Wipro Records 23% Growth in Net Income; Results for the Quarter Ended September 30, 2005 under US GAAP

Business Wire, Oct 19, 2005

BANGALORE, India & MOUNTAIN VIEW, Calif. -- Wipro Limited (NYSE:WIT) today announced financial results under US GAAP for its second fiscal quarter ended September 30, 2005.

Highlights:

Results for the quarter ended September 30, 2005

--Net Income grew by 23% over the corresponding period in the previous year to Rs. 4.7 billion ($107.1 million)

--Revenue increased by 26% over the corresponding period in the previous year to Rs. 25.0 billion ($568.2 million)

--Global IT Services & Products segment Revenue was Rs. 18.9 billion ($430.6 million), representing an increase of 27% over the corresponding period in the previous year contributed primarily by volume growth

--Global IT Services & Products Earnings before Interest and Tax (EBIT) was Rs. 4.5 billion ($102.4 million)

--Global IT Services & Products added 39 new clients in the quarter, including 2 new clients in BPO services

--The India, Middle East and Asia Pac Business Unit recorded 43% growth in EBIT over the corresponding period in the previous year; and Revenue grew by 26%

Outlook for the Quarter ending December 31, 2005

Azim Premji, Chairman of Wipro Limited commenting on the results said, "The quarter once again demonstrated the depth of our management and robustness of our processes as we smoothly managed organizational transitions to deliver a solid quarter. The Global IT business sustained its momentum, recording double digit volume growth sequentially, resulting in Revenues for the quarter being $430.7 million against our guidance of $422 million. Our continued success in delivering broad based results positions us well to lead industry growth. Looking ahead, for the quarter ending December 2005, we expect Revenues from our Global IT services business to be approximately $463 million."

Suresh Senapaty, Chief Financial Officer, said, "We saw robust sequential Revenue growth in all our business units, with our Finance Solutions and Technology Business delivering sequential double digit growth. Our differentiated services -- Technology Infrastructure Services and Testing Services -- posted double digit sequential growth as well. On the profitability front, we were able to expand our Operating Margins despite a gross addition of over 5,600 people in our IT Services team and lower price realizations. In line with our expectations, our BPO business delivered improved profitability for the quarter."

Wipro Limited

Total Revenues for the quarter ended September 30, 2005 were Rs. 25.0 billion ($568.2 million), representing a 26% increase over the corresponding period in the previous year. Net Income was Rs. 4.7 billion ($107.1 million), representing an increase of 23% over the same period last year. Earnings per share was Rs. 3.35 ($0.08) for the quarter ended September 30, 2005, representing an increase of 21% over the earnings per share of Rs. 2.76 for the quarter ended September 30, 2004.

Global IT Services & Products (76% of Revenues and 88% of Operating Income for quarter ended September 30, 2005)

Our Global IT Services & Products business segment recorded Revenue of Rs. 18.9 billion(1) ($430.6 million) for the quarter ended September 30, 2005, representing an increase of 27% over the same period last year. EBIT was Rs. 4.5 billion ($102.4 million) for the quarter ended September 30, 2005, representing an increase of 12% over the same period last year. Operating Income to Revenue for the quarter ended September 30, 2005 was 23.8%, representing a decrease of approximately 3.1% from the quarter ended September 30, 2004. This decrease was primarily due to currency appreciation and lower utilization. Return on Capital Employed (ROCE) for the quarter was 61% compared to 76% for the quarter ended September 30, 2004.

As of September 30, 2005, we had 45,835 employees, which include 32,856 employees in the IT Services business and 12,979 employees in the BPO business. This includes a net addition of 4,575 employees in IT Services.

During the quarter, we added 39 new clients, including 2 new clients in BPO services. We continued to build on our strengths in US with 23 new clients, and further increased our presence in Europe with 10 new clients. This quarter saw Wipro add clients across business lines, testimony to our investment in a broad suite of services and an integrated approach to enhancing client performance. Wins include a global pharmaceutical company, a leading online auction player, and a leading global manufacturer of consumer products. We also won an Order to Bill engagement that involves and integrated IT & BPO solution for a data communications major.

Wipro also announced its decision to open a near shore center in Eastern Europe. The new facility is expected to expand Wipro's language capabilities for Voice, Transaction Processing and L1/L2 support for Infrastructure Management.

India and Asia-Pac IT Services & Products (16% of Revenue and 6% of Operating Income for quarter ended September 30, 2005)

Our India and Asia-Pac Services and Products business segment (Wipro Infotech) recorded Revenue of Rs. 3.9 billion ($89 million) for the quarter ended September 30, 2005, representing an increase of 26% over the quarter ended September 30, 2004. EBIT for the quarter ended September 30, 2005, was Rs. 321 million ($7.3 million), representing an increase of 43% over the corresponding period in the previous year.