Wipro Annual Report 2011-12

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ANNUAL REPORT 2011-12 INSIDE Wipro in brief Do Business Better Financial Highlights Chairman's Letter to the Stakeholders CEO's Letter to the Stakeholders CFO's Letter to the Stakeholders President's (WCCLG) Letter to the Stakeholders President's (WIN) Letter to the Stakeholders Board of Directors Corporate Executive Council Management Discussion & Analysis Directors Report Corporate Governance Report Business Responsibility Report Standalone Financial Statements Consolidated Financial Statements Consolidated Financial Statements Under IFRS Glossary 2 4 12 14 16 18 20 22 24 30 32 49 64 94 117 157 193 236 Certain statements in this Annual Report are based on management's current expectations & forecasts and may be considered as forward-looking statements. There are a number of risks, uncertainties and other factors that could cause actual results to be materially different from management's current expectations and forecasts. This Annual Report is printed on 100% recycled paper as certified by the UKbased National Association of Paper Merchants (NAPM) and France - based Association des Producteurs et des Utilisateurs des papiers et cartons Recycles (APUR). Technology for most of our clients is no longer a cost, but an investment decision - it is a key enabler to drive productivity and simplify their business processes to reduce operational costs. 1 DO BUSINESS BETTER Today's business leaders recognize that technology can help them drive business outcomes by improving operations, build customer relationships and partnerships and drive innovation. Wipro can enable you to respond and change according to business needs – Change that helps you to “Do Business Better” and be future-ready. 4 FACING TOMORROW'S DEFINING CHALLENGES HEAD-ON Do Business Better An instant is all it takes for information to traverse the world, and this new reality of accelerated technology aids speed and accuracy in business and decision making essential in this new world. Businesses once content with status quo today face immense pressures and challenges and in most cases look no further than technology innovation to set them apart. For Wipro, this means being able to foresee change, adapting to it, and finding opportunity in that change. Often, it also means leading the change. We believe that this is the sweet spot in which we innovate and create the strategies that help our customers and ourselves do business better. Our approach has helped us take challenges head on and survive and thrive in a challenging and rapidly transforming business. Our response rate and our affinity towards innovation has also had a direct impact on our customers and their ability to do business better. With us, they are future ready and better equipped to meet and address the challenges that they face. Wipro is fundamentally geared towards doing or helping others do business better. Our unique blend of IT, BPO and product engineering services helps our customers develop world class products and also get these products to market faster. Our sustainable solutions open up new markets to our customers, and help them identify new revenue streams. We also help our customers reduce upfront investments, while meeting regulatory requirements and minimising operational risk. It is our belief at Wipro that success is when one is able to adjust to changes faster than the competitor. We believe this, we practice this, and we bring this to bear in all our customer engagements, all to one ultimate goal - to help our customers do business better. These solutions are backed by a deep and broad understanding of a world of challenges; one where the focus is on the shortterm efficiency versus long-term sustainability, where consumerization of technology is throwing up unprecedented demands, and where analytics is key to staying one step ahead. 5 HELPING ENTERPRISES DO BUSINESS BETTER Innovate to differentiate Wipro has built its success on looking around and looking ahead. Some of the challenges around us and in the near future are varied and yet connected. The world has a burgeoning population and yet faces a talent crunch. Metals and mineral costs have risen by 300% in five years, while we face shrinking access to capital. Government regulations are multiplying, while energy limitations and climate change are forcing businesses to revisit operations and partnerships. This climate of uncertainty is ripe for innovation. While businesses look to redesign their value chains to identify the right customer, they will also seek to reduce consumption of and dependence on constrained resources. The ability to spot trends and effectively use IT to overcome these challenges will determine the success of global organisations. The ability to help identify challenges around the corner and work alongside customers in diverse industries as they recalibrate their strategy and reformat their business model is the strength that Wipro brings to the engagement. At Wipro, we believe that applying minds to the problem brings radical solutions. This is borne out in engagements such as the one where we helped create the world's smallest dishwasher for a customer with a 30% lower energy footprint and 50% reduction in water consumption. Technology and analytics came together for a leading telecom customer to reduce their energy footprint by 11%, operational expenses by 8%, and GHG (Green House Gas) emissions by 6%. Challenges are the stepping stones to success, and for both Wipro and our customers, these are opportunities to excel, to differentiate, and to do business better. We have also been active behind a multi-screen solution for a customer in the broadcasting space, a remote patient monitoring platform, and semiconductor solution framework that brings in long-term royalties. 6 organisation's ability to address scale, standardization and simplification, driving efficiency, optimising delivery and lowering unit costs. This research also found that while IT projects include hardware, software, services, and facilities, they together accounted for nearly 63% of the costs. In this scenario, variabilization enables the business to adopt outcome-based models, SLA-driven engagements, and pay-per-use models. Virtualization and pay-as-you-go software such as SaaS and Cloud now allow businesses to variabilize their asset inventory, and expand or reduce components or services as the need dictates. While our customers have the freedom to leverage the model of their choice based on their preferences, Wipro believes that adopting this model also makes it a win-win situation for the service provider as well. ENABLING ENTERPRISES TO DO BUSINESS BETTER Business Agility through Variabalization Investments in assets have long been the sign of a successful business, but in today's unpredictable environment, businesses would rather focus on being an agile organization than one that is encumbered by sunken investments. Variabilization of technology and resources helps a business reduce its fixed costs, and it no longer needs to worry about end-of-life infrastructure and the additional investments needed to refresh. With variabilization, the asset utilisation is dynamic, and this enables the business to be nimble too. Internal research at Wipro shows that about 74% of an organisation's IT costs can be variabilized while still retaining the At Wipro, we are committed to investing in technologies such as Cloud, which can enable variabilized use of IT - whether applications, information, processing or storage. To quote an example, Wipro helped formulate a variabilized cloud solution for a leading global manufacturer, which, with its variable pricing model, helped the customer save US$ 30 million. Businesses that still believe in terms like 'capital-intensive' and 'fixed costs' would thrive only in predictable markets of which there are hardly any around us. Businesses facing shrinking product cycles and newer challenges with increasing frequency and are the facts of business today, and as with every evolution, the best solution must come to the fore. The answer and the future is variabilization. 7 Business value through consumerization of Technology The shift in focus within the IT world from the enterprise to the consumer has been gradual, but game-changing nonetheless. Today's consumer can consume more media and heavy data on a simple handheld device than the early connected enterprise did. With tools for communication, collaboration, and entertainment available across a range of devices, consumer spend on IT - from a hardware and applications perspective - has overtaken that of enterprises. Imagine - the world's largest data centres today serve consumers, not enterprises! The connected individual is bringing this same preference for devices and applications into the workplace, and employers today face the challenge of allowing employees to work from the location of their choice, on a device running an operating system of their choice, and yet demanding connectivity to all business tools and data. IDC recently reported that in 2011, 20% of respondents to their survey said that they use Facebook and MySpace for business, and this had more than doubled from 8% of respondents in 2010. This should be seen as a positive trend, as not only does it bring the latest technology to the workplace, it also helps lower the cost of procuring and provisioning hardware and software for the employer. Studies have also shown that employees who are allowed to bring their own devices to the workplace are happier and more productive. On the flip side, however, are the pressures faced by the IT department. An influx of diverse devices will prove to be a nightmare from a policy and governance standpoint, and could also expose corporate data to misuse. The safeguards put in place to prevent unauthorised access, or to ensure standard protocols among all devices connecting to the network, will have to be robust and regularly refreshed to address newer threats. Wipro has been helping customers on this journey for some time now. For instance, Wipro worked with a customer to implement a workforce management solution focused around consumer IT for rescheduling, routing, location intelligence and service management, for a global utility company. This solution brought the customer an improvement of up to 30% in resource 8 efficiency and productivity, further resulting in improved customer satisfaction, and higher revenues. Consumerization of Technology is here to stay, and the enterprise that identifies the best balance between freedom and control for their employees will reap the benefits of having motivated employees and being seen as an innovative organization. Another result of this consumerization is that consumers are increasingly drawn towards and equipped for a digital lifestyle. This means that marketers have an added medium - digital - to reach out to their target audiences and improve loyalty, and this can be done in interesting and engaging ways. Wipro Digital works with customers to devise an integrated digital marketing strategy, with a choice of a full suite of digital solutions and services, including creative design. Wipro Reach is the digital marketing platform for e-commerce, content, social collaboration and CRM, and analytics. Wipro Digital also helps drive consistent experiences and engagement across channels for the customer, and aids the business in its quest for return on investment, helps it to optimise spend, while enhancing customer loyalty and stickiness. Business performance through Analytics Data is growing at a phenomenal rate, and some of the indicators are simply astounding: enterprise data doubles every 18 months; 35 billion emails are exchanged every day, and YouTube has 24 hours worth of video content uploaded every minute! Apart from the consumer-driven or social data, there is a world of data generated each day from sensors, probes, cameras, RFID tags, GPS devices, microphones, ATMs, transactions, medical records, online activity, and even Tweets and SMSs contain insights that can be unlocked. Gartner predicts that by the end of 2012, 25% of their Global 2000 companies will report information assets in balance sheets. At the core of this wealth is analytics. Analytics can improve operating margins in retail to the tune of 60 per cent. The UN reports that the value of data it retrieves from real-time healthcare analytics is estimated at US$ 300 million. Using data from analytics can throw up new business Wipro's analytics solution has already made a difference among our customers, and has helped a global bank view its customers' exposure, offer counsel on investment opportunities as well as on product types and settlement markets that cause the highest 'fail' ratio. The bank's operation balance grew to US$209 billion as against US$149 billion the previous year. Using Analytics, our customers derive intelligence that drives their investments, helps them create better marketing strategies, improves their products and services, and substantially enhances their productivity. Analytics is all set to address the needs of a business that looks to the future with data from today, and Wipro is ideally positioned to work alongside these businesses and lead them through this new technological frontier. A six-hour flight from New York to Los Angeles in a twin-engine aircraft can produce up to 240 terabytes of data. Real-time analytics can be used to determine how much wear and tear the aircraft has been subjected to, and this can potentially transform the parameters considered in aircraft leasing. Insights generated through advanced analytics that are actionable will be one of the stark differentiators of the products, processes and business models of the future. models, moving away from one-time sale or rental models to pay-per-use or joint ownership models, even for manufactured goods. It can also aid in better product and service design, in forestalling flaws and improving quality, in predicting customer needs, in determining campaign performance, and in improving efficiency and driving down costs. 9 THE WINNING STRATEGY Differentiation at the front-end, standardization at the back-end Technology solution providers and business strategists had very clear areas of expertise and responsibility - until recently. Today, no technology solution is far removed from the ultimate business objective, and every initiative and investment is with a larger business goal in mind. Technology consultants and service providers must be able to show business benefit with any recommended component of the IT infrastructure today, and should therefore be experienced, should have tried and tested processes, robust operations and a determined focus on standardization at the back-end. A question we constantly ask ourselves at Wipro is this: Why should anyone partner with us, rather than with someone else? We believe that we are chosen for the unique value we provide, because our path to a solution may be different, and because we are known to constantly rethink the value chain and help our customers and ourselves reinvent the business to meet the challenges ahead. Our domain solutions and delivery excellence provide differentiation and competitive advantage to our customers. At Wipro, being adaptive to changes in business, technology, the environment and society is more than a differentiator - it is an imperative. This approach is at the root of our solutions, is what defines our delivery models, and is what drives us to become less resource intensive. This is the magic confluence at which new business models emerge. Our differentiators help us to be seen as the innovative front-end that our customers demand, while the standardized back-end gives them the comfort and confidence of a tried-and-tested solution that is still customised to their needs. This combination is our formula for success. It is what sets us apart. Our priority is on differentiators that lead to success. This is the base on which the organisation then innovates, experiences and delivers on the differentiator, supported by a back-end that is entirely reliable and robust. This is what is at the core of our ability to capitalise on new opportunities. 10 11 FINANCIAL HIGHLIGHTS FY 2012 * FINANCIAL PERFORMANCE Consolidated Revenue in ` Mn Revenue of IT Services in $ Mn Profit before Depreciation, Amortisation, Interest and tax in ` Mn Depreciation and Amortisation in ` Mn Profit before Interest and tax in ` Mn Effective tax rate (%) Profit after tax in ` Mn Dividend Paid (including distribution tax) in ` Mn Free Cash Flow Generation Return on average Networth (%) Return on average Capital Employed (%) PER SHARE DATA - ` EPS Basic Diluted Book Value Dividend Declared Per Share FINANCIAL POSITION in ` Mn Share Capital Networth Total Debt Property Plant & Equipment including Intangible assets Cash and Investments Goodwill Working Capital Capital Employed SHAREHOLDING RELATED Number of Shareholders Market price of shares** ` RATIOS Dividend Distribution Ratio Current Ratio DSO*** Return on Capital Investment Operating Cash Flow to PBIT 375,249 5,921 74,142 10,129 64,013 19.7 55,987 17,068 27,099 21.3 20 FY 2011 310,987 5,221 65,879 8,211 57,668 15.4 53,321 15,516 28,226 24.4 21 FY 2010 271,574 4,390 59,675 7,831 51,844 16.8 46,116 6,788 38,367 26.8 22 22.76 22.69 116 6.00 21.74 21.61 98 6.00 18.91 18.75 80 3.60 4,917 286,163 58,958 63,217 128,037 67,937 158,121 345,121 227,159 440 30 2.7 74 32 63 4,908 240,371 52,802 58,645 114,663 54,818 122,029 293,176 220,238 480 32 2.6 67 35 70 2,936 196,549 62,511 57,469 105,348 53,802 103,668 259,063 179,438 424 22 2.5 66 36 98 * Fiscal year for Wipro is April 01 to March 31 ** NSE based share price as of 31st March of the respective year *** DSO - Based on revenues for the quarter ended 31st March for the respective year Note: All Figures above are based on IFRS Consolidated Financial Statements 12 Revenue ( ` Mn) 375,249 310,987 255,338 271,574 Profit after Tax ( ` Mn) 53,321 46,116 38,860 55,987 Net Worth ( ` Mn) 286,163 240,371 196,549 147,381 2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 Revenue - IT Services ( $ Mn) 5,921 5,221 4,323 4,390 Market Captilization ( ` Bn) 1,179 1,038 1,082 No. of Employees - IT Services 135,920 122,385 108,701 97,180 360 2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 Revenue by Segments 2011-12 ( ` Mn) PBIT by Segments 2011-12 ( ` Mn) Average Capital Employed by Segments 2011-12 ( ` Mn) Consumer Care & Lighting 33,401 IT Products 38,436 Others Including reconciling Items 19,099 IT Products 1,787 Consumer Care & Lighting 3,956 Others Including reconciling Items (995) Others Including reconciling Items 157,508 IT Business 139,843 IT Services 284,313 IT Services 59,265 Consumer Care & Lighting 21,798 * NSE based share price as of 31st March of the respective year 13 CHAIRMAN'S LETTER TO THE STAKEHOLDERS 14 Dear Stakeholders, We are living in interesting times. Change is no longer sporadic and spaced out but regular and continuous. In this constantly changing world, our clients across the globe are focused on revenue growth and enhancing productivity with a view to increasing their profits. The entire Globe is their canvas. They are identifying newer growth opportunities and differentiating their offerings to customers in the market place. In parallel, our clients realize that they need to significantly change their cost structures and create a focused marketing strategy for each of their customer segments to compete globally. In my view, Technology is going to be the KEY enabler for clients to achieve this dual objective of growth and differentiation as they transform themselves. On the 'growth' paradigm, our clients are looking for deeper customer insights and improved ways of delivering services to their customers which will increase their ability to cater to a global market. Wipro's investments in key technology themes, coupled with our domain specific solutions and global footprint, positions us to be their trusted partners in their growth journey. Productivity and Variablization of cost structure is another prime priority of our clients. Technology for most of our clients is no longer a cost but an investment decision. It is a key enabler to drive productivity and simplify their business processes to reduce operational costs. Wipro with strong delivery capabilities, global presence and deep business process understanding, is well placed to help our clients achieve this goal. On the external front, it is these ideas that make me positive on our growth prospects in the IT services businesses. This optimism on the external front is supplemented by the significant progress on our organizational restructuring initiated in 2011. Wipro today is better equipped to help our customers to 'Do Business Better'. In the last completed fiscal year covered by this Annual Report, we achieved revenues of ` 375 billion, recording a year on year growth of 21%. All our efforts are directed towards positioning Wipro to leverage emerging opportunities in the market place to sustain our growth in the future. We continue to focus on our decade long sustainability journey, where we are seeing an increasing shift in mindset globally towards sustainable growth. To conclude, the energy in our leadership team and the high passion levels in our employees give us the confidence that we are well on our way to building a strong and sustainable business. I would like to thank each and every one of our customers, employees, shareholders, partners and supporters for their continued trust in building Wipro for this exciting future. . Very Sincerely, Azim H. Premji Chairman 15 CEO'S LETTER TO THE STAKEHOLDERS 16 Dear Stakeholders, We are living today in an era of a rapidly evolving market where technology advancement and globalization strongly impacts business strategy. This trend offers a unique opportunity to innovate and utilize technology to elevate business performance. result is evident in a very positive employee perception score. Our growth and success has been possible due to the diligence and passion shown by our leadership team and all members of Team Wipro. I thank them for their commitment. We remain focused on building an organization that is future To prepare for this shift, the last fiscal was focused on consolidation, fueled by three key directives - a focused business strategy, higher customer satisfaction and greater employee engagement. ready and is designed to win. As we move ahead our vision is about impact, momentum and execution - this journey will be unique, meaningful and successful for all of us at Wipro. We thank all our stakeholders for their support last year and look Focused business strategy Our strategy of creating a higher degree of differentiation at the front end and standardization in the back end has been critical for us to win. To achieve differentiation in the front end, we have significantly invested in building cross industry solutions and disruptive technologies such as cloud computing, analytics and mobility. These in turn help in transforming big corporate data into valuable information assets. Further emphasis will be on automation and industrialization of software development to drive predictable outcomes and cost efficiencies. Higher customer satisfaction We have clearly defined customer segmentation. This enables a single view of each customer and allows us to share best practices across accounts leading to faster decision making and quicker response time. Our efforts in building a simpler, nimbler and leaner Wipro is beginning to yield results, with the customer satisfaction index surging ahead. Greater employee engagement Our employee engagement is a two way connect between an employee and the organization. We initiated the Employee Advocacy Group to bring about changes that are relevant and important to employees. Our simplified people processes have led to better access to information and easier provisioning. The forward to the same this year. Very Sincerely, T. K. Kurien Executive Director & CEO-IT Business 17 CFO'S LETTER TO THE STAKEHOLDERS 18 Dear Stakeholders, Our revenue grew 21% in the fiscal 2012, with net income growth of 5%. This reflects a year of organizational restructuring to help us leverage the changing global business environment. We are making significant investments, both on the client facing initiatives as well driving transformation in delivery operations through process improvement and automation. A constant in this volatile business environment over the decades is our consistent and continuous attention to achieving the highest levels of corporate governance in Wipro. Our strong governance culture is reflected in the Spirit of Wipro values promoted at an employee level at the base, a strong and thriving Ombudsman system at the inner organization core, a strong management team and Board to keep the tone at the top consistent with our beliefs. We have a clear internal policy of zero tolerance to non-compliance with our value system. We are happy that our efforts in this sphere were recognized by the Ethisphere Institute, a leading business ethics think-tank, as one of the 2012 World's Most Ethical (WME) Companies. An organizational thrust that gained momentum over the last decade is our Sustainability Initiatives. Sustainable growth means that organizations have to look beyond financial performance to impact of our business on the ecology and society. Our sustainability reporting initiatives gives us a longer term view of our business and a stakeholder perspective that helps us keep our feet on the ground both when things are going well and when they are not. Our sustainability initiatives have resulted in Wipro being one of the only two Indian companies in the Dow Jones Sustainability Index for 2011. Looking ahead, the global macro environment is volatile, which is amplified by the fluctuations in exchange rates that have a material impact on our business. On the macro-environment front, Eurozone is facing significant challenges that have global impact. A silver lining among these dark clouds is the rupee depreciationin the recent months. However, we are conscious of its potential for a two-way move and have a consistent hedging policy designed to reduce the volatility of exchange rate fluctuation on our business results. On the operational front, our focus is to drive excellence across all aspects of the business to improve profitability. A specific area is cutting working capital cycle times and improving cash flow generation. We are also making significant investments to improve supply chain efficiencies through process redesign and automation. We are reasonably confident that our initiatives will help drive sustainable profitable growth in the years to come. In this volatile economic environment, we have a sound liquidity position with net cash (net-of-debt) of $ 1.4 billion. Our financial stability and strong balance sheet provides us the ability to make both short term and long term investments to accelerate growth. We continue our strategy of pursuing strategic acquisitions to fill gaps in our portfolio and provide a competitive edge in the business. Overall our priority is to build a sustainable business, which should deliver superior returns for all our stakeholders. We are quite confident that we are building an organization for today which will also adapt to the needs of tomorrow. Very Sincerely, Suresh C. Senapaty Chief Financial Officer 19 PRESIDENT'S LETTER TO THE STAKEHOLDERS (WIPRO CONSUMER CARE & LIGHTING GROUP) 20 Dear Stakeholders, Wipro Consumer Care and Lighting had an invigorating business year in 2011-12. While the environment continued to be extremely challenging in key business categories and geographies - we managed the terrain well and have delivered superior performance in all identified focus areas and business bets. Our business has grown around 11 times over the last 9 years. Our business has three main segments - Indian household business (including personal care and domestic lighting), Unza International personal care business, that spans across Asia and Africa and the Indian Office Solutions business. Let me share with you a snapshot update of our businesses in 2011-12. Services etc. Our focus on lighting of Green buildings and on new technology like LED paid off, with 100 out of 170 certified Green Buildings in India using Wipro Lighting. Our range of LED fixtures has been very well accepted by our customers. The launches of premium designer ranges, has continued to do well in our Modular furniture segment, enhancing our product portfolio, as well as helping to manage cost pressures. Our seating range has been enhanced with newer offerings that has helped growing the business. As we forge ahead, our guiding principles remain: • Obsession for growth - both organic and through relevant strategic acquisition • Leadership position in defined countries and businesses The Indian household business, including personal care and domestic lighting, had a strong year - growing 24%. This growth was led by our flagship brand Santoor - with revenues crossing the ` 10 billion mark. The brand relaunch with an enhanced bathing experience and a new perfume seems to have been well accepted by the consumer. Santoor is now the largest Toilet Soap brand in combined South and West India. Santoor extensions into Glycerine soap and deodorants also have delivered. Our acquired brand - Yardley (62% up) has been well accepted by the younger generation. The Domestic Lighting business, which includes modular switches, incandescent light bulbs, compact fluorescent lamps (CFLs) and luminaries, also saw good growth - led by CFLs (35% growth). Our International personal care business - Unza focuses on personal wash, toiletries, fragrances , deodorants, skincare and haircare categories. Here, we grew 20%, with leading growth from China (28%) , Middle East (19%) and Vietnam (13%). The lead brands, we focus on in Unza are Enchanteur - a female toiletries brand (21% up - with revenues crossing the USD 100 Mn mark), Safi - a Halal toiletries brand (19% up) and on Romano & Dashing - Male Toiletry brands (14% up). Our skin care thrust in Malaysia has worked well and we are now the market leader in that country. The focus on improving distribution and increasing media spends has helped improve growths in South East Asian countries. The Office solutions business in India, which includes Commercial Lighting and Modular furniture grew 15%, impacted by the slowdown in capacity expansion in some of our strong market segments like Modern work spaces, IT & Enabled We seek leadership in Personal Care in India, Malaysia and Vietnam. Similarly we seek leadership in Domestic Lighting, Institutional Lighting and Modular Furniture businesses in India. • Globally strong focus brands - led by innovation and sustainability. Increased investments in Research & Development will help us leverage technology for better innovation. • Leveraging our Team Capability • Speedy and Effective Execution It has been a stimulating year in 2011-12! We believe 2012-13, will be even more exciting! Very Sincerely, Vineet Agrawal President - Wipro Consumer Care & Lighting Group 21 PRESIDENT'S LETTER TO THE STAKEHOLDERS (WIPRO INFRASTRUCTURE ENGINEERING) 22 Dear Stakeholders, During 2011-12 Wipro Infrastructure Engineering continued to grow aggressively in line with our vision of becoming the largest Hydraulics Company in the world with a 15% global market share. While we did exceptionally well in India, we are getting back on the growth path in Europe despite the slowdown. We continued to remain focused on consolidating our position in our key markets, warding off pressures from local competition and cheaper imports. Despite the intense competition due to excess capacity, we maintained or grew our market share in all key customer segments. Going forward, we remain bullish on growing at twice the industry growth rate in our key markets. From the business expansion perspective, it has been an unprecedented year for Wipro Infrastructure Engineering as we forayed into new segments, forged new partnerships and widened our global footprint. We completed the acquisition of R. K. M. EQUIPAMENTOS HIDRÁULICOS LTDA, one of the leading hydraulic cylinders manufacturers in Brazil. This acquisition provides us immediate market access not just into Brazil but the entire Latin American region as well as strong design and manufacturing expertise for hydraulics in the agricultural equipment segment. During the year we commenced our first green-field operations in China; the world’s largest construction equipment market, which is pivotal for our global leadership ambitions. We expect to leverage this manufacturing base to make deep inroads into the identified segments in the Chinese market. We formalised our entry into the Aerospace and Defence (A&D) segment during the year through an agreement to manufacture actuators for a European aviation major. This is a significant first step towards realizing our vision to become a leading Global Supplier of Value-added Precision Machined Products and Subsystems to major aviation OEMs. We also formed a joint venture with Kawasaki for manufacturing excavator pumps for the Indian market. The new entity, Wipro Kawasaki Precision Machinery Pvt. Ltd. will be setting up a greenfield facility in Bangalore going live in 2012. Despite the global uncertainty over Eurozone and the relative slowdown in India - our biggest market, we remain bullish on the long term growth potential and the infinite possibilities it offers us. We will continue to invest prudently in capacity expansion while driving excellence in our offerings to customers through cost competitiveness and excellence in quality. In terms of geographic expansion we are keenly looking at the US/North American market as well as East Europe. While North America will get us an access to the second largest market, East Europe presence will help us drive our cost effectiveness in Europe. Very Sincerely, Pratik Kumar President- Wipro Infrastructure Engineering 23 Sitting Left to Right Ashok S. Ganguly - Independent Non-Executive Director William Arthur Owens - Independent Non-Executive Director Jagdish N. Sheth - Independent Non-Executive Director Azim H. Premji - Chairman Dr. Henning Kagermann - Independent Non-Executive Director Shyam Saran - Independent Non-Executive Director (in absence) 24 BOARD OF DIRECTORS Standing Left to Right B. C. Prabhakar - Independent Non-Executive Director Priya Mohan Sinha - Independent Non-Executive Director Suresh C Senapaty - Executive Director & Chief Financial Officer Narayanan Vaghul - Independent Non-Executive Director M. K. Sharma - Independent Non-Executive Director T. K. Kurien - CEO, IT Business & Executive Director 25 Azim H. Premji Mr. Premji has served as our Chief Executive Officer, Chairman and Managing Director (designated as Chairman) since September 1968. In 2011, Mr. Premji was honored with the Padma Vibhushan award by the Government of India for his contribution in trade and industry. Mr. Premji is a graduate in Electrical Engineering from Stanford University, USA. T. K. Kurien Mr. Kurien is the CEO, IT Business and Executive Director of the company. Mr. Kurien is also a member of the Wipro Corporate Executive Council and is credited with building global leadership for some of Wipro’s business units across the world. Prior to taking over the role as CEO of the IT Business in Feb 2011, he was President of Wipro’s recently launched Eco Energy Business. Mr. Kurien was awarded the Global BPO Industry Leader award by IQPC (International Quality & Productivity Center) in 2007 for exceptional performance of Wipro BPO. Suresh C. Senapaty Mr. Senapaty has served as our Chief Financial Officer and Executive Director since April 2008 and served with us in other positions since April 1980. He is a member of the Administrative/Shareholders & Investor Grievance Committee of our company. Mr. Senapaty holds a B. Com. from Utkal University in India, and is a Fellow Member of the Institute of Chartered Accountants of India. Mr. Senapaty is on the boards of the following of our Indian subsidiaries/associates: Wipro Trademarks Holding Limited, Wipro Chandrika Limited, Wipro Travel Services Limited, Cygnus Negri Investments Private Limited, Wipro Technology Services Limited, Wipro Consumer Care Limited and Wipro GE Healthcare Private Limited. Mr. Senapaty is also the Chairman of the Audit Committee of Wipro Technology Services Limited. Dr. Ashok Ganguly Dr. Ganguly has served as a director on our Board since 1999. He is the Chairman of our Board Governance & Nomination Committee and Compensation Committee. He is currently the Chairman of ABP Pvt. Ltd (Ananda Bazar Patrika Group).Dr. Ganguly also currently serves as a non-executive director of Mahindra & Mahindra Limited and Dr Reddy Laboratories Limited. DrGanguly is on the advisory board of Diageo India Private Limited. Dr. Ganguly is the chairman of Research and Development Committee of Mahindra and Mahindra Ltd, Member of Nomination, Governance & Compensation Committee and Chairman of Science,Technology & Operations Committee of Dr Reddy’s Laboratories Ltd. He is a member of the Prime 26 Minister’s Council on Trade and Industry and the India-USA CEO Council, established by the Prime Minister of India and the President of the USA. Dr. Ganguly is a Rajya Sabha Member. He is a former member of the Board of British Airways Plc (1996-2005) and Unilever Plc/NV (1990-97) and a Chairman of Hindustan Unilever Limited (1980-90). Dr. Ganguly was on the Central Board of Directors of the Reserve Bank of India (2000-2009). In 2006, Dr. Ganguly was awarded the CBE (Hon) by the United Kingdom. In 2008, Dr. Ganguly received the Economic Times Lifetime Achievement Award. Dr. Ganguly received the Padma Bhushan award by the Government of India in January 1987 and the Padma Vibhushan award in January 2009. Dr. Henning Kagermann Dr. Kagermann became a director of the Company on October 27, 2009. He served as Chief Executive officer of SAP AG until 2009. He has been a member of the SAP Executive Board since 1991. He is also President of Acatech (GermanAcademy of Science and Technology) and currently a member of supervisory boards of Deutsche Bank AG, Munich Re, Deutsche Post, BMW Group in Germany and Nokia. Dr. Kagermann is a professor of Theoretical Physics at the Technical University Braunschweig, Germany and received an honorary doctorate from the University of Magdeburg, Germany. Narayanan Vaghul Mr. Vaghul has served as a director on our Board since June 1997. He is the Chairman of our Audit, Risk and Compliance Committee, a member of the Board Governance & Nomination Committee and a member of the Compensation Committee. He was the Chairman of the Board of ICICI Bank Limited from September 1985 to April 2009. Mr. Vaghul is also on the Boards of Mahindra and Mahindra Ltd., Mahindra World City Developers Limited, Piramal Healthcare Limited, and Apollo Hospitals Enterprise Limited. Mr. Vaghul is on the boards of Hemogenomics Pvt. Ltd., Universal Trustees Pvt. Ltd., and IKP Trusteeship Services Limited. Mr. Vaghul is the Chairman of the Compensation Committee of Mahindra and Mahindra Limited and Piramal Healthcare Limited. Mr. Vaghul is also a member of the Audit Committee in Nicholas Piramal India Limited. Mr. Vaghul is a member of the Remuneration Committee of Mahindra World City Developers Limited and Apollo Hospitals Enterprise Limited. Mr. Vaghul is also the lead independent director of our Company. Mr. Vaghul holds Bachelor (Honors) degree in Commerce from Madras University. Mr. Vaghul was the recipient of the Padma Bhushan award by the Government of India in 2010. Mr. Vaghul also received the Economic Times Lifetime Achievement Award. 27 Priya Mohan Sinha Mr. Sinha became a director of our Company on January 1, 2002. He is a member of our Audit, Risk and Compliance Committee, Board Governance & Nomination Committee and Compensation Committee. He has served as the Chairman of PepsiCo India Holdings Limited and President of Pepsi Foods Limited since July 1992. From October 1981 to November 1992, he was on the Executive Board of Directors of Hindustan Lever Limited (currently Hindustan Unilever Limited). From 1981 to 1985, he also served as Sales Director of Hindustan Lever Limited (currently Hindustan Unilever Limited). Currently, he is also on the board of Lafarge India Private Limited. He is also a member of Audit and Board and Governance Committee Lafarge India Private Limited. He was also the Chairman of Reckitt Coleman India Limited and Chairman of Stephan Chemicals India Limited. Mr. Sinha is also on the Advisory Board of Rieter India. Mr. Sinha holds a Bachelor of Arts from Patna University, and he has also attended the Advanced Management Program at the Sloan School of Management, Massachusetts Institute of Technology. William Arthur Owens Mr. Owens has served as a director on our Board since July 1, 2006. He is also a member of the Board Governance and Nomination Committee. He has held a number of senior leadership positions at large multinational corporations. From April 2004 to November 2005, Mr. Owens served as Chief Executive Officer and Vice Chairman of the Board of Directors of Nortel Networks Corporation, a networking communications company. From August 1998 to April 2004, Mr. Owens served as Chairman of the Board of Directors and Chief Executive Officer of Teledesic LLC, a satellite communications company. From June 1996 to August 1998, Mr. Owens served as President, Chief Operating Officer and Vice Chairman of the Board of Directors of Science Applications International Corporation (SAIC), a research and engineering firm. Presently, Mr. Owens serves as a member of the Board of Directors of Polycom Inc., Intelius, Flow Mobile, Prometheus, and Chairman of Century Link Inc., a communications company. Mr. Owens holds an M.B.A. (Honors) degree from George Washington University, a B.S. in Mathematics from the U.S. Naval Academy and a B.A. and M.A. in Politics, Philosophy and Economics from Oxford University. 28 M. K. Sharma Mr. Sharma became a director of the Company on July 1, 2011. He is a member of our Audit, Risk and Compliance Committee. He served as Vice Chairman of Hindustan Unilever Limited from 2000 to 2007. He served as a whole-time director of Hindustan Unilever Limited from 1995 to 2000. He is currently on the boards of ICICI Lombard General Insurance Co. Limited, Fulford India Limited (Indian affiliate of MSD), Thomas Cook (India) Limited, Birla Corporation Limited, KEC International Limited and The Andhra Pradesh Paper Mills Limited. Mr. Sharma is a member of the Audit Committee of Fulford (India) Limited and Thomas Cook (India) Limited. Mr. Sharma is the Chairman of Remuneration Committee of Fulford (India) Limited. Mr. Sharma is a member the Shareholder’s Grievance Committee of Thomas Cook (India) Limited. Mr. Sharma is the Chairman of the Board Governance and Nomination Committee, Compensation Committee of ICICI Lombard General Insurance Co. Limited. Shyam Saran Mr. Saran became a director of our Company on July 1, 2010. He has been a director of Indian Oil Corporation Limited since March 2012. He is a career diplomat who has served in significant positions in the Indian government for over three decades. He joined Indian Foreign Service in 1970. He last served as the Special Envoy of the Prime Minister of India (October 2006 to March 2010) specializing in nuclear issues, and he also was the Indian envoy on climate change. Prior to this he was the Foreign Secretary of the Government of India from 2004 to 2006. He also served as the Ambassador of India to Nepal, Indonesia, Myanmar and Mauritius. His diplomatic stints have taken him to Indian missions in Geneva, Beijing and Tokyo. He has been a Fellow of the United Nations Disarmament Program in Geneva, Vienna and New York, U.S.A. Mr. Saran holds a Post Graduate degree in Economics. Mr. Saran has been honored with the Padma Bhushan award by the Government of India for his contribution in civil services. B. C. Prabhakar Mr. Prabhakar has served as a director on our Board since February 1997. He has been a practicing lawyer since April 1970. Mr. Prabhakar holds a B.A. in Political Science and Sociology and a BL. from Mysore University, India. Mr. Prabhakar serves asa non-executive director of Automotive Axles Limited and 3M India Limited. He is also a member of the Audit, Risk and Compliance Committee and Chairman of the Administrative and Shareholder Investor Grievances Committee of Wipro Limited. Dr. Jagdish N. Seth Dr. Seth has served as a director on our Board since January 1999. Dr. Seth has been a professor at Emory University since July 1991. Previously, Dr. Seth served on the faculty of Columbia University, Massachusetts Institute of Technology, the University of Illinois, and the University of Southern California. Dr. Seth also serves on the board of Manipal Acunova Ltd. Dr. Seth holds a B.Com (Honors) from Madras University, a M.B.A. and a Ph.D in Behavioral Sciences from the University of Pittsburgh. Dr. Seth is also the Chairman of Academy of Indian Marketing Professionals. 29 CORPORATE EXECUTIVE COUNCIL Sitting Left to Right T. K. Kurien - CEO, IT Business & Executive Director Azim H. Premji - Chairman Pratik Kumar - EVP - HR, Wipro & President, Wipro Infrastructure Engineering Suresh C Senapaty - CFO & Executive Director Vineet Agrawal - President, Wipro Consumer Care and Lighting Anurag Behar - Chief Sustainability Officer Standing Left to Right 30 Pratik Kumar Mr. Kumar has been associated with Wipro for the last 20 years and is a member of Wipro's senior leadership team. He has been instrumental in architecting the Wipro Competency Framework for talent management. It was under Mr. Kumar's leadership that Wipro was recognised as the first company in the world to be assessed at PCMM Level 5, the highest maturity level on the SEI framework of Carnegie Mellon University. A Post Graduate in Management from XLRI, Jamshedpur, he has assumed the leadership of Wipro Infrastructure Engineering business as President since July 2010. Anurag Behar Mr. Behar has earlier led the Wipro Infrastructure Engineering business, with remarkable growth from USD 30 million to over USD 300 million in four years. He has also led Wipro’s ecological sustainability initiative ‘Eco Eye’ and also leads Wipro Cares, a not-for-profit trust for local communities and rehabilitation efforts in communities affected by natural disasters. Mr. Behar is a Director on the Board of Wipro GE Healthcare Ltd. and a member of the Board of TERI University. He has an MBA in Marketing & Finance from XLRI, Jamshedpur and a Degree in Electrical Engineering from REC, Trichy. Mr. Behar has been honoured as a ‘Young Global Leader’ by the World Economic Forum. Vineet Agrawal Mr. Agrawal is a B.Tech from IIT, New Delhi, and has been instrumental in establishing Wipro’s various national brands and repositioning of the Wipro identity. Under his leadership, Wipro launched the Innovation Initiative, Wipro Applying Thought Program and Six Sigma Consultancy. Mr. Agrawal has been awarded the ‘Distinguished Alumni’ award from IIT Delhi in 2008. 31 MANAGEMENT DISCUSSION & ANALYSIS 32 Economic Overview Global economy is under stress due to high levels of sovereign debt in the Western markets coupled with increasing levels of unemployment and rising income and wealth inequalities. We see subdued growth in the developed markets and growth slowing down in the developing markets. In this economic environment, businesses are focused on investing in newer areas for growth and driving productivity and enhancing sustainability. We believe the shift towards driving sustainable growth, has brought ecological sustainability to the mainstream business mindset. The current economic landscape places technology as a primary business lever in developed markets, which is an opportunity that Wipro is well positioned to leverage. To elaborate, technology is the key enabler for businesses to adapt to the volatile macro environment and the changing ecological landscape, and our IT business is well set to capitalize on it. In the emerging markets, our Consumer Care business is well positioned to ride on the rising consumer demand, while our manufacturing presence in low cost countries will help our Infrastructure engineering business address the global demand for profitability. Business Segment Overview IT Services Industry Overview NASSCOM Strategic Review Report 2012 estimates worldwide technology spending to exceed $ 1.7 trillion in 2011, a growth of 5.4% over 2010. IT Spends bycategory ($ Billion) IT Services BPO IT Services + BPO Software Hardware Total Spend 2010 586 147 733 293 599 1,625 2011 605 153 758 309 645 1,712 Growth 3.2% 4.1% 3.4% 5.5% 7.7% 5.4% services. Established Indian IT services companies have a proven track record for providing business and technology solutions, ability to handle scale, high quality talent and strong domain and technology capabilities. These factors, coupled with strong existing client relationships have facilitated India's emergence as the global outsourcing hub. Wipro is well positioned to address the $ 758 billion market of IT Services and BPO. In addition, Wipro's unique capability in Engineering services help us address the $ 1.15 trillion global spend in that area. Our market continues to be large and our penetration levels low. We expect Indian IT exports to grow faster than the growth in global technology spends. Wipro: Our Credentials and Strategy Our over-arching desire is to drive 'Accelerated Growth' and therefore we target to be 1 A trusted partner of choice to our Clients; 2 Preferred employer of choice in the sphere of our operations to our Employees; 3 Preferred partner of choice to our Alliance partners; and 4 Recognized as an organization that delivers sustainable and consistent profitable growth to our Investors The key elements to realize our accelerated growth are: ¨ Differentiated & prioritized approach to growth & investments: Our focus is to target growth hot spots across industry segments and geographies. viz. Engineering Spend* 1,125 1,150 2.2% The shift towards global sourcing, continues, with a 12% growth in 2011 over 2010. We see a continuing trend of global businesses turning to offshore technology service providers to meet their need for Variabilization of their cost structures, enhanced cost competitiveness and efficiency through differentiated solutions. Over the past two decades, India has risen to become the leading destination for global sourcing of IT, BPO and R&D • Industry /Vertical focus: We continue to invest significant resources in understanding and prioritizing verticals such as energy, natural resources and utilities, banking, financial services and insurance, healthcare, life sciences & services and retail and consumer product goods. Within these verticals, we invest in acquiring deep industry knowledge, understanding their information and technology and leveraging available technologies to deliver effective solutions and products to our clients and potential clients. We seek to meet all the IT services needs of our clients in these verticals with our broad range of specialized service offerings that are designed to address their industry specific needs. • Geographies: Our prioritized investments in addition to our major markets will be focused on markets such as France and Germany in Europe, Canada, India, the Middle East, Asia Pacific and Africa. 33 • Technologies: We will continue to invest in the 3 disruptive technologies viz. Cloud Computing Services, Mobility Services & Analytics with the objective of providing differentiated business oriented solutions to our customers. ¯ Cloud Computing Services: Our cloud services offering is a growth driver for our business, and we continue to develop and improve our cloud based service offerings. We recognize that an integrated solutions approach is necessary to realize the business value of cloud services. We help clients achieve it through: ™ valuable insights, make informed decisions and drive revenues by harnessing and leveraging enterprise information. Our service line provides consulting, business centric and technology specific analytical solutions and data management frameworks developed through a complete ecosystem of partners, focusing on industry specific analytics, optimization and operations analytics, Enterprise Data Warehouse, MDM, Data quality and data life cycle management. Clients: The focus will be on deeper mining in key clients as well as hunting and acquiring new clients. We are driving innovation closer to the clients through Global Client partners with focus on 138 clients. In parallel, we have created a dedicated ecosystem for hunting. M&A: Acquisitions will continue to play a key part in strengthening our domain and technology capabilities, driving increased market penetration, and broadening the depth and breadth of our service portfolio. ¨ Strategy Consulting Services: Assist our customers integrate cloud services into their IT portfolio across public, private and hybrid cloud environments. System Integration Services: Design, build, deploy and manage cloud computing environments – from implementing on-premise private clouds for clients to implementing packaged product SaaS offerings. Engineering Services: Reengineer ISV packaged products for delivery as a SaaS offering to end customers and host the SaaS offerings in Wipro data centers. Application Development Services: Provide application development, testing and management services for public cloud platforms like Salesforce.com and MS Dynamic CRM. Infrastructure Services: Offer infrastructure advisory and collaboration services aimed at designing, managing and monitoring public and private cloud environments and virtual desktops. Wipro branded Cloud solutions: Develop industry specific solutions which will be delivered in a SaaS business model to our customers. ¨ ™ ™ ™ ™ ™ Employee Centricity: We believe that our employees are the heart of our organization; hence a large part of our management focus is towards strengthening and caring for our employees. Our aim is to create and nourish the best in class global leadership and provide them unlimited opportunities for career enhancement and growth. It is our aim to be a truly global company that not only services global customers but also employs people worldwide. We consciously enhance gender diversity with 28% of our employees being women. We have 23,000 employees onsite in customer locations of whom 38% are resident citizens. We have employees of 73 nationalities on our rolls. Our employee base is young with 65% of our employees aged less than 30 years and the average age of 29 years. Sales & Marketing Our solutions and services extend across the various cloud layers from business process as a service, software as a service, platform as a service to infrastructure as a service ¯ Mobility Services: Wipro Mobility Solutions enable next- • Sales: We believe that our customer always comes first. To achieve higher levels of client satisfaction we have organized ourselves on the four key elements: ™ generation mobile products and applications from end-toend design of mobile devices to creating mobile ecosystems for enterprises to serving internal and external customers. Our focus is on understanding all components of a mobile device, developing holistic system integration capabilities, market proven solution accelerators, strong partnerships with mobile enterprise application platforms, and testing expertise. ¯ Analytics and Information Management: Our Analytics and Client Relationship: We have designated global client partners with single person accountability for customer satisfaction and realizing sales targets. Industry Focus: Our sales teams are dedicated to a specific industry vertical and have significant experience and exposure in the industry they sell to. Proactive Solutions: We have a consulting led approach to sales where our teams provide proactive solutions to prospective clients based on their emerging and/or latent needs. Geographic Focus: Our dedicated sales teams with a country and region specific focus increases our knowledge of the local business culture, anticipate prospective and existing client needs and to increase our market penetration. ™ ™ Information Management service helps customers accelerate enterprise wide performance through smart, agile and integrated analytical solutions and frameworks. By bringing together the combined expertise of Analytics, Business Intelligence, Performance Management and Information Management, we help customers derive 34 ™ • Marketing: Our marketing organization is a key part of our strategy and supports our sales operations by: ™ Performance Highlights (Figures in ` million) Building and enhancing our brand as a global company who is a leader in global consulting and IT services; Positioning for our brand with clients as a solution provider that utilizes technology and innovation to help solve business problems; Crafting go-to-market programs that help drive demand in the market place. These include creating thought leadership around our products and services, enhancing our perception with analysts and media and generating demand through global field marketing programs and campaigns. Year ended March 31, 2012 Revenue Gross profit Selling and marketing expenses General and administrative expenses Operating income As a Percentage of Revenue: Selling and marketing expenses General and administrative expenses Gross margin Operating margin 5.7% 6.1% 32.6% 20.8% 5.4% 6.5% 34.7% 22.7% 284,313 92,600 (16,114) (17,221) 59,265 2011 234,850 81,404 (12,642) (15,355) 53,407 Year on year change 2011-12 21.1% 13.8% 27.5% 12.2% 11.0% (29)bps 48bps (209)bps (190)bps ™ ™ Delivery Efficiencies - We seek to achieve agility and increased efficiencies in our organization by continuously improving the manner in which we develop and deliver our IT services. We develop preconfigured solutions, standardized delivery tools and technology-enabled delivery processes to increase the speed and efficiency of our IT services and provide our clients with faster, more accessible and more cost effective IT solutions. For example, our cloud and hosted service offerings provide clients with standardized and automated solutions that allow them to collect, process and analyze information quickly without the need for extensive consultation and configuration. We also have 101 registered patents, 18 registered copyrights and 11 registered designs. We have approximately 56 patent applications, 12 design applications and 5 copyright applications pending for registration in various jurisdictions across the world. ¨ Our revenue from IT Services increased by 21.1%. In US dollar terms our revenue increased by 13.4% from US$ 5,221 million to US$ 5,921 million. This increase is primarily on account of increase in volume by 11.5% and increase in onsite-offshore mix by 1.3%. Our average US/INR realization increased from ` 44.9 for the year ended March 31, 2011 to ` 48.0 for the year ended March 31, 2012. Our gross profit to revenue percentage declined by 209 bps during the year. This decline in gross margin is primarily on account of lower employee utilization rates and an increase in personnel compensation cost during the year. Further, integration of our SAIC acquisition from June 2011 has contributed to a decline in gross margin by 50 bps. During the current year, we realised 53.8% of revenue from work done in locations outside India (“Onsite”) and remaining 46.2% of revenue was realised from the work performed from our development centers in India (“Offshore”). Our continued focus on driving revenue productivity resulted in our onsite price realization increasing by 2.3% during the year and our offshore price realization increasing by 0.6% in US dollar terms. Our revenue contribution from Fixed Price Projects (FPP) is 45.7% for the year. In FPP, we undertake to complete project within agreed timeline at a fixed price for a given scope of work. The economic gains or losses realized from completing the project earlier or later than initially projected timelines or at lower or higher efforts accrues to us. Where specialized solutions are required, we believe that more experienced and better trained personnel can identify problems, develop solutions and deliver those solutions in a more efficient and cost effective manner. By deploying more experienced and highly trained personnel across our service and product delivery offerings, we intend to further increase our effectiveness and efficiency. We have accelerated the speed to market of our solutions through our globally connected delivery centers and depth of capabilities. We have seven strategic delivery centers outside India located in the United States, Finland, China, Poland, Romania and Mexico. We have over 72 delivery centers globally. 35 Revenue Mix Vertical Distribution Our revenue increase of 13.4% was primarily due to a 57% increase in revenue from energy and utilities (organic growth of 28%), a 13% increase in revenue from financial solution, a 11% increase in revenue from retail and transportation, a 6% increase in revenue from manufacturing and Hi-tech, a 6% increase in revenue from healthcare life sciences and a 4% increase in revenue from global media and telecom. Our revenue distribution across industry verticals is as below 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% rin g& He Sc alth ien ca ce re s& ,L Se ife rv ice s Re Tr tail an & sp or ta tio En n er gy & Ut ilit ies Our revenue distribution across geographies is as below 60.0% 50.0% 40.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% In Ea dia & st bu Mid sin d es le s AP Em AC er an gin d O g M th ar er ke ts FY11 FY12 Eu ro pe FY11 FY12 ia io ns Gl Te oba lec l M om ed & ut Hi anu te fac ch tu Fin an We added 173 new customers in the current year, compared to 155 in the previous year. Our top customer contributed 3.6% of our revenue, top 5 customers 11.3% and the top 10 customers accounted for 19.6% of our revenue. We have 7 customers contributing more than $100 million revenues in the current year, an increase from 3 in the previous year. Revenue contributed by the customers added during the year was at 2%, the same level as in the previous year. In our IT Services Business segment, manpower cost accounts for approximately 50% of the Revenues. Other major costs included Sub-contracted manpower cost, depreciation and employeetravel cost. The operational drivers for these costs are Utilisation of employees, Onsite: Offshore composition and the composition of experience profile of employees called the 'Bulge-mix'. During the current year, our investments for strategic bench to fuel growth resulted in a drop in gross Utilisation from 69.9% in FY11 to 68.3% in FY12. As of March 31, 2012 approximately 42% of our employees had less than 3 years of work-experience, as compared to 40% as of March 31, 2011. FY11 FY12 ce S ol Revenue Mix Service Line Distribution We continued to expand and grow our Services portfolio. Growth in the current year was driven by 28% increase in revenues from Analytics & Information Management, 17% increase in revenues from Technology Infrastructure Services, 16% increase in revenues from Business Application Services, 2% increase in revenues from Business Process Outsourcing, 11% increase in revenues from Product Engineering and 10% increase in revenues from Application Development and Maintenance. Our Revenue distribution across service lines 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% M Risk Factors Our revenues from this business are derived in major currencies of the world while a significant portion of its costs are in Indian rupees. The exchange rate between the rupee and major currencies of the world has fluctuated significantly in recent years and may continue to fluctuate in the future. Currency fluctuations can adversely affect our revenues and gross margins. The market for IT services is highly competitive. Our competitors include software companies, IT companies, systems consulting and integration firms, other technology companies and client inhouse information services departments. We may also face competition from IT and ITES companies operating from emerging low cost destination like China, Philippines, Brazil, Romania, Poland etc. Revenue Mix: Geographical Distribution Growth in the current year was driven by an 18% increase in revenues from Europe, 17% increase in revenues from India & Middle East business and 42% increase in revenues from APAC and Other Emerging Markets. Increase in Revenues from the US geography in the current year was 7%. 36 ct Tec ur e S hno In er log fo vic y rm es at io An nM a lyt an ic ag s a em nd en Ap t pl Bu ica sin t B i es on us sP Se ine ro rv ss ce ice ss s O Pr u od ts o uc u r tE cin ng De g in ve ee lop r M ing m o en t & A bilit & M pp y ain lic te ati na on nc R& e D Bu sin es s Co ns ul tin g In fra st ru Am er Ja pa n ica s cost affordable computing, which is expected to also fuel growth. Increased adoption of virtualization and cloud computing technologies, large-scale digitization and the increased importance of big data or analytics have also contributed to growth in the server and storage markets. Demand for networking equipment is increasing as businesses invest in expanding and upgrading their infrastructure, and as penetration of mobile devices, teleconferencing and voice over internet protocol ("VOIP") increases. Increasing demand for data and rising consumer income is leading to an increase in demand for notebook computers, which according to the NASSCOM Strategic Review Report, 2012, was the fastest growing market among all hardware categories. We derive approximately 52% of revenues from United States and 28% from Europe. In an economic slowdown, our clients located in these geographies may reduce or defer their technology spending significantly. Reduction in spending on IT services may lower the demand for our services and negatively affect our revenues and profitability. Some countries and organizations have expressed serious concerns about a perceived association between offshore outsourcing and the loss of jobs domestically. With the growth of offshore outsourcing receiving increasing political and media attention, there have been concerted efforts to enact new legislation to restrict offshore outsourcing or impose disincentives on companies which have been outsourcing jobs. This may adversely impact our ability to do business in these jurisdictions and could affect our revenues and operating profitability. Our employees who work onsite at client facilities or at our facilities in the United States on temporary or extended assignments typically must obtain visas. If U.S. immigration laws change and make it more difficult for us to obtain H-1B and L-1 visas for our employees, our ability to compete for and provide services to our clients in the United States could be impaired. These risks are broadly country risks. At an organizational level, we have a well-defined business contingency plan and disaster recovery plan to address these unforeseen events and minimize the impact on services delivered from our development centers based in India or abroad. IT Products Industry Overview According to the NASSCOM Strategic Review Report 2012, the hardware market in India is estimated to account for 40% of the domestic IT industry and is expected to grow over 15% in 2012. The key components of the hardware industry are servers, desktops and laptops, storage devices, peripherals and networking equipment. Increased use of computing devices in education and consistent demand from enterprises are key factors driving the continued growth of this market. Additionally, the Government of India is promoting initiatives to provide low Wipro Credentials and Strategy Our IT Products segment provides a range of IT products encompassing computing, storage, networking, security, and software products. Under this segment, we sell IT products manufactured by us and third-party IT products. Our range of IT Products is comprised of the following: • Wipro Manufactured Products. Our manufactured range of products includes desktops, notebooks, net power servers, netStor storage and super computers. We offer form factors and functionalities that cater to the entire spectrum of users - from individuals to high-end corporate entities. We continue to launch new products based on market needs • Enterprise Platforms. Our offerings in this category include design and deployment services for enterprise class servers, databases and server computing resource management software • Networking Solutions. Our offerings under this category are comprised of consulting, design, deployment and audit of enterprise wide area network (WAN), wireless LAN and unified communication systems • Software Products. Our products under this category are comprised of enterprise application, data warehousing and business intelligence software from leading software product companies • Data Storage. Our products under this category are comprised of network storage, secondary and near line storage, backup and storage fabrics • Contact Center Infrastructure: Our offerings include switch integration, voice response solutions, computer telephony interface, customized agent desktop application, predictive dialer, customer relationship management, multiple host integration and voice logger interface • Enterprise Security: Our security products include intrusion detection systems, firewalls and physical security infrastructure covering surveillance and monitoring systems • Emerging Technologies. We also offer new technologies including virtualization, IP video solutions and private cloud implementations 37 We plan to grow in the IT Products market by focusing on: Positioning  Build enhanced solution capabilities to position ourselves as a Valued Added System Integrator, and  To offer innovative and best in class IT Products and Solutions catering to client needs Product Differentiation • Product Engineering to deliver value differentiation on Wipro products • Focus on building brand “Ego” and evolve as lifestyle brands within our manufactured products busines • Strengthen server portfolio though a combination of in-house and traded products Geographical expansion - enhanced focus for addressing new markets - Middle-East and Africa Customer Engagement • Vertical Focus - Strengthen presence in key verticals such as Government, Telecom and Banking • Mid-Market Drive - Tier 2/3 city penetration. Establish leadership position across 10 cities through increased coverage and marketing activities • Deliver customized solutions Alliances - realign existing and form new alliances, leverage alliance partnerships for joint GTM with Wipro. Partner with emerging technology providers to improve market address and develop new streams of revenue; Operational Excellence - Sustain Green Leadership in Wipro manufactured products. Continue to drive delivery and operational excellence through industry standard processes and global best practices for better customer satisfaction (CSAT) and cost optimization. Performance Highlights (Figures in ` million) Year ended March 31, 2012 Revenue Gross profit Selling and marketing expenses General and administrative expenses Operating income As a Percentage of Revenue: Selling and marketing expenses General and administrative expenses Gross margin Operating margin 3.6% 3.1% 11.3% 4.7% 3.5% 3.2% 11.0% 4.4% 38,436 4,356 (1,395) (1,174) 1,787 2011 36,910 4,067 (1,284) (1,174) 1,609 Year on year change 2011-12 4.1% 7.1% 8.6% 0% 11.1% (15) bps 13 bps 31 bps 29bps Our revenue from the IT Products segment increased by 4.1% primarily due to an increase in export revenue from US$ 79 million for the year ended March 31, 2011 to US$ 97 million for the year ended March 31, 2012. Our gross profit to revenue percentage in our IT Products segment increased marginally by 31 bps. This increase is primarily due to an increase in finance income on deferred consideration earned from the total outsourcing contracts. Risk IT Products revenues are impacted by seasonal changes that affect purchasing patterns among our consumers of desktops, notebooks, servers, communication devices and other products. The IT products market is a dynamic and highly competitive market. In the marketplace, we compete with both international and local providers. We are witnessing pricing pressures due to commoditization of manufactured products business and higher focus on Indian markets by leading global companies. Nonetheless, we are favorably positioned due to our quality leadership, expertise in target markets and our ability to create client loyalty by delivering value to the customer. Consumer Care and Lighting Industry Overview AC Nielsen estimates that India is amongst the fastest growing geographies for fast moving consumer goods (“FMCG”), with a growth rate of 14.2% for the Moving Annual Total November 2011, or the twelve month period ending in November 2011, for the non-food segment, the market we address. According to AC Nielsen, the market is expected to grow at a compounded annual 38 growth rate (“CAGR”) between 12% to 15% for the period from 2012-2015. According to AC Nielsen, household and personal care FMCG market in the other Asian countries in which we operate including Malaysia, Vietnam and Indonesia, is expected to grow at a CAGR of 8% for the period from 2012-2015. Wipro Credentials and Strategy Our Consumer Care and Lighting business segment focuses on niche markets in personal care in specific geographies in Asia, the Middle East and Africa, as well as office solutions in India. We successfully leverage our brands and distribution strengths to sustain a profitable presence in the personal care sector, including personal wash, fragrances, hair and skin care, male toiletries and household lighting and office products. Our office solutions include lighting products, modular switches, modular furniture and security solutions. Our Santoor brand is the third largest in India in the soap category, and our Safi brand is the largest Halal toiletries brand in Malaysia. Our Yardley brand gives us a stronger presence in the Middle East in the luxury segment of personal care. We are among the top 15 companies in personal care in India, and the third largest company in personal care in Malaysia and the fourth largest company in personal care in Vietnam. We market and sell our personal care products through a network of distribution channels which include modern retail outlets, hypermarts, supermarts, traditional retailers, van operators and wholesalers. We sell and market our consumer care products primarily through our distribution network in India, which has access to over 4,000 distributors and approximately 1.9 million retail outlets. We sell a significant portion of our lighting products to major industrial and commercial customers through our direct sales force, from 34 sales offices located throughout India. In India, we leverage our brand recognition by successfully incorporating the Wipro name in our consumer brands. We intend to expand our marketing efforts with the aid of advertising campaigns and promotional efforts targeted at specific regions of India. We intend to introduce acquired personal care product brands to further establish our presence in the markets for personal care products in India. In our other geographies, led by Malaysia, Vietnam, Indonesia and China, we have direct access to over 230,000 retail outlets. Performance Highlights (Figures in ` million) Year ended March 31, 2012 Revenue Gross profit Selling and marketing expenses General and administrative expenses Operating income As a Percentage of Revenue: Selling and marketing expenses General and administrative expenses Gross margin Operating margin 27.5% 3.9% 43.3% 11.8% 27.6% 4.2% 44.4% 12.7% 33,401 14,456 (9,195) (1,305) 3,956 2011 27,258 12,116 (7,514) (1,152) 3,450 Year on year change 2011-12 22.5% 19.3% 22.4% 13.3% 14.7% 4 bps 32 bps (117) bps (82) bps Our Consumer Care and Lighting revenue increased by 22.5%. This increase is attributable to an increase of approximately 24.1% in revenue from consumer products including Yardley products sold in Indian markets and an increase of approximately 20% in revenue from personal care products sold in southeast Asian markets. The growth in revenues in Indian markets is primarily due to an increase in revenue from toilet soap products, domestic lighting and institutional business. Our gross profit as a percentage of our revenues from the Consumer Care and Lighting segment decreased by 117 bps. The increase in major input costs has primarily contributed to reduction in gross margin. Risk Factors Our competitors in the consumer care and lighting are located primarily in India, and include multinational and Indian companies. Certain competitors have recently focused on sales strategies designed to increase sales volumes by lowering prices. Sustained price pressures by competitors may require us to respond with similar or different pricing strategies. This may adversely affect our gross and operating profits in future periods. 