a problem sometime back, because fixed-priced projects seem to have fallen significantly in this quarter as a percentage of revenue. Thanks.

Vivek: Let me take that Anantha. I think that what we are seeing is that as far as the fixed-priced projects are concerned, we had a continued improvement in that situation and we expect that improvement to continue. I think that issue what it was a couple of quarters ago is now a fraction of its size and should tail off pretty quickly. As far as the question on the operational improvements, I think that the areas that we have seen improvements are in the SG&A reductions particularly in being able to actually make provision for doubtful debts net negative through some active collection efforts. We have also seen some improvements on the subcontracting reduction side, and we have also seen some improvements in the acquisition costs coming down, offsetting that has been the higher salary increase, offsetting that has been slightly lower utilization, and of course the rupee.

Ananthanarayana: Thanks Vivek, do we read anything into the significant drop in fixed-priced revenue this quarter?

Vivek: Well I think that there is really nothing to say beyond the fact that we continue to manage fixed-priced projects and given some difficult experiences we had the company is going through and making sure that we only do fixed-priced projects for those kinds of projects that meet a certain hurdle requirement in terms of you know not being technologies we are doing for the first time, not being customers we are doing for the first time etc. So I would not read anything more than the fact that we continue to get our arms around that.

Ananthanarayana: Thank you and wish you all the best.

Vivek: Thanks.

Moderator: Thank you very much sir. Next on line we have Mr. Dange from CLSA.

Anirudha Dange: Yeah good morning and congratulations on excellent numbers. My first question is related to earlier question of high onsite, is it possibly because of Nervewire now being consolidated?

Vivek: Actually that is a contributor, but is not a big contributor, I think it would be unfair to put all that on that side, I think what we have is more consulting revenue, we have more package implementation and infrastructure services, so those are the kind of structural shifts that are creating more onsite; and also the project starts, particularly in telecom where we have had several new wins that have started primarily onsite, whereas telecom has primarily been an offshore business.

Lakshminarayana: Dange, I think the matrix last quarter did include the Wipro Nervewire as such, so it is a comparable number.

Anirudha Dange: Okay, just one more on National Grid Transco, I mean that revenue at least from the calculation that I have does not seem to grow, the utilities portion of the revenue is not growing for the last three quarters, and a couple of quarters back we had mentioned that basically there was a issue of it being acquired by National Grid, any update on that?

Vivek: Yeah, I think that the transition turbulence has gone and as the result now we saw very mild 4% growth if you will, so I think that the customer relationship continues healthy. It is unclear whether they are going to rapidly scale up spending though. So we are not counting on big bump up in the UK, but as look at the US I think as a result of the National Grid Transco acquisition, we may see some up side there.

Anirudha Dange: Okay, just final point on basically on this growth on verticals because you give numbers without the decimals so lot of times our numbers are quite different from yours, it will be useful if you could give the QOQ growth numbers on various verticals.

Lakshminarayana: Yeah, now we will take care of that.

Anirudha Dange: Okay thank you.

Lakshminarayana: Dange just want to add that in the utilities verticals we added two new clients in this quarter.

Anirudha Dange: Okay, thank you.

Moderator: Thank you very much sir. Next on line we have Mr. Sandeep Shah from Tower Capitals.

Sandeep Shah: Yeah sir, last quarter you have mentioned that the utilization rates are expected to increase, but this quarter the utilization rate has decreased, similarly the offshore contribution has also decreased, but you have mentioned that the increase in the OPM is on account of controlling SG&A expenses and some other expenses. So taken a fact that utilization rate will increase in future, can we expect that the operating margin will increase in the next quarter?

Laxman Badiga: Hi, we see two factors which has affected our utilization this quarter. We have been seeing a improvement quarter on quarter, one of the factors is we changed our mix and we are brining in more rookies in, if you see, the number of additions this quarter has been the highest in Wipro, that has been one factor. Second is, normally, every year the December quarter because of the year end and shut downs in the customer, there will be slight dip in the utilization. These are the two reasons why the utilization has come down, but going forward we will see improvement in that and the margins I think Balki will comment on that.

Balki: Sandeep just want to add on that utilization, this quarter out of the gross add of about 2,600 people, 30% of the people were from campus recruit, so they take a slightly longer time to bill. And the second reason is that gross add is such a big number for this quarter considering the growth we are projecting for the subsequent quarters.

Vivek: But it certainly does indicate some headspace to improve.

Sandeep Shah: Okay so can we expect any improvement in the margins going forward taken a fact that utilization rates might increase going forward?

Vivek: Yeah I think that is what we have been saying on the margins is that we continue to expect margins to stay stable to improve subject to the rupee rising.

Sandeep Shah: Okay and sir in the BPO business the utilization rate has increased significantly to around 75%, so is there any further scope for the expansion?

Raman: See the utilization rates there, as I said in my answer to one earlier question, was based on the number of people we had in training and what were able to move into production. At the end of last quarter, we had a little over 2,500 people in training and at the end of this quarter ended 31st December; we had a little over 2,000 in training. So it is all a matter of what time it takes and what we can move in to production. So for the quarter our utilization was higher because of the number of people in training over the quarter was relatively lower.

Sandeep Shah: Thank you.

Moderator: Thank you very much sir. We take our next question from Mr. Amit Khurana of Birla Sunlife.

Amit Khurana: Yeah hi thank you. Vivek we have seen some growth in the last two to three quarters, pretty sustainable growth, now do you see a change in the issues that you face going ahead, I mean in terms of the challenges, in terms of the positives negatives, what is the overall picture looking, what are the parameters that you would define from here onwards?

Vivek: Yeah I think that in some sense the situation is only a continuation of what we have been saying so far, which is customers are spending more, they are inclined to more offshore, we are seeing them step forward with bigger deal in some sense in the penetration curve when the late adopter phase, so these customers want established companies, they want to move in structured processes and they want to move in a big way, so I think that you know we won several orders this quarter I think better than we have done in several quarters and again I don’t want that to be

read too optimistically because you know orders winning is not the same as generating revenues, but I think that generally the indicators are all pointing in the same direction that we continue to see volume up left. I think that pricing continues to stabilize. I think we do expect that. We have had a couple of successes already in terms of contract re-negotiations. We need to make that more prevalent as we fix a fixed-price project issue our net yields also go up, that is also an upside. So I think that you know, and of course the acquisitions we made and the organic hires continuing to position us differently in front of the customers. So I think that the demand side, it is pretty much more of the same. On the supply side we continue to see that tightness on the ability to get people, but I think that the pressure on the business has come down. If you look at the last quarter, attrition went up, but if you segregate it into greater than 5 years and under 5 years experience, our greater than 5 years experience is actually attrition is about 2/3^rd that of less than 5 years. So that means that bigger attrition really is in the more junior crowd and we are going to try and address that as well. So I think that on the supply side we you know if anything it is sort of continues to be more of the same. I don’t know Raman, would you want to add something on the BPO side in terms of demand supply?

Raman: No, I think it is more of the same. There is a shortage of people where you look at the conversion time to make them global servicing resource, and therefore the investments that have to be made to get them to that level is higher. We have managed to get our arms around some aspects of it in the last quarter and that is what shows up in our utilization rate.

Amit Khurana: Thank you.

Moderator: Thank you very much sir. We have our next question from Ms. Mitali Ghosh from DSP Merrill Lynch.

Mitali Ghosh: Yeah hi, good afternoon and congratulations on a great quarter. I wanted to dwell a bit more on what you are seeing in terms of a change in customer behavior especially with the budgeting cycle just having sort of concluded. You know, how are you seeing customers behaving differently from what they were doing three months back? And, you know if you could give us some color on what sort of contracts you are looking at; are they looking more at maintenance or are they looking at fresh projects? Also, is there a change in the model of outsourcing from, you know, like full contracts to task-base kind of outsourcing? And if you could just touch on, you know, the sale cycles and ramp up.

Rich Garnick: Yes Mitali, thank you for good question. First of all what we are seeing at the client base is that continued growth but that there is the no material change in the outlook of outsourcing IT services and IT enabled services on a global basis this period versus even four quarters back. What we are seeing is that our average sales cycles, we have talked about many times, is six months to nine months for many of these engagements. So what we have been able report is current quarter was the reflection of the outlook at the clients over that period apparent to that cycle. We see that their maturity in the market place and the foundation of the strength of the quality and predictability of the global delivery model is why the customers are reaching out to the Indian IT service company and Wipro specifically. So, I think that the foundations are there for the broad based expansion and the kind of deals that the customers are getting into are more creative, are looking at different aspects of the value chain to take advantage of this trend and the capabilities, whether be it R&D and technology services, IT services, to IT enabled services, and Wipro’s strength in bringing these component parts together to bring an end-to-end capability is a differentiator that customers are seeing and it is our job to position it through the market place as a differentiator for the Indian IT industry and on a global competitive basis. So, we are cautiously and are optimistic about the outlook going forward because of not only the new engagements but what we see in the pipeline.

Mitali Ghosh: And if I may just have a follow-on on that and what do you see as the greatest challenge to ramp up from some of the, you know, from the huge pipeline that you seem to have currently?

Rich Garnick: I think we have met those challenges time and time again historically, and I think that the challenges are consistent with our processes that we put in place it is getting people, with putting in place the infrastructure, and resources to meet those engagements. I do not want to minimize those challenges because it takes a teamwork of great people to pull that off and there is a lot of built up knowledge that we build up to make sure that we do execute, but we do have to be, you know, cautious that we have to execute before we generate those revenues. So, as Vivek said a little while ago the wins are great to report but they do not translate to revenue until we start executing.

Mitali Ghosh: Okay, thank you.

Moderator: Thank you very much madam. Coming up next is a question from Mr. Manoj Singla of JP Morgan.

Manoj Singla: Yeah hi, congratulations on a good quarter once again. I had just two questions; one on the pricing for global IT services, what are we seeing for new clients, is the pricing above/below the current averages, you used to give that number before? And secondly I would like to know a little bit more about the Wipro Infotech business. We have seen significant growth in that business in this quarter. So, how is that business doing, and what should we expect going forward?

Balki: For onsite, the new clients for the quarter have come in at a slightly lower rate than the average, but for offshore, it is at a much higher rate than the average rate.

Manoj Singla: Could we quantify that? You know, what does much...?

Lakshminarayana: Manoj, we typically do not share those exact details. We just give a directional view on that.

Suresh Senapaty: Because they are never comparable, they cannot be compared with anything, because when the customers keep coming, the average you cannot compare with something that you are guiding. All we can say that they are better.

Manoj Singla: Sure, and on the ....

Suresh Senapaty: What is the second part of your question Manoj?

Manoj Singla: I just wanted to know more about the Wipro Infotech business?

Suresh Vaswani: I will just give you a perspective on our performance. I think the performance has been good across all the various lines of businesses that we address the India Asia Pacific and the Middle East markets with. We are in products; we are in services, software consulting, and e-procurement business. This quarter, all our businesses have done well. I think the results are good. The revenue is up by 28%. The profit is up by 45%. Our growth in product has been above the market growth; our growth in products has been roughly 17%. But the key thing is all the investments that we have been making in terms of building a software business as well as enhancing our services offering in India, and the Middle East, and the Asia Pacific has paid off. We have had a good growth in terms of services and solutions of 53% and a sequential growth of 28%. That is a broad perspective.

Manoj Singla: Yes, but what should we expect in the business going forward?

Suresh Vaswani: I think the market in India is showing a turnaround so to speak, and it is looking bullish and everybody is talking about India shining, so I think India is going to be a big growth opportunity for us as we go ahead, and over the years we have built up a strong end-to-

end services offering which is holding us and will hold us in good stead in terms of addressing customers here.

Suresh Senapaty: I think some of the duty changes that you are seeing in the recent past has also been favorable and we expect much more high level of penetration in the Indian market place, and the kind of IT investment that is coming from the corporate as well as the government, either from an e-governance perspective or improvement in the productivity, and similarly we are seeing things also in the Middle East geography. So, solution and IT services we are seeing strong potential growth.

Manoj Singla: Okay, just one last if I could squeeze in. On the onsite pricing in global IT, we have seen actually a decline. What has caused this decline? What is the outlook going forward on that?

Vivek: I think that, you know, it is just a reflection of the mix of businesses that we are getting.

Manoj Singla: Okay, sure. Thank you.

Suresh Senapaty: It is not like any re-negotiation of the contract or anything of that nature.

Manoj Singla: So, going forward would we expect further declines or ....?

Suresh Senapaty: We said that, you know, there are no price re-negotiations like things happening. Only in the offshore that we have little better pricing on which we are getting new customers. So, all we are saying is that the pricing would be in the narrow band primarily moving because of the mix.

Manoj Singla: Okay. I have a couple of more questions, but I will come back later. Thank you.

Moderator: Thank you very much sir. Next on line, we have Mr. Bhuvnesh Singh from CSFB.

Bhuvnesh Singh: Hi sir, congratulations on a very good result. You know, I wanted to know more about your acquisitions. Now we have had some time to basically assimilate these acquisitions, what exactly are you learning from this strategy, and how do we see that, would we have more acquisitions going forward or what is your view on basically next one or two years on that?

Vivek: I think that if you look at some of the acquisition matrix, I think we have seen good success. If you look at the Wipro Spectramind business, you know, today already 5 of the 19 customers are Wipro Technologies customers, 12% of our Q3 revenue was from them, and 75% of the pipeline is joint. If you look at the E&U consulting that we bought from AMS, we have been adding a customer a month, we have been cross selling, and we have sold offshore in 7 of their 12 active accounts. We made entries not only in the US but also in mainland continental Europe as a result of that, and we have added 60 plus people from India on their consulting practice. So it is generally good. On the Nervewire side, we have been able to use the skill sets that we have got to both position ourselves differently in terms of customers as well as be able to generate some large wins in the financial services sector, this quarter for example had a very nice sequential quarter growth. So, I think that what we have learnt is that there are generally good things for us to do, and being opportunistic as we have been we want to continue to do that. However, through the Nervewire process, one thing that we have learnt is that we did not get a full handle on the revenues as were expected to get in, and as a result we have had losses in that, and the good news is that these losses are declining, so they are coming under grip. So, I think that you know if I was to say are acquisitions going to be a part of our strategy, absolutely, just as carefully as we have been in the past. If what is the key learning, I think it is to spend more time on that substantiating the revenue base we are supposed to get in, not just counting on synergy revenue.

