Mumbai: Software exporter Wipro Ltd announced its results for the three months ended September that saw a 14.4% rise in profits to Rs1,161.7 crore, compared with Rs1,015.5 crore in the June quarter. The company’s senior management—Suresh Senapathy, executive director and chief financial officer (CFO), and Girish Paranjpe and Suresh Vaswani, both executive directors and joint chief executive officers—spoke in an interview about the company’s performance. Edited excerpts:
Your guidance for the next quarter is quite optimistic at 4.5–5% growth at the top end. What’s making you so bullish?
Paranjpe: The plus side is that a broad-based growth (has happened) across all our industry verticals (business segments), whether it is telecom service provider, manufacturing, or retail. We are seeing strong growth...in Europe, America and Asia. So what gives us confidence is that we are not driven by one or two verticals but it’s much (more) broad-based on the ground.
The market likes your numbers and the fact that margins have grown in the current quarter quite significantly in the IT (information technology) services business. What delivered these margins?
Strong forecast: (from left) Suresh Senapathy, Wipro executive director and chief financial officer, and Suresh Vaswani and Girish Paranjpe, executive directors and joint chief executive officers. Photographs by Hemant Mishra / Mint
Senapathy: We have worked hard at it as our objective is to be able to hold and expand margin as we go forward. I think Q2 has been a pretty satisfying quarter in multiple areas, as we have gone forward in terms of engagement with customers (and) cutting into more and more outcome-based pricing.
Which business segment has led the growth?
Vaswani: I would say that the growth has been broad-based, but if I have to single out some of the sectors that have grown well, they would be energy and utility, healthcare and services, manufacturing, retail, consumer packaged goods, transportation and the government sector and the telecom service provider sector. The two sectors that have had relatively modest growth would be the technology and telecom sectors, but even there we are looking at a positive recovery and a positive environment going forward.
Is this kind of margin performance sustainable? What do you see happening with the currency in the next two quarters?
Senapathy:While there is euphoria in terms of rupee firmness, I think on a capital account point of view, there are a lot of vulnerability as far as the rupee is concerned. Our own sense is, at least for the next two-four quarters, the rupee would stay range-bound. It will not be...moving into 40 (to a dollar) or more than 50 and that is where the play that comes into is how do you manage this particular volatility to be able to make sure that there is a consistency or within a narrow range impact of that into profitability on quarter-on-quarter. So far our experience has been very good—while (the rupee) depreciates, we haven’t got the benefit of it and while the rupee appreciates, we are not getting completely butchered.
What volume growth have you recorded in constant currency and in dollar terms for the current quarter?
Vaswani: Wipro BPO has done extremely well for us over the last couple of quarters. BPO has led the growth in terms of sequential growth as well as year-on-year growth. The thrust in our BPO business has been to do with transaction processing and that is today as much as 48% of our total business process outsourcing business.
Our domestic IT services is a place where we are extremely strongly differentiated. Some of the large wins that we have announced last quarter have been from the domestic IT space. It’s a place where we have a track record in terms of continuously winning in terms of strong, large and innovative deal wins.