EX-99.9 10 f19804exv99w9.htm EXHIBIT 99.9 exv99w9
 

Exhibit 99.9
Wipro Limited — Results for the Quarter and year ended March 31, 2006
Wipro Limited — Consolidated Unaudited Segment-wise Business performance
for the quarter and year ended
March 31, 2006 (In Rs. Million)
                                                 
Particulars   Quarter ended March 31,   Year ended March 31,
    2006   2005   Growth%   2006   2005   Growth%
 
Revenues
                                                
IT Services
     20,637       14,609       41       72,531       54,230       34  
Acquisitions
     443       —               502       —          
BPO Services
     2,091       1,800       16       7,627       6,523       17  
Global IT Services and Products
     23,171       16,409       41       80,660       60,753       33  
India and AsiaPac IT Services and Products
     5,695       4,842       18       17,048       13,964       22  
Consumer Care and Lighting
     1,658       1,228       35       6,008       4,723       27  
Others
     876       788       11       3,323       2,604       28  
Eliminations
     (268 )     (146 )             (781 )     (346 )        
Total
     31,132       23,121       35       106,258       81,698       30  
Profit Before Interest and Tax (PBIT)
                                                
IT Services
     5,412       3,923       38       18,751       14,835       26  
Acquisitions
     29       —               45       —          
BPO Services
     369       225       64       1,058       1,206       -12  
Global IT Services and Products
     5,810       4,148       40       19,854       16,041       24  
India and AsiaPac IT Services and Products
     566       415       36       1,459       1,042       40  
Consumer Care and Lighting
     214       177       21       805       672       20  
Others
     115       81       42       388       397       -2  
Total
     6,705       4,821       39       22,506       18,152       24  
Interest (Net) and Other Income
     402       197               1,272       796          
PROFIT BEFORE TAX
     7,107       5,018       42       23,778       18,948       25  
Income Tax expense including Fringe Benefit Tax
     (983 )     (715 )             (3,391 )     (2,750 )        
Profit before Share in earnings / (losses) of Affiliates and minority interest
     6,124       4,303       42       20,387       16,198       26  
Share in earnings of affiliates
     55       42               288       175          
Minority interest
     —       (15 )             (1 )     (88 )        
PROFIT AFTER TAX
     6,179       4,330       43       20,674       16,285       27  
Earnings per share — EPS(PY: Adjusted EPS for bonus issue in ratio of 1:1) Equity Shares of par value Rs. 2/- each
                                                
Basic (in Rs.)
     4.37       3.10               14.70       11.70          
Diluted (in Rs.)
     4.29       3.05               14.48       11.60          
Operating Margin
                                                
IT Services
     26 %     27 %             26 %     27 %        
Acquisitions
     7 %     —               9 %     —          
BPO Services
     18 %     13 %             14 %     18 %        
Global IT Services and Products
     25 %     25 %             25 %     26 %        
India and AsiaPac IT Services and Products
     10 %     9 %             9 %     7 %        
Consumer Care and Lighting
     13 %     14 %             13 %     14 %        
Total
     22 %     21 %             21 %     22 %        
Capital employed
                                                
IT Services
     27,952       21,416               27,952       21,416          
Acquisitions
     2,692       —               2,692       —          
BPO Services
     6,357       8,472               6,357       8,472          
Global IT Services and Products
     37,001       29,888               37,001       29,888          
India and AsiaPac IT Services and Products
     2,401       1,370               2,401       1,370          
Consumer Care and Lighting
     1,210       917               1,210       917          
Others
     26,272       21,538               26,272       21,538          
Total
     66,884       53,713               66,884       53,713          
Capital Employed Composition
                                                
IT Services
     41 %     40 %             41 %     40 %        
Acquisitions
     4 %     —               4 %     —          
BPO Services
     10 %     16 %             10 %     16 %        
Global IT Services and Products
     55 %     56 %             55 %     56 %        
India and AsiaPac IT Services and Products
     4 %     3 %             4 %     3 %        
Consumer Care and Lighting
     2 %     2 %             2 %     2 %        
Others
     39 %     39 %             39 %     39 %        
Total
     100 %     100 %             100 %     100 %        
Return on average capital employed
                                                
IT Services
     87 %     79 %             76 %     81 %        
Acquisitions
     5 %     —               3 %     —          
BPO Services
     17 %     11 %             14 %     16 %        
Global IT Services and Products
     65 %     59 %             59 %     62 %        
India and AsiaPac IT Services and Products
     96 %     119 %             77 %     63 %        
Consumer Care and Lighting
     76 %     90 %             76 %     89 %        
Total
     38 %     36 %             37 %     39 %        
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. Segment revenue includes exchange differences which are reported in other income in the financial statements.
3. PBIT for the quarter and year ended March 31, 2006 is after considering restricted stock unit amortisation of Rs. 154 Million (2005: Rs. 177 Million) and Rs. 633 Million (2005: Rs. 346 Million) respectively. PBIT of Global IT Services and Products for the quarter and year ended March 31, 2006 is after considering restricted stock unit amortisation of Rs. 131 Million (2005: Rs. 159 Million) and Rs. 544 Million (2005: Rs. 310 Million) respectively.
4. Capital employed of segments include current liabilities:
                 