Bhuvnesh Singh: Vivek, just one follow up on that. You know up till now we have acquired small companies excluding the Spectramind acquisition. Do you think that going forward we will acquire may be a larger company now we have got somewhat an experience in acquiring and we know what exactly it entails?

Suresh Senapaty: Spectra Mind also was small when we acquired. This has become big.

Bhuvnesh Singh: Yeah, that is true.

Vivek: I really, we do not have any rules that say we are going to exclude this or we are not going to include that, I think that the way that we are looking at this is it all depends on the size of the risk we think we are taking. The larger the company frankly the larger the risk in terms of the impact it has on, you know, on the cultural integration, on the people integration side, and we do not want to underestimate that, you know, when you have one big ball and one little ball kind of hit each other, the little ball absorbs all the ricochet. But when you have two bigger balls collide, then both the balls have to ricochet and that is a little bit tougher.

Bhuvnesh Singh: Okay, would we be also interested in say acquiring people from our customers as such taking over their employees on board or something?

Vivek: We have done that in small lots in several customers but really it has been, you know, tiny bits and it all has to be subject to the financial parameters that we are creating.

Bhuvnesh Singh: Thanks a lot.

Moderator: Thank you very much sir. Our next question comes from Mr. Pramod Gupta of ABN AMRO.

Pramod Gupta: Hello sir, congratulations on good set of results, a couple of things that I wanted to understand. One was on the financial side; your gross margin seems to have come off as it is visible in the US GAAP numbers. However, you have done a huge saving in the SG&A side as a percentage of revenue.

Suresh Senapaty: Could you just speak up please?

Pramod Gupta: Hello?

Suresh Senapaty: Can you just speak up? Yeah.

Pramod Gupta: Is it better now?

Suresh Senapaty: Yes, it is better.

Suresh Senapaty: Yes, just repeat the question.

Pramod Gupta: I was saying you have done a huge saving on the SG&A side. Your SG&A as a percentage of revenue has come off by almost 130 basis point, what has led to that, if you could, you know, just explain us, it will be really helpful?

Vivek: Yeah, sure. Actually let me just jump in and point out the levers that we have to improve the gross margin. I think clearly utilization as you saw dropped this quarter. We have the potential to move that up. I think potential also exists to move more offshore, we discussed that earlier, and of course continuing to reduce the acquisition related losses, and I think, you know, once we do that overall in terms of continuing to drive the bottom productivity, we have the opportunity to really address every line on that P&L.

Pramod Gupta: Okay, and this quarter specifically what led to a drop in SG&A as a percentage of revenue? That was basically what I wanted ....

Vivek: I think a big change was the provision for doubtful debts where through some very active collection we were able to make that provision for doubtful debts actually negative by being collecting not letting anything go into that greater than 180 day category this quarter, but also collecting some of the old ones.

Suresh Senapaty: And also if you see in absolute terms the money, the amount has not come down, but it is only as a percentage of sale, that means, given the existing investment that we have done, we have tried to get higher productivity out of this, and therefore as a percentage it is reduced apart from the fact that Vivek mentioned in terms of improvement we had in terms of the provision for doubtful debts.

Vivek: And just to remind you again the negative drivers, coming back to the gross margin side this quarter, were the rupee appreciation as well as the increase in compensation that we had mentioned of that would have an impact of 1.3 points of sales which we were able to deflect in terms of the overall operating margin.

Pramod Gupta: Sure. Next question is basically for Spectramind thing. Are we seeing some kind of competition from some of the capitals coming in to and doing the third party work also?

Raman: Are we seeing these capitals in front of the customer where we are competing for bids? No. Have they demonstrated their aspirations and ambitions to be there and made statements of doing that? Yes. You know, will they come in; will they have the cost structure and the ability to be able to fulfill the needs of the customer? Only time will tell. But we are not seeing them in front of the customer today.

Pramod Gupta: Okay.

Vivek: But all we are saying is that there is scope for the third party service providers as well as in sourcing that will happen, I think we see opportunities for both.

Pramod Gupta: Okay, thanks a lot sir and all the best.

Suresh Senapaty: And just to supplement, whatever in sourcing is coming, that is adding on to the overall BPO industry rather than whereas whatever third party service provider, you can say that it is eating into the existing operation somewhere else, but whatever in sourcing is basically what they were doing it themselves there now they are wanting to do it from India. So, it is expanding the overall market size too.

Moderator: Thank you very much sir. Participants are requested to kindly pick up the handsets while asking a question. We take our next question from Mr. Michael Dillon of Arete Research, London.

Hello, Mr. Deon? Hello Sir? Are you with us Mr. Deon?

Michael Deon: Yes.

Moderator: Please go ahead with your question sir.

Michael Deon: I just wanted you to let us know what as far as your doubtful debt write back on the provisions there was, because if you were expecting 1.3% drop in margins that they actually came back more than the otherwise, would that 3% or thereabout write back in the doubtful debts?

Vivek: I think we can get back to you with that when we publish the detail numbers or whatever.

Suresh Senapaty: We do not share the specific numbers but all we are saying is there has been, I mean we used to have about 50-100 bases points of quarter-on-quarter in terms of getting PDD provision. This quarter we did not have, but we had it from all write back.

Michael Deon: Okay, thank you.

Moderator: Thank you very much sir. Our next question comes from Mr. Supratim Basu of ICICI Securities.

Supratim Basu: Hi, good afternoon gentlemen and congratulations on a great quarter. My question is on the billing rate, I notice that there has been some degree of volatility on the onsite billing rate where in the first quarter you had a 1.5% decline and then 2.2% increase last quarter, and 2% decline again this quarter. Now, on a compounded quarterly basis this kind of adds up to about may be plus or minus 8-9% variation. If you could just explain why this is so and how this actually impacts margins in that specific quarter?

Vivek: I think that the variability in onsite rates links really to the mix of services that are being delivered.

Balki: Supratim, if I just give you the exact numbers; for Q1 onsite per month realization was 10,078 and it went up to 10,301 last quarter and it is 10,096 current quarter. So, there is not much of variation in the sense.

Vivek: Also what is happening is that ....

Balki: This is primarily due to mix of services, nothing to do with the re-negotiation of contracts.

Suresh Senapaty: Also you have look at the consulting part of our practice that has happened with the acquisitions, typically in the quarter ending December, the consulting is little lower because of the number of days of holidays and all that. So, in this quarter we had lower consulting revenue than in the previous quarter and consulting revenues are having high unit rates and that also has impacted the onsite rate having come down sequentially. So, it is a mix of services rather than re-negotiation of contracts.

Supratim Basu: No, sure, I understand that. What I am trying to get at is that, you know, if I annualize those monthly numbers that you gave me, the variation is a fair bit, and especially if you look at the variation on a quarter-to-quarter basis, so what I am trying to get at is that do you have that much of a service mix change happening each quarter that a kind of contributes to this, and if so what is the impact on margin that happened?

Balki: Supratim, if you look at from Q1 to Q3 the variation is a fraction of a percentage. So, it is not so much volatile as you are saying.

Supratim Basu: Yes but you had a spike Q2, and hence a decline in Q3.

Suresh Senapaty: Yes but Q2 we had this consulting business integration. We did the acquisition of Wipro Nervewire in May, so the full part of Nervewire revenue was considered in the quarter ending July-August-September, the consulting factor. So, when the highest unit realization is there, apart from this fact and also we had a package implementation, where the growth rates were higher, IT infrastructure software services which had the much higher growth.

Supratim Basu: Okay, one other question on the onsite mix. One issue that you have said is that you had new projects starts actually happening on the telecom side and that has pushed up

the onsite mix during this quarter. My understanding is that your telecom R&D business is more offshore driven, in some cases even 100% offshore driven, so are these new types of contracts that you are winning or is it just an aberration?

Vivek: Actually, this is a new type of contract, but the new type of contract is also very offshore centric. We are actually taking over full product ownership on an ongoing basis. For that we have to do the knowledge acquisition onsite. So as a result, even though the projects in long run are or in the coming soon time will actually be or primarily offshore centric, it is requiring a knowledge acquisition process that is different from what we had in the past.

Supratim Basu: Okay, but would the margins on the longer term actually equalize with what your margins were in the past in this area?

Vivek: Yes.

Supratim Basu: Okay, and if you could just you know kind of give me an example of what exactly a full product ownership would mean for specific product out of client?

Vivek: Well, basically what is happening is that for a product that is typically not in the sort of development phase, we need to take over all the installed base, bug fixes, field reports, upgrades, etc.,

Suresh Senapaty: For the entire lifetime. So, the package may have a lifetime of 5 year. So the entire lifetime it will be maintained by us.

Supratim Basu: This would be a software application or would this be embedded software within the hardware products that you .....

Balki: It will be system software.

Lakshminarayana: Typically Supratim, telecom switch has software running between two and three million lines of code, which is embedded into switch, and that needs to be maintained, routine bug fixes up gradation, change of standards, change of signaling protocols, all that has to be taken care of, and frequency changes etc. So, when that needs to be done and the switch has a life between 7 and 15 years and that this total ownership means that from this point on, Wipro maintains the switch, till there is an installed base on that switch.

Supratim Basu: Okay, excellent. Thank you very much and good luck gentlemen.

Vivek: Thank you.

Moderator: Thank you very much sir. Participants are requested to restrict to one question in the initial round of Q&A session. We take our next question from Mr. Anupam of HSBC.

Anupam: Hi. Just a quick question on pricing I know you had a sequential blip but what I am trying to get at is if there was a common mention that the new clients are coming at much higher prices and minor increase from the existing clients. I am more interested in the existing client because that forms the bulk. Vivek, if you can answer this, the price hike, which is reflected in numbers, can be due to various factors. What I am interested in if there is an economic reason for this prices to go up on a demand supply basis, which means our clients finding good corporates or good services companies to find difficult in India that is why they are giving rises to people like or the top player or is it more of the mix issue or more of a timing or more of a betterment of a fixed price issue or yield issue. I think I am more interested in the economics of it. Do you that has changed, or do you think a guy sitting in US or Europe, who had given you in these existing rate earlier will come back to you and say, “yeah, I understand, this is my need, and I know there is a supply constraint, let us go and increase prices.”

Vivek: Yeah, let me answer your question in couple of parts. But, first of all, I would like to strike from the record Balki’s use of word “much,” because that can set unnecessary expectations. I think that the reality is this quarter, like we said last quarter, our new customer prices are coming in higher than our existing customer prices, and I do not want people to make unnecessary assumptions, we don’t want to play coy on this one. I think as far as the market dynamics are concerned, if you look at three drivers, one is in terms of new businesses coming in. New business is coming in at higher rates. We do get the benefit as we mix and give business of getting an overall higher yield. However, that impact is very muted because, for example, you know in any given year or over the full year, our new business as a percentage of total revenue will be in the 11-12 to 15% range, so it is not a big impact. The second is that of price re-negotiations, and unfortunately, price re-negotiations can happen on both sides, and what we can say for sure is that the existing customers are not going after asking for reduced prices. Taking in to account the fact that they hear from us and from every other vendor that there is a capacity situation in terms of you know we are not selling an excess capacity and there is a cost situation in terms of all of us have had to do the salary increases. So, I think there is no negative negotiation. On the positive side, we are beginning to see some successes. We have had a couple of re-negotiations. The story line has been purely productivity. Its purely been able to say you know we are able to do this much more for you and therefore we think we deserve a little bit more. If we are not able to establish that quantifiable value for the customer, they are not willing to give us a sort of price hike, and what we are trying to do is go for yield increases, which is an effective dollar per hour rate going up rather than a head to head, you know, for this price I am going to get this to 5-10-15% rate increase that we used to do three to four years ago, but no longer can do today. So, I think that that impact also is slow in the coming because we don’t re-negotiate all the contracts upwards, and the good news is that there is no downward bias. The third is the mixture, and the mix, as it moves towards the higher value added process, whether it is a infrastructure services or it is a package implementation or it is some of our advanced horizontals like data warehousing etc, can have, again that can vary from quarter to quarter, although generally, our mix of these advanced services has been driving as a percentage of total for several quarters. So, I would say to me those are the three economic dynamics of pricing.

Anupam: Right. If I just may add, I think we have established that before at various forums that moving up the value chain necessarily does not mean moving up the margin chain. What I am, frankly you have answered my question partly, but to cut the noise away, a pure to simplify and I know it is difficult, but to pure simplify it, a per hour rate for an existing client is re-negotiated up only under very severe circumstances where you have been able to demonstrate a productivity increase, so there is no feeling hey there is a capacity constraint let us increase prices.

Vivek: Yeah, again I will also strip away, just like I stripped very much from Balki’s comments. Your comments are very severe. I would just simply say that your characterization is accurate to the extent that the customers are not going to give you just a dumb price increases. You have to be able to demonstrate productivity to them.

Anupam: Sure, thanks. Just a quick housekeeping question. There was a slight fall in the ODCs, should we read anything into it, because I thought this is very sticky and a quick comment on attrition, because I remember last quarter we were saying that moving up from 11 to 16 is probably a quarterly phenomena, but despite a wage hike that is sticking to such a high number, your thoughts on that. Thanks.

Vivek: Let me start with the attrition, I think that you know what we are seeing is that attrition is rising in the younger employee lot. So, if you look at greater than 5 year attrition, it is actually a 2/3rd the attrition rate of the overall company, and so obviously lower than 5 year experience is higher. I think that relates to the way we structure competition for them. These individuals are less interested in high pension and gratuity contribution and more on cash at hand, etc. So, we will have to do some compensation activity for that lot, but other than that I think you know from a sustaining the business going forward from the fear that we are going to bleed middle

management and senior management, we are certainly losing a couple of people, I don’t think that that has come to any worrisome circumstances. As far as the reduction in offshore development centers, I do not think that we can read too much into that.

Suresh Senapaty: And, just to inform you that the total revenue from ODC has gone up from 62% to 65% last quarter.

Anupam: Right. Thanks guys.

Moderator: Thank you very much sir. Participants are requested to restrict to one question in the initial round of Q&A session. Next in line, we have Mr. Trideep from UBS.