39 A major share of revenue in Consumer care and lighting business comes from top three brands in India and international business. Any dilution in market share of such brand against competition may adversely impact our revenue. Further, price volatility in major inputs for personal care products, could have an adverse impact on our margin. Others Our "Others" business segment includes our Infrastructure Engineering business. This business is centered on mobile construction equipments and material handling solutions. We manufacture and sell cylinders and truck hydraulics, and we also distribute hydraulic pumps, motors and valves for international companies. We are the world's largest independent manufacturer of hydraulic cylinders. We have a global footprint of manufacturing facilities in Europe, Brazil, China and India and sell to customers across the globe. We also expanded this business to provide water solutions that address the entire spectrum of treatment solutions and systems for water and waste water. Our strategy is to increase our global market share through strengthening relationships with global original equipment manufacturers (OEMs) who are likely to seek stable suppliers like Wipro to partner; and diversification into newer segments organically and/or inorganically through acquisitions. Our main domestic competitors include, UT Limited (India), Dongyong, Pacoma, Sundaram Hydraulics and Dantal and overseas suppliers such as the Kayaba, Precision Hydraulics Company and Hyva (in tipping business). Our Others business segment also includes our Wipro Eco Energy business unit, which provides intelligent, sustainable alternatives for energy generation, distribution and consumption. We help customers reduce their energy footprint, increase energy efficiency and replace conventional with renewable energy sources. Risk Factors The Infrastructure Engineering business is linked to infrastructure spending globally. If there is an economic slowdown, it would translate in to lower growth for our customers and in turn reduce our growth prospects. Performance Highlights Revenue from our Others segment, including reconciling items, increased by 59.5%, from ` 11,969 million for the year ended March 31, 2011 to ` 19,099 million for the year ended March 31, 2012. The increase in revenue is attributable to increased demand for infrastructure engineering products in India and Europe. Further, integration of our acquisition of R. K. M. Equipamentos Hidraulicos Ltda from May 2011 has resulted in additional revenue of ` 639 million. Discussion on financial performance with respect to operational performance Our revenue and profit for the years ended March 31, 2011 and 2012 are provided below. Wipro Limited and subsidiaries (Figures in ` million except otherwise stated) Year ended March 31, 2012 Revenue(1) Cost of revenue Gross profit Selling and marketing expenses General and administrative expenses Operating income Profit attributable to equity holders As a Percentage of Revenue: Selling and marketing expenses General and administrative expenses Gross margin Operating margin Earnings per share Basic Diluted 22.76 22.69 21.74 21.61 7.4% 7.1% 375,249 (263,173) 112,076 (27,777) (20,286) 2011 310,987 (212,808) 98,179 (22,172) (18,339) Year on year change 2011-12 20.7% 23.7% 14.2% 25.3% 10.6% 64,013 55,730 57,668 52,977 11.0% 5.2% (27) bps 5.4% 5.9% 49 bps 29.9% 17.1% 31.6% 18.5% (170) bps (148) bps 40 (1) For the purpose of segment reporting only, we have included the impact of exchange rate fluctuations in revenue. Excluding the impact of exchange rate fluctuations, revenue, as reported in our statements of income under IFRS, is ` 310,542 million and ` 371,971 million for the years ended March 31, 2011 and 2012, respectively. (2) Our adjusted non-GAAP profit for the year ended March 31, 2011 and 2012 is ` 52,601 million and ` 55,605 million an increase of 5.7% over the year ended March 31,2011. Segment Contribution 100% percentage of revenue from our Consumer Care and Lighting segment by 117 bps and a decline in gross profit as a percentage of revenue from our Others segment, including reconciling items by 147 bps. This decline was partially offset by an increase in gross profit as a percentage of revenue from our IT Products segment by 31 bps. • Our selling and marketing expenses as a percentage of revenue increased from 7.1% for the year ended March 31, 2011 to 7.4% for the year ended March 31, 2012. In absolute terms selling and marketing expenses increased by 25.3%, primarily due to an increase in the IT Services and Consumer Care and Lighting segment. Our general and administrative expenses as a percentage of revenue decreased from 5.9% for the year ended March 31, 2011 to 5.4% for the year ended March 31, 2012. In absolute terms general and administrative expenses increased by 10.6%, primarily due to increased expenses in the IT Services segment and Consumer Care and Lighting segment. As a result of the foregoing factors, our operating income increased by 11%, from ` 57,668 million for the year ended March 31, 2011 to ` 64,013 million for the year ended March 31,2012. Our finance expenses increased from ` 1,933 million for the year ended March 31, 2011 to ` 3,491 million for the year ended March 31, 2012. This increase is primarily due to increase of ` 1,277 million in exchange loss on foreign currency borrowings and related derivative instruments. This increase is also due to increase in interest expense by ` 281 million during the year ended March 31, 2012, due to higher loans and borrowings. Our finance and other income, increased from ` 6,652 million for the year ended March 31, 2011 to ` 8,895 million for the year ended March 31, 2012. Our interest and dividend income increased by ` 2,248 million during the year ended March 31, 2012 as compared to the year ended March 31, 2011. This was partially offset by a marginal decrease in the gain from sale of investments during the same period. Our income taxes increased by ` 4,049 million from ` 9,714 million for the year ended March 31, 2011 to ` 13,763 million for the year ended March 31, 2012. Adjusted for tax write-backs our effective tax rate increased from 16.5% for the year ended March 31, 2011 to 21% for the year ended March 31, 2012. This increase is primarily due to the expiration of the tax holiday period for STPs, which resulted in a substantial portion of our pre-tax income becoming subject to taxation. The increase is partially offset by an increase in profits from our operations in SEZ units. Our equity in earnings of affiliates for the years ended March 31, 2011 and 2012 was ` 648 million and ` 333 million, respectively. Equity in earnings of affiliates primarily relates to the equity in earnings of Wipro GE. As a result of the foregoing factors, our profit attributable to equity holders increased by ` 2,753 million, or 5.2%, from ` 52,977 million for the year ended March 31, 2011 to ` 55,730 million for the year ended March 31, 2012. 41 • 75% 75% 76% Revenue IT Services IT Products Consumer Care and Lighting Others, including reconciling items 25% 12% 9% 50% • 10% 9% 5% • 0% 4% 2011 2012 Year ended March 31 Segment Contribution 100% • 75% Operating Income IT Services IT Products Consumer Care and Lighting Others, including reconciling items 25% 50% 92% 93% • 3% 6% -1% -2% 3% 6% 0% 2011 2012 Year ended March 31 Results of operations for the years ended March 31, 2012 and 2011 • Our total revenues increased by 20.7%. This was driven primarily by a 21%, 4%, 23% and 60% increase in revenue from our IT Services, IT Products, Consumer Care and Lighting and Others segment, including reconciling items, business segments, respectively. Our gross profit as percentage of our total revenue decreased by 170 basis points (bps). This was primarily on account of a decline in gross profit as a percentage of revenue from our IT Services segment by 209 bps, a decline in gross profit as a • • • Foreign exchange gains/(losses), net We have a consistent hedging policy, designed to minimize the impact of volatility in foreign exchange fluctuations on the earnings. We evaluate exchange rate exposure arising from these transactions and enter into foreign currency derivative instruments to mitigate such exposure. We follow established risk management policies, including the use of derivatives like foreign exchange forward / option contracts to hedge forecasted cash flows denominated in foreign currency. Our foreign exchange gains / (losses), net for the years ended March 31, 2011 and 2012 were ` 445 million and ` 3,278 million respectively. The foreign exchange losses, net with respect to effective portion of derivative hedging instrument designated as cash flow hedges upon the occurrence of the related forecasted transaction and recorded as part of Revenues for the years ended March 31, 2011 and 2012 were ` (3,023) million and ` (3,720) million, respectively. Our foreign exchange gains/(losses), net, comprise of: • The changes in fair value for derivatives not designated as hedging derivatives and ineffective portions of the hedging instruments. For forward foreign exchange contracts which are designated and effective as cash flow hedges, the marked to market gains and losses are deferred and reported as a component of other comprehensive income in stockholder’s equity and subsequently recorded in the income statement when the hedged transactions occur, along with the hedged items; and Exchange differences arising from the translation or settlement of transactions in foreign currency, except for exchange differences on debt denominated in foreign currency (which are reported within finance expense, net). Although our functional currency is the Indian rupee, we transact a significant portion of our business in foreign currencies, in particular the U.S. dollar. The exchange rate between the Rupee and the dollar has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of our operations are affected as the Rupee fluctuates against the U.S. dollar. Our exchange rate risk primarily arises from our foreign currency revenues, cash balances, payables and debt. The break up of our currency wise exposure on the balance sheet is shown in the table below (Figures in ` million except otherwise stated) As at March 31, 2012 US$ Trade receivables Unbilled revenues Cash and cash equivalents Other assets Loans and borrowings Trade payables and accrued expenses Net Assets/(liabilities) 30,205 9,735 23,726 206 (28,419) (12,095) 23,563 Euro 5,711 2,727 1,439 515 (742) (2,186) 7,464 Pound Sterling 6,427 3,131 1,492 42 (1,912) 9,180 Japanese Yen 402 59 322 (21,728) (140) (21,085) Other currencies# 5,699 485 1,931 181 (2,068) 6,228 Figures in Millions Total 48,444 16,137 28,910 944 (50,684) (18,401) 25,350 (Figures in ` million except otherwise stated) As at March 31, 2011 US$ Trade receivables Unbilled revenues Cash and cash equivalents Other assets Loans and borrowings Trade payables and accrued expenses Net assets/(liabilities) 24,408 13,605 22,463 187 (27,544) (10,770) 27,979 Euro 5,123 239 1,863 311 (1,322) (2,063) 4,151 Pound Sterling 4,821 494 1,949 63 (1,407) 5,920 Japanese Yen 370 290 2 (18,861) (357) (18,556) Other currencies# 3,237 271 1,414 126 (162) 4,886 Total 37,959 14,609 29,797 689 (47,727) (14,759) 18,750 # Other currencies reflects currencies such as Singapore dollar, Saudi Arabian riyals etc. We enter into derivative instruments to primarily hedge our forecasted cash flows denominated in certain foreign currencies, foreign currency debt and net investment in overseas operations. Please refer to our Notes to the Consolidated Financial Statements under IFRS for additional details on our foreign currency exposures. 42 Finance expense Our finance expense is comprised of interest expense on borrowings, impairment losses recognized on financial assets, gains/losses on translation or settlement of foreign currency borrowings and changes in fair value and gains/ losses on settlement of related derivative instruments, except foreign exchange gains/losses on short-term borrowings which are considered as a natural economic hedge for the foreign currency monetary assets which are classified as foreign exchange gains/losses, net within results from operating activities. Borrowing costs are recognized in the statement of income using the effective interest method. Finance and other income Our finance and other income comprises interest income on deposits, dividend income and gains on disposal of available for-sale financial assets. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established. Liquidity and Capital Resources The Company’s cash flow from its operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows under IFRS, is summarized in the table below: (Figures in ` million except otherwise stated) Our credit period to customers generally ranges from 45-60 days. The quantum of overdue debtors beyond 90 days has come down from ` 14,834 million (24% of the total receivables) in year ended March 31, 2011 to ` 12,702 million (16% of the total receivables) in year ended March 31, 2012. The age wise break up of receivables, net of allowances that are past due, is given below: Debtors Year ended March 31, 2012 49,983 9,970 4,410 3,263 12,702 80,328 % to Total Year ended March 31, 2011 32,295 4,249 6,976 3,273 14,834 61,627 % to Total 52% 7% 11% 5% 25% 100% Not due Past due 0-30 days Past due 31-60 days Past due 61-90 days Past due > 90 days Total 62% 12% 5% 4% 16% 100% Year ended March 31, Net cash provided by/(used in) continuing operations: Year on year change 2011-12 (361) 9,183 8,981 17,803 1,157 2012 40,076 (8,056) (17,397) 14,623 1,680 2011 40,437 (17,239) (26,378) (3,180) 523 Operating activities Investing activities Financing activities Net change in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalent As of March 31, 2012, we had cash and cash equivalent and short-term investments of ` 119,627 million. Cash and cash equivalent and short-term investments, net of debt was ` 60,669 million. In addition we have unused credit lines of ` 32,747 million. To utilize these lines of credit we require the consent of the lender and compliance with certain financial covenants. We have historically financed our working capital and capital expenditures through our operating cash flows and through bank debt, as required. Cash provided by operating activities for the year ended March 31, 2012 decreased by ` 361 million, while profit for the year increased by ` 2,666 million during the same period. The decrease in cash provided by operating activities is primarily due to an increase in current receivables including unbilled, attributable higher revenue from IT Services segment without any corresponding change in Receivable Days in the IT Services segment. (In no. of days) Further, operating cash flow is decreased due to increase in inventory days for consumer care and lighting and infrastructure services by 12 days and 32 days, respectively and also due to increase in finance lease receivables by ` 463 million, primarily relating to large projects and increase in prepaid expenses and deposits by ` 1,886 million and ` 451 million, respectively. This is partially offset by the increase in trade payables and accrued expenses on account of better management of payment terms. Receivable Days as of a particular reporting date is the proportion of receivables, adjusted for unbilled and unearned revenue to the revenues for the respective fiscal quarter multiplied by 90. Cash used in investing activities for the year ended March 31, 2012 was ` 8,056 million. Cash provided by operating activities was utilized for the payment for business acquisitions amounting to ` 7,920 million. We also sold (net of purchases) available for sale investments and inter-corporate deposits amounting to ` 4,057 million. We purchased property, plant and equipment amounting to ` 12,977 million, which was primarily driven by the growth strategy of the Company. Cash used in financing activities for the year ended March 31, 2012 was ` 17,397 million as against ` 26,378 million for the year ended March 31, 2011. This decrease is primarily due to net proceeds from loans and borrowings amounting to ` 712 million and payment of dividend amounting to ` 17,229 million. On April 25, 2012, our Board proposed a cash dividend of ` 4 per equity share and ADR. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on July 23, 2012, and if approved, would 43 Receivable Days IT Services segment IT Products segment Year ended March 31, 2012 70 155 2011 70 131 result in a cash outflow of approximately ` 11,431, million including corporate dividend tax thereon. We maintain a debt/borrowing level that we have established through consideration of a number of factors including cash flow expectations, cash required for operations and investment plans. We continually monitor our funding requirements, and strategies are executed to maintain sufficient flexibility to access global funding sources, as needed. Please refer to Note 12 of our Notes to the Consolidated Financial Statements under IFRS for additional details on our borrowings. As discussed above, cash generated from operations is our primary source of liquidity. We believe that our cash and cash equivalents along with cash generated from operations will be sufficient to meet our working capital requirements as well as repayment obligations in respect of debt / borrowings. As of March 31, 2012, we had contractual commitments of ` 1,673 million related to capital expenditures on construction or expansion of software development facilities, ` 14,838 million related to non-cancelable operating lease obligations and ` 6,378 million related to other purchase obligations. Plans to construct or expand our software development facilities are dictated by business requirements. In relation to our acquisitions, a portion of the purchase consideration is payable upon achievement of specified earnings targets in the future. We expect that our cash and cash equivalents, investments in liquid and short-term mutual funds and the cash flows expected to be generated from our operations in the future will generally be sufficient to fund the earn-out payments and our expansion plans. In the normal course of business, we transfer accounts receivables, net investment in sale-type finance receivable and employee advances (financial assets). Please refer Note 15 of our Notes to Consolidated Financial Statements under IFRS. Our liquidity and capital requirements are affected by many factors, some of which are based on the normal ongoing operations of our businesses and some of which arise from uncertainties related to global economies and the markets that we target for our services. We cannot be certain that additional financing, if needed, will be available on favorable terms, if at all. As of March 31, 2011 and 2012, our cash and cash equivalent were primarily held in Indian Rupees, U.S. Dollars, Pound Sterling, Euros, Japanese Yen, Singapore Dollars and Saudi Riyals. Please refer to “Financial risk management” under Note 15 of our Notes to the Consolidated Financial Statements under IFRS for more details on our treasury activities. Acquisitions An active acquisition program is an important element of our corporate strategy. On June 10, 2011, we acquired the global oil and gas information technology practice of the Commercial Business Services Business Unit of Science Applications International Corporation Inc along with 100% of the share capital in SAIC Europe Limited and SAIC India Private Limited. On July 2, 2011 we also acquired 100% of the share capital of SAIC Gulf LLC (hereafter the acquisitions are collectively referred to as ‘oil and gas business of SAIC’). The oil and gas business of SAIC provides consulting, system integration and outsourcing services to global oil majors with 44 significant domain capabilities in the areas of digital oil field, petrotechnical data management and petroleum application services, addressing the upstream segment. The Company believes that the acquisition will further strengthen Wipro’s presence in the Energy, Natural Resources and Utilities domain. Typically the significant majority of our integration activities relating to an acquisition are substantially completed within three to six months after the Acquisition Date. We believe our acquisition program supports our long-term strategic direction, strengthens our competitive position, particularly in acquiring new domain expertise, expands our customer base, increases our ability to expand our service offerings and provides a greater scale to grow our earnings and increase stockholders’ value. See Note 6 of our Notes to Consolidated Financial Statements under IFRS for additional information related to our acquisitions. Contractual obligations The table of future payments due under known contractual commitments as of March 31, 2012, aggregated by type of contractual obligation, is given below: (Figures in ` million except otherwise stated) Particulars Total contractual payment 2012-13 Payments due in 2013-15 2015-17 2017-18 onwards Short-term borrowings Long-term debt Obligations under capital leases Estimated interest payment (1) Capital commitments Non-cancelable operating lease Obligation Purchase obligations Other non-current liabilities(2) 35,740 22,502 716 35,740 453 255 22,012 314 37 141 6 444 406 30 8 - 1,673 14,839 1,673 3,301 5,493 2,349 3,696 6,378 473 6,378 - 473 - - (1) Interest payments for long-term fixed rate debts have been calculated based on applicable rates and payment dates. Interest payments on floating rate debt have been calculated based on the payment dates and implied forward interest rates as of March 31, 2012 for each relevant debt instrument. (2) Other non-current liabilities and non-current tax liabilities in the statement of financial position include ` 3,046 million in respect of employee benefit obligations and ` 5,403 million towards uncertain tax positions, respectively. For these amounts the extent of the amount and timing of repayment/settlement is not reliably estimatable or determinable at present and accordingly have not been disclosed in the table above Risk Management at corporate level Risk Management at Wipro is an enterprise wide function. It is backed by a qualified team of specialists with deep industry experience who develop frameworks and methodologies for assessing and mitigating risks. ERM Framework at Wipro Our framework is based on principles laid out in the four globally recognized standards • Orange Book by UK Government Treasury. • COSO; Enterprise Risk Management – Integrated Framework by Treadway Commission • AS/NS 4360:2004 by AUS/NZ Standards board • ISO/FDIS 31000:2009 by ISO We have consciously moved to a system of proactive risk management by capturing weak signals and responding to them instead of reacting to a crisis. Early identification gives us a wider range of options and alternatives to respond effectively and efficiently. ERM Functional Risk Management - Approach and Methodology: Early Warning Signal Root Cause Analysis & Productive Testing Systemic Correction Functional Risk Tracking Diagnostic dashboards 1. Exception reporting 2. Complaint received via Ombuds process & other organizational channels 3. Security incident logs & other periodic risk reports 4. Feedback analysis of employee helpline calls/mails 1. Root cause analysis to identify process failures 2. Vulnerability assessment of the process 3. Stress testing of control point 4. Post mitigation control assurance 1. Identifying systemic change 2. Stock take of other similar processes 3. Control automated where feasible 4. System generated triggers for non automated corrections 1. Function wise risk register 2. Joint review with functional teams 1. Crisp summary for management action 2. Repeatability and Reproducibility of controls Where possible, compliance has been automated and exceptions tracked through action oriented dashboards. We carry out comprehensive process analysis to identify vulnerabilities that help us extrapolate known failure modes as early warning indicators. Our defined mitigation measures for the risks identified in periodic reviews is in the form of systemic fixes, which are deployed and assessed to evaluate their robustness and effectiveness. To enhance accountability and effectiveness, mitigations implemented are tracked using a functional risk register jointly with the functional owner. This also increases the repeatability and reproducibility of effectiveness of controls. 45 Risk Management areas for the year: (Listed alphabetically, not in order of impact) 1. Business Continuity & Disaster Recovery 2. Climate Change & Sustainability 3. Country (Geo-Political) Risks 4. Critical Partner Alliance Risks 5. Code of Business Conduct compliance / governance 6. Emerging Technology adoption 7. Fraud 8. Global economic conditions 9. Information Security & Compliance 10.Intellectual Property Risks 11. Large Project Risks 12. M&A Integration Risks 13. People Engagement & Supply Chain Risks 14.Physical Security & Employee safety 15. Regulatory Compliance including FCPA, UK Bribery act, Employment, Immigration and Tax laws 16. Reputation Risks 17. Systemic vulnerabilities Climate Change & Sustainability During the year, we engaged a 3rd party expert firm Det Norske Veritas (DNV) to carry out a specific risk assessment of Climate Change & Sustainability risks across the organization. Outcome of this exercise will be added to the risk inventory for mitigation tracking in the current year. Critical Partner Alliance Risk Management A Risk Management framework was deployed to assess the risks in engagement with critical alliance partners. Key risk indicators such as availability of alternates, financial stability, and delivery performance were assessed and mitigated. Code of Business Conduct compliance / governance (Ombuds Process) To augment the current Ombuds (whistle blowing) process at Wipro, we rolled out a 24/7 hotline and web support across the globe, accessible to employees, partners, clients and all other interested parties. Systemic issues identified during Ombuds investigations are considered as risks and taken up for mitigation. Global Economic Conditions Global Risks 2012 report tabled at World Economic Forum (WEF), 2012 listed “Bad Government Balance sheets” as a top risk. As a pro-active measure, we developed an Economic risk indicator framework with scenario planning and possible mitigations. Info security & Business Continuity Focus areas for the year included enhancing the information security compliance and business continuity planning in customer engagements and data protection reviews & compliance Intellectual Property Protection Focus on implementation of Intellectual Property risk management continued during the year. The controls were further subjected to an independent stress testing for assessing implementation effectiveness. Large Project Risks Specific models to address risks in business segments/processes were rolled out such as, customer credit risk assessment, deal risk assessment, etc. Physical Security & Employee Safety Employee safety continued as a core focus with enhanced measures for transportation process (24*7 operations). Proactive anti-fraud Initiatives Rule based anomaly detection systems have been introduced to identify exceptions. The control environment has been further strengthened during the year with more automated controls. Failure modes were comprehensively re-assessed and technology solutions were explored and implemented to automate controls. Awareness & Training Role based training programs to enhance risk literacy covering Intellectual Property practices, information security compliance, risk management in large bids, delivery risk management, Foreign Corrupt Practices Act and UK Bribery Act compliance were deployed. Educational newsletters and case studies were also regularly published. Outlook We have followed a practice of providing only revenue guidance for our largest business segment, namely, IT Services. The guidance is provided at the release of every quarterly earnings when detailed Revenue outlook for the succeeding quarter is shared. Over the years, the Company has performed in line with quarterly Revenue guidance. On April 25, 2012, along with our earnings release for quarter ended March 31, 2012, we provided our most recent quarterly guidance. Revenue from IT Services segment for the quarter ending June 30, 2012 is likely to be ranged between USD 1,520-1,550 million*. * Guidance is based on the following exchange rates: GBP/USD at 1.58, Euro/USD at 1.31, AUD/USD at 1.07, USD/INR at 50.07. 46 Internal Control Systems and their adequacy We have presence across multiple countries, and a large number of employees, suppliers and other partners collaborate to provide solutions to our customer needs. Robust internal controls and scalable processes are imperative to manage this global scale of operations. Our listing on the New York Stock Exchange (NYSE) provided us an opportunity to get our independent auditors assess and certify our internal controls primarily in the areas impacting financial reporting. For the companies listed in the United States of America, the Public Company Accounting Reform and Investor Protection Act of 2002, more popularly known as the Sarbanes–Oxley Act requires: • • Management to establish, maintain, assess and report on effectiveness of internal controls over financial reporting and; Independent auditors to opine on effectiveness of internal controls over financial reporting. The entire evaluation of internal controls was carried out by a central team reporting into the Chief Financial Officer. We have obtained a clean and unqualified report from our independent auditors on the effectiveness of our internal controls. Material developments in Human resources/Industrial Relations front (including number of people employed) In our IT Services segments, we had 135,920 employees as of March 31, 2012. Attrition for the year in our IT Services business segment (excluding BPO operations, Indian IT operations and other overseas subsidiaries) was 19.5% compared with 24.1% last year. Voluntary attrition stood at 17.6% compared with 22.3% last year. We adopted the COSO framework (Framework suggested by Company of Sponsoring Trade way Organisation) for evaluating internal controls. COSO identifies five layers of internal controls, namely, Control Environment, Risk Assessment, Control Activity, Information and Communication and Monitoring. Information Technology controls were documented, assessed and tested under the COBIT framework. 47 Compensation/People practices Our human resources department is centralized at our corporate headquarters in Bangalore and functions across all of our business segments. We have implemented corporate-wide recruiting, training, performance evaluation and compensation programs that are tailored to address the needs of each of our business segments. Our relationship with employees and employee groups are based on mutual trust and respect and we continue to maintain the same spirit at all times. We continue to fulfill all requirements and commitments which could arise out of collective bargaining as required across various development centers and manufacturing facilities and other such agreements in specific geographies across Americas, Europe and Asia. We hire entry level graduates from both the top engineering and management universities in India, as well as more experienced lateral hires through employee referral programs, advertisements, placement consultants, our website postings and walk-ins. To facilitate employee growth within the Company, all new openings are first offered to our employees. The nature of work, skill sets requirements and experience levels are highlighted to the employees. Applicants undergo the regular recruitment process and, if selected, get assigned to their new roles. We continually strive to provide our employees with competitive and innovative compensation packages. Our compensation packages include a combination of salary, stock options, pension, and health and disability insurance. We measure our compensation packages against industry standards and seek to match or exceed them. We adopted an employee stock purchase plan in 1984, employee stock option plan in 1999 and 2000 and restricted stock unit option plan in 2004, 2005 and 2007. We have devised both business segment performance and individual performance linked incentive programs that we believe more accurately link performance to compensation for each employee. 48 DIRECTORS’ REPORT Dear Shareholders, I am happy to present the 66th Directors’ Report of your Company along with the Balance Sheet and Profit and Loss Account for the year ended March 31, 2012. Financial Performance Key aspects of financial performance for Wipro and its group companies and standalone / consolidated financial results of Wipro Limited for the financial year 2011-12 are tabulated below: (` in Mn) Consolidated Sales and Other income Profit before Tax Provision for Tax Minority interest and equity in earnings/(losses) in affiliates Profit for the year* Appropriations Interim Dividend Proposed Dividend on equity shares Corporate tax on distributed dividend Transfer to General Reserve Balance retained in Profit & Loss account 4,917 9,835 4,908 9,818 4,917 9,835 4,908 9,818 Standalone 2011-12 2010-11 2011-12 2010-11 384,563 318,094 329,103 269,812 69,813 13,845 62,348 9,695 59,186 12,335 57,055 8,618 *profit for the year in standalone results is after considering loss of ` 2,787 million (March 2011: gain of ` 326 million) relating to changes in fair value of forward contracts designated as hedges of net investment in non-integral foreign operations, translation of foreign currency borrowings and changes in fair value of related cross currency swaps together designated as hedges of net investment in non-integral foreign operations. In the consolidated Accounts, these are considered as hedges of net investment in non-integral foreign operations and are recognized directly in shareholders’ funds. (Refer note 33 on page 141) Outlook According to Nasscom Strategic Review 2012, Global technology spend is expected to grow by 5% in 2012. Worldwide IT Services spending is expected to grow 4.3% in 2012 and 4.7% in 2013. The growth is fuelled both by use of IT to reduce cost structures as well as increased adoption of cloud, mobility, analytics and social media. India accounts for less than 5% of the global technology spending and this provides a strong headroom for growth of the IT-BPO sector in India. Worldwide IT spending is forecast to total $3.7 trillion in 2012, a 2.5 percent increase from 2011, according to the latest outlook by Gartner, Inc. Subsidiary Companies The Ministry of Corporate Affairs, Government of India, has granted a general exemption under section 212(8) of the Companies Act, 1956 from the requirement to attach detailed financial statements of each subsidiary. In compliance with the exemption granted, we have presented in page 190 to 192 summary financial information for each subsidiary. The detailed financial statements and audit reports of each of the subsidiaries are available for inspection at the registered office of the company during office hours between 11 am to 1 pm and upon written request from a shareholder, your company will arrange to send the financial statements of subsidiary companies to the said shareholder. 77 56,045 271 52,924 46,851 48,437 2,393 4,685 2,204 4,844 2,393 4,685 2,204 4,844 65,365 31,150 51,684 26,663 Wipro Limited 49 Consolidated Results Our Sales for the current year grew by 21% to ` 384,563 million and our Profit for the year was ` 56,045 million, recording an increase of 6% over the previous year. Dividend Your Directors recommend a final Dividend of 200% (` 4/- per equity share of ` 2/- each) to be appropriated from the profits of the year 2011-12, subject to the approval of the shareholders at the ensuing Annual General Meeting. The Dividend will be paid in compliance with applicable regulations. During the year 2011-12, unclaimed dividend of ` 5,731,075/was transferred to the Investor Education and Protection Fund, as required under the Investor Education and Protection Fund (Awareness and Protection of Investor) Rules, 2001. Interim Dividend Pursuant to the approval of Board of Directors on January 20, 2012, your company had distributed an interim dividend of ` 2/- per share, of face value of ` 2/- each, to shareholders, who were on the Register of Members of the company as at closing hours of January 25, 2012, being the record date fixed by the Board of Directors for this purpose. Interim Dividend was paid on February 3, 2012. Acquisitions in IT Space During the year, the Company acquired IT Business of SAIC Group and entered in to a Joint Venture Agreement with Kawasaki and for an acquisition in Brazil for its Infrastructure Engineering Business. Investments in direct subsidiaries During the year under review, your Company had invested an aggregate amount of USD 101 Mn as equity in its direct subsidiaries i.e. Wipro Cyprus Private Limited, Wipro Inc, Wipro Holdings Mauritius Limited and Wipro Infrastructure Engineering Machinery (Changzhou) Co., Ltd. Apart from this, your Company had funded its subsidiaries, from time to time, as per the fund requirements, through loans, guarantees and other means. Research and Development Requirement under Rule 2 of Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 regarding Technical Absorption and Research and Development in Form B is given in page 53 to 54 of the Annual Report, to the extent applicable. Corporate Governance & Corporate Social Responsibility Your company believes that Corporate Governance is the basis of stakeholder satisfaction. Your company’s governance practices are described separately in detail in the section on Corporate Governance Report (page 64 to 92) of this Annual Report. Your company has obtained a certificate from V. Sreedharan & Associates, Company Secretaries on compliance with clause 49 of the listing agreement with Indian Stock Exchanges. This certificate is given in page 93 of this Annual Report. The Ministry of Corporate Affairs had issued National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business 2011 for adoption by companies. The Guidelines broadly outline governance based on Ethics, Transparency and Accountability, Goods and Services that contribute to sustainability, promote well being of employees, respect the interest of disadvantaged, vulnerable and marginalised groups of stake holders, promotion of human rights, protect and restore environment, supporting inclusive growth and equitable development and provide value to our customers. Corporate Social Responsibility initiatives are provided in page no. 94 to 116. Personnel The particulars of employees as required by Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employee) Rules, 1975 as amended is reported in page no. 58 to 63 provided as annexure ‘C’ to this report. Wipro Employee Stock Option Plans (WESOP) / Restricted Stock Unit Plans Summary Information on stock options program of the Company is provided as Annexure B of this report. The information is being provided in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme) and (Employee Stock Purchase Scheme) Guidelines, 1999, as amended. No employee was issued Stock Option, during the year equal to or exceeding 1% of the issued capital of the Company at the time of grant. Foreign Exchange Earnings and Outgoings During the year, your company has earned foreign exchange of ` 234,413 million and the outgoings in foreign exchange were ` 99,782 million, including outgoings on materials imported and dividend. Conservation of Energy The Company has taken several steps to conserve energy through its “Sustainability” initiatives disclosed separately as part of this Annual Report. The information on Conservation of Energy as required under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is provided in Annexure A in page 52 of this Annual Report. Directors: (A) Re-appointment Articles of Association of the Company provide that at least two-third of our Directors shall be subject to retirement by rotation. One third of these retiring Directors must retire from office at each Annual General Meeting of the shareholders. A retiring Director is eligible for reelection. Dr. Jagdish N Sheth, Mr. Shyam Saran and Dr. Henning Kagermann, Directors, retire by Annual Report 2011-12 50 rotation and, being eligible offer themselves for reappointment at the ensuing Annual General Meeting. The Board Governance and Nomination Committee have recommended their reappointment for consideration of the Shareholders approval. Group The names of the Promoters and entities comprising “group” (and their shareholding) as defined under the Monopolies and Restrictive Trade Practices (“MRTP”) Act, 1969 for the purposes of Section 3(1)(e)(i) of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 include the following: Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Name of the shareholder Azim H Premji Yasmeen A Premji Rishad Azim Premji Tariq Azim Premji Mr. Azim Hasham Premji Partner Representing Hasham Traders Mr Azim Hasham Premji Partner Representing Prazim Traders Mr. Azim Hasham Premji Partner Representing Zash Traders Regal Investments & Trading Company Pvt Ltd Vidya Investment & Trading Company Pvt Ltd Napean Trading & Investment Company Pvt Ltd Azim Premji Foundation (I) Pvt. Ltd Azim Premji Trust Azim Premji Trustee Company Private Limited Azim Premji Foundation for Development Azim Premji Foundation Azim Premji Trust Services Private Limited Azim Premji Safe Deposits Private Limited Azim Premji Custodial Services Private Limited Total No. of shares 93,405,100 10,62,666 6,86,666 2,65,000 543,765,000 541,695,000 540,408,000 1,87,666 1,87,666 1,87,666 10,843,333 1,95,187,120 NIL NIL NIL Nil Nil Nil 1,927,880,883 Cost Audit Report The Cost Audit report for the year ended March 31, 2011 was due on September 30, 2011 and was filed on September 24, 2011. Fixed Deposits Your company has not accepted any fixed deposits. Hence, there is no outstanding amount as on the Balance Sheet date. Green Initiatives in Corporate Governance Ministry of Corporate affairs have permitted companies to send electronic copies of Annual Report, notices, quarterly results intimation about dividend etc., to the e-mail IDs of shareholders. We are accordingly arranging to send soft copies of these documents to the e-mail IDs of shareholders available with us or with our depositories. In case any of the shareholder would like to receive physical copies of these documents, the same shall be forwarded on written request to the Registrars M/s. Karvy Computer Share Private Limited. Directors’ Responsibility Statement On behalf of the Directors I confirm that as required under Section 217 (2AA) of the Companies Act, 1956. a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures are made from the same; We have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for the period; We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and We have prepared the annual accounts on a going concern basis. b) c) d) Acknowledgements and Appreciation Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company. I am sure you will join our Directors in conveying our sincere appreciation to all employees of the Company and its Subsidiaries and Associates for their hard work and commitment. Their dedication and competence has ensured that the Company continues be a significant and leading player in the IT services industry. For and on behalf of the Board of Directors Azim H. Premji, Chairman Bangalore, June 15, 2012 Management’s Discussion and Analysis Report The Management’s Discussion and Analysis on Company’s performance – industry trends and other material changes with respect to the Company and its subsidiaries, wherever applicable, are presented from page 32 to 48 of this Annual Report. Re-appointment of Statutory Auditor The auditors, M/s. BSR & Co (Regt. No. 101248W), Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if re-appointed. The proposal for their re-appointment is included in the notice for Annual General Meeting sent herewith. Wipro Limited 51 Annexure A forming part of the Directors Report A.  DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY (Wipro Infrastructure Engineering Division) ELECTRICITY 2011 - 12 2010 - 11 a. Purchased Unit KWH 9,890,305 8,528,328 Total Amount 57,612,166 46,194,564 ` Rate / Unit 5.83 5.42 ` b. Own Generation through Diesel Generator Unit KWH 2,204,232 1,080,430 Unit/Litre of diesel Units 2.99 2.92 Cost Per Unit 14.64 13.28 ` B. CONSUMPTION PER UNIT PRODUCTON (Wipro Infrastructure Engineering Division) Hydraulic cylinder Electricity Diesel (kwh/cyl.) (Lts/Cyl.) 2011-12 19.83 1.21 2010-11 20.11 0.77 CONSUMPTION PER UNIT PRODUCTON (Wipro Consumer Care Division) Vansapati Electricity Liquid Diesel Oil (KWH/Tonne) (Litres/tonne) ACT STD 2011 - 12 149.74 99.00 NA 2010 - 11 132.38 109.00 General Lighting Electricity Liquid Diesel Oil System (KWH/000 Nos.) (Litres/000 Nos.) ACT STD ACT STD 2011 - 12 13.48 16.00 0.17 2010 - 11 14.04 16.00 0.36 Flourescent Electricity Liquid Diesel Oil Tube Light (KWH/000 Nos.) (Litres/000 Nos.) ACT STD ACT STD 2011 - 12 113.77 129.00 2.25 2010 - 11 107.55 129.00 5.19 D. C.  DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY (Wipro Consumer Care Division) ELECTRICITY 2011 - 12 2010 - 11 a Purchased Unit KWH 23,012,741 19,857,756 Total Amount 122,844,357 98,858,732 ` Rate / Unit 5.34 4.98 ` b Own Generation Through Diesel Generator Unit KWH 1,525,930 1,961,637 Unit / Litre of Units 3.22 3.14 diesel Cost Per Unit 13.10 12.25 ` COAL Quantity Tones 4,075 1,843 Total Cost 18,867,818 10,184,851 ` Avg. Rate 4,630 5,528 ` FURNACE OIL Quantity FO Ltrs. 4,537,803 3,149,110 Total Cost 211,036,593 102,419,666 ` Avg. Rate 46.51 32.52 ` LPG & PROPANE Quantity Kgs. 826,377 741,751 43,754,490 30,954,644 Total Cost ` 52.95 41.73 Avg. Rate ` H2 GAS Quantity CMT 128,323 108,642 4,276,179 3,547,283 Total Cost ` 33.32 32.65 Avg. Rate ` Annual Report 2011-12 52 Form B Wipro’s R&D Activities: 2011–12 Strengthening the portfolio of Applied Research, Centers of Excellence (CoE), Customer Co-innovation, Cloud, Mobility, Analytics, Solution Accelerators, and Software Engineering Tools & Methodologies, have been the focus of Wipro’s Research and Development (R & D) activities. Applied Research Wipro’s focus on Inclusive Innovation is aimed at discovering where and how Information and Communication Technology (ICT) can address effective delivery of G2C and B2B services to rural citizens in Education, Health, Agriculture, and Rural Development sectors. The Applied Research in Intelligent Systems Engineering (ARISE) lab initiative set up this year jointly with IMEC, the world’s leading applied research organization in Nano-technology and Nanoelectronics provides a collaborative platform for customers to co-innovate and build affordable solutions for emerging market needs. ARISE has started applied research and system prototyping activities in two disruptive Nano-technologies - Hyper-spectral imaging (HSI) and Body area networks that have wide-ranging applications for Healthcare, Insurance, Manufacturing and Energy & Utilities customers. Center of Excellence (COE) Wipro’s COE create competencies in emerging areas of technology and industry domains and incubate new practices for business growth. Big Data, Machine to Machine, Natural User Experience, Web Science, and Nano electronics were the technology themes identified for the year and Investments in these technology themes have resulted in development of industry application prototypes in the area of Augmented Reality, Sensor Networks and Big Data visualization. The COE also created new services in the areas of Big Data Management, Application Performance, and Asset Tracking solutions thereby helping Wipro establish partnerships with leading technology platform providers like Microsoft, Cisco, EMC, HP, Oracle, Amazon, Salesforce and emerging technology startups like Splunk. Customer Co-Innovation Wipro was involved in performance tuning for a large project for Government of India. In-depth consulting was provided, based on custom Hadoop configuration with load balancing, performance tuning, proactive monitoring, and replication setup. Wipro conducted a detailed study of existing modeling and simulation systems used by insurance major and forecast a data explosion due to the implementation of Solvency II regulatory requirements. We worked closely for a large Indian Non-Renewable energy provider in setting up RTU’s connected to the Windmills to meet this regulatory need. Cloud Integrated Cloud Services (ICS) group was created this year to provide end-to-end business solutions to customers using cloud technologies. The offers include process-centric solutions (Process transformation leveraging SaaS Applications, Cloud Enabled Process Outsourcing, Cloud Based Business Platforms) and technology-centric solutions (Application Transformation for Private and Public Cloud, Cloud Based Infrastructure Transformation, Custom Cloud Engineering) and a wide variety of service products that align to these solution areas.  The team is focused on creating industry relevant vertical cloud solutions for the various industries by building a strong value network of partners, creating IPs, frameworks, and accelerators.    Mobility Wipro Mobility Solutions enables the mobile individual – at work and outside. Wipro brings its own IP on business processes and application code to help its clients rapidly implement mobile solutions, particularly in the areas of sales force, customer support, and employee benefits management. For enterprises looking to reach the mobile customer, we offer remote health management, anywhere TV and entertainment, connected home, automobile navigation and entertainment, mobile retail and mobile banking solutions. Analytics A new Service line ‘Analytics & Information Management’ was formed with a view to maximize opportunities in the Analytics space.  Big Data capabilities required by enterprises were developed in data management and processing areas like Non-relational, No SQL databases, in-memory databases, and map-reduce technologies. We are also creating a Big Data / Appliances Lab-on-Hire to enable Customer POCs. Partnerships with academia include collaborations with top universities with leading quant programs – Duke University, DePaul, Indian Statistical Institute, IIM-B and Carnegie Mellon. Solution Accelerators Wipro continues to invest in reusable IPs/solution accelerators (components, tools, and frameworks). We have integrated various accelerator assets to create integrated stacks and solutions. Our Digital TV broadcast middleware reusable IPs (ATSC, OpenCable, Cable Card components for US market; DVBT/S/C for Europe; ISDB-T/S for Japan; MHEG-5 etc.) have helped DTV OEMs reduce R&D costs and product development lead time. Today, the stacks have over 30 licensees. Some other examples of integrated stack and solutions and business platforms are: the Wipro Cloud stack, digital marketing platform and enterprise grade smart meters, Telco in a Box, and Oracle-based Clinical Trials solutions. Wipro has also developed a Telehealth solution platform designed around patient centricity, device interoperability, open standards for integration with backend PHR and decision support tools/systems. Wipro Limited 53 Software Engineering Tools & Methodologies We are committed to our investments in ‘in-house’ development of software engineering tools to improve productivity and quality. Some examples include, Wipro Requirements Management, Wipro Style, Wipro Accelerator, Wipro Unit Test, Wipro code checker and Deepcheck. We have also developed a tool called Wipro PAT (Portfolio Analysis Tool) in Transition area. We have developed a tool for Flex delivery especially for Managed Services engagements for effective queue, capacity, and productivity management at reduced cost. KEDB (Known Error Data Base) Tool on our Knowledge Management platform is another Wipro developed tool that helps in faster ticket resolution in managed services projects. An automated SHINE workflow-enabled learning framework was implemented on the Knowledge Management platform that reduces the cycle time to make new joiners ready for productive deployment on projects. Patents In FY 11-12, Wipro has filed for 15 new patents. From the previous filings, 10 patents have been granted. Wipro has also submitted invention disclosures and has contributed for its client to win patent in the pay-TV services area on techniques adopted in the middleware architecture. We have bagged two US Patents on algorithms/IPs in video post processing. Expenditure on R & D During the year, under review, your Company incurred an expenditure of ` 1,904 million including capital expenditure in continued development of R & D activities. Annual Report 2011-12 54 Annexure B DISCLOSURE IN COMPLIANCE WITH THE CLAUSE 12 OF THE SEBI (EMPLOYEE STOCK OPTION SCHEME) AND (EMPLOYEE STOCK PURCHASE SCHEME) GUIDELINES 1999, AS AMENDED FOR THE YEAR ENDED MARCH 31, 2012 WESOP 1999 WESOP 2000 Sl. No. Description 1 Total Number of options under the Plan Wipro Restricted Stock Unit Plan 2005 20,000,000 (Adjusted for the issue of bonus shares of the year 2005 and 2010) ADS Restricted Stock Unit Plan 2004 20,000,000 ADS representing 20,000,000 underlying equity shares (Adjusted for the issue of bonus shares of the years 2004. 2005 and 2010) 40,000 Face value of the share Face value of the share - Wipro Restricted Stock Unit Plan 2007 16,666,667 (Adjusted for the issue fo bonus shares of the year 2010 2 Fair market value i.e. the market price as defined by the Securities and Exchange Board of India Fair market value i.e. the market price as defined by the Securities and Exchange Board of India ADS 2000 Wipro Stock Option Restricted Plan Stock Unit Plan 2004 20,000,000 15,000,000 50,000,000 250,000,000 (Adjusted for (Adjusted for the ADS (Adjusted for the issue of issue of bonus representing the issue of bonus shares 15,000,000 bonus shares in shares in the of the years the years 2004, years 2004, 2005 underlying equity shares 2004, 2005 2005 and 2010) and 2010) (Adjusted for and 2010) the issue fo bonus shares of the years 2004, 2005 and 2010) 30,000 Exercise price Face value of being not less the share than 90% of the market price on the date of grant 807,077 704,586 704,586 Face value of the share 3 Options/RSUs grants approved during the year Pricing formula 4 5 6 2,372,446 2,974,372 2,974,372 568,568 668,125 668,125 - 7 - - - 78,046 @ 1,409,172 814,191 @ 5,948,744 411,853 @ 1,336,250 214,750 - 8 9 Options Vested during the year Options exercised during the year Total number of shares arising as a result of exercise of option (as of March 31, 2012) Options lapsed/forfeited during the year * Variation of terms of options upto March 31, [email protected] Money realised by exercise of options during the year (`) Wipro Limited 55 56 Sl. No. Description WESOP 1999 WESOP 2000 Annual Report 2011-12 10 - ADS 2000 Wipro Stock Option Restricted Plan Stock Unit Plan 2004 2,204,074 Wipro Restricted Stock Unit Plan 2005 6,797,504 ADS Restricted Stock Unit Plan 2004 2,173,692 Wipro Restricted Stock Unit Plan 2007 1,605,460 11 - - - - - - - Nil Nil 30,000 Nil Nil Nil Nil Nil 30,000 Nil Nil Nil Nil Nil Nil Nil Nil 30,000 Nil Nil Nil Nil Nil Nil Nil Nil 30,000 10,000 Nil Nil Nil Nil Nil Nil Nil 12 Total number of options in force at the end of the year (granted, vested and unexercised/unvested and unexercised Employee wise details of options granted to : i. Senior Management during the year T K Kurien ii. Senior Management holding 5% or more of the total number of options granted during the year a) Senior Management as above b) Other employee(s) iii. Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Diluted Earning per Share pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS ) 20 19.09 19.09 19.09 19.09 19.09 19.09 19.09 Sl. No. Description WESOP 1999 WESOP 2000 13 Not applicable as there were no grants during the year under this Plan Difference between cost as per fair value and intrinsic value method is ` 6.33 million 14 Where the Company has calculated the employees compensation cost using the instrinsic value of the stock opitons, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair vaule of the options. The impact of this difference on profits and on EPS of the Company Weighted average exercise prices and weighted average fair values of options separately for options whose exercise price either equals or exceeds or is less than the market prices of the stock Not applicable as there were no grants during the year under this Plan Exercise price is ` 480 per option. Market price was lower than exercise price as on March 31, 2012 - 15 ADS 2000 Wipro Stock Option Restricted Plan Stock Unit Plan 2004 Since these Not applicable as options were there were no granted at grants during a nominal exercise the year under this price, intrinsic Plan value on the date of grant approximates the fair value of options Exercise price Not applicable as ` 2/- per there were no option. Fair grants during value the year ` 436.47/- as under this on March 31, 2012 Plan - Wipro Restricted Stock Unit Plan 2005 Since these options were granted at a nominal exercise price, intrinsic value on the date of grant approximates the fair value of options Exercise price ` 2/- per option. Fair value ` 436.47/- as on March 31, 2012 - ADS Restricted Stock Unit Plan 2004 Since these options were granted at a nominal exercise price, intrinsic value on the date of grant approximates the fair value of options Exercise price ` 2/per option. Fair value $ 10.97/- as on March 31, 2012 - Wipro Restricted Stock Unit Plan 2007 Since these options were granted at a nominal exercise price, intrinsic value on the date of grant approximates the fair value of options Exercise price ` 2/- per option. Fair value ` 436.47/- as on March 31, 2012 - Since these Since these Since these Since these options were options were options were options were granted at granted at granted at granted at a nominal a nominal a nominal a nominal exercise exercise exercise exercise price, intrinsic price, intrinsic price, intrinsic price, intrinsic value on the value on the value on the value on the date of grant date of grant date of grant date of grant approximatels approximatels approximatels approximatels the fair value the fair value the fair value the fair value of options of options of options of options * As per the Plan, Options/RSUs lapse only on termination of the Plan. If an Option/RSU, expires or becomes unexercisable without having been exercised in full, such options shall become available for future grant under the Plan. @ Compensation Committee had during the year approved variation in vesting period for some of the options granted due to change in control in one of the subsidiary companies during the year as per terms of the Plans. A description of method and significant assumptions used durng the year to estimate the fiar values of options, including the following weighted average information: (a) risk free interest rate (b) expected life (c ) expected volatility (d) expected dividends and (e) the price fo the underlying share in market at the time of option grant 8% 5 years 62.2 1.28% ` 480 Not applicable as there were no grants during the year under this Plan Not applicable as there were no grants during the year under this Plan Wipro Limited 57 58 Annexure C Particulars of Employees forming part of the Director’s Report for the year ended March 31, 2012 - Information pursuant to Section 217(2A)(b)(ii) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules,1975. Remuneration (`) 9,948,504 6,440,204 12/4/1984 AMIE Elec. & Communication,, Diploma Electronics BE BE,Mtech Mtech,Btech MCA, MBA B.A, MBA 46 24 45 21 48 25 50 26 First Employment First Employment First Employment TVS Electronics Limited AF Ferguson & Co 19 24 26 48 46 48 52 42 47 25 23 24 28 20 23 First Employment CMC Limited ITI Ltd. First Employment 47 25 Raba Contel .P. Ltd 48 27 11/8/1983 MSc,MPHIL,B.SC. 51 27 First Employment Senior Vice President Date of joining (mm/dd/yyyy) Televista Electronics Vice - President – Computer Division Sr. Vice President Vice - President Vice - President Vice - President Executive VP – HR, Wipro & President, Wipro Infrastructure Engineering Vice - President Vice - President Vice - President International Sw Ind Vice - President Vice - President Vice - President Dcm Data Products Senior Vice President Blue Star Ltd Tata Consultancy Services M.Tech (Electrical), B.E. (Electronics & Communication) BE,MBA 4/10/1989 6/26/1989 11/2/1989 CA BE MBA, BE ORG Systems Senior Vice President Vice - President Vice - President Qualification AGE Experience Last Employment Designation Annual Report 2011-12 Sl No. Name 1 Subrahmanyam P 2 Sanjesh K Gupta 3 9,916,552 9,533,534 6,140,235 23,945,449 11/4/1991 7/16/1990 2/16/1987 3/31/1986 Deepak Jain 11,497,165 3/21/1986 4 Vasudevan A 5 Siby Abraham 6 Prasenjit Mazumder 7 Pratik Kumar 8 7,219,154 10,035,765 8,006,224 7,198,925 6,419,441 11,906,894 16,402,633 6,997,280 8,124,943 3/2/1989 1/12/1998 11/26/1988 BTech,MBA BTech Computer Engineering 11/16/1988 MMS 10/13/1988 MBA & BE (Hons) Electrical & Electronics 5/31/1995 BE 5/6/1988 BTech,Mtech, MBA 49 9/15/1994 B.SC., Btech, EMIB 48 2/15/1993 Btech,Mtech 43 Suresh B 7,099,445 5/22/1989 BE, ME 48 25 9 Dayapatra Nevatia 10 Madhavan S 11 Rajesh Ram Mishra 12 Kumudha Sridharan 13 Jayanta Dey 14 Sanjiv K R 15 Soumitro Ghosh 16 Jayakrishnan S 17 Prasad V Bhatt 18 13,809,721 14,856,467 8,051,495 Anil K Jain 10,137,198 4/10/1989 48 47 44 45 22 25 22 23 ORG Systems Reckit Coleman Tata Unisys Ltd Sr. Vice President Senior Vice President Pertech Computers Sr. Vice President Vice - President 19 Sriram Srinivasan 20 Anand Sankaran 21 Tapan D Bhat Sl No. 6,026,410 9,960,918 6,075,486 9,634,053 10,546,190 11,333,219 7,549,577 6,517,510 6,533,651 7,984,315 9/20/1999 BE E C,  Masters in Marketing Management ( MMM) PGD,Btech ME C A ,CS, CWA, MBA BE MECHANICAL, B Sc, PGDM-PM&IR MBA, B.E(Electrical) ACA,BA ,SSC MBA B.SC.,SSC, 8/16/2002 B Com 52 46 39 43 44 40 50 45 46 45 43 23 9/6/1999 PHD C SCIENCE,,BTech ELECTRICAL, 50 24 8/23/1999 MCA C SCIENCE, 42 19 5/17/1999 MBA,BE 44 21 12/15/2000 BTech,MTech,PHD 45 20 Evizeon Pricewaterhouse Coop Patni Computers 9/5/1992 PGDM,Btech, PHd 50 25 Niit Ltd 5/15/1995 PGDM MKTG&FIN,,BE E&C, 40 17 First Employment 12/1/1994 PGDBA, BTech C SCIENCE 43 22 TVS Electronics Limited Vice - President Vice - President Sr. Vice President Chief Technology Officer Vice - President Vice - President University of Head - Architecture Council Central Florida, USA AT & T Labs USA Vice - President 4/29/1991 PGDBM,BE 46 24 Hindustan Petroleum Sr. Vice President 10/3/1990 BE, , 51 27 Telco Vice - President Name Remuneration (`) Date of joining (mm/dd/yyyy) Qualification AGE Experience Last Employment Designation 22 Subhash Khare 23 Achuthan Nair 24 Pramod Idiculla 25 Rajan Kohli 26 Selvan D 27 Dr.Anurag Srivastava 28 Amitava Sharma 29 Arun Krishnamurthi 30 Udaya Bhaskar Vemulapati 31 Arun Kumar Singh 32 9,146,796 11,308,511 6,205,456 14,519,002 6,511,630 9,593,391 8,138,773 7,785,324 7,910,654 9/1/2000 3/1/2001 11/7/2002 10/4/2010 5/11/2009 7/15/2002 4/1/2002 1/25/1991 Prasanna Gamma Kali 13,120,765 12/2/1999 27 23 16 16 23 16 28 20 24 22 Microland ltd First Employment Reckitt Benckiser Pricewaterhouse Coop GE Genpact CYGNET SYSTEMS Dusk Valley Technology Daksh Stream Tracmail Senior Vice President Chief Information Officer Head WBPO Vice - President Senior Vice President Vice - President Vice - President Vice - President Vice - President Vice - President 33 Ramesh Nagarajan 34 Manish Dugar 35 Raja Ukil 36 Saurabh Govil 37 Mohd Ehteshamul Haque 38 Puneet Chandra 39 Richa Tripathi 40 Harsh Bhatia Wipro Limited 41 Srijit Rajappan 59 60 Sl No. 7,218,436 7,813,448 11,917,039 7,531,069 24,935,880 14,146,986 8,020,100 10,750,896 6,037,891 10,534,437 7,130,645 11,376,850 27,313,427 11,472,631 7,687,260 6,136,176 7,616,264 5/3/1990 1/13/1988 19/03/1987 BE MSc Chemical,,B.SC. Chemical PGDBM Information Management ,,BE Computer Science MTech,,BE Mechanical 9/3/1992 12/21/1992 PGDM,Btech PGDM,,BE Electronics 11/15/1985 BE,MBA 04/12/1985 B.Tech, 4/19/1999 B.Tech, MMS 46 50 51 46 51 45 4/22/2002 PG Diploma, BTech,B. SC. 50 2/18/1991 ICWA,B COM 54 31 28 22 26 25 24 26 22 8/1/1982 MTech, BE 60 35 10/1/2009 MBA, LLB 51 27 9/18/1989 BE 48 22 2/6/1997 CA 52 27 Sundaram Fasteners Ltd First Employment Microsoft Corp 4/10/1980 B Com, FCA 55 31 Lovelock & Lewis 8/1/2008 PGM 47 23 Microsoft Corp 8/29/2001 BE 53 31 Mascot Systems Vice - President Vice - President Executive Director & CFO Senior Vice President Vice - President Chief Learning Officer & Head - CHRD Bharath Electronics Vice - President Ltd National Textiles Corpn Ltd., Satyam Computer Services Limited Gillette First Employment Horizon Mktg & Serv First Employment Usha Microprocessors First Employment Sr VP and Global Operations Head Global Head-Operations Sr. Vice President President Chief Sales and Operations Officer-APJ Vice - President Vice - President Vice - President 3/12/2007 BE ,MBA 42 18 Capital One Financial Vice - President 5/24/2005 BA 48 21 Igate Global Solutions Vice - President Name Remuneration (`) Date of joining (mm/dd/yyyy) Qualification AGE Experience Last Employment Designation 42 Sanjeev Bhatia Annual Report 2011-12 43 Keyur Maniar 44 Sairaman Jagannathan 45 Suprio Sengupta 46 Suresh C Senapaty 47 Srinivasan P V 48 Ramanath L 49 Abhijit Bhaduri 50 Padmanabha K N 51 Harish J Shah 52 Hariprasad Hegde 53 Anil Chugh 54 Vineet Agrawal 55 Rajat Mathur 56 Neeraj Jaitley 57 Vinod Kumar T V 58 Anurag Seth 59 13,117,797 8,186,384 Vishwas Deep 6,130,778 3/1/1992 43 48 50 20 25 26 First Employment CMC Limited Suri Computers Vice - President Chief Business Operations Officer Vice - President 60 Bhanumurthy B M 61 Venkatesh H R Sl No. 7,633,078 7,756,703 6,133,994 6,162,720 14,830,125 7,303,776 6,260,534 6,137,354 6,749,548 7,542,430 6,867,587 11,482,792 13,235,962 7,699,975 6,097,315 8,337,441 51,290,104 6,058,181 8,421,216 7,640,097 6,191,200 8/23/2002 8/25/2003 4/15/1998 2/1/2002 2/11/2000 CA BE Electrical & Electronics BTech MCA, B.SC. BE 1/2/2001 BE 8/21/2000 Diploma 12/11/1997 BE, MBA 44 45 49 52 47 38 46 44 8/1/1992 BE 42 2/1/1992 BTech,Mtech 45 11/27/1996 BE 47 25 20 19 19 25 25 29 24 17 23 14 4/1/1992 B.SC., C A 45 21 3/1/1994 BE 42 20 3/6/1993 Diploma 46 22 Tamimi Adv/ Technolo EBE R&D (Systems) Sharp & Tannan Chatm ITI Ltd. First Employment HCL Limited 12/9/1991 BE 43 21 IDM 11/6/1991 BE Mechanical 49 26 Unicad Technologies 6/29/1982 PGDM,Btech 54 28 First Employment 7/1/1996 BTech, PGDBM 36 15 First Employment 7/3/1995 MTech,,BE, 57 33 ITI Ltd. Vice - President General Manager Executive Vice President Vice - President Vice - President Vice - President Principal Consultant Senior Vice President General Manager Sr. Vice President SBU Head Electrocure Systems General Manager & Services Pvt Ltd. Crompton Greaves Ltd Wipro GE General Manager Informix Internation Vice - President CEO-IT Business and Executive Director 24/7 Customer.Com Vice - President GE India HSBC Group N.A Vice - President General Manager Eveready industries Chief Risk Officer ( Union Carbide) 6/4/1988 BE 46 24 First Employment Vice - President 5/2/1994 MTech ,BE, PGSM 43 20 Private Limited Vice - President Name Remuneration (`) Date of joining (mm/dd/yyyy) Qualification AGE Experience Last Employment Designation 62 Srinivasa Rao P 63 Guha Patra P S 64 Balasubramaniyan SM 65 Srikanth N 66 Sambuddha Deb 67 Vishwas Santurkar 68 Syed Mansoor Ahmad 69 Moiz H Vaswadawala 70 Sujeeth Joseph 71 Kesavan V 72 Anup Kumar Sureka 73 Srinivas Pallia 74 Sangita Singh 75 Giri K K 76 Rajesh Nag 77 Anurag Mehrotra 78 Kurien T K 79 Balakrishnan Ramani 80 Rajeev Mendiratta 81 Giridharan Kolandaivelu Wipro Limited 82 Alexis Samuel 61 62 Sl No. 6,171,492 7,489,980 1/21/2009 BTech Elec. & Communication ,,ME Computer Science PGDM BE B Com B.SC. BE B COM,ACA MBA,B COM, BE ,MTech,PG Diploma B COM,ACA BCO Law ,,LLB Law BE Electrical Engineering BE B COM, C A B.E, MMS BE BE 1/29/2010 3/17/2010 B.Tech, PGDM B.A - Hons , PG Dip PM & IR 49 56 66 48 41 54 44 50 44 45 49 44 21 26 29 31 45 26 12 32 24 29 19 21 48 23 45 26 46 17 E Serve DSL Software Ltd. BSNL Infosys Reliance Industries Compaq First employment Tyco Health Care Diamond Innovations Videocon Atlas Copco EILL Godrej Consumer Care UBS / Cognizant 42 21 NIIT Foundation Vcustomer 51 23 KLM/NW Airlines 42 17 Hoogovers 42 21 Bharti Airtel Ltd Vice - President General Manager Vice - President General Manager Vice - President Vice - President Vice - President General Manager Sr. Vice President Vice - President Senior Vice President Chairman - Wipro Ltd Chief Quality Officer Vice - President Vice - President Sr. Vice President Sr. Vice President Chief Marketing Officer Vice - President 41 19 Polaris Software Technology General Manager 02/12/2005 BE, PGDM 46 22 Satyam Computer Services Limited Vice - President Name Remuneration (`) Date of joining (mm/dd/yyyy) Qualification AGE Experience Last Employment Designation 83 Somjit Amrit Annual Report 2011-12 84 Venkata Koteswara Rao Sriramagiri 7,281,945 6,090,161 8,575,869 6,427,939 6,551,730 6,845,382 6,851,575 6,387,776 11,977,682 6,812,421 10,184,917 19,781,066 7,893,852 6,539,123 6,234,157 6,235,766 6,833,453 6,601,937 6,134,996 7/1/1993 10/31/1995 5/19/1992 12/1/2008 2/28/2003 8/17/1966 7/5/2002 11/13/1997 10/23/2006 5/29/2006 2/20/2006 2/17/2006 8/4/2005 3/31/2003 8/12/2002 6/4/2001 5/26/2010 85 Sriram Tanjore Vaithianatha 86 Rajesh Sehgal 87 Hoshedar Contractor 88 Santhosh Ayyapath 89 Prashant Kulkarni 90 Geetha Anantharaman 91 Sandeep Kumar 92 Atul Kapoor 93 Ramit Sethi 94 Padmanabhan A 95 Thandava Murthy TD 96 Premji A H 97 Jagdish Ramaswamy 98 Raghavendran Swaminathan 99 Dilip Basole 100 Parag Kulkarni 101 Anil Kumar Raina 102 V.Suresh 103 Rajesh Sahay Sl No. Name Remuneration (`) Date of joining (mm/dd/yyyy) 4/28/2006 1/4/1991 8/12/1992 10/29/1990 MTech,BE 57 32 Alghmin Communicatin Services, Kuwait INDCHEM Texas Instruments Sun Microsystems Inc Ericsson India Rpg Cellular Services Ltd. 23 34 25 40 41 42 46 47 17 18 18 23 20 C DOT Shriram Honda EID Parry First Employment P L ENTERPRISES LTD BEML Asian Paint Ltd. The Chugh Firm Btech 48 26 Tata Unisys Ltd M.BA.,B.SC. 46 22 First Employment Vice - President Senior Vice President Chief Information Officer BE 50 25 HP GLOBALSOFT LTD Head WBPO Qualification AGE Experience Last Employment Designation Part of the year 4,409,916 4,554,651 6,160,587 8,970,795 1 Ashutosh Vaidya 2 Pavan Kumar Goyal 3 Ramakanth Desai 4 Badiga L K 5 4,522,810 10,935,885 5,289,547 5,913,653 6,389,219 6,005,628 6,125,118 6,348,855 8,958,620 11,356,546 6,881,500 5,635,634 10/28/2011 10/6/2006 BE B.A.(Hons), LL.B, LL.M 8/18/1994 BE 10/1/1996 CA,B.COM 2/21/2000 B.A,PGDM 11/29/1990 ICWA,B COM 48 11/16/1988 BE,PGDM 58 4/2/1994 ME 47 3/1/2000 PGDBM,BE 47 22 1/28/2003 ME 57 32 1/8/2007 BTech,PGDM 51 24 7/1/1991 BE 51 26 Vijayakumar I 5,349,129 7/16/1990 BE,B.SC. 47 23 Chief Technology Officer Vice - President Vice - President Vice - President Vice - President Vice - President Chief Risk Officer Vice - President Vice - President Senior Vice President Vice - President Vice - President Senior Vice President 6 Nagamani Murthy 7 Harsha Lal 8 Ravishankar Gs 9 Suryanarayana Valluri 10 Dipankar Banerjee 11 Mohan Rao S 12 Ramakrishnan R 13 Ajoy Menon 14 Rajendra Kumar Shreemal 15 Pawan Kumar S 16 Sudarshan S A 17 Inderpreet Sawhney Notes: 1. Remuneration comprises of salary, commission, peformance based paymets, allowance, medical, perquisite and company’s contribution to PF and superannuation. 2. Rishad Pemji, who is in the employment of the Company, is a relative of the Chairman and Managing Dircector as per the definition of “relative” under the Companies Act, 1956. 3. The nature of employment is contractual in all the above cases. 4. In terms of the Notification dated March 31, 2011 dated by Ministry of Corporate Affairs, employees posted and working in a country outside India, not being Directors or their relatives have not been included in the above statement. 5. None of the employees except the Chairman holds 2% or more of the paid up equity share capital of the Company. Wipro Limited 63 CORPORATE GOVERNANCE REPORT Our Corporate Governance principles and practices have been articulated through the Company’s Code of Business Conduct and Ethics, Corporate Governance guidelines, charters of various sub-committees of the Board and Company’s Disclosure policies. These policies seek to focus on enhancement of long-term shareholder value without compromising on Ethical Standards and Corporate Social Responsibilities. These practices form an integral part of the Company’s operating plans. The Spirit of Wipro represents the core values of Wipro framed around these Corporate Governance principles and practices. The three values encapsulated in the Spirit of Wipro are: Intensity to Win • • • • • • Make customers successful Team, innovate and excel Respect for the individual Thoughtful and responsible Delivering on commitments Honesty and fairness in action • Floor, Opp. Tower 8, No. 72 Keonics Electronic City, Hosur Road, Bangalore - 561 229. For those of you, who are unable to make it to the meeting, the facility to appoint a proxy to represent you at the meeting is also available. For this you need to fill a proxy form and send it to us. The last date for receipt of proxy forms by us is July 21, before 4.00 p.m. Annual General Meetings and other General Body meeting of the last three years and Special Resolutions, if any. For the year 2008-09 we had our Annual General Meeting on July 21, 2009, at 4.30 p.m. The meeting was held at Wipro Campus, Cafeteria Hall EC-3, Ground Floor, Opp. Tower 8, No. 72, Keonics Electronic City, Hosur Road, Bangalore – 561 229. The following resolutions was passed. • Re-appointment of Mr. Azim H Premji as Chairman and Managing Director of the Company as well as the payment of salary, commission and perquisites. On the same date at the same venue we had a Court Convened Extraordinary General Meeting. In this meeting the scheme of Amalgamation of Indian branch offices Wipro Networks Pte. Ltd., Singapore and WMNetserv Limited, Cyprus with Wipro Limited was taken up. Act with Sensitivity Unyielding Integrity Corporate Governance philosophy is put into practice at Wipro through the following four layers, namely, • • • • Governance by Shareholders, Governance by Board of Directors, Governance by Sub-committee of Board of Directors, and Governance of the management process For the year 2009-10 we had our Annual General Meeting on July 22, 2010, at 4.30 p.m. The meeting was held at Wipro Campus, Cafeteria Hall EC-3, Ground Floor, Opp. Tower 8, No. 72, Keonics Electronic City, Hosur Road, Bangalore – 561 229. The following resolutions were passed (last one being special resolution). • • Appointment of Dr. Henning Kagermann as a Director. Appointment of Mr. Shyam Saran as a Director. FIRST LAYER: GOVERNANCE BY SHAREHOLDERS Annual General Meeting Annual General meeting for the year 2011-12 is scheduled on July 23, 2012 at 4.00 p.m. The meeting will be conducted at Wipro Campus, Cafetaria Hall, EC-3 Ground Re-appointment of Mr. Rishad Premji under Section 314(1B) for holding office or place of profit. For the year 2010-11 we had our Annual General Meeting on July 19, 2011, at 4.30 p.m. The meeting was held at Wipro Campus, Cafeteria Hall EC-3, Ground Floor, Opp. Tower 8, No. 72, Keonics Electronic City, Hosur Road, Bangalore - 561 229. Annual Report 2011-12 64 The following resolutions were passed (last one being special resolution). • • • • Appointment of Mr. M. K. Sharma as a Director. Appointment of Mr. T. K. Kurien as a Director.  e-appointment of Mr. Azim H. Premji as Chairman and R Managing Director.  o pay remuneration by way of commission for a further T period of five years commencing from April 1, 2012 to any one or more or all of the existing Non-Executive Directors, or Non-Executive Directors to be appointed in future. share transfers in physical form, lodged with M/s. Karvy Computershare Private Limited, Registrar and Share Transfer Agent of the Company on or before June 30, 2012. (ii) In respect of shares held in electronic form, to those “deemed members” whose names appear in the statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as at the opening hours on July 1, 2012. National ECS facility As per RBI notification, with effect from October 1, 2009, the remittance of money through ECS is replaced by National Electronic clearing Services (NECS) and banks have been instructed to move to the NECS platform. NECS essentially operates on the new and unique bank account number, allotted by banks post implementation of Core Banking Solutions (CBS) for centralized processing of inward instructions and efficiency in handling bulk transaction. In this regard, shareholders holding shares in electronic form are requested to furnish the new 10-digit Bank Account Number allotted to you by your bank (after implementation of CBS), along with photocopy of a cheque pertaining to the concerned account, to your Depository Participant (DP). Please send these details to the Company/Registrars, if the shares are held in physical form, immediately. If your bank particulars have changed for any reason, please arrange to register the NECS with the revised bank particulars. The Company will use the NECS mandate for remittance of dividend either through NECS or other electronic modes failing which the bank details available with Depository Participant will be printed on the dividend warrant. All the arrangements are subject to RBI guidelines, issued from time to time. Special Resolution passed during the Financial Year 2011-12 through the Postal Ballot Procedure There were no Special Resolutions passed through Postal Ballot Procedure during the year 2011-12. Awards and Rating The Company has been awarded the highest rating of Stakeholder Value and Corporate Rating 1 (called SVG 1) by ICRA Limited, a rating agency in India being an associate of Moody’s. This rating implies that the Company belongs to the Highest Category on the composite parameters of stakeholder value creation and management as also Corporate Governance practices. The company has been awarded the National award for excellence in Corporate Governance from Institute of Company Secretaries of India during the year 2004. The company has been given the award for excellence in Financial Reporting from Institute of Chartered Accountants of India during the year 2012. Financial Calendar Our tentative calendar for declaration of results for the financial year 2012-13 is as given below: Table 01: Calendar for Reporting Quarter ending Fo r t h e q u a r t e r e n d i n g June 30, 2012 For the quarter and half year ending September 30, 2012 For the quarter and nine month ending December 31, 2012 For the year ending March 31, 2013 Release of results Fourth week of July 2012 Fourth week of October 2012 Third week of January 2013 Third week of April 2013 In addition, the Board may meet on other dates if there are special requirements. Interim Dividend Your Board of Directors declared an Interim Dividend of ` 2/- per share on equity shares of ` 2/- each on January 20, 2012. Record Date for Interim Dividend The record date for the purpose of payment of Interim Dividend was fixed as January 25, 2012, and the Interim Dividend was paid to our shareholders who were on the Register of Members as at the closing hours of January 25, 2012. Final Dividend Your Board of Directors has recommended a Final Dividend of ` 4/- per share on equity shares of face value of ` 2/- each. Date of Book closure Our Register of members and share transfer books will remain closed from July 1 to July 23, 2012 (both days inclusive). Final Dividend Payment Date Dividend on equity shares as recommended by the Directors for the year ended March 31, 2012, when declared at the meeting, will be paid on July 25, 2012. (i) to those members whose names appear on the Company’s register of members, after giving effect to all valid Wipro Limited 65 Mr. Azim H. Premji Chairman and managing Director of the Company has been awarded Long time Achievement Award for Excellence in Corporate Governance from Institute of Company Secretaries of India during the year 2011. The Company has also been assigned LAAA rating to Wipro’s long term credit. This is the highest credit quality rating assigned by ICRA Limited to long term instruments. The Company’s Long Term Corporate Credit Rating by Standard and Poor (S & P), a Credit Rating Agency is BBB+ (Outlook Negative). The Company was ranked among the Top 5 in Greenpeace International Ranking Guide and regained its top position among The Company has been Awarded as one of the world’s Most Ethical Company’s by Ethisphere Institute. Corporate Social Responsibility and Business Responsibility Reporting Wipro’s sustainability reporting articulates our perspective on the emerging forces in the global sustainability landscape and Wipro’s response on multiple dimensions. For each of the three dimensions of economic, ecological and social sustainability, we state the possible risks as well as the opportunities that we are trying to leverage. Our fourth ‘Sustainability Report’ for 2010-11 is a comprehensive articulation of Wipro’s multiple initiatives on Energy and Greenhouse Gas reduction, Water Efficiency, Waste Management, Diversity, Employee Engagement, Customer Stewardship, Education, Community Care and Advocacy. Our report has been rated A+ for the fourth successive instance based on a rigorous external audit by DNV AS, the globally renowned provider of sustainability assurance services. The rating represents the highest standards of transparency and completeness in reporting. The theme of our sustainability report for 2010-11 “The imperative of hope” symbolizes the pressing need for seeking answers to the intractable social and environmental problems that the world faces in a spirit of optimism and courage. The challenges are so many and so deep rooted that many view them with a sense of resignation as part of an existential dilemma that we can only hope to cope with and not ever resolve. Your Company’s Sustainability Report for 2010-11 has been assessed by DNV at the A+ level, which represents the highest levels of transparency, coverage and quality of reporting. You can know more about our sustainability and Social Initiatives in our website www.wipro.com/about.wipro/sustainability/ disclosures.aspx. Your Company’s Sustainability Report for 2011-12, which forms part of this Annual Report 2011-12 includes the disclosures recommended under National Voluntary Guidelines for the Social, Environmental and Economic Responsibilities of Business, 2011 issued by the Ministry of Corporate Affairs, Government of India. Shareholders’ Satisfaction Survey The Company conducted a Shareholders’ Satisfaction survey in July 2011 seeking views on various matters relating to investor services. 