Wipro Q3 profit up 41 pc despite pay rises
Wipro Ltd on Wednesday reported a 41 per cent increase in net profit at Rs 765.4 crores for the third quarter of 2006-07, reports BR Srikanth.india Updated: Jan 17, 2007 22:01 IST
Buoyed by growing outsourcing orders, Bangalore-based Wipro Ltd on Wednesday reported a 41 per cent increase in net profit at Rs 765.4 crores for the third quarter of 2006-07 which ended in December, up from Rs 543.5 crores for the corresponding quarter the previous fiscal, but its performance was dented somewhat by a stronger rupee and pay raises that increased costs.
The company's revenue rose by 45 per cent to Rs 3,979 crore in the quarter, from Rs 2,743.9 crore in the year-ago quarter. Wipro is India's third-largest software exporter, which also sells computers and consumer goods like Santoor soap and energy drink Glucovita.
"We have had another satisfying quarter," Wipro chairman Azim Premji told a news conference. "Looking ahead, we think the capabilities we have built and the investments we are making on our initiatives will help us deliver value to our customers and enable us to continue growing ahead of the industry."
The company added 37 new clients in the quarter, and nearly 5,000 employees who took its total staff strength beyond 66,000.
With a net addition of 4,997 employees, including 3,489 engineers for the global IT unit and 1,508 people for its buisness process outsourcing (BPO) business, the company's total employees strength stood at 66,176, including 49,313 software engineers in IT services and products and 16,863 people in BPO services.
The global IT division that exports services to western countries accounted for 72 per cent of the total revenue and 88 per cent of the company's profit before interest and tax (PBIT).
In dollar terms the global IT business accounted for revenues of $ 640.5 million, showing a year-on-year growth of 35.3 per cent.
For the last quarter of this fiscal, the company projected revenues of $ 685 million for the global IT service and products business. As a policy, the company does not give guidance for the entire fiscal or for its other business divisions.
The company's hardware business division (Wipro Infotech), which also offers services in India, the Asia Pacific and the Middle East, posted a revenue of Rs 700.8 crores, showing a year-on-year growth of 76 per cent and PBIT of Rs 58.7 crores showing a growth of 56 per cent year-on-year. Wipro Infotech accounted for 18 per cent of the diversified company's total revenue and seven per cent of the PBIT.
Revenue from the acquisition of 3D Networks and Planet PSG made during the quarter yielded Rs 47.7 crore.
Premji said IT services done for clients in energy, utilities, technology infrastructure sectors saw strong growth, while financial services and retail related work delivered 50 per cent growth year-on-year. Europe as a region and manufacturing as a client segment also showed growth rates above the company average.
The long ailing BPO business saw some prestigious clients added, he said.
Staff exit rates declined in both IT and BPO, and efficiency improved to offset the adverse effects of salary increases and a stronger rupee that erodes export profitability, he said.
Chief Financial Officer Suresh Senapaty said the company expected stable prices and strong volumes in business growth in the current quarter.