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Wipro’s Q4 profit rises 39% on back of BPO revenue, takeovers

Wipro’s Q4 profit rises 39% on back of BPO revenue, takeovers
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First Published: Fri, Apr 20 2007. 04 46 AM IST
Updated: Fri, Apr 20 2007. 10 29 PM IST
K. Raghu and Pankaj Mishra
New Delhi: Wipro Ltd, the country’s third-largest software exporter, said on Friday its profit rose 39% to Rs854 crore in the fourth quarter ended 31 March, as improved profitability in its BPO (business process outsourcing) business and profit from recent acquisitions helped offset the margin pressures from wage increases and a rising rupee against the dollar (the currency it bills most of its clients).
Sales rose to Rs4,333 crore in the three months, an annual growth of 39%.
Wipro Technologies, the global IT services business that contributes more than 80% to the revenues of the soap-to-software major, reported sales of $690.7 million (Rs2,901 crore), ahead of its guidance of $685 million. The company had forecast revenues from Wipro Technologies at $711 million for the quarter to June.
Wipro’s operating margin —measured by earnings before interest, tax, depreciation and amortization as a percentage of revenues—remained flat in the January-March months at 24.3% over the previous quarter. “While a muted guidance of 2.9% growth for the quarter is a cause for concern, it may be offset as the overall demand environment is good,” said Harmendra Gandhi, technology analyst at Brics Securities in Mumbai.
“Nothing alarming in the US, European or Japanese growth rates. Economy in Europe and continental Europe is showing strong signs of growth,” said Wipro chairman Azim Premji.
 The company is pursuing 10 large contracts, earning revenues of $50 million annually, said P.R. Chandrasekar, president (Americas and Europe), Wipro Technologies. The company won 10 large deals worth $50 million in the year.
Indian technology-service vendors are witnessing robust demand in the US and Europe as global corporations, such as General Motors Corp., General Electric Co. and British Gas Transco, outsource technology application development and maintenance work to India.
Wipro, which includes subsidiaries Wipro Infotech and Consumer Care and Lighting, reported 42% growth in profit, up to Rs2,942 crore on sales of Rs15,001 crore for the full year ended 31 March. Sales rose 38% to Rs11,095 crore and profit before interest and tax grew by 36% to Rs2,694 crore.
Revenues from six companies—mPower, New Logic, cMango, Enabler, Saraware and Quantech—that Wipro acquired during the year were Rs501 crore in the year.
Suresh Senapaty, chief financial officer, Wipro, said the company would see increased business from telecom service providers, BPO firms and retail customers. Wipro said its BPO revenue grew 12.5% in the quarter, expanding its operating margins over the quarter ended 31 December.
Wipro’s peer Tata Consultancy Services Ltd on Monday said its profit rose 44% to Rs1,195 crore on sales of Rs5,162 crore, bucking the effects of a strengthening rupee and increasing wages. Profits grew 8.1% over the previous quarter ended 31 December.
Last week, Infosys Technologies Ltd, India's second-largest software exporter, reported 70% annual growth in profits at Rs1,144 crore on sales of Rs3,772 crore. Its profit grew 5.8% over the July-September period.
The company added 14,076 people to take its total workforce to 67,818 through March. It increased salaries by 3-4% for staff working onsite in locations such as the US and Europe in the quarter. Its BPO business, which employs 17,464 people, witnessed a high turnover of 73% in the quarter to March.
Wipro’s shares fell Rs8.10, or 1.4%, to Rs570.80 on the Bombay Stock Exchange on Friday.
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First Published: Fri, Apr 20 2007. 04 46 AM IST
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