Companias
WIPRO LTD
In Full Swing
W
Keeping up the impressive growth trend, Wipro posted robust financial performance during 2004-05. Its net sales surged by 41 per cent over 2003-04 to Rs 7,233 crore. Likewise net profit rose by 63 per cent to Rs 1,494 crore. The company’s earnings in foreign exchange registered a growth of 40 per cent at Rs 5,373 crore during the year under review. On a consolidated basis, its net sales were augmented by 39 per cent over 2003-04 to Rs 8,160 crore and net profit was boosted by 58 per cent to Rs 1,628 crore.
Wipro Technologies has been an active player in the wave of mergers and acquisition in the IT industry. It acquired US based mPower Inc in an all-cash deal worth $ 28 million. It also acquired NewLogic, a system-on-chip design firm in Austria, for Rs 240 crore ($ 56 million) in an allcash deal. The company set up its second offshore development centre in Bangalore for Toshiba Mobile Communications Company. Wipro Technologies is poised to increase its presence in China, beyond Shanghai, to boost its engineering R&D services and has also established a small team in Beijing, in product engineering. It won a three-year multi-million dollar deal from a Swedish firm, Smart Trust, to build mobile device management solutions. The Andhra Pradesh government and Wipro have entered into a memorandum of understanding on land allotment. The government has allotted 100 acres of land to the company in Hyderabad, and another seven acres in Visakhapatnam to expand its software development operations in the state.
WCCL, a division with around 6 per cent share in the parent company, manufactures a wide range of products like soaps, detergents, talcum powder, baby products, energy drinks, edible oil, bulbs, etc. It recently ventured into the honey segment by launching its product labelled “Sanjeevani” and has also launched new products like Wipro Sanjeevani Isabgol, Wipro Safewash liquid detergent, etc. It is also planning to launch its modular furniture range in Mumbai following the successful launch of the product in southern markets.
Wipro reported an excellent financial performance for first three quarters of 2005
06. The company registered a 28 per cent growth in net sales at Rs 2,262 crore for April-June 2005 and net profit rose by 20 per cent over the corresponding period of the previous year to touch Rs 428 crore. For the quarter ended September 2005, net sales went up by 29 per cent to Rs 2,254 crore and net profit was augmented by
22.4 per cent over the same period of the previous year to Rs 453 crore. Recently, the company declared results for October-December 2005, reporting a 31 per cent rise in net sales over the same period of the previous year at Rs 2,467 crore and net profit increased by 34 per cent to Rs 505 crore. During the quarter under review, the company added 61 clients to its IT business.
l:iMCDOWELL AND CO
Consolidation on the Cards
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McDowell reported a healthy financial performance during 2004-05. The company’s net sales rose by 11 per cent to Rs 1,091 crore over 2003-04 and net profit increased by 25 per cent to Rs 26.7 crore. There was hardly any increase in the company’s earnings per share during 2004
05. The company’s foreign exchange earnings were also nil during the period under review.
McDowell has decided to merge its spirit business under one company. The company is going to merge its 10 companies including Phipson Distillery, United Spirits, Herbertsons, Triumph Distillers and Vintners and other companies owned by the UB group. The new entity called United Spirits will have more than 130 brands. Similarly the UB group is also demerging its investment division into Mcdowell India Spirit. Following the recent announcement to merge the 10 companies, McDowell has proposed to raise Rs 1,100 crore ($ 250 million) from the overseas market. McDowell, in order to enhance its product portfolio, is planning to introduce McDowell’s No 1 DietMate – the world’s first diet whisky in the domestic market.
During April-June 2005, McDowell posted a 17 per cent rise in net sales over the same period of previous year at Rs 326 crore and net profit rose by 90 per cent to Rs 10.4 crore. During the quarter under review, the company’s cost in the form of interest payments rose sharply from Rs 7.3 crore to Rs 14.9 crore. For the quarter ended September 2005, the company’s net sales increased by 5.7 per cent to Rs 304 crore over the same period of previous year and net profit jumped by 26.6 per cent to Rs 5.6 crore.
