Wipro Records 60% Growth in Net Income; Records 38% Revenue Growth in

Wipro Records 60% Growth in Net Income; Records 38% Revenue Growth in Global IT

    Business Editors

    BANGALORE, India & MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Jan. 20, 2005--

    Operating Margin in Global IT Business at 27%
    (Excluding 1% Non-Cash Charge for RSUs);
    Results for the Quarter Ended December 31, 2004 Under US GAAP

    Wipro Limited (NYSE:WIT) today announced financial results under US GAAP for its third fiscal quarter ended December 31, 2004.

    Highlights for the quarter ended December 31, 2004:

--	Net Income was Rs. 4.3 billion ($98.7 million), representing an increase of 60% over the same period last year.
--	Revenue was Rs. 20.9 billion ($483.1 million), representing an increase of 34% year over year
--	Global IT Services & Products Segment Revenue was Rs. 15.9 billion ($367.2 million), representing an increase of 38% over the same period last year.
--	Global IT Services & Products Earnings Before Interest and Tax (EBIT) was Rs. 4.1 billion ($95.4 million), representing an increase of 71% over the same period last year
--	Rs. 5.2 billion ($120.3 million) cash generated from operating activities.
--	Global IT Services & Products added 26 new clients in the quarter.
--	India, Middle East and Asia Pacific IT Services and Products segment revenues grew by 20% and EBIT grew by 45% year on year.

    Outlook for the Quarter ending March 31, 2005:

    Azim Premji, Chairman of Wipro, commenting on the results, said, "We continued our strong performance into the third quarter of the fiscal year. Our strategy of offering an integrated solution to our customers continues to pay off, as demonstrated by the healthy sequential growth in all our key verticals and service lines during the quarter. Looking ahead, for the quarter ending March 2005, we expect our Revenue from our Global IT services business to be approximately $370 million."
    Vivek Paul, Vice Chairman, said, "This quarter saw a 1% sequential improvement in our price realization for both Onsite projects as well as Offshore projects. In terms of verticals, our Finance Solutions, Telecom OEM and Manufacturing businesses grew double digit sequentially, while in terms of service lines, our Technology Infrastructure Services and Testing Services continued their momentum with double digit sequential growth, resulting in Revenues of $352 million, ahead of our guidance of $347 million. Annualized employee attrition came down to 12%."
    Suresh Senapaty, Corporate Executive Vice President - Finance, said, "Improvement in price realization for both Onsite projects as well as Offshore projects, proactive hedging and continued operational improvements helped significantly mitigate the impact of increased employee compensation and currency appreciation on Operating Margins in our Global IT business. Operating Margin in our Global IT business, before non-cash charge of 1% due to expensing of Restricted Stock Units, was 27%, a marginal increase sequentially."

    Wipro Limited

    Total Revenues for the quarter ended December 31, 2004 were Rs. 20.9 billion ($483.1 million), representing a 34% increase over the corresponding period in the previous year. Net Income was Rs. 4.3 billion ($98.7 million), representing an increase of 60% over the same period last year. Earnings per share was Rs. 6.14 ($0.14) for the quarter ended December 31, 2004, representing an increase of 60% over the earnings per share of Rs. 3.84 (adjusted for the 2:1 stock dividend) for the quarter ended December 31, 2003.
    Total Revenues for the nine months ended December 31, 2004 were Rs. 58.4 billion ($1,349.5 million), representing a 43% increase over the corresponding period in the last year. Net Income for the nine months ended December 31, 2004 was Rs. 11.4 billion ($262.5 million), representing an increase of 69% over net income for the same period last year. Earnings Per Share was Rs. 16.35 ($0.38) for the nine months ended December 31, 2004, representing an increase of 69% over the earnings per share (adjusted for 2:1 stock dividend) of Rs. 9.71, for the corresponding period last year.

