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Wipro's third quarter net up 41 p.c. at Rs. 765 cr.

Special Correspondent

Global IT business delivers volume growth

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BANGALORE: A broad-based growth across all its business units helped Wipro report better-than-expected profit growth of 41 per cent even as its revenues rose 45 per cent for the quarter-ended December 31, 2006, over the corresponding period last year.

The company recorded a net profit of Rs. 765 crore on revenues of Rs. 3,979 crore for the quarter under review as compared to Rs. 543.50 crore and Rs. 2743.90 crore, respectively, in the year-ago period.

Revenues from global IT business grew ahead of the company's guidance at Rs. 2,875.50 crore, registering a 35 per cent growth. On a sequential basis, the revenue growth in rupee terms was 8.8 per cent, while volumes grew by 9.3 per cent. Earnings from the domestic and Asia Pacific IT business were up 76 per cent at Rs. 700 crore. The consumer care and lighting business grew 36 per cent to Rs. 211 crore.

The company said the growth in global software services revenue was expected to continue in the fourth quarter, while its margins were expected to be range-bound owing to strong rupee and wage pressures as the company was implementing a salary hike for its onsite employees.

"We have had another satisfying quarter," said Wipro Chairman, Azim Premji, at a post-earnings press conference. "Our global IT business delivered good volume growth, primarily driven by robust performances by energy and utilities vertical, technology infrastructure services and enterprise application services," he said.

Wipro signed 37 new clients during the quarter and added 4,997 employees on a net basis to increase its overall headcount to 66,176. The attrition rate declined to 16.1 per cent from 17.6 per cent in the previous quarter. Wipro expects IT services exports to increase to $685 million in the fourth quarter, up 7 per cent over the third quarter.

Lower attrition coupled with improvement in other operational metrics helped Wipro largely offset the profitability pressures from wage increase and rupee appreciation. An improvement in BPO margins and the acquisition portfolio also helped the company offset the impact on margins. The operating margins dropped 20 basis points (bps) to 24.2 per cent from 24.4 per cent in the previous quarter, said Suresh Senapaty, chief financial officer.

A 12 per cent average wage hike for offshore employees impacted third quarter margins by 180 basis points while a 3.8 per cent gain in rupee against the dollar squeezed margins by 60 bps, Mr. Senapaty said.

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