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Wipro to go in for aggressive acquisitions

Global software major Wipro Ltd plans to pursue its acquisition strategy aggressively in future, a top company official said.

india Updated: Apr 19, 2006 17:06 IST

Buoyed by robust growth and a string of buyouts in fiscal 2005-06, global software major Wipro Ltd plans to pursue its acquisition strategy aggressively in future, a top company official said in Bangalore on Wednesday.

 

"Our experience with acquisitions so far has been quite satisfactory. This has given us confidence to pursue the acquisition strategy more aggressively in future.

 

Inorganic initiatives can help accelerate our strategic and operational plans to supplement our organic growth rate," Wipro chairman Azim H Premji told reporters in Bangalore.

 

As part of its long-term strategic plan, India's third largest IT bellwether has embarked on a number of initiatives to deliver strong growth in the coming years across its business verticals.

 

During the second half of FY 2006, the company made three acquisitions, beginning with the US-based mPower Software Services Inc, for $20.8 million (Rs 1.28 billion) in December.

 

This acquisition includes the minority shareholding held by MasterCard International in MPact India, a joint venture of MasterCard and mPower, which is engaged in providing IT services in the payments space.

 

In the same month the company bought out 100 per cent equity of New Logic, a European system-on-chip (SoC) design firm, based in Austriax, for $20.6 million (Rs 1.16 billion).

 

The all cash-deal includes New Logic's earn-outs of euro 26 million, to be paid over a three-year period. The acquisition also resulted in a goodwill of Rs 849 million for the company.

 

During the fourth quarter (January-March), Wipro acquired cMango Inc, for $20 million (Rs 90 million). The US-based IT firm in business services management (BSM) space will be integrated with the company during the first quarter (April-June) of 2006-07.

 

"Through our strategic initiatives, we delivered industry-leading revenue growth of 30 per cent (Rs 106 billion) across businesses, posted strong profit growth of 27 per cent (Rs 20.7 billion), stabilised operational margins and crossed several landmarks," Premji said.

 

Among the landmarks for the Bangalore-based is the $2 billion mark achieved in combined revenues from its global IT businesses, including software services and products in the US, Europe and Asia, besides India, Middle East and Asia Pacific by Wipro Infotech.

 

"Looking back at our performance in 2005-06, we are immensely satisfied to have crossed several landmarks, including Rs 100 billion in total revenues, $2 billion mark in IT businesses revenues, Rs 5 billion of quarterly profits, five per cent revenue contribution from innovation initiatives and the headcount in the flagship division (global IT services) crossing the 50,000 mark," Premji pointed out.

 

Proclaiming the IT services industry was evolving from an era of routine service provisioning to one of innovative knowledge creation, he said the strategic initiatives underway would place the company in a sound position to lead the evolution.

 

Beating its revenue guidance for the fourth quarter (January-March) of FY 2006 by posting $519 million from its global IT business as against the projected figure of $510 million, the company has spelt out a guidance of $533 million for the first quarter (April-June) of FY 2007.

 

"Given the exciting prospects in all our business segments and combined with our growth-oriented strategic road-map, we look forward to 2006-07 and beyond eagerly. Looking ahead, for the quarter ending June 2006, we expect our revenue from global IT services business to be about $533 million," Premji disclosed.