    Global IT Services and Products (76% of Revenues and 87% of Operating Income for quarter ended December 31, 2004)

    Our Global IT Services and Products business segment recorded Revenue of Rs. 15.9 billion ($367.2 million) for the quarter ended December 31, 2004, representing an increase of 38% over the same period last year. EBIT was Rs. 4.1 billion ($95.4 million) for the quarter ended December 31, 2004, representing an increase of 71% over the same period last year. Operating Income to Revenue for the quarter ended December 31, 2004 was 26%, representing an increase of approximately 500 basis points from the quarter ended December 31, 2003. This increase was primarily due to higher price realization driven by productivity improvements, lower proportion of Selling, General and Administrative costs and the higher proportion of work carried out Offshore.
    We had 39,337 employees as of December 31, 2004, which includes 24,997 employees in the IT Services business and 14,340 employees in the IT Enabled services business. This represents a net addition of 2,274 employees comprising the addition of 947 people in the IT Services business and 1,327 people in the IT Enabled services business.
    During the quarter, leading analyst firms AMR Research and IDC in their reports have again validated Wipro's position as a leader amongst major players of the global delivery model. While AMR Research report on Remote Data Center management identified Wipro as a leader in this practice, IDC's report on European Managed Services stated that Wipro's broad competitive services portfolio is a potential threat to the incumbent players.
    During the quarter, we added 26 new customers comprising 16 customers in R&D Services and 10 customers in Enterprise Services.

    India and Asia-Pac IT Services and Products (15% of Revenue and 6% of Operating Income for quarter ended December 31, 2004)

    Our India and Asia-Pac Services and Products business segment (Wipro Infotech) recorded Revenue of Rs. 3.2 billion ($74.8 million) for the quarter ended December 31, 2004, representing an increase of 20% over the quarter ended December 31, 2003. EBIT for the quarter ended December 31, 2004, was Rs. 267 million ($6.2 million), representing an increase of 45% over the same period last year.
    Operating Margin for the quarter ended December 31, 2004 was 8.3%, higher by 140 basis points compared to the quarter ended December 31, 2003.

    Consumer Care & Lighting (6% of Revenue and 4% of Operating Income for quarter ended December 31, 2004)

    Our Consumer Care & Lighting business segment recorded Revenue of Rs. 1.2 billion ($28.5 million) for the quarter ended December 31, 2004, representing an increase of 32% over the quarter ended December 31, 2003. EBIT was Rs. 175 million ($4.0 million) for the quarter ended December 31, 2004, representing a 28% increase over EBIT of Rs. 137 million for the quarter ended December 31, 2003.

    Our results for the quarter ended December 31, 2004, computed under Indian GAAP and US GAAP, along with individual business segment reports are available in the Investor Relations section of our website at www.wipro.com.
    For the convenience of the reader, the amounts in Indian rupees in this release have been translated into United States dollars at the noon buying rate in New York City on December 31, 2004, for cable transfers in Indian rupees, as certified by the Federal Reserve Bank of New York which is $1 = Rs. 43.27. However, the realized exchange rate in our Global IT Services & Products segment for the quarter ended December 31, 2004 is $1 = Rs. 45.14.

    Quarterly Conference call

    Wipro will hold conference calls today at 11:45 AM Indian Standard Time (1:15 AM Eastern Time) and at 6:45 PM Indian Standard Time (8:15 AM Eastern time) to discuss the company's performance for the quarter and answer questions sent to the email ID: lakshminarayana.lan@wipro.com or sridhar.ramasubbu@wipro.com. An audio recording of the management discussions and the question and answer session will be available online and will be accessible in the Investor Relations section of the company website at www.wipro.com shortly after the live broadcast.

    About Wipro Limited

    We are the first P CMM Level 5 and SEI CMM Level 5 certified IT Services company globally. We provide comprehensive IT Solutions and Services, including Systems Integration, Information Systems Outsourcing, Package Implementation, Software Application Development and Maintenance, and Research and Development services to corporations globally.
    In the Indian market, we are a leader in providing IT Solutions and Services for the corporate segment in India offering System Integration, Network Integration, Software Solutions and IT services. We also have a profitable presence in niche market segments of consumer products and lighting.
    Our ADSs are listed on the New York Stock Exchange, and our equity shares are listed in India on the Stock Exchange - Mumbai, and the National Stock Exchange. For more information, please visit our websites at www.wiprocorporate.com, www.wipro.com and www.wipro.co.in

    Forward-looking and cautionary statements

    Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which we make strategic investments, withdrawal of fiscal governmental incentives, political instability, war, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company's filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.

