Mumbai, Oct. 18: Wipro today unveiled a modest 2 per cent rise in second-quarter net profit at Rs 220.4 crore, leaving investors worried about just how it would cope with the bottomline squeeze in the months ahead.
Revenues for the quarter ended September 30 at Rs 1,060 crore were up 21 per cent year-on-year. Sales for the six-month period ended September were pegged at Rs 1990 crore; profit after tax was Rs 430 crore against Rs 364.5 crore last year.
Despite meeting forecasts, the Wipro share was clobbered on bourses as concerns over its declining margins mounted. The company said the ratio of operating margin to revenue was 30 per cent, a decline of 1 per cent sequentially and 4 per cent on a year-on-year basis.
The scrip opened at Rs 1452, peaked at Rs 1486 but ended lower at Rs 1438.95, a decline of 1.23 per cent over its previous close on BSE. In all, 9.20 lakh shares changed hands, generating a turnover of Rs 133.16 crore.
“A challenging global business environment has made India-based offshore initiatives a key priority for global corporations. The momentum in volume growth of the last two quarters should continue,” chairman Azim Premji said.
For the three months ending December, Premji said revenues from global IT services business are estimated at $ 152 million, of which Wipro Spectramind — the group’s business process outsourcing outfit — will contribute $ 12.5 million; healthcare and life sciences could account for $ 3.5 million.
Wipro Technologies vice-chairman and CEO Vivek Paul said the sequential revenue growth of 11 per cent in dollar terms was primarily driven by a 12 per cent rise in volume.
Paul was optimistic that pricing pressures faced by the company would ease. He said the integration of Wipro Spectramind is on course, and the numbers reflect the combined tally.
Wipro Technologies accounted for 64 per cent of group revenues. Its sales grew 19 per cent year-on-year to Rs 680 crore. Sequentially, the increase in utilisation of IT professionals by 1 per cent to 67 per cent was partially offset by a price decline of 2.7 per cent for offshore projects and 0.1 per cent for on-site projects.
For the group as a block, utilisation of IT professionals was up 7 per cent to 67 per cent over the corresponding quarter last year. However, this was negated by a 7.2 per cent fall in price for offshore projects and 8.6 per cent for onsite projects. New customers who came in this financial year contributed 6 per cent to total revenues for the quarter ended September.
Offshore sales made up 48 per cent of the services revenue in the second quarter, almost unchanged from the three months ended September 30, 2001. Fixed price projects were at 34 per cent of the revenue for the quarter, up from 27 per cent for the quarter ended September 2001.
The company said gross recruitment for the quarter was 1270 employees. The company had a total strength of 11,298 employees as of September 30, which represented an increase of 753 employees from June 30, 2002.
However, the net employee strength revealed that close to 517 employees left in the same period. Company circles said that of these, around 317 were asked to leave as they did not meet performance benchmarks while the rest left to pursue better prospects.
High on hire
At a time when the Indian software sector is seeing a rebound and more hiring, thanks to increasing outsourcing or IT spending, the Bangalore-based Wipro Technologies saw as many as 517 techies leaving the blue-chip company even as it recruited more than a thousand during the second quarter of 2002-03.
Paul said of the 517 software engineers who had left the company in the quarter under reference, around 317 were asked to leave for failing to meet performance benchmarks, and the remaining 200 left on their own for better prospects or in pursuit of professional advancement.
“During July-September, Wipro Technologies had hired 1270 engineers, but 517 have left in the same period, a net addition of 753 employees to the company,” Paul said. As a result, the total number of employees in Wipro Corporation stood at 11,298 by September 30, 2002.
Paul said that the new recruits included many freshers who were hired at campus level during the last fiscal, but their joining letters were deferred due to the slump in the IT industry.