l:iSESA GOA
In the Limelight
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Economic and Political Weekly January 28, 2006
| The Week’s Companies | (Rs lakh) and has been involved in the business of mining, processing and exporting iron ore | ||||
|---|---|---|---|---|---|
| Wipro | McDowell | Sesa Goa and also in support activities like shipping | |||
| Financial Indicators 2004-05 | 2003-04 | 2004-05 | 2003-04 | 2004-05 | 2003-04 and shipbuilding. The company’s mines |
| Income/Appropriations | are located in Goa, Karnataka and Orissa. In April 2004, SGL merged one of its | ||||
| 1 Net sales 723316 | 513268 | 109186 | 98409 | 137423 | 54923 |
| 2 Value of production 724245 | 514447 | 109240 | 98497 | 138724 | 54410 subsidiary Sesa Kembla Coke Company, |
| 3 Other income 7544 | 9327 | 7854 | 10461 | 4957 | 2367 which is involved in the production of |
| 4 Total income 731789 | 523773 | 117094 | 108958 | 143681 | 56778 metallurgical coke (met coke) with itself. |
| Raw materials/stores and spares/ | Following this merger, SGL now operates | ||||
| power and fuel consumed 123439 | 88449 | 74641 | 63387 | 22506 | 7527 in two major divisions, namely, iron ore |
| 6 Other manufacturing expenses 692 | 351 | 0 | 0 | 17209 | 10673 |
| 7 Remuneration to employees 287853 | 209620 | 8382 | 8176 | 4099 | 2943 and met coke. The company has also |
| 8 Other expenses 126737 | 104922 | 27286 | 28784 | 32637 | 23670 diversified its business into production of |
| 9 Depreciation 18597 | 15160 | 1563 | 2032 | 2560 | 1600 pig iron. |
| Gross profit 174472 | 105272 | 5222 | 6580 | 64670 | 10365 During 2004-05, SGL reported an ex |
| 11 Interest 557 | 352 | 3212 | 3309 | 550 | 742 |
| 12 Operating profit 173915 | 104920 | 2009 | 3270 | 64121 | 9623 cellent financial performance. Its net |
| 13 Non-operating surplus/deficit 1788 | 3305 | 1257 | 635 | 4621 | 4655 sales surged by 150 per cent to Rs 1,374 |
| 14 Profit before tax 175702 | 108225 | 3267 | 3905 | 68742 | 14278 crore over 2003-04; likewise net profit |
| Tax provisions 26220 | 16737 | 594 | 1770 | 22504 | 4400 registered a whopping 368 per cent rise |
| 16 Profit after tax 149482 | 91488 | 2673 | 2135 | 46238 | 9878 to Rs 462 crore. The company’s foreign |
| 17 Dividends (includes tax on | |||||
| dist profit) 35179 | 67500 | 1034 | 1034 | 8856 | 1968 exchange earnings spiralled by 75 per cent |
| 18 Retained profits 114304 | 23988 | 1638 | 1100 | 37381 | 7910 to Rs 695 crore during the year under |
| Liabilities/assets | review. The company’s sale of iron ore | ||||
| 19 Paid-up capital 14071 | 4655 | 5172 | 5172 | 3936 | 1968 increased by 74.8 per cent to Rs 1,105 |
| Reserves and surplus 475173 | 346104 | 23576 | 22083 | 68489 | 29583 crore in the same period. A healthy finan |
| 21 Long-term loan 4067 | 611 | 5940 | 5056 | 1545 | 2404 |
| 22 Short-term loan 2142 | 9458 | 51454 | 27142 | 111 | 5386 cial performance also resulted in a strong |
| (i) of which, bank borrowings 2142 | 9458 | 28752 | 7869 | 111 | 4859 turnover ratio and better earnings per |
| 23 Gross fixed assets 200517 | 146483 | 28727 | 27527 | 45839 | 30223 share from Rs 50 in 2003-04 to Rs 117 |
| 24 Accumulated depreciation 85553 | 67866 | 6781 | 5389 | 17093 | 10749 in 2004-05. |
| Inventories 12737 | 10208 | 14062 | 12875 | 15942 | 6294 |