WIPRO LIMITED & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data)

Three Months Ended December 31 ------------------------------------ 2003 2004 2004 Convenience translation into US$ (Unaudited) (Unaudited) (Unaudited) Revenues: Global IT Services and Products Services Rs. 11,449 Rs. 15,712 $ 363 Products 24 77 2 India and AsiaPac IT Services and Products Services 860 1,209 28 Products 1,836 2,031 47 Consumer Care and Lighting 935 1,231 28 Others 517 642 15 ----------- ----------- ------------ Total 15,621 20,902 483 ----------- ----------- ------------ Cost of Revenues: Global IT Services and Products Services 7,461 10,200 236 Products 15 67 2 India and AsiaPac IT Services and Products Services 463 659 15 Products 1,668 1,777 41 Consumer Care and Lighting 591 812 19 Others 365 438 10 ----------- ----------- ------------ Total 10,563 13,953 322 ----------- ----------- ------------ Gross profit 5,058 6,949 161 Operating expenses: Selling and marketing expenses (1,251) (1,386) (32) General and administrative expenses (925) (896) (21) Research and development expenses (57) (70) (2) Amortization of intangible assets (67) (23) (1) Foreign exchange gains / (losses), net 25 153 4 Others, net 17 24 1 ----------- ----------- ------------ Operating Income 2,800 4,751 110 Loss on direct issue of stock by subsidiary (30) (11) - Other income, net 202 179 4 Equity in Earnings / (losses) of affiliates 43 71 2 ----------- ----------- ------------ Income before income taxes and minority interest. 3,015 4,990 115 Income taxes (334) (694) (16) Minority interest (18) (25) (1) ----------- ----------- ------------ Net income Rs. 2,663 Rs. 4,271 $ 99 =========== =========== ============ Earnings per equity share: Basic 3.84 6.14 0.14 Diluted 3.82 6.04 0.14 ================================= =========== =========== ============ Additional Information Operating Income --------------------------------- Global IT Services & Products Rs. 2,416 Rs. 4,129 $ 95 India & AsiaPac IT Services & Products 185 267 6 Consumer Care & Lighting 137 175 4 Others 92 124 3 Reconciling Items (30) 56 1 ----------- ----------- ------------ Total Rs. 2,800 Rs. 4,751 $ 110 =========== =========== ============

Nine months ended December 31 ------------------------------------ 2003 2004 2004 Convenience translation into US$ (Unaudited) (Unaudited) (Unaudited) Revenues: Global IT Services and Products Services Rs. 30,832 Rs. 44,085 $ 1,019 Products 87 157 4 India and AsiaPac IT Services and Products - - 0 Services 2,118 3,286 76 Products 3,829 5,607 130 Consumer Care and Lighting 2,579 3,367 78 Others 1,374 1,893 44 ----------- ----------- ------------ Total 40,819 58,395 1350 ----------- ----------- ------------ Cost of Revenues: Global IT Services and Products Services 19,822 27,805 643 Products 58 142 3 India and AsiaPac IT Services and Products - - 0 Services 1,133 1,845 43 Products 3,425 5,027 116 Consumer Care and Lighting 1,650 2,160 50 Others 976 1,291 30 ----------- ----------- ------------ Total 27,064 38,270 884 ----------- ----------- ------------ Gross profit 13,755 20,125 465 Operating expenses: Selling and marketing expenses (3,875) (4,003) (93) General and administrative expenses (2,476) (2,689) (62) Research and development expenses (168) (201) (5) Amortization of intangible assets (223) (122) (3) Foreign exchange gains / (losses), net 201 (288) (7) Others, net 69 56 1 ----------- ----------- ------------ Operating Income 7,283 12,878 298 Loss on direct issue of stock by subsidiary (206) (207) (5) Other income, net 550 594 14 Equity in Earnings / (losses) of affiliates (5) 133 3 ----------- ----------- ------------ Income before income taxes and minority interest. 7,622 13,398 310 Income taxes (851) (1,971) (46) Minority interest (33) (67) (2) ----------- ----------- ------------ Net income Rs. 6,738 Rs. 11,360 $ 263 =========== =========== ============ Earnings per equity share: Basic 9.71 16.35 0.38 Diluted 9.67 16.23 0.38 ================================= =========== =========== ============ Additional Information Operating Income --------------------------------- Global IT Services & Products Rs. 6,340 Rs. 11,473 $ 265 India & AsiaPac IT Services & Products 380 597 14 Consumer Care & Lighting 411 494 11 Others 220 382 9 Reconciling Items (68) (68) (2) ----------- ----------- ------------ Total Rs. 7,283 Rs. 12,878 $ 298 =========== =========== ============