Trideep: Hi, congratulations to the management on a good quarter. Two questions. First, during the year do you reckon that you might have to give an onsite salary hike; and secondly, on the BPO side of the business, we seem to be growing 20% plus quarter over quarter, is this something, which we think, which we will sustain over longer term, I mean longer term meaning next one year or so, any comments from the management?

Vivek: I think on the onsite salary increase, currently, there seems to be no indications of wage pressure there, but we are not going to be down to something happens and we have to react, but I do not see that. It is a long shot of that happening. I will let Raman answer on the growth.

Raman: On the BPO side, we see a robust market place, will it be 20%, will it drop a few percentage points one way or the other, it is a matter of conversion. The sales cycle continue to be long.

Trideep: I see, but overall the growth rate will be like you know quite high, may not be 20 may be 18, but whatever.

Raman: Yeah, you have also got to take in to account the fact that you know showing a 20% growth with the small base that we had was one thing, but as our base grows keeping pace with that percentage becomes that much more onerous.

Trideep: I see thanks a lot.

Moderator: Thank you very much sir. Next in line, we have Ms. Priya Rohira from Refco.

Priya: Yeah, good afternoon sir, congratulations on good set of numbers. Two questions from my side. One, the outlook on the R&D services given the traction, which we are seeing and given the product clarity or new product launches we are seeing from the telecom OEM spend; and second thing is in terms of business potential among the tier 2 if you are looking at higher penetration in that segment.

Vivek: Yeah, I think that first of all in terms of the telecom business and the R&D services business we saw good growth this quarter as I said 13%. Frankly, we would see a lot more growth if it were not for the fact that similar to what the discussion we had in the BPO side, we are seeing a rising tide in the India owned centers by the companies that we serve. So the good news is that there is business for everybody but certainly the spending that you read about in terms of the telecom companies and the technologies companies is there, and it is coming to India through both the channels of direct and outsourced. In terms of the SME segment, I think that right now what we are seeing is going back to my penetration curve and the late adopters, we are seeing some of the larger companies are coming to India, and in fact more of our business is being driven by the larger companies than by the smaller companies, smaller companies only don’t need to have a higher SG&A cost and I will exclude by the way the R&D services business, where we do a lot of board design, chips design, or sell IP to small companies, but if I look at on the IT side, the business is actually biasing itself towards more and more bigger

companies, just based on the demand and their preference for large companies like us. So, for example, if I look at the top 50 accounts that we had, this quarter we grew 17% sequentially versus an aggregate growth of 13%.

Priya: Okay, and with the fact given that what buoyancy you are seeing towards R&D services and given they are more offshore centric, you would see further improvement in the offshore pricing?

Vivek: I think that as far as pricing is concerned, we actually had already a fairly detailed discussion about many of our drivers around that. I do think that as we said earlier that on the technology businesses, some of our telecom customers have started with an onsite knowledge acquisition, and I think that once that ends we should expect some more bias towards offshore.

Priya: Okay, my second question, just as a follow up question. There has been a change in terms of greater than $5 million clients and the clients driving between one to three million dollar clients. If you could highlight on that factor.

Vivek: I think it goes back again to the growth in our existing client base, growth in the larger customers. So, I think, you know customers are generally happy with what they are seeing. As they see a revival in their own spending patterns they are expanding both their spend and the stuff they send here.

Rich Garnick: And one of the other factors what we are fundamentally seeing is our efforts to cross sell and sell our service line, take a higher percentage of the share of each client we are engaged in. If you go back two or three years ago, we did not have a IT enabled services business to engage with our clients, we are seeing more of that cross selling, and we are now working to integrate our R&D services with IT and the IT enabled services.

Suresh Senapaty: But, our more than $5 million account has gone up from 38 to 43.

Priya: Okay, thank you very much and all the best in the future.

Vivek: Thanks.

Moderator: Thank you very much madam. Coming up next is a question from Mr. Dipen Shah of Dolat Capital.

Dipen Shah: Thank you my question has been answered.

Vivek: Thank you.

Moderator: Thank you very much sir. Next in line, we have Mr. Prateesh from SBI Capitals.

Prateesh: Yeah hi. I just have one question. This is actually on the BPO side, basically the attrition levels actually moved up substantially this quarter from 12% to 17%, any particular reasons for this or this is the industry trend?

Raman: See, there are two aspects; one is that we change the basis by which we calculate attrition. Previously our basis for calculating attrition was where we had done the full and final settlement after the employees had resigned and he or she has come for full and final settlement. We also realized that the profile of the workforce that we have, there are lot of people who just stop coming to work particularly after the salary has been credited to their bank account, and we realized that they were not coming back to work and they were not coming for a full and final settlement. So, we have changed the basis for calculating our attrition to say that people who do not come to work and are absent without leave for a specified number of days, we will count them as attrited, then that is the major contributor to the increase of the attrition. But there is ....

Suresh Senapaty: On a comparable basis.

Raman: On a comparable basis, our attrition is by and large the same, we may see a minor increase month on month basis or minor decrease, and attrition is the single largest issue that this industry is facing.

Prateesh: Okay, thanks a lot.

Moderator: Thank you very much sir. Next, we have a question from Mr. Sandeep of JP Morgan.

Sandeep: Hi, good afternoon. Finally, thanks for giving me a chance. Just a couple of questions. One is just looking at the next 12 months, how do we feel about the business growth, I mean I am basically trying to get around it, what kind of growth we could see in FY-05. And secondly, just on a more macro level, you know if you look 2-3 years out, I mean there was a lot of debate last year or so about the long-term business model of Indian IT services company, now what do you think will change in Wipro’s business model in the next few years or do you think we have got it altogether now, and we do not really need to change much.

Girish Paranjpe: Hi. I think one of the things that has changed in the environment is that as compared to the past that the customers who were only looking for reducing cost and hence their focus was much more on reducing the application or transferring the application management work offshore. Now, customers are looking not only at offshoring application maintenance but also looking at new project development. And, in that area, when you look at new application development there is an opportunity for us to bring in our skills not only on the execution side but also on the consulting and design side. So, I think from that perspective, there is in terms of time there is an unique opportunity for us to play on both hands and see what difference we can make.

Sandeep: Vivek, can you comment on your outlook for next year in terms of .... You are getting a bigger company now. So, in terms of growth rates we can sustain.

Vivek: It is difficult Sandeep to answer that question because I mean we have been so careful about not giving guidance for the next year etc. In any case, it has been maturing even if we were to change track on that, so it is difficult for me to help you with anything you know numerative except to say that certainly the wind is our sales. We continue to do what we said we will and which is to be disruptive to the global IT services, the acceptance rates are rising. There is a recovery that is catching hold, customers are spending more whether it is on the R&D or the IT or business process outsourcing side. Companies like Wipro have an unusual advantage, customers are valuing scale, valuing the experience, and valuing the quality of people they see when they come to Wipro. So, I think you know, I mean, all in all you have a lot of positives on the earnings line, you know you have the negatives, you have the rising rupee, you have ...., well actually if you think about it that is really the only negative to think about that is sustainable and out of your control, and may be attrition if that get out of hand, but it still seems to be very much under control and the link that has to compensation cost. So, I would say, the business model per se has not changed, we continue to believe that long run this business is going to require a mixed model. I do think though that right now many of the customers that are coming into India are coming in with the notion that they want offshore services, and so selling them consulting isn’t as effective as offering consulting services to our existing clients where we are able to use that to reset the relationship level at a higher plain.

Sandeep: Yeah thank you and congratulations on great set of numbers.

Vivek: Hope you are more cheerful now.

Sandeep: Absolutely, I was just pressing the buzzer about 22 times to get a chance to ask the question.

Vivek: You are right, it is like jeopardy you know you have to be quick.

Moderator: Thank you very much sir. We take the next question from Mr. Nitin of Irevna.

Nitin: Hi. My question was regarding the utilization rates going forward. With increase in MNC operations in India and the recent CRISIL study, don’t you think there is further pressure on the attrition rates and it will entirely affect your utilization rates, which you commented that it is increasing going forward and it will entirely result in productivity levels and operating margins affecting.

Vivek: I think that you know if you look at the utilization rates, you know as long as we are able to keep the short cycle we have on hires, we are in a pretty good position to be able to manage the effects of attrition. So you know if attrition begins to go out of hand, I think we will have many problems not the most of which will be this one, you know in terms of utilization impact, but we are not there, I don’t think we are going to be there, I think the surge that we had of MNC hiring while you now certainly not come down, it is not as big as it was a quarter ago either. So I guess I am not too concerned about that being a major factor that changes operating margins in the future. I think that we just have to keep working on improving utilizations and managing attrition.

Nitin: Do you see some sort of a strategic bench you are developing countering this factor like may be decreasing utilization rates so that in times of ramp up it can be used effectively for project planning and all those factors?

Vivek: Actually not really, in fact if anything our bench is a result of more campus hires that in turn have the benefit of lowering cost per employee but have the disadvantage of requiring more time to be field ready if you will.

Nitin: Yeah thanks a lot.

Moderator: Thank you very much sir. Next in line we have Ms. Sohini Andani from LKP Shares.

Sohini Andani: Congratulations for good results sir. My question was though you have given us a bit of a information on that, on the telecom side we were expecting a very good improvement in the overall environment. I exactly wanted to understand that what is happening with the global telcos and the service providers and you know from I mean what is leading to the very improved outlook on the telecom side.

Vivek: Okay I will talk about the equipment manufacturers and Suresh can talk about the service providers. On the equipment manufacturers what we are seeing is more spending, that is why as I mentioned earlier, our sequential quarter growth was higher than our average for telecom equipment companies, and on a year-on-year basis we had a 56% growth for the quarter telecom equipment revenue. So we are seeing that bump up as I mentioned earlier as well, we are seeing that we are sharing that revenue with some of it going to the company’s India owned centers and some of it coming to the outsourced partners, enough business for all, good growth rates. Let me ask Suresh to talk about the service provider business.

Suresh Vaswani: You know there is lot happening on the telecom service provider space globally. Like everybody knows there is major drive in so far as telecom service provider is concerned on cost reduction and especially IT and operations cost reduction, and you know we are very well poised in so far as the telecom service provider segment is concerned with out strong practices on the ADM side, with Wipro Spectramind now coming in and offering wide range of call center and BPO services, as well as our strengths in system integration. So, for example, this quarter we have acquired three new customers into telecom service provider

space. There has been a lot of growth in our existing accounts, and that is one of the reasons why you know you find in the overall Telco space the onsite mix looking larger, because our existing accounts have grown, these are all new growths that have taken place and therefore there is a large proportion of people today onsite in the knowledge management space and we will move these offshore. So all in all its on the ramp up phase. The overall segment they are looking at cost take outs, we have exciting propositions, and there should be happy times ahead again for us in the telecom service provider side.

Sohini Andani: Yeah thank you sir and all the best.

Moderator: Thank you very much madam. Next on line we have Mr. Vinod Chari from India Infoline.

Vinod Chari: Yeah hi, congratulations on the good set of numbers. Again my question relates to the telecom R&D space. You mentioned that there is a, I mean this quarter there was 13% growth in the telecom R&D offshore. What kind of trend do you expect going forward say for the next two or three quarters or next four quarters for that matter?

Vivek: Technology was up 13% sequentially, our telecom was actually higher, telecom was 15% up.

Vinod Chari: Okay, going forward what kind of a trend do you expect in telecom?

Vivek: I think we have spent a lot of time talking about future trends both in the economic terms and general terms, I am not sure I can add anything more to that.

Vinod Chari: Okay, one more thing is when you said this new type of contracts where you see more of knowledge acquisition process taking place at the initial stage. Do we read that, especially in the telecom verticals, do we read that as more development related work in telecom rather than maintenance?

Vivek: Actually that was particularly to the telecom space and that was more maintenance than development.

Suresh Senapaty: But we think some amount of new product launch has been planned in the second half of the 2004 versus early 2005 kind of thing. Most of the budgets are from the maintenance budgets.

Vinod Chari: Okay, thanks.

Suresh Senapaty: Telecom growth trend that we have talked about has been embedded into the guidance of 269 million.

Moderator: Thank you very much sir. We take our next question from Mr. Kawaljeet of Kotak Securities.

Alroy: Hi! This is Alroy from Kotak. Vivek I just wanted to ask you given your lines of business today and given the fact that you know you have a multi-vendor environment which is in you know enforce, where do you see you know account sizes finally moving up. Do you see constraints after a particular level and if so what are the kind of constraints you see?

Vivek: You know we are always reaching new territory and so frankly this is not something we apply ourselves a lot, I mean essentially you know we have now our largest account at the $48 million mark and rising, so I think that you know ...., right, so we have two accounts greater than $40 million. So I think that we are seeing is that accounts certainly have grown more than they had in the past, so I think it is not something that we think has a necessary cap to it, there might

be one, but our point is we would like to find it as we keep growing. So far at least the customers that we are growing are not setting that cap and in fact one of customers we are you know on the list of strategic partners, which is the only Indian company to be there, and they outsource you know roughly $6 billion of IT a year, so it is you know from their perspective at least they don’t see us reaching the end of the road.

Alroy: And what is the kind of challenges you faced you know at various levels in the sense if you get an account of around say $40 million, are the challenges different at $50 million or is it just you know more lines of businesses which you know increase the account, how do you increase that account size?

Vivek: I think it is as Rich Garnick had mentioned earlier, cross selling. I think it has to be on the basis of multiple service lines going in there and you know once you do then that growth is very manageable.

Suresh Senapaty: Just to give some data like Vivek talked about more than $40 million was two accounts from one last quarter, more than $30 million accounts have gone up from three to five, more than $20 million run rate account has gone up from 10 to 11, and more than $10 million run rate account has gone up from 18 to 25. So like that you will see that we have more and more service offerings, the price of the customer account will grow.

Alroy: Just another question on the demand supply equation. You talked about supply constraints. On the entry level employees, clearly you know the wages continue to be soft, so if there is a supply constraint there obviously you know it should have reflected in wage increases. So if it is at the middle management level considering that the industry is no longer as young as it has been may be 5 years back and it is an industry which has been in existence for quite sometime. Do you see this demand supply constraint still continuing over the next few quarters?

