Wipro puts up unimpressive 10% growth in Q3 net profit

Wipro puts up unimpressive 10% growth in Q3 net profit

The company has underperformed, says Chairman Azim Premji

Wipro puts up unimpressive 10% growth in Q3 net profit

Wipro’s CFO Suresh Senapathy (left) and newly appointed CEO (IT) T K Kurien at a press conference to announce the company’s financial results in Bangalore on Friday. PTI

The company’s total revenues during the reporting quarter at Rs 7,829.30 crore registered an increase of 12 per cent as against Rs 6,977.40 crore for the same period of the previous fiscal.

Likewise, the company clocked a 15 per cent growth in IT services revenues at Rs 5,949 crore during the reporting quarter and notching up 8 per cent growth in IT services earnings before interest and tax (EBIT) at Rs 1,321 crore. IT services business, which contributed 76 per cent of the total revenue during the reporting quarter, added 36 new clients.

Briefing reporters, Chairman Azim Premji conceded that the company had underperformed during the quarter as against its competitors as also its own potential. Premji attributed this to the fact that the company has not been able to make similar inroads in the financial and healthcare sectors in comparison to its peers.

“I dont think we should try making excuses about our performance. We have underperformed in quarter three relative to our competitors and as relative to our potential as a company,” he said. “What we are trying to do is trying to improve performance in quarter four and also significantly improving performance going forward,” he added. “The operating margins for IT services business,” Executive Director & Chief Financial Officer Suresh Senapathy said “was flat, despite lower working days and drop in utilisation.” The operating income to revenue for the segment during the quarter was flat at 22 per cent.

In a surprise move, Wipro also announced that its two joint CEOs Suresh Vaswani & Girish Paranjpe have stepped down and T K Kurien has been appointed new Chief Executive officer of IT Business & Executive Director of Wipro Limited. Asked why the joint CEOs are leaving, Premji said “joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our time. With the change in environment, there is a need for simpler organisation structure.” He, however, parried all questions on the circumstances that led to the exit of the two CEOs. According to Premji “the market is now exploding,” hence a “faster and leaner structure” was imperative and that “these changes were determined by strategy.”

The company, in its guidance for the fourth quarter ending March 31, 2011, said it expects revenues from IT services business to be in the range of US$1,384-1,411 million, envisaging a sequential growth of 3 to 5 per cent. The company added 3,591 net employees in this quarter taking the total head count to 1.19 lakh employees as on December 31. On standalone basis, the company saw a marginal dip in its net profit at Rs 1,223.7 crore in the current quarter of fiscal 2011 as against a net profit of Rs 1,231.2 crore in Q3 of fiscal 2010.

Segment-wise, the company’s IT products business saw a 13 per cent growth in revenues during the quarter over the previous quarter at Rs 879 crore, while consumer care and light revenues at Rs 695 crore recorded a 21 per cent growth over the previous quarter. The PBIT of the two segments were Rs 41 crore (32 pc growth over previous quarter) and Rs 85 crore (14 pc growth) respectively.