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TWO HEADS BETTER... : Mr Azim Premji, Wipro Chairman (right), and Mr P.S. Pai, Vice-Chairman, at a press conference in Bangalore on Friday.

BANGALORE, Jan.18

WIPRO Ltd has recorded a 12 per cent growth in revenues at Rs 875.9 crore and a 17 per cent rise in net profit at Rs 223.6 crore for the third quarter ended December 31, 2001.

For the nine-month period ended December 31, 2001, net profit grew by 44 per cent to Rs 654.1 crore compared to last year and revenues grew 18 per cent to Rs 2,551.9 crore.

The Global IT Services (Wipro Technologies) grew sequentially for the quarter by six per cent and onsite realisation went up by 1.5 per cent, while offshore realisation went up by 2.3 per cent.

Billing rates had been going up across-the-board by 2 per cent, the Vice-Chairman, Mr Vivek Paul, said. Onsite realisation is $10,996 per person per month and offshore realisation is $4,465 per person per month.

However, the telecom and Internet business saw a decline greater than the guidance issued by the company in the last quarter. While the company had expected a decline of 10 per cent in business in these two areas, revenues fell sharply by 23 per cent, Mr Paul said.

The decline in the telecom equipment business was made up by the growth in financial services and enterprise application services as well as the telecom and Internet service providers, which grew 54 per cent sequentially.

The company's cost cutting and 6 sigma initiatives have also contributed to better margins.

"If market reality is pricing pressure, we have to face it," said Mr Vivek Paul, indicating a severe competition in the market over billing rates. The company was facing a stiff competition in billing rates from rivals, he said.

"We are facing the challenge by going up the value chain". Forty-nine per cent of Wipro Technologies' revenues this quarter came from higher value-added businesses. However, the value chain was slipping at a very fast rate, he cautioned.

The domestic and APAC business (Wipro Infotech) saw further pressure and revenues slipped by 13 per cent from last quarter to touch Rs 154.2 crore, because of tough market conditions. Profit before interest and tax were down by 47 per cent to Rs 102 crore.

Wipro Infotech added 13 new customers , the Chief Executive Officer, Mr Suresh Vaswani, said. It has won five new contracts in the APAC region on a fixed price basis.

Fixed price projects were necessary to avoid the "commoditisation that is happening outside," he said. "Given the company's six sigma efforts which have been significantly bringing down lines of code that need to be written, billing according to man-hours, we would actually be losing business," he said, to emphasise the importance of fixed price projects. Currently, 30 per cent of the business is through fixed priced projects. "We will be content with 40-45 per cent," Mr Paul said.

For the next quarter, Wipro expected revenues of $120 million from the global IT business, said the Chairman, Mr Azim Premji. The Lattice Group order was "ahead of schedule'' he said.

The telecom and Internet business would "continue to drag us down", said Mr Paul.

However, "it is not that we do not see the telecom business as a strategic asset," he said. "It is a tough market for our customers and we are feeling the pain," Mr Paul said.

That, and the systems integration business, which was "lumpy" accounted for the conservative guidance, he said. Revenue flows were uncertain in the SI business, where the company had to "wait until the next big order". "The guidance does not assume anything more than the sure orders," he said.

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