Vivek: I think that in some sense this demand supply constraint is a resultant of the surge of MNC hiring. That surge might have finished and subsided over a period of time. So we do think that you know it is difficult to guess whether it is one quarter, two quarters, three quarters, but it is difficult to see more than that of that surge lasting.

Alroy: Okay thank you.

Moderator: Thank you very much sir. Next we have a follow up question from Mr. Mahesh Vaze of SSKI.

Mahesh Vaze: Yeah hi. This quarter when you gave a salary hike your attrition rate picked up and at 17% it is reasonably high. Does that raise of specter of an out of turn salary hike in next couple of quarters, and if the supply side is so tight, at what point are we going to look at a scenario where the sales guys would be proactively calling each client and exploring possibilities of rate increases?

Vivek: Well, I think that you know we are trying to encourage our sales teams to do that right now in terms of getting as much as they can on price hikes, but we also have to be careful that in a environment where there is a lot of volume coming our way particularly from existing customers that we are doing this in a balanced way. I think that in terms of the wage hikes for the future, as I mentioned earlier, our attrition is more towards the more junior employees and the more senior employees. You know we will take a look at that on an ongoing basis, and act as we need to.

Mahesh Vaze: Vivek to put it another way, at what level would the red light be blinking and you would say that you have to give a salary hike to control the situation, will it be 20%, 25%, what level of attrition you would have to give an out of turn salary hike?

Vivek: I am not sure if there is necessarily a particular number that we use. I think that for example the fact that our junior employees are leaving us is a matter of concern, we are looking at that pretty actively, but I wouldn’t wait for it to be 30%, because that is destruction testing, and we don’t want to do that.

Mahesh Vaze: Okay thanks.

Suresh: Operator can we have the last question please?

Moderator: Sure sir.

Sridhar: Senapaty we have a email question from Michael Dillon, he is the person who asked the questions before from London, he is from Aerete Research, this question is to Balki, he is asking, “assuming that you have a doubtful debt charge of 50-100 basis points, what is the actual charge taken this quarter?”

Lakshminarayana: Mike, we typically do not share the data of risk provision at segment level. The overall numbers are visible on the face of our balance sheet that is for all segments put together.

Sridhar: And there is a second question on what is the actual write back in provisions to the P&L in the quarter?

Lakshminarayana: I guess the same answer holds for that as well, we do not share it at the segment level, the net provision made is something that they are at the face of the P&L.

Vivek: One more question please.

Moderator: Sure sir. The last question is a follow up from Mr. Ananthanarayana of Morgan Stanley.

Ananthanarayana: This is a follow up from the Spectramind attrition issue addressed to Raman. Raman, 17% of the quarterly rate is definitely very alarming. How does such a business scale up with such high attrition rates, can this be stemmed and if not you know how do you maintain this double digit sequential growth going forward?

Raman: Absolutely it is a matter of grave concern as we go forward both as a company and as an industry where such high attrition levels are not sustainable. At this point of time we have taken very tactical measures to plan a bench to plan for high attrition so that we have people available, so that the customers do not see the impact of the attrition. But that obviously has a cost and has an impact on margins. At an industry level we are playing a active role with the organizations such as NASSCOM, such as CII to see what we can do at an industry level to do away with some of the bad practices that are causing harm to each other. Also we are actively working to see if we can increase the labor pool so that there is an availability of talent that people can utilize rather than having to rely to hire only from each other.

Suresh Senapaty: And also just to supplement that Anantha, when we are talking about a 17% it also includes that correction that he talked about, and also the fact that we are talking about this number based on this particular quarter, it is not that preceding 12 months like many others report, it is basically the attrition during the quarter. So from that perspective it is not a simple 17x4.

Ananthanarayana: Thank you.

Lakshminarayana: Thank you ladies and gentlemen for participating in this call.

Moderator: Thank you very much sir. At this moment I would like to hand over the floor back to the Wipro management for final remarks.

Lakshminarayana: Yeah thanks Prathibha, as I said thank you ladies and gentlemen for participating in this call. Should you have missed anything during the call the audio archive of this call will be available on our website and we will also be putting up a transcript of this call very soon. And of course should you need any further information or clarification, the investor relation team would be happy to talk to you. We look forward to talking to you again next quarter. Have a nice day.

Moderator: Ladies and gentlemen, thank you for choosing Cyber Bazaar’s conferencing service. That concludes this conference call. Thank you for your participation. You may now disconnect your lines. Thank you and have a nice day.

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EX-99.5 7 f95907exv99w5.htm EXHIBIT 99.5

EXHIBIT 99.5

WIPRO LIMITED Q3 03-04 EARNINGS INVESTOR CALL (EVENING CALL)
JANUARY 21, 2004

Moderator: Ladies and gentlemen, thank you very much for standing by and welcome to Wipro third quarter earning results conference call. At this time all participants’ lines are in listen-only mode. Later there will be an opportunity for question and answers with instructions given at that time. Should you require assistance during the call please press * and 0 and the conference specialist will assist you off line. As reminder, today’s conference call is being recorded. I would now like to turn the conference call over to the host Sridhar Ramsubbu of Wipro management. Please go ahead sir.

Sridhar: Morning ladies and gentlemen, and good evening to the participants across the globe. Let me take this opportunity to wish you all a very happy new year. Along with LAN and Anjan in Bangalore, we handle the investor interface for Wipro and we take pleasure in extending a warm welcome to all the participants from US, UK, and elsewhere to Wipro’s third quarter results and earnings call for the period ended December 31^st, 2003.

We have with us today Mr. Azim Premji, Chairman and Managing Director, Mr. Suresh Senapaty, CFO, who will comment on the US GAAP results for the quarter ended December 31, 2003. They are joined by Mr. Vivek Paul, Vice Chairman, Suresh Vaswani, President Wipro Infotech, Raman Roy, and other senior members of the management team who will be happy to answer the questions you have.

Before we go with the call, let me call your attention that during the call we might make certain forward-looking statements within the meaning of the Private Securities Litigation Reforms Act, 1995. These statements are based on management’s current expectations and are associated with uncertainty and risks, which could cause the actual results to differ materially from those expected. These uncertainties and risk factors have been explained in detail in our filings with the Securities Exchange Commission in the USA. Wipro does not undertake any obligations to update forward-looking statements to reflect events or circumstances after the date of filing thereof. The conference is slated for one hour, the presentation of the third quarter results, will be followed a question and answer session. The operator will walk you through the procedure for asking questions. The entire earnings call proceedings are being archived and transcripts will be made available after the call at www.wipro.com Ladies and gentlemen, over to Mr. Azim Premji, Chairman and Managing Director Wipro.

Azim Premji: Let me wish all of you all a very happy and a very successful new year. Your board of directors in the meeting held this morning approved the accounts for the quarter ended December 31, 2003. Our results have been mailed to those registered with us and are also available on our website. Let me share with you some of our thoughts on our performance and on our prospects. Business traction in our global IT services business continues to be robust. In the quarter ended December 31, 2003, we recorded revenues of $250 million and operating profits of over Rs. 2.5 billion equivalent of about $55 million, a sequential growth of 13% and 17% respectively. Combined with the encouraging performance of our other businesses, we posted our highest ever quarterly profit after tax. Within global IT business, our technology business grew sequentially by 13% and the enterprise business by 10%. If you were to look at different service lines, technology infrastructure services grew sequentially by 17%, business process outsourcing by 29%, and package implementation by 14%. On the profitability front, improvement in productivity and increased cost efficiencies offset the impacts of offshore compensation increase, rupee appreciation, and marginal decrease in utilization, resulting in an expansion in our operating margin as compared to the quarter ended September 30, 2003. In terms of business operations, the results have been encouraging as well. Robust growth was evident across all verticals, all service lines, and all geographies. We continued to be successful in selling new and enhanced services to our existing customers and to new customers. We significantly improved our ability to leverage the consulting skills from our acquisitions across all

business segments. We were also successful in selling IT enterprise solutions to our technology clients. Looking ahead, offshoring continues to gain momentum. We expect the volume growth across business segments to sustain and expect pricing environment to be stable. However, there will be quarterly aberrations due to mix of customers and services. Further, continued appreciation of the rupee puts pressure on business profitability.

In summary, we had a quarter of satisfactory performance. Opportunities are abundant in the current environment, but these opportunities come with their own challenges. We are as much focused on leveraging near-term opportunities as we are on building a long-term global organization. We believe that doing both are critical to create sustainable shareholder value and we are confident that we will achieve our goals on this. I will now request Suresh Senapaty, our CFO, to comment on financial results before we take questions.

Suresh Senapaty: Good morning ladies and gentlemen in US and good evening to those of you in India and Asia. Wish you a very happy new year. Mr. Premji shared our thinking on the business environment. I will touch upon a few aspects of the financial and operational significance. During the quarter ended 31^st December 2003, we had sequential revenue growth of 13% in our IT global services and product segment, which was comprised of 11% revenue growth in the IT service component of the segment and 29% growth in the IT enabled services business component of that segment. The 11% growth in the services component was driven by a 9% growth in the volume of business combined with a 2% increase in our realization rates for work performed offshore, partially offset by a 2% decrease in our realization rates for worked performed onsite. The growth in our IT enabled services business was primarily due to growth in the volume of business coupled with marginal improvement in price realization. During the quarter ended 31^st December 2003, we leveraged the skill sets of and resources in Wipro Nervewire to offer services to our customers in other verticals in technology as well as enterprise business. Consequent to this integrated approach, we believe that a consolidated representation of the segment results represents the appropriate presentation of operating results. We have therefore consolidated the business operations of the Wipro Nervewire resources into the results of our global IT services and products segments. Rupee appreciation continues unabated and the forward premiums have shown a negative trend. We have minimized the impact of this appreciation on our financial results by proactive hedging and as of December 31st we have forward cover for inflows for about the next two quarters at rates that are slightly better than the prevailing spot rates. For the quarter ending 31st March 2004, we anticipate that we will continue to see volume-led growth with prices moving in a narrow band. We expect to retain operating margins at current levels excluding the probable impact of appreciation of the rupee. With this we will be glad to take questions.

Moderator: Ladies and gentlemen if you do wish to ask a question please press the * then the 1 on your touchtone phone. You will hear a tone indicating you were placed in queue. To remove yourself at any time you may press the $ key. If you are using a speakerphone please pick up your handset before pressing the numbers. Once again for questions or comments please press * and then 1 on your touchtone phone. Our first question will come from the line of Julio Quinteros of Goldman Sachs. Please go ahead.

Julio: Good afternoon gentlemen or good morning depending upon your location. Quickly wanted to walk through the expense items, in particular I want to make sure that if there are any expenses from one time items which is kind of goes through the items that if you are in mind, just kind of highlighting, any potential changes in provisions for doubtful accounts, any other charges through either on your foreign exchange or some other components of your expenses and other items. If you don’t mind just starting that, that would be great. Thank you.

Suresh Senapaty: No there are no significant one-time items either on the debit side or on the income side in this particular quarter. In fact if you are seeing results the operating margin has shown an upward movement of 20.4% to 21% from the last quarter to this quarter and there has been let us say this has been in spite of the rupee appreciation by about 0.5%. We had the

onsite hasn’t gone up. We had a utilization drop by 1% because we had the highest additions in terms of the people hired. We had manpower cost increases which we had talked about in the previous calls. There was an impact of about 1.3% on account of that. There have been some plus we had in terms of savings from the subcontracting cost, in terms of reducing the losses on acquisition related expenses, and also in terms of the SG&A cost, not that there has been a reduction in the SG&A cost but we optimize on that by keeping the SG&A cost under check. So on a net-net, there was a 60 basis points improvement in the operating margins. The SG&A cost also had a provision for doubtful debt component like earlier we used to have a provision for doubtful debt we used to make provision, but this quarter we did well in terms of collecting and improving the quality of the debt, as a result of which we did not have any provision, in fact we had a small write back of the provision. So there are not one item charges or one item write back, we would expect this in the normal to happen going forward too.

Vivek: Thank you Suresh and if I may just in and add that what we also saw in the provision for doubtful debts, there is no change in the provisioning. So I just want to make sure that is clear. The second, if you think about any one time effect, there is no one time impact but we did have the impact of the salary hike kick in, we had talked about that at the last quarter’s earnings call, that kicked in, that is not a one time effect, it will flow through of course every quarter, but there was an unusual transient.

Julio: Right, thank you very much.

Moderator: The next question will come from the line of Moshe Khatri with SG Cowen. Please go ahead, your line is open.

John: Hi, this is John from SG Cowen. I was not able to make the call. Just a couple of questions on spot pricing, can you talk to us about spot pricing, pricing for new deals and services, and have you seen an uptake there, and can you quantify that if so?

Balki: For the quarter the onsite rates have dropped by 2 percentage points sequentially, and the offshore rates have gone up by 2.2 percentage points. Overall, the new accounts are coming at for onsite slightly lower rates than the average rates, and for offshore they are coming at higher rates than the average rates.

John: Great, thank you very much. On that note actually can you discuss turn over rates for the quarter in services, and just remind us what last quarters were?

Vivek: When you say turn over, you are talking about attrition?

John: Yeah.

Vivek: The attrition rate for this quarter was 17% on the IT services side on an annualized basis and that compares to ..., it is up by about 3 points, so that would be about 14% from the last quarter.

John: Great, thank you very much.

Vivek: And if I can just add one more clarification which is that if you look at the attrition rate, the attrition rate for our senior, greater than 5 year’s experience employees, is about three quarters that of the less than 5 year’s experience. So what we are seeing is that the particularly vulnerable population of the middle and senior managers appears to be under better control.

Moderator: We will next go to the line of Ashish Thadani. He is with Brean Murray please go ahead, your line is open.

Ashish: Good evening and a terrific quarter. I have a couple of questions. Relative to recent trends, there are some large positive variances in certain line items, you talked a little bit about the SG&A, it seems that that would be sustainable improvement. Could you talk a little bit about the India and Asia Pacific IT product revenue, what is going on over there?

Suresh Vaswani: You know we have had a strong performance this quarter. Our revenues were up by 28%.

Sridhar: Suresh you need to come closer to the mike, we are not able to hear you.