1,944 shareholders participated and responded to the survey. The analysis of the responses reflects an average rating of about 4.08 on a scale of 1 to 5. Around 85% of the shareholders indicated that the services rendered by the Company were good /excellent and were satisfied. We are constantly in the process of enhancing our service levels to further improve the satisfaction levels based on the feedback received from our shareholders. We would welcome any suggestions from your end to improve our services. Means of Communication with Shareholders / Analysis We have established procedures to disseminate, in a planned manner, relevant information to our shareholders, analysts, employees and the society at large. Our Audit Committee reviews the earnings press releases, SEC filings and annual and quarterly reports of the Company, before they are presented to the Board of Directors for their approval for release. News Releases, Presentations, etc.: All our news releases and presentations made at investor conferences and to analysts are posted on the Company’s website at www.wipro.com/ corporate/investors. Quarterly results: Our quarterly results are published in widely circulated national newspapers such as The Business Standard, the local daily Kannada Prabha. We have also commenced intimating quarterly results to shareholders by email from January 2011 onwards. Website: The Company’s website contains a separate dedicated section “Investors” where information sought by shareholders is available. The Annual report of the Company, earnings press releases, SEC filings and quarterly reports of the Company apart from the details about the Company, Board of directors and Management, are also available on the website in a userfriendly and downloadable form at www.wipro.com/corporate/ investors. Annual Report: Annual Report containing audited standalone accounts, consolidated financial statements together with Directors’ report, Auditors’ report and other important information are circulated to members and others entitled thereto. Table 02: Communication of Results Means of communications Earnings Calls Publication of results Analysts meet Number of times during 2011-12 4 4 1 Annual Report 2011-12 66 Listing on Stock Exchanges, Stock Codes, International Securities Identification Number (ISIN) and Cusip Number for ADRs Your company’s shares are listed in the following exchanges as of March 31, 2012 and the stock codes are: Table 03: Stock codes Equity shares Bombay Stock Exchange Limited (BSE) National Stock Exchange of India Limited (NSE) American Depository Receipts New York Stock Exchange (NYSE) Notes: 1. 2. 3. Listing fees for the year 2011-12 has been paid to the Indian Stock Exchanges Listing fees to NYSE for the calendar year 2012 has been paid. The stock code on Reuters is [email protected] and on Bloomberg is WIPR.BO Stock Codes 507685 Wipro We have also internally fixed turnaround times for closing the queries/complaints received from the shareholders within 7 working days if the documents are clear in all respects. Address for correspondence The address of our Registrar and Share Transfer Agents is given below. Karvy Computershare Private Ltd. Karvy House Karvy Computer Share Private Limited, Unit: Wipro Limited, Plot No: 17-24, Vittal Rao Nagar, Madhapur, Hyderabad:- 500 081. Tel: 040 23420815 Fax: 040 23420814 E-mail id: [email protected] Contact person: Mr. V K Jayaraman E-mail id: [email protected] Contact person: Mr. Krishnan S Shareholder grievance can also be sent through email to the following designated email id: [email protected] Overseas depository for ADSs J.P. Morgan Chase Bank N.A. 60, Wall Street New York, NY 10260 Tel: 001 212 648 3208 Fax: 001 212 648 5576 Indian custodian for ADSs India sub custody J.P. Morgan Chase Bank N.A. J.P. Morgan Towers, 1st Floor, off C.S.T. Road, Kalina, Santacruz (East), Mumbai - 400 098 Tel: 91-22-61573484 Fax: 91-22-61573910 Web-based Query Redressal System Members may utilize this new facility extended by the Registrar & Transfer Agents for redressal of their queries. Please visit http://karisma.karvy.com and click on “investors” option for query registration through free identity registration to log on. Investor can submit the query in the “QUERIES” option provided on the web-site, which would give the grievance registration number. For accessing the status/response to your query, please use the same number at the option “VIEW REPLY” after 24 hours. The investors can continue to put additional queries relating to the case till they are satisfied. Shareholders can also send their correspondence to the Company with respect to their shares, dividend, request for annual reports and shareholder grievance.The contact details are provided below: Mr.V. Ramachandran, Ph: 91 80 28440011 (Extn 226185) Company Secretary Fax: 91 080 28440051 Wipro Limited E-mail: [email protected] Doddakannelli Sarjapur Road Bangalore - 560 035 WIT International Securities Identification Number (ISIN) ISIN is an identification number for traded shares. This number needs to be quoted in each transaction relating to the dematerialized equity shares of the Company. Our ISIN number for our equity shares is INE075A01022. CUSIP Number for American Depository Shares The Committee on Uniform Security Identification Procedures (CUSIP) of the American Bankers Association has developed a unique numbering system for American Depository Shares. This number identifies a security and its issuer and is recognized globally by organizations adhering to standards issued by the International Securities Organization. Cusip number for our American Depository Scrip is 97651M109. Corporate Identity Number (CIN) O ur Cor porate Identit y Number (CIN), allotted by Ministry of Company Affairs , Government of India is L32102KA1945PLC020800, and our Company Registration Number is 20800. Registrar and Transfer Agents The Power of share transfer and related operations has been delegated to Registrar and Share Transfer Agents Karvy Computershare Private Limited, Hyderabad. Share Transfer System The turnaround time for completion of transfer of shares in physical form is generally less than 7 working days from the date of receipt, if the documents are clear in all respects. Wipro Limited 67 Mr. G. Kothandaraman, Ph: 91 80 28440011 (Extn 226183) Fax: 91 080 28440051 Senior ManagerE-mail: [email protected] Secretarial & Compliance Wipro Limited Doddakannelli Sarjapur Road Bangalore - 560 035 Analysts can reach our Investor Relations Team for any queries and clarification Financial/Investor Relations related matters: Mr. Manoj Jaiswal, Vice President & Corporate Treasurer Wipro Limited Doddakannelli Sarjapur Road Bangalore - 560 035 Mr. Aravind Viswanathan, Head Investor Relations, Wipro Limited,Doddkannelli, Sarjapur Road, Bangalore - 560 035 Mr R Sridhar CFO-International Sales & Operations Wipro Limited East Brunswick Tower 2 New Jersey US Ph: 91 80 28440011 (Extn. 226186) Fax 91 080 28440051 E-mail: [email protected] Description of voting rights All our shares carry voting rights on a pari-passu basis. Pursuant to Clause 5A of the Listing Agreement, Shareholders holding physical shares and not having claimed share certificates have been sent reminder letters to claim the certificates from the Company. Based on their response, such shares will be transferred to “unclaimed suspense account” as per the Listing Agreement subject to necessary due diligence and verification of such claims. The disclosure as required under Clause 5A of the Listing Agreement is given below: • Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the beginning of the year : Nil Number of shareholders who approached the issuer for transfer of shares from the Unclaimed Suspense Account during the year: Nil Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account during the year : Nil Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the end of the year : Nil • Ph : 91 80 28440011 (226143) Fax: 91 80 28440051 E-mail: [email protected] com • • Ph: +1 650-316-3537 Email : [email protected] com Table 04: Distribution of Shareholding and categories of Shareholders as on March 31, 2012 No. of Share holders 0-5000 222,590 1,698 5001 - 10000 10001 - 20000 1,085 20001 - 30000 421 30001 - 40000 225 40001 - 50000 163 50001 - 100000 307 100001 and above 669 Total 227,158 Category March 31, 2012 % of No. of Shares % of Total No. of Share Shares Equity holders 97.98 23,801,266 0.97 215,769 0.75 6,209,071 0.25 1,659 0.47 7,816,272 0.32 1,111 0.18 5,164,044 0.22 434 0.09 3,912,806 0.16 223 0.08 3,644,390 0.15 152 0.15 10,926,971 0.44 281 0.30 2,397,281,408 97.49 608 100.00 2,458,756,228 100.00 220,237 March 31, 2011 % of No. of Shares % of Total Shares Equity 97.97 23,535,421 0.96 0.75 6,088,430 0.25 0.50 8,009,893 0.33 0.20 5,396,893 0.22 0.10 3,904,440 0.16 0.07 3,418,497 0.14 0.13 9,942,841 0.40 0.28 2,394,112,730 97.54 100.00 2,454,409,145 100.00 We have 5,397 shareholders holding one share each of the Company. Annual Report 2011-12 68 Table 05: Major City Wise Report As On March 31, 2012 S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 City Ahmedabad Bangalore Chandigarh Chennai Cochin Coimbatore Guwahati Hyderabad Indore Jaipur Jamshedpur Kanpur Kolkatta Lucknow Madurai Mangalore Mumbai Nagpur New Delhi Panaji Pune Rajkot Surat Vadodara Others Total No. of shareholders 8,152 20,274 812 12,610 927 1,303 600 6,957 2,091 3,341 643 3,467 11,227 1,385 701 1,593 55,543 1,322 9,728 1,007 7,111 1,085 2,883 5,015 67,380 227,157 No. of shares 1,166,338 1,964,765,124 192,227 3,514,226 207,303 138,273 55,840 2,239,977 422,011 331,013 95,058 500,654 1,344,287 185,355 79,706 241,762 398,774,861 216,847 3,181,541 189,489 1,879,207 208,988 15,642,918 4,454,282 16,764,131 2,416,791,418 Note: Excludes shares held by custodians and against which depository receipts have been issued I)(a) Shareholding Pattern as of March 31, 2012 under Clause 35 of the Listing Agreement Partly paid-up shares No. of partly paid-up As a % of Total No. of As a % of Total No. of shares of shares partly paid-up shares the Company Held by promoter/promoter group 0 0 0 0 0 0 Held by public Total 0 0 0 Outstanding convertible No. of outstanding As a % of total no. of As a % of total no. of shares of the securities: securities outstanding convertible Company assuming full conversion securities of the convertible securities Held by promoter/promoter group 0 0 0 0 0 0 Held by public Total 0 0 0 Warrants: No. of warrants As a % of total no. of As a % of total no. of shares of warrants the Company, assuming full conversion of warrants Held by promoter/promoter group 0 0 0 Held by public 0 0 0 Total 0 0 0 Wipro Limited 69 I)(a) Shareholding Pattern as of March 31, 2012 under Clause 35 of the Listing Agreement Partly paid-up shares No. of partly paid-up As a % of Total No. of As a % of Total No. of shares of shares partly paid-up shares the Company Total paid-up capital of the 2,458,756,228 shares of ` 2/- each = ` 4,917,512,456 Company, assuming full conversion of warrants and convertible securities Category Category of shareholder code (I) (II) Number of Total number Number of shareholders of shares shares held in (III) dematerialized form Total shareholding as Shares Pledged a percentage of total or otherwise number of shares encumbered As a As a Number As a percentage percentage of Percentage of (A+B) of (A+B+C) Shares (1) (a) (b) (c) (d) (e) (f ) (2) (a) (b) (c) (d) (B) (1) (a) (b) (c) (d) (e) (f ) (g) (h) Shareholding of Promoter and Promoter Group Indian Individuals/ Hindu Undivided Family Central Government/ State Government(s) Bodies Corporate (Promoter in his capacity as Director of Private Limited/Section 25 Companies)* Financial Institutions/ Banks Any Other – Partnership firms (Promoter in his capacity as partner of Partnership firms) Trust Sub-Total (A)(1) Foreign Individuals (Non-Resident Individuals/ Foreign Individuals) Bodies Corporate Institutions Any Other (specify) Sub-Total (A)(2) Total Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2) Public Shareholding Institutions Mutual Funds/ UTI Financial Institutions/ Banks Central Government/ State Government(s) Venture Capital Funds Insurance Companies Foreign Institutional Investors (exclusive of ADR) Foreign Venture Capital Investors Any Other (specify) Sub-Total (B)(1) 4 Nil 4 95,419,432 Nil 11,406,331 95,419,432 Nil 11,406,331 3.95 Nil 0.47 3.88 Nil 0.46 Nil Nil Nil 3 Nil 1,625,868,000 Nil 1,625,868,000 Nil 67.27 Nil 66.13 1 195,187,120 12 1,927,880,883 Nil Nil 195,187,120 1,927,880,883 Nil 8.08 79.77 Nil 7.94 78.41 Nil Nil Nil Nil Nil Nil Nil Nil Nil NIL NIL 12 1,927,880,883 Nil Nil Nil NIL 1,927,880,883 Nil Nil Nil NIL 79.77 Nil Nil Nil NIL 78.41 Nil NA NA Nil NA NA 202 16 Nil Nil 3 423 Nil Nil 644 49,882,499 422,679 Nil Nil 33,532,300 163,931,370 Nil Nil 247,768,848 49,882,499 422,679 Nil Nil 33,522,300 163,931,370 Nil Nil 247,768,848 2.06 0.02 Nil Nil 1.39 6.78 Nil Nil 10.25 2.03 0.02 1.36 6.67 10.08 Annual Report 2011-12 70 Category Category of shareholder code (I) (II) Number of shareholders (III) Total number of shares Number of shares held in dematerialized form Total shareholding as a percentage of total number of shares Shares Pledged or otherwise encumbered (2) (a) (b) (c) Non-Institutions Bodies Corporate Individuals (i) Holding nominal share capital up to ` 1 lakh. (ii) Individual shareholders holding nominal share capital in excess of ` 1 lakh. Any Other (specify) (i) Non-Resident Indians (ii) Trusts (a) Wipro Inc. Benefit Trust (b) Wipro Equity Reward Trust (c) Other Trust (iii) Non-Executive Directors and Executive Directors & Relatives** (iv) Clearing Members (v) Foreign Nationals Sub-Total (B)(2) Total Public Shareholding (B)= (B)(1)+(B)(2) TOTAL (A)+(B) Shares held by Custodians and against which Depository Receipts have been issued Promoter and Promoter Group Public GRAND TOTAL (A)+(B)+(C) 1,940 219,336 251 69,420,414 51,531,870 79,294,900 As a As a Number As a percentage percentage of Percentage of (A+B) of (A+B+C) Shares NA NA 69,373,245 2.87 2.82 50,169,680 51,216,875 2.13 3.28 2.10 3.23 4,652 1 1 17 5 23,381,102 1,614,671 13,226,600 193,440 156,094 6,258,088 1,614,671 13,226,600 1,934,404 156,094 0.97 0.07 0.55 0.01 0.01 0.95 0.07 0.54 0.01 0.01 284 14 226,501 227,145 2,269,484 53,112 241,141,687 488,910,535 2,269,484 53,112 194,531,289 442,300,137 0.09 0.00 9.98 20.23 100.00 0.09 0.00 9.81 19.88 98.29 NA Nil NA NA Nil NA 227,157 2,416,791,418 2,370,181,020 (C) 1 41,964,810 41,964,810 227,158 2,458,756,228 2,412,145,830 1.71 1.71 100 Nil Nil Wipro Limited 71 I)(b) Statement showing Shareholding of persons belonging to the category “Promoter and Promoter Group” Sr. No. Name of the shareholder Number of shares Shares as a Shares Pledged or otherwise encumbered percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (A)(1) above} (IV) Number (V) As a As a Percentage Percentage total A+B+C of (VI)=(V)/ sub-clause (I)(a) (III)*100 (VIII) Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil (I) (II) (III) 1 2 3 4 5 6 7 8 9 10 11 12 TOTAL Azim H Premji Yasmeen A Premji Rishad Azim Premji Tariq Azim Premji Mr. Azim H. Premji partner representing Hasham Traders Mr. Azim H. Premji partner representing Prazim Traders Mr. Azim H. Premji partner representing Zash Traders Regal Investment Trading Company Pvt. Ltd. Vidya Investment Trading Company Pvt. Ltd. Napean Trading Investment Company Pvt. Ltd. Azim Premji Foundation (I) Pvt. Ltd. Azim Premji Trust 93,405,100 1,062,666 686,666 265,000 543,765,000 541,695,000 540,408,000 187,666 187,666 187,666 10,843,333 195,187,120 1,927,880,883 3.80 0.04 0.03 0.01 22.12 22.03 21.98 0.01 0.01 0.01 0.44 7.94 78.41 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil I)(c) Statement showing Shareholding of persons belonging to the category “Public” and holding more than 1% of the total number of shares. Sr. No. Name of the shareholder Number of shares 32,947,882 32,947,882 Shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above} 1.34% 1.34% 1 Life Insurance Corporation of India TOTAL (I)(d) Statement showing details of locked-in shares” Sr. No. Name of the shareholder Category of No. of Shares Locked-shares as a percentage of total number of shares {i.e. Grand Shareholders (Promoters/ Total (A)+(B)+(C) indicated in public) Statement at para (l)(a) above} Public 403,668 0.02 Percentage     Wipro Inc. Benefit Trust(held through trustees for sole beneficiary of Wipro Inc.) TOTAL 0.02   403,668 0.02 0.02 Annual Report 2011-12 72 (II)(a) statement showing details of depository receipts (DRs) Sr.No. Type of outstanding DR (ADRs, GDRs, SDRs, etc.) Number of outstanding DRs Number of shares underlying outstanding DRs 41,964,810 41,964,810 Shares underlying outstanding DRs as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at Para(I)(a) above}  1.71% 1.71%     American Depository Receipts (JP MORGAN CHASE BANK) TOTAL 41,964,810 41,964,810 (II)(b) Statement showing Holding of Depository Receipts (DRs), where underlying shares are held by promoter/ promoter group in excess of 1% of the total number of shares. Sr. No Name of the DR Holder Type of outstanding DR (ADRs, GDRs, SDRs, etc.) Nil Number Shares underlying outstanding DRs as a of shares percentage of total number of shares {i.e., Grand underlying Total (A)+(B)+(C) indicated in Statement at para (I) outstanding (a) above} DRs Nil Nil 1 Nil *out of 11,406,331 equity shares shown under I(A)(c), 10,843,333 equity shares are held by Azim Premji Foundation (I) Pvt.Ltd. Mr. Premji is also the promoter Director of Azim Premji Foundation (I) Pvt. Ltd. These shares are included under “Promoter Category”. ** Out of 13,420,040 shares held by other Trusts, 13,226,600 equity shares are held by Wipro Equity Reward Trust. ** The shareholding comprises of 39,999 shares held by 3 Non- Executive Directors & relatives and 116,095 shares held by 2 Executive non promoter Directors and relatives. These directors not being Promoter Directors and in as much as they do not exercise any significant control over the company, they are classified under “Any Other” category. Note : “Promoter shareholding” and “Promoter Group” and “Public shareholding” as per Clause 40A of the Listing Agreement. The details of outstanding employee stock options as on March 31, 2012 are provided in Annexure B to the Director’s Report, as per SEBI (ESOP & ESPP) Guidelines, 1999 as amended from time to time. Dematerialization of shares and liquidity 98.10% of outstanding equity shares have been dematerialized up to March 31, 2012. Table 06: List of top ten shareholders of the Company as at March 31, 2012 Sl. Name of the shareholder No. 1 Mr Azim Hasham Premji Partner Representing Hasham Traders 2 Mr Azim Hasham Premji Partner Representing Prazim Traders 3 Mr Azim Hasham Premji Partner Representing Zash Traders 4 Azim Premji Trust 5 Azim H Premji* 6 JP Morgan Chase Bank (ADR Depository) 7 Life Insurance Corporation of India 8 Alco Company Private Limited 9 Custodian of Enemy Property (shares held on behalf of a nonresident shareholder as per law) 10 Wipro Equity Reward Trust No. of % shares 543,765,000 22.12 541,695,000 22.03 540,408,000 21.98 195,187,120 95,419,432 41,964,810 32,947,882 16,787,000 15,360,000 13,226,600 7.94 3.88 1.71 1.34 0.68 0.62 0.54 SECOND LAYER: GOVERNANCE BY THE BOARD OF DIRECTORS All our directors inform the Board every year about the Board membership and Board Committee membership they occupy in other companies including Chairmanships in Board/Committees of such companies. They notify us of any change as and when they take place in these disclosures at the board meeting. As on March 31, 2012, we had nine non-executive Directors, three executive Directors of which one executive Director is also Chairman of our Board. All the nine non-executive directors are independent directors i.e. independent of management and free from any business or other relationship that could materially influence their judgment. All the independent directors satisfy the criteria of independence as defined under listing agreement with Indian Stock Exchanges and New York Stock Exchange Corporate Governance standards. The profile of our Directors is given below as of March 31, 2012. Azim H. Premji has served as our Chief Executive Officer, Chairman and Managing Director (Designated as Chairman) since September 1968. More recently, Mr Azim Premji, Chairman, Wipro Limited has been honoured with the Padma Vibhushan award by Government of India for his contribution in trade and industry. Azim Premji is a graduate in Electrical Engineering from Stanford University, USA. * includes shares held by his immediate family members. Wipro Limited 73 Dr. Ashok Ganguly has served as a director on our Board since 1999. He is the Chairman of our Board Governance & Nomination Committee and Compensation Committee. He is currently the Chairman of ABP Pvt. Ltd (Ananda Bazar Patrika Group). Dr. Ganguly also currently serves as a non-executive director of Mahindra & Mahindra Limited and Dr Reddy Laboratories Limited. Dr Ganguly is on the advisory board of Diageo India Private Limited. Dr. Ganguly is the chairman of Research and Development Committee of Mahindra and Mahindra Ltd, Member of Nomination, Governance & Compensation Committee and Chairman of Science, Technology & Operations Committee of Dr Reddy’s Laboratories Ltd. He is a member of the Prime Minister’s Council on Trade and Industry and the India-USA CEO Council, established by the Prime Minister of India and the President of the USA. Dr. Ganguly is a Rajya Sabha Member. He is a former member of the Board of British Airways Plc (1996-2005) and Unilever Plc/NV (1990-97) and Dr. Ganguly was formerly the Chairman of Hindustan Unilever Limited (1980-90). Dr. Ganguly was on the Central Board of Directors of the Reserve Bank of India (2000-2009). In 2006, Dr. Ganguly was awarded the CBE (Hon) by the United Kingdom. In 2008, Dr. Ganguly received the Economic Times Lifetime Achievement Award. Dr. Ganguly received the Padma Bhushan award by the Government of India in January 1987 and the Padma Vibhushan award in January 2009. B.C. Prabhakar has served as a director on our Board since February 1997. He has been a practicing lawyer since April 1970. Mr. Prabhakar holds a B.A. in Political Science and Sociology and a BL. from Mysore University, India. Mr. Prabhakar serves as a non-executive director of Automotive Axles Limited and 3M India Limited. He is also a member of the Audit, Risk and Compliance Committee and Chairman of the Administrative and Shareholder Investor Grievances Committee of Wipro Limited. Dr. Jagdish N. Sheth has served as a director on our Board since January 1999. Dr. Sheth has been a professor at Emory University since July 1991. Previously, Dr. Sheth served on the faculty of Columbia University, Massachusetts Institute of Technology, the University of Illinois, and the University of Southern California. Dr. Sheth also serves on the board of Manipal Acunova Ltd. Dr.Sheth holds a B.Com (Honors) from Madras University, a M.B.A. and a Ph.D in Behavioral Sciences from the University of Pittsburgh. Dr. Sheth is also the Chairman of Academy of Indian Marketing Professionals. Narayanan Vaghul has served as a director on our Board since June 1997. He is the Chairman of our Audit, Risk and Compliance Committee, a member of the Board Governance & Nomination Committee and a member of the Compensation Committee. He was the Chairman of the Board of ICICI Bank Limited from September 1985 to April 2009. Mr. Vaghul is also on the Boards of Mahindra and Mahindra Ltd., Mahindra World City Developers Limited, Piramal Healthcare Limited, and Apollo Hospitals Enterprise Limited. Mr. Vaghul is on the boards of Hemogenomics Pvt. Ltd., Universal Trustees Pvt.Ltd., and IKP Trusteeship Services Limited. Mr. Vaghul is the Chairman of the Compensation Committee of Mahindra and Mahindra Limited and Piramal Healthcare Limited. Mr. Vaghul is also a member of the Audit Committee in Nicholas Piramal India Limited. Mr. Vaghul is a member of the Remuneration Committee of Mahindra World City Developers Limited and Apollo Hospitals Enterprise Limited. Mr. Vaghul is also the lead independent director of our Company. Mr. Vaghul holds Bachelor (Honors) degree in Commerce from Madras University. Mr. Vaghul was the recipient of the Padma Bhushan award by the Government of India in 2010. Mr. Vaghul also received the Economic Times Lifetime Achievement Award. Priya Mohan Sinha became a director of our Company on January 1, 2002. He is a member of our Audit, Risk and Compliance Committee, Board Governance & Nomination Committee and Compensation Committee. He has served as the Chairman of PepsiCo India Holdings Limited and President of Pepsi Foods Limited since July 1992. From October 1981 to November 1992, he was on the Executive Board of Directors of Hindustan Lever Limited (currently Hindustan Unilever Limited). From 1981 to 1985, he also served as Sales Director of Hindustan Lever Limited (currently Hindustan Unilever Limited). Currently, he is also on the board of Lafarge India Private Limited. He is also a member of Audit and Board and Governance Committee Lafarge India Private Limited. He was also the Chairman of Reckitt Coleman India Limited and Chairman of Stephan Chemicals India Limited. Mr. Sinha is also on the Advisory Board of Rieter India. Mr. Sinha holds a Bachelor of Arts from Patna University, and he has also attended the Advanced Management Program at the Sloan School of Management, Massachusetts Institute of Technology. William Arthur Owens has served as a director on our Board since July 1, 2006. He is also a member of the Board Governance and Nomination Committee. He has held a number of senior leadership positions at large multinational corporations. From April 2004 to November 2005, Mr. Owens served as Chief Executive Officer and Vice Chairman of the Board of Directors of Nortel Networks Corporation, a networking communications company. From August 1998 to April 2004, Mr. Owens served as Chairman of the Board of Directors and Chief Executive Officer of Teledesic LLC, a satellite communications company. From June 1996 to August 1998, Mr. Owens served as President, Chief Operating Officer and Vice Chairman of the Board of Directors of Science Applications International Corporation (SAIC), a research and engineering firm. Presently, Mr. Owens serves as a member of the Board of Directors of Polycom Inc., Intelius, Flow Mobile, Prometheus, and Chairman of Century Link Inc., a communications company. Mr. Owens holds an M.B.A. (Honors) degree from George Washington University, a B.S. in Mathematics from the U.S. Naval Academy and a B.A. and M.A. in Politics, Philosophy and Economics from Oxford University. Shyam Saran became a director of our Company on July 1, 2010. He has been a director of Indian Oil Corporation Limited since March 2012. He is a career diplomat who has served in significant positions in the Indian government for over three decades. He joined Indian Foreign Service in 1970. He last served as the Special Envoy of the Prime Minister of India (October 2006 to March 2010) specializing in nuclear issues, and he also was the Indian envoy on climate change. Prior to this he was Annual Report 2011-12 74 the Foreign Secretary of the Government of India from 2004 to 2006. He also served as the Ambassador of India to Nepal, Indonesia, Myanmar and Mauritius. His diplomatic stints have taken him to Indian missions in Geneva, Beijing and Tokyo. He has been a Fellow of the United Nations Disarmament Program in Geneva, Vienna and New York, U.S.A. Mr. Saran holds a Post Graduate degree in Economics. Mr. Saran has been honored with the Padma Bhushan award by the Government of India for his contribution in civil services. Dr. Henning Kagermann became a director of the Company on October 27, 2009. He served as Chief Executive officer of SAP AG until 2009. He has been a member of the SAP Executive Board since 1991. He is also President of Acatech (German Academy of Science and Technology) and currently a member of supervisory boards of Deutsche Bank AG, Munich Re, Deutsche Post, BMW Group in Germany and Nokia. Dr. Kagermann is a professor of Theoretical Physics at the Technical University Braunschweig, Germany and received an honorary doctorate from the University of Magdeburg, Germany. M K Sharma became a director of the Company on July 1, 2011. He is a member of our Audit, Risk and Compliance Committee. He served as Vice Chairman of Hindustan Unilever Limited from 2000 to 2007. He served as a whole-time director of Hindustan Unilever Limited from 1995 to 2000. He is currently on the boards of ICICI Lombard General Insurance Co. Limited, Fulford India Limited (Indian affiliate of MSD), Thomas Cook (India) Limited, Birla Corporation Limited, KEC International Limited and The Andhra Pradesh Paper Mills Limited. Mr. Sharma is a member of the Audit Committee of Fulford (India) Limited and Thomas Cook (India) Limited. Mr. Sharma is the Chairman of Remuneration Committee of Fulford (India) Limited. Mr. Sharma is a member the Shareholder’s Grievance Committee of Thomas Cook (India) Limited. Mr. Sharma is the Chairman of the Board Governance and Nomination Committee, Compensation Committee of ICICI Lombard General Insurance Co. Limited. Suresh C Senapaty has served as our Chief Financial Officer and Executive Director since April 2008 and served with us in other positions since April 1980. He is a member of the Administrative/ Shareholders & Investor Grievance Committee. Mr. Senapaty holds a B. Com. from Utkal University in India, and is a Fellow Member of the Institute of Chartered Accountants of India. Mr. Senapaty is on the Boards of the following Indian Subsidiary/ Associate companies: Wipro Trademarks Holding Limited, Wipro Chandrika Limited, Wipro Travel Services Limited, Cygnus Negri Investments Private Limited, Wipro Technology Services Limited, Wipro Consumer Care Limited and Wipro GE Healthcare Private Limited. Mr. Senapaty is also the Chairman of the Audit Committee of Wipro Technology Services Limited. T K Kurien has served as our Chief Executive Officer-IT Business and Executive Director, Wipro Limited since February 2011 and served with us in other positions since February 2000. Mr. Kurien is a Chartered Accountant. Mr. Kurien is also a member of the Board of Wipro GE Healthcare Private Limited. Information flow to the Board Members Information is provided to the Board members on a continous basis for their information, review, inputs and approval from time to time. More specifically, we present our annual Strategic Plan and Operating Plans of our businesses to the Board for their review, inputs and approval. Likewise, our quarterly financial statements and annual financial statements are first presented to the Audit committee and subsequently to the Board of Directors for their approval. In addition specific cases of acquisitions, important managerial decisions, material positive/negative developments and statutory matters are presented to the Board and Committees of the Board for their approval. As a system in most cases information to directors is submitted along with the agenda papers well in advance of the Board meeting. Inputs and feedback of Board members are taken in preparation of agenda and documents for the Board meeting. We schedule meetings of our business heads and functional heads with the Directors prior to the Board meeting dates. These meetings facilitate Directors to provide their inputs and suggestions on various strategic and operational matters directly to the business and functional heads. Meeting with directors enthuse and motivate our business leaders. Board Meetings We decide on the board meeting dates in consultation with Board Governance & Compensation Committee and all our directors, considering the practices of earlier years. Once approved by the Board Governance & Nomination Committee, the schedule of the Board meeting and Board Committee meetings is communicated in advance to the Directors to enable them to schedule their meetings. Our Board met four times in the financial year 2011-12, on April 25-27 2011, July 19-20 2011, October 30-31, 2011 and January 18-20,2012. Our Board meetings are normally scheduled for two days. The gap between two meetings did not exceed four months. The necessary quorum was present for all the meetings. Post-meeting follow-up system After the board meetings, we have a formal system of follow up, review and reporting on actions taken by the management on the decisions of the Board and sub-committees of the Board. Disclosure of materially significant related party transactions During the year 2011-12, no transactions of material nature had been entered into by the Company with the Management or their relatives that may have a potential conflict with interest of the Company. None of the Non-Executive Directors have any pecuniary material relationship or transactions with the Company for the year ended March 31, 2012, and have given undertakings to that effect as per clause 49 of the Listing Agreement. Wipro Limited 75 Details of transactions of a material nature with any of the related parties (including transactions where Directors may have a pecuniary interest) as specified in Accounting Standard 18 of the Companies (Accounting Standards) Rules, 2006, have been reported in the Notes to the Accounts and they are not in conflict with the interest of the Company at large. Register under Section 301 of the Companies Act, 1956 is maintained and particulars of transactions are entered in the Register, wherever applicable. Such transactions are provided to the Board, and the interested Directors neither participate in the discussion, nor do they vote on such matters, wherever approval of Board is sought. Details of non-compliance by the company, penalties, and strictures imposed on the company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years. The Company has complied with the requirements of the Stock Exchange or SEBI on matters related to Capital Markets, as applicable. Whistle Blower policy and affirmation that no personnel have been denied access to the Audit, Risk and Compliance Committee The Company has adopted an Ombuds process which is a channel for receiving and redressing of employees’ complaints. The details are provided in the section titled compliance with non-mandatory requirements of this report. No personnel of the Company were denied access to the Audit/Risk and Compliance Committee. Details of compliance with mandatory requirements and adoption of the non-mandatory requirements of this clause. Your Company has complied with all the mandatory requirements of the Clause 49 of the Listing Agreement. The details of these compliances have been given in the relevant sections of this Report. This Annual Report includes the disclosures recommended under National Voluntary Guidelines for the Social, Environmental and Economic Responsibilities of Business, 2011 issued by the Ministry of Corporate Affairs, Government of India. Please refer page 94 to 116 of this Annual Report for further details. Lead Independent Director The Board of Directors of the Company has designated Mr. N Vaghul as the Lead Independent Director. The role of the Lead Independent Director is described in the Corporate Governance guidelines of your company. Particulars of directors proposed for re-appointment. Dr. Jagdish N. Sheth, Dr. Henning Kagermann and Mr. Shyam Saran, retire by rotation and being eligible offer themselves for re-appointment at this Annual General Meeting. The Board Governance and Nomination Committee/Board have recommended their re-appointment for consideration of the Shareholders. Brief resume of the Directors proposed for re-appointment at the ensuing Annual General Meeting is provided as an Annexure to the Notice convening the Annual General Meeting. Remuneration Policy and criteria of making payments Directors Compensation Committee recommends the remuneration, including the commission based on the net profits of the Company for the Chairman and Managing Director and other Executive Directors. This is then approved by the Board and shareholders. Prior approval of shareholders is obtained in case of remuneration to non executive directors. The remuneration paid to Chairman and Managing Director and other Executive Directors is determined keeping in view the industry benchmark, the relative performance of the Company to the industry performance, and macro economic review on remuneration packages of CEOs of other organizations. Perquisites and retirement benefits are paid according to the Company policy as applicable to all employees. Independent Non-Executive Directors are appointed for their professional expertise in their individual capacity as independent professionals / Business Executives. Independent Non Executive Directors receive sitting fees for attending the meeting of the Board and Board Committees and commission as approved by the Board and shareholders. This remuneration approved by the Board subject to the condition that cumulatively it shall not exceed 1% of the net profits of the Company for all Independent Non Executive Directors in aggregate for one financial year subject to an individual limit for each of the Non-Executive Directors. The remuneration by way of commission paid to the Independent Non-Executive directors is determined periodically & reviewed based on the industry benchmarks. Details of Remuneration to all Directors Table 07 provides the remuneration paid to the Directors for the services rendered during the financial year 2011-12. No stock options were granted to any of the Independent Non Executive Directors during the year 2011-12. Annual Report 2011-12 76 Table 07: Directors remuneration paid and grant of stock options during the financial year 2011-12 Dr. Ashok S. Ganguly Henning Kagermann None 125,000* 80,[email protected] Dr. Jagdish N. Sheth Suresh C. Senapaty B. C. Prabhakar Azim H. Premji Relationship with directors Salary Allowances Commission /Incentives Other annual compensation Deferred benefits Stock options granted during the year Sitting fees Notice period None 3,000,000 1,310,184 None - None 1,200,000 - None 100,000* - None 2,375,000 - None 1,950,000 - None 125,000* - None None None - None 47,57,100 1,12,50,000 5,692,478 6,237,519 1,555,623 1,403,345 11,678,942 16,766,045 771,497 3,318,750 60,000 11,237,925 3,175,000 1,606,037 2,626,891 - 2,000,000 1,500,000 - Upto 6 Months 340,000 260,000 80,[email protected] 240,000 240,000 160,[email protected] Upto 6 Months Upto 6 Months 80,000 140,000 * Figures mentioned in $ - as amounts payable in $ @ Figures in ` equivalent to amount paid in foreign currency # Appointed as Director with effect from July 1, 2011 All figures other than specifically stated above are in Indian Rupees M. K. Sharma# Shyam Saran T.K. Kurien P. M. Sinha Bill Owens N. Vaghul Wipro Limited 77 Azim H. Premji N. Vaghul B. C. Prabhakar Dr .Jagdish N. Sheth Dr. Ashok S. Ganguly P. M. Sinha Bill Owens Suresh C. Senapaty T.K. Kurien Shyam Saran Henning Kagermann Category Independent NonExecutive Director 20.02.1997 7 3 2 4 Yes 00002014 00040052 00332717 00010812 00035257 5,000 1,666 33,333 00422976 Yes Yes Yes Yes Yes 4 4 4 3 4 4 Yes 91,083 00018711 3 1 1 2 1 4 4 Yes 25,012 03009368 2 2 4 1 6 1 01.01.1999 01.01.1999 01.01.2002 01.07.2006 18.04.2008 01.02.2011 01.07.2010 1 4 Yes 03116287 Independent NonExecutive Director Independent NonExecutive Director Independent NonExecutive Director Independent Executive NonDirector Executive Director Promoter Director Independent NonExecutive Director 09.06.1997 Executive Director Independent Independent Non-Executive Non-Executive Director Director 27.10.2009 4 Yes 02449128 Independent NonExecutive Director 01.07.2011 8 2 6 3 Yes 00327684 Date of appointment 16 4 Yes 95,419,432 00234280 01.09.1968 Directorship in other companies * Chairmanship in Committees of Board of other companies * Membership in Committees of Board of other companies * No. of Board meetings attended Attendance at the last AGM held on July 19, 2011 Number of shares held as on March 31, [email protected] Director Identification number *This does not include position in foreign companies, position as an advisory board member and position in companies under Section 25 of the Companies Act, but includes private companies. *None of the Directors of our Company were members in more than 10 committees nor acted as chairman of more than five committees across all companies in which they were Directors. The Committee membership and committee Chairmanship shown above includes Audit Committee, Compensation Committee, Board Governance/Nomination Committee and Shareholders and Investor Grievance Committee. @ Includes shares held jointly with immediate family members.. M. K. Sharma 78 Table 08: Key Information pertaining to directors as on March 31, 2012 Annual Report 2011-12 THIRD LAYER: GOVERNANCE BY THE SUB-COMMITTEE OF THE BOARD OF DIRECTORS Our Board has constituted sub-committees to focus on specific areas and make informed decisions within the authority delegated to each of the Committees. Each Committee of the Board is guided by its Charter, which defines the scope, powers and composition of the Committee. All decisions and recommendations of the Committees are placed before the Board either for information or for review and approval. We have four sub-committees of the Board as at March 31, 2012. • • • • Audit/Risk and Compliance Committee Board Governance and Nomination Committee Compensation Committee Administrative/Shareholders’ Grievance Committee Committee on various issues. The Audit/Risk and Compliance Committee is comprised of the following four non-executive directors: Mr. N. Vaghul – Chairman Mr. P. M. Sinha, Mr. B. C. Prabhakar and Mr. M. K. Sharma – Members Our Audit/Risk and Compliance Committee met Six times during the financial year on – April 24, 2011; June 15, 2011; July 18, 2011; October 29, 2011; January 18, 2012 and March 13, 2012. The composition of the Audit/Risk and Compliance Committee and their attendance are given in Table 09. Name N. Vaghul** P. M. Sinha ** M. K. [email protected] Position Chairman Member Member Number of meetings Attended 6 4 6 4 Audit/Risk and Compliance Committee The Audit/Risk and Compliance Committee of the Board of Directors, which was formed in 1987, reviews, acts on and reports to our Board of Directors with respect to various auditing and accounting matters, This Committee was renamed as Audit/Risk and Compliance Committee with effect from April 22, 2009. The primarily responsibilities of the Committee, inter-alia, are • Auditing and accounting matters, including recommending the appointment of our independent auditors to the shareholders Compliance with legal and statutory requirements Integrity of the Company’s financial statements, discussing with the independent auditors the scope of the annual audits, and fees to be paid to the independent auditors Performance of the Company’s Internal Audit function, Independent Auditors and accounting practices. Review of related party transactions, functioning of Whistle Blower mechanism, and Implementation of the applicable provisions of the Sarbanes Oxley Act, 2002 including review on the progress of internal control mechanism to prepare for certification under Section 404 of the Sarbanes Oxley Act, 2002. B. C. Prabhakar** Member ** Out of which participation was over Tele-conference for 1 meeting. Mr. M. K. Sharma has attended all Audit Committee meets after the date of his appointment. @ Board Governance and Nomination Committee All members of the Board Governance and Nomination Committee are independent non executive directors. The primary responsibilities of the Board Governance and Nomination Committee are: • • Develop and recommend to the Board Corporate Governance Guidelines applicable to the Company. Evaluation of the Board on a continuing basis including an assessment of the effectiveness of the full board, operations of the Board Committees and Contributions of Individual directors. Lay down policies and procedures to assess the requirements for inclusion of new members on the Board. Implement policies and processes relating to corporate governance principles. Ensure that appropriate procedures are in place to access Board membership needs and Board effectiveness. Review the company’s policies that relate to matters of corporate social responsibility, including public issues of significance to the company and its stakeholders. Formulate the disclosure Policy, its review and approval of disclosure. • • • • • • • • • The Chairman of the Audit/Risk and Compliance Committee is present at the Annual General Meeting. The detailed charter of the Committee is posted at our website and available at www. wipro.com/investors/corporate-governance. All members of our Audit/Risk and Compliance Committee are independent non executive directors and financially literate. The Chairman of our Audit/Risk and Compliance Committee has the accounting and financial management related expertise. Statutory Auditors as well as Internal Auditors always have independent meetings with the Audit/Risk and Compliance Committee and also participate in the Audit/Risk and Compliance Committee meetings. Our CFO & Executive Director and other Corporate Officers make periodic presentations to the Audit/Risk and Compliance • The Board Governance and Nomination Committee of the Board met four times on – April 25, 2011, July 18, 2011 October 29, 2011 and January 19, 2012, during the financial year 2011-12. Wipro Limited 79 Table 10 provides the composition and attendance of the Board Governance and Nomination Committee. Name Dr. Ashok S. Ganguly P. M. Sinha* N. Vaghul Bill Owens Position Chairman Member Member Member Number of meetings attended 4 3 4 4 Dividend payments, issue of duplicate share certificates, transmission of shares and other shareholder related queries, complaints etc. In addition to above, this Committee is also empowered to oversee administrative matters like opening/closure of Company’s Bank accounts, grant and revocation of general, specificand banking powers of attorney, consider and approve allotment of equity shares pursuant to exercise of stock options, setting up branch offices and other administrative matters as delegated by Board from time to time. The Chairman of the Committee is an independent non executive director. The Administrative and Shareholders Grievance Committee met four times in the financial year on – April 25, 2011, July 25, 2011, October 29, 2011 and January 18, 2012. In addition, the Shareholders Grievance Committee, reviews once in 15 days the investor complaints and redressal of the shareholders queries. Table 12 provides the composition and attendance of the Shareholders / Investors Grievance Committee. Table 12 Name Position Number of meetings Attended 4 4 3 * Attended one meeting over Tele-conference The detailed charter of this Committee is posted on our website and available at www.wipro.com/investors/corporate. governance Compensation Committee Our Executive Vice-President - Human Resources makes periodic presentations to the Compensation Committee on compensation reviews. The members of the Compensation Committee are as follows: Dr. Ashok Ganguly – Chairman Mr. N. Vaghul and Mr. P. M. Sinha – Members. The primary responsibilities of the Compensation Committee, inter-alia: a) Determine and approve salaries, benefits and stock options grants to Senior Management employees and Directors of our Company. Approve and evaluate the Compensation Plans and programs for Whole-time directors. B. C. Prabhakar Chairman Suresh C. Senapaty Member T. K.Kurien Member b) All members of the Compensation Committee are independent non-executive directors. This Committee of the Board met four times on – April 25, 2011, July 18, 2011, October 29, 2011 and January 18, 2012, during the financial year 2011-12 Table 11 provides the composition and attendance of the Board Governance and Compensation Committee. Name Position Number of meetings attended 4 3 4 The status on the shareholder queries and complaints we received, response to the complaints and the current status of pending queries if any, as on March 31, 2012 is Tabulated in Table 13. Table 13 Description Non-Receipt of Securities Non-Receipt of annual reports Correction/ Revalidation of Dividend Warrants SEBI/Stock Exchange Complaints Non-Receipt of Dividend Warrant Demat request Received Others Total Nature Complaint Complaint Request Received Replied Pending 33 33 0 40 429 40 429 0 0 Dr. Ashok S. Ganguly Chairman Member P. M. Sinha N. Vaghul Member Administrative/Shareholders & Investors Grievance Committee: The members of the Committee as on March 31, 2012 are as under: Mr. B. C. Prabhakar – Chairman Mr. Suresh C. Senapaty – Member Mr. T. K. Kurien – Member The Adm inistrative/Shareholders & Investors Grievance Committee is responsible for resolving investor’s complaints pertaining to share transfers, non receipt of annual reports, Complaint 7 7 0 Complaint 161 161 0 Request Request 0 0 670 0 0 670 0 0 Annual Report 2011-12 80 Apart from this there are certain pending cases relating to dispute over title to shares in which in certain cases the Company has been made a party. However, these cases are not material in nature. Mr. V. Ramachandran, Company Secretary is our Compliance Officer for the Listing Agreement with Stock Exchange. Unclaimed Dividends Pursuant to Sec- 205A and 205C and other applicable provisions of Companies Act, 1956, Dividends that are unclaimed for a period of seven years are required to be transferred to the Investor Education and Protection Fund administered by the Central Government. We give below a table providing the dates of declaration of Dividend since 2004-05 and the corresponding dates when unclaimed dividend are due to be transferred to the central government. Table 14 Financial Year Date of declaration of Last date for Dividend claiming unpaid Dividend 21-Jul-05 20-Jul-12 18-Jul-06 17-Jul-13 23-Mar-07 22-Mar-14 18-Jul-07 17-Jul-14 19-Oct-07 18-Oct-14 17-Jul-08 16-Jul-15 21-Jul-09 20-Jul-16 22-Jul-10 21-Jul-17 21-Jan-11 20-Jan-18 21-Jul-11 20-Jul-18 24-Jan-12 23-Jan-19 Unclaimed Amount (Rs) as on May 31, 2012 1,104,970 2,994,210 2,030,720 1,039,601 2,504,444 2,567,528 2,102,160 1,902,462 1,359,426 2,725,220 1,408,564 Due date for transfer to Investor Education and Protection Fund 19-Aug-12 16-Aug-13 21-Apr-14 16-Aug-14 17-Nov-14 15-Aug-15 19-Aug-16 20-Aug-17 19-Feb-18 19-Aug-18 22-Feb-19 2004-2005 2005-2006 2006-2007 (Interim Dividend) 2006-2007 (Final Dividend) 2007-2008 (Interim Dividend) 2007-2008 (Final Dividend) 2008-2009 (Final Dividend) 2009-10 (Final Dividend) 2010-11 (Interim Dividend) 2010-11 (Final Dividend) 2011-12(Interim Dividend) Separate letters will be sent to the Shareholders who are yet to encash the Dividend indicating that Dividend yet to be encashed by the concerned shareholder and the amount remaining unpaid will be transferred as per the above dates. Members are requested to utilize this opportunity and get in touch with Company’s Registrar and Share Transfer Agent, M/s. Karvy Computershare Pvt. Limited, Hyderabad for encashing the unclaimed Dividend standing to the credit of their account. After completion of seven years as per the above table, no claims shall lie against the said Fund or against the Company for the amounts of Dividend so transferred nor shall any payment be made in respect of such claims. Secretarial Audit A qualified practicing Company Secretary has carried out secretarial audit every quarter to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the aggregate total number of shares in physical form, shares allotted and advised for demat credit but pending execution and the total number of dematerialized shares held with NSDL and CDSL Compliance with Clause 49 of the Listing Agreement The certificate dated June 15, 2012 obtained from V Sreedharan & Associates, Company Secretaries is given at page no. 93 of the Annual Report for Compliance with Clause 49 of Listing Agreement. Subsidiary Monitoring Framework All the subsidiary companies of the Company are managed with their Boards having the rights and obligations to manage these companies in the best interest of their stakeholders. The Company nominates its representatives on the Board of subsidiary companies and monitors performance of such companies, inter alia, by reviewing: • Financial statements, in particular the investment made by the unlisted subsidiary companies, statement containing all significant transactions and arrangements entered into by the unlisted subsidiary companies forming part of the financials being reviewed by the Audit Committee of the your Company on a quarterly basis Minutes of the meetings of the unlisted subsidiary companies, if any, placed before the Company’s Audit Committee/Board regularly. • Wipro Limited 81 FOURTH LAYER: GOVERNANCE OF THE MANAGEMENT PROCESS Corporate Executive Council of the Company (CEC) The day-to-day management is vested with the CEC of the Company comprising of Business and Functional heads who work under the overall superintendence and control of the Board. The CEC is headed by the Chairman, Mr. Azim H. Premji. The list of CEC members is given below: (i) Azim H. Premji, Chairman and Managing Director Likewise, under this policy, we have prohibited discrimination, retaliation or harassment of any kind against any employees who, based on the employee’s reasonable belief that such conduct or practice have occurred or are occurring, reports that information or participates in the said investigation. No individual in the Company has been denied access to the Audit/ Risk and Compliance Committee or its Chairman. Mechanism followed under Ombudsmen process is appropriately communicated within the Company across all levels and has been displayed on Wipro’s intranet and on Wipro’s website at www.wipro.com The Audit/Risk and Compliance Committee periodically reviews the functioning of this mechanism. Compliance Committee We have a Compliance Committee which considers matters relating to Wipro’s Code of Business Conduct, Ombuds process, Code for Prevention of Insider Trading and other applicable statutory matters. The Compliance Committee consists of Chairman, CFO & Executive Director, CEO-IT Business, Executive Vice-President - Human Resources, Vice-President - Legal and General Counsel, Chief Risk Officer and Vice-President - Internal Audit. During the financial year 2011-12, the Compliance Committee met four times and submitted its report to the Audit Committee for its review and consideration. Compliance with adoption of mandatory requirements Your Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement. Non Compliance on matters related to capital markets Your Company has complied with the requirements of the Stock Exchange or SEBI on matters related to Capital Markets, as applicable. Compliance report on Non-mandatory requirements under Clause 49 1. The Board – Chairman’s Office & Tenure of Directors The Chairman of Wipro is an Executive Director and this provision is not applicable to Wipro. Some of our independent directors have completed a tenure exceeding a period of nine years on the Board of Directors of the Company. 2. Remuneration Committee The Board of Directors constituted a Compensation Committee, which is entirely composed of independent directors. The Committee also discharges the duties and responsibilities as described under non-mandatory requirements of Clause 49. The details of the Compensation Committee and its powers have been discussed in this section of the Annual Report. 3. Shareholders rights We display our quarterly and half yearly results on our web site, www.wipro.com and also publish our results in widely circulated (ii) Suresh Senapaty, CFO and Executive Director (iii) T.K. Kurien, CEO (IT Business) and Executive Director (iv) Vineet Agrawal, President Wipro Consumer Care and Lighting (v) Pratik Kumar, Executive Vice-President - Human Resources & President - Wipro Infrastructure Engineering (vi) Anurag Behar, Chief Sustainablity Officer. Code of Business Conduct and Ethics In 1983, we articulated ‘Wipro Beliefs’ consisting of six statements. At the core of beliefs was integrity articulated as • Our individual and Company relationship should be governed by the highest standard of conduct and integrity. Over years, this articulation has evolved in form but remained constant in substance. Today we articulate it as Code of Business Conduct and Ethics. In our company, the Board of Directors and all employees have a responsibility to understand and follow the Code of Business Conduct. All employees are expected to perform their work with honesty and integrity. Wipro’s Code of Business Conduct reflects general principles to guide employees in making ethical decisions. This code is also applicable to our representatives. The Code outlines fundamental ethical considerations as well as specific considerations that need to be maintained for professional conduct. This Code has been displayed on the Company’s website. www.wipro.com/corporate/investors/ corporate-governance. The Chairman has affirmed to the Board of Directors that this Code of Business Conduct and Ethics has been complied by the Board members and Senior Management. Ombudsmen process We have adopted an Ombudsmen process which is the channel for receiving and redressing employees’ complaints. Under this policy, we encourage our employees to report any reporting of fraudulent financial or other information to the stakeholders, any conduct that results in violation of the Company’s Code of Business Conduct and Ethics, to management (on an anonymous basis, if employees so desire). Annual Report 2011-12 82 newspapers. We have sent quarterly results by email to those shareholders who have provided their email ids with effect from December 2010 quarter onwards. We have also communicated the payment of dividend by e-mail to shareholders in addition to dispatch of letters to all shareholders. We will publish the voting results of the Shareholder meetings and make it available in Company’s website www.wipro.com and report the same to Stock Exchange in terms of Clause 35A of Listing Agreement. 4. Audit Qualifications The Auditors have not qualified the financial statements of the Company. 5. Training of Board Members The board of directors is responsible for supervision of the Company. To achieve this, board undertakes periodic review of various matters including business wise performance, risk management, borrowings, internal audit/external audit reports etc. In order to enable the directors to fulfill the governance role, comprehensive presentations are made on the various businesses, business models, risk minimization procedures and new initiatives of the Company. Changes in domestic/overseas corporate and industry scenario including their effect on the company, statutory matters are also presented to the directors on a periodic basis 6. Mechanism for evaluation: Independent Board members In line with our corporate governance guidelines, evaluation of all Board members is done on an annual basis. This evaluation is lead by the Chairman of the Board Governance and Nomination Committee with specific focus on the performance and effective functioning of the Board, Committees of the Board and report the recommendation to the Board. The evaluation process also considers the time spent by each of the Board members, core competencies, personal characteristics, accomplishment of specific responsibilities and expertise. 7. Whistle Blower Policy The details of the Ombudsmen process and its functions have been discussed earlier in this section. Disclosures by the Management During the year 2011-12, there have been no transactions of material nature entered into by the Company with the Management or their relatives that may have a potential conflict with interest of the Company. None of the Non-Executive Directors have any pecuniary material relationship or material transaction with the Company for the year ended March 31, 2012 and has given undertakings to that effect as per Clause 49 of Listing Agreement. Code for prevention of Insider Trading We have comprehensive guidelines on preventing insider trading. Our guidelines are in compliance with the SEBI guidelines on prevention of Insider Trading. NYSE Corporate Governance Listing Standards The Company has made this disclosure of compliance with the NYSE Listing Standards in its website www.wipro.com/investors/ corp-governance and has filed the same with the New York Stock Exchange (NYSE). Declaration as required under Clause 49 (I)(D)(ii) of the Stock Exchange Listing Agreement All Directors and senior management personnel of the Company have affirmed compliance with Wipro’s Code of Business Conduct and Ethics for the financial year ended March 31, 2012. Sd/Date: June 15, 2012 Azim H. Premji Chairman Wipro Limited 83 Share Data The performance of our stock in the financial year is tabulated in Table 15. Table 15: Monthly high and low price points and volume in National Stock Exchange and New York Stock Exchange is provided below: Month Volume traded NSE High Date Volume traded on that date Low Date Volume trade on that date High Low April 26,203,043 May June July August 32,158,011 September 36,452,411 October 24,900,644 November 34,868,144 December 41,130,090 January 30,312,774 February 25,163,650 March 28,123,232 17,814,389 20,266,712 25,725,741 Price in NSE during each month: 490 19-Apr-11 639,452 453.9 2-May11 539,401 450.9 1-Jun-11 446,583 435 8-Jul-11 1,154,821 397.2 1-Aug-11 498,158 359.95 21Sep-11 1,708,409 390 28-Oct-11 1,698,761 389.45 14-Nov-11 1,643,586 420.95 13-Dec-11 1,900,127 425 4-Jan-12 1,903,417 453 17-Feb-12 1,489,281 448.05 9-Mar-12 1,581,732 439.5 4-Apr-11 2,183,439 428 4-May-11 939,570 381.45 20-Jun-11 1,829,456 350 8-Jul-11 1,154,821 310.5 19-Aug-11 1,561,982 312.3 6-Sep-11 2,041,335 323.6 3-Oct-11 1,277,993 360.05 18-Nov-11 2,043,004 379.05 2-Dec-11 4,940,550 382.5 12-Jan-12 2,920,897 410 1-Feb-12 1,059,014 416.25 27-Mar-12 1,537,441 S&P CNX Nifty Index during each month: 5,928.65 5,706.05 5,775.25 5,328.70 5,657.90 5,195.90 5,740.10 5,532 5,551.9 4,720 5,169.25 4,758.85 5,360.25 4,728.30 5,326.45 4,639.10 5,099.25 4,531.15 5,217 4,588.05 5,629.95 5,159 5,499.40 5,135.95 Wipro Price Movement vis-à-vis Previous Month High/Low (%) : High % Low % 1.09 1.87 -7.36 -2.16 -0.66 -10.87 -3.53 -8.24 -8.69 -11.28 -9.38 0.57 8.34 3.62 -0.14 11.26 8.08 5.28 0.96 0.91 6.58 7.18 -1.09 1.52 S&P CNX Nifty Index Movement vis-à-vis Previous Month High/Low % High % Low % 0.96 6.69 -2.58 -6.61 -2.03 2.49 1.45 6.47 -3.27 -14.67 -6.89 0.82 3.69 -0.64 -0.63 -1.89 -4.27 -2.32 2.31 1.26 7.92 12.44 -2.32 -0.45 Graph : 01 Wipro share price movements in NSE compared with S&P CNX Nifty 10 8 6 4 2 0 -2 -4 -6 -8 -10 April May June Relative performance of Wipro Share Vs. S & P CNX Nifty July Aug Wipro Share Sept October November December January February March S & P CNS Nifty Month & Year 2011-12 Annual Report 2011-12 84 Table 16: ADS Share Price during the financial year 2011-12 April Wipro ADS price in NYSE during each Month closing ($) (*) NYSE TMT Index during each month closing ($) Wipro ADS Price Movement (%) Vis a vis Previous month Closing $ (*) NYSE TMT Index Movement (%) Vis a vis Previous month Closing $ (*) 13.77 May 13.83 June 13.17 July 11.88 August 9.98 September 9.25 October 10.46 November 9.6 December 10.19 January 10.88 February 10.98 March 11.00 6,309.65 6,192.68 6,076.31 5,882.55 5,540.76 5,169.91 5,623.53 5,570.69 5,485.15 5,685.15 5,907.88 6,060.97 5.9 0.44 -4.77 -9.80 -15 -7.31 13.08 -8.22 6.15 6.77 0.92 0.18 3.7 -1.85 -1.88 -3.19 -5.81 -6.69 8.77 -0.94 -1.54 3.65 3.92 2.60 Graph 02: Wipro Share price movements in NYSE compared with TMT index 15 12 9 6 3 0 -3 -6 -9 -12 -15 April May June Relative performance of Wipro ADS Vs. NYSE TMT Index July Aug Sept October November December January February March Wipro ADS Price NYSE TMT Month & Year 2011-12 Wipro Limited 85 1-Jul-11 1-Jun-11 1-Jan-12 1-Oct-11 1-Apr-11 1-Sep-11 1-Dec-11 1-Feb-12 1-Aug-11 Wipr ipro ADS Premium 1-Nov-11 1-May-11 1-Mar-12 86 Annual Report 2011-12 55 ADS premium Movement as Percentage over Equity Share Price in India during the year 2011-12 50 45 40 35 30 25 20 15 10 5 0 Other Information a. Table 17 Share Capital History History of IPO/ Private Placement/ Bonus Issues/ Stock Split/ Allotment of Shares pursuant to Exercise of Stock Options Type of Issue Year of Issue Bonus Face shares/ Value of Stock Shares (`) split ratio 100/100/100/100/100/100/10/10/10/10/Shares Allotted No. of Shares Total Total Paid-up Capital (`) 1,700,000 2,266,700 4,533,400 9,066,800 9,216,800 18,433,600 18,433,600 36,867,200 73,734,400 76,385,450 IPO Bonus issue Bonus issue Bonus issue Issue of shares to Wipro Equity Reward Trust Bonus issue Stock split Bonus issue Bonus issue Issue of shares pursuant to merger of Wipro Infotech Limited and Wipro Systems Limited with the Company Bonus issue Bonus issue Stock split ADR Allotment of equity shares pursuant to exercise of stock options Bonus Allotment of equity shares pursuant to exercise of stock options Allotment of equity shares pursuant to exercise of stock options Bonus Allotment of equity shares pursuant to exercise of stock options 1946 1971 1980 1985 1985 1987 1990 1990 1992 1995 1:3 1:1 1:1 Number 17,000 5,667 22,667 45,334 1,500 92,168 1,843,360 3,686,720 265,105 Nominal Value 1,700,000 566,700 2,266,700 4,533,400 1,50,000 9,216,800 18,433,600 36,867,200 2,651,050 17,000 22,667 45,334 90,668 92,168 184,336 1,843,360 3,686,720 7,373,440 7,638,545 1:1 10:1 1:1 1:1 1995 1997 1999 2000 On various dates (Upto the record date for issue of bonus shares in the year 2004) 2004 On various dates (Upto March 31, 2005) On various dates (Upto the record date for issue of bonus shares in the year 2005) 2005 On various dates (Upto March 31, 2006) 1:1 2:1 5:1 1:1 10/10/2/$41.375 2/- 7,638,545 30,554,180 3,162,500 496,780 76,385,450 305,541,800 6,325,000 993,560 15,277,090 45,831,270 229,156,350 232,318,850 232,815,630 152,770,900 458,312,700 458,312,700 464,637,700 465,631,260 2:1 2/- 465,631,260 2/5,123,632 931,262,520 10,247,264 698,446,890 1396,893,780 703,570,522 1407,141,044 2/- 2,323,052 4,646,104 705,893,574 1,411,787,148 1:1 2/- 705,893,574 2/- 13,967,119 1,411,787,148 1,411,787,148 2,823,574,296 27,934,238 1,425,754,267 2,851,508,534 Wipro Limited 87 Type of Issue Year of Issue Bonus Face shares/ Value of Stock Shares (`) split ratio 2/- Shares Allotted No. of Shares Total Total Paid-up Capital (`) Allotment of Equity Shares pursuant to exercise of Stock Options Allotment of Equity Shares pursuant to exercise of Stock Options Allotment of equity shares to shareholders of subsidiary companies arising from merger Allotment of Equity Shares pursuant to exercise of Stock Options Allotment of Equity Shares pursuant to exercise of Stock Options Bonus issue Allotment of Equity Shares pursuant to exercise of Stock Options Allotment of Equity Shares pursuant to Exercise of Stock Options On various dates upto March 31, 2007 On various dates upto March 31,2008 March 26, 2009 Number 33,245,383 Nominal Value 66,490,766 1,458,999,650 2,917,999,300 2/- 2,453,670 5,117,426 1,461,453,320 2,922,906,640 2/- 968,803 1,937,606 1,462,422,123 2,926,781,952 On various dates upto March 31, 2009 On various dates upto March 31, 2010 2010 On various dates upto March 31, 2011 On various dates upto March 31, 2012 2:3 2/- 2,558,623 5,117,426 1,464,980,746 2,929,961,492 2/- 3,230,443 6,460,886 1,468,211,189 2,936,422,378 2/- 979,765,124 2/6,432,832 1,959,530,248 2,447,976,313 4,895,952,626 12,865,664 2,454,409,145 4,908,818,290 2/- 4,347,083 8,694,166 2,458,756,228 4,917,512,456 History of Bonus Issue and Stock Split Year Ratio 1971 1:3(Bonus) 1980 1:1(Bonus) 1985 1:1(Bonus) 1987 1:1(Bonus) 1990 10:1 (stock split) 1990 1:1(Bonus) 1992 1:1(Bonus) 1995 1:1(Bonus) 1997 2:1(Bonus) 1999 5:1 (stock split) 2004 2:1(Bonus) 2005 1:1(Bonus) 2010 2:3 (Bonus) Annual Report 2011-12 88 History of Dividend declared for the last fifteen years Financial Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 (Interim Dividend) 2006-07 (Final Dividend) 2007-08 (Interim Dividend) 2007-08 (Final Dividend) 2008-09 2009-10 2010-11(Interim Dividend) 2010-11 (Final dividend) 2011-12(Interim Dividend) 2011-12(Final Dividend) Table 18: Mergers and Demergers Since the mid-1990s, Company’s growth has been both organic and through mergers and demergers. The table below gives the relevant data on such mergers/demergers from the year 1994 onwards. Merging Company Wipro Infotech Limited Wipro Systems Limited Wipro Computers Limited Wipro Net Limited Wipro BPO Solutions Limited Spectramind Limited, Bermuda Spectramind Limited, Mauritius Wipro Infrastructure Engineering Limited Wipro HealthCare IT Limited Quantech Global Services Limited MPACT Technology Services Private Limited mPower Software Services (India) Private Limited CMango India Private Limited Indian Branches of Wipro Networks Pte. Limited and WMNETSERV Limited Wipro Yardley Consumer Care Private Limited Merger/Demerger Merger Merger Merger Demerger Merger Merger Merger Merger Merger Merger Merger Merger Merger Merger Merger Appointed Date April 1, 1994 April 1, 1994 April 1, 1999 April 1, 2001 April 1, 2005 April 1, 2005 April 1, 2005 April 1, 2007 April 1, 2007 April 1, 2007 April 1, 2007 April 1, 2007 April 1, 2007 April 1, 2009 April 1, 2010 Dividend amount per share (`) and rate (%) ` 1.50 Per Share (Face value ` 10) ` 1.50 Per Share (Face value ` 10) ` 0.30 Per Share (Face value ` 2) ` 0.50 Per Share (Face value ` 2) ` 1.00 Per Share (Face value ` 2) ` 1.00 Per Share (Face value ` 2) ` 29.00 Per Share (Face value ` 2) ` 5.00 Per Share (Face value ` 2) ` 5.00 Per Share (Face value ` 2) ` 5.00 Per Share (Face value ` 2) ` 1.00 Per Share (Face value ` 2) ` 2.00 Per Share (Face value ` 2) ` 4.00 Per Share (Face value ` 2) ` 4.00 Per Share (Face value ` 2) ` 6 Per Share (Face value ` 2) ` 2 per Share (Face Value ` 2) ` 4.00 Per Share (Face value ` 2) ` 2.00 Per share(Face value ` 2) ` 4.00 Per Share (Face Value `2) Percentage 15% 15% 15% 25% 50% 50% 1450% 250% 250% 250% 50% 100% 200% 200% 300% 100% 200% 100% 200% Wipro Limited 89 Table No.19: Locations or facilities (other than Corporate and Administrative Office) Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Address 3rd, 4th, 5th and 6th Floor, S B Towers, 88, M G Road No. 8, 7th Main, 1st Block, (K-2) Koramangala 26, Sri Chamundi Complex, (M-2), Bommanahalli, Hosur Main Road No.1,2,3,4 and 54/1, Survey No.201/C, (M-3, M4) Madivala, Hosur Main Road, No. 319/1, (Adea Building) Bomanahalli, Hosur Main Road, 2nd, 3rd, 4th Floor, Sigma Tech Park, Beta Towers, No. 7 Whitefield Main Road, Electronics City Phase 1, 2, 3,4, Keonics Electronic City, Hosur Road Wipro SEZ, Doddathogur Village, Begur Hobli/ Electronic City, 3rd Floor, Ahmed Plaza, No.38/1&2, Bertenna Agrahara, Hosur Main Road Pritech Park SEZ, ECO Space, Outer Ring Road, Belandur Village Wirpo, SEZ, Doddakannelli Village, Varthur Hobli, Sarjapur Road, 146/147, Mettagalli Industrial Area, Mettagalli 111, (CDC-1) Mount Road, Guindy 105, (Sterling Building) Mount Road, Guindy 475A, Shollinganallur, Old Mahabalipuram Road (CDC-2) 475A, Shollinganallur, Old Mahabalipuram Road (WBPO) ELCOT SEZ, Sy.No.602/3, Sholinganallur Village, Mahindra World City SEZ, Kanchepuram District Ascendas IT Park, Taramani Road, Infopark SEZ, Kusumagiri Po, Kakanad 1-8-448, Lakshmi Buildings, S P Road, Begumpet Survey Nos.64, Serilingampali Mandal, Madhapur, Wipro SEZ, S.No.203/1, Manikonda Jagir Village, Rajendranagar Mandal, RR District S.No.203/1, Manikonda Jagir Village, Rajendranagar Mandal, RR District Wipro SEZ, IT Park, Gopanapally, RR District Plot No.2, MIDC, Rajeev Gandhi Infotech Park-1, Hinjewadi Plot No.2, MIDC, Rajeev Gandhi Infotech Park-1, Hinjewadi (WBPO) Wipro SEZ, Plot No.31, MIDC, Rajeev Gandhi Infotech Park-2, Hingewadi 2nd , 3rd, 4th Floor, Spectra Building, Hiranandani Garderns, Powai (WBPO) 3rd Floor CIDCO Building, Belapur Railway station Complex (WBPO) Hiranandani SEZ, Hiranandani Garderns, Powai Serene Properties Pvt. Ltd., SEZ, Mindspace, Airoli Wipro Ltd, SEZ, Plot No. 1, 7, 8 & 9, Block-DM, Sector-V, Saltlake, Block-CN 1- V, Sector-V, Saltlake, Plot No. 2 (P), IDCO Info City, Industrial Estate Chandaka, 237, 238 and 239 Okhla Industrial Estate, Phase-III (WBPO) Omaxe Squire, Plot 13, Jasola City/Country Bangalore 560 001, India Bangalore 560 095, India Bangalore 560 068, India Bangalore 560 068, India Bangalore 560 068, India Bangalore 560 066, India Bangalore 560 100, India Bangalore 560 100, India Bangalore 560 100, India Bangalore 560 034, India Bangalore 560 035, India Mysore 570 016, India Chennai 600 032, India Chennai 600 032, India Chennai 600 019, India Chennai 600 019, India Chennai 600 119, India Chennai 603 002, India Chennai 600 113, India Kochi 682 030, India Hyderabad 500 003, India Hyderabad 500 033, India Hyderabad 500 019, India Hyderabad 500 020, India Hyderabad 500 032, India Pune 411 027, India Pune 411 027, India Pune 411 027, India Mumbai 400 076, India Navi Mumbai 400 614, India Mumbai 400 076, India Mumbai 400 708, India Kolkata 700 091, India Kolkata 700 091, India Bhubaneswar 751 022, India New Delhi 100 020, India New Delhi 100 020, India No.1,2,3,4 and 54/3, Survey No.201/C, (M-3) Research and Development, Madivala, Hosur Main Road, Bangalore 560 068, India Annual Report 2011-12 90 Sl. No. 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 Address Wipro SEZ, Plot No. 2,3 & 4, Knowledge Park, Greater Noida, UP No. 480-481, Udyog Vihar, Phase-III, Gurgoan 1, Cyber Pod Centris, Eton Centris, Barangay Pinahan, Quezon City, Manila Tainfu Software Park, Tainfu Avenue, 765, Hi-Tech Zone, Chengdu Unit 1518, Building 1, Shanghai Pudong Software Park, Shanghai Unit A202, Information Center, Zhongguancun Software Park, Hai Dian District, Beijing Yokohama Landmark Tower 9F # 911A, Minato-Mirai, Nishi-ku, Yokohama, Kanagawa 185, Kings Court, Kings Road, Reading RG 14 EX G6, S2/S3 Columbia House, Columbia Drive, Worthing BN13 3HD Unit 12, Charter Point, Ashby Business Park, Ashby-de-la-Zouch Leicestershire LE65 1JF Ashton House, Birchwood Park, Warrington Road, Birchwood, Warrington, WA3 6AE 2, Rue Marie Berhaut, Immeuble Cap Nord A, 35000 RENNES Web Campus, Kaistrasse, 101 Kiel 24114 Munich Office (Germany)Willy-Brandt-Allee 4, D-81829 Munchen, Munich “BüroHaus auf dem hagen_campus, Richmodstr. 6 50667 Koeln (Cologne), Technology Centre, Vahrenwalder Strasse 7, 30165 Hannover Polarisavenue 57, 2132 JH Hoofddorp, Wassenaarsweg 22, 2596 CH Den Haag, PartnerPort, Altrottstrasse 31, Walldorf, Technopolis, Business id 0487422-3, Elektroniikkatie 8, FIN 90570, Oulu Millennium Park 6, A-6890 Lustenau, Austria City/Country Greater Noida, India Haryana-122 015, India Philippines China China China Japan United Kingdom United Kingdom United Kingdom United Kingdom France Germany Germany Germany Germany Netherlands Netherlands Germany Finland Austria Lot-7, Block-2, Corner Arch Bishop Reyes Street and Mindanao St.CEBU Business Park, CEBU IT Tower Cebu City, Philippines TRUST CORPORATION SA., Splaiul Independentei, nr 319C, Sector 6, Bucharest, Romania. Romania Tel +40 213 128 010 C. Brediceanu, Nr. 10, City Business Center Building C, Timisoara, Tel.: +40 312 261 300, Timisore Wipro Limited, Infopark – Building D. 5.6. 1117 Budapest Gábor Dénes utca 2. Frykdalsbacken 12-14, Stockholm, Rua Engº Frederico Ulrich, 2650, Edifício WIPRO, 4470-605 Moreira, Maia, Porto Centro Empresarial de Braga, Lugar da Ventosa, 4710 - 319 Ferreiros, Braga, Hiomotie 30, Pitäjänmäki, Helsinki Koy Elektrocity, Tykistökatu 4, 5th floor, Apartment 504Turku, Dusseldorferstr 71B, 40667 Meerbusch, Germany Level-6, 80, George Street, Paramatta Levels 1 and 3, 19 Grenfell Street, Adelaide, SA 5000 Level 3, 80 Dorcas Street, South Melbourne, Victoria – 3205 Chrysler Building, 6th Floor, 1 Riverside Drive West, WINDSOR ONN5A5K4 Level 6, 80 George St, Parramatta, NSW, 2150 Romania Hungary Sweden Portugal Portugal Finland Finland Germany NSW, Australia Adelaide, Australia Melbourne, Australia Canada Australia Wipro Limited 91 Sl. No. 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 Address Level 3, 80 Dorcas Street, South Melbourne, Victoria - 3205 Levels 1 and 3, 19 Grenfell Street, Adelaide, SA 5000 #02-08/09/10, 1 Changi Buiness Park, Crescent, Singapore 486025 Suite G08-09, 2300 Century Square, Jalan Usahawan,Cyber 6, 63000 Cyberjaya, Selangor Darul Ehsan 6th Floor, Damac - Executive Heights, Dubai UAE, PO 500119 B124, Ground Floor, Smart Village, Giza, Cairo, Arab Republic of Egypt 3535 Piedmont Road NE, Building 14 Suites 1400/1550 Atlanta, GA 30305 3575 Piedmont Road NE, Building 15 Suite 600 Atlanta, GA 30305 3565 Piedmont Road NE, Building 4 Suite 500 Atlanta, GA 30305 Seattle/Bellevue , Washington: 110 110th Avenue, NE, Suite 300 Bellevue, WA 98004 Troy, Michigan: 888 W. Big Beaver Road, Suite 1290 Troy, MI 48084 Bentonville, Arkansas: 711 SE J Street, Suite 11 Bentonville, AR 72712 Brea, California: 3300 East Birch Street Brea, CA 92821-6254 Jefferson City, Missouri: 905Weathered Rock Road Jefferson City, MO 65101-1806 Leonia, New Jersey: 2 Christie Heights Street Leonia, NJ 07605 Norcross, Georgia: 6620 Bay Circle Drive Norcross, GA 30071-1210 Omaha, Nebraska: 11707 Miracle Hills Drive Omaha, NE 68154 Tempe, Arizona: 2005 E. Technology Circle Tempe, AZ 85284 Old - Rua Alexandre Dumas, 2100 SI 32 - Chácara Santo Antonio. 04717-004 Sao Paulo, SP- Brazil João Marchesini Street, number 139 - 5th and 6th floorPost Code: 80215-432 Curitiba/Parana - Brazil Carlos Pellegrini, 581 (Piso 7) 1009 Capital Federal, Buenos Aires – Argentina 427 E. Garza Sada Avenue Local 38-27. Col. Altavista Monterrey, NL, México C.P. 64840 800 North Point Pkwy Alpharetta, GA 30005 USA Avenida Maria Coelho Aguiar, 215, 6º Andar do Bloco B do Centro Empresarial de São Paulo City/Country Australia Australia Singapore Malaysia Dubai Egypt US US US US US US US US US US US US Brazil Brazil Argentina Mexico US Brazil SP CEP 05804-900. Brazil 2, Christie Heights, Leonia, New Jersey 07605 3300 East Birch Street, Brea, CA 92821-6254 140 Riverside Court, Kings Mountain, NC 28086 6620 Bay Circle Drive, Norcross, GA 30071-1210 11707 Miracle Hills Dive, Omaha, NE 68154 2005 E. Technology Circle, Tempe, AZ 85284 Dusseldorestr. 71B, 40667 Meerbush US US US US US US Germany The Company’s manufacturing facilities are located at: Sl. No. 1 2 3 4 5 6 7 8 9 10 11 Address P O Box No.12, Dist. Jalgaon L-8, MIDC, Waluj 105, Hootagalli Industrial Area A-28, Thattanchavady Industrial Estate 120/1, Vellancheri, Plot No.4, Anthrasanahalli Industrial Area 9A/10B, Peenya Industrial Area Plot no.226C/226D, Industrial Development Area, APIIC, Hindupur – 515211, Andhra Pradesh. Plot C-1, SIPCOT Industrial Park, Irrungattukottai, Sriperumbadur Taluk, Kancheepuram Dist. Baddi Industrial Area, Baddi, Himachal Pradesh Plot No.99-104, Sector 6A, IIE, SIDCUL, Haridwar City/ State Amalner 425 401 Aurangabad 431 136 Mysore 571 186 Pondicherry 560 058 Guduvanchery 603 202 Tumkur 572 106 Bangalore Hindupur – 515211, Tamil Nadu - 602105 Himachal Pradesh Uttarakhand 249403 Annual Report 2011-12 92 corporate governance compliance certificate Corporate Identity No. : L32102KA1945PLC020800 Nominal Capital ` 555 crores To the Members of Wipro Limited We have examined all the relevant records of Wipro Limited (“the Company”) for the purpose of certifying compliance of the conditions of the Corporate Governance under Clause 49 of the Listing Agreement with the Stock Exchanges for the financial year ended March 31, 2012. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of certification. The compliance of conditions of corporate governance is the responsibility of the Management. Our examination was limited to the procedure and implementation process adopted by the Company for ensuring the compliance of the conditions of the corporate governance. This certificate is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the mandatory conditions of the Clause 49 of the Listing Agreement. As regards Annexure 1D of non-mandatory requirements, the Company has complied with items 2,3,4,5,6 and 7 of such non-mandatory requirements. Bangalore, June 15, 2012 For V. Sreedharan & Associates Company Secretaries Sd/V. Sreedharan Partner F.C.S.2347; C.P. No. 833 Wipro Limited 93 Business Responsibility Report Introductory Context This section provides a detailed overview of Wipro’s sustainability program - its constituent dimensions, vision, goals and progress as of March 31st 2012. While we have been publishing a comprehensive sustainability report for four years now, this is the first instance that we are including a sustainability overview as part of our Annual Financial Report. Scope: The scope of this report covers all of Wipro’s business - unless mentioned otherwise - and is for the financial year 2011-12 . The content for this section is driven by the twin pillars of Stakeholder Inclusiveness and Materiality Determination i.e. ‘Who are our stakeholders’ and ‘What issues are material to them’ For our materiality determination framework, please refer to our last Sustainability Report for 2010-11. There are no significant changes from the seventeen principal sustainability dimensions mentioned in the report. Our Sustainability Report is based on the AA1,000 standard and the GRI framework - based on which, our reports have been consistently rated A+ four times in succession, representing the highest levels of transparency and depth of reporting. In preparing this overview, while drawing from our GRI reporting experience, we have largely aligned it with the ‘National Voluntary Guidelines (NVGs) on the Social, Environmental and Economic responsibilities of Business” drafted by the Ministry of Corporate Affairs. i. For details of the NVGs, please refer http://www.iica. in/images/MCA_NVG_BOOKLET.pdf. A summary articulation of the Nine Principles of Responsible Business under the NVG framework is available in the annexure at the end of this section ii. Our Sustainability Reports can be viewed and downloaded at www.wipro.com/about-wipro/ sustainability/sustainability-disclosures.aspx Why Disclose: We believe that sustainability disclosures carry value for both, the stakeholders at which they are targeted and for the reporting organization. For the stakeholder, it provides a consistent and logical basis to understand the organization’s vision, commitment and progress on the principal ecological, social and economic indicators. A company’s thinking and actions on sustainability is increasingly seen as a proxy for its long term orientation and longevity. For the reporting organization, disclosures provide a valuable platform to engage with its stakeholders and to use it as a catalyst for continuous improvement. We believe that including this sustainability overview section in our Annual Report will provide us with a far larger scale of reach with our investors, customers and other key stakeholders ; we hope that this will lead on to a richer platform for engaging with our stakeholders which will provide us with valuable insights and inputs into our sustainability program. The principal sustainability topics covered in this report and their mapping to corresponding NVG principles are shown in the diagrammatic representation below 4 1 CORPORATE GOVERNANCE STAKEHOLDER ENGAGEMENT HUMAN CAPITAL 3 4 PEOPLE ENGAGEMENT 5 AT WIPRO SUSTAINABILITY DIMENSION 6 ECOLOGICAL SUSTAINABILITY VALUE CHAIN SUSTAINABILITY POLICY ADVOCACY 7 2 9 EDUCATION AND 8 COMMUNITY Stakeholder Engagement (Aligned to Principle 4 of the NVG guidelines) Management Approach: At Wipro, we have always viewed our Customers, Employees and Investors as strategic partners and stakeholders. Over the last decade, our programs in education and community care has brought us in close engagement with two new stakeholders – Partners in the Education Ecosystem and Proximate Communities. While the IT services industry model does not necessitate a deep supply chain, the rapid expansion of this sector in the last two decades has resulted in a variety of ancillary services e.g. bus transport, housekeeping, canteen, security. Services Suppliers and Contractors have become thus critical stakeholders for Annual Report 2011-12 94 our operations. Our suppliers have played a strategic role in the success of our Green Computing journey. Wipro has been engaging closely with Government and Industry Networks on matters related to energy, water, e-waste and education policy. Simultaneously, we also have collaborative partnerships with Research and Academic Institutions. To these seven stakeholders, we have , by deliberate design, identified another stakeholder, Current and Future generations. We think that the future must inform our thinking and actions on sustainability more than anything else, as otherwise our vision will stop short of being truly sustainable; therefore, while this stakeholder group may not have a tangible and real face to it, they act as an anchor for all our decisions. A summary of our stakeholder engagement Strategic and operational reviews, Customer Meets, Formal customer feedback and surveys Ongoing and continuous; Surveys are annual and project-based - Integrity and transparency at workplace, the company’s larger vision on sustainability and social issues - Counseling and Grievance Redressal Annual General Meeting, Annual Report, Investor meets, Analyst conferences, Roadshows, Shareholder voting, Investor complaints Ranges from Quarterly to Annual; Analyst meets and roadshows may be periodic depending on situational requirement - Company strategy and performance, future plans - Returns to shareholders - Corporate governance standards - Top risks and company’s approach to risk mitigation Suppliers Regular operational reviews, Supplier meets, Vendor survey Will vary from monthly to annual Investors Customers - Quality and cost effectiveness of services - Innovativeness of delivery - Compliance on labor and human rights ; Alignment to Wipro COBCE (Code of conduct and Ethics) - Alignment with Wipro expectations on ecological sustainability - Incorporate diverse suppliers (minority, disadvantaged sector for example) in procurement Periodic meetings and discussions, Regular e-mail exchanges, Annual Education Forum, Faculty Workshops, Mission10X collaborative portal Varies from weekly to annual - Delivery compliance (Quality, Schedule, etc.) across products and services - Impact on customer’s business goals - Does Wipro meet the expected norms and code of conduct (Wipro or Customer agreed) on environment, labor and human rights and corporate responsibility? Open houses, Performance reviews, 360 deg feedback, All hands meet, Focus groups, Leadership webcasts, Blogs and discussion groups, Perception Surveys Employees The education ecosystem Ranges from daily (blogs) to annual (360 deg feedback) - Empowerment, Continuous Learning , Quality of Work, Work-Life balance - Compensation & Benefits, Workplace facilities - Health & Safety - Diversity in the workplace - Career planning, Appraisal and Feedback - Systemic reform in India’s school education system: Educational material and publications, Organizational capability development and Public advocacy - Improving the quality of engineering education through both curriculum interventions and faculty training Engagement Modes Engagement Frequency Engagement Focus Areas Wipro Limited 95 Business Responsibility Report Communities and NGOs Periodic meetings with partners, open meets with community, Partner newsletters Varies from monthly to quarterly Corporate Governance (Aligned to Principle 1 of the NVG guidelines) An organization’s license to operate in the long run is dependent on the soundness of its governance and management practices. The visual below showing the organizational architecture of Wipro illustrates this point - most of the boxes reflect a long-term orientation that a company needs to assiduously build and ingrain into its DNA. Governance and Management Architecture at Wipro Strategic planning PEOPLE Continuous learning - Identification of emerging material areas for engagement/ intervention - Education for disadvantaged children e.g. children of migrant laborers, children with hearing disability etc - Primary healthcare for rural communities - Environment issues that affect disadvantaged communities e.g. Water - Long term rehabilitation for disaster affected areas Planned meetings, workshops, taskforces and steering committees of industry network bodies Varies from monthly to annual Operational Planning Empowered workplace Environment Health, Safety Global Delivery Model Practices • Innovation • Quality • Customer Centricity • Knowledge Management Regular reviews by Board and CEC Leadership development Information Security Wividus Backoffice Diversity & Inclusivity Policy, Research and Advocacy POLICIES People Talent Supply Chain Procurement Continuous Internal Audit - India’s policies on climate change, energy efficiency, water, e-waste and ICT - Policy research on energy options for India - Advocacy papers and reports on business responsibility Indirect inference from our school interventions mentioned above, Published sociological research and analysis of emerging generation PROCESSES Governance • Enterprise Risk Management • COBC • Ombuds-process • Board governance • Internal Audit Current and Future Generations Sustainability • Resource And Cost Efficiency • Ecological footprint reduction • Education and Community • Transparent disclosures - Ecological sustainability of our planet - Meaningful work, work life balance Engagement Modes Engagement Frequency Engagement Focus Areas Sustainability Governance Sustainability is integral to Wipro’s vision and outlook ; this is reflected in the commitment and engagement with sustainability issues by Wipro’s leadership team, starting from our Chairman. The Chief Sustainability Officer (CSO) who carries overarching responsibility for our sustainability charter reports to the chairman and is part of the Corporate Executive Council, the senior most executive body in the organization. In addition, we have constituted a Sustainability Council that provides direction and reviews progress on our sustainability goals. The council includes the CEOs of the IT, Consumer Care and Lighting and the Infrastructure Engineering businesses, the CSO and the global heads of Human Resources, Operations, Marketing, Talent Transformation, Recruitment, Risk Management , Diversity and Sustainability. The council meets once a quarter and its charter includes all dimensions of corporate responsibility. Annual Report 2011-12 96 For other details on Corporate Governance – including the governance structure, mechanisms, composition of board, board sub-committees, etc - please refer to the Corporate Governance section of this report. Code of Business Conduct Wipro has a corporation wide Code of Business Conduct & Ethics (COBCE) that sets both, the broad direction and specific guidelines for all business transactions. The emphasis is on human rights, prevention of fraudulent and corrupt practices, freedom of association, elimination of child and forced labor, advertisement and media policy, avoidance of conflict of interest, prevention of sexual harassment and unyielding integrity at all times. The COBCE contains guidelines for all business practices and is applicable to all employees, contractors and consultants. The complete code can be accessed at www. wipro.com/corporate/investors/ corporate-governance. htm. The COBCE is socialized at multiple points of an employee’s lifecycle - it is first covered as part of the induction program of new hires and subsequently, every employee has to take an online test annually to assert his familiarity with the tenets of the COBCE. We have a zero tolerance policy for non compliance with the COBCE, especially on non-negotiable factors - e.g. child labor, anti-corruption etc. The Ombuds-process Having a robust whistleblower policy that employees and other stakeholders can use without fear or apprehension is a sine non qua for a transparent and ethical company. Wipro’s Ombuds-process is designed to be this and more. It allows and encourages any affected stakeholder to report breaches of the COBCE and any other matter of integrity to the concerned Ombuds-person. In 2011-12, a total of 728 complaints were received via the Ombudsprocess and the resolution percentage of cases as of March 2012 was 92%. Human Capital People Engagement at Wipro (Aligned to principle 3, 4 and 5 of the NVG guidelines) Management Approach: Doing good begins at home. We believe that the global standards that we embrace as a corporation must translate into our actions as an employer. These standards are incorporated in meeting the strategic drivers that shape our people practices and processes. Ours is a global knowledge workforce that offers high end solutions to a global customer audience. In this context drivers such as engagement, learning and empowerment are integral to building a world class workforce. Core values of the Spirit of Wipro and the COBCE create a global foundation for a free and fair workplace for employees across all countries and businesses. At the same time, our practices are broad and flexible in integrating local regulatory and cultural flavors. Our practices in wellbeing and health, learning and development and Diversity are influenced by globally accepted standards set applied to operational contexts. All our efforts point towards creating and nurturing a workplace characterized by freedom, fairness and worldclass practices. Engagement and Empowerment Employee engagement is an inclusive and empowering platform that connects employees with leaders as well as peer groups. Forums such as company level Wipro Meets, Business Unit level All Hands Meets and Regional meets are interactive platforms for sharing information, voicing feedback and conferring reward and recognition. Webcasts and web-chats also form a regular channel of engagement between senior leaders or Subject Matter Experts (SMEs) and employees. A host of newsletters are created internally by respective functions to keep Wiproites abreast of latest developments and initiatives. Information on people policies and practices are made available to all employees on the company intranet portal; revisions to policies are updated regularly as well. During 2011-12, several policies In Wipro, our Chief Risk Officer is also the Chief Ombudsperson who works with designated Ombuds-person in each BU. The process ensures confidential and anonymous submissions regarding (i) questionable accounting or auditing matters, the conduct of which results in a violation of law by Wipro or (ii) substantial mismanagement of company resources (iii) Any instance of sexual harassment or any other form of discrimination (iv) Any violation of human rights as articulated in the COBCE and as per the principles of the U.N.Global Compact. In 2011-12, the Ombuds portal has been upgraded with a 24/7 multi-lingual hotline facility for ease of access in logging concerns as well as access via web at www.wipro.com. Wipro was among the Top 3 in the 2012 Business Today list of Best Companies to work for in India. Wipro Limited 97 Business Responsibility Report and processes were simplified as part of the ‘Simplify’ initiative, to improve employees’ experience. At Wipro, we respect employees’ right to form or participate in trade unions. Less than 1% of our employees in the IT business are part of registered trade unions. These are a section of employees in Europe, Brazil, Mexico and Australia. We also have Work Councils in France and Germany. Collective Bargaining Agreements are entered into with trade unions in Finland and Brazil. The HR function meets these groups every month to consult on any changes that can impact work environment and terms and conditions. One significant source of employee feedback and opinion, globally, is the Employee Perception Survey (EPS). The EPS is held once every 2 years and covers various themes that are material to employees -Culture, Manager Quality, Role, Work Environment, Leadership and the Spirit of Wipro values. In the EPS 2011, Diversity, Team, Social Responsibility, Customer Focus and Values were the 5 top-rated drivers of engagement. The areas of improvement on which we are focusing are career growth, development linked to role, greater communication around Wipro’s strategic direction. In 2011, in order to more directly embed employee feedback into organizational action, the Employee Advocacy Group (EAG) was created. The EAG is formed of volunteers who come together as peers, as a steering group. The EAG works on two specific areas: channelizing feedback on existing policies and practices, and reviewing new policies before launch, wherever feasible. At Wipro, we believe in the power of appreciation; recognizing performance and valuable contribution is a part of our organizational DNA. Quarterly, half yearly and annual reward events are held across businesses and geographies to recognize stellar accomplishments. In 2011, the Winners Circle reward and recognition framework was launched. Partner Employees Across IT businesses, contract employees with specific skills are deployed in projects. Skilled contract employment is a leverage point for technology firms globally; it creates value as well as flexibility, for clients and talented individuals alike. At Wipro, our people supply chain is a key value enabler, for various critical business and functional processes. Contract workforce is an integral part of various projects across IT business. Across locations, contract workforce is engaged in key functions such as Security, Housekeeping and other essential support functions. Our total contract workforce is around 25,000, and covers both skilled and support services. A unique example of enhancing people supply chain value is the Partner Employee Engagement Team (PEET) in one of our service lines, which alone employs over 10,000 skilled contract employees. The partner engagement team is a dedicated human resource team that manages engagement, learning & development, performance management and reward & recognition for contract employees. This practice was initiated in 2010-11 and since then has yielded tangible results in terms of higher retention as well as higher engagement of contract workforce. In 2011-12, the Partner Employee Engagement Practice was recognized as one of 8 most impactful practices at the NHRD HR Showcase Event at Bangalore. The Winner’s Circle is comprehensive and people-friendly; it brings together all types of rewards under a single pointbased framework. Winners earn reward ‘points’ and have a wide choice of prizes to redeem their points. Details of our employee metrics for the IT business are provided in ‘Management Discussion & Analysis’ section of the report. Free and Fair workplace Wipro is an Equal Opportunity employer and remains committed to the highest standards of openness, probity and accountability. The Code of Business Conduct & Ethics (COBC&E) defines our commitment and actions as a meritocracy and equal opportunity employer. All decisions regarding hiring, learning opportunity, salary, compensation and separation are based on merit and performance. We are committed to nondiscrimination on any grounds, such as nationality or ethnic origin, gender, race, religion, caste, disability, political or sexual orientation. We strongly believe that this commitment reinforces a progressive and high-performing culture at work. Compliance with basic employment norms such as adherence to minimum wage standards, statutory benefits and timely wage payment have been maintained without any defaults for the reporting period across our businesses. Suppliers and third party Annual Report 2011-12 98 employment agreements also include contractual obligations to fulfill these employment norms. Health and Well being Wipro promotes and adheres to a cohesive and holistic approach to the well being of its employees - including physical, emotional and mental well being. Work-life balance at Wipro is perceived not just as a time share between work and home but rather as a focus on all aspects governing ‘Life’ for all employees, irrespective of gender or any other factor. We view employees as complete individuals and hence our practices to promote safety, health, emergency response and overall wellness are frequently revised based on regulations, industry trends and employee feedback. This approach is reflected in our workplace security administration, prevention and mitigation of health and safety hazards, comprehensive medical policies and numerous initiatives on fitness, nutrition and emotional wellbeing. Employees actively support and participate in these initiatives, thereby making them relevant and successful. 15 of our locations, covering 70% of our workforce, are certified for OHSAS 18001:2007 (Occupational health and safety assessment series) Physical Safety & Security • Security teams trained in vigilance, Emergency Response Teams with employee volunteers and Working with law enforcement agencies to continuously improve, through drills & simulations. Senior Police officials are invited for web-chats with employees • Educations and Awareness drives, such as Security Week • Occupational Health Centers at major campus locations • Comprehensive medical cover across locations, globally • Life cover, Accidental Death and Disability cover in all key geographies. Comprehensive Medical Benefits Package/ Retirement Benefit Options • Comprehensive leave policies - Covering Medical Leave and Industrial Injury Leave • Maternity, Paternity and other Parental leave, as mandated by law, across geographies. • Voluntary pension plans • “Fit for Life” program has over 34,000 registered users. • Physical fitness facilities such as gym, tennis court, basketball courts available on major Wipro Campuses. Health/ low calorie food options in cafeterias. • Tie ups with crèches, hospitals, pharmacies and gyms. Mental and Physical well being • mitr - an “Employee Assistance program (EAP)” for emotional counseling as well as specialist legal and financial advice in India. Accessible 24X7 on phone. Over 700 calls received by mitr during 2011-12. Plans for 2012-13 year include identifying and focusing on major stressors and expanding the concept of emotional wellness. • Similar EAP programs also available in key geographies like the U.S. and U.K. Wipro Limited 99 Business Responsibility Report Learning and Development at Wipro At Wipro, learning and development is an integral part of the work culture and takes place in many different ways. Structured learning takes place via classroom training and online e-learning. Every employee has an Individual Learning Plan that addresses individual learning needs through the Integrated Talent Management System (ITMS) portal, which is a vast repository of over 17,961 e-learning titles, spread over 3,520 courses. Soft skill training inputs are linked to the Performance Management System and are customized to each role within Wipro. The range of training spans technical, domain, process and behavioural training. The pioneering WASE program (Wipro Academy of SoftwareExcellence) was launched in 1995. The WASE program consists of an 8-semester (four years) off - campus collaborative MS Program with the Birla Institute of Technology & Science (BITS), Pilani (Rajasthan, India). Students receive technical and academic inputs as well as the opportunity to apply their learning in live projects. WASE: 3,143 students joined in 2011-12 WiSTA: 400 students joined in the first year of the program in 11-12 TEC: 2,000 employees benefitted WiSTA (Wipro Software Technology Academy) is the latest entrant in Wipro’s training repertoire. WiSTA is a new, work-integrated M.S. program in Information Technology for science graduates with non-mathematics disciplines. It is structured along similar lines as WASE, in collaboration with VIT University, Vellore (Tamil Nadu). Last year also witnessed the launch of Talent Enrichment Centers (TECs). TECs enable employees to upgrade their skills, spend minimal in-between projects and find the right assignments. entrusted with driving growth, operational efficiencies, customer relationships and people engagement. Global Program Excellence Group has also been formed under Global Transformation office to assess, develop and deploy program managers. At Wipro, leadership development is a strong, institutionalized process that comprises lifecycle programs and customized interventions to build leaders at all levels. Every year, all leaders above the middle management grade receive 360-degree feedback on the Wipro Leaders’ Qualities (WLQs). The qualities are periodically revised to keep aligned to current and emerging business realities. In 2011, the WLQs underwent revision and the revised qualities are centered on the twin pillars of Client and People. 2012 During 2011-12, IT business employees across levels benefited from over 7,500 programs. These programs included over 5,000 technical and domain skill building, over 1,000 functional, operational and quality process orientation, and over 1,000 behavioural and leadership development programs. Summary of Learning and Development courses: Wipro featured in the 2011 Global Top 25 Companies for Leaders rankings by Aon Hewitt, the RBL Group and Fortune. Technical skill building programs Non Technical learning (functional, domain, operational, quality Behavioral skill building Leadership development Total 5,314 1,310 896 289 7,809 The key focus of 2011- 2012 has been to build capabilities in realm of Program Management, Architecture and Delivery Management which have been identified as key distinguishing capabilities for Wipro. We believe this will help us partner with our clients in their business transformation initiatives. This includes the Architect Career essentials (ACE) framework launched in October 2011 and the Unified Competency Framework for technical competency building. At the middle management level, the Delivery Manager Academy offers individualized development where Delivery Managers are People Diversity at Wipro For a global organization such as ours, talent and workforce diversity is a key success factor. We believe in treating all people with respect and dignity. Managing diversity not only makes us more creative, flexible, productive and competitive but also promotes innovation and business success. Our focus on Diversity and Inclusion has gathered significant momentumover the last four years and today it is seen as a key aspect of our work culture and ethos. Wipro’s diversity charter focuses on four primary pillars: Gender, Nationalities, Persons with Disabilities and people from underprivileged sections of society. Annual Report 2011-12 100 The Women of Wipro program is a strategic business enabler for Wipro. The objectives of Women of Wipro are to improve retention of women employees, facilitate an increased talent pipeline of women leaders at senior levels, and develop Wipro as an equal opportunity employer. Women of Wipro has been instrumental in the launch of numerous programs , more notable of which are the Women in Leadership workshops which help understand and address the issues and dilemmas often faced by successful career women and the “Mentoring for Success” program for high-potential women in middle management. • Gender: • 28 % of our workforce in the IT business consists of women employees • 515 women employees covered in “Mentoring for Success” program • “Women of Wipro” speaker series -senior women from client organizations speak on career and life Nationality: 10.6% of workforce consists of employees from across 75 nationalities. Persons with Disabilities: 350 across various roles Wipro was presented the 2011 ‘NASSCOM Corporate Award’ as the Best IT services & Product Company for Excellence in Gender Inclusivity “Women helping Women” category award at the 8th Annual Stevie Awards for Women in Business Persons with disability voluntarily declare their disability through a Self Identification Form ensuring complete transparency. During in 2011-12, 150 persons declared their disability via this form. We have also introduced a Reasonable Accommodation policy, to enable managers and HR teams in providing an inclusive environment. Other interventions include an e-learning module on Diversity and Inclusion which has been completed by over 7,000 employees as on March 2012. An Emergency Evacuation Preparedness Program for persons with disabilities was initiated in 2011-12 at Bangalore, Kolkata and Chennai. At the close of 2011-12, we had over 350 persons with disability working in different roles, across geographies. People engagement in Manufacturing units: The key tenets of human rights and labor practices as articulated in the COBCE are also applied across our manufacturing setups (Consumer Care& Lighting and Wipro Infrastructure - WIN). In WIN, 38% of our total workforce is Non- Indian. As a demonstration of our commitment to diversity and inclusion, WIN manufacturing has started employing women and people with hearing impairment on the shop floor in the Chennai plant. In collaboration with the Directorate of Employment and Training we have made efforts to ensure that appropriate training, safety and other enabling infrastructure is provided. Recruitment drives are conducted in collaboration with Vocational Rehabilitation Centre to extend opportunities to people with disabilities. In 2009, Wipro introduced a comprehensive framework designed to aid the inclusion and a high degree of contribution by employees with disabilities who worked with Wipro. This laid the foundation to welcome more people with disability into Wipro. We believe that an inclusive environment facilitates employment as well as career building for persons with disability. The framework focuses on 6 areas - People Policies, Accessible Infrastructure, AccessibleInformation Systems, Recruitment, Training and Awareness. This includes enabling infrastructural changes in existing and new premises, such as addition of hand rails, ramps, lifts, designated parking spaces, customized workstations and also technology assistance in terms of modified laptops, voice activated programs and other assistive applications. Ecological Sustainability (Aligned to principle 6 of the NVG guidelines) Management Approach: Ecological sustainability is a cornerstone of our charter and a major driver of many of our key programs, internal and external. Hitherto, resource efficiency – materials, energy, water -, waste management and pollution mitigation have been the principal levers of any corporate organization’s environmental program. But this has changed in the last few years ; with the increasing centrality of issues like climate change and water stress, organizations have come to realize that externalizing the costs of ecological damage is a poor idea in the long run. Wipro Limited 101 Business Responsibility Report Our program is built on five pillars : Energy efficiency and GHG mitigation, Water efficiency and responsible use, Waste management, Biodiversity and Product Responsibility. We present a progress update on the first four in this sub-section with the last dimension being covered in the next sub-section. Scope of Reporting: India: 67 locations, the majority of operations is from 27 owned locations representing 88% of our workforce. Overseas: 85 locations, which includes 8 customer data centers. Nearly all of the office locations overseas are leased. Management system We have been following the guidelines of the ISO 14001 framework for more than a decade now as one of the cornerstones of our Environmental Management System (EMS). 20 of our campus sites in India are certified to the standards of ISO 14001:2004. GHG-Scope 1 and 2 300,000 250,000 200,000 150,000 100,000 52,917 50,000 0 2009-10 IT 2010-11 Non - IT 2010-12 60,633 69,253 243,393 290,150 292,350 Energy Goal(s) To Reduce the Scope 1 and Scope 2 GHG intensity of Wipro’s operations by 50% over a 4 year period : from 2.6 MT per employee in 2010-11 to 1.3 MT per employee by 2014-15, translating into a net reduction of nearly 60,600 tons at the Wipro Ltd level. This target applies to all of ourcampus facilities and offices Note: For Scope 3 emissions – these comprise emission sources that are not in our direct sphere of control - while we have a strong baseline measurement in place, we are in the process of expanding the sources to be included under this Scope as per the new GHG Corporate Value Chain (Scope 3) Accounting and Reporting Standard. We will complete this exercise by end-2012 and simultaneously establish goals for reduction that are appropriate for this category The below dashboard provides a summary of our overall carbon emissions – categorized under Scope 1 (emission from direct energy consumption, like fuel) and Scope 2 (emissions from purchased electricity) A summary of our Scope 3 emissions (other indirect sources) is provided below.Out of the 15 categories of scope 3 reporting as per the new GHG corporate value chain standard, we are presently reporting on 6 of the 12 applicable categories. In 2011-12, we added new reporting heads (reported separately below) for which data was not available in earlier years for example Agent airline bookings, Cash claims on cab commute, Hotel Stays. Scope 3 170,608 169,451 180,000 160,000 130,188 140,000 120,000 100,000 80,000 60,000 40,000 9,440 20,000 0 2009-10 37,169 6,799 2010-11 6,255 2011-12 422 2011-12 (new categories) IT Non - IT The table below shows the extent of coverage across our operations for the major Scope 3 categories Annual Report 2011-12 102 Category Coverage Business Travel Complete for Air Travel across all business units, 95% for all other travel modes Employee Commute Complete Upstream Leased Complete; This is currently Assets/ office space reported under Scope 1 and Scope 2 Waste generated Complete in operations Downstream Complete; Transportation transportation/ and distribution for distribution computing products End-of-Life treatment Complete of sold products Business travel and commute each contribute to 20% of the total emissions profile for the India IT business Office Space Energy Metrics The total energy consumption, electricity and backup diesel generated, for office spaces across all global operations in IT is 319 Mn Units. Data centers, India and overseas (USA and Germany) contribute to another 75 Mn units. Considering the significant change in our energy efficiency consumption profile due to data centers, we report energy and emissions intensity for office spaces and data centers separately. The emissions intensity per employee and per area (floor space) for office facilities is shown below. Against a per employee annual emission target of 2.2 tons for 11-12, we are at 2.34. Emissions Intensity 3.0 Tons Per Employee Per Annum The 11% reduction in GHG emissions intensity for the reporting year as compared to 2010-11 has been driven by two key contributory factors: • Energy efficiency measures contributed to a 4% decrease in energy intensity per employee. This is due to energy optimization measures, replacement of some older equipment with more energy efficient equipment and consolidation of operations accompanied by a transition from leased to owned facilities with the resulting increase in overall utilization of office space. • We have used separate grid emission factors (from Central Electricity Authority) based on locations of our operations; for South India operations we have used 0.75 Kg/KwH while for other regions we have used 0.80 kg/KwH. The undifferentiated emission factor in 2010 was 0.79 kg/KwH. The emission factor for south used is 5% lower than the grid emission factor used for 2010-11. This is a more accurate representation of our GHG emissions. Our five year GHG mitigation strategy consists of three key elements – Energy Efficiency, Renewable Energy (RE) Purchase and Captive RE ; of this, RE procurement will contribute the maximum to GHG emission reductions. The visual below depicts a graphic representation of this strategy 80% Renewable Energy (Purch) MW Scale purchase of Clean Energy from third party providers 15% Energy Efficiency 80 GHG Mitigation Approach 5 15 Higher Cooling Efficiency (Earth Air Tunnel, Geo- Thermal) Higher Lighting Efficiency (LED) Changes in bldg. design Behavioral and process changes 5% Renewable Energy (Gen) MW Scale generation of Solar PV, Wind, Bio Gasifier GHG Mitigation Strategy 2.5 2.0 1.5 1.0 0.5 0.0 2.7 2.6 15.91 19.00 2.39 2.34 2.2 17.00 15.00 13.00 12.46 11.00 9.00 7.00 5.00 Kg Per Square Feet Per Annum Emissions Intensity-india Emissions Intensity-Global Emissions per Square Feet-india 2010-11 2.7 2.6 15.91 2011-12 2.39 2.34 14.32 Wipro Limited 103 Business Responsibility Report Energy Efficiency: Over the preceding five year period, we have implemented a variety of energy efficiency measures e.g. we were one of the early adopters of Green Building Design with 18 of our current buildings certified to the international LEED standard ( Silver, Gold, Platinum) . Since 2007, we have been working on a server rationalization and virtualization program, through which we have decommissioned old physical servers and replaced the processing capacity with virtualization technology on fewer numbers of servers. As of March 2012, we have 800 virtual servers running on 120 physical servers - contributing to an energy savings of approximately 3 Million units annually. The above measures have resulted in a cumulative energy intensity reduction of around 20%. RE procurement: For the reporting period of 2011-12, we procured 55 Mn units of Renewable energy through the PPAs (Power Purchase agreements) with private producers, which amounts to approximately 17% of our total office space energy consumption in the IT business. Captive RE: We implemented two pilot installations of solar PV of 100 KW each in our Kolkata and Chennai campuses ; this is combination with our extensive use of solar water heaters in our guest blocks and cafeterias have resulted in a cumulated savings of 1.6 Mn units of electricity. Remote collaboration and mobile productivity enablers The IT services outsourcing model require frequent travel to customer locations , mainly overseas, across the delivery life cycle and contributes to around 20% of our overall emissions footprint. Over the years, we have launched various remote collaboration and workstation productivity solutions, like internet enabled voice and video conferencing technologies and accessibility of intranet based applications over internet. This has resulted in a 30% increase in the use of web meeting technologies (like Microsoft Live meeting and Webex). Our conservative estimates show an emissions savings of over 30,000 tons. Water: Intensity and Recycling Ratio At Wipro, we view water from the three inter-related lens of Conservation, Responsibility and Security; our articulated goals are therefore predicated on these three dimensions. Goal(s): To improve water efficiency (Fresh water use per employee) by 5% year on year • Responsible Sourcing - To ensure responsible water manage ment in proximate communities, especially in locations that are prone to water scarcity Water Efficiency Water Security Water Responsibility • Recognizing water availability as a business risk, to proactively assess and plan for the water security of the organization in a manner that is congruent with the above two goals. Water is withdrawn from four sources - ground water, municipal water supplies, private purchase and rain water utilization - with the first two sources accounting for nearly 65% of the sourced water. The majority of the balance 35% is from private sources near our operations. The water supplied by the municipal bodies and the industrial association are sourced by them in turn from river or lake systems. Our water that is purchased from private sources can be traced to have been extracted from ground water. The per employee water consumption for the reporting year is 1.71 m3 per month (as compared to 1.81 in 2010-11). We recycle 1,032,050 m3 of water in 23 of our major locations, (872,880 for 21 locations in 2010-11) using Sewage Treatment Plants (STPs), which represents 33% of the total water consumed. The percentage of this recycled water as a percentage of freshwater extracted is around 50%. We are continuously exploring better metering of our water infrastructure (input and consumption points). A significant proportion of the water data is based on water balance derivations and not actual readings. Sourcing of water is a complex interplay of various socio-economic factors at various levels - organization, community, catchment area and the city. Hence a multistakeholder approach to water management is crucial. While government agencies and the public sector have been important players in water till now, there are enough case studies from across the world that illustrates the critical importance of community management in water. With the objective of improving our own understanding of the socio-economic context of our sourcing of water and acting upon it, we have commissioned a comprehensive study to explore these areas at two of our large locations in Bangalore and Chennai. Annual Report 2011-12 104 The study, to be completed in 2012, will serve as a reference template for Wipro to form an informed understanding of the water scenario in the other locations that it operates in. The study could also play a role in larger advocacy across government, utility service providers and business. Biodiversity: Nature provides us the best illustration of why diversity is critical; for it is well understood now that biodiversity or the plurality of species is crucial to human well being - from providing new sources of medical cures to preserving climate integrity and providinglivelihoods to millions. We think therefore that the business sector must get involved much more in the issues of biodiversity. As an organization with large campuses in urban settings, we are acutely conscious ofour responsibility on this front and have set for ourselves the following goals. • To convert five of our existing campuses to biodiversity zones by 2015. • All new campuses will incorporate biodiversity principles into their design Our first biodiversity project was initiated at our Electronic City campus inpartnership with ATREE, a globally renowned biodiversity institution (www.atree. org) in 2010-11. The first phase of the project - a butterfly park and herbal garden - will get completed by March 2013. Pollution and Waste: Goal(s): To ensure 95% of total waste is recycled/ reused by 2013 - i.e. Less than 5% is disposed through landfills. Pollution of air and water poses one of the most serious threats to community health and welfare. Our waste management strategies are centered around either • recycling the waste for further use or • arranging for safe disposal. To operationalize our strategy, we follow robust processes of segregating waste into organic, inorganic,E-waste, hazardous, packaging, Bio medical and other categories, which is then either recycled inhouse or through outsourced vendor 83% of the total waste from our IT India operations is recycled -through both, in-house recycling units and through authorized vendor tie-ups. A majority of the balance mixed solid waste is also handled through authorized vendors - however its trail is not entirely known to us and hence we have classified it as untreated waste. In 2012-13, we are initiating a comprehensive waste audit at key locations by an external agency - the audit will help us verify our processes and get insights into improving our recycling ratio. We continually assess operational risks to the environment and apply the precautionary principle in our approach to get insights and plan - for example, the responsible water use study and waste life cycle audits to be completed in 2012-13. In the reporting period, there were no instances of environmental fines imposed or negative consequences due to our operations. Consumer Care and Lighting Although a formal program was started in 2011-12, over the past couple of years, aspects of sustainability are ingrained in many resource and operational efficiency, health and safety, labor relations and community initiatives across the manufacturing locations. . There have been targeted reductions in the water and electricity consumption apart from the increased use the use of recycled water in the factory premises. All our manufacturing units have rain water harvesting facilities. The CCLG business has been reporting resource use (energy, water, waste) as part of key disclosures, like the Carbon Disclosure Project for the past three years. Consumer Care and Lighting goals on Energy, Water and Waste • Energy: 10% reduction over last year for both lighting and consumer care units • Water: Reduce fresh water consumption by 5% YoY. . Recycling/Reuse water: From 12% to 20% of fresh water consumption in lighting and from 7% to 15% of fresh water in Soaps (metrics arrived based on rule of thumb) • Waste: 100% disposal of hazardous waste through Pollution control board certified agencies. For non-hazardous categories, we will reduce percentage waste going to landfills by 5% YoY. Wipro Infrastructure Engineering (WIN): Energy conservation, material conservation through redesigning of products and processes have been part of WIN’s quality and environmental management systems. All manufacturing locations of WIN are ISO14001 certified. There is zero discharge of waste water across all plant locations. Wipro Limited 105 Business Responsibility Report Value Chain Sustainability (Aligned to Principle 2 and Principle 9 of the NVG guidelines) Management Approach: In the globalised world of markets for services and products, the networks for resources, skills and manufacturing locations are increasingly multi-tiered and interlinked. The environmental and social footprint of products and services is therefore spread across these many layers and carry different degrees of risks. It becomes the responsibility of the primary producer of services and products therefore to exercise varying degrees of influence and control on its value chain. In our sustainability vision and thinking, we recognize the centrality of going beyond our organization’s boundaries and of working with all important stakeholders in the value chain - suppliers, customers, contractors, service providers etc. Our customer stewardship program consists of multiple pillars - the Green Computing initiative, the Green Data Center program, the IT for Green portfolio of Software Solutions and custom solutions in Green Buildings and Clean Energy. In our lighting division, our portfolio includes a range of CFL and LED lights. Apart from health products, we continue to look for innovations which promote consumer well being across our product portfolio. For more details on our customer solutions portfolio, please refer to the “Customer Stewardship” section of our last Sustainability Report 2010-11 Started in 2007, we have been pioneers in Green Computing with mature programs on the three pillars of Energy Efficiency, Toxics Elimination and Extended Producer Responsibility for e-waste. Our Supplier Responsibility program is more recent : In 2011-12, we initiated a Environmental and Social Risk Profiling of our top 100 suppliers in the Computers and IT services division. We will use this as a foundation to create a strong program on supplier responsibility from 2012-13 onwards IT Services In IT services, our predominant suppliers are utility providers, telecom, IT infrastructure and support services like hospitality, catering and transportation. An example of the collaborative approach that we adopt with our service providers is the successful partnership with the local transport authority in Bengaluru that has resulted in significant benefits for employees, local community and the environment. Another unique example is a study that we initiated in 11-12 to explore the development of a Responsible Water use framework - this involves interaction with local authorities and water supply chain stakeholders. Recognizing the socio-economic benefits of local procurement, we encourage sourcing from the local economy. Aligned to the LEED standards, nearly 50% of the construction materials is sourced locally. At an aggregate level , nearly 88% of our supplier base is based in India which translated into 73% of the procurement by value for the reporting year. We have also started an exercise in consolidating our supply chain base in order to make our engagement more focused and meaningful. In FY13, we will also be launching our supplier engagement program on ESG principles with a select group of suppliers. Wipro expects its suppliers to adhere to similar standards of ethics and integrity as for itself. Specific clauses in the COBCE require our suppliers to adhere to the ethical and responsible principles governing child labor, forced labor, discrimination, fraud and anti-corruption. We have zero tolerance for breaches of fundamental human rights principles and on bribery and anti-corruption with a resultant terminaton of any supplier found guilty of such breaches. Our Ombuds process is available 24X7 (online and through specified contact numbers) for supplier s and contractors to report any breach of code of conduct by Wipro employees. In 2011-12, we have launched a multilingual 24X7 call center. During 2011-12, there were 25 instances of suppliers who were found in breach of the COBCE, subsequent to which we terminated and blacklisted 6. For the balance 19 - where the breaches were not serious- limited actions were taken along with counseling and warnings. Annual Report 2011-12 106 IT Products: Life cycle sustainability in our personal computing business is based based on the three pillars of energy management, chemicals management and waste (end of lifecycle) management. All our new product launches are Energy Star 5 (as per U.S. EPA standards) enabled. In India, BEE Ver 1.0 (equivalent to ES 5) is a new energy rating system for laptops and all 4 laptop models introduced in the reporting period are compliant with BEE guidelines. Over the years, we have developed successful partnerships to procure computing components that meet and exceed RoHS (Restriction on Hazardous substances) guidelines. Across all the customer shipments that were made during 11-12, RoHS compliance stood at around 99.7%, with the small portion explainable on account of customer specified components. We have also launched a few models as part of our “Beyond RoHS” program with the aim to offer PVC and BFR free products. We are fully geared up to meet the new e-waste guidelines and are working closely with stakeholders to ensure compliance. Customer communication on health and safety aspects is a key aspect of our sustainability program. Instructions on our end-of-life disposal program are added in all shipments. Our take-back program for end of life desktops and laptops is an industry first in India. Across the country there are 17 collection centers. In 2011-12, we collected 229 tons of e-waste. All products follow required EMI/EMC (Electromagnetic Interference) regulations. Desktop Monitors (18.5 and 20 Inch models) are TCO certified which cover aspects of ergonomics and user centered design. Instructions on safe disposal and recyclability are mentioned on the carton and individual accessories. The installation failure trend, which measures hard failures in the first month of product use, is one of the lowest in the industry at 0.27%. Across the warranty period (1 year) this figure is still a low 0.4%, which demonstrates the build quality of the product. Greenpeace continues to be instrumental in providing critical feedback and inputs to our Green Computing journey. Their “Guide to Green Electronics” has rated Wipro as the No. 1 green company in India since 2009. Earlier last year, Wipro launched a program for our key and materially important component suppliers with a view to understand their environmental footprint and social impact and further strengthen our supply chain engagement on ESG (Environment, Social and Governance) aspects. Consumer Care and Lighting: Product quality and manufacturing efficiency have always been part of our life cycle sustainability program in the Wipro Consumer Care & Lighting division. We use recycled material in packaging across our key product categories. We are first in the market to introduce LED lighting for domestic consumers and are leaders in selling the LED lighting solutions in commercial and institutional markets in India. LEDs draw 1/10th of power of normal GLS bulbs for the same luminosity output. Simultaneously, we have reduced the mercury content in our CFL bulbs from 4.5 mg to 3 mg and are planning to eliminate the mercury in tube lights (FTL) through alternate arrangement by the end of 201213. All our manufacturing locations have quality, EMS (Environmental Management System) and Health & Safety, which does thorough audit of the sustainable practices within the organization as a part of certification process. We are working on a program that will include onproduct communication of safe disposal method for consumer care products like baby diapers and lighting products like CFL and Tubelights. A Management team visits the market once in a month in different parts of country to collect feedback on product issues and to identify opportunities for more effective customer service. The inputs from these visits are captured in a ‘Customer Service Opportunity (CSO)’ portal with the commitment that the issues should be resolved within 45 days. A toll free customer care number is printed in all the products we sell, through which customers can log complaints/queries and suggestions related to our products. Education and Community (Aligned to Principle 8 of the NVG guidelines) Management Approach: For more details on our innovations in customer solutions addressing this principle, please refer to the “Customer Stewardship” section of our last Sustainability Report 2010-11 and the “Value chain Sustainability” section of this report. Our social transformation initiatives are now nearly a decade old. Over the years, our approach has been to engage in social issues with sensitivity, rigor and responsibility. Education and Community Care are the two areas that we decided focus on when we started a decade back. Wipro Limited 107 Business Responsibility Report The following visual is a summary view of our three social transformation programs addressing the two focus areas. VISUAL SUMMARY OF WIPRO’S PROGRAMS IN EDUCATION AND COMMUNITY CARE Addresses Issues of deep systematic reform in India’s education ecosystem Education Comprises Mission 10X, a not-for-profit trust Comprises Wipro Applying Thought in Schools (WATIS) Through a network of 30 partners, reaches 2000+ schools across the country Community Care Addresses Long-term disaster rehabilitation & issues of health, education and environment Comprises Wipro Cares, a not-for-profit trust Works with proximate communities through partners Works with 700 + engineering colleges across 20 states, reaching 10,000 faculty The reasons for this deliberate set of choices have the same compelling validity today as they had then • Education is the only catalyst of social development that can bring about change which is truly sustainable and durable over the long term; and • It is a fundamental responsibility of every business to engage deeply with its proximate communities and to try to address some of their biggest challenges Mission 10X Mission10X, started in 2007, was sought to create a quantum improvement in the employability of students by bringing about systemic change in the existing teaching-learning paradigms in engineering education. Over the last 4 years Mission10X has reached out to over 21,000 faculty members through the Innovative Mission10X Learning Approach (MxLA). Key goals for Mission10X Phase 2 are: • to develop 250 Academic leaders to build institutions of excellence • to deploy 2,500 Unified Learning Kits to bridge the • technology and learning gap between industry and academia • to empower 25,000 more faculty members in Mission10X Learning Approach Highlights of 2011-12 Mission10X reached out to over 8,400 Mission10Xians. The Mission10X community has reached out to 25 states covering over 1,184 colleges in India. Academic Leadership Program (ALP) for principals for engineering colleges. Over 200 principals from various engineering colleges have participated so far. • • Launched Mission10X Technology Learning Center (MTLC). The Unified Technology Learning Platform (UTLP) being part of MTLC will provide a platform to the students to do industry relevant projects and help build the necessary skills that are required by the industry. • Partnership withmany international and national educational organizations including Dale Carnegie Training, University of Cambridge, Harvard Business School Publishing, Indian Society of Technical Education and International Federation of Engineering Education Societies (IFEES) Annual Report 2011-12 108 • NASSCOM National Association of Software and Services Companies has partnered with Mission10X to use Mission10X pedagogy across IT companies. World Economic Forum’s latest report featured Mission10X as one of the 55 global good practices in solving Talent Mobility and employability problems. For more information, visit www.mission10x.com Wipro Cares Started in 2004, Wipro Cares is Wipro’s sustainability initiative that focuses on the developmental needs of communities in its proximate locations. Focus Areas: • Education for the underprivileged • Primary health care • Long term Disaster rehabilitation. Focus area for 2012-13: Extend our education focus in Teacher capacity building for children with disabilities. The visual below presents the key community initiatives we have engaged in 2011-12 undertaken under the charter of Wipro Cares: Volunteering is an integral part of Wipro Cares where we provide the employees of Wipro with a platform to engage meaningfully with communities. In 2011-12 Wipro Cares saw around 700 volunteers across India sharing their knowledge and skills with underprivileged communities through various initiatives. Wipro Cares currently has eight chapters in Bangalore, Mumbai, Chennai, NCR, Kolkata, Pune, Kochi and Hyderabad. Wipro Cares also organized old books collection, blood donation, joy of giving, NGO stalls during Diwali and eye donation drives through the year. Key Highlights of 2011-12 Access to Education Supported the education of 10500 + children in 6 cities & 1 village though 8 projects Primary Health Care Services Supported a population of 45000 covering 30 villges in Aurangabad, Tumkur and Hindupur with OPD and RCH(Reproductive Child Health) facilities Started similar projects in Mysore and Amalner covering a population of 5000 people Restoration of Environment Planted more than 25,000 trees and generated livelihood for more than 25 subsistence farmers in rural Tamil Nadu through a social forestry project Karnataka floods project completed, built 539 houses for two districts (Yadgir&Koppal) in North Karnataka Completed the project which provided eco sanitation, dug wells, rainwater harvesting for a village of 90 households which was affected by the Kosi floods in Bihar Carried out a global collection drive for Japan, collected 100,000 USD which was donated to Ashinaga, an NGO that supports the educational and emotional needs of children. Increased employee engagement through various campaigns across Wipro locations pan-India, currently have a base of around 700 volunteers Disaster Rehabilitation Employee Engagement Wipro Limited 109 Business Responsibility Report Wipro Applying Thought In Schools (WATIS) WATIS is a social initiative of Wipro’s that aims to bring about quality education in schools in India. Our strategy and focus areas within the larger ambit of school education reform can be summarised as follows. Education: a prime enabler of social vision Our Mission: work with social orgs to increase their capacity in ngaging with school education to realize the vision. Our Focus areas: Org capability building in the education space • To address the scarcity of orgs and people in this space • For sustainable impact Developing Educational material & Literature • To address the scarcity of good material for children and educators Public Advocacy • To create greater awareness on important educational issues Strategy Radical stimulus to influence public thinking Create good educational literature large advocacy initiatives Advocate Experiment and learn Deep engagement with schools Support thematic experiments create shareable learning Build eco-system Build civil society eco-system Strengthen network build capabilities in network Education reform in India is a large canvas and our program focuses on 3 outcome areas within this and our work in 2011-12 also was in line with this. Work in schools To work with school to • Support org capability development • Develop educational material • Do public advocacy Worked with around 2000 schools and 10,500 educators across 17 states reaching around 800,000 students Leads to Org Capability building To help orgs build specific capabilities To address lack of good orgs working in education For sustainable impact • Supported over 65 projects with 30 orgs • Partners network of 27 of India’s foremost educational organizations • 14 Wipro Fellows recruited so far Edu Material & Literature To support development of good children’s books & materials for educators To address the scarcity of good educational material Public Advocacy To provide radical stimulus to public thinking on education To address lack of awareness on important educational issues What Way • Published 3 books 3 in process • Learning Standards for primary classes • A video series on Student Misconceptions • Student Learning Study results as cover story of “India Today” • Student Misconception videos disseminated to 10,000 schools • Completed Quality Edu. Study: advocacy efforts underway Annual Report 2011-12 110 One of the key outcomes of our work has been to develop a country-wide network of partner organizations. This section provides an overview of the work that we have been doing on policy and advocacy in the above areas with emphasis on the highlights for 2011-12. Stakeholders and the primary issues Our primary identified stakeholders for public policy and advocacy are • Relevant government ministries and departments, both at the center and the states where we operate in ; Our interactions have been largely with the Ministry of Environment and Forests, Ministry of New and Renew able Energy, the Planning Commission, Ministry of Human Resources Development, Ministry of Corporate Affairs Industry networks and associations play a crucial role as catalysts for awareness, advocacy and action on the multiple dimensions of sustainability ; by providing a common platform for industry representatives to share and exchange ideas and practices, industry association can help foster a virtuous cycle of innovation led improvement. Industry networks also lend trength and credibility in the dialogue process with government on important matters of policy and directives. The industry networks that we have been an integral part of are: • • • • The CII-Godrej Green Business Center The CII-ITC Center for Sustainable Development The CII Climate Change Council The Nasscom working groups on Gender Diversity • Policy Advocacy (Aligned to Principle 7 of the NVG guidelines) Management Approach: Aligned with our conviction that business, government, civil society and academia must be equal stakeholders in engaging on the critical issues of sustainability, we have consciously been working towards building advocacy and engaging with government and industry networks on areas that , we think, need priority attention. Our areas of focus on policy and advocacy have centered around Clean Energy and Climate Change, Water, e-Waste, Education and Diversity. Our approach is to work through industry platforms like CII and to support research and publication s with partners who carry expertise in the above domains. • Research and Advocacy NGOs: Issues like Energy, Climate Change, Water, Biodiversity, Community Health etc require strong civil society involvement in addition to policy intervention and business action ; while the advocacy role of NGOs is well established, an equally critical role is that of furthering empirical research in these areas. NGOs, by combining the right blend of field work and academic rigor can generate valuable insights that can inform the work of practitioners, policy makers and industry professionals. Illustrative examples of such organizations that we work with are : CSTEP in the area of Clean Energy, BIOME in the area of Water, ATREE in the area of Biodiversity etc Wipro Limited 111 Business Responsibility Report The table below provides a summary of our major stakeholder engagements in policy and advocacy. Category of engagement Advocacy through industry network Brief CII-Climate Change Council Domain / Area Climate Change Brief highlights - High level body with representation across industries - Led the Indian business representation at Durban COP17 - Tabled concerns and challenges with National Solar Mission Influencing policy through industry network CII working group on CSR CSR related directives in proposed Companies Bill Amendment 2011 - Cross industry representation - Prepared comprehensive ‘Essential & Leadership’ guidelines on NVG disclosures for companies - Regular representations to Ministry of Corporate Affairs on Industry stand on proposed Companies Bill amendments, especially on the mandating of 2% of PAT spend on CSR Advocacy through industry network CDP working group on ICT sector module Climate Change - Part of global working group convened by Carbon Disclosure Project (CDP) to create and publish an ICT sector supplement for CDP disclosure - High level body with wide representation from industry sectors and government - Creates awareness and debate on multiple sustainability dimensions e.g. Climate Change, Water, Education etc Influencing policy through invited engagement with government Influencing policy through industry network Planning Commission working group on Water MAIT(Manufacturers’ Association of Information Technology) working group and the ‘e-waste 2012’ legislation Water -Part of the Planning Commission working group on Water that provided detailed inputs as part of the 12th plan exercise - Wipro played a central role as part of the MAIT working group that worked with the Ministry of Environment and Forests in the drafting of the e-waste 2012 legislation - The legislation seeks to place the primary onus for e-waste collection and handling on the producer Advocacy through industry network CII Sustainability Advisory Council Sustainability in Business e-waste Annual Report 2011-12 112 Category of engagement Advocacy through industry network Brief CII working group on Green Procurement Domain / Area Sustainable Operations Brief highlights - Prepared and published comprehensive guidelines for green procurement that companies can adopt - Wide representation from across industries - Based on two year study of nearly 900 schools across the country, we along with our partner EI published a detailed analytical study of quality of school education in India’s urban school system - The study was covered in detail in select national press - Convened discussions with schools and other stakeholders in education across the 4 cities of Kolkata,Chennai,Bangalore and New Delhi - Report shared with thousands of schools across country - Study and discussions around it can be accessed at www.qualityeducationstudy.com Advocacy through press and education network Wipro-Education Initiatives (EI) advocacy on ‘Quality Education Study’ School Education Plans and direction forward • We think that public policy and advocacy will have to play an increasingly strong part in bringing sustainability concerns, challenges and solutions to the center stage of attention in the national arena; the business sector must adopt a proactive and visionary stance, moving away from a compliancedriven mindset to one where it sees itself as a driver of a shift to a radically different position for business - one in which it views larger socio-ecological issues as being central to its own sustainability and therefore one where it should drive innovation and improvement through progressive thinking Our areas of advocacy focus will continue to be • Energy and Climate Change • • • • • Water Biodiversity E-Waste Education, including ‘Sustainability Education’ Gender Diversity • Persons with Disability: Inclusive interventions in the work place and Systemic interventions in the space of education for this section • We will continue to work primarily through industry networks, the education ecosystem and research and advocacy NGOs in bringing about systemic change ; one of our core operating principles is to not spread our energies and resources thin by working on too many issues - we will, therefore, be selective in the partners we engage with on the areas mentioned above. • Wipro Limited 113 Business Responsibility Report Annexure “National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business” from the Ministry of Corporate Affairs– A summary of the 9 principles and core elements Principle # 1 Principle Business to conduct and govern with ethics, transparency and accountability Key aspects of Elements I) II) III) IV) V) VI) Corporate Governance Transparent Communication Institutionalization of Anti-Corruption Practices High standards of mandatory financial reporting Disclosure on NVG reporting status Zero complicity with any party that is in breach of NVGs 2 Business should provide goods and services that are safe and contribute to sustainability throughout their life cycle I) Lifecycle Resource use II) Consumer Education III) Sustainable Product Design and Manufacturing IV) Regular review of new technology from ethical, social and environmental perspectives V) Respect for IP, especially embedded in traditional forms VI) Promote Sustainable Consumption I) Freedom of Association II) Equal opportunity employer III) Zero Child and Forced Labor IV) Work-Life Balance, especially of women V) Adequate workplace facilities, especially for people with disability VI) Adequate emphasis on Safety, Hygiene and Dignity at the workplace VII) Climate of continuous learning and empowerment VIII) Harassment free workplace I) Formal process of stakeholder identification and engagement II) Transparency and Accountability for impact on stakeholders III) Special attention to stakeholders in underdeveloped areas, IV) Fair and Equitable resolution of stakeholder differences 3 Businesses should promote the wellbeing of all employees 4 Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised Businesses should respect and promote human rights 5 I) Policy on Human Rights that is based on Indian Constitution and International Bill of Human Rights II) Integrate Human Rights into management systems Compliance, III) Recognize Human Rights of all stakeholders including that of community IV) Influence and promote human rights across the value chain V) Zero complicity with third party Human Right violations Annual Report 2011-12 114 Principle # 6 Principle Business should respect, protect, and make efforts to restore the environment Key aspects of Elements I) Optimize use of natural resources II) Assess and minimize pollution and bear its cost III) Equitable sharing of business benefits of the usage of biological and natural resources IV) Adoption of energy efficiency, renewable energy and Clean production systems V) Evolve an Environmental Management System that helps in preventing / mitigating any potential environmental disaster VI) Adequate Environmental Reporting VII) Address Environmental issues in Supply Chain i) Pursue policy advocacy that is consistent with the NVGs ii) Leverage industry networks for such policy advocacy 7 Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner Businesses should support inclusive growth and equitable development 8 i) Minimize negative impact, if any, on social development ii) Innovate in products, technologies and processes that promote social well being iii) Align with development priorities at local and national level iv) Must display special sensitivity to local concerns, esp in under-developed areas 9 Businesses should engage with and provide value to their customers and consumers in a responsible manner i) Must address overall well being of customers and society, not a narrow need ii) Should not restrict freedom of choice of the customer in any way iii) Transparent disclosure about the social and ecological impacts of products through labeling etc. iv) Responsible Advertising, v) Ensure that products do not overuse natural resources and / or lead to conspicuous consumption vi) Grievance Handling process for customers Wipro Limited 115 Independent Assurance Statement on Business Responsibility Report Introduction Det Norske Veritas AS (‘DNV’) has been commissioned by the management of Wipro Limited (‘Wipro’ or ‘the Company’) to carry out an independent assurance engagement on the Business Responsibility Report (‘BRR’ or ‘the Report’) to be published along with its Annual Report 2011 – 12 in its printed format. This assurance engagement has been conducted against the nine principles enunciated in the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ (NVG) framed by the Ministry of Corporate Affairs (MCA), Government of India. The verification was conducted by a multidisciplinary team of qualified and experienced assurance professionals during May 2012, for the year of activities covered in the Report i.e. 1st April 2011 to 31st March 2012. The intended users of this assurance statement are the management of the Company and readers of this Report. The management of Wipro is responsible for all information provided in the Report as well as the processes for collecting, analyzing and reporting the information. DNV’s responsibility regarding this verification is to Company only and in accordance with the agreed scope of work. The assurance engagement is based on the assumption that the data and information provided to us is complete and true. DNV expressly disclaims any liability or co-responsibility for any decision a person or entity would make based on this Assurance Statement. Scope, boundary and limitations of Assurance The scope of work agreed upon with Wipro includes verification of the content of the BRR i.e. disclosures against nine principles of NVG and reported in the Annual Report 2011-12 i.e. review of the policies, initiatives, practices and performance described in the Report as well as references made in the Report. For Det Norske Veritas AS, The reporting boundary is as set out in the Report, covering entities over which Wipro has management control and significant influence as explained in the report. During the verification process, there were no limitations encountered on the scope for the assurance engagement. Assurance Methodology This assurance engagement was planned and carried out in accordance with the DNV Protocol for Verification of Sustainability Reporting .The Report has been reviewed for a moderate level of assurance, as set out in VeriSustain. As part of the engagement, DNV has verified the statements and claims made in the Report and assessed the robustness of the underlying data management system, information flow and controls. Conclusion We consider the methodology and process for gathering information developed by the Company for this Report is appropriate and the qualitative and quantitative data included in the Report, were found to be reliable, identifiable and traceable; the personnel responsible were able to demonstrate the origin and interpretation of the data. The report predominantly covers the response to Wipro’s IT business which account for 86 % of its total business revenue, however Wipro needs to include disclosures related to its non IT business to improve the completeness. In our opinion the Report, provides a fair representation of the company’s sustainability policies, objectives, management approach and performance during the reporting year. On the basis of our verification methodology and scope of work agreed upon nothing has come to our attention that would cause us not to believe that this report is not materially correct and is not a fair representation of the data and information. Nandkumar Vadakepatth Lead Verifier Head-Sustainability & Business Excellence Services(South) Det Norske Veritas AS, India Bangalore, India, 15 th June 2012. Jayaram Santhosh Reviewer Head-Sustainability & Business Excellence Services(South) Det Norske Veritas AS, India Annual Report 2011-12 116 FINANCIAL STATEMENTS Wipro Limited 117 Standalone Financial Statements AUDITORS’ REPORT To the Members of WIPRO LIMITED We have audited the attached balance sheet of Wipro Limited (“the Company”) as of March 31, 2012, the statement of profit and loss and the cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 1. As required by the Companies (Auditor’s Report) Order, 2003, as amended (“the Order”), issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 (“the Act”), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in paragraph 1 above, we report that: a) b) c) d) e) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; the balance sheet, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account; in our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act ; on the basis of written representations received from the directors as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as of March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: –  in the case of the balance sheet, of the state of affairs of the Company as of March 31, 2012; –  in the case of the statement of profit and loss, of the profit of the Company for the year ended on that date; and –  in the case of the cash flow statement, of the cash flows of the Company for the year ended on that date. 2. (f ) for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore April 25, 2012 Annual Report 2011-12 118 Standalone Financial Statements ANNEXURE TO AUDITORS’ REPORT Annexure referred to in paragraph 1 of our report to the members of Wipro Limited (“the Company”) for the year ended March 31, 2012. (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verification. (c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption. (ii) (a) The inventory, except goods-in-transit, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. (b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. As informed to us, the discrepancies noticed on verification between the physical stocks and the book records were not material. (iii) (a) The Company has granted loans to four parties covered in the register maintained under Section 301 of the Companies Act, 1956 (“Act”). The maximum amount outstanding during the year was ` 4,060 millions and the year-end balance of such loans was ` 3,969 millions (of which loans amounting to ` 3,536 millions are interest free). (b) In our opinion, the rate of interest, where applicable and other terms and conditions on which loans have been granted to companies, firms or other parties covered in the register maintained under Section 301 of the Act are not, prima facie, prejudicial to the interest of the Company. (c) The principal amounts and interest, where applicable, are being repaid regularly in accordance with the agreed contractual terms. Additionally, there are no overdue amounts in excess of Rupees one lakh. Accordingly, paragraphs 4(iii) (c) and (d) of the Order is not applicable to the Company. (d) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, paragraphs 4 (iii) (e) to (g) of the Order are not applicable to the Company. (vi) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit. (v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in (a) above and exceeding the value of ` five lakh in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. (vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) We have broadly reviewed the books of account relating to material, labor and other items of cost maintained by the Company pursuant to the Rules prescribed by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records. Wipro Limited 119 Standalone Financial Statements (ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Service tax, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax, Customs duty, Excise duty, Investor Education and Protection Fund and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Service tax, Employees’ State Insurance, Income-tax, Salestax, Wealth tax, Investor Education and Protection Fund, Customs duty, Excise duty and other material statutory dues were in arrears as of March 31, 2012 for a period of more than six months from the date they became payable. (b) According to the information and explanation given to us, there is no disputed amounts payable in respect of Wealth tax. The following dues of Income tax, Excise duty, Customs duty, Sales tax and Service tax have not been deposited by the Company on account of disputes: Nature of the Statute Nature of the dues Amount Period to which Forum where dispute is unpaid * the amount relates pending (` in millions) (Assessment year) 5,226 2007-2008 Income tax Appellate Tribunal 866 1986-87 to 2007-08 Appellate Authorities 414 1986-87 to 2009-10 39 1999-00 to 2006-07 Appellate Tribunal High Court / Supreme Court Appellate Authorities CESTAT Appellate Authorities CESTAT High Court / Supreme Court Appellate Authorities CESTAT The Income Tax Act, 1961 State Sales Tax/VAT and CST (pertaining to various states) State Sales Tax/VAT and CST (pertaining to various states) State Sales Tax/VAT and CST (pertaining to Kerala, Karnataka and Andhra Pradesh) The Central Excise Act, 1944 The Central Excise Act, 1944 The Customs Act, 1962 The Customs Act, 1962 The Customs Act, 1962 The Finance Act, 1994 Service tax The Finance Act, 1994 Service tax Income Tax and interest demanded Sales tax, interest and penalty demanded Sales tax demanded Sales tax and penalty Demanded Excise duty demanded Excise duty demanded Customs duty, interest and penalty demanded Customs duty and penalty demanded Customs duty demanded Service tax demanded Service tax demanded 41 1997-98 to 2010-11 7 2004-05 342 1994-95, 1997-98, 2001-10 40 1991-92 to 2006-07 44 1990-98 and 2005-06 105 2003-04 to 2007-08 378 2002-03 to 2009-10 *The amounts paid under protest have been reduced from the amounts demanded in arriving at the aforesaid disclosure. (x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its banks. The Company did not have any outstanding dues to any financial institutions or debentures holders during the year. (xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund / nidhi / mutual benefit fund / society. Annual Report 2011-12 120 Standalone Financial Statements (xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. (xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company. (xvi) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purposes for which they were raised. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment. (xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Act. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised any money by public issues during the year. (xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit. for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore April 25, 2012 Wipro Limited 121 Standalone Financial Statements BALANCE SHEET EQUITY AND LIABILITIES Shareholders’ funds Share capital Reserves and surplus Share application money pending allotment (1) Non-current liabilities Long term borrowings Deferred tax liabilities Other long term liabilities Long term Provisions Current Liabilities Short term borrowings Trade payables Other current liabilities Short term provisions TOTAL EQUITY AND LIABILITIES ASSETS Non-current assets Fixed assets Tangible assets Intangible assets and goodwill Capital work-in-progress Non-current investments Deferred tax assets Long term loans and advances Other non-current assets Current assets Current investments Inventories Trade receivables Cash and bank balances Short term loans and advances Other current assets (` in millions, except share and per share data, unless otherwise stated) Notes As of March 31, 2012 2011 3 4 5 6 47(ii) 7 8 9 10 11 12 4,917 238,608 243,525 – 22,022 58 355 2,593 25,028 30,410 38,922 20,507 27,567 117,406 385,959 4,908 208,294 213,202 – 19,354 – 2,659 2,737 24,750 27,754 36,099 12,454 26,939 103,246 341,198 13 14 15 47(ii) 16 17 18 19 20 21 22 23 41,961 4,537 3,012 62,943 326 9,404 9,194 131,377 40,409 7,851 79,670 62,328 33,211 31,113 254,582 385,959 41,045 1,325 3,964 60,184 108 9,627 7,823 124,076 47,950 7,249 57,813 52,033 24,835 27,242 217,122 341,198 TOTAL ASSETS Significant Accounting Policies 2 (1) value is less than one million rupees. The notes referred to above form an integral part of the balance sheet As per our report attached For and on behalf of the Board of Directors for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore April 25, 2012 Annual Report 2011-12 122 Azim Premji B. C. Prabhakar Chairman Director Suresh C. Senapaty Chief Financial Officer & Director T. K. Kurien CEO, IT Business & Executive Director V. Ramachandran Company Secretary Standalone Financial Statements STATEMENT OF PROFIT AND LOSS Notes REVENUE Revenue from operations (gross) Less: Excise duty Revenue from operations (net) Other Income 25 24 318,034 1,205 316,829 12,274 329,103 26 27 28 29 13 14 30 14,475 32,086 449 133,115 6,057 7,395 66 76,274 269,917 59,186 12,495 (160) 12,335 Net Profit Earnings per equity share [Refer note 41] (Equity shares of par value ` 2 each) Basic Diluted 2 19.13 19.09 46,851 2012 (` in millions, except share and per share data, unless otherwise stated) For the year ended March 31, 2011 264,012 1,007 263,005 6,807 269,812 10,857 26,972 (316) 109,374 1,360 5,934 67 58,509 212,757 57,055 8,378 240 8,618 48,437 Total Revenue EXPENSES Cost of materials consumed Purchases of stock-in-trade [Refer note 27] Changes in inventories of finished goods, work in progress and stock-in-trade Employee benefits expense Finance Costs Depreciation expense Amortisation expense Other expenses Total Expenses Profit before tax Tax expense Current tax [Refer note 47(i)] Deferred tax 19.88 19.78 Significant Accounting Policies The notes referred to above form an integral part of the statement of profit and loss As per our report attached for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membershi For and on behalf of the Board of Directors Azim Premji B. C. Prabhakar Chairman Director Suresh C. Senapaty Chief Financial Officer & Director T. K. Kurien CEO, IT Business & Executive Director V. Ramachandran Company Secretary Wipro Limited 123 Standalone Financial Statements CASH FLOW STATEMENT A. B. C. Cash flows from operating activities: Profit before tax Adjustments: Depreciation and amortisation Amortisation of share based compensation Provision for diminution in the value of non-current investments Exchange differences, net Impact of cash flow hedges Interest on borrowings Dividend / interest income Profit on sale of investments Gain on sale of fixed assets Working capital changes: Trade receivables and unbilled revenue Loans and advances and other assets Inventories Liabilities and provisions Net cash generated from operations Direct taxes paid, net Net cash generated by operating activities Cash flows from investing activities: Acquisition of fixed assets including capital advances Proceeds from sale of fixed assets Purchase of investments Proceeds from sale / maturity of investments Investment in inter-corporate deposits Refund of inter-corporate deposits Payment for acquisition Investment in subsidiaries Dividend / interest income received Net cash used in investing activities Cash flows from financing activities: Proceeds from exercise of employee stock options Share application money pending allotment Interest paid on borrowings Dividends paid including distribution tax Proceeds from borrowings / loans Repayment of borrowings / loans Net cash used in financing activities Net increase / (decrease) in cash and cash equivalents during the year Cash acquired upon merger Cash and cash equivalents at the beginning of the year Effect of exchange rate changes on cash balance Cash and cash equivalents at the end of the year [Refer note 21] For and on behalf of the Board of Directors Azim Premji B. C. Prabhakar Chairman Director Suresh C. Senapaty Chief Financial Officer & Director (` in millions) Year ended March 31, 2012 2011 59,186 7,461 878 1,767 2,972 1,095 799 (8,386) (181) (108) (22,471) (2,730) (602) 4,806 44,486 (14,507) 29,979 (7,701) 420 (332,889) 340,611 (13,480) 10,380 (4,044) (4,526) 7,831 (3,398) 9 – (744) (17,130) 69,298 (68,671) (17,238) 9,343 – 52,033 952 62,328 57,055 6,001 1,310 – 804 4,251 586 (6,234) (171) (130) (14,675) (6,540) (1,133) 4,029 45,153 (8,041) 37,112 (8,689) 431 (468,165) 451,328 (14,290) 20,100 – (1,577) 6,122 (14,740) 36 (18) (615) (15,585) 71,371 (82,522) (27,333) (4,961) 28 56,643 323 52,033 As per our report attached for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore April 25, 2012 Annual Report 2011-12 124 T. K. Kurien CEO, IT Business & Executive Director V. Ramachandran Company Secretary Standalone Financial Statements NOTES TO THE FINANCIAL STATEMENTS (` in millions, except share and per share data, unless otherwise stated) 1. Company overview of each balance sheet date is disclosed under long term loans and advances. Wipro Limited (Wipro or the Company), is a leading India based provider of IT Services, including Business Process v. Investments Outsourcing (BPO) services, globally. Further, Wipro has Long term investments are stated at cost less other than other businesses such as IT Products, Consumer Care temporary decline in the value of such investments, if and Lighting and Infrastructure engineering. Wipro is any. Current investments are valued at lower of cost and headquartered in Bangalore, India. fair value determined by category of investment. The fair 2. Significant Accounting Policies value is determined using quoted market price/market observable information adjusted for cost of disposal. On i. Basis of preparation of financial statements disposal of the investment, the difference between its carrying amount and net disposal proceeds is charged or The financial statements are prepared in accordance with credited to the statement of profit and loss. Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis, vi. Inventories except for certain financial instruments which are measured on a fair value basis. GAAP comprises Accounting Standards Inventories are valued at lower of cost and net realizable specified in the Companies (Accounting Standards) Rules, value, including necessary provision for obsolescence. Cost 2006 (as amended), Accounting Standards issued by the is determined using the weighted average method. Cost of work-in-progress and finished goods include material cost Institute of Chartered Accountants of India (ICAI) and other generally accepted accounting principles in India. and appropriate share of manufacturing overheads. ii. Use of estimates vii. Provisions and contingent liabilities Provisions are recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. The Company recognizes provision for onerous contracts based on the estimate of excess of unavoidable costs of meeting obligations under the contracts over the expected economic benefits. viii. Revenue recognition Services: The Company recognizes revenue when the significant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured. The method of recognizing the revenues and costs depends on the nature of the services rendered: A. Time and material contracts Revenues and costs relating to time and material contracts are recognized as the related services are rendered. The preparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, expenses and the disclosure of contingent liabilities at the end of the reporting period. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimate is recognised in the period in which the estimates are revised and in any future period affected. iii. Goodwill The goodwill arising on acquisition of a group of assets is not amortized and is tested for impairment if indicators of impairment exist. iv.  Tangible assets, intangible assets and Capital workin-progress Fixed assets are stated at historical cost less accumulated depreciation. Costs include expenditure directly attributable to the acquisition of the asset. Borrowing costs directly attributable to the construction or production of qualifying assets are capitalized as part of the cost. Intangible assets are stated at the consideration paid for acquisition less accumulated amortization. Cost of fixed assets not ready for use before the balance sheet date is disclosed capital work-in-progress. Advances paid towards the acquisition of fixed assets outstanding as Wipro Limited 125 Standalone Financial Statements B. Fixed-price contracts Revenues from fixed-price contracts, including systems development and integration contracts are recognized using the “percentage-of-completion” method. Percentage of completion is determined based on project costs incurred to date as a percentage of total estimated project costs required to complete the project. When total cost estimates exceed revenues in an arrangement, the estimated losses are recognized in the statement of profit and loss in the period in which such losses become probable based on the current contract estimates. ‘Unbilled revenues’ included in other current assets represent cost and earnings in excess of billings as of the balance sheet date. ‘Unearned revenues’ included in other current liabilities represent billing in excess of revenue recognized. Revenue from maintenance contracts is recognized ratably over the period of the contract using the percentage of completion method. When services are performed through an indefinite number of repetitive acts over a specified period of time, revenue is recognized on a straight-line basis over the specified period unless some other method better represents the stage of completion. In certain projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. In such contracts, revenue is recognized with respect to the actual output achieved till date as a percentage of total contractual output. Any residual service unutilized by the customer is recognized as revenue on completion of the term. finance leases. Finance leases are capitalized at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability. Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Lease rentals in respect of assets taken under operating leases are charged to profit and loss account on a straight line basis over the lease term. In certain arrangements, the Company recognizes revenue from the sale of products given under finance leases. The Company records gross finance receivables, unearned income and the estimated residual value of the leased equipment on consummation of such leases. Unearned income represents the excess of the gross finance lease receivable plus the estimated residual value over the sales price of the equipment. The Company recognises unearned income as financing revenue over the lease term using the effective interest method. x. Foreign currency transactions The Company is exposed to currency fluctuations on foreign currency transactions. Foreign currency transactions are accounted in the books of account at the average rate for the month. Transaction: The difference between the rate at which foreign currency transactions are accounted and the rate at which they are realized is recognized in the statement of profit and loss. Translation: Monetary foreign currency assets and liabilities at periodend are restated at the closing rate. The difference arising from the restatement is recognized in the statement of profit and loss. In March 2009, Ministry of Corporate affairs issued a notification amending AS 11, ‘The effects of changes in foreign exchange rates’. This was further amended by notification dated December 29, 2011. Before the said amendment, AS 11 required the exchange gains / losses on long term foreign currency monetary assets / liabilities to be recorded in the statement of profit and loss. The amended AS 11 provides an irrevocable option to the Company to amortise exchange rate fluctuation on long term foreign currency monetary asset / liability over the life of the asset / liability or March 31, 2020, whichever is earlier. The amendment is applicable retroactively from the financial year beginning on or after December 7, 2006. The Company did not elect to exercise this option. C. Maintenance Contracts Products: Revenue from sale of products is recognised when the product has been delivered, in accordance with the sales contract. Revenue from product sales are shown as net of excise duty, sales tax separately charged and applicable discounts. Other income: Agency commission is accrued when shipment of consignment is dispatched by the principal. Interest is recognized using the time-proportion method, based on rates implicit in the transaction. Dividend income is recognized when the Company’s right to receive dividend is established. ix. Leases Leases of assets, where the Company assumes substantially all the risks and rewards of ownership are classified as Annual Report 2011-12 126 Standalone Financial Statements xi. Financial Instruments Financial instruments are recognised when the Company becomes a party to the contractual provisions of the instrument. Derivative instruments and Hedge accounting: The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in a non-integral foreign operation and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into derivative financial instruments, where the counterparty is a bank. The Company has adopted the principles of Accounting Standard 30, Financial Instruments: Recognition and Measurement (AS 30) issued by ICAI except to the extent the adoption of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006 and other authoritative pronouncements. In accordance with the recognition and measurement principles set out in AS 30, changes in fair value of derivative financial instruments designated as cash flow hedges are recognised directly in shareholders’ funds and reclassified into the statement of profit and loss upon the occurrence of the hedged transaction. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the statement of profit and loss. The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc. Non-Derivative Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets of the Company mainly include cash and bank balances, trade receivables, unbilled revenues, finance lease receivables, employee travel and other advances, other loans and advances and derivative financial instruments with a positive fair value. Financial liabilities of the Company mainly comprise long term and short term borrowings, trade payable, accrued expenses and derivative financial instruments with a negative fair value. Financial assets are derecognized when all of risks and rewards of the ownership of the financial asset have been transferred. In cases where substantial risk and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset. The Company measures the financial assets and liabilities, except for derivative financial assets and liabilities at amortized cost using the effective interest method. The Company measures the short-term payables and receivables with no stated rate of interest at original invoice amount, if the effect of discounting is immaterial. Noninterest bearing deposits are discounted to their present value. xii. Depreciation and amortization The Company has provided for depreciation using straight line method, at the rates specified in Schedule XIV to the Companies Act, 1956, except in cases of the following assets, which are depreciated based on estimated useful life, which is higher than the rates specified in Schedule XIV. Class of Asset Buildings Computer equipment and Software (included under plant and machinery) Furniture and fixtures Electrical installations (included under plant and machinery) Office equipment Vehicles Estimated useful life 30 - 60 years 2 - 7 years 5 - 6 years 5 years 5 years 4 years Fixed assets individually costing Rupees five thousand or less are depreciated at 100% over a period of one year. Assets under finance lease are amortised over their estimated useful life or the lease term, whichever is lower. Intangible assets are amortized over their estimated useful life on a straight line basis. For various brands acquired by the Company, estimated useful life has been determined ranging between 20 to 25 years. The Company believes this based on number of factors including the competitive environment, market share, brand history, product life cycles, operating plan, no restrictions on title and the macroeconomic environment of the countries in which the brands operate. Accordingly, such intangible assets are being amortised over the determined useful life. Payments for leasehold land are amortised over the period of lease. xiii. Impairment of assets Financial assets: The Company assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss. The amount of loss for short-term receivables is measured as the difference between the assets carrying amount and undiscounted amount of future cash flows. Reduction, if any, is recognised in the statement of profit and loss. If at the balance sheet date there is any indication Wipro Limited 127 Standalone Financial Statements that if a previously assessed impairment loss no longer exists, the recognised impairment loss is reversed, subject to maximum of initial carrying amount of the short-term receivable. Other than financial assets: The Company assesses at each balance sheet date whether there is any indication that a non-financial asset including goodwill may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs to is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. In respect of goodwill, the impairment loss will be reversed only when it was caused by specific external events of an exceptional nature that is not expected to recur and their effects have been reversed by subsequent external events. xiv. Employee benefits Provident fund: Employees receive benefits from a provident fund. The employee and employer each make monthly contributions to the plan. A portion of the contribution is made to the provident fund trust managed by the Company, while the remainder of the contribution is made to the Government’s provident fund. The Company is generally liable for any shortfall in the fund assets based on the government specified minimum rate of return. Compensated absences: The employees of the Company are entitled to compensated absence. The employees can carry-forward a portion of the unutilized accumulating compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The Company recognizes accumulated compensated absences based on actuarial valuation. Nonaccumulating compensated absences are recognized in the period in which the absences occur. The Company recognizes actuarial gains losses immediately in the statement of profit and loss. Gratuity: In accordance with the Payment of Gratuity Act, 1972, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The gratuity fund is managed by the Life Insurance Corporation of India (LIC), HDFC Standard Life, TATA AIG and Birla Sun-life. The Company’s obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation carried out by an independent actuary using the projected unit credit method. The Company recognizes actuarial gains and losses immediately in the statement of profit and loss. Superannuation: Superannuation plan, a defined contribution scheme, is administered by the LIC and ICICI Prudential Insurance Company Limited. The Company makes annual contributions based on a specified percentage of each covered employee’s salary. xv. Employee stock options The Company determines the compensation cost based on the intrinsic value method. The compensation cost is amortised on a straight line basis over the vesting period. xvi. Taxes Income tax: The current charge for income taxes is calculated in accordance with the relevant tax regulations. Tax liability for domestic taxes has been computed after considering Minimum Alternate Tax (MAT). The excess tax paid under MAT provisions being over and above regular tax liability can be carried forward and set off against future tax liabilities computed under regular tax provisions. Accordingly, MAT credit has been recognized, wherever applicable on the balance sheet which can be carried forward for a period of ten years from the year of recognition. Deferred tax: Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profit offered for income taxes and the profit as per the financial statements of the Company. Deferred taxes are recognised in respect of timing differences which originate during the tax holiday period but reverse after the tax holiday period. For this purpose, reversal of timing difference is determined using first in first out method. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment/ substantive enactment date. Annual Report 2011-12 128 Standalone Financial Statements Deferred tax assets on timing differences are recognised only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. However, deferred tax assets on the timing differences when unabsorbed depreciation and losses carried forward exist, are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are reassessed for the appropriateness of their respective carrying amounts at each balance sheet date. The Company offsets, on a year on year basis, the current and non-current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis. xvii. Earnings per share Basic: The number of equity shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year excluding equity shares held by controlled trusts. Diluted: The number of equity shares used in computing diluted earnings per share comprises the weighted average number of equity shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of equity shares and potentially dilutive equity shares are adjusted for any stock splits and bonus shares issued. xviii. Cash flow statement Cash flows are reported using the indirect method, whereby net profits before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the Company are segregated. 3. Share Capital As of March 31, 2012 2011 5,300 250 5,550 4,908 4,908 Authorised Capital 2,650,000,000 (2011: 2,650,000,000) equity shares [Par value of ` 2 per share] 25,000,000 (2011: 25,000,000) 10.25% redeemable cumulative preference shares [Par value of ` 10 per share] Issued, subscribed and fully paid-up capital 2,458,756,228 (2011: 2,454,409,145) equity shares of ` 2 each [Refer note (i) below] Terms / Rights attached to equity shares 5,300 250 5,550 4,917 4,917 The Company has only one class of equity shares having a par value of ` 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to shareholders approval in the ensuing Annual General Meeting. Following is the summary of per share dividends recognised as distributions to equity shares: For the Year ended March 31, 2012 2011 `2 `2 `4 `4 Interim dividend Final dividend In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts, if any, in proportion to the number of equity shares held by the shareholders. Wipro Limited 129 Standalone Financial Statements (i) Reconciliation of number of shares As of March 31, 2012 No. of Shares ` million As of March 31, 2011 No. of shares ` million 1,468,211,189 2,936 Opening number of equity shares / American Depository Receipts (ADRs) outstanding Equity shares / ADRs fully allotted as fully paid bonus shares / ADRs by capitalization of Securities Premium account and Capital redemption reserve Equity shares issued pursuant to Employee Stock Option Plan Closing number of equity shares / ADRs outstanding 2,454,409,145 4,908 – 4,347,083 2,458,756,228 – 9 4,917 979,765,124 6,432,832 2,454,409,145 1,960 12 4,908 (ii) Details of shareholders having more than 5% of the total equity shares of the Company Sl. Name of the Shareholder No. 1 2 3 4 Mr. Azim Hasham Premji Partner representing Hasham Traders Mr. Azim Hasham Premji Partner representing Prazim Traders Mr. Azim Hasham Premji Partner representing Zash Traders Azim Premji Trust As of March 31, 2012 No. of shares % held 543,765,000 22.12 541,695,000 22.03 540,408,000 21.98 195,187,120 7.94 As of March 31, 2011 No. of shares % held 543,765,000 22.15 541,695,000 22.07 540,408,000 22.01 213,000,000 8.68 (iii) Other details of Equity Shares for a period of five years immediately preceding March 31, 2012 As of March 31, 2012 Aggregate number of share allotted as fully paid up pursuant to contract(s) without payment being received in cash (Allotted to the Wipro Inc Trust, the sole beneficiary of which is Wipro Inc., a wholly owned subsidiary of the Company, in consideration of acquisition of inter-company investments) Aggregate number of shares allotted as fully paid bonus shares Aggregate number of shares bought back (iv) Shares reserved for issue under option For details of shares reserved for issue under the employee stock option plan of the Company, refer note 39. 1,614,671 2011 1,614,671 979,119,256 – 979,119,256 – Annual Report 2011-12 130 Standalone Financial Statements 4. Reserves and Surplus: As of March 31, 2012 2011 1,144 – 1,144 29,188 2,895 (1,960) 30,123 3,791 (3,507) 284 147,012 4,743 151,755 – – – (5,099) 4,041 222 (839) 3,424 (1,675) – 48,437 4,908 9,818 2,204 4,844 26,663 208,294 Capital Reserve Balance brought forward from previous year Additions during the year Securities premium account Balance brought forward from previous year Add: Exercise of stock options by employees Less : Amount utilised for bonus shares Restricted stock units reserve [Refer note 39] * Employee stock options outstanding Less: Deferred employee compensation expense General reserve Balance brought forward from previous year Amount transferred from surplus balance in the statement of profit and loss [Refer note (a) below] Foreign exchange translation reserve Balance brought forward from previous year On account of foreign branch operations Hedging reserve [Refer note 34 & 2(xi)] Balance brought forward from previous year Net loss reclassified into statement of profit and loss Deferred cancellation gain / (loss) relating to roll-over hedging Changes in fair value of effective portion of derivatives Gain / (loss) on cash flow hedging derivatives, net Surplus from statement of profit and loss Balance brought forward from previous year Profit for the year Less: Appropriations – Interim dividend – Proposed dividend – Tax on dividend – Amount transferred to general reserve Closing balance 1,144 – 1,144 30,123 332 – 30,455 2,819 (1,913) 906 151,755 4,626 156,381 – 85 85 (1,675) 1,272 (12) (1,632) (372) (2,047) 26,663 46,851 4,917 9,835 2,393 4,685 51,684 238,608 * Restricted stock units reserve includes Deferred Employee Compensation, which represents future charge to the statement of profit and loss and employee stock options outstanding to be treated as securities premium at the time of allotment of shares. (a) Additions to General Reserve include: For the year ended March 31, 2012 2011 4,685 4,844 (6) 19 – (74) (53) (46) 4,626 4,743 Transfer from statement of profit and loss (Additional dividend paid) / Excess provision reversed for the previous year Adjustment on account of merger Others Wipro Limited 131 Standalone Financial Statements 5. Share application money pending allotment (a) Number of shares proposed to be issued for share application money pending allotment outstanding as of March 31, 2012 and 2011 is 150,824 and 211,605 respectively representing the shares to be issued under employee stock option plan formulated by the Company. (b) Securities premium on account of shares pending allotment amounts to ` 39 and ` 55 as of March 31, 2012 and 2011, respectively. The shares pending allotment as of the year-end is expected to be allotted upon the completion of the vesting period based on the grant to which it pertains to. (c) The Company has sufficient authorized equity share capital to cover the share capital on allotment of shares pending allotment as of March 31, 2012 and 2011. (d) There are no interest accrued and due on amount due for refund as of March 31, 2012 and 2011. (e) No shares are pending for allotment beyond the period for allotment as of March 31, 2012 and 2011. Long term borrowings As of March 31, 2012 2011 96 96 6. Secured: Obligation under finance lease (a) Unsecured: Term loan: External commercial borrowing (b) Interest free loan from State Government (c) Others (d) 10 10 21,728 37 247 22,012 22,022 18,861 37 360 19,258 19,354 (a)  bligation under finance lease is secured by underlying fixed assets. These obligations are repayable in monthly installments O within the year ending March 31, 2014. These obligations carry an interest rate of 15.6%.  he Company entered into an arrangement with a consortium of banks to obtain External Commercial Borrowings (ECB) during the T year ended March 31, 2008. Pursuant to this arrangement, the Company has availed ECB of approximately 35 billion Yen repayable in full in April 2013. The ECB carries an average interest rate of 1.86% p.a. The ECB is an unsecured borrowing and the Company is subject to certain customary restrictions on additional borrowings and quantum of payments for acquisitions in a financial year. Interest free loan from State Government is repayable in five equal annual installments of ` 7 starting from financial year 2013-14.  nsecured loans from others are repayable in monthly installments within the year ending March 31, 2015. The interest rate for U these loans ranges from 6.03% to 7.21%. Other long term liabilities As of March 31, 2012 2011 2,586 73 2,659 (b) (c) (d) As of March 31, 2012 and 2011, the Company has complied with the covenants under the loan arrangements. 7. Others Derivative liabilities Deposits and other advances received 307 48 355 Annual Report 2011-12 132 Standalone Financial Statements 8. Long term provisions As of March 31, 2012 2,579 14 2,593 As of March 31, 2012 2011 2,701 36 2,737 Employee benefit obligations Warranty provision [Refer note 40] 9. Short term borrowings 2011 27,754 27,754 Unsecured Loan repayable on demand from banks 30,410 30,410 The interest rate for these loans ranges from 1.0% to 2.0% other than PCFC loan disbursed in Indian Rupees, interest rate for which is 9.50%. 10. Trade payables As of March 31, 2012 1 26,260 12,661 38,922 As of March 31, 2012 371 66 8,685 3,776 6,780 739 22 68 20,507 As of March 31, 2012 3,176 11,870 9,835 1,595 276 815 27,567 2011 1 19,031 17,067 36,099 Trade payables – Due to micro and small enterprises [Refer note 42] Trade payables – Due to other than micro and small enterprises Accrued expenses 11. Other current liabilities Current maturities of long term borrowings Current maturities of obligation under finance lease Unearned revenue Statutory liabilities Derivative liabilities Advances from customers Unclaimed dividends Interest accrued but not due on borrowings 12. Short term provisions 2011 266 67 6,188 3,288 1,814 798 20 13 12,454 Employee benefit obligations Provision for tax Proposed dividend Tax on proposed dividend Warranty provision [Refer note 40] Others [Refer note 40] 2011 1,620 11,634 9,818 1,593 416 1,858 26,939 Wipro Limited 133 Standalone Financial Statements 13. Tangible assets Land (a) Buildings Plant and Furniture machinery and fixtures Office equipment Vehicles Total Gross carrying value As of April 1, 2010 Additions (b, d) Disposals / adjustments As of March 31, 2011 (c) As of April 1, 2011 Additions due to acquisition Additions (d) Disposals / adjustments As of March 31, 2012 (c) Depreciation As of April 1, 2010 Charge for the year Deductions / other adjustments (c) As of March 31, 2011 As of April 1, 2011 Charge for the year Deductions / other adjustments As of March 31, 2012 Net Block As of March 31, 2011 As of March 31, 2012 (a) (b) (c) (d) 3,910 910 – 4,820 4,820 – 328 – 5,148 97 7 – 104 104 18 (59) 63 4,716 5,085 16,074 3,275 (44) 19,305 19,305 – 680 (7) 19,978 908 323 (36) 1,195 1,195 476 – 1,671 18,110 18,307 34,455 6,604 (955) 40,104 40,104 10 6,113 (640) 45,587 23,277 4,138 (870) 26,545 26,545 4,825 (446) 30,924 13,559 14,663 6,729 968 (437) 7,260 7,260 – 1,048 (346) 7,962 3,669 804 (342) 4,131 4,131 1,329 (267) 5,193 3,129 2,769 2,072 284 (53) 2,303 2,303 – 420 (39) 2,684 1,057 241 (44) 1,254 1,254 497 (26) 1,725 1,049 959 2,700 26 (437) 2,289 2,289 – 21 (590) 1,720 1,721 421 (335) 1,807 1,807 250 (515) 1,542 482 178 65,940 12,067 (1,926) 76,081 76,081 10 8,610 (1,622) 83,079 30,729 5,934 (1,627) 35,036 35,036 7,395 (1,313) 41,118 41,045 41,961 Includes gross block of ` 1,270 (2011: ` 1,270) and accumulated amortisation of ` 63 (2011: ` 104) being leasehold land. Include gross block of ` 37 and accumulated depreciation of ` 17 on account of merger. Includes Plant and machinery of ` 25 (2011: ` 25) and Furniture & fixtures of ` 5 (2011: ` 5) for research and development assets. Interest capitalised aggregated to ` 43 and ` 137 for the year ended March 31, 2012 and 2011 respectively. Annual Report 2011-12 134 Standalone Financial Statements 14. Intangible assets and goodwill Goodwill Technical Brands, patents, Know-how trademarks and rights 55 35 (3) 87 87 – 38 – 125 46 3 (1) 48 48 6 3 57 39 68 1,171 7 – 1,178 1,178 – 30 – 1,208 275 64 – 339 339 60 6 405 839 803 Total Gross carrying value As of April 1, 2010 Additions Disposals / adjustments As of March 31, 2011 As of April 1, 2011 Additions due to acquisition Additions Disposals / adjustments As of March 31, 2012 Amortisation As of April 1, 2010 Charge for the year Deductions / other adjustments As of March 31, 2011 As of April 1, 2011 Charge for the year Deductions / other adjustments As of March 31, 2012 Net Block As of March 31, 2011 As of March 31, 2012 15. Non-current investments (Valued at cost unless stated otherwise) 447 – – 447 447 3,219 – – 3,666 – – – – – – – – 447 3,666 1,673 42 (3) 1,712 1,712 3,219 68 – 4,999 321 67 (1) 387 387 66 9 462 1,325 4,537 As of March 31, 2012 Trade Investments in unquoted equity instruments – Subsidiaries [Refer note 43(i)] Investments in unquoted preference shares – Subsidiary (a) [Refer note 43(ii)] Non-trade Investment in unquoted equity instruments (Associate) – Wipro GE Healthcare Private Limited (b) [Refer note 43 (iii)] Less: Provision for diminution in value of non-current investments (a) (b) 2011 64,591 – 60,065 – 227 64,818 1,875 62,943 227 60,292 108 60,184 value of investments is less than one million rupees. Investments in this company carry certain restrictions on transfer of shares as provided for in the shareholders’ agreements. Wipro Limited 135 Standalone Financial Statements 16. Long term loans and advances (Unsecured, considered good unless otherwise stated) As of March 31, 2012 273 4,074 1,889 1,489 1,178 501 – 9,404 2011 273 3,585 2,067 2,163 1,256 271 12 9,627 Inter corporate deposit to Subsidiary * Loans to subsidiary companies * Capital advances Prepaid expenses Security deposits Other deposits Other advances * Refer note 45 for loans given to subsidiaries. 17. Other non-current assets As of March 31, 2012 Secured, considered good: Finance lease receivables Unsecured, considered good: Derivative assets Others 5,710 5,710 3,458 26 3,484 9,194 2011 4,839 4,839 2,984 – 2,984 7,823 Finance lease receivables are secured by the underlying assets given on lease. 18. Current investments As of March 31, 2012 Quoted Investments in Indian money market mutual funds * [Refer note 44(i)] Investments in debentures [Refer note 44 (ii)] Unquoted Certificate of deposit/bonds Investments in equity instruments [Refer note 44(iii)] 19,842 129 19,971 20,369 69 20,438 40,409 19,996 2011 23,877 722 24,599 23,282 69 23,351 47,950 24,645 Aggregate market value of quoted investments * includes investments in mutual funds amounting to ` 400 (2011: Nil) pledged as margin money deposit for entering into currency future contracts. 19. Inventories As of March 31, 2012 3,113 927 866 1,675 1,270 7,851 2011 2,206 833 523 2,561 1,126 7,249 Raw materials Stock in process Finished goods Traded goods Stores and spares Annual Report 2011-12 136 Standalone Financial Statements 20. Trade Receivables As of March 31, 2012 Unsecured: Over six months from the date they were due for payment Considered good Considered doubtful Less: Provision for doubtful receivables Other receivables Considered good Considered doubtful Less: Provision for doubtful receivables 2011 5,192 2,203 7,395 (2,203) 5,192 74,478 170 74,648 (170) 74,478 79,670 As of March 31, 2012 2,516 2,028 4,544 (2,028) 2,516 55,297 65 55,362 (65) 55,297 57,813 21. Cash and bank balances 2011 Cash and cash equivalents Balances with Banks – In current accounts – Unclaimed dividend – In deposit accounts Cheques, drafts on hand Cash in hand Deposit accounts with more than 3 months but less than 12 months maturity Deposit accounts with more than 12 months maturity a) b) 32,957 22 27,971 1,377 1 62,328 21,040 800 22,353 20 28,691 967 2 52,033 18,278 – Cash and cash equivalents include restricted cash balance of ` 22 and ` 20, primarily on account of unclaimed dividends, as of March 31, 2012 and 2011, respectively. The deposits with banks comprise time deposits, which can be withdrawn at any time without prior notice and without any penalty on the principal. 22. Short term loans and advances (Unsecured, considered good unless otherwise stated) As of March 31, 2012 2,027 1,000 949 3,107 253 461 7,340 14,630 1,060 2,384 844 34,055 (844) 33,211 2011 1,417 630 786 1,876 278 173 4,240 13,316 126 1,993 568 25,403 (568) 24,835 Employee travel and other advances Advance to suppliers Balance with excise and customs Prepaid expenses Other deposits Security deposits Inter corporate deposits Advance income tax MAT credit entitlement Others Considered doubtful Less: Provision for doubtful loans and advances Wipro Limited 137 Standalone Financial Statements 23. Other current assets As of March 31, 2012 Secured and considered good: Finance lease receivables Unsecured and considered good: Derivative assets Interest receivable Unbilled revenues 2,003 2,003 1,879 1,467 25,764 29,110 31,113 2011 2,411 2,411 2,124 905 21,802 24,831 27,242 Finance lease receivables are secured by the underlying assets given on lease. 24. Revenue from operations (gross) Year ended March 31, 2012 2011 63,897 51,668 254,137 212,344 318,034 264,012 For the year ended March 31, 2012 2011 30,392 28,581 10,996 8,404 8,672 6,186 5,092 2,075 8,745 6,422 63,897 51,668 (1,205) (1,007) 62,692 50,661 For the year ended March 31, 2012 2011 234,726 194,139 18,969 18,021 442 184 254,137 212,344 Year ended March 31, 2012 2011 Income from current investments – Dividend on mutual fund units – Profit on sale of investments, net Interest on debt instruments and others Other exchange differences, net Miscellaneous income 2,090 181 6,296 3,451 256 12,274 2,288 171 3,946 13 389 6,807 Sale of products Sale of services (A) Details of income from sale of products Mini computers/micro processor based systems and data Toilet soaps Hydraulic and pneumatic equipment Lighting products Others Less: Excise duty (B) Details of income from services rendered Software services IT enabled services Others 25. Other income Annual Report 2011-12 138 Standalone Financial Statements 26. Cost of materials consumed Opening stock Add: Purchases Less: Closing stock Details of raw materials consumed Year ended March 31, 2012 2011 2,206 1,467 15,382 11,596 (3,113) (2,206) 14,475 10,857 Year ended March 31, 2012 2011 2,079 1,287 3,831 2,903 8,565 6,667 14,475 10,857 Year ended March 31, 2012 2011 833 2,561 523 3,917 927 1,675 866 3,468 449 543 2,416 642 3,601 833 2,561 523 3,917 (316) Peripherals / Components for computers Oil and fats Others 27. Changes in inventories of finished goods, work in progress and Stock-in-trade Opening stock In Process Traded goods Finished products Less: Closing stock In Process Traded goods Finished products (Increase) / Decrease Details of purchase of traded goods Computer units / printers / software products Others 28. Employee benefits expense Year ended March 31, 2012 2011 23,132 22,241 8,954 4,731 32,086 26,972 Year ended March 31, 2012 2011 126,605 102,923 2,553 2,472 878 1,310 3,079 2,669 133,115 109,374 Year ended March 31, 2012 2011 799 586 5,258 774 6,057 1,360 Salaries and wages Contribution to provident and other funds Share based compensation Staff welfare expenses 29. Finance costs Interest Exchange fluctuations on foreign currency borrowings, net Wipro Limited 139 Standalone Financial Statements 30. Other expenses Year ended March 31, 2012 2011 32,918 26,151 10,947 8,564 1,767 – 253 188 4,311 1,336 2,334 2,005 2,154 1,848 2,408 2,159 3,231 2,479 1,310 1,282 1,271 1,513 1,473 1,202 288 227 524 449 638 378 43 2 1 10,401 76,274 37 2 1 8,688 58,509 Subcontracting / technical fees / third party application Travel Provision for diminution in the value of non-current investments Repairs to building Repairs to machinery Power and fuel Rent Communication Advertisement and sales promotion Legal and professional Staff recruitment Carriage and freight Stores and spares Insurance Rates and taxes Auditors’ remuneration As auditor For certification including tax audit Reimbursement of expenses Miscellaneous expenses 31. Capital commitments The estimated amount of contracts remaining to be executed on Capital account and not provided for, net of advances is ` 1,248 (2011: ` 1,682). As of March 31, 2012 2011 a) Disputed demands for excise duty, customs duty, income tax, sales tax and other matters b) Performance and financial guarantees given by banks on behalf of the Company c) Guarantees given by the Company on behalf of subsidiaries Contingent liabilities in respect of: would be a retroactive levy of import duties on certain hardware previously imported duty free. As of March 31, 2012, the Company has met all commitments required under the plan. Tax Demands: The Company had received tax demands aggregating to ` 40,040 (including interest of ` 10,616) arising primarily on account of denial of deduction under Section 10A of the Income Tax Act, 1961 in respect of profit earned by the Company’s undertaking in Software Technology Park at Bangalore for the years ended March 31, 2001 to March 2008. The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by the second appellate authority for the years upto March 2004 and further appeals have been filed by the Income tax authorities before the Hon’ble High Court. The first appellate authority has granted relief for the year ended March 31, 2005 and further appeal has been filed by the Income tax authorities before the Income-tax Appellate Tribunal.  The Company is in appeal before the Income-tax Appellate Tribunal for the years ended March 31, 2006 and March 31, 2007 after receiving the assessment orders following the directions of the Dispute Resolution Panel. For the year ended March 31, 2008, the objections against the draft assessment order are pending before the Dispute Resolution Panel. 32. Contingent Liabilities 2,374 1,472 18,986 5,597 9,706 3,919 The Company’s Indian operations have been established as units in Special Economic Zone and Software Technology Park Unit under plans formulated by the Government of India. As per the plan, the Company’s Indian operations have export obligations to the extent of net positive foreign exchange (i.e. foreign exchange inflow - foreign exchange outflow should be positive) over a five year period. The consequence of not meeting this commitment in the future Annual Report 2011-12 140 Standalone Financial Statements Considering the facts and nature of disallowance and the order of the appellate authority upholding the claims of the Company for earlier years, the Company believes that the final outcome of the above disputes should be in favor of the Company and there should not be any material impact on the financial statements. The Company is subject to legal proceedings and claims which have arisen in the ordinary course of its business. The resolution of these legal proceedings is not likely to have a material and adverse effect on the results of operations or the financial position of the Company. The Company has applied the principles of AS 30, as per announcement by ICAI except to the extent such principles of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006. The Company has designated USD 262 million (2011: USD 262 million) and Euro 40 million (2011: Euro 40 million) of forward contracts as hedges of its net investments in non integral foreign operations. The Company has also designated a yen-denominated foreign currency borrowing amounting to JPY 16.5 billion (2011: JPY 16.5 billion), along with a floating for floating Cross-Currency Interest Rate Swap (CCIRS), as a hedging instrument to hedge its net investment in a non-integral foreign operation. Further, the Company has also designated yen-denominated foreign currency borrowing amounting to JPY 8 billion (2011: JPY 8 billion) along with floating for fixed CCIRS as cash flow hedge of the yen-denominated borrowing and also as a hedge of net investment in a non-integral foreign operation. As equity investments in non-integral foreign subsidiaries/operations are stated at historical cost, in these standalone financial statements, the changes in fair value of forward contracts, the yen-denominated foreign currency borrowing and the related CCIRS amounting to gain/ (loss) of ` (2,787) for the year ended March 31, 2012 has been recorded in the statement of profit and loss as part of other income (2011: ` 326). As of March 31, 2012 the Company has recognized losses of ` 2,047 (2011: ` 1,675) relating to derivative financial instruments (comprising foreign currency forward contract and option contracts) that are designated as effective cash flow hedges in the shareholders’ fund. The following table presents the aggregate contracted principal amounts of the Company’s derivative contracts outstanding as of: 33. Adoption of AS 30 Designated derivative instruments $ 1,081 Sell £ 4 ¥ 1,474 AUD – € 17 CHF – Buy – Non designated derivative instruments Cross currency swaps ¥ 31,511 $ 1,103 Sell AUD 31 £ 58 € 84 Buy $ 555 ¥ 1,997 (In Million) As of March 31, 2012 2011 $ 901 £ 21 ¥ 3,026 AUD 4 € 2 CHF 6 – ¥ 31,511 $ 788 AUD 13 £ 40 € 88 $ 617 ¥ – As of the balance sheet date, the Company has net foreign currency exposures that are not hedged by a derivative instrument or otherwise amounting to ` 21,492 (2011 : ` 27,733). 35. Sale of financial assets From time to time, in the normal course of business, the Company transfers accounts receivables, net investment in finance lease receivables and employee advances (financials assets) to banks. Under the terms of the arrangements, the Company surrenders control over the financial assets and is without recourse. Accordingly, such transfers are recorded as sale of financial assets. Gains and losses on sale of financial assets without recourse are recorded at the time of sale based on the carrying value of the financial assets and fair value of servicing liability. In certain cases, transfer of financial assets may be with recourse. Under arrangements with recourse, the Company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with the banks. Accordingly, in such cases the amount received are recorded as borrowings in the balance sheet and cash flows from financing activities. Additionally, the Company retains servicing responsibility for the transferred financial assets. During the year ended March 31, 2012, the Company transferred financial assets of Nil (2011: ` 1,369), under such arrangements. Proceeds from transfer of receivables on non-recourse basis are included in the net cash provided by operating activities in the statements of cash flows. Proceeds from transfer of receivables on recourse basis are included in the net cash provided by financing activities. This transfer resulted in a net gain / (loss) of Nil for the year ended March 31, 2012 (2011: ` (7)). As of March 31, 2012, the maximum amounts of recourse obligation in respect of the transferred financial assets are Nil (2011: Nil). 34. Derivatives Wipro Limited 141 Standalone Financial Statements 36. Finance lease receivables The Company provides lease financing for the traded and manufactured products primarily through finance leases. The finance lease portfolio contains only the normal collection risk with no important uncertainties with respect to future costs. These receivables are generally due in monthly, quarterly or semi-annual installments over periods ranging from 3 to 5 years. The components of finance lease receivables are as follows: As of March 31, 2012 2011 8,999 8,851 2,043 6,776 180 (1,286) 7,713 2,523 6,129 199 (1,601) 7,250 Operating leases: The Company leases office and residential facilities under cancelable and non-cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. Rental payments under such leases are ` 2,154 and ` 1,848 during the years ended March 31, 2012 and 2011, respectively. Details of contractual payments under non-cancelable leases are given below: As of March 31, 2012 2011 965 717 3,220 1,782 5,967 2,237 1,464 4,418 Gross investment in lease Not later than one year Later than one year and not later than five years Unguaranteed residual values Unearned finance income Net investment in finance receivables Not later than one year Later than one year and not later than five years Thereafter 38. Employee benefit plans Present value of minimum lease receivables are as follows: As of March 31, 2012 2011 Present value of minimum lease payments receivables Not later than one year Later than one year and not later than five years Unguaranteed residual value 37. Assets taken on lease Finance leases: The following is a schedule of present value of minimum lease payments under finance leases, together with the value of the future minimum lease payments as of March 31, 2012 and 2011. As of March 31, 2012 2011 Present value of minimum lease payments Not later than one year  Later than one year and not later than five years Thereafter Total present value of minimum lease payments Add: Amount representing interest Total value of minimum lease payments 7,713 1,964 5,588 161 7,250 2,350 4,723 177 Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) covering certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India (LIC), HDFC Standard Life, Tata AIG and Birla Sun Life (‘Insurer’). Under this plan, the settlement obligation remains with the Company, although the Insurer administers the plan and determines the contribution premium required to be paid by the Company. Change in the benefit obligation Projected benefit obligation (PBO) at the beginning of the year Service cost Interest cost Benefits paid Actuarial loss / (gain) PBO at the end of the year Change in plan assets Fair value of plan assets at the beginning of the year Expected return on plan assets Employer contributions Benefits paid Actuarial gain / (loss) Fair value of plan assets at the end of the year Present value of unfunded obligation Recognised liability As of March 31, 2012 2011 2,448 424 207 (343) 83 2,819 2,023 628 158 (229) (132) 2,448 66 10 – 76 6 82 67 96 – 163 25 188 As of March 31, 2012 2011 2,339 180 587 (343) 52 2,815 (4) (4) 1,932 160 463 (229) 13 2,339 (109) (109) Annual Report 2011-12 142 Standalone Financial Statements The Company has invested the plan assets with the insurer managed funds. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation. Expected contribution to the fund during the year ending March 31, 2013 is ` 336. Net gratuity cost for the year ended March 31, 2012 and 2011 are as follows: For the year ended March 31, 2012 2011 424 628 207 158 (16) – (180) (160) 31 (145) 466 481 contributions based on a specified percentage of each covered employee’s salary. For the year ended March 31, 2012, the Company has reversed (net) ` (38), being excess the contribution (2011: contribution recognised ` 168) to superannuation fund, in the statement of profit and loss. Provident fund (PF): In addition to the above, all employees receive benefits from a provident fund. The employee and employer each make monthly contributions to the plan equal to 12% of the covered employee’s salary. A portion of the contribution is made to the provident fund trust established by the Company, while the remainder of the contribution is made to the Government’s provident fund. The interest rate payable by the trust to the beneficiaries is regulated by the statutory authorities. The Company has an obligation to make good the shortfall, if any, between the returns from its investments and the administered rate. Upto year ended March 31, 2011, in the absence of guidance from the Actuarial Society of India, actuarial valuation could not have been applied to reliably measure the provident fund liabilities. During the year ended March 31, 2012, the Actuarial Society of India issued the final guidance for measurement of provident fund liabilities. Accordingly, based on such actuarial valuation there is no shortfall in the fund as of March 31, 2012. The details of fund and plan assets are given below: Change in the benefit obligation Fair value of plan assets Present value of defined benefit obligation Excess of (obligations over plan assets) / plan assets over obligations As of March 31, 2012 2011 17,928 15,305 17,664 264 15,408 (103) Service cost Interest cost Past Service cost Expected return on plan assets Actuarial loss / (gain) recognized The weighted average actuarial assumptions used to determine benefit obligations and net periodic gratuity cost are: Assumptions Discount rate Expected rate of salary increase Expected return on plan assets As of March 31, 2012 2011 8.35% 7.95% 5% 5% 8% 8% As of March 31, 2012 and 2011, 100% of the plan assets were invested in the insurer managed funds. As of March 31, 2012 2011 2010 Experience adjustments: On Plan liabilities   On Plan assets   Present value of benefit obligation Fair value of plan assets Excess of obligations over plan assets (140) 52 2,819 2,815 (4) (55) 15 2,448 2,339 (109) 84 18 2,023 1,932 (91) 2009 (59) 26 1,820 1,394 (426) The principal assumptions used in determining the present value obligation of interest guarantee under the deterministic approach are as follows: Assumptions Discount rate Average remaining tenure of investment portfolio Guaranteed rate of return As of March 31, 2012 2011 8.35% 7.95% 6 years 8.25% 7 years 9.5% The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards. The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Superannuation : Apart from being covered under the gratuity plan, the employees of the Company also participate in a defined contribution plan maintained by the Company. This plan is administered by the Life Insurance Corporation of India and ICICI Prudential Insurance Company Limited. The Company makes annual For the year ended March 31, 2012, the Company contributed ` 2,125 (2011: ` 1,824) towards provident fund. As of March 31, 2012, provision for leave encashment of ` 3,289 has been presented under Provisions Employee retirement benefits. The liability as of March 31, 2011 of ` 2,028 that was previously included under Sundry Creditors in the financial statements for year ended March 31, 2011 prepared under the pre-revised Schedule VI of the Companies Act, 1956, has now been Wipro Limited 143 Standalone Financial Statements accordingly reclassified under provisions. Provision for leave encashment is a deferred deduction under the tax laws which can be claimed only on actual payment. Accordingly, the consequent impact on current and deferred tax has been given effect. 39. Employee stock option i) Employees covered under Stock Option Plans and Restricted Stock Unit (RSU) Option Plans (collectively “stock option plans”) are granted an option to purchase shares of the Company at the respective exercise prices, subject to requirements of vesting conditions. These options generally vest over a period of five years from the date of grant. Upon vesting, the employees can acquire one equity share for every option. The maximum contractual term for these stock option plans is generally 10 years. ii) The stock compensation cost is computed under the intrinsic value method and amortised on a straight line basis over the total vesting period of five years The instrinic value on the date of grant approximates the fair value. For the year ended March 31, 2012, the Company has recorded stock compensation expense of ` 878 (2011: ` 1,310). The compensation committee of the board evaluates the performance and other criteria of employees and approves the grant of options. These options vest with employees over a specified period subject to fulfillment of certain conditions. Upon vesting, employees are eligible to apply and secure allotment of Company’s shares at a price determined on the date of grant of options. The particulars of options granted under various plans are tabulated below. (The number of shares in the table below are adjusted for any stock splits and bonus shares issues). iii) Wipro Employee Stock Option Plans and Restricted Stock Unit Option Plans A summary of the general terms of grants under stock option plans and restricted stock unit option plans are as follows: Name of Plan Wipro Employee Stock Option Plan 1999 (1999 Plan) Wipro Employee Stock Option Plan 2000 (2000 Plan) Stock Option Plan (2000 ADS Plan) Wipro Restricted Stock Unit Plan (WRSUP 2004 plan) Wipro ADS Restricted Stock Unit Plan (WARSUP 2004 plan) Wipro Employee Restricted Stock Unit Plan 2005 (WSRUP 2005 plan) Wipro Employee Restricted Stock Unit Plan 2007 (WSRUP 2007 plan) Authorized Shares (1) 50,000,000 250,000,000 15,000,000 20,000,000 20,000,000 20,000,000 16,666,667 Range of Exercise Prices ` 171 – 490 ` 171 – 490 US$ 3–7 ` 2 US$ 0.04 ` 2 ` 2 (1) adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. The activity in these stock option plans is summarized below: As of March 31, 2012 2011 Number Weighted Number Weighted Average Average Exercise Exercise Price Prices – ` – 200,000 ` 293.40 – US$ – 2,677 US$ 2.82 15,382,761 ` 2 17,103,172 ` 2 3,223,892 US$ 0.04 2,943,035 US$ 0.04 30,000 ` 480.20 – ` – – US$ – – US$ – 40,000 ` 2 5,227,870 ` 2 – US$ – 1,437,060 US$ 0.04 – ` – (80,000) ` 293.40 – US$ – – US$ – (3,708,736) ` 2 (5,482,210) ` 2 (638,347) US$ 0.04 (870,622) US$ 0.04 – ` – (120,000) ` 293.40 – US$ – (2,677) US$ 2.82 (1,106,987) ` 2 (1,466,071) ` 2 (411,853) US$ 0.04 (285,581) US$ 0.04 Outstanding at the beginning of the period (1) Granted Exercised Forfeited and lapsed Range of Exercise Prices ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 Annual Report 2011-12 144 Standalone Financial Statements Outstanding at the end of the period Exercisable at the end of the period Range of Exercise Prices ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 As of March 31, 2012 2011 Number Weighted Number Weighted Average Average Exercise Exercise Price Prices 30,000 ` 480.20 – ` – – US$ – – US$ – 10,607,038 ` 2 15,382,761 ` 2 2,173,692 US$ 0.04 3,223,892 US$ 0.04 – ` – – ` – – US$ – – US$ – 5,370,221 ` 2 7,533,984 ` 2 578,400 US$ 0.04 1,147,391 US$ 0.04 (1) The opening balance as of April 1, 2010 have been adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. The following table summarizes information about outstanding stock options: 2012 Weighted Average Remaining Life Numbers (Months) 30,000 – 10,607,038 2,173,692 48 – 30 37 Weighted Average Exercise Price ` US$ ` US$ 480.20 – 2 0.04 2011 Weighted Average Remaining Life (Months) – – 35 48 Weighted Average Exercise Price ` US$ ` US$ – – 2 0.04 Range of Exercise price ` 480 – 489 US$ 4 – 6 `2 US$ 0.04 Numbers – – 15,382,761 3,223,892 The weighted-average grant-date fair value of options granted during the year ended March 31, 2012 was ` 449.80 (2011: ` 417.65) for each option. The weighted average share price of options exercised during the year ended March 31, 2012 was ` 399.22 (2011: ` 424.28) for each option. The fair value of 30,000 options granted during the year ended March 31, 2012 (other than at nominal exercise price) has been estimated on the date of grant using the Black-Scholes-Merton option pricing model. The fair value of share options has been determined using the following assumptions: Expected term Risk free interest rates Volatility Dividend yield 5 years 8% 62.2% 1.28% The movement in Restricted Stock Unit reserve is summarized below: For the year ended March 31, 2012 2011 284 1,723 (332) 954 906 (2,872) 1,433 284 Opening balance Less: Amount transferred to share premium Add: Amortisation ** Closing balance ** Includes amortization expense relating to options granted to employees of the Company’s subsidiaries, amounting to ` 76 (2011: ` 123). This expense has been debited to respective subsidiaries. Wipro Limited 145 Standalone Financial Statements 40. Provisions Provision for warranty represent cost associated with providing sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 to 2 years from the balance sheet date. Other provisions primarily include provisions for tax related contingencies and litigations. The timing of cash outflows in respect of such provision cannot be reasonably determined. The activity in the provision balance is summarized below: For the year ended March 31, 2012 March 31, 2011 Provision for Warranty OthersProvision taxes for Warranty Otherstaxes Earnings per share and number of shares outstanding for the year ended March 31, 2011 have been adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. 42. The Management has identified enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such enterprises as of March 31, 2012 has been made in the annual financial statements based on information received and available with the Company. The Company has not received any claim for interest from any supplier under the said Act. For the year ended March 31, 2012 2011 The principal amount remaining unpaid to any supplier as of the end of each accounting year; The interest due remaining unpaid to any supplier as of the end of each accounting year; The amount of interest paid by the Company along with the amounts of the payment made to the supplier beyond the appointed day during the year; – Interest – Principal The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act; The amount of interest accrued and remaining unpaid at the end of the year; The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise; Provision at the beginning of the year Additions during the year, net Utilized/Reversed during the year Provision at the end of the year Non-current portion Current portion 452 420 (582) 290 14 276 1,858 179 (1,222) 815 – 815 532 482 (562) 452 36 416 1,763 149 (54) 1,858 – 1,858 1 – – 1 41. Earnings per share The computation of equity shares used in calculating basic and diluted earnings per share is set out below: For the year ended March 31, 2012 2011 Weighted average equity shares outstanding 2,463,897,683 2,451,354,673 Share held by controlled trusts (14,841,271) (14,841,271) Weighted average equity shares for computing basic EPS 2,449,056,412 2,436,513,402 Dilutive impact of employee stock options 5,315,776 12,856,846 Weighted average equity shares for computing diluted EPS 2,454,372,188 2,449,370,248 Net income considered for computing EPS (` in Million) 46,851 48,437 1 35 2 88 – – – 1 – – Annual Report 2011-12 146 Standalone Financial Statements 43. Details of Non-current investments (i) Investments in unquoted equity instruments (Fully paid up) of Subsidiaries [Trade] No. of shares Currency Face value 2012 2011     50,000 50,000 INR 10 900,000 900,000 INR 10 94,000 94,000 INR 10 66,171 66,171 INR 10 39,284,680 39,284,680 INR 10 879,136 45,831,270 105,448,318 25,000 160,378 650 149,609 28,126,108 1,472,279 – 24,000 3,700,000 – INR INR usd AUD USD JPY 10 10 1 1 2,500 50,000 1 1 1 1 1 10 As of March 31, 2012 2011 1 1 7 7 22 22 1 1 6,205 6,205 886 1 4,747 1 17,244 10 9 33,465 1,271 94 – 83 24 37 483 64,591 – – 2,023 1 16,802 10 9 33,355 1,271 94 16 83 24 37 104 60,065 Name of the subsidiary Wipro Consumer Care Limited Wipro Chandrika Limited Wipro Trademarks Holding Limited Wipro Travel Services Limited Wipro Technology Services Limited Wipro Energy IT Services India Private Limited (formerly SAIC India Private Limited) Vignani Solutions Private Limited Wipro Holdings (Mauritius) Limited Wipro Australia Pty Limited Wipro Inc. Wipro Japan KK Wipro Shanghai Limited Wipro Cyprus Private Limited 3D Networks Pte Limited Planet PSG Pte Limited Cmango Pte Limited WMNETSERV Limited Wipro Chengdu Limited Wipro Airport IT Services Limited Wipro Infrastructure Engineering Machinery (Changzhou) Company Limited 44,448,318 25,000 156,378 650 (Refer note 1 below) 148,910 Eur 28,126,108 SGD 1,472,279 SGD 2 USD 24,000 USD (Refer note 1 below) 3,700,000 INR (Refer note 1 below) Note1 – As per the local laws of People’s Republic of China, there is no concept of issuance of Share Certificate. Hence the investment by the Company is considered as equity contribution. (ii) Investments in unquoted preference shares (Fully paid up) of Subsidiary [Trade] No. of shares 2012 1,800 2011 1,800 INR Currency Face value   10 As of March 31, 2012 – 2011 – Name of the subsidiary   9% cumulative redeemable preference shares held in Wipro Trademarks Holding Limited (a) (a) Value of investment is less than one million rupees. (iii) Investments in equity instruments (Fully paid up) of Associate [Non-Trade] Name of the associate   Wipro GE Healthcare Private Limited No. of shares Currency Face value 2012 2011     5,150,597 5,150,597 INR 10 As of March 31, 2012 2011 227 227 Wipro Limited 147 Standalone Financial Statements 44. Details of current investments (i) Investments in Indian money market mutual funds No. of Units as of March 31, 2012 62,693,235 57,027,753 30,000,000 89,387,501 51,060,882 90,530,657 254,395,503 30,131,560 23,863,804 516,514 110,876,864 475,391 50,048,176 826,155 920,158 2011 281,936,542 – 50,003,369 100,461,481 239,954,367 – 163,254,234 184,569,350 238,800,422 28,632,720 15,000,000 30,009,000 – – 129,999,183 Balances as of March 31, 2012 3,917 656 300 1,220 1,662 1,826 3,204 483 566 747 1,374 700 915 984 1,288 19,842 (ii) Investments in debentures – Others (Fully paid up) No. of shares/units 2012 Debentures in Citicorp Finance (India) Limited Debentures in Morgan Stanley   (iii) Investments in equity instruments – Others (Fully paid up) No. of shares/units 2012 Mycity Technology Limited WeP Peripherals Limited 44,935 306,000 2011 44,935 306,000 INR INR 10 10 Currency Face value As of March 31, 2012 45 24 69 2011 45 24 69 1,500 – 2011 2,500 500 INR INR 100,000 1,000,000 Currency Face value As of March 31, 2012 129 – 129 2011 241 481 722 2011 3,709 – 500 1,335 6,025 – 2,752 2,703 3,676 1,065 150 300 – – 1,662 23,877 Fund House   Birla Mutual Fund DWS Mutual Fund DSP BlackRock Mutual Fund Kotak Mutual Fund ICICI Prudential Mutual Fund Reliance Mutual Fund IDFC Mutual Fund Tata Mutual Fund Franklin Templeton Mutual Fund UTI Mutual Fund JP Morgan Religare Mutual Fund HDFC Mutual Fund Axis Mutual Fund SBI Mutual Fund Annual Report 2011-12 148 Standalone Financial Statements 45. Related party relationships and transactions The list of subsidiaries as of March 31, 2012 are provided in the table below. Direct Subsidiaries Wipro Inc. Wipro Gallagher Solutions Inc. Enthink Inc.* Infocrossing Inc. Wipro Energy IT Services India Private Limited (formerly SAIC India Private Limited) Wipro Japan KK Wipro Shanghai Limited Wipro Trademarks Holding Limited Cygnus Negri Investments Private Limited Wipro Travel Services Limited Wipro Consumer Care Limited Wipro Holdings (Mauritius) Limited Wipro Holdings UK Limited Wipro Holding Austria GmbH (A) Step Subsidiaries Country of Incorporation USA USA USA USA India Japan China India India India India Mauritius U.K. Wipro Technologies UK Limited U.K. Austria U.K. 3D Networks (UK) Limited U.K Wipro Europe Limited (A) (formerly SAIC Europe Limited) Wipro Cyprus Private Limited Wipro Technologies S.A DE C. V Wipro BPO Philippines LTD. Inc Wipro Holdings Hungary Korlátolt Felelősségű Társaság Wipro Technologies Argentina SA Wipro Information Technology Egypt SAE Wipro Arabia Limited* Wipro Poland Sp Zoo Wipro IT Services Poland Sp. z o. o Wipro Outsourcing Services UK Limited Wipro Technologies (South Africa) Proprietary Limited Cyprus Mexico Philippines Hungary Argentina Egypt Saudi Arabia Poland Poland U.K. South Africa Wipro Limited 149 Standalone Financial Statements Direct Subsidiaries Step Subsidiaries Wipro Information Technology Netherlands BV (formerly RetailBox BV) Country of Incorporation Netherland Wipro Portugal S.A. (A) (Formerly Portugal Enabler Informatica SA) Wipro Technologies Limited, Russia Russia Wipro Gulf LLC (formerly SAIC Gulf LLC) Wipro Technology Chile SPA Wipro Infrastructure Engineering AB Wipro Infrastructure Engineering  Oy. (A) Hydrauto Celka San ve Tic Wipro Technologies SRL Wipro Singapore Pte Limited PT WT Indonesia Wipro Unza Holdings Limited Wipro Technocentre (Singapore) Pte Limited Wipro (Thailand) Co. Limited Wipro Bahrain Limited WLL Wipro Yardley FZE Wipro Australia Pty Limited Wipro Networks Pte Limited (formerly 3D Networks Pte Limited) Planet PSG Pte Limited Wipro Technologies SDN BHD Wipro Chengdu Limited Wipro Chandrika Limited* Vignani Solutions Private Limited WMNETSERV Limited WMNETSERV (U.K.) Limited WMNETSERV INC Wipro Technology Services Limited Wipro Airport IT Services Limited* Wipro Infrastructure Engineering Machinery (Changzhou) Co., Ltd. (A) Sultanate of Oman Chile Sweden Finland Turkey Romania Singapore Indonesia Singapore Singapore Thailand Bahrain Dubai Australia Singapore Singapore Malaysia China India India Cyprus U.K. USA India India China * All the above direct subsidiaries are 100% held by the Company except that the Company hold 98% of the equity securities of Enthink Inc., 66.67% of the equity securities of Wipro Arabia Limited, 90% of the equity securities of Wipro Chandrika Limited and 74% of the equity securities of Wipro Airport IT Services Limited. Annual Report 2011-12 150 Standalone Financial Statements (A) Step Subsidiary details of Wipro Unza Holdings Limited, Wipro Holding Austria GmbH, Wipro Portugal S.A, Wipro Infrastructure Engineering Oy and Wipro Europe Limited are as follows: Step Subsidiaries Wipro Unza Singapore Pte Limited Wipro Unza Indochina Pte Limited   Wipro Unza Cathay Limited Wipro Unza China Limited   PT Unza Vitalis Wipro Unza Thailand Limited Wipro Unza Overseas Limited Unzafrica Limited Wipro Unza Middle East Limited Unza International Limited Unza Nusantara Sdn Bhd                 Wipro Holding Austria GmbH Wipro Portugal S.A.   Step Subsidiaries     Wipro Unza Vietnam Co., Limited           Wipro Unza (Guangdong) Consumer   Products LTD.                             Unza Holdings Sdn Bhd   Unza (Malaysia) Sdn Bhd     Wipro Unza (Malaysia) Sdn Bhd Wipro Manufacturing Services Sdn Bhd     Shubido Pacific Sdn Bhd(a) Gervas Corporation Sdn Bhd     Gervas (B) Sdn Bhd Formapac Sdn Bhd   Wipro Technologies Austria GmbH New Logic Technologies SARL SAS Wipro France (formerly Enabler France SAS) Wipro Retail UK Limited (formerly Enabler UK Limited) Wipro do Brasil Technologia Ltda (formerly Enabler Brazil Ltda) R.K.M Equipamentos Hidraulicos Ltda Wipro Technologies Gmbh (formerly Enabler & Retail Consult GmbH) Country of Incorporation Singapore Singapore Vietnam Hong Kong Hong Kong China Indonesia Thailand British Virgin Islands Nigeria British Virgin Islands British Virgin Islands Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Austria France France U.K. Brazil Brazil Germany Russia Wipro Infrastructure Engineering  Oy Wipro Infrastructure Engineering LLC Wipro Europe Limited (formerly SAIC Europe Limited) Wipro UK Limited (formerly SAIC Limited) Wipro Europe (formerly Science Applications International, Europe SARL) U.K. France a) All the above subsidiaries are 100% held by the Company except Shubido Pacific Sdn Bhd in which the Company holds 62.55% of the equity securities. Wipro Limited 151 Standalone Financial Statements Name of other related parties Wipro Equity Reward Trust Wipro Inc Benefit Trust Wipro GE Healthcare Private Limited Azim Premji Foundation Hasham Premji (partnership firm) Prazim Traders (partnership firm) Zash Traders (partnership firm) Regal Investment & Trading Company Private Limited Vidya Investment & Trading Company Private Limited Napean Trading & Investment Company Private Limited Azim Premji Trust Key management personnel Azim Premji Suresh C Senapaty T K Kurien Suresh Vaswani Girish S Paranjpe Relative of Key Management Personnel Rishad Premji 1 2 Nature Trust Trust Associate Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director % of holding Fully controlled trust Fully controlled trust 49%     Country of Incorporation India USA India     Chairman and Managing Director Chief Financial Officer & Director CEO, IT Business & Director1 Jt CEO, IT Business & Director2 Jt CEO, IT Business & Director2         w.e.f February 1, 2011 Upto January 31, 2011 The Company has the following related party transactions: Transaction / Balances Subsidiaries / Trusts 2012 7,024 328 5,816 33 89 382 24 59# – 32 – – 115 131 18,878* 2,052 2011 6,481 – 5,563 64 71 373 – 60# – 30 5 – 97 – 11,715* 1,965 Associate 2012 56 20 – – – – – – – – – 98 – – 16 – 2011 5 13 – – – – – – – – – – – – 7 – Entities controlled by Directors 2012 2011 – – 12 – – – – – 11,102 10,362 – – 3 – 7,330 7,401 – – – – – – – – – – – – 1 7,330 – 7,401 Key Management [email protected] 2012 2011 – – – – – – – – 573 536 – – – – 382 384 87 275 – – – – – – – – – – – 384 – 385 Sale of services Sale of products Purchase of services Purchase of products Dividend paid Commission paid Rent paid Dividend payable Remuneration paid Interest income Dividend received Royalty received Corporate guarantee commission Loans and advances given Balances as of the year end Receivables Payables # Represents dividend payable to Wipro Inc Benefit Trust and Wipro Equity Reward Trust. Annual Report 2011-12 152 Standalone Financial Statements @ Including relative of key management personnel. * Includes the following balances being in the nature of loans given to subsidiaries of the Company including interest accrued, where applicable and inter-corporate deposits with subsidiary. Balance as of March 31, 2012 Wipro Cyprus Private Limited Wipro Chandrika Limited Wipro Singapore Pte Limited Wipro Holdings (Mauritius) Limited Wipro Consumer Care Limited Vignani Solutions Private Limited Wipro Inc. 1,935 299 – – 1 105 2,007 2011 1,577 273 – – 1 – 2,007 Maximum amount due during the year 2012 2,026 299 – – 1 105 2,007 2011 1,577 273 22 3 2 – 2,007 Name of the entity The following are the significant related party transactions during the year ended March 31, 2012 and 2011: For the year ended March 31, 2012 Sale of services Wipro Inc. Sale of products Wipro Infrastructure Engineering AB Purchase of services Infocrossing Inc. Wipro Technologies SRL-BPO Wipro Retail UK Limited Wipro Portugal S.A Wipro Technologies OY Purchase of products Unza Holdings Limited Vignani Solutions Private Limited Dividend paid Hasham Traders Prazim Traders Zash Traders Azim Premji Trust Commission paid Wipro Japan KK Wipro Technologies Gmbh Rent paid Wipro Holding UK Limited 24 – 339 43 373 – 3,263 3,250 3,242 1,278 3,045 3,033 3,026 426 20 13 61 – 1,603 923 744 20 188 839 937 710 783 635 323 – 3,917 4,144 2011 Wipro Limited 153 Standalone Financial Statements For the year ended March 31, 2012 Dividend received Wipro Cyprus Private Limited Dividend payable Hasham Traders Prazim Traders Zash Traders Azim Premji Trust Remuneration paid to key management personnel Azim Premji Suresh Senapaty T K Kurien Girish Paranjpe Suresh Vaswani Interest income Wipro Cyprus Private Limited Wipro Chandrika Limited Corporate guarantee commission Wipro Infrastructure Engineering AB Infocrossing Inc. Wipro Holding UK Limited Loans and advances given Wipro Chandrika Limited Vignani Solutions Private Limited 46. Acquisitions On June 10, 2011, the Company acquired the global oil and gas information technology practice of the Commercial Business Services Business Unit of Science Applications International Corporation Inc., Delaware, USA (‘SAIC’) through an Asset and Stock Purchase agreement (‘ASPA’). SAIC’s global oil and gas practice provides consulting, system integration and outsourcing services to global oil majors with significant domain capabilities in the areas of digital oil field, petro-technical data management and petroleum application services, addressing the upstream segment. The Company believes that the acquisition will further strengthen Wipro’s presence in the Energy, Natural Resources and Utilities domain. In accordance with the ASPA, all fixed assets, current assets and liabilities, right and obligations of the oil and gas business of US and Canada have been vested with the Company. The acquired assets and liabilities recorded in the books of SAIC relating to the US and Canada oil and gas business are recorded by the 26 105 – – 25 25 40 24 17 36 15 18 14 16 19 18 45 – – 28 43 8 89 102 2,175 2,167 2,162 781 2,175 2,167 2,162 852 – 5 2011 Company at their respective book values. The goodwill of ` 3,219 comprises value of expected synergies arising from the acquisition. The purchase consideration of ` 3,781was settled in cash.  47. Income Tax The provision for taxation includes tax liability in India on the Company’s worldwide income. The tax has been computed on the worldwide income as reduced by the various deductions and exemptions provided by the Income tax Act in India (Act) and the tax credit in India for the tax liabilities payable in foreign countries. Most of the Company’s operations are through units in Special Economic Zone and Software Technology Parks (‘STPs’). Income from STPs is not eligible for deduction from April 01, 2011. Income from SEZ’s are eligible for 100% deduction for the first 5 years, 50% deduction for the next 5 years and 50% deduction for another 5 years subject to fulfilling certain conditions. Annual Report 2011-12 154 Standalone Financial Statements The Company has calculated its tax liability after considering the provisions of law relating to Minimum Alternative Tax (MAT). As per the Act, any excess of MAT paid over the normal tax payable can be carried forward and set off against the future tax liabilities. Accordingly an amount of ` 1,060 is included under ‘Short term loans and advances’ in the balance sheet as of March 31, 2012 (March 31, 2011: ` 126). i) Current tax provision includes reversal of tax provision in respect of earlier periods no longer required amounting to ` 745 for the year ended March 31, 2012 (2011: ` 590) and MAT credit of ` 1,060 for the year ended March 31, 2012 (2011: Nil). The components of the deferred tax, net are as follows: As of March 31, 2012 Deferred Tax Assets - DTA Accrued expenses and liabilities Allowances for doubtful trade receivables Deferred Tax Liabilities - (DTL) Tangible assets Amortisable goodwill Net DTA/(DTL) (1,312) (58) (1,370) 268 (1,059) – (1,059) 108 931 707 1,638 525 642 1,167 2011 presentation and disclosures made in the financial statements, particularly presentation of Balance Sheet. 