    (In Rs. Million)
    As at March 31,
Name of the segment   2006   2005
 
Global IT Services and Products
     13,510       8,338  
India & AsiaPac IT services and Products
     5,314       4,233  
Consumer Care and Lighting
     1,080       764  
Others
     8,866       4,709  
 
Total
     28,770       18,044  
 
5. Capital employed of ‘Others’ includes cash and cash equivalents including liquid mutual funds of Rs. 29,817 Million (2005: Rs. 28,497 Million).
6. The Company has four geographic segments: India, USA, Europe 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:
7. For the purpose of reporting, business segments are considered as primary segments and geographic segments are considered as secondary segment.
8. Until June 30, 2005, the Company reported IT Services and BPO Services as an integrated business segment — Global IT Services and Products. Effective July 2005, the Company reorganized the management structure of Global IT Services and Products Segment, the segment reporting format has been changed accordingly. Revenues, operating profits and capital employed of Global IT Services business are now segregated into IT Services and BPO Services.
                                                                 
                                                            (In Rs. Million)
Geography   Quarter ended,   Year ended
    March 31,   March 31,
    2006   %   2005   %   2006   %   2005   %
     
India
     7,042       23       5,876       25       22,438       21       19,513       24  
USA
     15,215       49       11,345       50       53,088       50       41,935       51  
Europe
     7,020       22       4,710       20       24,311       23       16,661       20  
Rest of the world
     1,855       6       1,190       5       6,421       6       3,589       5  
 
Total
     31,132       100       23,121       100       106,258       100       81,698       100  
 
9. Effective December 1, 2005, the Company acquired 100% equity of mPower Software Services Inc. and its subsidiaries (mPower) including the minority shareholding held by MasterCard International in MPact India, a joint venture between MasterCard International and mPower Inc., for an aggregate cash consideration of Rs. 1,275 Million. mPower Software Services Inc. is a US based company engaged in providing IT services in the payments space.
As a part of this acquisition, Wipro aims to provide MasterCard a wide range of services including application development and maintenance, infrastructure services, package implementation, BPO and testing. Through this acquisition, Wipro is able to expand domain expertise in payment space and increase the addressable market for IT services. This acquisition resulted in goodwill of Rs. 1,089 Million.
10. On December 28, 2005 the Company acquired 100% equity of BVPENTE and its subsidiaries (New Logic). New Logic is an European System-on-Chip design company. The consideration includes cash consideration of Rs. 1,157 Million and earn outs of Euro 26 Million to be determined and paid in future based on financial targets being achieved over a 3 year period.
Through this acquisition, the Company has acquired strong domain expertise in semiconductor IP cores and complete system-on-chip solutions with digital, analog mixed signal and RF design services. The acquisition also enables the Company to access over 20 customers in the product engineering space. This acquisition resulted in goodwill of Rs. 849 Million.
11. As at March 31, 2006, revenues, operating profits and capital employed (including goodwill) of mPower and New Logic are reported separately under ‘Acquisitions’.
12. As of March 31, 2006, forward contracts and options (including zero cost collars) to the extent of USD 226 Million have been assigned to the foreign currency assets as on the balance sheet date. The proportionate premium / discount on the forward contracts for the period up to the date of balance sheet is recognized in the profit and loss account. The exchange difference measured by the change in exchange rate between inception of forward contract and the date of balance sheet is applied on the foreign currency amount of the forward contract and recognized in the profit and loss account.
Additionally, the Company has designated forward contracts and options to hedge highly probable forecasted transactions. The Company also designates zero cost collars to hedge the exposure to variability in expected future foreign currency cash inflows due to exchange rate movements beyond a defined range. The range comprises an upper and lower strike price. At maturity, if the exchange rate remains within the range, the Company realizes the cash inflows at spot rate, otherwise the Company realizes the inflows at the upper or lower strike price.
The exchange differences on the forward contracts and options are recognized in the profit and loss account in the period in which the forecasted transaction is expected to occur. The premium / discount at inception of forward contracts is amortised over the life of the contract.
Wipro Limited — Stand alone — Parent Company
Unaudited Financial Statements for the quarter and year ended March 31, 2006
(In Rs. Million)
                                         
    Nine months ended   Three months ended   Year ended
Particulars   December 31,   March 31,   March 31,
    2005   2006   2005   2006   2005
 
