1. WIPRO The Soft Transform

The
erstwhile vegetable oil company turned infotech giant went a notch up in
1999-00, growing 41% to touch Rs 2,036 crore against Rs 1,443 crore in the
previous year. Wipro’s hardware and software divisions–under Wipro Infotech
and Wipro Technologies, respectively–continued to remain the company’s
source of growth and prosperity. Wipro Infotech was headed by Arun Thiagarajan,
while Wipro Technologies–the bedrock of the company’s revenues–rested on
the shoulders of its Santa Clara-based chief, Vivek Paul. And, of course,
Chairman Azim Hasham Premji remined the brain behind all.

Wipro
had its fair amount of successes and failures. It lost one of the main pillars
of its IT success, Ashok Soota, who departed to launch his own company, and a
host of other senior hands. However, Premji in his impeccable style, brought in
Vivek Paul from General Electric to handle the software division. Wipro also had
the distinction of becoming the numero uno company in terms of market
capitalization, touching a peak of Rs 69,528 crore on January 4, 2000,
displacing in the process the

STRATEGY

  • To focus on services
  • To cash in on its brand of boxes as an entry point.
  • Will be going for a listing in the US.

PERFORMANCE HIGHLIGHTS

  • Returned to the DQ Top 20 number one slot after a gap of two years
  • Grew 41% to cross the Rs 2,000-crore mark–at Rs 2,036 crore
  • Wipro Technologies grew by 65%
  • Vivek Paul took over from Ashok Soota as chief of Wipro
    Technologies.

fast-moving consumer goods major Hindustan Lever from the top
slot. Wipro was also the first IT company to opt for a stock split. It went for
a five-for-one split, which increased the liquidity of its shares.

Wipro Technologies grew by 65% in the last fiscal while Wipro
Infotech went up by 20%, contributing about 51% and 49% of the total revenue,
respectively. Incidentally, Wipro, which is a major supplier of Sun and Cisco
products, had about 20% of its total revenue coming from agency operations. Its
own products were able to bring in only about 29%, down by 6% from the previous
year’s 35%.

  • START-UP YEAR: 1981
  • PRODUCTS AND SERVICES: IT hardware, software,
    software consulting services
  • BRANCH OFFICES: 37 (Including 20 international
    offices)
  • DEALER OUTLETS: 250
  • EMPLOYEES: 8,149
  • ADDRESS: Doddakennelli, Sarjapur Road,
    Bangalore 560 035
  • TEL: 844 0011
  • FAX: 844 0056
  • WEBSITE: www.wiproindia.com
    www.wipro.com

Global R&D and Telecom Solutions arms together brought in
46% of the software revenues for Wipro Technologies, while the balance came from
the Enterprise Solutions business. Ecommerce contributed 15% of Enterprise
Solutions revenue for the year. The domestic business was affected by a drop in
the contribution of revenue from the peripherals division, which recently was
hived off as a separate entity with Wipro holding a 39% stake. The peripherals,
which had brought in 15% of the revenue in 1998-99, could only bring in 11% in
the last fiscal. The systems business also showed a slowdown. While it had
contributed 26% in the previous year, it brought in only 24% for the total kitty
in the last fiscal.

Interestingly, the operating margins didn’t offer much to
speak about. While Wipro Technologies had an operating margin of 28%, Wipro
Infotech was even lower at only 5%.

If we break up Wipro Technologies’ revenue, we find that
telecom brought in 46%, followed by manufacturing at 30%, small office and home
care 13%, and banking and finance 11%. Despite its strategy to target the home
market, Wipro has not been able to do much on that front. Its strategy this year
is to get into the home segment, and it has earmarked a branding campaign
towards this end. However, services is the core area that Wipro will be
concentrating at.

Incidentally, Wipro recently decided to restructure the peripherals division
of Wipro Infotech. The new entity, called Wipro ePeripherals, was to be largely
owned by employees led by Ram N Agarwal as the MD and CEO. This division may be
hived off because of the low margins that it earns. With a US listing in the
pipeline, such moves can help Wipro command a better premium. DQ

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