Suresh Vaswani: I said we have had a strong quarter in Wipro Infotech in the India Asia Pacific and the Middle East business. Our revenues are up 28% year-on-year, our profits are up roughly 45% year-on-year, and this is a result of you know strong performance across all our business lines in India Asia Pacific and the Middle East. Our business lines are the products business, the services business, as well as the software and consulting business that we address the market with in India.

Suresh Senapaty: Yeah, the numbers that Suresh Vaswani talked about was under the Indian GAAP but if you look at the US GAAP, the Indian and Asia IT services and products has grown in revenue terms 60% YOY and 39% sequential on the quarter ending September to the quarter ending December. In this particular quarter we had you know the new accounting standard, which is 0021, which was not there earlier, there were certain revenues which we were recognizing under Indian GAAP but not under US GAAP, but because of this particular change in the 0021 some of the revenues under US GAAP generally not being considered before are now being considered under revenue recognition, and therefore we had a increase in this particular quarter as a one time adjustment you can say, and therefore the growth YOY is 60% and sequential 39%.

Ashish: Is it possible in dollar terms to quantify that jump on account of the new standards?

Lakshminarayana: Typically in the Indian GAAP, it is about 28%, and in the US GAAP it is about 60% YOY, but this is largely accounted by the change in standards.

Ashish: Okay, just if we move on, there is also a drop in the fixed-priced project contract component. What impact might that have in the quarter and going forward?

Vivek: Let me just answer that Ashish. I think that that should not have any effect in terms of either volume growth or margins. In fact it just representative of the fact that we have been trying to wrestle down our fixed-priced projects to a level we are comfortable that we are doing them in the kind of projects where there is a benefit to us of doing fixed-priced projects and there is limited risk. So I would say that the volume growth continues, the fixed-priced projects are being much more sharply focused.

Ashish: Good, and then I just had a question on pricing going forward, let us say a few quarters out, if robust demand is accompanied by a improving client health, is there any reason why the company cannot pass on future salary hikes either as a surcharge or as in terms of higher billing rates, you know few quarters out?

Vivek: I think that the situation is still too premature to say that we have the ability to get raw pricing power. I think that the good news is we have been able to re-negotiate contracts with a couple of customers, significant customers, that have been able to inch prices up, but it is on the back of us demonstrating a very numerative, quantitative productivity measurement. So I think that what we are focusing on is really a more yield rather than just a apple to apple price, because we are still not finding customers terribly and truly reactive about that. First customers are in the mood of giving more volume and therefore not willing to talk price.

Ashish: Okay that is helpful, and the last question, yes or no answer will be just fine, on the subject of an ADR stock split, is that something that the board would be open to considering?

Vivek: I think the answer should be yes or no like you asked.

Ashish: Is it a yes or a no?

Sridhar: I think that is a decision for the board, so Ashish we will take it off line.

Ashish: Okay thank you very much.

Moderator: We will next go to the line of Mitali Ghosh with Merrill Lynch, please go ahead, your line is open.

Mitali Ghosh: Yeah hi. My first question is regarding how you are seeing global vendor competition playing out this quarter. Have you seen any changes in the kind of activities from them?

Vivek: I think that you know we had mentioned earlier in the call that you were on that this quarter we have had a fair share of decent sized wins and I would say that in virtually everyone of those decent sized wins we had some international competitor or the other and the ones that we were competing in right now are exactly of the same tenure. So, I think that what we are seeing is exactly what we said earlier in existing accounts, where the deal is large, the international players are willing play the offshore game to retain the customer and to retain volume.

Mitali Ghosh: And would there be still, you know there was an earlier talk of lot of undercutting by some of the global vendors, are we seeing that stabilizing now?

Vivek: No, I think that you know we haven’t heard of any of the really scary stories that we did the last quarter, but they are still coming in substantially below where we are.

Mitali Ghosh: Okay, and my second question is regarding utilization levels, you know you are at fairly high 77% kind of levels, what do you think is sustainable levels, going forward?

Vivek: I think you know I mean the sustainability has to sort of take a look back and see what levels have we been able to be at and what is the best and what is kind of the upper 25^th percentile if you will, and I think that would indicate little bit of room for improvement but not a lot.

Mitali Ghosh: Right, my last question is regarding you know we are seeing a lot of demand for offshore services, what do you think is the biggest risk you know in terms of upsetting this demand flow?

Vivek: I think that you know if you look at it from the macro environment, let me sort of start from the macro and zoom into the micro, I think that if in a month’s time Hillary Clinton parks herself outside a major customer and talked about how this was a major issue, I think customers may generally become a little gun shy, although frankly that would be a short-term phenomenon not a longer-term phenomenon but you know we live quarter to quarter so we would hate for that to happen, but that is a risk. I think that the second risk is that the dollar fall may be more uncontrolled than controlled, and if that happens then of course you have a jolt to the system both for us and for a lot of other people as well. So that would be on a sort of macro economic environment. On the industry spending, I think we continue to be fairly optimistic about spending patterns, I think all the indicators including the service usage seem to be positive. I think that in terms of spending on offshore that continues to be positive, so I don’t see a lot of potential for direction shift there. And finally on the internal side there is the, you know if there was any run away attrition or if there was a real problem in getting people, neither of which we see, but you know who knows it, if I was to sort of say you know risk may be but pretty low risk.

Mitali Ghosh: Okay, thank you.

Lakshminarayana: Yeah, before we get on to the next question just wanted to clarify request that Ashish asked earlier. Ashish the difference between, this is with accounting standard change, is approximately $7 million in terms of revenue.

Sridhar: Ashish you got that from LAN? Anyway, I think we will move on.

Moderator: The next question will come from the line of Lou Miscioscia with Lehman Brothers, please go ahead.

Lou: Okay thank you. Before I start, if I could just ask that there was I guess a company speakers they are dialed them remotely, it is reasonably difficult unfortunately to hear you, where some of the other ones are coming in quite clear. I am not sure what you can do, may be if you are on speakerphone may be you could lift up.

Sridhar: Yeah I can ask our Bangalore conference room, who are in the conference room to come closure to the speakerphone and talk through the speakerphone, because we are not able to hear when Premji or Senapaty talked from the conference room. LAN can you organize that?

Lakshminarayana: Yes we will do that please.

Sridhar: Okay, thank you.

Lou: Okay great. My first question had to do with and I think Vivek had also mention something about it, in continuing to win some bigger contracts. Could you go into the details of those contracts, are they starting to breakout of you know the custom applications and systems integration and may be doing a little bit more consulting or are they pretty much similar to the ones that you have won over the let us say the last 12 months?

Vivek: Actually they are very similar.

Lou: Okay, do you see that changing into the let us say over the next 12 months or do you expect more of the same?

Vivek: Well I think that you know as we see more spending on new projects, we may see more system integration projects and they would entail both the application build as well as the architecting and consulting. So I think that that might change but as of now I cannot say that any of the contracts we won are of that nature yet. I think that if I go in to the R&D space, particularly in the telecom sector, we are beginning to see more full product ownership where its you know fundamentally maintenance of an ongoing stream but where we take over the entire responsibility for the product where we do the installed base, bug fixes, release management, and you know launches out to the field and upgrades.

Lou: Okay great, and next question actually hits on two separate areas one of whom is the one you just comment on being the telecom area, how does the, now that companies Motorola, Lucent, Nortel are starting to see their business transfer to pick up, how staffed are they in their R&D areas, in the sense of have they cut back so much they will need to even make more use of your services instead what they are going out and hiring, which they might be a little bit reluctant to do, and that same question also for let us the Fortune 500 IT staff in the US?

Vivek: I think that what we are seeing on the telecom side is that they are hiring in their India centers and they are giving us a lot of work too, and right now I would say we get the lion share of the work, not all of it or not you know almost all of it but at the lion share. I think that we are seeing them ramp up the India development centers as well. So in fact we do see that return to

R&D spending on the telecom equipment side. On the IT major side, we still have not seen on the US side any local hiring, and they continue to pursue outsourcing opportunities. We also see the outsourcing opportunities not just for ourselves but in the few instances where we have lost to a global major they are also outsourcing to a global major even in the United States.

Lou: Okay great. Then switching course a little bit, any kind of prediction we can get on the US dollar to the rupee, in the sense that not a currency analyst over here so do you expect it to just flat line or do you expect it to continue to increase, just some kind of thought you put into I guess you are planning I guess over the next four months.

Suresh Senapaty: Well our expectation I mean is that looking at the past medium to short term, we think in the short term rupee would continue to appreciate, based on whatever our understanding of the US Government pursuing the policies vis-à-vis dollar and the Indian Government the way their interventions are. So therefore for the next two quarters in flows we have done in hedging, which is little better compared to the current spot rates. We thought that is the better way to insulate with the P&L to the best of our ability by doing that.

Vivek: Actually Sridhar I am also wondering if we could perhaps direct you know a couple of names of econometric forecasting companies that actually do have rupee forecast, so you can not only get our outlook but also what so many economists are saying.

Sridhar: Yeah we could get that and I will share that with Lou separately. Do you want to comment on that now or ...?

Vivek: No I think that you know let the economist speak for themselves.

Sridhar: Yeah, okay.

Lou: Okay thank you, those were my questions, good look on the year.

Vivek: Thanks.

Moderator: The next question which will come from the line of Sujeet Sehgal with UBS, please go ahead.

Sujeet Sehgal: Hi, good morning gentlemen, this is Sujeet Sehgal from UBS. Congratulations on a great quarter. Just like to ask a couple of questions. Firstly, on pricing, I mean one had we are saying in our opening remarks that there is basically there is stability in billing rates, and on the other hand we are also saying that new customers in onsite projects are coming below average rates and we are also saying that multinationals are still bidding at significantly lower rates than what you guys are at. So I am kind of getting a bit you know more conservative commentary on pricing than I was probably expected. Can you throw some light on where are we in this cycle, I mean in the last few months has the optimism on this price stabilization changed or what is happening?

Vivek: Well I think if you want to term it as price stabilization, the optimism continues, you know first and foremost, if you look at the fact that, actually let me back up, let me just split pricing into the multiple elements. First is the new account pricing, and we have discussed that we are seeing gains on the offshore side and a little bit behind on the onsite, but you know in some sense that transactional, last time it was onsite was higher as well. So I think it is a matter of what orders you got, or what business you started flowing over the quarter. I think that the new business, however, does not have a very large impact in any given year, because in any given year are no more than 11-12% of our revenue has been from new customers, but that is one impact. The second impact, which is the largest impact is existing customers, and there is two elements in there, existing customers pricing negotiations and existing customer mix changes. If you look at existing customer price negotiations, we are seeing stability, the pressure that we had

to lower prices is gone, we have had a couple of episodic example this quarter and the last quarter where we were being able to get higher prices, but I would not call that a wide spread factor or a source of optimism that the prices are going up, I think that the term pricing stability would apply. That really is the biggest chunk of the pricing make up. The third element which is the mix, we are seeing sort of two mixes sort of wash each other out. One is that as we climb volumes with existing customers, we climb to lower pricing slabs, but we are also seeing a higher mix of some of our higher value added services like infrastructure services, package implementation, and as a result that mix effect is pretty much washing itself out. So net-net I think the word stabilization is something that we feel confident does apply.

Sujeet Sehgal: Okay excellent it is heartening to note that. Secondly, a very quick question on onsite attrition and do we see any need at all to be giving a meaningful wage increases to our onsite employees, may be around six months down the line?

Vivek: Not at this point. We are not seeing any uptake in the US employment environment and we are not seeing any uptake therefore on the wage pressure.

Sujeet Sehgal: Okay so there are no attrition issues, and you don’t see next six months you may need to do that?

Vivek: No, nothing that can’t be controlled.

Sujeet Sehgal: Okay excellent, thank you very much and have a great day.

Moderator: Next we have got the line of Moshe Khatri with SG Cowen, please go ahead.

Khatri: Hi thanks. I have a couple of follow on questions here. Can you looking at client additions this quarter at least in R&D they seemed relatively high, now are we seeing a fundamental improvement and may be strength in demand trends and R&D work? Thanks.

Vivek: I think that the number of client openings is not terribly good predictor of the future, and the reason is that only R&D business side we get both projects which are large such as you know taking over of an existing project or we could do a chip design or a board design or a IT sale to a small company. So I would say that just going by the number of accounts opened is perhaps less useful an indicator as the fact that we are seeing volume growth and revenue growth coming in at pretty strong levels from that business.

Khatri: Okay, and then can you provide us any comment about long-term margin trends, may be in this context assuming the rupee to dollar rate remains stable and that spot pricing continues to firm, do we see margins actually expand, and then may be finally, can we assume that Nervewire reached break even levels this quarter? Thanks.

Vivek: Let me just take that in sort of reverse order. Nervewire had a smaller loss, but the negative still hung around, so I think we are still there. We are continuing to tighten that and get that behind us. In terms of the longer term margin outlook, I think that what we have indicated is that with pricing stabilizing we do feel that, if there is not an untoward impact of the rupee appreciation, we should be able to improve margins, however, that rupee appreciation is the wild card and we don’t know which way it is going to play out and how much.

Khatri: Okay, and if Nervewire posted a small loss, can we assume that basically the loss kind of goes away when you look at the March quarter?

Vivek: I think that you know it should become insignificant, if not better than that.

Khatri: Okay, and then finally, any thoughts about acquisitions, you have stayed away from acquisitions for a couple quarters now trying to digest Nervewire and may be the utilities business that you acquired from AMS, anything on the horizon that we should kind of focus on?

Vivek: First of all we would like to break ourselves and all of you of the habit that we should acquire a company a quarter. I think we are pretty clear that that is not what we want to do. I think if you look at the track record of our acquisitions, we feel quite heartened. If you look at Wipro Spectramind, 5 of 19 customers they have now are Wipro Technologies customers, 12% of the Q3 revenue came from them, and 75% of the pipelines is coming from them. If you look at energy and utility, we have been adding a customer a month through the consolidated offering. We have already cross sold of the 12 AMS active accounts, 7 of them we are offshoring services and sent 60 plus people from India on consulting. So I think that has gone pretty well. On the Nervewire side, we have been able to ramp up our financial services growth rate by changing the face we put in front of our customers including the mix that we do. I think the challenge that we have had on Nervewire has been that the incoming revenue that we expected didn’t come in the way we expected. So we did get the synergy benefits but not the base revenue that we thought, and that has been a bit disappointing and that is what has lead to the losses. So if you look at this experience, what we feel is that certainly there is lessons we can learn, and I think we are trying very hard to make sure we don’t make the same mistake twice, but that does not mean that it derails us from using acquisitions as a growth vehicle, but by the same token just we have maintained from the very beginning, acquisitions are not a must, we will be very thoughtful and careful as we do them.