50. Additional information pursuant to Schedule VI (i) Value of imported and indigenous materials consumed For the year ended March 31, 2012 % Raw Materials Imported Indigenous Stores and Spares Imported Indigenous 18 82 100 (ii) Value of imports on CIF basis For the year ended March 31, 2012 (Does not include value of imported items locally purchased) Raw materials, components and peripheral Stores and spares Capital goods (iii) Activities in foreign currency For the year ended March 31, 2012 a) Expenditures Traveling and onsite allowance Interest Royalty Professional fees Subcontracting charges Foreign taxes Dividend Others 62,226 205 959 6,567 14,221 3,231 0.22 12,373 99,782.22 57,855 114 307 7,843 9,390 2,901 0.11 10,133 88,543.11 2011 22,982 212 394 23,588 27,358 40 231 27,629 2011 52 236 288 7 93 100 17 210 227 34 66 100 4,880 9,595 14,475 35 65 100 3,837 7,020 10,857 ` 2011 % ` ii) The Net DTA / (DTL) of ` 268 (2011: ` 108) has the following breakdown: As of March 31, 2012 Deferred tax asset Deferred tax liabilities Net DTA/(DTL) 326 (58) 268 2011 108 – 108 48. The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Accounting Standard 17, Segment Reporting, the Company has disclosed the segment information in the consolidated financial statements. 49. Hitherto the applicability of revised Schedule VI from the current year, the Company has reclassified previous year figures to conform to this year’s classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it significantly impacts Wipro Limited 155 Standalone Financial Statements For the year ended March 31, b) Earnings Export of goods on F.O.B basis Services Agency commission Dividend remitted in foreign currencies: Final Dividend For the year ended March 31, 2012 2011 0.14 0.04 35,087 7 2010-11 6,978 2 2009-10 8,554 225,640 219 234,413 6,291 177,192 288 183,771 Net amount remitted (in ` Million) Number of shares held by non-resident shareholders Number of foreign shareholders Financial year to which interim dividend relates For the year ended March 31, 2012 2011 0.08 0.07 40,701 7 2011-12 34,810 8 2010-11 Net amount remitted (in ` Million) Number of shares held by non-resident shareholders Number of foreign shareholders Financial year to which final dividend relates Interim Dividend Dividend remitted in foreign currencies: As per our report attached for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore April 25, 2012 For and on behalf of the Board of Directors Azim Premji B. C. Prabhakar Director Chairman Suresh C. Senapaty Chief Financial Officer & Director T. K. Kurien CEO, IT Business & Executive Director V. Ramachandran Company Secretary Annual Report 2011-12 156 Consolidated Financial Statements AUDITORS’ REPORT AUDITORS’ REPORT TO THE BOARD OF DIRECTORS ON THE CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND ITS SUBSIDIARIES We have audited the attached consolidated balance sheet of Wipro Limited (‘the Company’) and subsidiaries (collectively called ‘the Wipro Group’) as of March 31, 2012, the consolidated statement of profit and loss and the consolidated cash flow statement for the year ended on that date, annexed thereto. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements and Accounting Standard 23, Accounting for Investments in Associates in Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India (‘ICAI’). Without qualifying our opinion, we draw attention to Note 28 of the Notes that describes the principles of Accounting Standard (AS) 30, Financial Instruments: Recognition and Measurements, followed by the Company, which has not currently been notified by the National Advisory Council for Accounting Standards pursuant to the Companies (Accounting Standards) Rules, 2006 as per Section 211(3C) of the Companies Act, 1956. Had the Company not followed the principles of AS 30, the profit after taxation for the year ended March 31, 2012 would have been lower by ` 1,633 million. In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the consolidated balance sheet, of the state of affairs of the Wipro Group as of March 31, 2012; (b) in the case of the consolidated statement of profit and loss, of the profit of the Wipro Group for the year ended on that date; and (c) in the case of the consolidated cash flow statement, of the cash flows of the Wipro Group for the year ended on that date. for B S R & Co. Chartered Accountants Firm registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore June 13, 2012 Wipro Limited 157 Consolidated Financial Statements consolidated BALANCE SHEET EQUITY AND LIABILITIES Shareholders’ funds Share capital Reserves and surplus Share application money pending allotment (1) Minority interest Non-current liabilities Long term borrowings Deferred tax liabilities Other long term liabilities Long term provisions Current Liabilities Short term borrowings Trade payables Other current liabilities Short term provisions TOTAL EQUITY AND LIABILTIES ASSETS Non-current assets Goodwill Fixed assets Tangible assets Intangible assets Capital work-in-progress Non-current investments Deferred tax assets Long term loans and advances Other non-current assets Current assets Current investments Inventories Trade receivables Cash and bank balances Short term loans and advances Other current assets TOTAL ASSETS Significant Accounting Policies 2 value is less than one million rupees The notes referred to above form an integral part of the balance sheet As per our report attached For and on behalf of the Board of Directors (1) (` in millions, except share and per share data, unless otherwise stated) Notes As of March 31, 2012 2011 3 4 5 4,915 265,258 270,173 – 849 22,510 275 778 3,107 26,670 35,480 47,736 23,305 28,368 134,889 432,581 4,906 219,964 224,870 – 691 19,759 141 2,659 2,714 25,273 31,166 42,047 16,169 28,125 117,507 368,341 6 36(ii) 7 8 9 10 11 12 67,961 13 14 15 36(ii) 16 17 18 19 20 21 22 23 54,627 1,767 3,466 3,232 440 22,893 9,168 163,554 41,483 10,662 80,387 77,666 23,263 35,566 269,027 432,581 54,266 48,849 1,769 5,034 2,993 179 20,510 7,823 141,423 49,413 9,707 61,773 61,141 15,271 29,613 226,918 368,341 for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore June 13, 2012 Annual Report 2011-12 158 Azim Premji B. C. Prabhakar Chairman Director Suresh C. Senapaty Chief Financial Officer & Director T. K. Kurien CEO, IT Business & Executive Director V. Ramachandran Company Secretary Consolidated Financial Statements consolidated STATEMENT OF PROFIT AND LOSS (` in millions, except share and per share data, unless otherwise stated) Notes For the year ended March 31, 2012 REVENUE Revenue from operations (gross) Less: Excise duty Revenue from operations (net) Other income 24 373,083 1,205 371,878 12,685 384,563 20,158 37,595 118 25 26 13 14 27 154,074 3,439 9,592 162 89,611 314,749 69,814 13,933 (88) 13,845 Profit before minority interest/share in earnings of associates Minority interest Share in earnings of associates Net Profit Earnings per equity share [Refer note 38] (Equity shares of par value ` 2 each) Basic Diluted 22.88 22.83 21.72 21.61 55,969 (257) 333 56,045 311,392 1,007 310,385 7,709 318,094 14,922 33,991 (652) 127,210 1,932 7,732 159 70,452 255,746 62,348 9,469 226 9,695 52,653 (344) 615 52,924 2011 Total Revenue EXPENSES Cost of materials consumed Purchases of stock-in-trade Changes in inventories of finished goods, work in progress and stock-in-trade Employee benefits expense Finance costs Depreciation expense Amortisation expense Other expenses Total Expenses Profit before tax Tax expense Current tax [refer note 36(i)] Deferred tax Significant Accounting Policies 2 The notes referred to above form an integral part of the statement of profit and loss As per our report attached for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore June 13, 2012 For and on behalf of the Board of Directors Azim Premji B. C. Prabhakar Chairman Director Suresh C. Senapaty Chief Financial Officer & Director T. K. Kurien CEO, IT Business & Executive Director V. Ramachandran Company Secretary Wipro Limited 159 Consolidated Financial Statements consolidated CASH FLOW STATEMENT A. Cash flows from operating activities: Profit before tax Adjustments: Depreciation and amortisation Amortisation of share based compensation Exchange differences - net Impact of cash flow hedges Interest on borrowings Dividend / interest income Profit on sale of investments Loss on sale of subsidiary Gain on sale of fixed assets Working capital changes : Trade receivables and unbilled revenue Loans and advances and other assets Inventories Liabilities and provisions Net cash generated from operations Direct taxes paid, net Net cash generated by operating activities Cash flows from investing activities: Acquisition of fixed assets including capital advances Proceeds from sale of fixed assets Purchase of investments Proceeds from sale / maturity of investments Investment in inter-corporate deposits Refund of inter-corporate deposits Payment for acquisition of businesses, net of cash acquired Dividend / interest income received Net cash used in investing activities Cash flows from financing activities: Proceeds from exercise of employee stock options Share application money pending allotment Interest paid on borrowings Dividends paid including distribution tax Proceeds from borrowings / loans Repayment of borrowings / loans Net cash used in financing activities 69,814 9,754 954 280 1,095 1,025 (8,708) (187) 77 (104) (20,599) (3,495) (862) 7,150 56,194 (16,105) 40,089 (12,977) 774 (338,599) 346,826 (14,550) 10,380 (7,920) 8,010 (8,056) 9 – (902) (17,229) 70,839 (69,905) (17,188) 14,845 61,141 1,680 77,666 (` in millions) Year ended March 31, 2012 2011 62,348 7,891 1,433 822 4,389 776 (6,460) (192) – (131) (17,816) (5,234) (1,781) 3,692 49,737 (9,293) 40,444 (12,211) 521 (474,476) 456,894 (14,290) 20,100 (140) 6,363 (17,239) 36 (18) (696) (15,585) 72,596 (83,798) (27,465) (4,260) 64,878 523 61,141 B. C. Net increase / (decrease) in cash and cash equivalents during the year Cash and cash equivalents at the beginning of the year Effect of exchange rate changes on cash balance Cash and cash equivalents at the end of the year [Refer note 21] As per our report attached For and on behalf of the Board of Directors for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore June 13, 2012 Azim Premji B. C. Prabhakar Chairman Director Suresh C. Senapaty Chief Financial Officer & Director T. K. Kurien CEO, IT Business & Executive Director V. Ramachandran Company Secretary Annual Report 2011-12 160 Consolidated Financial Statements (` in millions, except share and per share data, unless otherwise stated) 1. Company overview Wipro Limited (Wipro or the Parent), together with its subsidiaries (collectively, the Company or the group) is a leading India based provider of IT Services, including Business Process Outsourcing (BPO) services, globally.  Further, Wipro has other businesses such as IT Products, Consumer Care and Lighting and Infrastructure engineering. Wipro is headquartered in Bangalore, India. Significant Accounting Policies i. Basis of preparation of financial statements The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis, except for certain financial instruments which are measured on a fair value basis. GAAP comprises Accounting Standards (AS), issued by the Institute of Chartered Accountants of India (ICAI) and other generally accepted accounting principles in India. ii. Principles of consolidation The consolidated financial statements have been prepared on the following basis: NOTES TO THE FINANCIAL STATEMENTS Minority interest in share of net result for the year is identified and adjusted against the profit after tax. Excess of loss, if any, attributable to the minority over and above the minority interest in the equity of the subsidiaries is absorbed by the Company.   – The consolidated financial statements are prepared using uniform accounting policies for similar transactions and other events in similar circumstances. iii. Use of estimates The preparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, expenses and the disclosure of contingent liabilities at the end of the reporting period. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimate is recognised in the period in which the estimates are revised and in any future period affected. iv. Tangible assets, intangible assets and capital work-in-progress 2.   – The consolidated financial statements include the financial statements of Wipro and all its subsidiaries, which are more than 50% owned or controlled. The financial statements of the parent Company and its majority owned / controlled subsidiaries have been combined on a line by line basis by adding together the book values of all items of assets, liabilities, incomes and expenses after eliminating all interCompany balances / transactions and resulting unrealized gain / loss.   – The consolidated financial statements include the share of profit / loss of associate companies, which are accounted under the ‘Equity method’, wherein, the share of profit / loss of the associate Company has been added / deducted to / from the cost of investment.   – Minority interest in the net assets of consolidated subsidiaries consists of: a)  the amount of equity attributable to the minorities at the dates on which investment in a subsidiary is made; and b)  the minorities share of movements in equity since the date of parent-subsidiary relationship came into existence. Fixed assets are stated at historical cost less accumulated depreciation. Costs include expenditure directly attributable to the acquisition of the asset. Borrowing costs directly attributable to the construction or production of qualifying assets are capitalized as part of the cost. Intangible assets are stated at the consideration paid for acquisition less accumulated amortization. Cost of fixed assets not ready for use before the balance sheet date is disclosed as capital work-in-progress. Advances paid towards the acquisition of fixed assets outstanding as of each balance sheet date is disclosed under long term loans and advances. v. Investments Long term investments are stated at cost less other than temporary decline in the value of such investments, if any. Current investments are valued at lower of cost and fair value determined by category of investment. The fair value is determined using quoted market price/market observable information adjusted for cost of disposal. On disposal of the investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. vi. Inventories Inventories are valued at lower of cost and net realizable value, including necessary provision for obsolescence. Cost Wipro Limited 161 Consolidated Financial Statements is determined using the weighted average method. Cost of work-in-progress and finished goods include material cost and appropriate share of manufacturing overheads. vii. Provisions and contingent liabilities Provisions are recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. The Company recognizes provision for onerous contracts based on the estimate of excess of unavoidable costs of meeting obligations under the contracts over the expected economic benefits. viii. Revenue recognition Services: The Company recognizes revenue when the significant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured. The method for recognizing revenues and costs depends on the nature of the services rendered: Time and material contracts Revenues and costs relating to time and material contracts are recognized as the related services are rendered. Fixed-price contracts Revenues from fixed-price contracts, including systems development and integration contracts are recognized using the “percentage-of-completion” method. Percentage of completion is determined based on project costs incurred to date as a percentage of total estimated project costs required to complete the project. When total cost estimates exceed revenues in an arrangement, the estimated losses are recognized in the statement of profit and loss in the period in which such losses become probable based on the current contract estimates. ‘Unbilled revenues’ included in other current assets represent cost and earnings in excess of billings as of the balance sheet date. ‘Unearned revenues’ included in other current liabilities represent billing in excess of revenue recognized. Maintenance contracts Revenue from maintenance contracts is recognized ratably over the period of the contract using the percentage of completion method. When services are performed through an indefinite number of repetitive acts over a specified period of time, revenue is recognized on a straight-line basis over the specified period unless some other method better represents the stage of completion. In certain projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. In such contracts, revenue is recognized with respect to the actual output achieved till date as a percentage of total contractual output. Any residual service unutilized by the customer is recognized as revenue on completion of the term. Products: Revenue from sale of products is recognised when the product has been delivered, in accordance with the sales contract. Revenues from product sales are shown as net of excise duty, sales tax separately charged and applicable discounts. Other income: Agency commission is accrued when shipment of consignment is dispatched by the principal. Interest is recognized using the time-proportion method, based on rates implicit in the transaction. Dividend income is recognized when the Company’s right to receive dividend is established. ix. Leases A. B. Leases of assets, where the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability. Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Lease rentals in respect of assets taken under operating leases are charged to profit and loss account on a straight line basis over the lease term. In certain arrangements, the Company recognizes revenue from the sale of products given under finance leases. The Company records gross finance receivables, unearned income and the estimated residual value of the leased equipment on consummation of such leases. Unearned income represents the excess of the gross finance lease receivable plus the estimated residual value over the sales price of the equipment. The Company recognises unearned income as financing revenue over the lease term using the effective interest method. C. Annual Report 2011-12 162 Consolidated Financial Statements x. Foreign currency transactions Transaction: The Company is exposed to currency fluctuations on foreign currency transactions. Foreign currency transactions are accounted in the books of account at the average rate for the month. The difference between the rate at which foreign currency transactions are accounted and the rate at which they are realized is recognized in the statement of profit and loss. Translation: Monetary foreign currency assets and liabilities at periodend are translated at the closing rate. The difference arising from the translation is recognised in the statement of profit and loss, except for the exchange difference arising on monetary items that qualify as hedging instruments in a cash flow hedge or hedge of a net investment in a nonintegral foreign operation. In such cases the exchange difference is initially recognised in hedging reserve or translation reserve, respectively. Such exchange differences are subsequently recognised in the statement of profit and loss on occurrence of the underlying hedged transaction or on disposal of the investment, respectively. Further, foreign currency differences arising from translation of intercompany receivables or payables relating to foreign operations, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of net investment in foreign operation and are recognized in Foreign Currency Translation Reserve (FCTR). Integral operations: Monetary assets and liabilities are translated at the exchange rate prevailing at the date of the balance sheet. Non-monetary items are translated at the historical rate. The items in the statement of profit and loss are translated at the average exchange rate during the period. The differences arising out of the translation are recognised in the statement of profit and loss. Non-integral operations: Assets and liabilities are translated at the exchange rate prevailing at the date of the balance sheet. The items in the statement of profit and loss are translated at the average exchange rate during the period. The differences arising out of the translation are transferred to translation reserve. xi. Financial Instruments Financial instruments are recognised when the Company becomes a party to the contractual provisions of the instrument. Derivative instruments and Hedge accounting: The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in non-integral foreign operations and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into derivative financial instruments, where the counterparty is a bank. The Company has adopted the principles of Accounting Standard 30, Financial Instruments: Recognition and Measurement (AS 30) issued by ICAI except to the extent the adoption of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006 and other authoritative pronouncements. In accordance with the recognition and measurement principles set out in AS 30, changes in fair value of derivative financial instruments designated as cash flow hedges are recognised directly in shareholders’ funds and reclassified into the profit and loss account upon the occurrence of the hedged transaction. The Company also designates derivative financial instruments as hedges of net investment in non-integral foreign operation. The portion of the changes in fair value of derivative financial instruments determined to be an effective hedge are recognised in the shareholders’ funds and would be recognised in the statement of profit and loss upon sale or disposal of related non-integral foreign operation. Changes in fair value relating to the ineffective portion of the hedges and derivatives that do not qualify for hedge accounting are recognised in the statement of profit and loss. The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc. Non-Derivative Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets of the Company mainly include cash and bank balances, trade receivables, unbilled revenues, finance lease receivables, employee travel and other advances, other loans and advances and derivative financial instruments with a positive fair value. Financial liabilities of the Company mainly comprise secured and unsecured borrowings, trade payables, accrued expenses, eligible current and noncurrent liabilities and derivative financial instruments with a negative fair value. Financial assets are derecognized when all of risks and rewards of the ownership of the financial asset have been transferred. In cases where substantial risk and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset. Wipro Limited 163 Consolidated Financial Statements The Company measures the financial assets and liabilities, except for derivative financial assets and liabilities at amortized cost using the effective interest method. The Company measures the short-term payables and receivables with no stated rate of interest at original invoice amount, if the effect of discounting is immaterial. Noninterest bearing deposits are discounted to their present value. xii. Depreciation and amortisation The Company has provided for depreciation using straight line method, at the rates specified in Schedule XIV to the Companies Act, 1956, except in cases of the following assets, which are depreciated based on estimated useful life, which is higher than the rates specified in Schedule XIV. Nature of asset Buildings Computer equipment and software (included under plant and machinery) Furniture and fixtures Electrical installations (included under plant and machinery) Office equipment Vehicles Plant and machinery Life of asset 30 – 60 years 2 – 6 years 3 – 10 years 5 years 3 – 10 years 4 years 2 – 21 years and loss. If at the balance sheet date there is any indication that if a previously assessed impairment loss no longer exists, the recognised impairment loss is reversed, subject to maximum of initial carrying amount of the short-term receivable. Other than financial assets: The Company assesses at each balance sheet date whether there is any indication that a non-financial asset including goodwill may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs to is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. In respect of goodwill, the impairment loss will be reversed only when it was caused by specific external events of an exceptional nature that is not expected to recur and their effects have been reversed by subsequent external events. xiv. Employee benefits Provident fund: Employees receive benefits from a provident fund. The employee and employer each make monthly contributions to the plan. A portion of the contribution is made to the provident fund trust managed by the Company, while the remainder of the contribution is made to the Government’s provident fund. The Company is generally liable for any shortfall in the fund assets based on the government specified minimum rate of return. Compensated absences: The employees of the Company are entitled to compensated absence. The employees can carry-forward a portion of the unutilized accumulating compensated absences and utilize it in future periods or receive cash compensation at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. The Company recognizes accumulated compensated absences based on actuarial valuation. Nonaccumulating compensated absences are recognized in the period in which the absences occur. The Company recognizes actuarial gains and losses immediately in the statement of profit and loss. Fixed assets individually costing Rupees five thousand or less are depreciated at 100% over a period of one year. Assets under finance lease are amortised over their estimated useful life or the lease term, whichever is lower. Intangible assets are amortized over their estimated useful life on a straight line basis. For various brands acquired by the Company, estimated useful life has been determined ranging between 20 to 25 years. The Company believes this based on number of factors including the competitive environment, market share, brand history, product life cycles, operating plan, no restrictions on title and the macroeconomic environment of the countries in which the brands operate. Accordingly, such intangible assets are being amortised over the determined useful life. Payments for leasehold land are amortised over the period of lease. xiii. Impairment of assets Financial assets: The Company assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss. The amount of loss for short-term receivables is measured as the difference between the assets carrying amount and undiscounted amount of future cash flows. Reduction, if any, is recognised in the statement of profit Annual Report 2011-12 164 Consolidated Financial Statements Gratuity: In accordance with the Payment of Gratuity Act, 1972, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The gratuity fund is managed by the Life Insurance Corporation of India (LIC), HDFC Standard Life, TATA AIG and Birla Sun-life. The Company’s obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation carried out by an independent actuary using the projected unit credit method. The Company recognizes actuarial gains and losses immediately in the statement of profit and loss. Superannuation: Superannuation plan, a defined contribution scheme, is administered by the LIC and ICICI Prudential Insurance Company Limited. The Company makes annual contributions based on a specified percentage of each eligible employee’s salary. xv. Employee stock options The Company determines the compensation cost based on the intrinsic value method. The compensation cost is amortised on a straight line basis over the vesting period. xvi. Taxes Income tax: The current charge for income taxes is calculated in accordance with the relevant tax regulations. Tax liability for domestic taxes has been computed after considering Minimum Alternate Tax (MAT). The excess tax paid under MAT provisions being over and above regular tax liability can be carried forward and set off against future tax liabilities computed under regular tax provisions. Accordingly, MAT credit has been recognized, wherever applicable on the balance sheet which can be carried forward for a period of ten years from the year of recognition. Deferred tax: Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profit offered for income taxes and the profit as per the financial statements of each entity in the Group. Deferred taxes are recognised in respect of timing differences which originate during the tax holiday period but reverse after the tax holiday period. For this purpose, reversal of timing difference is determined using first in first out method. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment/ substantive enactment date. Deferred tax assets on timing differences are recognised only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. However, deferred tax assets on the timing differences when unabsorbed depreciation and losses carried forward exist, are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are reassessed for the appropriateness of their respective carrying amounts at each balance sheet date. The Company offsets, on a year on year basis, it’s current and non-current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis. xvii. Earnings per share Basic: The number of equity shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year excluding equity shares held by controlled trust. Diluted: The number of equity shares used in computing diluted earnings per share comprises the weighted average number of equity shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of equity shares and potentially dilutive equity shares are adjusted for any stock splits and bonus shares issued. xviii. Cash flow statement Cash flows are reported using the indirect method, whereby net profits before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the Company are segregated. Wipro Limited 165 Consolidated Financial Statements 3. Share capital As of March 31, 2012 2011 5,300 250 5,550 4,908 (2) 4,906 Authorised Capital 2,650,000,000 (2011: 2,650,000,000) equity shares [Par value of ` 2 per share] 25,000,000 (2011: 25,000,000) 10.25% redeemable cumulative preference shares [Par value of ` 10 per share] Issued, subscribed and fully paid-up capital [Refer note (i) below] 2,458,756,228 (2011: 2,454,409,145) equity shares of ` 2 each Less: 1,614,671 (2011: 1,614,671) equity shares issued to controlled trusts 2,457,141,557 (2011: 2,452,794,474) equity shares of ` 2 each Terms / Rights attached to equity shares 5,300 250 5,550 4,917 (2) 4,915 The Company has only one class of equity shares having a par value of ` 2 per share. Each shareholder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to shareholders approval in the ensuing Annual General Meeting. Following is the summary of per share dividends recognised as distributions to equity shares. For the Year ended March 31, 2012 2011 Interim dividend `2 `2 Final dividend `4 `4 In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts, if any, in proportion to the number of equity shares held by the shareholders. (i) Reconciliation of number of shares As of March 31, 2012 No. of Shares ` million Opening number of equity shares / American Depository Receipts (ADRs) outstanding Equity shares / ADRs fully allotted as fully paid bonus shares / ADRs by capitalization of Securities Premium account and Capital redemption reserve Equity shares issued pursuant to Employee Stock Option Plan Number of equity shares / ADRs outstanding Less: Equity shares issued to controlled trusts Closing number of equity shares / ADRs outstanding (ii) Sl. No. 1. 2. 3. 4. 2,454,409,145 – 4,347,083 2,458,756,228 (1,614,671) 2,457,141,557 4,908 – 9 4,917 (2) 4,915 As of March 31, 2011 No. of shares ` million 1,468,211,189 979,765,124 6,432,832 2,454,409,145 (1,614,671) 2,452,794,474 2,936 1,960 12 4,908 (2) 4,906 Details of shareholders having more than 5% of the total equity shares of the Company As of March 31, 2012 Name of the Shareholder No. of shares % held Mr. Azim Hasham Premji Partner representing Hasham Traders 543,765,000 22.12 Mr. Azim Hasham Premji Partner representing Prazim Traders 541,695,000 22.03 Mr. Azim Hasham Premji Partner representing Zash Traders 540,408,000 21.98 Azim Premji Trust 195,187,120 7.94 As of March 31, 2011 No. of shares % held 543,765,000 22.15 541,695,000 22.07 540,408,000 22.01 213,000,000 8.68 (iii) Other details of Equity Shares for a period of five years immediately preceding March 31, 2012 As of March 31, 2012 2011 Aggregate number of share allotted as fully paid up pursuant to contract(s) without payment being received in cash 1,614,671 1,614,671 (Allotted to the Wipro Inc. Trust, the sole beneficiary of which is Wipro Inc., a wholly owned subsidiary of the Company, in consideration of acquisition of inter-company investments) Aggregate number of shares allotted as fully paid bonus shares 979,119,256 979,119,256 Aggregate number of shares bought back – – Annual Report 2011-12 166 Consolidated Financial Statements (iv) Shares reserved for issue under option 4. For details of shares reserved for issue under the employee stock option plan of the Company, refer note 35. Reserves and surplus As of March 31, 2012 Capital Reserve Balance brought forward from previous year Additions during the year Securities premium account Balance brought forward from previous year Add: Exercise of stock options by employees Less : Amount utilised for bonus shares Less: Shares issued to controlled trust [refer note 3(iii)] Foreign exchange translation reserve Balance brought forward from previous year Movement during the year Restricted stock units reserve [Refer note 35] * Employee stock options outstanding Less: Deferred employee compensation expense General reserve Balance brought forward from previous year Amount transferred from surplus balance in the statement of profit and loss [Refer note (a) below] Hedging reserve [Refer note 29 & 2(xi)] Balance brought forward from previous year Net loss reclassified into statement of profit and loss Deferred cancellation gain / (loss) relating to roll-over hedging Changes in fair value of effective portion of derivatives Gain / (loss) on cash flow hedging derivatives, net 1,144 – 1,144 30,123 332 – 30,455 (540) 29,915 1,485 5,910 7,395 2,819 (1,913) 906 157,544 4,594 162,138 (1,226) 1,272 (12) (1,639) (379) (1,605) 2011 1,144 – 1,144 29,188 2,895 (1,960) 30,123 (540) 29,583 218 1,267 1,485 3,791 (3,507) 284 152,712 4,832 157,544 (4,954) 4,041 222 (535) 3,728 (1,226) Surplus from statement of profit and loss Balance brought forward from previous year Add: Profit for the year Less: Appropriations – Interim dividend – Proposed dividend – Tax on dividend – Amount transferred to general reserve Closing balance 31,150 56,045 4,917 9,835 2,393 4,685 65,365 265,258 – 52,924 4,908 9,818 2,204 4,844 31,150 219,964 * Restricted stock units reserve includes Deferred Employee Compensation, which represents future charge to the statement of profit and loss and employee stock options outstanding to be treated as securities premium at the time of allotment of shares. Wipro Limited 167 Consolidated Financial Statements (a) Additions to General Reserve include: For the year ended March 31, 2011 2012 4,685 4,844 – (64) (186) (54) (6) 19 142 74 (41) 13 4,594 4,832 Transfer from statement of profit and loss Adjustment on account of merger Additional purchase consideration (Additional dividend paid) / Excess provision reversed for the previous year Dividend paid to Wipro Equity Reward Trust and Wipro Inc Benefit Trust Others 5. Share application money pending allotment a) Number of shares proposed to be issued for share application money pending allotment outstanding as of March 31, 2012 and 2011 is 150,824 and 211,605 respectively representing the shares to be issued under employee stock option plan formulated by the Company. Securities premium on account of shares pending allotment amounts to ` 39 and ` 55 as of March 31, 2012 and 2011, respectively. The shares pending allotment as of the year-end is expected to be allotted upon the completion of the vesting period based on the grant to which it pertains to. The Company has sufficient authorized equity share capital to cover the share capital on allotment of shares pending allotment as of March 31, 2012 and 2011. There are no interest accrued and due on amount due for refund as of March 31, 2012 and 2011. No shares are pending for allotment beyond the period for allotment as of March 31, 2012 and 2011. b) 6. c) d) e) Long term borrowings As of March 31, 2012 2011 49 431 480 Secured: Term loan from bank (a) Obligation under finance lease (b) Unsecured: Term loan: External commercial borrowing (c) Interest free loan from State Government (d) Others (e) 44 454 498 21,728 37 247 22,012 22,510 18,861 37 381 19,279 19,759 (a)  erm loan from bank are repayable in four equal installments of ` 11 starting from financial year 2013-14. Term loan carries an T interest of 6.5%. Term loan from bank is secured by hypothecation of stock-in-trade, book debts, immovable/movable properties and other assets of a subsidiary.  bligation under finance lease is secured by underlying fixed assets. These obligations are repayable in monthly installments O within the year ending March 31, 2017. The interest rates for these finance lease obligations ranges from 2.5% to 15.6%.  he Company entered into an arrangement with a consortium of banks to obtain External Commercial Borrowings (ECB) during the T year ended March 31, 2008. Pursuant to this arrangement, the Company has availed ECB of approximately 35 billion Yen repayable in full in April 2013. The ECB carries an average interest rate of 1.86% p.a. The ECB is an unsecured borrowing and the Company is subject to certain customary restrictions on additional borrowings and quantum of payments for acquisitions in a financial year. Interest free loan from State Government is repayable in five equal annual installments of ` 7 starting from financial year 2013-14.  nsecured loans from others are repayable in monthly installments within the year ending March 31, 2015. The interest rate for U these loans ranges from 6.03% to 7.21%. (b) (c) (d) (e) As of March 31, 2012 and 2011, the Company has complied with the covenants under the loan arrangements. Annual Report 2011-12 168 Consolidated Financial Statements 7. Other long term liabilities As of March 31, 2012 307 96 375 778 2011 2,586 73 – 2,659 Others Derivative liabilities Deposits and other advances received Others 8. Employee benefit obligations Warranty provision [Refer note 37] 9. Short term borrowings Long term provisions As of March 31, 2012 3,046 61 3,107 2011 2,633 81 2,714 As of March 31, 2012 Secured: Cash credit (a) Unsecured: Loan repayable on demand from banks (b) (a) 2011 1,325 29,841 31,166 1,727 33,753 35,480  ash credit is secured by hypothecation of stock-in-trade, book debts, immovable/movable properties and other assets of two C subsidiaries. The interest rate for these loans ranges from 1.53% to 6.4%.  he interest rate for loan repayable on demand from banks ranges from 1.0% to 6.4% other than PCFC loan disbursed in Indian T Rupees, interest rate for which is 9.50%. (b) 10. Trade payables Trade payables Accrued expenses 11. Other current liabilities Current maturities of long term borrowings Current maturities of obligation under finance lease Unearned revenue Statutory liabilities Derivative liabilities Advances from customers Unclaimed dividends Interest accrued but not due on borrowings Others As of March 31, 2012 706 262 9,569 4,689 6,780 1,153 22 102 22 23,305 2011 1,673 203 6,595 4,046 1,814 1,025 20 31 762 16,169 As of March 31, 2012 28,805 18,931 47,736 2011 22,201 19,846 42,047 Wipro Limited 169 Consolidated Financial Statements 12. Short term provisions Employee benefit obligations Provision for tax Proposed dividend Tax on proposed dividend Warranty provision [Refer note 37] Others [Refer note 37] 13. Tangible assets Land (a) Buildings Plant and machinery Furniture and fixtures Office equipment Vehicles Total As of March 31, 2012 3,176 12,700 9,776 1,595 306 815 28,368 2011 2,028 12,361 9,818 1,593 467 1,858 28,125 Gross carrying value: As of April 1, 2010 Translation adjustment (b) Additions (c) Disposal / adjustments As of March 31, 2011 As of April 01, 2011 Translation adjustment (b) Additions (c) Additions due to acquisitions Disposal / adjustments As of March 31, 2012 Depreciation As of April 1, 2010 Translation adjustment (b) Charge for the year Disposal / adjustments As of March 31, 2011 As of April 01, 2011 Translation adjustment (b) Charge for the year Disposal / adjustments As of March 31, 2012 Net Block As of March 31, 2011 As of March 31, 2012 (a) (b) (c) 4,110 19 1,053 – 5,182 5,182 61 574 6 (44) 5,779 115 1 42 – 158 158 12 71 (55) 186 5,024 5,593 19,214 117 3,533 (41) 22,823 22,823 389 2,113 15 (159) 25,181 2,015 50 489 (39) 2,515 2,515 136 646 (28) 3,269 20,308 21,912 47,006 337 8,360 (1,145) 54,558 54,558 1,951 10,073 279 (960) 65,901 31,437 230 5,493 (1,077) 36,083 36,083 1,217 6,531 (622) 43,209 18,475 22,692 6,753 33 1,315 (521) 7,580 7,580 136 1,261 32 (467) 8,542 3,787 10 903 (316) 4,384 4,384 70 1,495 (343) 5,606 3,196 2,936 3,108 35 377 (70) 3,450 3,450 93 468 19 (56) 3,974 1,756 35 350 (59) 2,082 2,082 63 568 (38) 2,675 1,368 1,299 2,941 11 117 (458) 2,611 2,611 26 69 9 (621) 2,094 2,019 13 455 (354) 2,133 2,133 21 281 (536) 1,899 478 195 83,132 552 14,755 (2,235) 96,204 96,204 2,656 14,558 360 (2,307) 111,471 41,129 339 7,732 (1,845) 47,355 47,355 1,519 9,592 (1,622) 56,844 48,849 54,627 Includes Gross block of ` 1,586 (2011 : ` 1,426) and Accumulated amortisation of ` 186 (2011 : ` 158) being leasehold land. Represents translation of tangible assets of non-integral operations into Indian Rupee. Interest capitalised aggregated to ` 43 and ` 137 for the year ended March 31, 2012 and 2011 respectively. Annual Report 2011-12 170 Consolidated Financial Statements 14. Intangible assets Brands, patents, Technical trademarks and Know-how rights Gross carrying value: As of April 1, 2010 Translation adjustment (a) Additions Disposal / adjustments As of March 31, 2011 As of April 1, 2011 Translation adjustment (a) Additions Disposal / adjustments As of March 31, 2012 Amortisation As of April 1, 2010 Translation adjustment (a) Charge for the year Disposal / adjustments As of March 31, 2011 As of April 01, 2011 Translation adjustment (a) Amortisation Disposal / adjustments As of March 31, 2012 Net Block As of March 31, 2011 As of March 31, 2012 (a) Total 3,121 (90) 92 (3) 3,120 3,120 125 103 (7) 3,341 1,185 (43) 159 50 1,351 1,351 69 162 (8) 1,574 1,769 1,767 377 19 91 (3) 484 484 32 73 (7) 582 355 18 20 50 443 443 30 22 (8) 487 41 95 2,744 (109) 1 – 2,636 2,636 93 30 – 2,759 830 (61) 139 – 908 908 39 140 – 1,087 1,728 1,672 Represents translation of intangible assets of non-integral operations into Indian Rupee. (Valued at cost unless stated otherwise) 15. Non-current investments Investment in unquoted equity instruments (Associate) – Wipro GE Healthcare Private Limited (a) [Refer note 30] (a) As of March 31, 2012 3,232 3,232 2011 2,993 2,993 Investments in this Company carry certain restrictions on transfer of shares as provided for in the shareholders’ agreements. 16. Long term loans and advances (Unsecured, considered good unless otherwise stated) Capital advances Prepaid expenses Security deposits Advance income tax Other deposits Other advances As of March 31, 2012 1,998 3,068 1,372 15,922 533 – 22,893 2011 2,212 2,423 1,409 14,156 271 39 20,510 Wipro Limited 171 Consolidated Financial Statements 17. Other non-current assets Secured, considered good: Finance lease receivables Unsecured, considered good: Derivative assets Finance lease receivables are secured by the underlying assets given on lease. 18. Current investments Quoted Investments in Indian money market mutual funds * [Refer note 44(i)] Investment in debentures [Refer note 44(ii)] Unquoted Certificate of deposits/bonds [Refer note 44(iii)] Investment in equity instruments [Refer note 44(iv)] Others Aggregate market value of quoted investments As of March 31, 2012 20,760 129 20,889 20,497 69 28 20,594 41,483 20,914 2011 25,200 722 25,922 23,394 69 28 23,491 49,413 25,968 As of March 31, 2012 5,710 3,458 9,168 2011 4,839 2,984 7,823 * include investments in mutual funds amounting to ` 400 (2011: Nil) pledged as margin money deposit for entering into currency future contracts. 19. Inventories Raw materials Stock in process Finished goods Traded goods Stores and spares 20. Trade Receivables Unsecured Over six months from the date they were due for payment Considered good Considered doubtful Less: Provision for doubtful receivables Other receivables Considered good Considered doubtful Less: Provision for doubtful receivables As of March 31, 2012 2011 As of March 31, 2012 4,144 1,410 1,873 1,964 1,271 10,662 2011 3,217 1,109 875 3,381 1,125 9,707 7,608 2,678 10,286 (2,678) 7,608 72,779 176 72,955 (176) 72,779 80,387 3,487 2,489 5,976 (2,489) 3,487 58,286 105 58,391 (105) 58,286 61,773 Annual Report 2011-12 172 Consolidated Financial Statements 21. Cash and bank balances Cash and cash equivalents Balances with Banks [Refer note 45] – In current accounts – Unclaimed dividend – In deposit accounts Cheques, drafts on hand Cash in hand Deposit accounts with more than 3 months but less than 12 months maturity Deposit accounts with more than 12 months maturity a) b) As of March 31, 2012 2011 39,481 22 36,525 1,632 6 77,666 24,590 900 26,654 20 33,514 949 4 61,141 20,004 1,283 Cash and cash equivalents include restricted cash balance of ` 22 and ` 20, primarily on account of unclaimed dividends, as of March 31, 2012 and 2011, respectively. The deposits with banks comprise time deposits, which can be withdrawn at any time without prior notice and without any penalty on the principal. 22. Short term loans and advances (Unsecured, considered good unless otherwise stated) Employee travel and other advances Advance to suppliers Balance with excise and customs Inter corporate deposits Prepaid expenses Security deposits Other deposits MAT credit entitlement Others Considered doubtful Less: Provision for doubtful loans and advances 23. Other current assets Secured, considered good: Finance lease receivables Unsecured, considered good: Derivative assets Interest receivable Unbilled revenue As of March 31, 2012 2,003 2,003 1,879 1,659 30,025 33,563 35,566 2011 2,411 2,411 2,124 929 24,149 27,202 29,613 As of March 31, 2012 2,127 1,120 1,543 8,410 4,585 608 253 1,223 3,394 844 24,107 (844) 23,263 2011 1,500 760 1,570 4,240 3,431 325 278 488 2,679 568 15,839 (568) 15,271 Finance lease receivables are secured by the underlying assets given on lease. Wipro Limited 173 Consolidated Financial Statements 24. Other income Income from current investments – Dividend on mutual fund units – Profit on sale of investments, net Interest on debt instruments and others Other exchange differences, net Miscellaneous income 25. Employee benefits expense Salaries and wages Contribution to provident and other funds Share based compensation Staff welfare expenses 26. Finance costs Interest Exchange fluctuations on foreign currency borrowings, net 27. Other expenses Subcontracting / technical fees / third party application Travel Advertisement and sales promotion Repairs Communication Power and fuel Rent Stores and spares Insurance Rates and taxes Auditors’ remuneration Miscellaneous expenses Year ended March 31, 2012 2011 33,877 26,121 12,484 9,967 6,946 5,337 4,876 5,255 3,296 3,745 2,890 2,452 3,734 3,230 1,132 827 1,334 877 563 460 46 40 18,433 12,141 89,611 70,452 Year ended March 31, 2012 2011 1,025 776 2,414 1,156 3,439 1,932 Year ended March 31, 2012 2011 146,030 119,437 3,707 3,376 954 1,433 3,383 2,964 154,074 127,210 Year ended March 31, 2012 2011 2,211 190 6,497 3,278 509 12,685 2,402 152 4,064 445 646 7,709 Annual Report 2011-12 174 Consolidated Financial Statements 28. Adoption of AS 30 The Company has applied the principles of AS 30, as per announcement by ICAI except to the extent such principles of AS 30 does not conflict with existing accounting standards prescribed by Companies (Accounting Standards) Rules, 2006. i) As permitted by AS 30, the Company has designated a yen-denominated foreign currency borrowing amounting to JPY 16.5 billion (2011: JPY 16.5 billion) along with a floating for floating Cross-Currency Interest Rate Swap (CCIRS), as a hedging instrument to hedge its net investment in a non-integral foreign operation. In addition, the Company has also designated yendenominated foreign currency borrowing amounting to JPY 8 billion (2011: JPY 8 billion) along with floating for fixed CCIRS as cash flow hedge of the yen-denominated borrowing and also as a hedge of net investment in non-integral foreign operation. Accordingly, the translation gain/(loss) on the foreign currency borrowings and portion of the changes in fair value of CCIRS which are determined to be effective hedge of net investment in nonintegral operation and cash flow hedge of yendenominated borrowings aggregating to ` (1,633) for the year ended March 31, 2012 (2011: ` 447) was recognised in translation reserve / hedging reserve in shareholders’ funds. The amount of gain/(loss) of ` (1,627) for the year ended March 31, 2012 (2011: ` 142) recognised in translation reserve would be transferred to profit and loss account upon sale or disposal of the non-integral foreign operation and the amount of gain / (loss) of ` (6) for year ended March 31, 2012 (2011: ` 305) recognised in the hedging reserve would be transferred to the statement of profit and loss occurrence of the hedged transaction. In accordance with AS 11, if the Company had continued to recognize translation (losses) /gains on foreign currency borrowing in the statement of profit and loss, the foreign currency borrowing would not have been eligible to be combined with CCIRS for hedge accounting. Consequently, the CCIRS also would not have qualified for hedge accounting and changes in fair value of CCIRS would have to be recognised in the statement of profit and loss. As a result profit after tax would have been lower by ` 1,633 for the year ended March 31, 2012 (2011: higher by ` 447). in non-integral foreign operations. The Company has recognized loss of ` 1,153 for the year ended March 31, 2012 (2011: ` 122) relating to the derivative financial instruments in translation reserve in the shareholders’ funds. The following table presents the aggregate contracted principal amounts of the Company’s derivative contracts outstanding as of: (In Million) As of March 31, 2012 2011 Designated cash flow hedging derivative instruments Sell ii) $ 1,081 £ 4 ¥ 1,474 AUD – CHF € $ 901 £ 21 ¥ 3,026 AUD 4 6 2 – CHF 17 € Net investment hedges in foreign operations Cross currency swaps  Others Non designated derivative instruments Sell ¥ $ € 24,511 ¥   24,511 262 $ 262 40 € 40   $ 526 £ 40 € 48 AUD 13 $ 617 ¥ – ¥ 7,000 iii) Buy Cross currency swaps 30. Investment in associates $ 841 £ 58 € 44 AUD 31 $ 555 ¥ 1,997 ¥ 7,000 Wipro GE Medical Systems (Wipro GE) The Company has a 49% equity interest in Wipro GE Healthcare Private Limited (Wipro GE), an entity in which General Electric, USA holds the majority equity interest. The shareholders agreement provides specific rights to the two shareholders. Management believes that these specific rights do not confer joint control as defined in Accounting Standard 27 “Financial Reporting of Interests in Joint Ventures”. Consequently, Wipro GE is not considered as a joint venture and consolidation of financial statements is carried out as per the equity method in terms of Accounting Standard 23 “Accounting for Investments in Associates in Consolidated financial statements”. Wipro GE had received tax demands aggregating to ` 2,615 (including interest) arising primarily on account of transfer pricing adjustments, denial of export benefits and tax 29. Derivatives As of March 31, 2012, the Company has recognised losses of ` 1,605 (2011: ` 1,226) relating to derivative financial instruments (comprising of foreign currency forward contract, option contracts and floating to fixed CCIRS) that are designated as effective cash flow hedges in the shareholders’ funds. In addition to the derivative instruments discussed above in Note 28, the Company has also designated certain foreign currency forward contracts to hedge its net investment Wipro Limited 175 Consolidated Financial Statements holiday benefits claimed by Wipro GE under the Income Tax Act, 1961 (the “Act”) for the year ended March 31, 2001 to March 31, 2007. The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by first appellate authority for the years upto March 2004 and further appeals have been filed by the Income tax authorities before the second appellate authority. The first appellate authority has granted partial relief for the year ended March 31, 2005 and further appeal would be preferred by the Company before the second appellate authority.  The Company filed appeal before the second appellate authority for the year ended March 31, 2006 after receiving the assessment orders following the directions of the Dispute Resolution Panel. The second appellate authority passed an order directing assessing officer (AO) to give fair opportunity of hearing to the Company, the case is pending with AO. For the year ended March 31, 2007, the appeal filed against the demand is pending before the first appellate authority. Considering the facts and nature of disallowance and the order of the appellate authority upholding the claims of Wipro GE, Wipro GE believes that the final outcome of the disputes should be in favour of Wipro GE and will not have any material adverse effect on its financial position and results of operations. Others During the year ended March 31, 2012, the Company entered into an agreement to purchase 26% of the equity investments in Wipro Kawasaki Precision Machinery Pvt. Ltd. for a cash consideration of ` 130. This investment is accounted as an equity method investment under Accounting Standard 23, “Accounting for Investments in Associates in Consolidated Financial Statements”. From time to time, in the normal course of business, the Company transfers accounts receivables and net investment in finance lease receivables (financials assets) to banks. Under the terms of the arrangements, the Company surrenders control over the financial assets and transfer is without recourse. Accordingly, such transfers are recorded as sale of financial assets. Gains and losses on sale of financial assets without recourse are recorded at the time of sale based on the carrying value of the financial assets and fair value of servicing liability. In certain cases, transfer of financial assets may be with recourse. Under arrangements with recourse, the Company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with the banks. The Company has transferred trade receivables with recourse obligation and accordingly, in such cases the amounts received are recorded as borrowings in the balance sheet and cash flows from financing activities. As of March 31, 2012 and 2011, the maximum amounts of recourse obligation in respect of the transferred financial assets (recorded as borrowings) are ` 1,163 and ` 1,085 respectively. 32. Finance lease receivables The Company provides lease financing for the traded and manufactured products primarily through finance leases. The finance lease portfolio contains only the normal collection risk with no important uncertainties with respect to future costs. These receivables are generally due in monthly, quarterly or semi-annual installments over periods ranging from 3 to 5 years. The components of finance lease receivables are as follows: As of March 31, 2012 2011 8,999 8,851 2,043 6,776 180 (1,286) 7,713 2,523 6,129 199 (1,601) 7,250 Gross investment in lease Not later than one year Later than one year and not later than five years Unguaranteed residual values Unearned finance income Net investment in finance receivables Present value of minimum lease receivables are as follows: As of March 31, 2012 2011 Present value of minimum lease payments receivables Not later than one year Later than one year and not later than five years Unguaranteed residual value 33. Assets taken on lease Finance leases: The following is a schedule of present value of minimum lease payments under finance leases, together with the value of the future minimum lease payments as of March 31, 2012 and 2011. As of March 31, 2012 2011 Present value of minimum lease payments Not later than one year Later than one year and not later than five years Thereafter Total present value of minimum lease payments Add: Amount representing interest Total value of minimum lease payments 262 454 – 716 49 765 7,713 1,964 5,588 161 7,250 2,350 4,723 177 31. Sale of financial assets 203 372 60 635 66 701 Annual Report 2011-12 176 Consolidated Financial Statements Operating leases: The Company leases office and residential facilities under cancelable and non-cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. Rental payments under such leases are ` 3,734 and ` 3,230 during the years ended March 31, 2012 and 2011 respectively. Details of contractual payments under non-cancelable leases are given below: As of March 31, 2012 2011 3,301 1,828 7,842 3,696 14,839 5,143 3,294 10,265 Change in plan assets Fair value of plan assets at the beginning of the year Acquisitions Expected return on plan assets Employer contribution Benefits paid Actuarial (loss) / gain Fair value of the plan assets at the end of the year Recognised asset / (liability) As of March 31, 2012 2011 2,387 1 184 586 (344) 52 2,866 21 1,967 – 164 473 (230) 13 2,387 (89) Not later than one year Later than one year and not later than five years Thereafter 34. Employee benefit plans The Company has invested the plan assets with the insurer managed funds. The expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. Expected contribution to the fund during the year ending March 31, 2013 is ` 341. Net gratuity cost for the year ended March 31, 2012 and 2011 are as follows: For the year ended March 31, 2012 2011 435 386 (16) 254 211 161 (184) (164) 14 (168) 460 469 Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) covering certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India (LIC), HDFC Standard Life, TATA AIG and Birla Sunlife (‘Insurer’). Under this plan, the settlement obligation remains with the Company, although the Insurer administers the plan and determines the contribution premium required to be paid by the Company. Change in the benefit obligation Projected Benefit Obligation (PBO) at the beginning of the year Acquisitions Current service cost Past service cost Interest on obligation Benefits paid Actuarial loss / (gain) PBO at the end of the year As of March 31, 2012 2011 2,476 25 435 (16) 211 (352) 66 2,845 2,060 – 386 254 161 (230) (155) 2,476 Current service cost Past service cost Interest on obligation Expected return on plan assets Actuarial loss / (gain) recognized Net gratuity cost The weighted average actuarial assumptions used to determine benefit obligations and net periodic gratuity cost are: Assumptions Discount rate Expected rate of salary increase Expected return on plan assets As of March 31, 2012 2011 8.35% 7.95% 5% 5% 8% 8% Wipro Limited 177 Consolidated Financial Statements As of March 31, 2012, 2011, 2010 and 2009, 100% of the plan assets were invested in the insurer managed funds. As of March 31, 2012 2011 2010 Experience Adjustments: On Plan Liabilities On Plan Assets Present value of benefit obligation Fair value of plan assets Excess of (obligations over plan assets)/plan assets over obligations (147) 52 2,845 2,866 (32) 15 2,476 2,387 84 18 2,060 1,967 2009 (53) 26 1,858 1,416 The details of fund and plan assets are given below: Change in the benefit obligation Fair value of plan assets Present value of defined benefit obligation Excess of (obligations over plan assets) / plan assets over obligations As of March 31, 2012 2011 17,932 15,309 17,668 15,412 264 (103) 21 The principal assumptions used in determining the present value obligation of interest guarantee under the deterministic approach are as follows: Assumptions Discount rate Average remaining tenure of investment portfolio Guaranteed rate of return As of March 31, 2012 8.35% 6 years 8.25% 2011 7.95% 7 years 9.5% (89) (93) (442) The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards. The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Superannuation: Apart from being covered under the gratuity plan, the employees of the Company also participate in a defined contribution plan maintained by the Company. This plan is administered by the LIC & ICICI. The Company makes annual contributions based on a specified percentage of each covered employee’s salary. For the year ended March 31, 2012, the Company contributed ` 493 to superannuation fund (2011: ` 631). Provident Fund (PF): In addition to the above, all employees receive benefits from a provident fund. The employee and employer each make monthly contributions to the plan equal to 12% of the covered employee’s salary. A portion of the contribution is made to the provident fund trust established by the Company, while the remainder of the contribution is made to the Government’s provident fund. The interest rate payable by the trust to the beneficiaries is regulated by the statutory authorities. The Company has an obligation to make good the shortfall, if any, between the returns from its investments and the administered rate. Upto year ended March 31, 2011, in the absence of guidance from the Actuarial Society of India, actuarial valuation could not have been applied to reliably measure the provident fund liabilities. During the year ended March 31, 2012, the Actuarial Society of India issued the final guidance for measurement of provident fund liabilities. Accordingly, based on such actuarial valuation there is no shortfall in the fund as of March 31, 2012. For the year ended March 31, 2012, the Company contributed ` 2,236 to PF (2011: ` 2,276). As of March 31, 2012, provision for leave encashment of ` 3,289 has been presented under Provisions – Employee retirement benefits. The liability as of March 31, 2011 of ` 2,028 that was previously included under Sundry Creditors in the financial statements for year ended March 31, 2011 prepared under the pre-revised Schedule VI of the Companies Act, 1956, has now been accordingly reclassified under provisions. Provision for leave encashment is a deferred deduction under the tax laws which can be claimed only on actual payment. Accordingly, the consequent impact on current and deferred tax has been given effect. i) Employees covered under Stock Option Plans and Restricted Stock Unit (RSU) Option Plans (collectively “stock option plans”) are granted an option to purchase shares of the Company at the respective exercise prices, subject to requirements of vesting conditions. These options generally vest in tranches over a period of five years from the date of grant. Upon vesting, the employees can acquire one equity share for every option. The maximum contractual term for aforementioned stock option plans is generally 10 years. The stock compensation cost is computed under the intrinsic value method and amortised on a straight line basis over the total vesting period of five years. The intrinsic value on the date of grant approximates the fair value. For the year ended March 31, 2012, the Company has recorded stock compensation expense of ` 954 (2011: ` 1,433). 35. Employee stock option ii) Annual Report 2011-12 178 Consolidated Financial Statements iii) The compensation committee of the board evaluates the performance and other criteria of employees and approves the grant of options. These options vest with employees over a specified period subject to fulfillment of certain conditions. Upon vesting, employees are eligible to apply and secure allotment of Company’s shares at a price determined on the date of grant of options. The particulars of options granted under various plans are tabulated below. (The numbers of shares in the table below are adjusted for any stock splits and bonus shares issues). Wipro Employee Stock Option Plans and Restricted Stock Unit Option Plans A summary of the general terms of grants under stock option plans and restricted stock unit option plans are as follows: Name of Plan Wipro Employee Stock Option Plan 1999 (1999 Plan) Wipro Employee Stock Option Plan 2000 (2000 Plan) Stock Option Plan (2000 ADS Plan) Wipro Restricted Stock Unit Plan (WRSUP 2004 plan) Wipro ADS Restricted Stock Unit Plan (WARSUP 2004 plan) Wipro Employee Restricted Stock Unit Plan 2005 (WSRUP 2005 plan) Wipro Employee Restricted Stock Unit Plan 2007 (WSRUP 2007 plan) Authorized Shares (1) 50,000,000 250,000,000 15,000,000 20,000,000 20,000,000 20,000,000 16,666,667 Range of Exercise Prices ` 171 – 490 ` 171 – 490 US$ 3–7 ` 2 US$ 0.04 ` 2 ` 2 (1) adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. The activity in these stock option plans is summarized below: As of March 31, 2012 2011 Number Weighted Number Weighted Average Average Exercise Exercise Price Prices – ` – 200,000 ` 293.40 – US$ – 2,677 US$ 2.82 15,382,761 ` 2 17,103,172 ` 2 3,223,892 US$ 0.04 2,943,035 US$ 0.04 30,000 ` 480.20 – ` – – US$ – – US$ – 40,000 ` 2 5,227,870 ` 2 – US$ – 1,437,060 US$ 0.04 – ` – (80,000) ` 293.40 – US$ – – US$ – (3,708,736) ` 2 (5,482,210) ` 2 (638,347) US$ 0.04 (870,622) US$ 0.04 – ` – (120,000) ` 293.40 – US$ – (2,677) US$ 2.82 (1,106,987) ` 2 (1,466,071) ` 2 (411,853) US$ 0.04 (285,581) US$ 0.04 30,000 ` 480.20 – ` – – US$ – – US$ – 10,607,038 ` 2 15,382,761 ` 2 2,173,692 US$ 0.04 3,223,892 US$ 0.04 – ` – – ` – – US$ – – US$ – 5,370,221 ` 2 7,533,984 ` 2 578,400 US$ 0.04 1,147,391 US$ 0.04 Outstanding at the beginning of the period (1) Granted Exercised Forfeited and lapsed Outstanding at the end of the period Exercisable at the end of the period Range of Exercise Prices ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 ` 480 – 489 US$ 4 – 6 ` 2 US$ 0.04 (1)  he opening balance as of April 1, 2010 have been adjusted for the two equity shares for every three equity shares stock dividend T approved by the shareholders on June 4, 2010. Wipro Limited 179 Consolidated Financial Statements The following table summarizes information about outstanding stock options: Numbers Range of Exercise price ` 480 – 489 30,000 US$ 4 – 6 – `2 10,607,038 US$ 0.04 2,173,692 2012 Weighted Average Remaining Life (Months) 48 – 30 37 Numbers 2011 Weighted Average Remaining Life (Months) – – 35 48 Weighted Average Exercise Price ` 480.20 US$ – ` 2 US$ 0.04 – – 15,382,761 3,223,892 Weighted Average Exercise Price ` – US$ – ` 2 US$ 0.04 The weighted-average grant-date fair value of options granted during the year ended March 31, 2012 was ` 449.80 (2011: ` 417.65) for each option. The weighted average share price of options exercised during the year ended March 31, 2012 was ` 399.22 (2011: ` 424.28) for each option. The fair value of 30,000 options granted during the year ended March 31, 2012 (other than at nominal exercise price) has been estimated on the date of grant using the Black-Scholes-Merton option pricing model. The fair value of share options has been determined using the following assumptions: Expected term Risk free interest rates Volatility Dividend yield 5 years 8% 62.2% 1.28% Pursuant to the amendments in the Act, the Company has calculated its tax liability after considering the provisions of law relating to Minimum Alternate Tax (MAT). As per the Act, any excess of MAT paid over the normal tax payable can be carried forward and set off against the future tax liabilities. Accordingly an amount of ` 1,223 (2011: ` 488) is included under ‘Short term loans and advances’ in the balance sheet as of March 31, 2012. i) Current taxes are net of reversal of provisions recorded in earlier periods, which are no longer required, amounting to ` 845 for the year ended March 31, 2012 (2011: ` 590) and MAT credit of ` 1,061 for the year ended March 31, 2012 (2011: Nil). The components of the deferred tax, net are as follows:    As of March 31, 2012 2011 Deferred tax assets (DTA) Accrued expenses and liabilities Allowances for doubtful trade receivables Carry–forward business losses Deferred revenue Others Deferred tax liabilities (DTL) Tangible assets Amortisable goodwill Net DTA/(DTL) 930 789 324 813 29 2,885 (2,445) (275) (2,720) 165 520 716 90 – 171 1,497 (1,318) (141) (1,459) 38 ii) The movement in Restricted Stock Unit reserve is summarized below: For the year ended March 31, 2012 2011 284 1,723 (332) 954 906 (2,872) 1,433 284 Opening balance Less: Amount transferred to share premium Add: Amortisation Closing balance 36. Income tax The provision for taxation includes tax liability in India on the Company’s worldwide income. The tax has been computed on the worldwide income as reduced by the various deductions and exemptions provided by the Income tax act in India (Act) and the tax credit in India for the tax liabilities payable in foreign countries. Most of the Company’s operations are through units in Software Technology Parks (‘STPs’) and Special Economic Zones (SEZ’s). Income from STPs is not eligible for deduction from 1st April, 2011. Income from SEZ’s are eligible for 100% deduction for the first 5 years, 50% deduction for the next 5 years and 50% deduction for another 5 years subject to fulfilling certain conditions. The Net DTA / (DTL) of ` 165 (2011: ` 38) has the following breakdown: As of March 31, 2012 2011 440 179 (275) (141) 165 38 Deferred tax asset Deferred tax liabilities Net DTA/(DTL) Annual Report 2011-12 180 Consolidated Financial Statements 37. Provisions Provision for warranty represents cost associated with providing sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 to 2 years from the date of balance sheet. Other provisions primarily include provisions for tax related contingencies and litigations. The timing of cash outflows in respect of such provision cannot be reasonably determined. The activity in provision balance is summarized below: For the year ended March 31, 2012 March 31, 2011 Provision for Warranty Others- Provision for taxes Warranty Otherstaxes 38. Earnings per share The computation of equity shares used in calculating basic and diluted earnings per share is set out below: For the year ended March 31, 2012 2011 Weighted average equity shares outstanding 2,463,897,683 2,451,354,673 Share held by controlled trusts (14,841,271) (14,841,271) Weighted average equity shares for computing basic EPS 2,449,056,412 2,436,513,402 Dilutive impact of employee stock options 5,315,776 12,856,846 Weighted average equity shares for computing diluted EPS 2,454,372,188 2,449,370,248 Net income considered for computing EPS (` in Million) 56,045 52,924 Earnings per share and number of shares outstanding for the year ended March 31, 2011 have been adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. Provision at the beginning of the year Additions during the year, net Utilized/reversed during the year Provision at the end of the year Non-current portion Current portion 548 460 1,858 179 611 532 (595) 548 81 467 1,763 149 (54) 1,858 – 1,858 (641) (1,222) 367 61 306 815 – 815 39. Related party relationships and transactions The list of subsidiaries as of March 31, 2012 are provided in the table below. Direct Subsidiaries Wipro Inc. Wipro Gallagher Solutions Inc. Enthink Inc.* Infocrossing Inc. Wipro Energy IT Services India Private Limited (formerly SAIC India Private Limited) Wipro Japan KK Wipro Shanghai Limited Wipro Trademarks Holding Limited Cygnus Negri Investments Private Limited Wipro Travel Services Limited Wipro Consumer Care Limited Wipro Holdings (Mauritius) Limited Wipro Holdings UK Limited Step Subsidiaries Country of Incorporation USA USA USA USA India Japan China India India India India Mauritius U.K. Wipro Technologies UK Limited U.K. Wipro Holding Austria GmbH (A) Austria U.K. 3D Networks (UK) Limited U.K Wipro Europe Limited (A) (formerly SAIC Europe Limited) Wipro Limited 181 Consolidated Financial Statements Direct Subsidiaries Wipro Cyprus Private Limited Step Subsidiaries Wipro Technologies S.A DE C. V Wipro BPO Philippines Ltd. Inc. Wipro Holdings Hungary Korlátolt Felelősségű Társaság Wipro Technologies Argentina SA Wipro Information Technology Egypt SAE Wipro Arabia Limited * Wipro Poland Sp Zoo Wipro IT Services Poland Sp. z o. o Wipro Outsourcing Services UK Limited Wipro Technologies (South Africa) Proprietary Limited Wipro Information Technology Netherlands BV (formerly RetailBox BV) Country of Incorporation Cyprus Mexico Philippines Hungary Argentina Egypt Saudi Arabia Poland Poland U.K. South Africa Netherland Wipro Infrastructure Engineering AB Wipro Portugal S.A. (A) (Formerly Enabler Informatica SA) Wipro Technologies Limited, Russia Wipro Gulf LLC (formerly SAIC Gulf LLC) Wipro Technology Chile SPA Wipro Infrastructure Engineering  Oy. (A) Hydrauto Celka San ve Tic Portugal Russia Sultanate of Oman Chile Sweden Finland Wipro Technologies SRL Wipro Singapore Pte Limited Wipro Australia Pty Limited Wipro Networks Pte Limited (formerly 3D Networks Pte Limited) Planet PSG Pte Limited Wipro Chengdu Limited Wipro Chandrika Limited* Vignani Solutions Private Limited WMNETSERV Limited Wipro Technology Services Limited Wipro Airport IT Services Limited* Wipro Infrastructure Engineering Machinery (Changzhou) Co., Ltd. Wipro Yardley FZE Turkey Romania Singapore PT WT Indonesia Indonesia Wipro Unza Holdings Limited (A) Singapore Wipro Technocentre (Singapore) Singapore Pte Limited Wipro (Thailand) Co Limited Thailand Wipro Bahrain Limited WLL Bahrain Dubai Australia Singapore Singapore Malaysia China India India Cyprus U.K. USA India India China Wipro Technologies SDN BHD WMNETSERV (U.K.) Limited WMNETSERV INC * All the above direct subsidiaries are 100% held by the Company except that the Company holds 98% of the equity securities of Enthink Inc., 66.67% of the equity securities of Wipro Arabia Limited, 90% of the equity securities of Wipro Chandrika Limited and 74% of the equity securities of Wipro Airport IT Services Limited. Annual Report 2011-12 182 Consolidated Financial Statements (A)  tep Subsidiary details of Wipro Unza Holdings Limited, Wipro Holding Austria GmbH, Wipro Portugal S.A, Wipro Infrastructure S Engineering Oy and Wipro Europe Limited are as follows: Step Subsidiaries   Wipro Unza Vietnam Co., Limited     Wipro Unza (Guangdong) Consumer Products Ltd.               Unza Holdings Sdn Bhd Unza (Malaysia) Sdn Bhd   Wipro Manufacturing Services Sdn Bhd   Gervas Corporation Sdn Bhd   Formapac Sdn Bhd Wipro Technologies Austria GmbH New Logic Technologies SARL SAS Wipro France (formerly Enabler France SAS) Wipro Retail UK Limited (formerly Enabler UK Limited) Wipro do Brazil Technologia Ltda (formerly Enabler Brazil Ltda) Wipro Technologies Gmbh (formerly Enabler & Retail Consult GmbH) Wipro Infrastructure Engineering LLC Wipro UK Limited (formerly SAIC Limited) Wipro Europe (formerly Science Applications International, Europe SARL)                   Country of Incorporation Singapore Singapore Vietnam Hong Kong Hong Kong China Step Subsidiaries Wipro Unza Singapore Pte Limited Wipro Unza Indochina Pte Limited   Wipro Unza Cathay Limited Wipro Unza China Limited   PT Unza Vitalis Wipro Unza Thailand Limited Wipro Unza Overseas Limited Unzafrica Limited Wipro Unza Middle East Limited Unza International Limited Unza Nusantara Sdn Bhd                 Wipro Holding Austria GmbH Wipro Portugal S.A. Indonesia Thailand British Virgin Islands   Nigeria   British Virgin Islands   British Virgin Islands   Malaysia   Malaysia   Malaysia Wipro Unza (Malaysia) Sdn Bhd Malaysia   Malaysia Malaysia Shubido Pacific Sdn Bhd (a)   Malaysia Gervas (B) Sdn Bhd Malaysia   Malaysia Austria France France U.K. Brazil R.K.M Equipamentos Hidraulicos Ltda Brazil Germany Russia U.K. France Wipro Infrastructure Engineering  Oy Wipro Europe Limited (formerly SAIC Europe Limited) (a)  ll the above subsidiaries are 100% held by the Company except Shubido Pacific Sdn Bhd in which the Company holds 62.55% A of the equity securities. The list of controlled trusts is: Name of entity Nature Country of Incorporation Trust Wipro Equity Reward Trust India Wipro Inc Benefit Trust Trust USA Wipro Limited 183 Consolidated Financial Statements List of other related parties are as under: Name of other related parties Wipro GE Healthcare Private Limited Azim Premji Foundation Hasham Premji (partnership firm) Prazim Traders (partnership firm) Zash Traders (partnership firm) Regal Investment & Trading Company Private Limited Vidya Investment & Trading Company Private Limited Napean Trading & Investment Company Private Limited Azim Premji Trust Key management personnel Azim Premji Suresh C Senapaty T K Kurien Suresh Vaswani Girish S Paranjpe Relative of key management personnel Rishad Premji Nature Associate Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Chairman and Managing Director Chief Financial Officer & Director CEO, IT Business & Director 1 Jt CEO, IT Business & Director 2 Jt CEO, IT Business & Director 2 Relative of the director % of holding 49%     Country of Incorporation India             1 2 w.e.f February 01, 2011 Upto January 31, 2011 The Company has the following related party transactions: Transaction / Balances Associate 2012 56 20 – – – 98 – 16 – 2011 5 13 – – – – – 7 – Entities controlled by Directors 2012 2011 – – 12 – 11,102 10,362 7,330 7,401 – – – – 3 – 1 7,330 – 7,401 Key Management [email protected] 2012 2011 – – – – 573 536 382 384 87 275 – – – – – 384 – 385 Sale of services Sale of products Dividend paid Dividend payable Remuneration Royalty income Rent paid Balances as of the year end Receivables Payables @ Including relative of key management personnel. Annual Report 2011-12 184 Consolidated Financial Statements The following are the significant related party transactions during the year ended March 31, 2012 and 2011: Year ended March 31, 2012 Sale of products Azim Premji Foundation Dividend paid Hasham Traders Prazim Traders Zash Traders Azim Premji Trust Rent paid Hasham Premji Private Limited Dividend payable Hasham Traders Prazim Traders Zash Traders Azim Premji Trust Remuneration paid to key management personnel Azim Premji Suresh Senapaty T K Kurien Girish Paranjpe Suresh Vaswani 40. Capital commitments The estimated amount of contracts remaining to be executed on Capital account and not provided for, net of advances is ` 1,673 (2011: ` 2,071). 