REVENUES
     67,499       34,980       20,656       102,479       72,456  
Cost of Sales / Services
                                        
a. Consumption of raw materials*
     8,959       4,306       3,515       13,265       11,106  
b. Other expenditure
     33,863       18,730       9,872       52,593       34,569  
Gross Profit
     24,677       11,944       7,269       36,621       26,781  
Selling and Marketing expenses
     4,678       1,836       1,247       6,514       5,111  
General and Administrative expenses
     3,121       1,944       764       5,065       2,995  
Operating Profit before interest and depreciation
     16,878       8,164       5,258       25,042       18,675  
Interest expense
     28       3       10       31       56  
Depreciation
     1,752       1,171       564       2,923       1,860  
Operating Profit after interest and depreciation
     15,098       6,990       4,684       22,088       16,759  
Other income
     828       489       187       1,317       811  
Profit before tax
     15,926       7,479       4,871       23,405       17,570  
Provision for tax
     2,296       904       657       3,200       2,622  
PROFIT FOR THE PERIOD
     13,630       6,575       4,214       20,205       14,948  
Paid up equity share capital
     2,841       2,852       1,407       2,852       1,407  
Reserves
     63,369       61,353       47,517       61,353       47,517  
Earnings per share (EPS)
                                        
(PY: Adjusted EPS for bonus issue in ratio of 1:1)
                                        
Basic — in Rs.
     9.71       4.65       3.02       14.37       10.74  
Diluted — in Rs.
     9.57       4.57       2.97       14.15       10.64  
Aggregate of non-promoters shareholding
                                        
Number of shares
     259,602,839       264,618,007       237,664,784       264,618,007       237,664,784  
(PY: Adjusted for bonus issue in ratio of 1:1)
                                        
Percentage of holding
     18.27 %     18.55 %     16.89 %     18.55 %     16.89 %
Details of expenditure
                                        
Items exceeding 10% of total expenditure Staff Cost
     29,142       13,648       8,450       42,790       30,219  
*Includes Increase / (Decrease) in finished and processed stocks
     (88 )     (154 )     (44 )     (242 )     (93 )
Status of Redressal of Complaints received for the period from January 1, 2006 to March 31, 2006
                                 
Nature of Complaints   Opening balance   Complaints received   Complaints disposed   Unresolved
    for the quarter   during the quarter   during the quarter        
Non-receipt of Securities
     —       14       14       —  
Non-receipt of Annual Reports
     —       4       4       —  
Correction / revalidation of Dividend warrants
     —       100       100       —  
SEBI / Stock Exchange complaints
     —       1       1       —  
Non-receipt of Dividend warrants
     —       44       44       —  
Total
     —       163       163       —  
Notes:
(1) The above unaudited financial results were taken on record by the Board of Directors of the Company at its meeting held on April 19, 2006.
(2) The Board of Directors of the Company have recommended a final dividend of Rs. 5/- per share.
(3) In August 2005, the Company issued bonus shares in the ratio of one additional equity share for every equity share or ADS held.
(4) During the year ended March 31, 2006, the Company made additional investments in Wipro Inc. and Wipro Holdings UK Limited, of Rs. 1,275 Million and Rs. 1,157 Million respectively. In December 2005, Wipro Inc. acquired mPower Software Services Inc. USA & its subsidiaries and Wipro Holdings UK Limited acquired NewLogic Technologies AG, Austria & its subsidiaries.
(5) In terms of the scheme of amalgamation approved by the Reserve Bank of India on February 11, 2006, the High Court of Karnataka on April 5, 2006, the Registrar of Companies, Mauritius on January 6, 2006 and the Ministry of Finance, Bermuda on March 28, 2006, Wipro BPO Solutions Limited, India, Spectramind Limited, Mauritius and Spectramind Limited, Bermuda amalgamated with the Company with effect from April 1, 2005. The Company has accounted for the amalgamation as amalgamation in the nature of merger under AS 14 — Accounting for amalgamation. The Company is in the process of obtaining certified copy of the order of high court of Karnataka approving the amalgamation. The Company will file this order with Registrar of Companies, Karnataka and subsequently, publish audited accounts.
The following are the salient features of the scheme:
a) Spectramind Limited, Bermuda is the wholly owned subsidiary of the Company. Spectramind Limited, Mauritius, a wholly owned subsidiary of Spectramind Limited, Bermuda is therefore a wholly owned subsidiary of the Company. All shares held in Spectramind Limited, Mauritius and Spectramind Limited, Bermuda were cancelled and extinguished.
b) From the effective date of the scheme, the entire share capital of Wipro BPO Solutions Limited comprising of 31,023,567 shares of Rs. 10/- each held by the Company, 1 equity share of Rs. 10/- held by Spectramind Limited, Bermuda and 34,904,102 equity shares of Rs. 10/- each held by Spectramind Limited, Mauritius were cancelled and extinguished.
c) All the assets and liabilities of Wipro BPO Solutions Limited, Spectramind Limited, Bermuda and Spectramind Limited, Mauritius are recorded in the books of the Company at their carrying amounts as on April 1, 2005.
d) Pursuant to the scheme of amalgamation, the following amounts, being the balances in the Share Premium and General reserves has been recorded as an addition / adjustment to the Share Premium and General reserves of the Company.
e) Total investments of Rs. 6,151 Million including Rs. 852 Million invested during the year in Wipro BPO Solutions Limited have been cancelled as a part of the amalgamation.
         
