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The profits of prose

india Updated: Jan 29, 2012 01:59 IST
Manas Chakravarty
Manas Chakravarty
Hindustan Times
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Economic Times, January 21

I come to you with stirring tales of profits, of deals won and lost, of coruscating accounting revelations and the romance of bottomlines. I bring to you, my gallant investors, Wipro's profit and loss account for the December quarter. It is accounting poetry, a historic tour de force, with revenues vaulting 2.2% to $1,505.5 million. Analysts had prophesied our profits, newspapers celebrated the result, auditors ratified its authenticity. For have we not exceeded all expectations, despite the world being out of whack, the time being out of joint?

Our information technology revenues celebrated the return of pricing power, that long absent prodigal son. But business volume growth has been an agony, as churlish clients played a dangerous game of continuous deferral, like Scheherazade in the Arabian Nights. Rupee depreciation rode like a shining knight to our rescue and our margins swelled like the turgid Ganges in the monsoons, overflowing its banks and pushing up net profits to Rs 14, 564 million. No wonder then that shareholders have sung, in the manner of the Song of Solomon, 'A bundle of myrrh is my Wipro stock unto me, it shall lie all night betwixt my breasts.'

And as I looked at the balance sheet, at its elusive mystery, at its almost Shakespearean stature, belief in grace and charity and earnings per share and Salman Rushdie and business process outsourcing surged up in me ecstatically and I believed, like Kerouac, I was an oldtime bhikku, but in modern accounting garb wandering the world in order to turn the Wheel of the True Meaning, which is irretrievably and irrevocably linked to the US Generally Accepted Accounting Principles, throughout all ages, world without end, Amen. Or at least till the advent of the International Financial Reporting Standards. For are not True and Fair the main principles of accounting and will not one say on looking on our balance sheet, once again from the Song of Solomon, 'Behold, thou art fair, my beloved, yea, pleasant; also, our bed is green?' Ok, cancel that bit about the beloved and the bed. But our P&L account does portray the titanic struggle against historical circumstance, much in the manner of the Polish poet Czeslaw Milosz.

We must be cautious, though, about allowing one overpowering, hag-ridden desire to boost earnings per share to override everything else. That way lies madness. For has it not been said: what shall it profit a company, if it looks to its assets, but forgets its liabilities? We need space to celebrate all the numbers, oceans of space in which to move about, to perambulate, to sing, to dance, to climb, to bathe, to leap somersaults, to look at cash flows, utilisation rates, attrition rates, price earnings ratios, on-site revenues, surreally conjoining the spiritual and the microscopically accurate, akin to Hieronymus Bosch's fantastic landscapes.

Which brings us to an overwhelming question…Oh, do not ask what it is, let us go and compare ourselves to Infosys. Listen to the sweet music from analysts: 'Wipro has given a fourth quarter guidance of $1,520-1,550 million, implying 1-3% quarter-on-quarter growth, a guidance higher than that of Infosys.' O frabjous day, Callooh Callay!

I trust I have been able to narrate the incandescent spirit of adventure, the angst and spiritual ambiguities that lie behind Wipro's earnings statement. Let us go then, you and I, when the evening is spread out against the sky, to the analysts' conference.

Manas Chakravarty is Consulting Editor, Mint. The views expressed by the author are personal.