Software services major Wipro on Friday reported 6 per cent year-on-year growth in revenues at Rs. 27,124 crore. Buoyed by a 240-basis point increase in operating margins, the company made a net profit of Rs.4,593 crore in 2009-10, an increase of 18 per cent over 2008-09.
Revenues from IT services, which contribute about three-quarters of the total revenues and 92 per cent of the operating income, were higher by 6 per cent (year-on-year) at Rs.20,249 crore. In dollar terms, revenues from IT services increased by a modest 3.5 per cent sequential growth at $1.166 billion, reflecting the appreciation of the rupee during the year.
The company has announced the issue of two bonus shares for every three shares held. The company board has also recommended a final dividend of Rs.6 per share on the face value Rs. 2 each.
Improving environment
Announcing the results, Wipro Chairman Azim Premji said the company's “billable headcount in the last quarter of 2009-10 was among the strongest in several quarters. The international environment is stabilising and companies that were sitting on the fence are now taking decisions about their IT budgets.”
Delivering the revenue guidance for the first quarter of 2010-11, Mr. Premji said revenues from IT services are likely to be between $1.190 billion and $1.215 billion.
Mr. Premji said the company's operating margins improved by 60 basis points in the fourth quarter. Wipro planned to increase the share of locals working in overseas delivery centres from the current level of 39 per cent to 50 per cent. This would help in reducing the company's demand for H1-B visas and the associated expenses, he explained.
The company had done well despite the appreciation of the rupee, the increase in wage costs and adverse impact of cross currency movements, he said.
Chief Financial Officer Suresh Senapathy said the appreciation of the rupee “will be a major concern for Wipro during the year. It has manifested on the results for 2009-10. Exporters expect the Reserve Bank of India to deal with capital inflows, which are having an adverse impact on their earnings.” The company had foreign exchange cover (hedging) to the extent of earnings amounting to $1.17 billion, he said.
Joint CEO and Board member Suresh Vaswani said government projects, particularly the Unique Identification project, were an “important focus area” for Wipro. “We are involved in most large projects of the government and public sector companies,” he added.
The company reported an attrition rate of 17 per cent in 2009-10. Mr. Premji admitted that the attrition in Wipro was higher than the 12 per cent attrition rate among industry peers.