WIPRO LIMITED & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share data and unless stated otherwise)

As of December 31, ------------------------------------ 2003 2004 2004 ----------- ----------- ------------ Convenience translation into US$ (Unaudited) (Unaudited) (Unaudited) ASSETS

Current assets: Cash and cash equivalents Rs. 1,801 Rs. 3,215 $ 74 Accounts receivable, net of allowances 9,394 13,143 304 Costs and earnings in excess of billings on contracts in progress 1,964 2,845 66 Inventories 1,517 1,619 37 Investments in liquid and short- term mutual funds 19,429 21,605 499 Deferred income taxes 219 343 8 Other current assets 2,872 3,625 84 ----------- ----------- ------------ Total current assets 37,196 46,395 1,072 ----------- ----------- ------------ Property, plant and equipment, net 8,628 12,251 283 Investments in affiliates 524 744 17 Deferred income taxes 193 234 5 Intangible assets, net 314 380 9 Goodwill 5,427 5,590 129 Other assets 760 663 15 ----------- ----------- ------------ Total assets Rs. 53,042 Rs. 66,257 $ 1,531 =========== =========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities: Borrowings from banks Rs. 1,591 Rs. 513 $ 12 Current portion of long term debt 28 - - Accounts Payable 2,067 3,248 75 Accrued expenses 2,348 3,741 86 Accrued employee cost 2,367 2,929 68 Advances from customers 920 1,242 29 Other current liabilities 1,109 1,976 46 ----------- ----------- ------------ Total current liabilities 10,430 13,649 315 ----------- ----------- ------------ Other liabilities 281 577 13 ----------- ----------- ------------ Total liabilities 10,711 14,226 329 ----------- ----------- ------------ Minority interest 385 519 12 Stockholders' equity Equity shares at Rs. 2 par value: 750,000,000 shares authorized; Issued and outstanding: 697,885,677 and 702,120,931 shares as of December 31, 2003 and 2004 465 1,404 32 Additional paid-in capital 7,008 12,445 288 Deferred stock compensation (12) (3,236) (75) Accumulated other comprehensive income / (loss) (74) 233 5 Retained earnings 34,559 40,666 940 Equity shares held by a controlled Trust: 3,939,030 and 3,946,530 shares as of December 31, 2003 and 2004 (a) (a) (a) ----------- ----------- ------------ Total stockholders' equity 41,946 51,512 1,190 ----------- ----------- ------------ Total liabilities and stockholders' equity Rs. 53,042 Rs. 66,257 $ 1,531 =========== =========== ============ (a) Equity shares held by a controlled trust Rs.(75,000) Rs.(75,000) $ (1,733)

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CONTACT: Wipro Limited Sridhar Ramasubbu, 650-316-3537

KEYWORD: CALIFORNIA INDIA INTERNATIONAL ASIA PACIFIC INDUSTRY KEYWORD: TELECOMMUNICATIONS SOFTWARE NETWORKING EARNINGS CONFERENCE CALLS SOURCE: Wipro Limited

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