Wipro annual report 2013-14 analysis

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FINANCIAL MANAGEMENT ASSIGNMENT

WIPRO ANNUAL REPORT 2013-2014 ANALYSIS

WIPRO IN BRIEF: (pg 2-7)

Wipro started its business with the manufacturing of vegetable oil in 1945 in a small town in western India and then expanded its business and produced other consumer care products. It entered the IT industry in 1980s and continues to expand since then.

WIPRO believes in 3 core values:

1. Intensity to Win

2. Act with Sensitivity

3. Unyielding Integrity

WIPRO believes in being simple so that the tasks can be understood easily and can be worked more effectively. Simplicity fosters speed and innovation. And this is what WIPRO exactly believes in.

To be excellent at what it does, WIPRO has focused on 3 parameters:

1. Proper account management to have growing and positive results. The have structures that and country specific and have hired local experienced personnel as regional heads. This has helped them to build better relations and have a successful strategy implementation.

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2. WIPRO also believes in investing heavily in the new and more automated technology to meet the ever growing needs of the business. They believe in connecting to their customers and giving them the best of what WIPRO has. They believe that interactions and transactions are what result in their massive growth. They are constantly trying to improve their abilities and develop their skills to be able to innovate and deliver.

3. WIPRO believes in understanding their customers’ business along with the relationship they share with the customer so that they can constantly innovate and deliver better results and solutions. An IDC Marketscape also rated WIPRO as “MAJOR PLAYER” in the EMEA utilities market. Their domain knowledge in the respective field is helping them appreciate the industry and move faster and adapt these active changes.

4. WIPRO, along with its strategic partners like SAP, Oracle, Microsoft etc aims at co-creating and co-innovating for the future. WIPRO believes that more than the technology, it’s the people who are the pillars of the organization. They work hard to retain, satisfy and delight their customers.

Also, WIPRO has identified 6 market disruptions that could change the scenario:

Consumerisation

Consumption Models

Regulations

Complexity

Cyber Security

Changing Stakeholder Influence

WIPRO has come up with 6 strategies to overcome these disruptions:

Focus on core strengths

Work on technology disruptions

Change the way they sell

Build solutions and human assets

Build better ecosystem

Deliver efficiency

WIPRO also believes that businesses need to be flexible, modular and innovative to manage the enormous stake holders and communicate well to be able to stay relevant in the future. Innovation and value creation is the key for being a good business player and this is what it takes to sustain in the competition today as well as in the future. WIPRO has witnessed significant shifts in various sections of its business and have always aimed at value creation and optimizes solution provision for its customers.

FINANCIAL HIGHLIGHTS: (pg 8-9)

We can see that the Revenue has increased from 322,075 million rupees in FY 2011-12 to 437,628 million rupees in FY 2013-14. This tells us that the business is steadily growing.

The Share Capital and the debt has also increased attributing to the fact that the business needs more funds and also since the business is earning profits people are showing faith in WIPRO and investing in it. Further detailed analysis of these reports shall be done in the second part of the assignment.

The graphs tell us about the growth or decline in various sections of the company.

The total revenue from continuing operations is increasing steadily and there is an increase in the workforce employed as well.

The Voluntary Attrition rate was 17.5% in FY 2011-12 which has reduced to 15.1% in FY 2013-14 showing that the employees are comparatively more stable. However, it was 13.7% in FY 2012-13 which is lower that 2011-12 but increased in FY 2013-14.

There is an increase in the gender diversity as well in WIPRO. The percentage of women employees was 28.4% in 2011-2012 which increased to 30% in 2012-13 further increasing to 30.7% in 2013-14. This shows that the company is giving an equal opportunity for women to work with them.

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Since the company is steadily growing and earning more, it is even giving out higher dividends to its shareholders. The dividend was rs.6/share in 2011-12 and is now rs.8/share in 2013-14.

This shows that the company believes in sharing its profits with those who have showed faith in the organization and invested in its shares.

There is a decrease in the number of shareholders in the company but the market price of these shares has first decreased and then increased.

CHAIRMAN’S LETTER TO THE STAKEHOLDERS (pg10-11)

In the chairman’s addressal to the stakeholders, he emphasizes on the importance of Information and Communication Technology. He states as to how these have transformed our lives and have a huge social as well as economic impact. He also tells that thought a lot of factors have contributed to the development and advancement of technology, the key factor is the spread of education across the world since the last 50-70 years. He says that today a larger chunk of population have access to education which was not available before and also a lot of segments that were deprived or excluded now have started gaining knowledge.

WIPRO started “Wipro Applying Thoughts in Schools” which focused on improving Indian School Education. In 2007 WIPRO launched “Mission 10X”which aimed at improving the quality of engineering colleges in India. They have also partnered with Michigan State University and University of Massachusetts and are involved in various other schools where over 250 teachers take training in math and science to develop expertise and serve the disadvantaged communities.

Last year WIPRO also commenced a program for graduates in the United Kingdom which provides them with on-the-job training, connection with the industry and polishing their talent. They also started a program in South Africa for the students from communities that are deprived and also provided employment to them. WIPRO has always worked towards the improvement in education and has always felt responsible towards these communities.

The letter also tells about the company’s performance on the business front. During 2013-14 WIPRO’S market capitalization increased over 24% and also proved to be a sustainable company by being selected as a member of the Dow Jones Sustainability Index for the 4th time in a row. In the end the chairman has thanked all his stakeholders, employees, partners and customers for their constant support and faith in WIPRO.