| 26 Total assets/liabilities 668787 | 525770 | 114074 | 85992 | 97198 | 53453 The company has undertaken various |
| Miscellaneous items | projects and, among them, a power plant | ||||
| 27 Excise duty 4302 | 5551 | 62850 | 57968 | 10007 | 8293 project of approximately 30-megawatt |
| 28 Gross value added 477867 | 324171 | 8970 | 7944 | 66495 | 12659 capacity is expected to be operational by |
| 29 Total foreign exchange earnings 537369 | 383575 | 0 | 0 | 69565 | 39758 the end of 2006-07. Power will be gen- |
| Total foreign exchange outgo 391446 | 239363 | 1241 | 923 | 49093 | 20325 |
| Key financial and performance ratios | erated by using “coke oven flue gas” from | ||||
| 31 Turnover ratio(sales to total assets) 1.2 | 1.1 | 1.7 | 1.8 | 2.0 | 1.2 the coke plant and “blast furnace gas” from |
| 32 Gross value added to gross | the pig iron plant. | ||||
| fixed assets (%) 275.4 | 227.4 | 31.9 | 29.6 | 174.8 | 43.1 SGL has entered into a technology li |
| 33 Return on investment (gross profit | |||||
| to total assets) (%) 29.2 | 22.1 | 5.2 | 7.6 | 85.9 | 20.2 censing agreement with XTnrgy, LLC a |
| 34 Gross profit to sales | limited liability company of US. Under | ||||
| (gross margin) (%) 24.1 | 20.5 | 4.8 | 6.7 | 47.1 | 18.9 the agreement SLG has granted XT an |
| Operating profit to sales (%) 24.0 | 20.4 | 1.8 | 3.3 | 46.7 | 17.5 exclusive and non-transferable licence to |
| 36 Profit before tax to sales (%) 24.3 | 21.1 | 3.0 | 4.0 | 50.0 | 26.0 use its Indian patented non-recovery coke |
| 37 Tax provisions to profit before tax (%) 14.9 | 15.5 | 18.2 | 45.3 | 32.7 | 30.8 |
| 38 Profit after tax to net worth | making technology for setting up non | ||||
| (return on equity) (%) 35.6 | 26.2 | 9.5 | 8.0 | 88.9 | 35.6 recovery coke oven plants within north |
| 39 Dividend (%) 214.9 | 1264.2 | 17.2 | 17.4 | 193.6 | 87.2 America, central America, south America |
| Earnings per share (Rs) 21.2 | 39.3 | 5.2 | 4.1 | 117.5 | 50.2 and the UK. |
| 41 Book value per share (Rs) 69.5 | 150.7 | 55.6 | 52.7 | 184.0 | 160.3 |
| 42 P/E ratio (multiple) 33.9 | 36.7 | 46.2 | 18.5 | 11.6 | -SGL reported an impressive financial |
| 43 Debt-equity ratio (adjusted for | performance for the first two quarters of | ||||
| revaluation) 0.01 | 0.03 | 2.00 | 1.18 | 0.02 | 0.25 2005-06. For the quarter ended June 2005, |
| 44 Short-term bank borrowings | net sales of the company increased by | ||||
| to inventories (%) 16.8 | 92.7 | 204.5 | 61.1 | 0.7 | 77.2 104 per cent to Rs 438 crore over the |
| Sundry creditors to sundry | |||||
| debtors (%) 23.0 | 23.8 | 89.9 | 74.3 | 49.0 | 97.8 same period of the previous year and |
| 46 Total remuneration to employees | net profit was boosted by 131 per cent | ||||
| to value added (%) 60.2 | 64.7 | 93.5 | 102.9 | 6.2 | 23.3 to Rs 158 crore. For the quarter ended |
| 47 Total remunerations to employees | September 2005, net sales went up by | ||||
| to value of production (%) 39.7 | 40.7 | 7.7 | 8.3 | 3.0 | 5.4 |
| 48 Gross fixed assets formation | 21 per cent over the corresponding pe | ||||
| (% growth) 36.9 | 5.7 | 4.4 | 5.0 | 51.7 | 6.1 riod of the previous year at Rs 164 crore |
| 49 Growth in inventories (%) 24.8 | 1.0 | 9.2 | 3.4 | 153.3 | -6.2 and net profit rose by 30.5 per cent to |
Notes: – not available; P/E multiples are the latest with corresponding last year’s figures. Rs 31.3 crore.
l:iEconomic and Political Weekly January 28, 2006