Khatri: That is great, thanks and a great quarter.

Moderator: Next question from the line of Sandeep Dhingra with JP Morgan, please go ahead.

Sandeep Dhingra: Yeah hi, congratulations on a great quarter. Couple of question from me, one is just on this whole hiring numbers, you are hiring in you know close to 3,000 people a quarter, your neighbors across in Bangalore are hiring similar numbers, so are we running the risk of you know I mean how long can we continue this momentum, are we running out of people anytime soon, especially if you keep hiring laterals through all this?

Vivek: I think that you know let me break that into two pieces Sandeep, one is on the campus hiring, I think what we have seen is we have seen the percentage hiring from campuses continue to rise steadily you know quarter after quarter. So I think in the last quarter we were at about 30%. So I think that that does definitely open up the availability of people. The second is that what we have is ability to be able to find talent based on the brand name that and the brand equity that Wipro has as an employer. So I don’t think we are at this moment in time, if you remember two quarters ago, I had said that we were facing a certain tightness in being able to hire people, I think that tightness feels a little loser now, I still think that we are not there in terms of being able to hire all the senior managers we need, but frankly given the fact that the attrition has been lower in the senior management ranks and in the lower management ranks or I should say the lower ranks because under 5 years’ experience not necessarily make people a manager, I feel that the situation is under control. So at least at this time we are not seeing a supply side constraint.

Sandeep Dhingra: Vivek, just another different point, you know you must be tracking your win rates you know in deals against global competition, Indian competition. So have you seen a significant improvement in that for Wipro in last 6 months you know which may explain that you are seeing a much higher acceleration than some of your peers?

Vivek: You know it is only feels that way but you know I just hate to you know I mean sometimes you only see what you see, so you always almost never know the universe, so I don’t want to sort of jump up and down and say we have got a massive market share gains, but I do know that

many of the contracts we have competed for we won and if we add up all of them we feel like we have won more than anybody else did, but like I said, we could be biased in our sample.

Sandeep Dhingra: Right, just you know looking at it differently the large contracts you won this quarter, are a lot of them you know are you the sole vendor and several of those or they are typically coming as joint relationships?

Vivek: No actually the typical arrangement is a multi-vendor deal.

Sandeep Dhingra: Okay. And finally just on the attrition side on the BPO side of the business, I mean, 17% on a quarter is you know sounds like a very scary number. So obviously that is a industry with a higher attrition rates, but how do we you know see that going forward?

Raman: Yes that is a scary number.

Sridhar: Raman there is a feedback in your call, do you want to see if you have a something like that where you can talk little bit I mean without the feedback?

Raman: Yeah let me use Vivek’s phone. Okay we have changed this methodology by which we calculate our attrition. Earlier we used to only count people who would resign and done their full and final settlement for attrition. We discovered that there are lot of people you know these are typical 23 years olds that form a large proportion of our employees who do not really come forward for a full and final settlement, they just don’t show up for work. So we have started counting people who do not show up for work and are on unpaid leave without any intimation for a specific period of time as people who have attrited and that is where the number has gone up. If you take that out the number is comparable with what we had last quarter, it is in the same ball park. However, going forward, we will be using the methodology that we are now using as a point for comparison.

Sandeep Dhingra: Okay, thank you.

Moderator: The next question comes from the line of Julio Quinteros, he is with Goldman Sachs, please go ahead.

Julio Quinteros: Sure, want a quick follow-up. Did you guys thought specifically through the revenue contribution that Nervewire having in the current quarter or is that, I know that it is now being included in your consolidated statements, but did you break up the Nervewire contribution for the quarter?

Sridhar: We have not published separate numbers for Nervewire this quarter. I mean we could discuss that off line if you want, but we have not published in the quarter results.

Suresh Senapaty: The Nervewire results have been integrated into the mainstream in Wipro in terms of security practice as well as the other enterprise and engineering and product engineering side of the business, and therefore there is no standalone Wipro Nervewire entity so called, and that is the reason why from this quarter onwards, the last quarter onwards, we haven’t given any separate kind of numbers.

Julio Quinteros: Okay understood, thank you.

Moderator: I would now go to the line of Neelkanth Mishra with CSFB, go ahead your line is open.

Neelkanth Mishra: Yeah one very short question, a house keeping one. What is the share of BPO revenues that come from voice-based processes?

Raman: We do 86% of our revenue from voice-based processes, and 14% of our revenue from non-voice.

Neelkanth Mishra: Right, and was it 91% and 9% last quarter?

Raman: Yes it was. I wouldn’t know the exact numbers, but ....

Suresh Senapaty: Yeah that is right Raman.

Raman: It in excess of 9%.

Suresh Senapaty: It was 91% last quarter and it has come down to 86% this quarter.

Neelkanth Mishra: Great thanks.

Moderator: At this time there are no further questions in queue, please continue.

Sridhar: Are there anybody on the line Rod?

Moderator: There are no other questions on line.

Sridhar: Okay so shall we wind up Senapaty, there are no other questions now?

Suresh: Yeah sure Sridhar.

Sridhar: Yeah, thank you very much for listening in and if you need any further assistance please do feel free to contact me or write to us at sridhar.ramasubbu@wipro.com Thank you very much.

We can wind up the call Rod.

Moderator: Ladies and gentlemen, that does conclude your conference call for today. Thank you very much for your participation and for using AT&T Executive Teleconference.

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EX-99.6 8 f95907exv99w6.htm EXHIBIT 99.6

EXHIBIT 99.6

CNBC Interview

Interviewee: Vivek Paul – Vice Chairman, Suresh Senapaty-CFO and Raman Roy-Chairman, Wipro Spectramind

CNBC: It is Wipro time. That is the key result, which might have a lot of bearing on sentiment as we go into trade, numbers we have just gone through. We go right back to Bangalore, or right across to Bangalore where we have got the Wipro top management waiting for us.

Well joining us live from Bangalore now are Wipro’s Vice Chairman, Vivek Paul, and Chief Financial Officer Suresh Senapaty, and in a bit we have got Raman Roy of Spectramind also joining in. Vivek and Suresh good to see you guys again, good morning.

Vivek: Good morning to you.

CNBC: Well Vivek, markets always look forward before we get down to this quarter’s numbers, Which look good, $269 million you have guided for the next quarter for global IT, 19% sequential growth in this quarter, where is this optimism coming from?

Vivek: I think that what we continue to see is Wipro definitely in the grip of the India Shining moment. I think that not only is our global IT export business doing well but also our domestic businesses have shown strong profit growth, so we feel pretty good about the overall portfolio. If you focus on the global IT businesses, what we saw was really around the world kind of a growth. We saw our growth in terms of our technology businesses, which as we pointed earlier, grew 13%, IT businesses growing 10%, and business process outsourcing businesses growing about 29%, even telecom, which used to be a drag, is actually up 15% quarter-on-quarter and 56% over the year ago. So, I think we feel very good that we are seeing growth across the board. We continue to see customers having a lot of interest in both spending more and spending offshore. So I think all indicators are good, particularly when you see prices also being stable.

CNBC: Vivek we will get back to the numbers and of course we will discuss it over the next 20 minutes, but one question which the market really wants answered is whether Wipro is going ahead With the sponsored ADS program, are you?

Vivek: I will let Suresh answer that question.

Suresh: Well, as you know that is always a particular opportunity that we all have as an option. As you know last time when in 2000 when we were listed in the New York Stock Exchange it was not for mobilizing money but to be able to create a brand equity and a currency. I think this scope exists for us to proceed with that to be able to increase the floor, but as of now no such decision has been taken. I think we are doing well on the results and I think we want to concentrate more in this area to take a decision going forward.

CNBC: Have you moved onto another gear? The question that the market would be asking is, has it pretty much changed in terms of the working plan for Wipro? The size of the orders are just starting to become huge and you have got pricing power to some extent out there; So We may actually be moving to a completely different level playing field or plane as far as financials are concerned

Vivek: Well, we certainly hope so. I think that if you look at numbers - two straight quarters of 13% sequential growth feels pretty good. If you look at pricing, the stabilization feels pretty good. We won larger orders in the last quarter than we had in a long time. So that feels pretty good. You look at volume growth, man-month growth over so many quarters now. So clearly the indicators are that the customers are buying, customers are buying more offshore, and Wipro is very well positioned with its broad range of services.

CNBC: Suresh, you have managed not just to keep the margins intact, you have actually bumped it up by a percent. Tell us how are you managing on the cost side, we have been hearing about attrition, increase in compensation, yet you seem to be doing this fine including foreign currency of course, what is the scenario there?

Suresh: Yeah I think we did as we had talked about previously, we did have some kind of a downside With respect to exchange, compensation increase that had happened and therefore the impact was felt. We had little bit of dip in the utilization by about one percentage point,. Onsite went up by one percentage point. But the plus to that effect were in terms of some of the IP sales and product sales which contributes through the operating margins, and also some of the acquisition related loses which was there that has gone down. Subcontracting expenses were down, and in overall SG&A expenses also, there has been some rationalization. As a combination of all these factors we have been able to post 100 basis points of improved operating margins.

Vivek: If I can just summarize that, I think what you have seen is that our ability to absorb the salary increase that we have talked about in the last quarter has been there. Not only did we take a hit that was about 1.3% of sales; and absorbed the foreign exchange effect of the rupee devaluing, I think we were still able to crank out a one point increase in the operating margin. If I may just take you back a quarter, last quarter, I had said that this was the first quarter after six quarters of declining margins that we had actually shown a little bit of a turn. I think we felt pretty good that what was a small turn last quarter became a much bigger improvement this quarter.

CNBC: Vivek, if you could give us some more color on the telecom side of the market - last quarter you also told us that Telecom was showing signs of picking up, has those signs strengthened in this quarter? If that space is really picking up, if you have any kind of leverage in terms of increasing prices which have been fairly subdued there?

Vivek: Actually we have already got some price increases in that sector. In fact, that sector has been the leader in terms of getting some price increases. So, I feel pretty good about our ability to establish value particularly in today’s context. We can add more services like nobody else can in terms of combining our business process outsourcing, our infrastructure services, and our testing, along with the R&D development that We. So you know which ever matrix you look at, volume, number of man months, this is the record highest ever telecom quarter we have had. Pricing, as I said is stabilizing. In the last quarter part of the reason why we had higher onsite ratio was that we had many new project starts for which our telecom teams were outside. I don’t want to be overly optimistic about it, but I do feel pretty good about it.

CNBC: Vivek just walk us through how you are leveraging NerveWire and how it is going to be leveraged as you move forward in terms of winning bigger contracts and may be more value added contracts?

Vivek: You know I think it is a great question and in fact you know may be I can just step back a little bit and talk about all the acquisitions. If you look at the Spectramind acquisition, clearly no doubt - it has been successful. Today roughly 5 out of the 19 active customers are Wipro customers, generating about 15% of the revenues, 75% of funnel is shared. If you look at the acquisition of the energy and utility consulting business from American Management Systems, we have generated one new client a month since we have acquired it, and today we have got something like 12 out of the 17 customers they have already being serviced by offshore services. So we have got good penetration. If you look at the NerveWire, in many of our core customers we have been able to go back and with consulting offerings been able to reposition ourselves in a different way. As a result we have been able to get more growth, our financial services business grew quarter-on-quarter at a very nice pace, almost 19%. I think that we have been able to see some of that impact. However, as a standalone entity, NerveWire, made a loss, smaller loss than last quarter. But still a loss, and that is something we would like to get over with.

CNBC: We will have to thank you now. Suresh you will of course be staying with us. We will also have Raman Roy who heads Spectramind joining us. .

Welcome back, you are watching morning call. Just in case you have joined in late, Wipro’s numbers are out and we will be discussing. We are in the midst of discussing those numbers, 19% sequential growth and profits they have guided $269 million in global IT revenues for the next quarter, 11% jump in revenues. We have been talking to Vivek Paul and Suresh Senapaty, but Vivek has stepped out and Raman Roy Who is chairman of Wipro Spectramind, who runs their BPO outfit has joined us now and Suresh Senapaty, Chief Financial Officer remains with us. Raman, 29% sequential growth is the strongest that you have managed in the long While, take us through how the quarter has been.

Raman: Yes, we have had an excellent quarter. It is our highest ever quarter in terms of revenue and profitability. We now have 19 customers and we do 68 processes for those customers. We are seeing a robust growth. Not only are we seeing growth from the customers, but we have on our books and what we are doing for them, the pipeline is very robust and there is a lot of interest in BPO activities out of India.

CNBC: Most of us outside the industry get confused by the amount of outsourcing backlash information they keep getting. Yet when we see numbers from companies like your’s, they are extremely robust. Walk us through what the scenario looks like, is it getting hazier or is it getting clearer.

Raman: See, the certain amount of talk on backlash is real. We are sensitive to what our customers’ want, what they want to talk about, but there is a real commercial and economic reality that the corporate world in the developed countries is facing. Given the value proposition of quality and cost that companies such as Wipro Spectramind can offer from India, it is a real value proposition and it is very difficult for companies there to ignore that proposition.

CNBC: Raman, tell us if there has been any fundamental change in the kind of activities. You said you are doing 68 processes now, are you moving up the value chain, and what could that mean for your margins in terms of business transformation services.

Raman: See for the tenured customers who have been with us for a long time, who have experienced India, experienced the quality and kind of work that we do from here, there are some high value-added processes, some more complex processes that we are getting. Right now, 11% of the revenue of Wipro Spectramind is from non-voice processes. We are seeing a growth in those kinds of processes coming in, and each one of these more complex non-voice processes bring in an aspect of incremental margins.

Suresh: You know, in terms of processes it has improved from about 60 to 68 from last quarter too. Similarly over rate realization perspective, there has been a marginal increase in the rate realization.