12 2011 – 3,263 3,250 3,242 1,278 3,045 3,033 3,026 426 at Bangalore for the years ended March 31, 2001 to March 31, 2008. The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by the second appellate authority for the years upto March 31, 2004 and further appeals have been filed by the Income tax authorities before the Honorable High Court. The first appellate authority has granted relief for the year ended March 31, 2005 and further appeal has been filed by the Income tax authorities before the Income-tax Appellate Tribunal. The Company is in appeal before the Income-tax Appellate Tribunal for the years ended March 31, 2006 and March 31, 2007 after receiving the assessment orders following the directions of the Dispute Resolution Panel. For the year ended March 31, 2008, the objection against the draft assessment order is pending before the Dispute Resolution Panel. Considering the facts and nature of disallowance and the order of the appellate authority upholding the claims of the Company for earlier years, the Company believes that the final outcome of the above disputes should be in favor of the Company and there should not be any material impact on the financial statements. The Company is subject to legal proceedings and claims which have arisen in the ordinary course of its business. The resolution of these legal proceedings is not likely to have a material and adverse effect on the results of operations or the financial position of the Company. In June 2011, the Company acquired the global oil and gas information technology practice of the Commercial Business Services Business Unit of Science Applications International Corporation Inc. along with 100% of the share capital in SAIC Europe Limited and SAIC India Private Limited. In July 2011, the Company also acquired 100% of the share capital of SAIC Gulf LLC (hereafter the acquisitions are collectively referred to as ‘oil and gas business of SAIC’). The oil and gas business of SAIC provides consulting, system integration and outsourcing services to global oil majors with significant domain capabilities in the areas of digital oil field, petro-technical data management and petroleum application services, addressing the upstream segment. The Company believes that the acquisition will further strengthen Wipro’s presence in the Energy, Natural Resources and Utilities domain. The goodwill of ` 6,004 comprises of value of expected synergies arising from the acquisition. The purchase consideration of ` 7,536 was settled in cash. a) The Company is currently organized by business segments, comprising IT Services, IT Products, Consumer Care and Lighting and Others. Business segments have been determined based on system of internal financial reporting to the board of directors 3 – 2,175 2,167 2,162 781 2,175 2,167 2,162 852 19 18 45 – – 28 43 8 89 102 42. Acquisitions 41. Contingent liabilities As of March 31, 2012 2011 a) Disputed demands for excise duty, custom duty, income tax, sales tax and other matters b) Per formance and financial guarantee given by the banks on behalf of the Company Tax Demands: The Company had received tax demands aggregating to ` 40,040 (including interest of ` 10,616) arising primarily on account of denial of deduction under Section 10A of the Income Tax Act, 1961 in respect of profit earned by the Company’s undertaking in Software Technology Park 2,374 1,472 23,240 19,841 43. Segment reporting Wipro Limited 185 Consolidated Financial Statements and chief executive officer and are considered to be primary segments. The secondary segment is identified based on the geographic location of the customer. b) IT Services: The IT Services segment provides IT and IT enabled services to customers. Key service offering includes software application development, application maintenance, research and development services for hardware and software design, data center outsourcing services and business process outsourcing services. IT Products: The IT Products segment sells a range of Wipro personal desktop computers, Wipro servers and Wipro notebooks. The Company is also a value added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to these items is reported as revenue from the sale of IT Products. d) Consumer care and lighting: The Consumer Care and Lighting segment manufactures, distributes and sells personal care products, baby care products, lighting products and hydrogenated cooking oils in the Indian and Asian markets. The Others’ segment consists of business segments that do not meet the requirements individually for a reportable segment as defined in AS 17 Segment Reporting and includes corporate and treasury. Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segment. Segment revenue resulting from business with other business segments are on the basis of market determined prices and common costs are apportioned on a reasonable basis. e) c) f ) The segment information for the year ended March 31, 2012 and 2011 is as follows: Year ended March 31, 2012 2011 Revenues IT Services IT Products Consumer care and lighting Others Eliminations Total Profit before interest and tax IT Services IT Products Consumer care and lighting Others Total Interest and other income, net Profit before tax Tax expense Profit before share in earnings of associate and minority interest Minority interest Share in earnings of associate Net profit 284,111 37,924 34,599 18,731 (209) 375,156 58,997 1,247 3,886 225 64,355 5,459 69,814 (13,845) 55,969 (257) 333 56,045 234,760 36,995 28,436 11,209 (570) 310,830 53,457 1,627 3,426 (849) 57,661 4,687 62,348 (9,695) 52,653 (344) 615 52,924 Notes to Segment report a) The segment report of Wipro Limited and its consolidated subsidiaries has been prepared in accordance with the AS 17 “Segment Reporting” issued pursuant to the Companies (Accounting Standard) Rules, 2006. Annual Report 2011-12 186 Consolidated Financial Statements b) Segment wise depreciation and amortisation is as follows: Year ended March 31, 2012 2011 8,697 6,994 41 65 513 483 503 349 9,754 7,891 IT Services IT Products Consumer Care & Lighting Others c) d) e) Segment PBIT includes ` 509 for the year ended March 31, 2012, (2011: ` 646) of certain operating other income / (loss) which is reflected in other income in the statement of profit and loss. For the purpose of segment reporting, the Company has included the impact of ‘Other exchange difference, net’ in ‘Revenues’. Segment assets and liabilities are as follows: As of March 31, 2012 Segment Segment Assets Liabilities 233,046 69,347 29,540 7,033 169,995 26,221 432,581 102,601 As of March 31, 2011 Segment Segment Assets Liabilities 193,384 56,307 26,312 5,505 148,645 28,167 368,341 89,979 IT Services and Products Consumer Care & Lighting Others f ) The Company has four geographic segments: India, USA, Europe and Rest of the World. Significant portion of the segment assets are in India. Revenue from geographical segments based on domicile of the customers is outlined below: Year ended March 31, 2012 2011 80,135 67,234 148,160 129,286 87,186 68,159 59,675 46,151 375,156 310,830 India United States of America Europe Rest of the world g) Segment-wise capital expenditure incurred during the year ended March 31, 2012 and 2011 is given below: Year ended March 31, 2012 2011 9,296 10,301 797 889 750 455 2,134 566 12,977 12,211 IT Services IT Products Consumer Care & Lighting Others h) i) For the purpose of reporting, business segments are considered as primary segment and geographic segments are considered as secondary segment. Management believes that it is currently not practicable to provide disclosure of geographical assets and liabilities, since the meaningful segregation of the available information is onerous. Wipro Limited 187 Consolidated Financial Statements 44. Details of current investments (i) Investments in Indian money market mutual funds as of March 31, 2012 As of March 31, 2012 4,502 3,204 1,898 1,662 1,374 1,288 1,240 985 935 789 744 700 656 483 300 20,760 As of March 31, 2012 129 129 As of March 31, 2012 3,879 2,516 2,040 1,892 1,130 910 907 902 722 681 584 498 461 453 453 400 274 250 249 237 228 227 227 149 128 50 50 20,497 Birla Mutual Fund IDFC Mutual Fund Reliance Mutual Fund ICICI Prudential Mutual Fund JP Morgan SBI Mutual Fund Kotak Mutual Fund Axis Mutual Fund HDFC Mutual Fund UTI Mutual Fund Franklin Templeton Mutual Fund Religare Mutual Fund DWS Mutual Fund Tata Mutual Fund DSP BlackRock Mutual Fund (ii) Investments in debentures as of March 31, 2012 Debentures in Citicorp Finance (India) Limited (iii) Investments in certificate of deposits / bond as of March 31, 2012 LIC Housing Finance Ltd. IDFC Ltd. Vijaya Bank Corporation Bank GIC Housing Finance Ltd. Canara Bank Syndicate Bank IL&FS Ltd. Axis Bank Indian Overseas Bank HDFC Ltd. EXIM Bank of India NABARD Punjab National Bank Allahabad Bank National Highway Authority of India Indian Bank L&T Finance Ltd. National Housing Bank IRFC Bank of India Andhra Bank Oriental Bank of Commerce Tube Investments ICICI Bank PGC of India Power Finance Corporation Annual Report 2011-12 188 Consolidated Financial Statements (iv) Investments in equity instruments as of March 31, 2012 Mycity Technology Limited WeP Peripherals Limited As of March 31, 2012 45 24 69 45. Cash and Bank Details of balances with banks as of March 31, 2012 are as follows: Bank Name Wells Fargo Bank HSBC Bank Canara Bank Axis Bank Corporation Bank Citi Bank Indian Overseas Bank Union Bank of India HDFC Bank Punjab National Bank State Bank of Travancore Standard Chartered Bank Oriental Bank of Commerce ICICI Bank Allahabad Bank Yes Bank ING Vysya South Indian Bank State Bank of India Karur Vysya Bank Federal Bank Malayan Bank Berhad Others including cash and cheques on hand Total In Current Account 22,189 5,881 1 49 – 3,653 2 2 2,560 – – 1,660 1 699 – 6 2 – 564 – – 106 3,766 41,141 In Deposit Account – 616 6,357 4,725 4,508 207 3,820 2,854 – 2,335 2,000 14 1,415 600 1,235 950 950 850 253 600 600 330 1,306 36,525 Total 22,189 6,497 6,358 4,774 4,508 3,860 3,822 2,856 2,560 2,335 2,000 1,674 1,416 1,299 1,235 956 952 850 817 600 600 436 5,072 77,666 46. Hitherto the applicability of revised Schedule VI from the current year, the Company has reclassified previous year figures to conform to this year’s classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of Balance Sheet. As per our report attached for B S R & Co. Chartered Accountants Firm Registration No: 101248W Natrajh Ramakrishna Partner Membership No. 032815 Bangalore June 13, 2012 For and on behalf of the Board of Directors Azim Premji B. C. Prabhakar Chairman Director Suresh C. Senapaty Chief Financial Officer & Director T. K. Kurien CEO, IT Business & Executive Director V. Ramachandran Company Secretary Wipro Limited 189 190 Information relating to Subsidiaries as of March 31, 2012 (` in Million) Name of the Subsidiary Proposed Exchange Total Reserves InvestmentsSales & Profit Provision Profit Dividend Reporting rate as on Share Total Liabilities % of & other than in Other before for after (incl. Assets [excl. (4) Holding Currency March 31, Capital Surplus subsidiaries Income taxation taxation taxation dividend 2012 & (5)] tax) Pursuant to the exemption by the Ministry of Company affairs, Government of India, the Company is presenting summary financial information about individual subsidiaries as of March 31, 2012. The detailed financial statements, directors’ report and auditors’ report of the individual subsidiaries are available for inspection at the registered office of the Company. Upon written request from a shareholder we will arrange to deliver copies of the financial statement, directors’ report and auditors’ report for the individual subsidiaries. Consolidated Financial Statements Annual Report 2011-12 (1) USD USD JPY INR INR INR USD USD USD INR INR RMB EUR EUR EUR EUR EUR EUR EUR EUR GBP USD USD GBP SGD SGD MYR EUR 67.89 67.89 81.50 50.87 50.87 81.50 40.47 40.47 16.62 67.89 67.89 67.89 540 3 573 2 1 9 7 807 42 88 67.89 9 67.89 (471) 67.89 1,845 (1,701) 1,153 24 67.89 1,927 (1,750) 190 8.08 9 (28) 506 1.00 1 2 5 2 525 13 1,009 495 4,326 448 2,424 (102) (60) 119 73 12 (6) 204 (6) (3) 208 1,262 5,703 1,271 126 994 75 36 4 1,247 68 19 1,046 274 3,276 800 184 875 14 4 236 32 22 750 1.00 1 (2) 1 50.87 132 (113) 139 120 50.87 4,737 (1,800) 4,129 1,192 3 50.87 4,747 (1,534) 3,217 4 1.00 1 58 286 228 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 1.00 1 35 36 100% 1.00 10 (240) 173 402 90% 49 (1,530) 653 903 (1,617) 1,587 82 1,682 736 3,072 1,129 201 2,239 (7) 633 11 28 2,150 62.04 10 (574) 181 745 100% 525 50.87 105 (131) 22 48 98% (3) 50.87 17,243 (10,657) 32,684 26,098 540 100% 6,232 (100) (3) (126) (32) 20 (1,531) (1,756) (1) 29 (1,620) 178 65 (60) 483 903 (208) 19 221 (8) (1) 69 10 5 106 (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) 32 7 218 5 215 (93) 2 1 16 (13) (132) (3) (126) (32) 13 (1,531) (1,756) (1) 29 (1,620) 178 65 (278) 478 688 (115) 19 221 (8) (1) 69 8 4 89 (14) 33,998 38,333 SR. No. 1 Wipro Inc. 2 Enthink Inc. 3 Wipro Japan KK 4 Wipro Chandrika Limited 5 Wipro Trademarks Holding Limited 6 Wipro Travel Services Limited 7 Wipro Holdings (Mauritius) Limited 8 Wipro Holdings UK Limited 9 Wipro Technologies UK Limited 10 Wipro Consumer Care Limited 11 Cygnus Negri Investments Private Limited 12 Wipro Shanghai Limited 13 Wipro Holding Austria GmbH 14 Wipro Technologies Austria GmbH (formerly New Logic Technologies GmbH) 15 New Logic Technologies SARL 16 Wipro Cyprus Private Limited 17 Wipro Information Technology Netherlands BV (formerly Retail Box BV) 18 Wipro Portugal S.A. ( Formerly Enabler Informatica S.A.) 19 Wipro Technologies Gmbh (formerly Enabler & Retail Consult Gmbh) 20 SAS Wipro France (formerly Enabler France SAS) 21 Wipro Retail UK Limited (formerly Enabler UK Limited) 22 WMNETSERV Limited 23 WMNETSERV (UK) Ltd 24 3D Networks (UK) Limited 25 Wipro Networks Pte Limited (formerly 3D Networks Pte Limited) 26 Planet PSG Pte Limited 27 Wipro Technologies SDN BHD 28 Wipro Infrastructure Engineering Oy Information relating to Subsidiaries as of March 31, 2012 (` in Million) SR. No. Name of the Subsidiary Proposed Total Exchange Reserves InvestmentsSales & Profit Provision Profit Dividend Reporting rate as on Share Total Liabilities % of & other than in Other before for after (incl. Currency March 31, Capital Assets [excl. (4) Holding Surplus subsidiaries Income taxation taxation taxation dividend 2012 & (5)] tax) (1) SEK USD SGD SGD SGD VND HKD HKD RMB IDR THB USD USD USD USD MYR MYR MYR MYR MYR MYR MYR BND MYR MXN SGD AUD SAR HUF SGD USD RUB USD 40.47 16.62 3.99 52.92 13.56 0.23 40.47 50.87 1.73 50.87 16.62 16.62 46 36 36 2 40.47 10,926 1 358 100 180 75 16.62 4 16.62 12 478 535 60 27 145 (153) 2,203 (197) 271 193 10 16.62 55 608 16.62 724 2,140 2,285 179 64 194 652 338 11,264 53 6,364 19,717 20,122 43 1,021 458 528 16.62 1,192 (475) 2,013 50.87 441 2,109 2,506 50.87 20 749 729 (43) 1,295 61 1,650 1,746 73 13 803 52 3,803 406 140 571 265 443 50.87 5 7 2 50.87 96 310 214 1.65 135 (103) 66 34 128 0.01 239 89 994 667 8.08 329 (167) 627 464 6.55 114 18 148 16 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - 62.55% 100% 100% 100% 100% 100% 100% - 66.67% 100% 100% 100% 100% 100% 6.55 56 72 409 280 100% 0.00 84 198 639 356 100% 1,973 609 1,631 1,592 53 344 1,033 668 1,004 7 6,323 3,257 304 518 543 945 12 6,536 699 66 1,003 122 674 40.47 86 695 1,282 501 100% 1,972 40.47 57 (43) 123 109 100% 386 (12) 159 162 26 2 39 (5) 14 (30) 637 (1,007) 14 433 175 48 22 (29) 945 (8) 849 696 (111) (2) 68 (91) 40.47 1,901 422 3,674 1,350 100% 113 (68) 50.87 5,744 14,381 8,638 100% 12,959 1,077 7.67 1,873 (1,408) 3,319 2,854 100% 4,012 (443) 66 71 4 13 36 71 166 (1) 108 35 12 10 58 (103) 100 (57) - (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (443) 1,077 (67) (12) 94 92 22 (11) 3 (5) 14 (30) 566 (1,173) 15 324 140 35 12 (87) 945 (8) 952 596 (111) 55 68 (91) (14) 225 - 29 Wipro Infrastructure Engineering AB 30 Infocrossing Inc. 31 Wipro Unza Holdings Limited 32 Wipro Unza Singapore Pte Limited 33 Wipro Unza Indochina Pte Limited 34 Wipro Unza Vietnam Co Limited 35 Wipro Unza Cathay Limited 36 Wipro Unza China Limited 37 Wipro Unza (Guangdong) Consumer Products LTD 38 PT Unza Vitalis 39 Wipro Unza Thailand Limited 40 Wipro Unza Overseas Limited 41 Unzafrica Limited 42 Wipro Unza Middle East Limited 43 Unza International Limited 44 Unza Nusantra Sdn Bhd 45 Unza Holdings Sdn Bhd 46 Unza (Malaysia) Sdn Bhd 47 Wipro Unza (Malaysia) Sdn Bhd 48 Wipro Manufacturing Services Sdn Bhd 49 Shubido Pacific Sdn Bhd 50 Gervas Corporation Sdn Bhd 51 Gervas (B) Sdn Bhd 52 Formapac Sdn Bhd 53 Wipro Technologies S.A DE C. V 54 Wipro Singapore Pte Limited 55 Wipro Australia Pty Limited 56 Wipro Arabia Limited 57 Wipro Holdings Hungary Korlátolt Felelősségű Társaság 58 Wipro Technocentre (Singapore) Pte Limited 59 Wipro BPO Philippines LTD. Inc 60 Wipro Technologies Limited, Russia Consolidated Financial Statements Wipro Limited 61 Wipro Gallagher Solutions Inc 191 192 Information relating to Subsidiaries as of March 31, 2012 (` in Million) Name of the Subsidiary Proposed Total Exchange Reserves InvestmentsSales & Profit Provision Profit Dividend Reporting rate as on Share Total Liabilities % of & other than in Other before for after (incl. Currency March 31, Capital Assets [excl. (4) Holding Surplus subsidiaries Income taxation taxation taxation dividend 2012 & (5)] tax) SR. No. Consolidated Financial Statements Annual Report 2011-12 (1) ARS PLN EGP THB INR RMB USD BHD INR IDR RMB INR ZAR RUB INR BRL RON BRL EUR GBP EUR OMR 134.92 67.89 81.50 51 10 17 67.89 7 27.91 654 (171) 593 662 61 (41) 15.49 169 261 27.91 190 72 508 977 1,308 600 1,510 99 34 1.00 9 366 559 1.73 (2) 19 22 184 245 547 825 797 27 58 6.63 26 29 3 1.00 1 (71) 97 167 8.08 442 5 586 139 0.01 11 (3) 9 1 1.00 50 16 642 576 11 74% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 134.92 6 50 93 37 100% 50.87 13 436 704 255 100% 8.08 24 (126) 182 284 100% 455 1,086 105 346 17 84 9 797 703 1,404 1,399 1,250 3,722 116 13 1.00 393 6,107 7,882 1,382 907 100% 3,690 1.65 154 271 591 166 100% 354 109 1,927 (11) 78 36 13 (3) (55) (44) (9) (5) 130 72 131 (446) 1,250 363 5 (40) 8.43 7 (71) 98 162 100% 37 (30) 16.33 1 81 148 66 100% 391 17 11.63 (137) 89 226 100% 34 (80) 3 595 2 (1) 43 28 21 19 (121) 2 (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (80) 13 (30) 109 1,332 (11) 78 36 11 (3) (55) (44) (9) (4) 87 45 110 (465) 1,250 484 3 (40) (14) - 62 Wipro Technologies Argentina SA 63 Wipro Poland Sp Zoo 64 Wipro Information Technology Egypt SAE 65 Wipro (Thailand) Co Limited 66 Wipro Technlogy Services Limited 67 Wipro Chengdu Limited 68 Wipro Yardley FZE 69 Wipro Bahrain Limited WLL 70 Wipro Airport IT Services Limited 71 PT WT Indonesia 72 Wipro Infrastructure Engineering Machinery (Changzhou) Co., Ltd. 73 Vignani Solutions Private Limited 74 Wipro Technologies (South Africa) Proprietary Limited 75 Wipro Infrastructure Engineering LLC 76 Wipro Energy IT Services India Private Limited (formerly SAIC India Private Limited) 77 RKM Equipamentos Hidraulicos Ltda (a) 78 Wipro Technologies SRL (a) 79 Wipro do Brasil Technologia Ltda (formerly Enabler Brasil LTDA) (a) 80 Wipro Europe Limited (formerly SAIC Europe Limited) (b) 81 Wipro UK Limited (formerly SAIC Limited) (b) 82 Wipro Europe (formerly Science Applications International, Europe SARL) (b) 83 Wipro Gulf LLC (formerly SAIC Gulf LLC) (b) 84 Hydrauto Celka San ve Tic (c) 85 WMNETSERV Inc (c) 86 Wipro IT Services Poland sp. z o.o (c) 87 Wipro Technology Chile SPA (c) 88 Wipro Outsourcing Services UK Limited (c) (a)    The financial results are as of and for the year ended December 31, 2011. (b)    The financial results are as of and for the year ended January 31, 2012. (c) Hydrauto Celka San ve Tic, WMNETSERV Inc, Wipro IT Services Poland sp. z o.o, Wipro Technology Chile SPA and Wipro Outsourcing Services UK Limited are yet to commence operations. (d) Wipro Technologies OY has been sold during the year and hence not included above. (e) cMango Pte Limited has been liquidated during the year and hence not included above. Consolidated Financial Statements Under IFRS CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION Report of Independent Registered Public Accounting Firm The Board of Directors and Equity holders Wipro Limited: We have audited the accompanying consolidated statements of financial position of Wipro Limited and subsidiaries (“the Company”) as of March 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the years in the three-year period ended March 31, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2012, in conformity with International Financial Reporting Standards as issued by International Accounting Standards Board. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 31, 2012, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 16, 2012 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. KPMG Bangalore, India May 16, 2012 Wipro Limited 193 Consolidated Financial Statements Under IFRS WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Rupees in millions, except share and per share data, unless otherwise stated) Notes 2011 As at March 31, 2012 2012 Convenience Translation into US$ in millions (Unaudited) Refer note 2(iv) 1,335 83 1,159 64 68 51 202 231 3,193 210 1,578 506 590 825 111 29 1,526 5,374 8,567 97 598 4,754 39 130 (11) 5,606 17 5,623 442 6 7 106 69 1 631 716 929 188 142 125 191 22 2,313 2,944 8,567 ASSETS Goodwill............................................................................................... Intangible assets................................................................................ Property, plant and equipment................................................... Investment in equity accounted investees.............................. Derivative assets................................................................................ Deferred tax assets........................................................................... Non-current tax assets.................................................................... Other non-current assets............................................................... Total non-current assets................................................................... Inventories........................................................................................... Trade receivables............................................................................... Other current assets......................................................................... Unbilled revenues............................................................................. Available for sale investments...................................................... Current tax assets.............................................................................. Derivative assets................................................................................ Cash and cash equivalents............................................................ Total current assets............................................................................ TOTAL ASSETS........................................................................................... EQUITY Share capital........................................................................................ Share premium.................................................................................. Retained earnings............................................................................. Share based payment reserve...................................................... Other components of equity........................................................ Shares held by controlled trust.................................................... Equity attributable to the equity holders of the Company.. Non-controlling interest................................................................. Total equity. ............................................................................................... LIABILITIES Loans and borrowings..................................................................... Derivative liabilities.......................................................................... Deferred tax liabilities...................................................................... Non-current tax liabilities............................................................... Other non-current liabilities.......................................................... Provisions............................................................................................. Total non-current liabilities............................................................. Loans and borrowings and bank overdraft............................. Trade payables and accrued expenses...................................... Unearned revenues.......................................................................... Current tax liabilities........................................................................ Derivative liabilities.......................................................................... Other current liabilities................................................................... Provisions............................................................................................. Total current liabilities. ..................................................................... TOTAL LIABILITIES................................................................................... TOTAL EQUITY AND LIABILITIES....................................................... 5 5 4 16 15 18 11 9 8 11 7 15 10 54,818 3,551 55,094 2,993 2,984 1,467 9,239 8,983 139,129 9,707 61,627 19,744 24,149 49,282 4,955 1,709 61,141 232,314 371,443 4,908 30,124 203,250 1,360 580 (542) 239,680 691 240,371 67,937 4,229 58,988 3,232 3,462 2,597 10,287 11,781 162,513 10,662 80,328 25,743 30,025 41,961 5,635 1,468 77,666 273,488 436,001 4,917 30,457 241,912 1,976 6,594 (542) 285,314 849 286,163 22,510 307 353 5,403 3,519 61 32,153 36,448 47,258 9,569 7,232 6,354 9,703 1,121 117,685 149,838 436,001 12 15 18 14 14 12 13 15 14 14 ` 19,759 2,586 301 5,021 2,706 81 30,454 33,043 42,024 6,595 7,340 1,358 7,934 2,324 100,618 131,072 371,443 The accompanying notes form an integral part of these consolidated financial statements. Annual Report 2011-12 194 Consolidated Financial Statements Under IFRS WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Rupees in millions, except share and per share data, unless otherwise stated) Year ended March 31, Notes 2010 2011 2012 2012 Convenience Translation into US$ in millions (Unaudited) Refer note 2(iv) Revenues...................................................................... Cost of revenues........................................................ Selling and marketing expenses......................... General and administrative expenses............... Foreign exchange gains / (losses), net............... Finance expense........................................................ Finance and other income..................................... 23 24 21 22 22 22 271,957 (186,299) 85,658 (18,608) (14,823) (383) 51,844 (1,324) 4,360 530 55,410 18 (9,294) 46,116 45,931 185 46,116 25 18.91 18.75 21.74 21.61 22.76 22.69 0.45 0.45 310,542 (212,808) 97,734 (22,172) (18,339) 445 57,668 (1,933) 6,652 648 63,035 (9,714) 53,321 52,977 344 53,321 371,971 (263,173) 108,798 (27,777) (20,286) 3,278 64,013 (3,491) 8,895 333 69,750 (13,763) 55,987 55,730 257 55,987 7,309 (5,171) 2,138 (546) (399) 64 1,258 (69) 175 7 1,371 (270) 1,100 1,095 5 1,100 Gross profit......................................................................... Results from operating activities. ........................... Share of profits of equity accounted investees. 16 Income tax expense................................................. Profit before tax............................................................... Profit for the year. ........................................................... Attributable to: Equity holders of the Company........................... Non-controlling interest......................................... Profit for the year. ........................................................... Earnings per equity share: Basic .............................................................................. Diluted. .......................................................................... Weighted-average number of equity shares used in computing earnings per equity share: Basic............................................................................... Diluted. .......................................................................... 2,429,025,243 2,449,658,532 2,436,440,633 2,449,056,412 2,449,056,412 2,451,154,154 2,455,958,722 2,455,958,722 The accompanying notes form an integral part of these consolidated financial statements. Wipro Limited 195 Consolidated Financial Statements Under IFRS WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Rupees in millions, except share and per share data, unless otherwise stated) Notes 2010 Year ended March 31, 2011 2012 2012 Convenience Translation into US$ in millions (Unaudited) Refer note 2(iv) 1,100 Profit for the year..................................................................... Other comprehensive income, net of taxes: Foreign currency translation differences:  Translation difference relating to foreign operations. ............................................................  Net change in fair value of hedges of net investment in foreign operations. ................ Net change in fair value of cash flow hedges..  Net change in fair value of available for sale investments.................................................................... Total other comprehensive income, net of taxes........ Total comprehensive income for the year...................... Attributable to: Equity holders of the Company............................... Non-controlling interest............................................ 46,116 53,321 55,987 17 17 15, 18 7, 18 (5,522) 4,202 9,841 (50) 8,471 54,587 54,447 140 54,587 1,222 20 3,684 29 4,955 58,276 57,956 320 58,276 9,226 (2,780) (350) (20) 6,076 62,063 61,744 319 62,063 181 (55) (7) 119 1,219 1,213 6 1,219 The accompanying notes form an integral part of these consolidated financial statements. Annual Report 2011-12 196 WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rupees in millions, except share and per share data, unless otherwise stated) Other components of equity No. of shares 1,464,980,746 3,230,443 1,468,211,189 1,468,211,189 979,765,124 6,432,832 2,454,409,145 4,908 30,124 203,250 -1,092 1,360 52,977 12 2,896 (2,872) 1,266 1,524 1,960 (1,960) (15,516) 2,936 29,188 165,789 3,140 258 (4,692) 3,684 (1,008) 2,936 29,188 165,789 3,140 258 (4,692) 1,302 35 35 29 64 (1,275) 9,841 (50) 45,931 (542) (542) (542) 6 1,908 (1,908) (6,788) 2,930 27,280 126,646 3,745 1,533 (14,533) 85 (542) Share Foreign Cash Shares based currency flow held by Share Share Retained payment translation hedging Other controlled capital premium earnings reserve reserve reserve reserve Trust* 147,144 (6,788) 6 45,931 8,516 1,302 196,112 196,112 (15,516) 36 52,977 4,979 1,092 239,680 Equity attributable to the equity holders Nonof the controlling Company interest 237 185 (45) 60 437 437 (66) 344 (24) 691 Total equity 147,381 (6,788) 6 46,116 8,471 60 1,302 196,549 196,549 (15,582) 36 53,321 4,955 1,092 240,371 As at April 1, 2009..................................................................................... Cash dividend paid (including dividend tax thereon)................ Issue of equity shares on exercise of options................................. Profit for the year...................................................................................... Other comprehensive income............................................................. Infusion of capital ................................................................................... Compensation cost related to employee share based payment...................................................................................................... As at March 31, 2010............................................................................... As at April 1, 2010..................................................................................... Cash dividend paid (including dividend tax thereon)................ Issue of shares in form of stock dividend........................................ Issue of equity shares on exercise of options................................. Profit for the year...................................................................................... Other comprehensive income............................................................. Compensation cost related to employee share based payment...................................................................................................... As at March 31, 2011............................................................................... Consolidated Financial Statements Under IFRS Wipro Limited 197 198 WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rupees in millions, except share and per share data, unless otherwise stated) Consolidated Financial Statements Under IFRS Annual Report 2011-12 Other components of equity Share Share Retained No. of shares capital premium earnings 4,908 9 -4,917 97 598 4,754 39 156 30,457 241,912 1,976 7,908 949 (1,358) (27) 6,384 (350) 55,730 (20) 44 1 333 (333) (17,068) 30,124 203,250 1,360 1,524 (1,008) 64 (542) (542) (11) Share Foreign Cash based currency flow payment translation hedging reserve reserve reserve Shares held by Other controlled reserve Trust* Equity attributable to the equity holders Nonof the controlling Company interest 239,680 (17,068) 9 55,730 6,014 949 285,314 5,606 691 (161) 257 62 849 17 Total equity 240,371 (17,229) 9 55,987 6,076 949 286,163 5,623 4,347,083 - As at April 1, 2011.......................................................................... 2,454,409,145 Cash dividend paid (including dividend tax thereon)..... Issue of equity shares on exercise of options...................... Profit for the year........................................................................... Other comprehensive income.................................................. Compensation cost related to employee share based payment........................................................................................... As at March 31, 2012.................................................................... 2,458,756,228 Convenience translation into US $ in millions (Unaudited) Refer note 2(iv) *Represents 8,930,563, 14,841,271, 14,841,271 treasury shares held as of March 31, 2010, 2011 and 2012, respectively. The accompanying notes form an integral part of these consolidated financial statements Consolidated Financial Statements Under IFRS WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Rupees in millions, except share and per share data, unless otherwise stated) Year ended March 31, 2010 2011 2012 Cash flows from operating activities: Profit for the year...............................................................................................  Adjustments to reconcile profit for the year to net cash generated from operating activities: Gain on sale of property, plant and equipment........................... Depreciation and amortization. .......................................................... Exchange (gain) / loss............................................................................. Impact of cash flow/net investment hedging activities............ Gain on sale of investments................................................................. Loss on sale of subsidiary...................................................................... Share based compensation.................................................................. Income tax expense................................................................................ Share of profits of equity accounted investees............................. Dividend and interest (income)/expenses, net............................. Changes in operating assets and liabilities: Trade receivables............................................................................ Unbilled revenues........................................................................... Inventories......................................................................................... Other assets...................................................................................... Trade payables and accrued expenses................................... Unearned revenues........................................................................ Other liabilities and provisions.................................................. Cash generated from operating activities before taxes...................... Income taxes paid, net........................................................................... Net cash generated from operating activities........................................ Cash flows from investing activities: Expenditure on property, plant and equipment and intangible assets Proceeds from sale of property, plant and equipment.............. Purchase of available for sale investments..................................... Proceeds from sale of available for sale investments................. Investment in inter-corporate deposits........................................... Refund of inter-corporate deposits................................................... Payment for business acquisitions, net of cash acquired.......... Interest received....................................................................................... Dividend received.................................................................................... Net cash (used) in investing activities....................................................... Cash flows from financing activities: Proceeds from issuance of equity shares........................................ Proceeds from issuance of equity shares by a subsidiary......... Repayment of loans and borrowings............................................... Proceeds from loans and borrowings............................................... Interest paid on loans and borrowings............................................ Payment of cash dividend (including dividend tax thereon)... Net cash (used) in financing activities.......................................................  Net increase / (decrease) in cash and cash equivalents during the year......................................................................................................................... Effect of exchange rate changes on cash and cash equivalents………. Cash and cash equivalents at the beginning of the year……………… Cash and cash equivalents at the end of the year (Note 10)…………. 2012 Convenience Translation into US$ in millions (Unaudited) Refer note 2(iv) 1,100 (2) 199 38 22 (4) 2 19 270 (7) (150) (343) (115) (17) (69) 84 57 20 1,104 (316) 788 (255) 15 (6,654) 6,815 (286) 204 (156) 114 43 (158) (1,378) 1,392 (18) (339) (342) 287 33 1,197 1,517 46,116 (43) 7,831 (1,462) 6,017 (308) 1,302 9,294 (530) (2,820) (2,150) (2,600) (218) (2,203) (66) (1,272) 2,024 58,912 (7,914) 50,998 (12,631) 397 (340,891) 325,770 (10,750) 4,950 (4,399) 2,297 1,442 (33,815) 6 60 (55,661) 63,011 (1,194) (6,823) (601) 16,582 (1,258) 48,232 63,556 53,321 (131) 8,211 1,036 4,389 (192) 1,092 9,714 (648) (5,684) (10,699) (7,441) (1,781) (5,451) 5,674 (867) (813) 49,730 (9,293) 40,437 (12,211) 521 (474,476) 456,894 (14,290) 20,100 (140) 3,960 2,403 (17,239) 25 (82,718) 72,596 (696) (15,585) (26,378) (3,180) 523 63,556 60,899 55,987 (104) 10,129 1,938 1,095 (187) 77 949 13,763 (333) (7,651) (17,470) (5,876) (862) (3,501) 4,289 2,898 1,040 56,181 (16,105) 40,076 (12,977) 774 (338,599) 346,826 (14,550) 10,380 (7,920) 5,799 2,211 (8,056) 22 (70,127) 70,839 (902) (17,229) (17,397) 14,623 1,680 60,899 77,202 The accompanying notes form an integral part of these consolidated financial statements Wipro Limited 199 Consolidated Financial Statements Under IFRS WIPRO LIMITED AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Rupees in millions, except share and per share data, unless otherwise stated) 1. The Company overview b. Available-for-sale financial assets; Wipro Limited (“Wipro” or the ”Parent Company”), together with its subsidiaries and equity accounted investees (collectively, “the Company” or the “Group”) is a leading India based provider of IT Services, including Business Process Outsourcing (“BPO”) services, globally. Further, Wipro has other businesses such as IT Products, Consumer Care and Lighting and Infrastructure engineering. Wipro is a public limited company incorporated and domiciled in India. The address of its registered office is Wipro Limited, Doddakannelli, Sarjapur Road, Bangalore - 560 035, Karnataka, India. Wipro has its primary listing with Bombay Stock Exchange and National Stock Exchange in India. The Company’s American Depository Shares representing equity shares are also listed on the New York Stock Exchange. These consolidated financial statements were authorized for issue by Audit Committee on May 16, 2012. 2. Basis of preparation of financial statements (i) Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). (ii) Basis of preparation These consolidated financial statements have been prepared in compliance with IFRS as issued by the IASB. Accounting policies have been applied consistently to all periods presented in these financial statements. The consolidated financial statements correspond to the classification provisions contained in IAS 1(revised), “Presentation of Financial Statements”. For clarity, various items are aggregated in the statements of income and statements of financial position. These items are disaggregated separately in the Notes to the consolidated financial statements, where applicable. The accounting policies have been consistently applied to all periods presented in these consolidated financial statements. All amounts included in the consolidated financial statements are reported in millions of Indian rupees (Rupees in millions) except share and per share data, unless otherwise stated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures. (iii) Basis of measurement The consolidated financial statements have been prepared on a historical cost convention and on an accrual basis, except for the following material items which have been measured at fair value as required by relevant IFRS:a. Derivative financial instruments; and (iv) Convenience translation (unaudited) The accompanying consolidated financial statements have been prepared and reported in Indian rupees, the national currency of India. Solely for the convenience of the readers, the consolidated financial statements as of and for the year ended March 31, 2012, have been translated into United States dollars at the certified foreign exchange rate of US$1 = ` 50.89, as published by Federal Reserve Board of Governors on March 30, 2012. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United States dollars at such a rate or any other rate. (v) Use of estimates and judgment The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is included in the following notes: a) Revenue recognition: The Company uses the percentage of completion method using the input (cost expended) method to measure progress towards completion in respect of fixed price contracts. Percentage of completion method accounting relies on estimates of total expected contract revenue and costs. This method is followed when reasonably dependable estimates of the revenues and costs applicable to various elements of the contract can be made. Key factors that are reviewed in estimating the future costs to complete include estimates of future labor costs and productivity efficiencies. Because the financial reporting of these contracts depends on estimates that are assessed continually during the term of these contracts, recognized revenue and profit are subject to revisions as the contract progresses to completion. When estimates indicate that a loss will be incurred, the loss is provided for in the period in which the loss becomes probable. To date, the Company has not incurred a material loss on any fixed-price and fixed-timeframe contract. b) Goodwill: Goodwill is tested for impairment at least annually and when events occur or changes in circumstances indicate that the recoverable amount of the cash generating unit is less than its carrying value. The recoverable amount of cash generating units is determined based on higher of value-in-use and fair value less cost to sell. The calculation involves use of significant estimates and Annual Report 2011-12 200 Consolidated Financial Statements Under IFRS assumptions which includes revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rate, future economic and market conditions. c) Income taxes: The major tax jurisdictions for the Company are India and the United States of America. Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods. Though, the Company considers all these issues in estimating income taxes, there could be an unfavorable resolution of such issues. d) Deferred taxes: Deferred tax is recorded on temporary differences between the tax bases of assets and liabilities and their carrying amounts, at the rates that have been enacted or substantively enacted. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced. e) Business combination: In accounting for business combinations, judgment is required in identifying whether an identifiable intangible asset is to be recorded separately from goodwill. Additionally, estimating the acquisition date fair value of the identifiable assets acquired and liabilities assumed involves management judgment. These measurements are based on information available at the acquisition date and are based on expectations and assumptions that have been deemed reasonable by management. Changes in these judgments, estimates, and assumptions can materially affect the results of operations. f ) Other estimates: The preparation of financial statements involves estimates and assumptions that affect the reported amount of assets, liabilities, disclosure of contingent liabilities at the date of financial statements and the reported amount of revenues and expenses for the reporting period. Specifically, the Company estimates the uncollectability of accounts receivable by analyzing historical payment patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required. Similarly, the Company provides for inventory obsolescence, excess inventory and inventories with carrying values in excess of net realizable value based on assessment of the future demand, market conditions and specific inventory management initiatives. If market conditions and actual demands are less favorable than the Company’s estimates, additional inventory provisions may be required. In all cases inventory is carried at the lower of historical cost and net realizable value. The stock compensation expense is determined based on the Company’s estimate of equity instruments that will eventually vest. 3. (i) Significant accounting policies Basis of consolidation Subsidiaries The consolidated financial statements incorporate the financial statements of the Parent Company and entities controlled by the Parent Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. All intra-company balances, transactions, income and expenses including unrealized income or expenses are eliminated in full on consolidation. Equity accounted investees Equity accounted investees are entities in respect of which, the Company has significant influence, but not control, over the financial and operating policies. Generally, a Company has a significant influence if it holds between 20 and 50 percent of the voting power of another entity. Investments in such entities are accounted for using the equity method (equity accounted investees) and are initially recognized at cost. (ii) Functional and presentation currency Items included in the consolidated financial statements of each of the Company’s subsidiaries and equity accounted investees are measured using the currency of the primary economic environment in which these entities operate (i.e. the “functional currency”). These consolidated financial statements are presented in Indian Rupee, the national currency of India, which is the functional currency of Wipro Limited and its domestic subsidiaries and equity accounted investees. (iii) Foreign currency transactions and translation a) Transactions and balances Transactions in foreign currency are translated into the respective functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the exchange rates prevailing at reporting date of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of income and reported within foreign exchange gains/(losses), net within results of operating activities. Gains/losses relating to translation or settlement of borrowings denominated in foreign currency are reported within finance expense except foreign exchange gains/losses on shortterm borrowings, which are considered as a natural economic hedge for the foreign currency monetary assets are classified and reported within foreign exchange gains/(losses), net within results from operating activities. Non monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction. Wipro Limited 201 Consolidated Financial Statements Under IFRS b) Foreign operations For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s foreign operations that have local functional currency are translated into Indian Rupee using exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and held in foreign currency translation reserve (FCTR), a component of equity. When a foreign operation is disposed off, the relevant amount recognized in FCTR is transferred to the statement of income as part of the profit or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the exchange rate prevailing at the reporting date. c) Others Foreign currency differences arising on the translation or settlement of a financial liability designated as a hedge of a net investment in a foreign operation are recognized in other comprehensive income and presented within equity in the FCTR to the extent the hedge is effective. To the extent the hedge is ineffective, such difference are recognized in statement of income. When the hedged part of a net investment is disposed off, the relevant amount recognized in FCTR is transferred to the statement of income as part of the profit or loss on disposal. Foreign currency differences arising from translation of intercompany receivables or payables relating to foreign operations, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of net investment in foreign operation and are recognized in FCTR. (iv) Financial Instruments a) Non-derivative financial instruments Non derivative financial instruments consist of: financial assets, which include cash and cash equivalents, -  trade receivables, unbilled revenues, finance lease receivables, employee and other advances, investments in equity and debt securities and eligible current and non-current assets; -  financial liabilities, which include long and short-term loans and borrowings, bank overdrafts, trade payable, eligible current liabilities and non-current liabilities. Non derivative financial instruments are recognized initially at fair value including any directly attributable transaction costs. Financial assets are derecognized when substantial risks and rewards of ownership of the financial asset have been transferred. In cases where substantial risks and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset. Subsequent to initial recognition, non derivative financial instruments are measured as described below: A. Cash and cash equivalents The Company’s cash and cash equivalent consist of cash on hand and in banks and demand deposits with banks, which can be withdrawn at anytime, without prior notice or penalty on the principal. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Company’s cash management system. B. Available-for-sale financial assets The Company has classified investments in liquid mutual funds, equity securities, other than equity accounted investees and certain debt securities (primarily certificate of deposits with banks) as available-for-sale financial assets. These investments are measured at fair value and changes therein are recognized in other comprehensive income and presented within equity. The impairment losses, if any, are reclassified from equity into statement of income. When an available for sale financial asset is derecognized, the related cumulative gain or loss in equity is transferred to statement of income. C. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are initially recognized at fair value plus transaction costs and subsequently measured at amortized cost using the effective interest method, less any impairment losses. Loans and receivables comprise trade receivables, unbilled revenues, cash and cash equivalents and other assets. b) Derivative financial instruments The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations and forecasted cash flows denominated in foreign currency. The Company limits the effect of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into derivative financial instruments where the counterparty is a bank. Derivatives are recognized and measured at fair value. Attributable transaction cost are recognized in statement of income as cost. A. Cash flow hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognized in other comprehensive income and held in cash flow hedging reserve, a component of equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in the statement of income and reported within foreign exchange gains/(losses), net within results from operating activities. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then Annual Report 2011-12 202 Consolidated Financial Statements Under IFRS hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the statement of income upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, such cumulative balance is immediately recognized in the statement of income. B. Hedges of net investment in foreign operations The Company designates derivative financial instruments as hedges of net investments in foreign operations. The Company has also designated a combination of foreign currency denominated borrowings and related cross-currency swaps as a hedge of net investment in foreign operations. Changes in the fair value of the derivative hedging instruments and gains/losses on translation or settlement of foreign currency denominated borrowings designated as a hedge of net investment in foreign operations are recognized in other comprehensive income and within equity in the FCTR to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in the statement of income and reported within foreign exchange gains/(losses), net within results from operating activities. C. Others Changes in fair value of foreign currency derivative instruments not designated as cash flow hedges or hedges of net investment in foreign operations are recognized in the statement of income and reported within foreign exchange gains/(losses), net within results from operating activities. Changes in fair value and gains/(losses) on settlement of foreign currency derivative instruments relating to borrowings, which have not been designated as hedges are recorded in finance expense. (v) Equity and share capital a) Share capital and share premium The Company has only one class of equity shares. The authorized share capital of the Company is 2,650,000,000 equity shares, par value ` 2 per share. Par value of the equity shares is recorded as share capital and the amount received in excess of par value is classified as share premium. Every holder of the equity shares, as reflected in the records of the Company as of the date of the shareholder meeting shall have one vote in respect of each share held for all matters submitted to vote in the shareholder meeting. b) Shares held by controlled trust (Treasury shares) The Company’s equity shares held by the controlled trust, which is consolidated as a part of the Group are classified as Treasury Shares. The Company has 14,841,271 treasury shares as of March 31, 2011 and 2012, respectively. Treasury shares are recorded at acquisition cost. c) Retained earnings Retained earnings comprises of the Company’s prior years’ undistributed earnings after taxes. A portion of these earnings amounting to ` 1,144 is not freely available for distribution. d) Share based payment reserve The share based payment reserve is used to record the value of equity-settled share based payment transactions with employees. The amounts recorded in share based payment reserve are transferred to share premium upon exercise of stock options by employees. e) Cash flow hedging reserve Changes in fair value of derivative hedging instruments designated and effective as a cash flow hedge are recognized in other comprehensive income (net of taxes), and presented within equity in the cash flow hedging reserve. f) Foreign currency translation reserve The exchange difference arising from the translation of financial statements of foreign subsidiaries, differences arising from translation of long-term intercompany receivables or payables relating to foreign operations, changes in fair value of the derivative hedging instruments and gains/losses on translation or settlement of foreign currency denominated borrowings designated as hedge of net investment in foreign operations are recognized in other comprehensive income, and presented within equity in the FCTR. g) Other reserve Changes in the fair value of available for sale financial assets is recognized in other comprehensive income (net of taxes), and presented within equity in other reserve. h) Dividend A final dividend, including tax thereon, on common stock is recorded as a liability on the date of approval by the shareholders. An interim dividend, including tax thereon, is recorded as a liability on the date of declaration by the board of directors. (vi) Property, plant and equipment a) Recognition and measurement Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the acquisition of the asset. Borrowing costs directly attributable to the construction or production of a qualifying asset are capitalized as part of the cost. b) Depreciation The Company depreciates property, plant and equipment over the estimated useful life on a straight-line basis from the date the assets are available for use. Assets acquired under finance lease and leasehold improvements are amortized over the shorter of estimated useful life of the asset or the related lease term. The estimated useful life of assets are reviewed and where appropriate are adjusted, annually. The estimated useful lives of assets for the current and comparative period are as follows: Category Buildings Plant and machinery Computer equipment and software Furniture, fixtures and equipment Vehicles Useful life 30 to 60 years 2 to 21 years 2 to 6 years 3 to 10 years 4 years Wipro Limited 203 Consolidated Financial Statements Under IFRS When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Subsequent expenditure relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Deposits and advances paid towards the acquisition of property, plant and equipment outstanding as of each reporting date and the cost of property, plant and equipment not available for use before such date are disclosed under capital work- in-progress. (vii) Business combination, Goodwill and Intangible assets Business combinations are accounted for using the purchase (acquisition) method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the date of an acquisition. Transaction costs incurred in connection with a business combination are expensed as incurred. The cost of an acquisition also includes the fair value of any contingent consideration. Any subsequent changes to the fair value of contingent consideration classified as liabilities are recognized in the consolidated statement of income. a) Goodwill The excess of the cost of an acquisition over the Company’s share in the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities is recognized as goodwill. If the excess is negative, a bargain purchase gain is recognized immediately in the statement of income. b) Intangible assets Intangible assets acquired separately are measured at cost of an acquisition. Intangible assets acquired in a business combination are measured at fair value as at the date of an acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and impairment losses, if any. The amortization of an intangible asset with a finite useful life reflects the manner in which the economic benefit is expected to be generated and consumed. Intangible assets with indefinite lives comprising of brands are not amortized, but instead tested for impairment at least annually and written down to the recoverable amount as required. The estimated useful life of amortizable intangibles are reviewed and where appropriate are adjusted, annually. The estimated useful lives of the amortizable intangible assets for the current and comparative periods are as follows: Category Customer-related intangibles Marketing related intangibles (viii) Leases Useful life 2 to 11 years 20 to 30 years a) Arrangements where the Company is the lessee Leases of property, plant and equipment, where the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lower of the fair value of the leased property and the present value of the minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability. Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases are recognized in the statement of income on a straight-line basis over the lease term. b) Arrangements where the Company is the lessor In certain arrangements, the Company recognizes revenue from the sale of products given under finance leases. The Company records gross finance receivables, unearned income and the estimated residual value of the leased equipment on consummation of such leases. Unearned income represents the excess of the gross finance lease receivable plus the estimated residual value over the sales price of the equipment. The Company recognizes unearned income as financing revenue over the lease term using the effective interest method. (ix) Inventories Inventories are valued at lower of cost and net realizable value, including necessary provision for obsolescence. Cost is determined using the weighted average method. (x) Impairment a) Financial assets The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss. A. Loans and receivables Impairment losses on trade and other receivables are recognized using separate allowance accounts. Refer Note 2 (v) for further information regarding the determination of impairment. B. Available for sale financial asset When the fair value of available-for-sale financial assets declines below acquisition cost and there is objective evidence that the asset is impaired, the cumulative loss that has been recognized in other comprehensive income, a component of equity in other reserve is transferred to the statement of income. An impairment loss may be reversed in subsequent periods, if the indicators for the impairment no longer exist. Such reversals are recognized in other comprehensive income. b) Non financial assets The Company assesses long-lived assets, such as property, plant, equipment and acquired intangible assets for impairment Annual Report 2011-12 204 Consolidated Financial Statements Under IFRS whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount of an asset or cash generating unit is the higher of its fair value less cost to sell (FVLCTS) and its value-in-use (VIU). If the recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of income. If at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the impairment losses previously recognized are reversed such that the asset is recognized at its recoverable amount but not exceeding written down value which would have been reported if the impairment losses had not been recognized initially. Intangible assets with indefinite lives comprising of brands are not amortized, but instead tested for impairment at least annually at the same time and written down to the recoverable amount as required. Goodwill is tested for impairment at least annually at the same time and when events occur or changes in circumstances indicate that the recoverable amount of the cash generating unit is less than its carrying value. The goodwill impairment test is performed at the level of cash-generating unit or groups of cash-generating units which represent the lowest level at which goodwill is monitored for internal management purposes. An impairment in respect of goodwill is not reversed. (xi) Employee Benefit a) Post-employment and pension plans The Group participates in various employee benefit plans. Pensions and other post-employment benefits are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Company’s only obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits. The related actuarial and investment risks fall on the employee. The expenditure for defined contribution plans is recognized as an expense during the period when the employee provides service. Under a defined benefit plan, it is the Company’s obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Company. The present value of the defined benefit obligations is calculated using the projected unit credit method. The company has the following employee benefit plans: A. Provident fund Employees receive benefits from a provident fund, which is a defined benefit plan. The employer and employees each make periodic contributions to the plan. A portion of the contribution is made to the approved provident fund trust managed by the Company; while the remainder of the contribution is made to the government administered pension fund. The Company is generally liable for any shortfall in the fund assets based on the government specified minimum rates of return. B. Superannuation Superannuation plan, a defined contribution scheme is administered by Life Insurance Corporation of India and ICICI Prudential Insurance Company Limited. The Company makes annual contributions based on a specified percentage of each eligible employee’s salary. C. Gratuity In accordance with the Payment of Gratuity Act, 1972, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The gratuity fund is managed by the Life Insurance Corporation of India (LIC), HDFC Standard Life, TATA AIG and Birla Sun-life. The Company’s obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation using the projected unit credit method. The Company recognizes actuarial gains and losses immediately in the statement of income. b) Termination benefits Termination benefits are recognized as an expense when the Company is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date, or to provide termination benefit as a result of an offer made to encourage voluntary redundancy. c) Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are recorded as expense as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profitsharing plans, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. d) Compensated absences The employees of the Company are entitled to compensated absences. The employees can carry forward a portion of the unutilized accumulating compensated absences and utilize it in future periods or receive cash at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Company recognizes accumulated compensated absences based on actuarial valuation. Nonaccumulating compensated absences are recognized in the period in which the absences occur. The Company recognizes actuarial gains and losses immediately in the statement of income. Wipro Limited 205 Consolidated Financial Statements Under IFRS (xii) Share based payment transaction Employees of the Company receive remuneration in the form of equity settled instruments, for rendering services over a defined vesting period. Equity instruments granted are measured by reference to the fair value of the instrument at the date of grant. In cases, where equity instruments are granted at a nominal exercise price, the intrinsic value on the date of grant approximates the fair value. The expense is recognized in the statement of income with a corresponding increase to the share based payment reserve, a component of equity. The equity instruments generally vest in a graded manner over the vesting period. The fair value determined at the grant date is expensed over the vesting period of the respective tranches of such grants (accelerated amortization). The stock compensation expense is determined based on the Company’s estimate of equity instruments that will eventually vest. (xiii) Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Provisions for onerous contracts are recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. Provisions for onerous contracts are measured at the present value of lower of the expected net cost of fulfilling the contract and the expected cost of terminating the contract. (xiv) Revenue The Company derives revenue primarily from software development and related services, BPO services, sale of IT and other products. a) Services The Company recognizes revenue when the significant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured. The method for recognizing revenues and costs depends on the nature of the services rendered: A. Time and materials contracts Revenues and costs relating to time and materials contracts are recognized as the related services are rendered. B. Fixed-price contracts Revenues from fixed-price contracts, including systems development and integration contracts are recognized using the “percentage-of-completion” method. Percentage of completion is determined based on project costs incurred to date as a percentage of total estimated project costs required to complete the project. The cost expended (or input) method has been used to measure progress towards completion as there is a direct relationship between input and productivity. If the Company does not have a sufficient basis to measure the progress of completion or to estimate the total contract revenues and costs, revenue is recognized only to the extent of contract cost incurred for which recoverability is probable. When total cost estimates exceed revenues in an arrangement, the estimated losses are recognized in the statement of income in the period in which such losses become probable based on the current contract estimates. ‘Unbilled revenues’ represent cost and earnings in excess of billings as at the end of the reporting period. ‘Unearned revenues’ represent billing in excess of revenue recognized. Advance payments received from customers for which no services have been rendered are presented as ‘Advance from customers’. C. Maintenance contract Revenue from maintenance contracts is recognized ratably over the period of the contract using the percentage of completion method. When services are performed through an indefinite number of repetitive acts over a specified period of time, revenue is recognized on a straight-line basis over the specified period unless some other method better represents the stage of completion. In certain projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. In such contracts, revenue is recognized with respect to the actual output achieved till date as a percentage of total contractual output. Any residual service unutilized by the customer is recognized as revenue on completion of the term. b) Products Revenue from products are recognized when the significant risks and rewards of ownership have transferred to the buyer, continuing managerial involvement usually associated with ownership and effective control have ceased, the amount of revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. c) Multiple-element arrangements Revenue from contracts with multiple-element arrangements are recognized using the guidance in IAS 18, Revenue. The Company allocates the arrangement consideration to separately identifiable components based on their relative fair values or on the residual method. Fair values are determined based on sale prices for the components when it is regularly sold separately, third-party prices for similar components or cost plus, an appropriate business-specific profit margin related to the relevant component. Annual Report 2011-12 206 Consolidated Financial Statements Under IFRS d) Others The Company accounts for volume discounts and pricing incentives to customers by reducing the amount of revenue recognized at the time of sale. Revenues are shown net of sales tax, value added tax, service tax and applicable discounts and allowances. Revenue includes excise duty. The Company accrues the estimated cost of warranties at the time when the revenue is recognized. The accruals are based on the Company’s historical experience of material usage and service delivery costs. (xv) Finance expense Finance expense comprise interest cost on borrowings, impairment losses recognized on financial assets, gains / (losses) on translation or settlement of foreign currency borrowings and changes in fair value and gains / (losses) on settlement of related derivative instruments except foreign exchange gains/ (losses), net on short-term borrowings which are considered as a natural economic hedge for the foreign currency monetary assets which are classified as foreign exchange gains/(losses), net within results from operating activities. Borrowing costs that are not directly attributable to a qualifying asset are recognized in the statement of income using the effective interest method. (xvi) Finance and other income Finance and other income comprises interest income on deposits, dividend income and gains / (losses) on disposal of available-for-sale financial assets. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established. (xvii) Income tax Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of income except to the extent it relates to a business combination, or items directly recognized in equity or in other comprehensive income. a) Current income tax Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for the period. The tax rates and tax laws used to compute the current tax amount are those that are enacted or substantively enacted by the reporting date and applicable for the period. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and liability simultaneously. b) Deferred income tax Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of the transaction. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Deferred income tax liabilities are recognized for all taxable temporary differences except in respect of taxable temporary differences associated with investments in subsidiaries, associates and foreign branches where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The Company offsets deferred income tax assets and liabilities, where it has a legally enforceable right to offset current tax assets against current tax liabilities, and they relate to taxes levied by the same taxation authority on either the same taxable entity, or on different taxable entities where there is an intention to settle the current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. (xviii) Earnings per share Basic earnings per share is computed using the weighted average number of equity shares outstanding during the period adjusted for treasury shares held. Diluted earnings per share is computed using the weighted-average number of equity and dilutive equivalent shares outstanding during the period, using the treasury stock method for options and warrants, except where the results would be anti-dilutive. New Accounting standards adopted by the Company: The Company adopted IAS 24 (revised 2009) “Related Party Disclosures” (“IAS 24”) effective April 1, 2011. The purpose of the revision is to simplify the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition. Adoption of IAS 24 (revised 2009), did not have a material effect on these consolidated financial statements. New Accounting standards not yet adopted by the Company: In October, 2010, the IASB issued an amendment to IFRS 7 “Disclosures – Transfers of financial assets”. The purpose of the amendment is to enhance the existing disclosures in IFRS 7 when an asset is transferred but is not derecognized and introduce new disclosures for assets that are derecognized but the entity Wipro Limited 207 Consolidated Financial Statements Under IFRS continues to have a continuing exposure to the asset after the sale. The amendment is effective for fiscal years beginning on or after July 1, 2011. Earlier application is permitted. The Company is evaluating the impact, these amendments will have on the Company’s consolidated financial statements. In December, 2011, the IASB issued an amendment to IFRS 7 “Disclosures – offsetting financial assets and financial liabilities”. The amended standard requires additional disclosures where financial assets and financial liabilities are offset in the balance sheet. These disclosures would provide users with information that is useful in (a) evaluating the effect or potential effect of netting arrangements on an entity’s financial position and (b) analyzing and comparing financial statements prepared in accordance with IFRSs and U.S. GAAP. The amendment is effective retrospectively for fiscal years beginning on or after January 1, 2013. Earlier application is permitted. The Company is evaluating the impact, these amendments will have on the Company’s consolidated financial statements. In November 2009, the IASB issued the chapter of IFRS 9 “Financial Instruments relating to the classification and measurement of financial assets”. The new standard represents the first phase of a three-phase project to replace IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) with IFRS 9 Financial Instruments (IFRS 9). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the many different rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial assets (its business model) and the contractual cash flow characteristics of the financial assets. In October 2010, the IASB added the requirement relating to classification and measurement of financial liabilities to IFRS 9. Under the amendment, an entity measuring its financial liability at fair value, can present the amount of fair value change in the liability attributable to change in the liabilities credit risk in other comprehensive income. Further the IASB also decided to carry-forward unchanged from IAS 39 requirements relating to de-recognition of financial assets and financial liabilities. IFRS 9 is effective for fiscal years beginning on or after January 1, 2015. Earlier application is permitted. The Company is evaluating the impact, these amendments will have on the Company’s consolidated financial statements. In May 2011, the IASB issued IFRS 10” Consolidated Financial Statements”. The new standard establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 replaces the consolidation requirements in  SIC-12 “Consolidation—Special Purpose Entities” and IAS 27 “Consolidated and Separate Financial Statements”. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. IFRS 10 is effective for fiscal years beginning on or after January 1, 2013. Earlier application is permitted. The Company is evaluating the impact, these amendments will have on the Company’s consolidated financial statements. In May 2011, the IASB issued IFRS 13 “Fair Value Measurement”. The new standard defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. IFRS 13 applies when other IFRSs require or permit fair value measurements. It does not introduce any new requirements to measure an asset or a liability at fair value or change what is measured at fair value in IFRSs or address how to present changes in fair value. IFRS 13 is effective for fiscal years beginning on or after January 1, 2013. Early application is permitted. The Company is evaluating the impact, these amendments will have on the Company’s consolidated financial statements. In June 2011, the IASB issued Amendment to IAS 1 “Presentation of Financial Statements” that will improve and align the presentation of items of other comprehensive income (OCI) in financial statements prepared in accordance with International Financial Reporting Standards (IFRSs). The amendments require companies preparing financial statements in accordance with IFRSs to group together items within OCI that may be reclassified to the profit or loss section of the income statement. The amendments will also reaffirm existing requirements that items in OCI and profit or loss should be presented as either a single statement or two consecutive statements. This amendment is effective for fiscal years beginning on or after July 1, 2012. Earlier adoption is permitted. The Company is evaluating the impact, these amendments will have on the Company’s consolidated financial statements. In June 2011, the IASB issued IAS 19 (Amended) “Employee Benefits”. The new standard has eliminated an option to defer the recognition of gains and losses through re-measurements and requires such gain or loss to be recognized through other comprehensive income in the year of occurrence to reduce volatility. The amended standard requires immediate recognition of effects of any plan amendments. Further it also requires asset in profit or loss to be restricted to government bond yields or corporate bond yields, considered for valuation of Projected Benefit Obligation, irrespective of actual portfolio allocations. The actual return from the portfolio in excess of such yields is recognized through Other Comprehensive Income. The amendment is effective retrospectively for fiscal years beginning on or after January 1, 2013. Earlier adoption is permitted. The Company is evaluating the impact, these amendments will have on the Company’s consolidated financial statements. In December, 2011, the IASB issued an amendment to IAS 32 “Offsetting financial assets and financial liabilities”. The purpose of the amendment is to clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. This includes clarifying the meaning of “currently has a legally enforceable right to set-off” and also the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The amendment is effective retrospectively for fiscal years beginning on or after January 1, 2014. Earlier application is permitted. The Company is evaluating the impact these a mendments will have on the Company’s consolidated financial statements. Annual Report 2011-12 208 Consolidated Financial Statements Under IFRS 4. Property, plant and equipment Furniture Plant and fixtures and Buildings machinery* equipment ` 19,359 117 3,533 (41) ` 22,968 ` 1,998 50 493 (39) ` 2,502 ` 46,657 337 8,360 (1,145) ` 54,209 ` 30,995 231 5,500 (1,077) ` 35,649 9,855 68 1,692 (591) ` 11,024 ` ` 5,497 45 1,271 (375) ` 6,438 Gross carrying value: As at April 1, 2010 Translation adjustment Additions Disposal / adjustments As at March 31, 2011 Accumulated depreciation/impairment: As at April 1, 2010 Translation adjustment Depreciation Disposal / adjustments As at March 31, 2011 Capital work-in-progress Net carrying value as at March 31, 2011 Gross carrying value: As at April 1, 2011 Translation adjustment Additions Acquisition through business combination.. Disposal / adjustments As at March 31, 2012 Accumulated depreciation/impairment: As at April 1, 2011 Translation adjustment Depreciation Disposal / adjustments As at March 31, 2012 Capital work-in-progress Net carrying value as at March 31, 2012 Land ` 2,794 17 943 ` 3,754 ` - Vehicles ` 2,929 11 117 (458) ` 2,599 ` 2,004 14 455 (354) ` 2,119 Total ` 81,594 550 14,645 (2,235) ` 94,554 ` 40,494 340 7,719 (1,845) ` 46,708 7,248 ` 55,094 ` 94,554 2,625 14,452 412 (2,307) ` 109,736 ` 46,708 1,522 9,544 (1,567) ` 56,207 5,459 ` 58,988 ` ` 3,754 30 445 58 (44) ` 4,243 ` - ` 22,968 389 2,113 15 (159) ` 25,326 ` 2,502 136 649 (28) ` 3,259 ` 54,209 1,951 10,096 279 (960) ` 65,575 ` 35,649 1,233 6,537 (622) ` 42,797 ` 11,024 229 1,729 51 (523) ` 12,510 ` 6,438 132 2,077 (381) ` 8,266 ` 2,599 26 69 9 (621) ` 2,082 ` 2,119 21 281 (536) ` 1,885 ` *Including net carrying value of computer equipment and software amounting to ` 4,397 and ` 7,463 as at March 31, 2011 and 2012, respectively. Interest capitalized by the Company was ` 66 and ` 63 for the year ended March 31, 2011 and 2012, respectively. The capitalization rate used to determine the amount of borrowing cost capitalized for the year ended March 31, 2011 and 2012 are 4.23% and 11.07%, respectively. 