CEO’S LETTER TO THE STAKEHOLDERS (pg 12-13)

The letter from the CEO talks about the development and advancement of WIPRO. It tells that the business has picked up, particularly in the USA. The clients are showing more confidence in the company and are excited about the technological advancements. To have more “Customer Centricity” the organization has decided to focus on 3 areas.

1. Customer experience:

The Company shall focus on giving its customers a delightful experience. Their Global Client Partner Model has helped them a lot to improve customer satisfaction. The company shall provide with the best solutions and alternatives.

2. Execution Excellence:

The company shall always try to keep the process simple and eliminate all the unnecessary steps or processes. The company will also become more and more automated therefore reducing time and giving better results.

3. Predictability:

The ability to predict issues and opportunities results in excellence in execution and better customer experience. Maximum automation and accuracy are the key areas WIPRO targets on. WIPRO shall continue to increase automation, build competence, increase operational efficiency and encourage right skill tasks.

Through these efforts the company shall be able to foresee the potential problems and come up with solutions well in time. They shall also emphasize on “next level” maturity by using robotics etc. The company shall always do what is best for its customers, stakeholders and its employees.

CFO’S LETTER TO THE STAKEHOLDERS (pg 14-15)

In the letter by the CFO, he tells about the financial growth of the company. The revenues generated by IT have gone up by 18% and the net income grew 27%. Also with the increase in these profits the dividend payout increased by rs.2880 million.

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The CFO also states that the company has a good and healthy balance sheet and steady cash flows. The main focus is to have a profitability growth and have enhanced operational efficiencies by increasing productivity and delivering value to its customers.

The CFO states that there has been a steady global growth and therefore India is optimistic about the increasing demands. With the changes in the regulations, the company’s main aim is to take advantage of all the opportunities and to increase the shareholder value. The company has also managed to win the title of being the “World’s Most Ethical Company” for the 3rd time by the Ethisphere Institute.

BOARD OF DIRECTORS (pg16-21)

MR. AZIM PREMJI- Chairman

Graduate in Electrical Engineering from Stanford University, USA.

Established Azim Premji Foundation which works in 7 states in India and has over 300,000 schools. In 2011 Azim Premji University was established which focuses on programs relating to human development.

He was featured as “India’s Tech King” on the cover of Business Week in October 2003.

Listed amongst top 30 entrepreneurs in world history in July 2007.

Time listed him among the 100 most influential people in April 2004 and April 2011 for his contribution towards the improvement in the Indian education system.

Also named as one of the most powerful business leaders outside US by Fortune in August 2003.

And as one of ten people globally with most “power to effect change” by Forbes in March 2003.

And one amongst the top ten thinkers by Journal of foreign Policy in November 2011.

He is the first Indian to receive Faraday Medal and has honorary doctorates by the Michigan State University and Wesleyan University (in the USA) and IIT Bombay and Roorkee.

All India Management Association Managing India Award was presented to him for his inspiring values and his contribution to the society.

Also received Lifetime Achievement Award by The Economic Times in December 2013.

Mr. Premji is a member of the Strategy Committee of the company.

MR. T.K. KURIEN- Executive Director and Chief Executive Officer

He is a chartered accountant by qualification.

Was the CFO of GE Medical systems (South Asia)

Was the managing director of GE X ray from October 1997 to January 2000

In early years at WIPRO he started Telecom Internet Service Provider which contributed significantly to WIPRO’s revenues.

Was appointed the Chief Executive of WIPRO’s healthcare and life sciences in February 2003.

Headed the WIPRO BPO from 2004 to 2008.

Serves as the chair of India Advisory Board of Catalyst, an organization working for expansion of opportunities for women.

MR. SURESH SENAPATY- Executive Director and Chief Financial Officer

He is a fellow member of the Institute of Chartered Accountants of India.

He is the chairman of the Audit/Risk and Compliance Committee and a member of the Administrative/Shareholders and Investors Grievance Committee of WIPRO Ltd.

He is a member of Securities and Exchange Board of India’s committee on accounting and disclosure standards.

Was awarded the ‘best CFO’ by CNBC-TV 18.

Was involved in the merger of various companies such as Wipro Systems and Wipro InfoTech with Wipro Ltd and also the listing of WIPRO in New York Stock Exchange.

Serves as the CFO and Executive Director since April 2008 and served at various other positions since April 1980.

SR.NO

DURATION

NAME OF THE DIRECTOR

DESIGNATION

1

Since 1999

Dr. Ashok S. Ganguly

Chairman of Board Governance, Nomination and Compensation Committee

2

Since 1997

B. C. Prabhakar

Chairman of Administrative/shareholders and Investors Grievances

3

Since October 2009

Dr. Henning Kagermann

Member of Strategy Committee

4

Since October 2013

Ireena Mittal

Member of Audit/Risk and Compliance Committee

5

Since January 1999

Dr. Jagdish N. Sheth

Chairman of Academy of Indian Marketing Professionals

6

Since July 2011

M. K. Sharma

Member of Audit/Risk and Compliance Committee

7

Since June 1997

Narayan Vaghul

Chairman of Audit/Risk and Compliance Committee

8

Since October 2012

Vyomesh Joshi

Member of Strategy Committee

9

Since July 2010

Shyam Saran

Director

10

Since July 2006

William Arthur Owens

Member of Board Governance, Nomination and Compensation Committee

MANAGEMENT DISCUSSION AND ANALYSIS(pg 24-40)