CNBC: Raman, if you could take us through the kind of outlook that you have because the number of recruitments in this quarter for Spectramind is 900+ and that seems very strong. You spoke about adding new clients. Tell us the outlook. Why did you hire so many people and whether all of this is just volume driven or are you seeing some kind of pricing stabilization.

Raman: In terms of outlook, we are very bullish on what the future holds for us. The 1000 odd people that you see as hiring and the number of people that we have in training, that is for meeting the needs of our customers. In terms of prices, yes, the pressure has declined, but irrational pricing as we call it - - prices that are not commercially viable - by some of the other people in the marketplace continues. We are seeing a decrease in that, but there are some irrational prices that continue to happen.

CNBC: Suresh, a question on margins to you. Now, 2800+ hiring, both the BPO and IT put together, that seems a lot. Are you confident of maintaining high utilization rates or will your margins come under pressure from there current level of 22% in the light of the rupee and the extra hiring.

Suresh: Well, I think like you saw the last quarter, we had an onsite increase by 1 percentage point and also utilization dropped by 1 percentage point because of the strong hiring that we had done. I think there is scope for us to improve on both these areas going forward. So, we think going forward, we will have an exchange issue. Rupee will continue to appreciate in the short term. Therefore impact of that will be felt, like we felt in the last quarter. But there are opportunities in the form of utilization, opportunities in the form of offshore where we think we should be able to work on it, and therefore we think going forward we should be able to maintain or improve the operating margin but for the exchange correction.

CNBC: Raman, tell us what is happening on the cost side. Every time we seem to talk to people in the industry, they say job hopping is favorite pass time out there and compensation increases so fast that it is impossible to keep track. How you are handling that and your additions to revenues? Is it coming from newer clients or are older clients are ramping up.

Raman: Attrition is the single largest problem that faces this industry. As an industry we have got to bring in discipline. Ultimately we are ending up increasing our cost base. As a matter of policy, Wipro Spectramind is looking at increasing the labor pool and we tend to hire people from outside the industry or fresh hires. We believe we have a very robust, effective, and efficient method of training and getting these resources to be global fulfillment resources. But yes, to the extent we have attrition in the industry and that is high. It does not lead to an economically viable model and puts a pressure on margins. To the second part of your question, do we see an impact on cost, yes, if you pay more, if you do not architect solutions that are keeping with the global fulfillment strategy, it will add to the pressure on cost and we see that as a key aspect. This is a scale business and we believe scale is critical to be able to get the economies for our benefit and for the benefit of our customers.

CNBC: Raman, we will have to leave it there. Thanks very much for joining in. Suresh, thanks very much for joining in. Good to see you guys.

EX-99.7 9 f95907exv99w7.htm EXHIBIT 99.7

EXHIBIT 99.7

Reuters Interview

Interviewee: Vivek Paul, Vice Chairman

Journalist: The mood this quarter improved significantly, but what is not clear is how it is compared to last quarter, has the momentum become better or it is the same?

Vivek: Well I would say that, you know, this is two quarters in a row that we have had 13% sequential quarter growth in our global IT business and that seems pretty good, particularly this quarter, I think, on a year-on-year basis it was 50% growth. So I think that first of all on the growth side, you know, it looks pretty impressive, and the good news is there is growth across the board. We are seeing growth on the IT side, which grew 10%, on the technology side, which grew 13%, I am talking quarter-on-quarter, which was the numbers you were asking for, and on the business process outsourcing side almost 30%. So really it was great to see growth across the board. Interestingly, even telecom, which, you know, has been a laggard was actually a leader with 15% sequential growth. So I think we felt pretty good about that as Well. Overall, for Wipro though, I thought this was an India shining quarter, not only did our global export businesses do well, but our India facing businesses like consumer care and Indian IT services business showed very impressive profit gains.

Journalist: What about the outlook in terms of the telecom because there seems to have been some real solid rebound and there have been some held up budget spending taking effect in the last American quarter that is in Q3 for them, how has that impacted you, has that improved your outlook for telecom?

Vivek: Well if you look at telecom, you know, I mean, the best test of the pudding is in the tasting, this quarter versus a year ago quarter our growth was 56%. So that is a pretty impressive growth rate.

Journalist: Okay and what about the outlook looking into both global IT and telecom in terms of the rebound in spending.

Vivek: Well I think that you know we have continued to be very optimistic. I guess you know all the leading indicators are there. We are seeing price stabilizing, we are seeing consistent volume growth, and we are seeing customers not only willing to spend more but also in absolutely wide spread acceptance of the global delivery model. So I think that, you know, everything points in the right direction.

Journalist: Okay, but I have also been hearing about big-ticket deals that are on and very much close, but you are not talking about them for confidentiality reasons and possible backlash.

Vivek: I would say that this last quarter was probably one of the best quarters we have had in the long time in terms of closing some of the larger deals. Interestingly, many of them are with existing customers, as they step up the pace, but definitely I would say that we saw that pace pickup this quarter as well.

Journalist: I see, would you like to confirm this quarter AT&T and Aviva are part of your ....

Vivek: I cannot really mention any names, but, you know, certainly there was a Wall Street Journal article on AT&T Wireless working with us and as you know AT&T Wireless CIO is an ex Wipro employee, Chris Corrado.

Journalist: Oh! I did not know that, but so this will be more in the nature of an old relationship and this is not a new win is it?

Vivek: Well it is not an engagement which we are starting in this quarter, but as I said, you know, I think I am sorry I cannot talk about them.

Journalist: But I can say it is a ramp up. Then you seem to have digested NerveWire finally in to the fold.....

Vivek: Well I think still not as well, I think that, you know, if you look at what we were doing on the Spectramind deal, I mean, certainly you know every thing is working well, we have got, I think something like of the 19 active accounts, something like 5 are Wipro accounts. We are seeing roughly 17% of the revenue already coming from Wipro accounts, and we are seeing about 75% of the funnel being joint accounts. So I think the integration on the Wipro Spectramind side has been very well. On the AMS side I think we are seeing that.

Journalist: By funnel you mean upcoming?

Vivek: That is right. On the AMS side, which was the new consultants business that we attracted, we are also seeing some very interesting statistics like that, and if you can give me a minute I actually want to share those with you, it was actually quite interesting. Sorry, I think that we are seeing good traction on that as well, while I look for it. On the NerveWire side I think what we have seen is we have seen the ability to be able to drive synergies in terms of being able to reposition ourselves in key accounts. We have seen the ability to be able to reduce the losses, but unfortunately there are still losses. So I do not ...

Journalist: You are talking about AMS still?

Vivek: No I am talking about NerveWire.

Journalist: NerveWire, okay sorry.

Vivek: I will come back to AMS. So as a result I do not want declare early victory except to say we are making progress on that.

Journalist: Okay.

Vivek: I will come back and give you some interesting stats on AMS if I can find that.

Journalist: But is it okay to say that the telecom business is coming back that is as a whole completely out of the woods and back on to the big ramp?

Vivek: I think definitely, I mean the numbers are clearly indicating that. So there is no hesitation in saying that, you know, whichever way you look at it, it is. Yes here is on the AMS acquisition, we have been adding a customer a month into the consolidated offerings.

Journalist: Okay.

Vivek: Yeah, we are cross selling offshore in 7 of the 12 accounts. One customer a month and we are cross selling in 7 of the 12 accounts.

Journalist: Okay and then looking at the margins, how, you have said 22% in the latest quarter as opposed to, I mean you have got a one percentage point rise, but the prices have been stable. So does it assume that it is your process efficiency that is driving the margins?

Vivek: Well if you look at what we had announced last quarter was that we were going to do a salary hike this quarter and we had said that that salary hike alone was going to be having an impact of 1.3% of sales. So what we have effectively been able to do is not only offset that but

actually drive productivity savings and cost reduction savings to overcome that merit salary increase and also drive some operating margins improvements.

Journalist: Okay so that is an all around thing and in terms of new initiatives apart from digesting the old acquisition what are the prospects, and are the markets on the rebound are you? Is there any more scope for inorganic growth or you going to be happy digesting your purchases that you have made?

Vivek: I think that you know we are always open to acquisitions, so as a result you know we are always looking, but we are quite disciplined in terms of making sure that we have the right fit.

***

EX-99.8 10 f95907exv99w8.htm EXHIBIT 99.8

EXHIBIT 99.8

Dow Jones Interview

Interviewee: Suresh Senapaty-CFO

SCS: If you were asking the question in terms of the people add in the IT services, we had net add of 1,904 people. Also if you look at the growth which has been a 13% sequential growth last quarter which is in the back of 13% sequential growth in the previous quarter and for one to two and for quarter two to three, sequential growth of top 50 customers are 17% higher than the average. Then new customer prices continue to be better than an average. Large number of projects starts which in the telecom, OEM vertical. So net-net I think across the customer base, across verticals, across practices, we are seeing significant sequential growth.

Dow Jones: Any take on the pricing?

SCS: Pricing as we said that all we are seeing is there is fair amount of stability being seen, we have seen that last quarter, we had little bit decline in the onsite prices, but in the offshore prices there was an increase. Now that decrease is not from the point of view that there has been re-negotiations but because of the mix of the customer, there will be some customers with higher rates, some customers with lower rates, so we have a change in the mix; it tends to be in a narrow band. So that is where we think that there is stability on the pricing, so it will keep changing in the narrow band because of the mix other than any kind of process where we think there would be re-negotiation on the pricing.

Dow Jones: The new client are pricing better than the existing ones?

SCS: Yeah. Generally they are better.

Dow Jones: Coming to the pressure on margins, I mean how have they been and what is your outlook on the margins?

SCS: See, last quarter if look at we had cost pressure on the salary increases we had talked about, 1.5% increase in the cost, it had increased about 1.3%, we had a little fall in the utilization, and it impacted two basis points. We had onsite increase by about one percentage point that has had an adverse impact. We had some IT sales, and therefore that has become positive impact where some savings and also because of the cost structure where we got some savings. So net-net we have been able to put 1% improvement in the operating margin. Going forward, we think there is scope for us to improve on the offshore that means we can make more business, deliver more business from offshore. Utilization had dropped by one percentage point last quarter, so it is possible for us to recover back. Similarly there will be cost pressures on the compensation. There would be pressures on the foreign exchange like we had the last quarter. So net-net our objective would be, but for the exchange difference, should be able to retain or improve the operating margins.

Dow Jones: Okay, how much cash reserves do you all have?

SCS: Oh cash, cash will be about $350 million.

Dow Jones: And any plans there, I mean any acquisition plans.

SCS: Well, we are always you know as we have already stated that acquisition is part of a strategy of ours to achieve growth, to achieve our mission, and we have already demonstrated having acquired before in the past, we have fairly good experience in terms of having got the synergy value of it, and we look forward to similar such opportunities going forward based on the requirement of various verticals in which we operate.

Dow Jones: How has the NerveWire’s performance this quarter?

SCS: See NerveWire, as you know this time we have not giving any numbers separately. It has been integrated as a result of which the consultant that is part of NerveWire which were more aligned to certain verticals has got pulled into various verticals. So they have been included as part of those various vertical revenues. So there are consultants we got into retail, who went into utility, who went into embedded, and who went into financial services, security practices, and so on. So now it is completely integrated with the Wipro Technologies overall as a standalone and therefore we have not up to two quarters of separate results having been given, we have no more separate results being given forward for NerveWire. But there the losses were lower and it had a positive impact vis-à-vis the overall operating margin improvement that we saw.

Dow Jones: Okay and that contributed to the improvement in the margins. Just one more thing on, yeah any plans on equity dilution?

SCS: No specific plans on equity dilution at this point in time.

Dow Jones: Okay, but I mean do you see that happening sometimes.

SCS: Well one of the options is to, I mean like we said the last we went for listing overseas, it was not for mobilizing money but to be able to create the brand equity, and I think opportunities continues to exist for us to even strengthen that. At this point in time, we are concentrating on our results, and I think there is still time to take a decision on that and we will let you know as soon as we take that decision.

Dow Jones: Just a bit of understanding, I mean, you have so much of cash and you have also declined to equity dilution, I mean, would the purpose was that to be raise some money as well, I mean, in addition to the brand equity?

SCS: See that is one option, like I said that we will keep needing cash, we have today, but if you want to do larger acquisitions we would need it. So therefore a decision has to be taken keeping that in mind. If the decision is only primarily to increase the float in the US markets then we can get into a secondary sponsored program rather than getting money into the company, which means interesting shareholders sell the stock rather than the company selling its equity and therefore split into dilution. So those options are there but no specific decision in this matter has been taken.

Dow Jones: What is the mix of your revenue offshore and onsite?

SCS: 59% is the onsite.

Dow Jones: And how does it compare ...?

SCS: One percentage point, 58 has gone up to 59.

Dow Jones: And you see this going up?

SCS: Our objective is to bring it down and that means we will increase the offshore rather than onsite; that was our endeavor last quarter but it finally went up primarily because if you see the growth rates that we achieved in the IT infrastructure services as well as package implementation services has gone up, and that has lead to the onsite increase, including some new project start ups that we had in the telecom OEM space. So some of that, but we think that some of that will lead to offshore revenue and some of the onsite revenue can be pushed into the offshore line and as a result of this to create that upside We Will be able to mitigate some of the cost pressures that we will have going forward.

Dow Jones: One last questions, the 24 new clients that you have acquired, is there a change in your, I mean, geographically how does it?

SCS: I think geographically also they have been fairly, what you tell, almost similar, which means North America is about 19, Europe is about 3.

Dow Jones: Okay, that is it.

EX-99.9 11 f95907exv99w9.htm EXHIBIT 99.9

EXHIBIT 99.9

Economic Times Interview

Interviewee: Suresh Vaswani, President, Wipro Infotech

ET: What are the highlights of the quarter?

Suresh Vaswani: All our businesses grew- products, services, Solutions, 01 and consulting. We were on course on all our businesses. Second, we had a steep growth in services- this included software. Third is our growth in profitability. Our profits grew by 45 % YoY. Our growth is also because we have reached scale in our software and services business.

ET : While the prime driver the growth in economy. Besides this, are there any other reasons? Did the sales and marketing initiatives pay off?

Suresh Vaswani: What is paying off is our thrust in services. We invested in consulting and solutions, where we have reached scale. Customers are seeing us an IT partner for end to end solutions. Our Profit and revenue growth is today because of the investments we have made.