    Rs. in Million
Share Premium
     1,120.21  
General Reserve
     (3,257.30 )
Total
     (2,137.09 )
(6) The Company has been granting restricted stock units (RSUs) since October 2004. The RSUs generally vest equally at annual intervals over a five year period. The stock compensation cost is computed under the intrinsic value method and amortized on a straight line basis over the total vesting period of five years. As permitted by generally accepted accounting principles in the United States (US GAAP), the Company applies a similar straight line amortization method for financial reporting under US GAAP. The company has been advised by external counsel that the straight line amortization complies with SEBI guidelines.
However, an alternative interpretation could result in amortization of the cost on an accelerated basis. Under this approach, the amortization in the initial years would be higher with a lower change in subsequent periods (though the overall change over the full vesting period will remain the same). If the Company were to amortize the cost on an accelerated basis, profit before taxes and profit after tax for three months ended March 31, 2006 would have been lower by Rs. 28 Million & Rs. 24 Million and for the year ended March 31, 2006 would have been lower by Rs. 490 Million & Rs. 449 Million respectively. Similarly, the profit before taxes and profit after tax for the year ended March 31, 2005 would have been lower by Rs. 443 Million and Rs. 409 Million respectively. This would effectively increase the profit before and after tax in later years by similar amounts.
The Company is awaiting further clarification on the matter.
Notes to segment report continued:
In certain cases, the Company has entered into forward contracts having a maturity earlier than the period in which the hedged transaction is forecasted to occur. The gain / loss on roll over / cancellation / expiry of such contracts is recognized in the profit and loss account in the period in which the forecasted transaction is expected to occur, till such time the same is accumulated and shown under Loans and Advances / Current liabilities.
In respect of option / forward contracts which are not designated as hedge of highly probable forecasted transactions, realized / unrealized gain or loss are recognized in the profit and loss account of the respective periods.
As at March 31, 2006, the Company had forward / option contracts to sell USD 438 Million in respect of highly probable forecasted transactions. The effect of marked to market of the said forward contracts is a gain of Rs. 131 Million. The final impact of such contracts will be recognized in the profit and loss account of the respective periods in which the forecasted transactions are expected to occur.
13. In August 2005, the Company issued bonus shares in the ratio of one additional equity share for every equity share or ADS held.
14. The Company has been granting restricted stock units (RSUs) since October 2004. The RSUs generally vest equally at annual intervals over a five year period. The stock compensation cost is computed under the intrinsic value method and amortized on a straight line basis over the total vesting period of five years. As permitted by generally accepted accounting principles in the United States (US GAAP), the Company applies a similar straight line amortization method for financial reporting under US GAAP. The company has been advised by external counsel that the straight line amortization complies with SEBI guidelines.
However, an alternative interpretation could result in amortization of the cost on an accelerated basis. Under this approach, the amortization in the initial years would be higher with a lower charge in subsequent periods (though the overall charge over the full vesting period will remain the same). If the Company were to amortize the cost on an accelerated basis, profit before taxes and profit after tax for three months ended March 31, 2006 would have been lower by Rs. 28 Million & Rs. 24 Million and for the year ended March 31, 2006 would have been lower by Rs. 490 Million & Rs. 449 Million respectively. Similarly, the profit before taxes and profit after tax for the year ended March 31, 2005 would have been lower by Rs. 443 Million and Rs. 409 Million respectively. This would effectively increase the profit before and after tax in later years by similar amounts.
The Company is awaiting further clarification on the matter.
15. a) 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.
b) The Company has a 49% equity interest in Wipro GE Medical Systems Private Limited (Wipro GE), an entity in which General Electric, USA holds the majority equity interest. The shareholders agreement provides specific rights to the two shareholders. Management believes that these specific rights do not confer joint control as defined in Accounting Standard 27 “Financial Reporting of Interest in Joint Venture”. Consequently, 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”.
c) 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.
     
By order of the Board
    
Place: Bangalore
  Azim H Premji
Date: April 19, 2006
  Chairman
(WIPRO LOGO)
WIPRO LIMITED
Regd. Office: Doddakannelli,
Sarjapur Road, Bangalore — 560 035.
www.wipro.com