ET: How much has services grown?

Suresh Vaswani :In Q2 2003-04, Services mix was 32%, which used to be around 25% a couple of quarters back. While I cannot share specific revenues, Services grew by 53% YoY and 28% sequentially.

ET: Which business has the largest headcount?

Suresh Vaswani: We have roughly 1850 people, excluding our service partner leverage. Services has the largest team in Wipro Infotech.

ET: Can you share 1-2 Wins which you believe showcases your competencies?

Suresh Vaswani: Vijaya Bank is one marquee deal, where we have done complete core banking software implementation, network integration, program management and have supplied all the hardware, including enterprise servers. We also manage all that infrastructure the second is for an insurance company – We have done a large BI data warehousing implementation, for which we have got an award from Hummingbird. We are also doing infrastructure integration and technology consulting for Qatar Petroleum. We are doing complete computerization for Karnataka police. At Bharti cellular, we are doing call center infrastructure management. Basically, our proposition is the whole story- technology infrastructure and software. There are many integrated deals that are happening. In Middle East, people are looking at wider and deeper range of products and services.

ET: How is the domestic market? General feeling is that it has moved up.

Suresh Vaswani: It is showing an upturn. All segments are growing. Especially Banking. The recent RBI stipulation to computerize is seeing investments in banking. Telecom is investing, Government is investing, education is investing. There is general buoyancy. Plus the reductions in excise and SAD will contribute to PC market growth. The mood is certainly buoyant. There is positivity in the environment and that means more investment, hopefully good tidings for us.

ET: How many contracts have you won during the year and the quarter?

Suresh Vaswani: We have won close to 200 FM contracts in the year. In terms of total projects won in solutions and services during the quarter, its 102. In India-72, APAC-11, Middle East-19. Our presence is strong among top 1000 customers in India.

ET : Having created a good reputation in 2 quarters, are you becoming choosy in deals?

Suresh Vaswani: In services, since we address top 1000 clients, deal sizes are not small. Even if small, they can lead into large orders later as we go into IT life cycle of the customers. This helps us build deeper relationship and we in turn can offer a wide range of offerings.

ET: A few words on the competition scenario?

Suresh Vaswani: There aren’t too many strong System Integrators left. Customers look at IBM, HP or TCS. We have kept our presence in India and if this quarter is any indication, we are on right track.

ET: Is pure Facilities Management profitable and is it picking up?

Suresh Vaswani: Customers are wanting to outsource IT to us. A lot more are wanting to Outsource application maintenance. We have built a reasonably strong software business. We are best placed to address these opportunities. There are many such projects rolling out across India and we are in a position to address these.

ET : Are you entering 4^th qtr with renewed hopes?

Suresh Vaswani: 4^th qtr is a big one for the industry.

ET : Manpower additions in Q3

Suresh Vaswani : We have added close to 200 people.

ET: Between software and services, if you break up, which is the fastest growing segment?

Suresh Vaswani : Services grew by 53%, software by 200% Year on year and sequentially by 49%, Professional IT services by 41% yoy and 24% sequentially. Consulting by 126% yoy and 37% sequentially. Middle East and APAC grew by 177% yoy and 75% sequentially. Professional services is our mainstay and We have been there 15 yrs. Growth is really happening in new business lines. A lot of work is happening in financial sector- more integration than application sustenance. We are getting a lot of annuity business in Middle East.

To sum up the whole story- last couple of years- we have been building up our proposition, we have reached scale and all investment businesses growing well. We can be a strong IT partner for most enterprise customers, manage software, supply products and core infrastructure. We are doing an eGovernance implementation for a prestigious govt organization- making it completely paperless. Even in Government, there is a lot of outsourcing.

Products business has grown 23% - on a gross sale basis. All levers have performed up to expectation. It’s a factor of market and winning some crucial deals and having reached a level of maturity in all businesses.

ET: What about 01 markets?

Suresh Vaswani : Its going strong and is well accepted. Another model is emerging- where we have developed a software which we offer as a service to a customer- like etendering, reverse auctions. It is hosted on our site and customers pay for this service. We are also approaching global customers this Way. There is a directive by CVC that Government has to post all tenders mandatorily on the web by Dec 2004. We see an opportunity here. We have also been able to develop a strong procurement domain expertise.

ET : To sum up, would it be appropriate to say, in the last 3 quarters, services and software business is helping you surge ahead

Suresh Vaswani: Services business grew but products which was challenged in earlier quarters surged this quarter. Services business is continuing to grow. Revenue growth was an issue in products. This quarter, everything has come together. Q3 tends to be lean but this time, it was contrary to normal industry pattern. Net net, a solid and robust performance.

ET : Till now, fundamental driver has been software and services, isn’t it?

Suresh Vaswani: We want to enhance customer proposition. Earlier we were in products and services. We added software. Yes, these are adding revenue and are spurring growth. Products is not to be ignored because a lot of services revolve around the products business. Product business is the bedrock.

ET: How has been the Operating Margin Performance?

Suresh Vaswani: OM is 6.8% from 6.1%. Sequentially also, it has gone up.

ET: Do you go in for salary hikes?

Suresh Vaswani: We had it in Oct. It happens at corporate level.

EX-99.10 12 f95907exv99w10.htm EXHIBIT 99.10

EXHIBIT 99.10

Wipro Limited - Results for the nine months period ended December 31, 2003

Wipro Limited - Consolidated Audited Segment-wise
Business performance for the nine months period ended
December 31, 2003 (In Rs. Million)

	Nine months ended December 31,								Year ended
Particulars	2003			2002			Growth %		March 31, 2003
Segment Revenue
Global IT Services & Products		31,026			21,795			42		30,487
India & AsiaPac IT Services & Products		6,096			5,945			3		8,395
Consumer Care & Lighting		2,629			2,210			19		2,991
Others		1,198			1,014					1,468
Continuing Operations		40,949			30,964			32		43,341
Discontinued ISP Business		—			42					42
Total		40,949			31,006			32		43,383
Profit Before Interest and Tax (PBIT)
Global IT services & Products		6,573			6,322			4		8,451
India & AsiaPac IT Services & Products		393			316			24		557
Consumer Care & Lighting		415			329			26		436
Others		158			115					240
Continuing Operations		7,539			7,082			6		9,684
Discontinued ISP Business		—			(182	)				(182	)
Total		7,539			6,900			9		9,502
Interest income		530			527					634
Profit Before Tax		8,069			7,427			9		10,136
Income Tax expense		(922	)		(894	)				(1,276	)
Profit before extraordinary items		7,147			6,533			9		8,860
Discontinuance of ISP business		—			(289	)				(263	)
Profit before equity in earnings / (losses) of affiliates and minority interest		7,147			6,244			14		8,597
Equity in earnings / (losses) of affiliates		(5	)		(259	)				(355	)
Minority interest		(35	)		(34	)				(37	)
Profit after tax		7,107			5,951			19		8,205
Earnings per share (in Rs.)
Basic
On profit for the period from continuing operations		30.90			28.76			7		38.83
On losses of discountinued ISP business		—			(0.50	)				(0.50	)
On extraordinary items		—			(1.25	)				(1.14	)
On equity in earnings of affiliates / minority interest		(0.17	)		(1.27	)				(1.70	)
On profit for the period		30.73			25.74			19		35.49
Diluted
On profit for the period from continuing operations		30.89			28.71			8		38.75
On losses of discountinued ISP business		—			(0.50	)				(0.50	)
On extraordinary items		—			(1.25	)				(1.13	)
On equity in earnings of affiliates / minority interest		(0.17	)		(1.27	)				(1.69	)
On profit for the period		30.71			25.69			20		35.43
Operating Margin
Global IT Services & Products		21	%		29	%				28	%
India & AsiaPac IT Services & Products		6	%		5	%				7	%
Consumer Care & Lighting		16	%		15	%				15	%
Continuing Operations		18	%		23	%				22	%
Total		18	%		22	%				22	%
Capital employed
Global IT Services & Products		19,163			14,722					18,536
India & AsiaPac IT Services & Products		1,496			1,199					1,075
Consumer Care & Lighting		520			612					682
Others		22,552			16,578					15,082
Continuing Operations		43,731			33,111					35,375
Discontinued ISP Business		—			(150	)				(7	)
Total		43,731			32,961					35,368
Return on average capital employed from continuing business
Global IT Services & Products		46	%		72	%				62	%
India & AsiaPac IT Services & Products		41	%		39	%				54	%
Consumer Care & Lighting		92	%		64	%				60	%
Continuing Operations		25	%		32	%				31	%
Total		25	%		31	%				31	%

Wipro Limited - Stand alone - Parent Company
Audited Financial Results for the nine months period ended
December 31, 2003 (In Rs. Million)

	Three months ended					Nine months ended					Year ended
	December 31,					December 31,					March 31,
	2003		2002			2003		2002			2003
Net Income from Sales / Services		13,273		10,214			35,898		29,156			40,327
Cost of Sales / Services
a. Consumption of raw materials		1,956		1,593			5,170		5,237			7,243
b. Other expenditure		6,567		4,516			17,551		12,350			17,268
Gross Profit		4,750		4,105			13,177		11,569			15,816
Selling General and Administrative expenses		1,779		1,427			5,134		4,060			5,506
Operating Profit before interest and depreciation		2,971		2,678			8,043		7,509			10,310
Interest expense		14		5			24		18			29
Depreciation		391		352			1,073		986			1,380
Operating Profit after interest and depreciation		2,566		2,321			6,946		6,505			8,901
Other income		198		220			544		588			705
Profit before tax		2,764		2,541			7,490		7,093			9,606
Provision for tax		319		325			930		834			1,211
Profit before non-recurring / extraordinary items		2,445		2,216			6,560		6,259			8,395
Extraordinary / non-recurring expense		—		(1	)		—		(289	)		(263	)
Profit for the period / year		2,445		2,215			6,560		5,970			8,132
Paid up equity share capital		465		465			465		465			465
Reserves excluding revaluation reserves		39,468		30,918			39,468		30,918			32,837
Earnings Per Share
Basic
Profit before extraordinary items		10.57		9.58			28.37		27.07			36.31
Extraordinary items		—		—			—		(1.25	)		(1.14	)
Profit for the period		10.57		9.58			28.37		25.82			35.17
Diluted
Profit before extraordinary items		10.55		9.57			28.35		27.03			36.25
Extraordinary items		—		—			—		(1.25	)		(1.13	)
Profit for the period		10.55		9.57			28.35		25.78			35.12
Aggregate of non-promoters shareholding
Number of shares		37,501,449		37,420,035			37,501,449		37,420,035			37,436,882
Percentage of holding		16.12		16.09			16.12		16.09			16.10
Details of expenditure
Staff Cost		2,270		1,772			6,075		4,590			6,424
Items exceeding 10% of total expenditure
Travelling and allowance		4,204		2,908			11,677		8,027			11,180

Status of Redressal of Complaints received for the period
from October 1, 2003 to December 31, 2003

	Opening balance		Complaints received		Complaints disposed
Nature of Complaints	for the quarter		during the quarter		during the quarter		Unresolved
Complaints with respect to transfer / transmission / split / consolidation / exchange / duplicate issue of shares		0		0		0		0
Complaints with respect to Dematerialisation / Rematerialisation of shares		0		4		4		0
Complaints with regard to non-receipt of Corporate benefits like Dividend / Interest / Bonus Shares		0		0		0		0
General queries		0		0		0		0
Total		0		4		4		0

(In Rs. Million)
Geography	December 31, 2003		%		December 31, 2002		%
India		9,479		23		9,081		29
USA		22,131		54		13,846		45
Rest of the world		9339		23		8,079		26
Total		40,949		100		31,006		100

Notes to segment report:

1.     The segment report of Wipro Limited and its consolidated subsidiaries and associates has been prepared in accordance with the Accounting Standard 17 “Segment Reporting” issued by the Institute of Chartered Accountants of India.

2.     The Company has three geographic segments: India, USA and Rest of the World. Significant portion of the segment assets are in India. Revenue from geographic segments based on domicile of the customers is outlined in the table alongside.

3.     For the purpose of reporting, business segments are considered as primary segments and geographic segments are considered as secondary segment.

4.     Effective April 1, 2003, Wipro Spectramind is included in the Global IT Services segment. Wipro Nervewire, the business acquired in May 2003, has been included in Global IT Services segment.

In April 2003, the Company restructured the HealthScience business segment. The HealthScience business which addresses the IT requirement of clients in healthcare and life sciences sector and Wipro Healthcare IT, the Company acquired in August 2002, will now form part of the Global IT Services and Products segment. Wipro Biomed, a business segment that was reported as part of the HealthScience segment has now been reported as part of ‘Others’. Segment data for previous periods has been reclassified on a comparable basis.

5.     In accordance with Accounting Standard 21 “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India, the consolidated financial statements of Wipro Limited include the financial statements of all subsidiaries which are more than 50% owned and controlled.

6.     The company has a 49% equity interest in Wipro GE Medical Systems Limited (WGE), a joint venture with General Electric, USA. The joint venture agreement provides specific rights to the joint venture partners. The rights conferred to Wipro are primarily protective in nature. Therefore, WGE is not considered as a joint venture, and consolidation of financial statements are carried out as per equity method in terms of Accounting Standard 23 “Accounting for Investments in Associates in Consolidated Financial statements”.

7.     In accordance with the guidance provided in Accounting Standard 23 “Accounting for Investments in Associates in Consolidated Financial Statements” WeP Peripherals have been accounted for by equity method of accounting.

The above financial results were approved by the Board of Directors of the Company at its meeting held on January 21, 2004. There are no qualifications in the report issued by the Auditors for these periods.

Place: Bangalore	By order of the Board
Date: January 21, 2004	Azim H Premji
	Chairman and Managing Director

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EX-99.1

EXHIBIT 99.1

EX-99.2

EXHIBIT 99.2

EX-99.3

EXHIBIT 99.3

EX-99.4

EXHIBIT 99.4

EX-99.5

EXHIBIT 99.5

EX-99.6

EXHIBIT 99.6

EX-99.7

EXHIBIT 99.7

EX-99.8

EXHIBIT 99.8

EX-99.9

EXHIBIT 99.9

EX-99.10

EXHIBIT 99.10