5. Goodwill and Intangible assets The movement in goodwill balance is given below: Year ended March 31, 2011 2012 Balance at the beginning of the year ` 53,802 ` 54,818 Translation adjustment 962 7,207 Acquisition through business 54 5,912 combination, net Balance at the end of the year ` 54,818 ` 67,937 The Company has recognized additional goodwill as a result of earn-out provisions from business combinations consummated in fiscal years 2006 and 2007 (contingent consideration) amounting to ` 54 and ` 207 during the year ended March 31, 2011 and 2012, respectively. Goodwill as at March 31, 2011 and 2012 has been allocated to the following reportable segments: Segment IT Services IT Products Consumer Care and Lighting Others Total As at March 31, 2011 2012 ` 39,098 ` 49,809 472 546 13,475 15,354 1,773 2,228 ` 54,818 ` 67,937 The goodwill held in the Infocrossing, Healthcare and Unza cash generating units (CGU) are considered significant in comparison to the total carrying amount of goodwill as at March 31, 2012. The goodwill held in these CGUs are as follows: CGUs Infocrossing Healthcare Unza As at March 31, 2011 2012 ` 11,592 ` 13,221 9,959 11,358 12,492 14,173 Wipro Limited 209 Consolidated Financial Statements Under IFRS The movement in intangible assets is given below: Intangible assets Customer related Marketing related Gross carrying value: As at April 1, 2010 Translation adjustment Additions As at March 31, 2011 Accumulated amortization and impairment: As at April 1, 2010 Translation adjustment Amortization As at March 31, 2011 Net carrying value as at March 31, 2011 Gross carrying value: As at April 1, 2011 Translation adjustment Acquisition through business combination Additions As at March 31, 2012 Accumulated amortization and impairment: As at April 1, 2011 Translation adjustment Amortization As at March 31, 2012 Net carrying value as at March 31, 2012 Net carrying value of marketing-related intangibles includes indefinite life intangible assets (brands and trade-marks) of ` 660 and ` 1,745 as of March 31, 2011 and 2012, respectively. The assessment of marketing-related intangibles (brands and trade-marks) that have an indefinite life were based on a number of factors, including the competitive environment, market share, brand history, product life cycles, operating plan and macroeconomic environment of the geographies in which these brands operate. Amortization expense on intangible assets is included in selling and marketing expenses in the statement of income. As of March 31, 2012, the estimated remaining amortization period for customer-related intangibles acquired on acquisition are as follows: Acquisition Estimated remaining amortization period Citi Technology Services Limited 2.75 years Wipro Yardley FZE and Wipro Yardley 8 years Consumer Care Private Limited Science Application International 1.25 – 8.25 years Corporation R.K.M Equipamentos Hidraulicos Ltd 8.125 years ` 1,932 11 1,943 ` 3,464 (105) 36 3,395 993 (48) 109 1,054 2,341 3,395 171 97 3,663 1,054 65 83 1,202 2,461 Total ` 5,396 (94) 36 ` 5,338 ` 1,385 (48) 450 ` 1,787 ` 3,551 ` 5,338 294 864 97 ` 6,593 ` 1,787 65 512 ` 2,364 ` 4,229 ` ` ` ` 392 341 ` 733 ` 1,210 1,943 123 864 2,930 733 429 1,162 1,768 ` ` ` ` ` ` ` ` ` ` ` ` Goodwill and indefinite life intangible were tested for impairment annually in accordance with the Company’s procedure for determining the recoverable value of such assets. For the purpose of impairment testing, goodwill is allocated to a CGU representing the lowest level within the Group at which goodwill is monitored for internal management purposes, and which is not higher than the Group’s operating segment. The useful life of the trademark and brand in respect of the acquired Wipro Yardley FZE, Wipro Yardley Consumer Care Private Limited, Chandrika and Northwest has been determined to be indefinite life intangible assets. For the purpose of impairment testing, indefinite life intangibles in Wipro Yardley FZE and Wipro Yardley Consumer Care Private Limited are allocated to the Yardley businesses and the indefinite life intangibles in Chandrika and Northwest are allocated to Consumer Care India businesses. The recoverable amount of the CGU is the higher of its FVLCTS and its VIU. The FVLCTS of the CGU is determined based on the market capitalization approach, using the turnover and earnings multiples derived from observed market data. The VIU is determined based on discounted cash flow projections. Key assumptions on which the Company has based its determination of VIUs include: a) Estimated cash flows for five years based on formal/ approved internal management budgets with extrapolation for the remaining period, wherever such budgets were shorter than 5 years period. Annual Report 2011-12 210 Consolidated Financial Statements Under IFRS b) Terminal value arrived by extrapolating last forecasted year cash flows to perpetuity using long-term growth rates. These long-term growth rates take into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector. c) The discount rates used are based on the Company’s weighted average cost of capital as an approximation of the weighted average cost of capital of a comparable market participant, which are adjusted for specific country risks. d) Value-in-use is calculated using after tax assumptions. The use of after tax assumptions does not result in a value-in-use that is materially different from the value-in-use that would result if the calculation was performed using before tax assumptions. The before tax discount rate is determined based on the value-in-use derived from the use of after tax assumptions. Assumptions Year ended March 31, 2011 2012 2.5%-6% 3%-6% strengthen Wipro’s presence in the Energy, Natural Resources and Utilities domain. The goodwill of ` 5,309 comprises of value of expected synergies arising from the acquisition. The purchase consideration of ` 7,536 was settled in cash. The following table summarizes the recognized amounts of assets acquired and liabilities assumed: Descriptions PreFair value Purchase acquisition adjustments price carrying allocated amount ` 541 541 1,170 75 288 82 (602) (76) 54 1,532 ` 756 (61) 695 1,170 75 756 288 82 (602) (76) (7) ` 2,227 5,309 ` 7,536 Terminal value long-term growth rate After tax discount rate 10%-17% 10%-16% Before tax discount rate 12.3%-19.5% 11.4%-20.8% Based on the above, no impairment was identified as of March 31, 2011 and 2012 as the recoverable value of the CGUs exceeded the carrying value. Further, none of the CGU’s tested for impairment as of March 31, 2011 and 2012 were at risk of impairment. An analysis of the calculation’s sensitivity to a change in the key parameters (Revenue growth, operating margin, discount rate and long-term growth rate) based on reasonably probable assumptions, did not identify any probable scenarios where the CGU’s recoverable amount would fall below its carrying amount. 6. Business combination Science Applications International Corporation On June 10, 2011, the Company acquired the global oil and gas information technology practice of the Commercial Business Services Business Unit of Science Applications International Corporation Inc along with 100% of the share capital in SAIC Europe Limited and SAIC India Private Limited. On July 2, 2011 the Company also acquired 100% of the share capital of SAIC Gulf LLC (hereafter the acquisitions are collectively referred to as ‘oil and gas business of SAIC’). The oil and gas business of SAIC provides consulting, system integration and outsourcing services to global oil majors with significant domain capabilities in the areas of digital oil field, petro-technical data management and petroleum application services, addressing the upstream segment. The Company believes that the acquisition will further Cash and cash equivalents Trade receivables Property, plant and equipment Customer - related intangibles Other assets Current tax assets Trade payables and accrued expenses Unearned revenues D e fe r re d i n co m e taxes, net Total ` Goodwill Total purchase price None of the goodwill, other than goodwill relating to business purchase in the U.S. (` 2,703), is expected to be deductible for income tax purposes. The gross and fair value of trade receivables included in other assets above amounts to ` 1,170. None of the trade receivable has been impaired and it is expected that full contractual amount can be collected. From the date of acquisition, the oil and gas business of SAIC have contributed ` 6,792 of revenue and ` 243 of profit before tax for the period of the Company. If the acquisition had occurred on April 1, 2011, management estimates that the annual consolidated revenue for the Company would have been ` 373,798 and the annual profit before taxes for the year for the Company would have been ` 69,935. The pro-forma amounts are not necessarily indicative of the results that would have occurred if the acquisitions had occurred on dates indicated or that may result in the future. Wipro Limited 211 Consolidated Financial Statements Under IFRS 7. Available for sale investments Available for sale investments consists of the following: Cost* As at March 31, 2011 Gross gain Gross loss recognized recognized directly in directly in equity equity ` 126 ` (49) 17 143 (14) Fair Value As at March 31, 2012 Cost* Gross gain Gross loss Fair Value recognized recognized directly in directly in equity equity ` 37,090 ` 32,635 ` 96 ` (25) ` 32,706 12,192 9,267 96 (12) 9,255 Investment in liquid and short-term mutual funds and others Certificate of deposits Total ` 37,013 12,189 ` 49,202 ` ` (63) ` 49,282 ` 41,902 ` ` (37) ` 41,961 * Available for sale investments include investments amounting to ` Nil and ` 400 as of March 31, 2011 and 2012, respectively, on which there is a lien. (1) 8. Trade receivables These deposits can be withdrawn by the Company at any time without prior notice and without any penalty on the principal. As at March 31, Cash and cash equivalent consists of the following for the 2011 2012 purpose of the cash flow statement: Trade receivables ` 64,221 ` 83,076 Allowance for doubtful accounts receivable ` (2,594) (2,748) 61,627 ` 80,328 As at March 31, 2010 2011 2012 Cash and cash equivalents ` 64,878 ` 61,141 ` 77,666 (as per above) Bank overdrafts (1,322) (242) (464) ` 63,556 ` 60,899 ` 77,202 11. Other assets As at March 31, 2011 2012 Current Interest bearing deposits with corporates(1) Prepaid expenses Due from officers and employees Finance lease receivables Advance to suppliers Deferred contract costs Interest receivable Deposits Balance with excise and customs Non-convertible debentures Others Non current Prepaid expenses including rentals for leasehold land Finance lease receivables Deposits Non-convertible debentures Others ` 4,240 ` 8,410 The activity in the allowance for doubtful accounts receivable is given below: Year ended March 31, 2011 2012 Balance at the beginning of the year ` 2,327 ` 2,594 Additions during the year, net 399 393 Uncollectable receivables charged (132) (239) against allowance Balance at the end of the year ` 2,594 ` 2,748 9. Inventories As at March 31, 2011 2012 ` 1,125 ` 1,271 3,217 4,144 1,109 1,410 4,256 3,837 ` 9,707 ` 10,662 Inventories consist of the following: Stores and spare parts Raw materials and components Work in progress Finished goods 10. Cash and cash equivalents 4,620 5,507 1,110 1,681 2,411 2,003 1,407 1,868 1,503 1,659 393 1,123 603 227 1,570 1,543 815 45 1,072 1,677 ` 19,744 ` 25,743 ` 2,423 ` 3,422 Cash and cash equivalents as of March 31, 2010, 2011 and 2012 consist of cash and balances on deposit with banks. Cash and cash equivalents consist of the following: As at March 31, 2010 2011 2012 ` 24,155 ` 27,628 ` 41,141 40,723 33,513 36,525 ` 64,878 ` 61,141 ` 77,666 Cash and bank balances Demand deposits with banks(1) 4,839 5,710 1,680 2,507 84 41 58 ` 8,983 ` 11,781 Total ` 28,727 ` 37,524 (1) Such deposits earn a fixed rate of interest and will be liquidated within 12 months. Annual Report 2011-12 212 Consolidated Financial Statements Under IFRS Finance lease receivables Finance lease receivables consist of assets that are leased to customers for periods ranging from 3 to 5 years, with lease payments due in monthly, quarterly or semi-annual installments. Details of finance lease receivables are given below: Minimum lease payment Present value of minimum lease payment As at March 31, As at March 31, 2011 2012 2011 2012 ` 2,043 6,776 180 8,999 (1,286) ` 7,713 ` 2,350 4,723 177 ` 7,250 ` 2,411 4,839 ` 1,964 5,588 161 ` 7,713 ` 2,003 5,710 Not later than one year Later than one year but not later than five years Unguaranteed residual values Gross investment in lease Less: Unearned finance income Present value of minimum lease payment receivable Included in the financial statements as follows: Current finance lease receivables Non-current finance lease receivables 12. Loans and borrowings Short-term loans and borrowings The Company had short-term borrowings including bank overdrafts amounting to ` 31,694 and ` 35,740 as at March 31, 2011 and 2012, respectively. Short-term borrowings from banks as of March 31, 2012 primarily consist of lines of credit of approximately ` 19,730, US$ 812 million, SEK 241 million, SAR 90 million, Euro 17 million, GBP 21 million, MYR (Malaysian Ringgit) 47 million and RM (Chinese Yuan) 41 million from bankers primarily for working capital requirements. As of March 31, 2012, the Company has unutilized lines of credit aggregating ` 11,395, US$ 334 million, SEK 111 million, SAR 34 million, Euro Long-term loans and borrowings A summary of long- term loans and borrowings is as follows: Currency ` 2,523 6,129 199 8,851 (1,601) ` 7,250 7 million, GBP 21 million, MYR 47 million and RM 8 million, respectively. To utilize these unused lines of credit, the Company requires consent of the lender and compliance with certain financial covenants. Significant portion of these lines of credit are revolving credit facilities and floating rate foreign currency loans, renewable on a periodic basis. Significant portion of these facilities bear floating rates of interest, referenced to LIBOR and a spread, determined based on market conditions. The Company has non-fund based revolving credit facilities in various currencies equivalent to ` 34,963 for operational requirements that can be used for the issuance of letters of credit and bank guarantees. As of March 31, 2012, an amount of ` 11,724 was unutilized out of these non-fund based facilities. As at March 31, 2011 Foreign Indian Foreign currency Rupee currency in millions in millions 35,016 NA 66 ` 18,861 366 786 354 106 ` 20,473 635 ` 21,108 ` 1,349 19,759 35,016 NA 6 As at March 31, 2012 Indian Interest rate Rupee Final maturity Unsecured external commercial borrowing Japanese Yen Unsecured term loan Indian Rupee Saudi Riyals Others Other secured term loans Obligations under finance leases Current portion of long term loans and borrowings Non-current portion of long term loans and borrowings ` 21,728 1.86% April 2013 463 6.03% – 7.21% 2012 – 2015 79 1.25% 2012 – 2013 177 0 – 3.7% 2012 – 2014 55 3.18% – 6.5% 2012 – 2017 ` 22,502 716 ` 23,218 ` 708 22,510 Wipro Limited 213 Consolidated Financial Statements Under IFRS The Company has entered into cross-currency interest rate swap (CCIRS) in connection with the unsecured external commercial borrowing and has designated a portion of these as hedge of net investment in foreign operation. The contract governing the Company’s unsecured external commercial borrowing contain certain covenants that limit future borrowings and payments towards acquisitions in a financial year. The terms of the other secured and unsecured loans and borrowings also contain certain restrictive covenants primarily requiring the Company to maintain certain financial ratios. As of March 31, 2012, the Company has met the covenants under these arrangements. A portion of the above short-term loans and borrowings, other secured term loans and obligation under finance leases aggregating to ` 2,067 and ` 2,398 as at March 31, 2011 and 2012, respectively, are secured by inventories, accounts receivable, certain property, plant and equipment and underlying assets. Interest expense was ` 776 and ` 1,057 for the year ended March 31, 2011 and 2012, respectively. The following is a schedule of future minimum lease payments under finance leases, together with the present value of minimum lease payments as of March 31, 2011 and 2012: Minimum lease payment As at March 31, 2011 2012 `      242 `      281        396        478               63                6 701 765      (66)      (49) `       635 `       716 Present value of minimum lease payment As at March 31, 2011 2012 `       203 `       255         372 455               60               6                                 ` 635 ` 716 `       203         432 `      255         461 Not later than one year Later than one year but not later than five year. Later than five years Total minimum lease payments Less: Amount representing interest Present value of minimum lease payments Included in the financial statements as follows: Current finance lease payables Non-current finance lease payables 13. Trade payables and accrued expenses Trade payables and accrued expenses consist of the following: As at March 31, 2011 2012 ` 20,618 ` 23,429 21,406 23,829 ` 42,024 ` 47,258 As at March 31, 2011 2012 Provisions: Current: Provision for warranty Others Non-current: Provision for warranty Total Trade payables Accrued expenses 14. Other liabilities and provisions Other liabilities: Current: Statutory and other liabilities Employee benefit obligation Advance from customers Others Non-current: Employee benefit obligations Others Total ` ` ` ` 467 1,857 2,324 81 2,405 ` ` ` ` 306 815 1,121 61 1,182 As at March 31, 2011 2012 ` 4,046 2,028 1,049 811 7,934 ` 4,241 3,176 1,157 1,129 9,703 Provision for warranty represents cost associated with providing sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 to 2 years. Other provisions primarily include provisions for indirect tax related contingencies and litigations. The timing of cash outflows in respect of such provision cannot be reasonably determined. ` ` ` ` 2,633 73 ` 2,706 ` 10,640 3,046 473 ` 3,519 ` 13,222 Annual Report 2011-12 214 Consolidated Financial Statements Under IFRS A summary of activity for provision for warranty and other provisions is as follows: Year ended March 31, 2012 Provision Others Total for warranty ` 548 ` 1,857 ` 2,405 460 180 640 Fair Value The fair value of cash and cash equivalents, trade receivables, unbilled revenues, trade payables, current financial liabilities and borrowings approximate their carrying amount largely due to the short-term nature of these instruments. A substantial portion of the Company’s long-term debt has been contracted at floating rates of interest, which are reset at short intervals. Accordingly, the carrying value of such long-term debt approximates fair value. Further, finance lease receivables are periodically evaluated based on individual credit worthiness of customers. Based on this evaluation, the Company records allowance for expected losses on these receivables. As of March 31, 2011 and 2012, the carrying value of such receivables, net of allowances approximates the fair value. Investments in liquid and short-term mutual funds, which are classified as available-for-sale are measured using quoted market prices at the reporting date multiplied by the quantity held.  Fair value of investments in certificate of deposits, classified as available for sale is determined using observable market inputs. The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc. Fair value hierarchy Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 – Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs) Balance at the beginning of the year Additional provision during the year, net Provision used during the year Balance at the end of the year 15. Financial instruments ` (641) 367 ` (1,222) 815 (1,863) ` 1,182 Financial assets and liabilities (carrying value/fair value): As at March 31, 2011 2012 Assets: Trade receivables ` 61,627 ` 80,328 Unbilled revenues 24,149 30,025 Cash and cash equivalents 61,141 77,666  Available for sale financial 49,282 41,961 investments Derivative assets 4,693 4,930 Other assets 16,995 21,769 Total ` 217,887 ` 256,679 Liabilities: Loans and borrowings ` 52,802 ` 58,958  Trade payables and accrued 42,024 47,258 expenses Derivative liabilities 3,944 6,661 Other liabilities 140 566 Total ` 98,910 ` 113,443 By Category (Carrying value/Fair value): As at March 31, 2011 2012 Assets:   Loans and receivables   Derivative assets   Available for sale financial assets Total Liabilities:   Financial liabilities at amortized cost   Trade and other payables   Derivative liabilities Total ` 163,912 ` 209,788 4,693 4,930 49,282 41,961 ` 217,887 ` 256,679 ` 52,802 42,164 3,944 ` 98,910 ` 58,958 47,824 6,661 ` 113,443 Wipro Limited 215 Consolidated Financial Statements Under IFRS The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis: Particulars Total As at March 31, 2011 Fair value measurements at reporting date using Level 1 Level 2 Level 3 ` 1,991 1,523 1,179 24,036 ` Total As at March 31, 2012 Fair value measurements at reporting date using Level 1 Level 2 Level 3 ` 2,218 1,136 1,576 2,412 21,176 ` - Assets Derivative instruments - Cash flow hedges - Net investment hedges - Others Available for sale financial assets: - Investment in liquid and shortterm mutual funds - Investment in certificate of deposits and other investments Liabilities Derivative instruments - Cash flow hedges - Net investment hedges - Others Derivatives assets and liabilities: ` 1,991 1,523 1,179 25,246 24,036 ` ` 2,218 1,136 1,576 20,785 21,176 ` 25,246 - 18,373 - 1,504 2,812 2,812 1,701 2,668 2,668 739 1,181 1,181 The following table summarizes activity in the cash flow hedging reserve within equity related to all derivative instruments The Company is exposed to foreign currency fluctuations classified as cash flow hedges: on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency and net investment in foreign As at March 31, operations. The Company follows established risk management 2011 2012 policies, including the use of derivatives to hedge foreign currency Balance as at the beginning of the ` (4,954) ` (1,226) assets / liabilities, foreign currency forecasted cash flows and year net investment in foreign operations. The counter party in these 4,041 1,272 Net (gain)/loss reclassified into derivative instruments is a bank and the Company considers the statement of income on occurrence risks of non-performance by the counterparty as non-material. of hedged transactions (1) The following table presents the aggregate contracted principal Deferred cancellation gains/(losses) 222 (12) amounts of the Company’s derivative contracts outstanding: relating to roll - over hedging Changes in fair value of effective As at March 31, portion of derivatives (535) (1,639) 2011 2012 Gains/ (losses) on cash flow hedging Designated derivative instruments derivatives, net ` 3,728 ` (379) Sell US$ 901 US$ 1,081 Balance as at the end of the year ` (1,226) ` (1,605) € 2 € 17 Deferred tax asset thereon 218 247 £ 21 £ 4 Balance as at the end of the year, net ` (1,008) ` (1,358) ¥ 3,026 ¥ 1,474 of deferred tax AUD 4 AUD CHF 6 CHF (1) On occurrence of hedge transactions, net (gain)/loss was Net investment hedges in foreign included as part of revenues. operations The related hedge transactions for balance in cash flow Cross-currency swaps ¥ 24,511 ¥ 24,511 hedging reserve as of March 31, 2012 are expected to occur and Others US$ 262 US$ 262 reclassified to the statement of income over a period of 2 years. € 40 € 40 Non designated derivative As at March 31, 2011 and 2012, there were no significant gains instruments or losses on derivative transactions or portions thereof that have Sell US$ 526 US$ 841 become ineffective as hedges, or associated with an underlying £ 40 £ 58 exposure that did not occur. € 48 € 44 Sale of financial assets AUD 13 AUD 31 Buy US$ 617 US$ 555 From time to time, in the normal course of business, the ¥ - ¥ 1,997 Company transfers accounts receivables, net investment in Cross currency swaps ¥ 7,000 ¥ 7,000 1,504 1,701 739 - Annual Report 2011-12 216 Consolidated Financial Statements Under IFRS finance lease receivables (financial assets) to banks. Under the terms of the arrangements, the Company surrenders control over the financial assets and transfer is without recourse. Accordingly, such transfers are recorded as sale of financial assets. Gains and losses on sale of financial assets without recourse are recorded at the time of sale based on the carrying value of the financial assets and fair value of servicing liability. In certain cases, transfer of financial assets may be with recourse. Under arrangements with recourse, the Company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with the banks. The Company has transferred trade receivables with recourse obligation (credit risk) and accordingly, in such cases the amounts received are recorded as borrowings in the statement of financial position and cash flows from financing activities. As at March 31, 2011 and 2012, the maximum amount of recourse obligation in respect of the transferred financial assets (recorded as borrowings) is ` 1,085 and ` 1,163, respectively. Financial risk management General Market risk is the risk of loss of future earnings, to fair values or to future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments, foreign currency receivables, payables and loans and borrowings. The Company’s exposure to market risk is a function of investment and borrowing activities and revenue generating activities in foreign currency. The objective of market risk management is to avoid excessive exposure of the Company’s earnings and equity to losses. Risk Management Procedures The Company manages market risk through a corporate treasury department, which evaluates and exercises independent control over the entire process of market risk management. The corporate treasury department recommends risk management objectives and policies, which are approved by senior management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies. Foreign currency risk The Company operates internationally and a major portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services in the United States and elsewhere, and purchases from overseas suppliers in various foreign currencies. The exchange rate risk primarily arises from foreign exchange revenue, receivables, cash balances, forecasted cash flows, payables and foreign currency loans and borrowings. A significant portion of revenue is in U.S. dollars, euro and pound sterling, while a significant portion of costs are in Indian rupees. The exchange rate between the rupee and U.S. dollar, euro and pound sterling has fluctuated significantly in recent years and may continue to fluctuate in the future. Appreciation of the rupee against these currencies can adversely affect the Company’s results of operations. The Company evaluates exchange rate exposure arising from these transactions and enters into foreign currency derivative instruments to mitigate such exposure. The Company follows established risk management policies, including the use of derivatives like foreign exchange forward / option contracts to hedge forecasted cash flows denominated in foreign currency. The Company has designated certain derivative instruments as cash flow hedge to mitigate the foreign exchange exposure of forecasted highly probable cash flows. The Company has also designated a combination of foreign currency borrowings and related cross-currency swaps and other foreign currency derivative instruments as hedge of its net investment in foreign operations. As at March 31, 2011 and 2012, Re. 1 increase / decrease in the exchange rate of Indian Rupee with U.S. dollar would result in approximately ` 810 and ` 1,629 decrease / increase in the fair value of the Company’s foreign currency dollar denominated derivative instruments, respectively. As at March 31, 2011 and 2012, 1% change in the exchange rate between U.S. dollar and Yen would result in approximately ` 170 and ` 194 increase/decrease in the fair value of cross-currency interest rate swaps, respectively. Wipro Limited 217 Consolidated Financial Statements Under IFRS The below table presents foreign currency risk from non derivative financial instruments as of March 31, 2011 and 2012: US$ Trade receivables Unbilled revenues Cash and cash equivalents Other assets Loans and borrowings Trade payables and accrued expenses Net assets / (liabilities) ` 24,408 13,605 22,463 187 ` (27,544) (10,770) ` 22,349 As at March 31, 2011 Euro Pound Japanese Sterling Yen ` 5,123 ` 4,821 ` 370 239 494 1,863 1,949 290 311 63 2 ` (1,322) (2,063) ` 4,151 ` (1,407) ` 5,920 ` (18,861) (357) ` (18,556) Other currencies# ` 3,237 271 1,414 126 ` ` (162) 4,886 Total ` 37,959 14,609 27,979 689 ` (47,727) (14,759) ` 18,750 US$ Trade receivables Unbilled revenues Cash and cash equivalents Other assets Loans and borrowings Trade payables and accrued expenses Net assets / (liabilities) ` 30,205 9,735 23,726 206 ` (28,214) (12,095) ` 23,563 As at March 31, 2012 Euro Pound Sterling ` 5,711 ` 6,427 2,727 3,131 1,439 1,492 515 42 ` (742) ` (2,186) (1,912) ` 7,464 ` 9,180 Japanese Yen ` 402 59 322 ` (21,728) (140) ` (21,085) Other currencies# ` 5,699 485 1,931 181 ` (2,068) ` 6,228 Total ` 48,444 16,137 28,910 944 ` (50,684) (18,401) ` 25,350 # Other currencies reflects currencies such as Singapore dollars, Saudi Arabian riyals etc. As at March 31, 2011 and 2012 respectively, every 1% increase/ customers, taking into account the financial condition, current decrease of the respective foreign currencies compared to economic trends, analysis of historical bad debts and ageing of functional currency of the Company would impact our result accounts receivable. Individual risk limits are set accordingly. No from operating activities by approximately ` 187 and ` 254 single customer accounted for more than 10% of the accounts respectively. receivable as at March 31, 2011 and 2012, respectively and revenues for the year ended March 31, 2010, 2011 and 2012, Interest rate risk respectively. There is no significant concentration of credit risk. Interest rate risk primarily arises from floating rate borrowing, Financial assets that are neither past due nor impaired including various revolving and other lines of credit. The Company’s investments are primarily in short-term investments, Cash and cash equivalents, available-for-sale financial assets, which do not expose it to significant interest rate risk. The investment in certificates of deposits and interest bearing Company manages its net exposure to interest rate risk relating deposits with corporates are neither past due nor impaired. to borrowings, by balancing the proportion of fixed rate Cash and cash equivalents with banks and interest-bearing borrowing and floating rate borrowing in its total borrowing deposits are placed with corporate, which have high creditportfolio. To manage this portfolio mix, the Company may enter ratings assigned by international and domestic credit-rating into interest rate swap agreements, which allows the Company agencies. Available-for-sale financial assets substantially to exchange periodic payments based on a notional amount include investment in liquid mutual fund units. Certificates of and agreed upon fixed and floating interest rates. As of March deposit represent funds deposited with banks or other financial 31, 2012, substantially all of the Company borrowings was institutions for a specified time period. subject to floating interest rates, which reset at short intervals. If Financial assets that are past due but not impaired interest rates were to increase by 100 bps from March 31, 2012, additional annual interest expense on the Company’s floating There is no other class of financial assets that is past due but not rate borrowing would amount to approximately ` 564. impaired except for trade receivables of ` 2,594 and ` 2,748 as of March 31, 2011 and 2012, respectively. Of the total receivables, ` Credit risk 41,146 and ` 58,982 as of March 31, 2011 and 2012, respectively, Credit risk arises from the possibility that customers may not were neither past due nor impaired. The company’s credit period be able to settle their obligations as agreed. To manage this, generally ranges from 45-60 days. The aging analysis of the the Company periodically assesses the financial reliability of receivables have been considered from the date of the invoice. Annual Report 2011-12 218 Consolidated Financial Statements Under IFRS The age wise break up of receivables, net of allowances that are past due, is given below: As at March 31, 2011 2012 ` 41,146 ` 58,982 Financial assets that are neither past due nor impaired Financial assets that are past due but not impaired Past due 0 – 30 days Past due 31 – 60 days Past due 61 – 90 days Past due over 90 days Total past due and not impaired Counterparty risk entering into transactions with counterparties that are usually banks or financial institutions with acceptable credit ratings. Exposure to these risks are closely monitored and maintained within predetermined parameters. There are limits on credit exposure to any financial institution. The limits are regularly assessed and determined based upon credit analysis including financial statements and capital adequacy ratio reviews. In addition, net settlement agreements are contracted with significant counterparties. Liquidity risk Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company’s corporate treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows. As of March 31, 2011 and 2012, cash and cash equivalents are held with major banks and financial institutions. 4,249 6,976 3,273 14,834 ` 29,332 9,970 4,410 3,263 12,702 ` 30,345 Counterparty risk encompasses issuer risk on marketable securities, settlement risk on derivative and money market contracts and credit risk on demand and time deposits. Issuer risk is minimized by only buying securities which are at least AA rated. Settlement and credit risk is reduced by the policy of The table below provided details regarding the contractual maturities of significant financial liabilities. Less than 1 year ` 33,043 42,024 1,358 Less than 1 year ` 36,448 47,258 6,354 As at March 31, 2011 1-2 years 2-4 years 4-7 years ` 19,322 2,586 ` 304 ` 133 Total ` 52,802 42,024 3,944 Total ` 58,958 47,258 6,661 Loans and borrowings Trade payables and accrued expenses Derivative liabilities As at March 31, 2012 1-2 years 2-4 years 4-7 years ` 22,121 273 ` 314 34 ` 75 - Loans and borrowings Trade payables and accrued expenses Derivative liabilities The balanced view of liquidity and financial indebtedness is stated in the table below. This calculation of the net cash position is used by the management for external communication with investors, analysts and rating agencies: share of profits of Wipro GE for the year ended March 31, 2010, As at March 31, 2011 and 2012 was ` 530, ` 648 and ` 335, respectively. 2011 2012 The aggregate summarized financial information of Wipro GE Cash and cash equivalents ` 61,141 ` 77,666 is as follows: Interest bearing deposits with 4,240 8,410 corporates Available for sale investments 49,282 41,961 Year ended March 31, Loans and borrowings (52,802) (58,958) 2010 2011 2012 Net cash position ` 61,861 ` 69,079 Revenue ` 12,567 ` 19,882 ` 25,684 16. Investment in equity accounted investees Gross profit 3,573 5,278 4,611 Profit for the year 934 1,127 553 Wipro GE Medical Systems (Wipro GE) The Company holds 49% interest in Wipro GE. Wipro GE is a private entity that is not listed on any public exchange. The carrying value of the investment in Wipro GE as at March 31, 2011 and 2012 was ` 2,993 and ` 3,232, respectively. The Company’s As at March 31, 2011 2012 ` 16,830 ` 18,608 8,543 10,408 ` 8,287 ` 8,200 Wipro Limited 219 Total assets Total liabilities. Total equity Consolidated Financial Statements Under IFRS In April 2010, Wipro GE acquired medical equipment and related businesses from General Electric for a cash consideration of approximately ` 3,728. Wipro GE had received tax demands aggregating to ` 2,615 (including interest) arising primarily on account of transfer pricing adjustments, denial of export benefits and tax holiday benefits claimed by Wipro GE under the Income Tax Act, 1961 (the “Act”) for the year ended March 31, 2001 to March 31, 2007. The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by first appellate authority for the years upto March 2004 and further appeals have been filed by the Income tax authorities before the second appellate authority. The first appellate authority has granted partial relief for the year ended March 31, 2005 and further appeal would be preferred by the Company before the second appellate authority.  The Company filed appeal before the second appellate authority for the year ended March 31, 2006 after receiving the assessment orders following the directions of the Dispute Resolution Panel. The second appellate authority passed an order directing assessing officer (AO) to give fair opportunity of hearing to the company, the case is pending with AO. For the year ended March 31, 2007, the appeal filed against the demand is pending before the first appellate authority. Considering the facts and nature of disallowance and the order of the appellate authority upholding the claims of Wipro GE, Wipro GE believes that the final outcome of the disputes should be in favour of Wipro GE and will not have any material adverse effect on its financial position and results of operations. Others During the year ended March 31, 2012, the Company entered into an agreement to purchase 26% of the equity investments in Wipro Kawasaki Precision Machinery Pvt. Ltd for a cash consideration of ` 130. This investment is accounted as an equity method investment under IAS 28, “Investments in Associates”. 17. Foreign currency translation reserve The movement in foreign currency translation reserve attributable to equity holders of the Company is summarized below: As at March 31, 2011 2012 ` 258 ` 1,524 1,246 9,164 18. Income taxes Income tax expense has been allocated as follows: Year ended March 31, 2010 2011 2012 9,294 ` 9,714 ` 13,763 Income tax expense as per ` the statement of income Income tax included in other comprehensive income on: unrealized gains/(losses)  (14) on available for sale investments gains/(losses) on cash flow  hedging derivatives 2,091 Total income taxes ` 11,371 2 (1) 44 (29) ` 9,760 ` 13,733 Income tax expense from continuing operations consist of the following: Year ended March 31, 2010 2011 2012 Current taxes Domestic Foreign Deferred taxes Domestic Foreign Total income tax expense ` ` ` ` ` 5,461 ` 3,403 8,864 ` 40 ` 390 430 ` 9,294 ` 5,573 ` 10,602 3,895 4,065 9,468 ` 14,667 292 ` (935) (46) 31 246 ` (904) 9,714 ` 13,763 Current taxes are net of reversal of provisions recorded in earlier periods, which are no longer required, amounting to ` 442, ` 590 and ` 845 for the year ended March 31, 2010, 2011 and 2012, respectively. Balance at the beginning of the year Translation difference related to foreign operations Change in effective portion of hedges of net investment in foreign operations Total change during the year Balance at the end of the year ` ` 20 1,266 1,524 ` ` (2,780) 6,384 7,908 Annual Report 2011-12 220 Consolidated Financial Statements Under IFRS The reconciliation between the provision of income tax of the Company and amounts computed by applying the Indian statutory income tax rate to profit before taxes is as follows: Year ended March 31, 2010 2011 2012 ` 55,410 ` 63,035 ` 69,750 33.99% 33.218% 32.445% Profit before taxes Enacted income tax rate in India Computed expected tax 18,834 20,939 22,630 expense Effect of: Income exempt from tax (10,802) (10,458) (9,115) Basis differences that will 898 (217) 636 reverse during a tax holiday period Income taxed at higher/ (475) (566) 367 (lower) rates Income taxes relating to (442) (590) (845) prior years. Changes in unrecognized 811 160 (214) deferred tax assets Expenses disallowed for 456 426 300 tax purposes Others, net 14 20 4 Total income tax expense ` 9,294 ` 9,714 ` 13,763 Deferred taxes on unrealized foreign exchange gain / loss relating to cash flow hedges is recognized in other comprehensive income and presented within equity in the cash flow hedging reserve. Deferred tax liability on the intangible assets identified and recorded separately at the time of an acquisition is recorded by an adjustment to goodwill. Other than these, the change in deferred tax assets and liabilities is primarily recorded in the statement of income. In assessing the realizability of deferred tax assets, the Company considers the extent to which, it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on this, the Company believes that it is probable that the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced. Deferred tax asset in respect of unused tax losses amounting to ` 2,076 and ` 1,734 as of March 31, 2011 and 2012, respectively have not been recognized by the Company. The Company has recognized deferred tax assets of ` 2,042 and ` 2,330 in respect of carry forward losses of its various subsidiaries during the year ended March 31, 2011 and 2012. Management’s projections of future taxable income and tax planning strategies support the assumption that it is probable that sufficient taxable income will be available to utilize these deferred tax assets. Pursuant to the changes in the Indian income tax laws, Minimum Alternate Tax (MAT) has been extended to income in respect of which deduction is claimed under section 10A, 10B and 10AA of the Act; consequently, the Company has calculated its tax liability for current domestic taxes after considering MAT. The excess tax paid under MAT provisions over and above normal tax liability can be carried forward and set-off against future tax liabilities computed under normal tax provisions. The Company was required to pay MAT and accordingly, a deferred tax asset of ` 488 and ` 1,223 has been recognized in the statement of financial position as of March 31, 2011 and 2012, respectively, which can be carried forward for a period of ten years from the year of recognition. A substantial portion of the profits of the Company’s India operations are exempt from Indian income taxes being profits attributable to export operations and profits from undertakings situated in Software Technology, Hardware Technology Parks and Export Oriented units. Under the tax holiday, the taxpayer can utilize an exemption from income taxes for a period of any ten consecutive years. The tax holidays on all facilities under Software Technology, Hardware Technology Parks and Export Oriented units has expired on March 31, 2011. Additionally, under the Special Economic Zone Act, 2005 scheme, units in The tax rates under Indian Income Tax Act, for the year ended March 31, 2012 is 32.445% as compared to 33.218% for the year ended March 31, 2011. This change in tax rate is on account of reduction in surcharge from 7.5% for the year ended March 31, 2011 to 5% for the year ended March 31, 2012, in the financial annual budget by the Indian Government. The components of deferred tax assets and liabilities are as follows: As at March 31, 2010 2011 2012 Carry-forward business losses ` 1,851 ` 2,042 ` 2,330 Accrued expenses and liabilities 568 521 930 Allowances for doubtful 328 716 789 accounts receivable Cash flow hedges 262 218 247 Minimum alternate tax 363 488 1,223 Deferred revenue 1,285 Others 83 196 85 3,455 4,181 6,889 Property, plant and equipment ` (525) ` (1,107) ` (2,223) Amortizable goodwill (458) (659) (1,120) Intangible assets (734) (682) (685) I nv e s t m e n t i n e q u i t y accounted investee (432) (567) (617) (2,149) (3,015) (4,645) Net deferred tax assets ` 1,306 ` 1,166 ` 2,244 Amounts presented in statement of financial position: Deferred tax assets ` 1,686 ` 1,467 ` 2,597 Deferred tax liabilities ` (380) ` (301) ` (353) Wipro Limited 221 Consolidated Financial Statements Under IFRS designated special economic zones providing service on or after April 1, 2005 will be eligible for a deduction of 100 percent of profits or gains derived from the export of services for the first five years from commencement of provision of services and 50 percent of such profits and gains for a further five years. Certain tax benefits are also available for a further five years subject to the unit meeting defined conditions. Profits from certain other undertakings are also eligible for preferential tax treatment. In addition, dividend income from certain category of investments is exempt from tax. The difference between the reported income tax expense and income tax computed at statutory tax rate is primarily attributable to income exempt from tax. Deferred income tax liabilities are recognized for all taxable temporary differences except in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Accordingly, deferred income tax liabilities on cumulative earnings of subsidiaries amounting to ` 12,969 and ` 15,722 as of March 31, 2011 and 2012, respectively has not been recognized. Further, it is not practicable to estimate the amount of the unrecognized deferred tax liabilities for these undistributed earnings. The tax loss carry-forwards of ` 5,941 and ` 5,344 as of March 31, 2011 and 2012, respectively relates to certain subsidiaries on which deferred tax asset has not been recognized by the Company. Approximately, ` 4,644 and ` 4,417 as of March 31, 2011 and 2012 respectively, of these tax loss carry-forwards is not currently subject to expiration dates. The remaining tax loss carry forward of approximately ` 1,297 and ` 928 as of March 31, 2011 and 2012 respectively, expires in various years through fiscal 2029. We are subject to U.S. tax on income attributable to our permanent establishment in the United States due to operation of our U.S. branch. In addition, the Company is subject to a 15% branch profit tax in the United States on the “dividend equivalent amount” as that term is defined under U.S. tax law. The Company has not triggered the branch profit tax until year ended March 31, 2012. The Company intends to maintain the current level of net assets in the United States commensurate with its operation and consistent with its business plan. The Company does not intend to repatriate out of the Unites States any portion of its current profits. Accordingly, the Company did not record current and deferred tax provision for branch profit tax. 19. Dividends The Company declares and pays dividends in Indian rupees. According to the Indian law any dividend should be declared out of accumulated distributable profits only after the transfer to a general reserve of a specified percentage of net profit computed in accordance with current regulations. The cash dividends paid per equity share were ` 4, ` 6 and ` 4 during the years ended March 31, 2010, 2011 and 2012, respectively. The Company has also paid an interim dividend of ` 2 per equity share during the year ended March 31, 2012. During the year ended March 31, 2011, the Company has also paid stock dividend, commonly known as bonus shares in India, comprised of two equity shares for every three equity shares outstanding on the record date and two ADSs for every three ADSs outstanding on the record date. The stock dividend did not affect the ratio of ADSs to equity shares, such that each ADS after the stock dividend continues to represent one equity share of par value of ` 2 per share. The Board of Directors in their meeting on April 25, 2012 proposed a final dividend of ` 4 (US$0.08) per equity share and ADR. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on July 23, 2012, and if approved, would result in a cash outflow of approximately ` 11,431, including corporate dividend tax thereon (` 1,595). 20. Additional capital disclosures The key objective of the Company’s capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor and customer confidence and to ensure future development of its business. The Company focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company. The Company’s goal is to continue to be able to return excess liquidity to shareholders by continuing distributing annual dividends in future periods. During the year ended March 31, 2011 and 2012, the Company distributed ` 6 and ` 4, respectively in dividend per equity share. The Company has also distributed an interim dividend of ` 2 per equity share during the year ended March 31, 2012. The amount of future dividends will be balanced with effort to continue to maintain an adequate liquidity status. The capital structure as of March 31, 2011 and 2012 was as follows: As at March 31, 2011 2012 % Change Total equity attributable to ` 239,680 ` 285,314 19.04% the equity shareholders of the Company As percentage of total 82% 83% capital Current loans and 33,043 36,448 borrowings Non-current loans and borrowings 19,759 22,510 Total loans and borrowings 52,802 58,958 11.66% As percentage of total capital 18% 17% Total capital (loans and borrowings and equity) ` 292,482 ` 344,272 17.71% The Company is predominantly equity-financed. This is also evident from the fact that loans and borrowings represented Annual Report 2011-12 222 Consolidated Financial Statements Under IFRS only 18% and 17% of total capital as of March 31, 2011 and 2012, respectively. Further, the Company has consistently been a net cash company with cash and bank balance along with available for sale investments being in excess of debt. 21. Revenues Year ended March 31, 2010 2011 2012 ` 202,990 ` 234,285 ` 281,014 68,967 76,257 90,957 ` 271,957 ` 310,542 ` 371,971 23. Finance expense Year ended March 31, 2010 2011 2012 1,232 ` 776 ` 1,057 Rendering of services Sale of products Total revenues 22. Expenses by nature Interest expense Exchange fluctuation on foreign currency borrowings, net Total ` ` 92 1,324 ` 1,157 1,933 ` 2,434 3,491 24. Finance and other income Year ended March 31, 2010 2011 2012 2,610 ` 4,057 ` 6,497 1,442 2,403 2,211 308 192 187 4,360 ` 6,652 ` 8,895 Employee compensation Raw materials, finished goods, process stocks and stores and spares consumed Sub contracting/technical 17,527 26,415 34,210 fees/third party application Travel 8,064 10,156 12,609 Depreciation and 7,831 8,211 10,129 amortization Repairs 5,020 5,253 9,455 Advertisement 4,534 5,114 6,583 Communication 3,157 3,492 4,007 Rent 3,062 3,230 3,734 Power and fuel 1,797 2,427 2,862 Legal and professional fees 1,593 1,629 1,818 Rates, taxes and insurance 1,023 1,324 1,883 Carriage and freight 950 1,181 1,487 Provision for doubtful debt 566 399 394 Miscellaneous expenses 5,563 7,455 7,729 Total cost of revenues, selling and marketing expenses and general and administrative expenses ` 219,730 ` 253,319 `311,236 Year ended March 31, 2010 2011 2012 ` 107,230 ` 126,867 `154,066 51,813 50,166 60,270 Interest income ` Dividend income Gain on sale of investments Total ` 25. Earnings per equity share A reconciliation of profit for the year and equity shares used in the computation of basic and diluted earnings per equity share is set out below: Basic: Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period, excluding equity shares purchased by the Company and held as treasury shares. Equity shares held by controlled Wipro Equity Reward Trust (‘WERT’) and Wipro Inc Benefit Trust (WIBT) have been reduced from the equity shares outstanding for computing basic and diluted earnings per share. Wipro Limited 223 Consolidated Financial Statements Under IFRS Profit attributable to equity holders of the Company Weighted average number of equity shares outstanding Basic earnings per share Year ended March 31, 2010 2011 2012 ` 45,931 ` 52,977 ` 55,730 2,429,025,243 2,436,440,633 2,449,056,412 ` 18.91 ` 21.74 ` 22.76 Diluted: Diluted earnings per share is calculated by adjusting the weighted average number of equity shares outstanding during the period for assumed conversion of all dilutive potential equity shares. Employee share options are dilutive potential equity shares for the Company. The calculation is performed in respect of share options to determine the number of shares that could have been acquired at fair value (determined as the average market price of the Company’s shares during the period). The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. Year ended March 31, 2010 2011 2012 ` 45,931 ` 52,977 ` 55,730 2,429,025,243 2,436,440,633 2,449,056,412 20,633,289 14,713,521 6,902,310 2,449,658,532 2,451,154,154 2,455,958,722 ` 18.75 ` 21.61 ` 22.69 Profit attributable to equity holders of the Company Weighted average number of equity shares outstanding Effect of dilutive equivalent share options Weighted average number of equity shares for diluted earnings per share Diluted earnings per share Earnings per share and number of share outstanding for the year ended March 31, 2010, have been adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. 26. Employee stock incentive plans The stock compensation expense recognized for employee services received during the year ended March 31, 2010, 2011 and 2012 is ` 1,302, ` 1,092 and ` 949, respectively. Wipro Equity Reward Trust (WERT) In 1984, the Company established a controlled trust called the Wipro Equity Reward Trust (“WERT”). The WERT purchases shares of the Company out of funds borrowed from the Company. The Company’s compensation committee recommends to the WERT certain officers and key employees, to whom the WERT grants shares from its holdings at nominal price. Such shares are then held by the employees subject to vesting conditions. The shares held by the WERT are reported as a reduction in stockholders’ equity The movement in the shares held by the WERT is given below: Year ended March 31, 2010 2011 2012 7,961,760 13,269,600 13,269,600 Wipro Employee Stock Option Plans and Restricted Stock Unit Option Plans A summary of the general terms of grants under stock option plans and restricted stock unit option plans are as follows: Name of Plan Authorized Shares(1) Range of Exercise Prices 50,000,000 ` 171 – 490 Shares held at the beginning of the period(1) Shares granted to employees Grants forfeited by employees Shares held at the end of the period (1) Wipro Employee Stock Option Plan 1999 (1999 Plan) Wipro Employee Stock Option Plan 2000 (2000 Plan) Stock Option Plan (2000 ADS Plan) Wipro Restricted Stock Unit Plan (WRSUP 2004 plan) Wipro ADS Restricted Stock Unit Plan (WARSUP 2004 plan) Wipro Employee Restricted Stock Unit Plan 2005 (WSRUP 2005 plan) Wipro Employee Restricted Stock Unit Plan 2007 (WSRUP 2007 plan) (1) 250,000,000 ` 171 – 490 15,000,000 US$ 20,000,000 ` 20,000,000 US$ 20,000,000 ` 3–7 2 0.04 2 16,666,667 ` 2 7,961,760 13,269,600 13,269,600 adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. Employees covered under the stock option plans and restricted stock unit option plans (collectively “stock option plans”) are granted an option to purchase shares of the Company at the respective exercise prices, subject to requirement of vesting The opening balance as of April 1, 2010 has been adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. Annual Report 2011-12 224 Consolidated Financial Statements Under IFRS conditions (generally service conditions). These options generally vests in tranches over a period of five years from the date of grant. Upon vesting, the employees can acquire one equity share for every option. The maximum contractual term for these stock option plans is generally ten years. The activity in these stock option plans is summarized below: 2010 Number Weighted Average Exercise Price 1,140 ` 254 120,000 1,606 13,799,549 2,470,641 — — — 5,000 137,100 — — — (2,736,924) (493,519) (1,140) — — (805,722) (348,401) — 120,000 1,606 10,261,903 1,765,821 — — 1,606 4,719,739 645,341 ` US$ ` US$ ` ` US$ ` US$ ` ` US$ ` US$ ` ` US$ ` US$ ` ` US$ ` US$ ` ` US$ ` US$ 489 4.7 2 0.04 — — — 2 0.04 — — — 2 0.04 254 — — 2 0.04 — 489 4.7 2 0.04 — — 4.7 2 0.04 Year ended March 31, 2011 Number Weighted Average Exercise Price — ` — 200,000 2,677 17,103,172 2,943,035 — — — 5,227,870 1,437,060 — (80,000) — (5,482,210) (870,622) — (120,000) (2,677) (1,466,071) (285,581) — — — 15,382,761 3,223,892 — — — 7,533,984 1,147,391 2012 Number Weighted Average Exercise Price — ` — ` — US$ — ` 2 US$ 0.04 ` — ` 480.20 US$ — ` 2 US$ — ` — ` — US$ — ` 2 US$ 0.04 ` — ` — US$ — ` 2 US$ 0.04 ` — Range of Exercise Prices Outstanding at the beginning of the period(1) ` 229 – 265 ` 480 – 489 US$ 4–6 ` 2 US$ 0.04 Granted ` 229 – 265 ` 480 – 489 US$ 4–6 ` 2 US$ 0.04 Exercised ` 229 – 265 ` 480 – 489 US$ 4–6 ` 2 US$ 0.04 Forfeited and lapsed ` 229 – 265 ` 480 – 489 US$ 4–6 ` 2 US$ 0.04 Outstanding at the end of ` 229 – 265 the period ` 480 – 489 US$ 4–6 ` 2 US$ 0.04 Exercisable at the end of ` 229 – 265 the period ` 480 – 489 US$ 4–6 ` 2 US$ 0.04 (1) ` 293.40 — US$ 2.82 — ` 2 15,382,761 US$ 0.04 3,223,892 ` — — ` — 30,000 US$ — — ` 2 40,000 US$ 0.04 — ` — — ` 293.40 — US$ — — ` 2 (3,708,736) US$ 0.04 (638,347) ` — — ` 293.40 — US$ 2.82 — ` 2 (1,106,987) US$ 0.04 (411,853) ` — — ` US$ ` US$ ` ` US$ ` US$ — — 2 0.04 — — — 2 0.04 30,000 ` 480.20 — US$ — 10,607,038 ` 2 2,173,692 US$ 0.04 — ` — — ` — US$ 5,370,221 ` 578,400 US$ — — 2 0.04 The opening balance as of April 1, 2010 have been adjusted for the two equity shares for every three equity shares stock dividend approved by the shareholders on June 4, 2010. Wipro Limited 225 Consolidated Financial Statements Under IFRS The following table summarizes information about outstanding stock options: As at March 31, 2010 2011 2012 Weighted Weighted Numbers Weighted Weighted Numbers Weighted Weighted Average Average Average Average Average Average Remaining Exercise Remaining Exercise Remaining Exercise Life Price Life Price Life Price (Months) (Months) (Months) - ` - ` - ` 49 ` 489 - ` 30,000 48 ` 480.20 1 US$ 4.70 - US$ - US$ 37 ` 2 15,382,761 35 ` 2 10,607,038 30 ` 2 44 US$ 0.04 3,223,892 48 US$ 0.04 2,173,692 37 US$ 0.04 Range of Exercise price Numbers ` 229 – 265 ` 480 – 489 US$ 4 –6 ` 2 US$ 0.04 120,000 1,606 10,261,903 1,765,821 The weighted-average grant-date fair value of options granted during the year ended March 31, 2010, 2011 and 2012 was ` 814, ` 417.65 and ` 449.8 for each option, respectively. The weighted average share price of options exercised during the year ended March 31, 2010, 2011 and 2012 was ` 557.52, ` 424.28 and ` 399.22 for each option, respectively. The fair value of 30,000 options granted during the year ended March 31, 2012 (other than at nominal exercise price) has been estimated on the date of grant using the Black-Scholes-Merton option pricing model. The fair value of share options has been determined using the following assumptions: Expected term Risk free interest rates Volatility Dividend yield 27. Employee benefits a) Employee costs include: Year ended March 31, 2010 2011 2012 ` 103,194 ` 122,399 ` 149,410 276 2,458 469 2,907 460 3,247 5 years 8% 62.2% 1.28% b) Defined benefit plans - Gratuity: Amount recognized in the statement of income in respect of gratuity cost (defined benefit plan) is as follows: Year ended March 31, 2010 2011 2012 133 ` 161 ` 211 (122) (164) (184) (63) 328 276 ` 138 ` (168) 254 386 469 ` 177 ` 14 (16) 435 460 232 Salaries and bonus Employee benefit plans Gratuity Contribution to provident  and other funds Share based compensation Interest on obligation ` Expected return on plan assets Actuarial losses/(gains) recognized Past service cost Current service cost Net gratuity cost/(benefit) ` Actual return on plan assets ` 1,302 1,092 949 ` 107,230 ` 126,867 ` 154,066 In May 2010, the Government of India amended the Payment of Gratuity Act, 1972 to increase the limit of gratuity payment from ` 0.35 to ` 1. Consequently, during the year ended March 31, 2011, the Company has recognized ` 254 of vested past service cost in the statement of income. The principal assumptions used for the purpose of actuarial valuation are as follows: As at March 31, 2010 2011 2012 7.15% 7.95% 8.35% 8% 8% 8% 5% 5% 5% The employee benefit cost is recognized in the following line items in the statement of income: Year ended March 31, 2010 2011 2012 Cost of revenues ` 90,350 ` 106,235 ` 128,770 Selling and marketing 9,126 10,860 14,169 expenses General and administrative 7,754 9,772 11,127 expenses ` 107,230 ` 126,867 ` 154,066 Discount rate Expected return on plan assets Expected rate of salary increase The expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. Annual Report 2011-12 226 Consolidated Financial Statements Under IFRS Change in present value of defined benefit obligation is summarized below: 2009 ` 1515 34 369 135 (118) (77) ` 1,858 As at March 31, 2010 2011 ` 1,858 ` 2,060 ` 328 386 254 133 161 (214) (230) (45) (155) ` 2,060 ` 2,476 ` 2012 2,476 25 435 (16) 211 (352) 66 2,845 Defined benefit obligation at the beginning of the year Acquisitions Current service cost Past service cost Interest on obligation Benefits paid Actuarial losses/(gains) Defined benefit obligation at the end of the year Change in plan assets is summarized below: Fair value of plan assets at the beginning of the year Acquisitions Expected return on plan assets Employer contributions Benefits paid Actuarial gains/(losses) Fair value of plan assets at the end of the year Present value of unfunded obligation Recognized asset/(liability) 2009 ` 1,244 19 92 154 (118) 25 1,416 ` (442) ` (442) As at March 31, 2010 2011 ` 1,416 ` 1,967 122 164 625 473 (214) (230) 18 13 1,967 2,387 ` (93) ` (89) ` (93) ` (89) 2012 ` 2,387 1 184 586 (344) 52 2,866 ` 21 ` 21 The experience adjustments, meaning difference between changes in plan assets and obligations expected on the basis of actuarial assumption and actual changes in those assets and obligations are as follows: As at March 31, 2010 2011 Difference between expected and actual developments: of fair value of the obligation  of fair value of plan assets ` (84) 18 ` (32) 15 2012 ` (147) 52 As at March 31, 2010, 2011 and 2012, 100% of the plan assets were invested in insurer managed funds. The expected future contribution and estimated future benefit payments from the fund are as follows: Expected contribution to the fund during the year ending March 31, 2013 Estimated benefit payments from the fund for the year ending March 31: 2013 2014 2015 2016 2017 Thereafter Total c) Provident Fund: ` ` 341 620 612 626 686 717 2,969 6,230 ` The expected benefits are based on the same assumptions used to measure the Company’s benefit obligations as of March 31, 2012. Upto year ended March 31, 2011, in the absence of guidance from the Actuarial Society of India, actuarial valuation could not have been applied to reliably measure the provident fund liabilities. During the year ended March 31, 2012, the Actuarial Society of India issued the guidance for measurement of provident fund liabilities. Accordingly, based on such actuarial valuation there is no shortfall in the fund as at March 31, 2012. Wipro Limited 227 Consolidated Financial Statements Under IFRS The details of fund and plan assets are given below: As at March 31, 2009 2010 2011 2012 ` 10,020 ` 12,285 ` 15,309 ` 17,932 10,013 12,194 15,412 17,668 ` 7 ` 91 ` (103) ` 264 Fair value of plan assets Present value of defined benefit obligation Net (shortfall)/excess The principal assumptions used in determining the present value obligation of interest guarantee under the deterministic approach are as follows: 2009 6.75% 7 years 8.5% As at March 31, 2010 2011 7.15% 7.95% 7 years 7 years 8.5% 9.5% 2012 8.35% 6 years 8.25% Discount rate for the term of the obligation Average remaining tenure of investment portfolio Guaranteed rate of return 28. Related party relationships and transactions List of subsidiaries as of March 31, 2012 are provided in the table below. Direct Subsidiaries Wipro Inc. Wipro Gallagher Solutions Inc. Enthink Inc.* Infocrossing Inc. Wipro Energy IT Services India Private Limited (formerly SAIC India Private Limited) Wipro Japan KK Wipro Shanghai Limited Wipro Trademarks Holding Limited Cygnus Negri Investments Private Limited Wipro Travel Services Limited Wipro Consumer Care Limited Wipro Holdings (Mauritius) Limited Wipro Holdings UK Limited Step Subsidiaries Country of Incorporation U.S. U.S. U.S. U.S. India Japan China India India India India Mauritius U.K. Wipro Technologies UK Limited U.K. Wipro Holding Austria GmbH(A) Austria U.K. 3D Networks (UK) Limited U.K Wipro EuropeLimited (A) (formerly SAIC Europe Limited) Cyprus Mexico Philippines Hungary Argentina Egypt Saudi Arabia Wipro Cyprus Private Limited Wipro Technologies S.A DE C. V Wipro BPO Philippines LTD. Inc Wipro Holdings Hungary Korlátolt Felelősségű Társaság Wipro Technologies Argentina SA Wipro Information Technology Egypt SAE Wipro Arabia Limited* Annual Report 2011-12 228 Consolidated Financial Statements Under IFRS Direct Subsidiaries Step Subsidiaries Wipro Poland Sp Zoo Wipro IT Services Poland Sp. z o. o Wipro Outsourcing Services UK Limited Wipro Technologies (South Africa) Proprietary Limited Wipro Information Technology Netherlands BV (formerly RetailBox BV) Wipro Portugal S.A.(A) (Formerly Enabler Informatica SA) Wipro Technologies Limited, Russia Wipro Gulf LLC (formerly SAIC Gulf LLC) Wipro Technology Chile SPA Wipro Infrastructure Engineering AB Wipro Infrastructure Engineering Oy.(A) Hydrauto Celka San ve Tic Wipro Technologies SRL Wipro Singapore Pte Limited Country of Incorporation Poland Poland U.K. South Africa Netherland Portugal Russia Sultanate of Oman Chile Sweden Finland Turkey Romania Singapore Indonesia Singapore Singapore Wipro Yardley FZE Wipro Australia Pty Limited Wipro Networks Pte Limited (formerly 3D Networks Pte Limited) Planet PSG Pte Limited Wipro Technologies SDN BHD Wipro Chengdu Limited Wipro Chandrika Limited* Vignani Solutions Private Limited WMNETSERV Limited WMNETSERV (U.K.) Limited. WMNETSERV INC Wipro Technology Services Limited Wipro Airport IT Services Limited* Wipro Infrastructure Engineering Machinery (Changzhou) Co., Ltd. PT WT Indonesia Wipro Unza Holdings Limited (A) Wipro Technocentre (Singapore) Pte Limited Wipro (Thailand) Co Limited Thailand Wipro Bahrain Limited WLL Bahrain Dubai Australia Singapore Singapore Malaysia China India India Cyprus U.K. U.S. India India China *All the above direct subsidiaries are 100% held by the Company except that the Company hold 98% of the equity securities of Enthink Inc., 66.67% of the equity securities of Wipro Arabia Limited, 90% of the equity securities of Wipro Chandrika Limited and 74% of the equity securities of Wipro Airport IT Services Limited. Wipro Limited 229 Consolidated Financial Statements Under IFRS As of March 31, 2012, the Company also held 49% of the equity securities of Wipro GE HealthCare Private Limited that is accounted for as an equity method investment. (A) Step Subsidiary details of Wipro Unza Holdings Limited, Wipro Holding Austria GmbH, Wipro Portugal S.A, Wipro Infrastructure Engineering Oy and Wipro Europe Limited are as follows: Step Subsidiaries Wipro Unza Singapore Pte Limited Wipro Unza Indochina Pte Limited   Wipro Unza Cathay Limited Wipro Unza China Limited   PT Unza Vitalis Wipro Unza Thailand Limited Wipro Unza Overseas Limited Unzafrica Limited Wipro Unza Middle East Limited Unza International Limited Unza Nusantara Sdn Bhd                 Wipro Holding Austria GmbH Step Subsidiaries   Wipro Unza Vietnam Co., Limited     Wipro Unza (Guangdong) Consumer Products LTD.               Unza Holdings Sdn Bhd Unza (Malaysia) Sdn Bhd   Wipro Manufacturing Services Sdn Bhd   Gervas Corporation Sdn Bhd   Formapac Sdn Bhd Wipro Technologies Austria GmbH New Logic Technologies SARL Wipro Portugal S.A. SAS Wipro France (formerly Enabler France SAS) Wipro Retail UK Limited (formerly Enabler UK Limited) Wipro do Brasil Technologia Ltda (formerly Enabler Brazil Ltda) France U.K. Brazil                   Country of Incorporation Singapore Singapore Vietnam Hong Kong Hong Kong China Indonesia Thailand British virgin islands   Nigeria   British virgin islands   British virgin islands   Malaysia   Malaysia   Malaysia Wipro Unza (Malaysia) Sdn Bhd Malaysia   Malaysia Malaysia Shubido Pacific Sdn Bhd(a)   Malaysia Gervas (B) Sdn Bhd Malaysia   Malaysia Austria France R.K.M Equipamentos Hidraulicos Brazil Ltda Wipro Technologies Gmbh (formerly Enabler Germany & Retail Consult GmbH) Wipro Infrastructure Engineering Oy Wipro Infrastructure Engineering LLC Wipro Europe Limited (formerly SAIC Europe Limited) Wipro UK Limited (formerly SAIC Limited) Wipro Europe (formerly Science Applications International, Europe SARL) U.K. France Russia Annual Report 2011-12 230 Consolidated Financial Statements Under IFRS a) All the above subsidiaries are 100% held by the Company except Shubido Pacific Sdn Bhd in which the Company holds 62.55% of the equity securities. The list of controlled trusts are: Name of entity Wipro Equity Reward Trust Wipro Inc Benefit Trust The other related parties are: Name of entity Wipro GE Healthcare Private Limited Azim Premji Foundation Azim Premji Trust Hasham Premji (partnership firm) Prazim Traders (partnership firm) Zash Traders (partnership firm) Regal Investment Trading Company Private Limited Vidya Investment Trading Company private Limited Napean Trading Investment Company Private Limited Key management personnel - Azim Premji - Suresh C Senapaty Suresh Vaswani - - Girish S Paranjpe - T K Kurien - Dr. Ashok S Ganguly - Narayanan Vaghul Dr. Jagdish N Sheth - - P.M Sinha B.C. Prabhakar - - William Arthur Owens Dr. Henning Kagermann - - Shyam Saran - M K Sharma Relative of Key management personnel - Rishad Premji (3) (1) (2) Nature Trust Trust Country of Incorporation India USA Nature Associate Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Entity controlled by Director Chairman and Managing Director Chief Financial Officer and Director Jt CEO, IT Business and Director(1) Jt CEO, IT Business and Director(1) CEO, IT Business and Director(2) Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director(3) Relative of the Key management personnel % of holding Country of Incorporation 49% India Up to January 31, 2011 With effect from February 01, 2011 With effect from July 01, 2011 Wipro Limited 231 Consolidated Financial Statements Under IFRS The Company has the following related party transactions: Transaction/ Balances 2010 7 32 Associate 2011 18 2012 75 98 16 Entities controlled by Directors 2010 2011 2012 ` 1 ` - ` 12 4,418 10,362 11,102 3 1 Key Management Personnel 2010 2011 2012 ` ` ` 573## 234 536## 175 34 4 260 30 5 108 34 5 22 Sale of goods and services Dividend Royalty income Others Key management personnel# Remuneration and short-term benefits Other benefits Remuneration to relative of key management personnel Balances as on March 31, Receivables Payables ` ` ` 1 - 7 - 2 - 44 8 # Post employment benefit comprising gratuity, and compensated absences are not disclosed as these are determined for the Company as a whole. ## including relative of key management personnel. arising primarily on account of denial of deduction under section 10A of the Income Tax Act, 1961 in respect of profit earned by the Company’s undertaking in Software Technology Park at Bangalore for the years ended March 31, 2001 to March 31, 2008. The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by the second appellate authority for the years up to March 31, 2004 and further appeals have been filed by the Income tax authorities before the Honorable High Court. The first appellate authority has granted relief for the year ended March 31, 2005 and further appeal has been filed by the Income tax authorities before the Income-tax Appellate Tribunal. The Company is in appeal before the Income-tax Appellate Tribunal for the years ended March 31, 2006 and March 31, 2007 after receiving the assessment orders following the directions of the Dispute Resolution Panel. For the year ended March 31, 2008, the objections against the draft assessment order is pending before the Dispute Resolution Panel. Considering the facts and nature of disallowance and the order of the appellate authority upholding the claims of the Company for earlier years, the Company believes that the final outcome of the above disputes should be in favor of the Company and there should not be any material impact on the consolidated financial statements. The Contingent liability in respect of disputed demands for excise duty, custom duty, income tax, sales tax and other matters amounts to ` 1,384, ` 1,472 and ` 2,374 as of March 31, 2010, 2011 and 2012, respectively. The Company is subject to legal proceedings and claims which have arisen in the ordinary course of its business. The resolution of these legal proceedings is not likely to have a material and adverse effect on the results of operations or the financial position of the Company. 29. Commitments and contingencies Operating leases: The Company has taken office and residential facilities under cancelable and non-cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The operating lease agreements extend up to a maximum of fifteen years from their respective dates of inception and some of these lease agreements have price escalation clause. Rental payments under such leases were ` 3,062, ` 3,230 and ` 3,734, for the year ended March 31, 2010, 2011 and 2012, respectively. Details of contractual payments under non-cancelable leases are given below: As at March 31, 2011 2012 Not later than one year ` 1,828 ` 3,301 Later than one year but not later than 5,143 7,842 five years Later than five years 3,294 3,696 ` 10,265 ` 14,839 Capital commitments: As at March 31, 2011 and 2012, the Company had committed to spend approximately ` 2,071 and ` 1,673, respectively, under agreements to purchase property and equipment. These amounts are net of capital advances paid in respect of these purchases. Guarantees: As at March 31, 2011 and 2012, performance and financial guarantees provided by banks on behalf of the Company to the Indian Government, customers and certain other agencies amount to approximately ` 19,841 and ` 23,240, respectively, as part of the bank line of credit. Contingencies and lawsuits: The Company had received tax demands aggregating to ` 40,040 (including interest of ` 10,616) Annual Report 2011-12 232 Consolidated Financial Statements Under IFRS Other commitments: The Company’s Indian operations have been established as unit in Special Economic Zone and Software Technology Park Unit under plans formulated by the Government of India. As per the plan, the Company’s India operations have export obligations to the extent of foreign exchange net positive (i.e. foreign exchange inflow – foreign exchange outflow should be positive) over a five year period. The consequence of not meeting this commitment in the future would be a retroactive levy of import duties on certain hardware previously imported duty free. As of March 31, 2012, the Company has met all commitments required under the plan. 30. Segment Information The Company is currently organized by segments, which includes IT Services (comprising of IT Services and BPO Services), IT Products, Consumer Care and Lighting and ‘Others’. Information on reportable segments is as follows: The Chairman of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by IFRS 8, Operating Segments. The Chairman of the Company evaluates the segments based on their revenue growth, operating income and return on capital employed. The management believes that return on capital employed is considered appropriate for evaluating the performance of its operating segments. Return on capital employed is calculated as operating income divided by the average of the capital employed at the beginning and at the end of the period. Capital employed includes total assets of the respective segments (except cash and cash equivalents, available for sale investments and inter-corporate deposits amounting to ` 105,348, ` 114,663 and ` 128,037 as of March 31, 2010, 2011 and 2012, respectively, which is included under Reconciling items) less all liabilities, excluding loans and borrowings. Year ended March 31, 2010 IT Services and Products Consumer Others Reconciling Care and Items Total IT IT Lighting Services Products Revenues Cost of revenues Selling and marketing expenses General and administrative expenses Operating income of segment Finance expense Finance and other income Share of profits of equity accounted investees Profit before tax Income tax expense Profit for the year Depreciation and amortization expense Total assets Total liabilities Opening capital employed Closing capital employed Average capital employed Return on capital employed Additions to:   Goodwill   Intangible assets   Property, plant and equipment 202,490 (132,144) (10,213) (12,446) 47,687 38,205 (34,151) (1,275) (1,015) 1,764 240,695 (166,295) (11,488) (13,461) 49,451 22,584 (11,805) (6,470) (1,207) 3,102 7,143 (7,446) (323) (210) (836) 1,152 (753) (327) 55 127 Entity Total 271,574 (186,299) (18,608) (14,823) 51,844 (1,324) 4,360 530 55,410 (9,294) 46,116 7,831 329,928 133,379 204,272 259,063 231,667 22% 2,576 1,049 13,399 6,816 165,192 61,009 91,401 109,487 100,444 49% 1,557 18 12,223 402 24,428 5,707 17,901 19,269 18,585 17% 1,019 1,031 627 294 7,125 4,284 5,544 5,414 5,479 (15)% 538 319 133,183 62,379 89,426 124,893 107,159 11 Wipro Limited 233 Consolidated Financial Statements Under IFRS Revenues Cost of revenues Selling and marketing expenses General and administrative expenses Operating income of segment Finance expense Finance and other income Share of profits of equity accounted investees Profit before tax Income tax expense Profit for the year Depreciation and amortization expense Total assets Total liabilities Opening capital employed Closing capital employed Average capital employed Return on capital employed Additions to:   Goodwill   Intangible assets   Property, plant and equipment Year ended March 31, 2011 IT Services and Products Consumer Others Reconciling Items IT IT Total Care and Lighting Services Products 234,850 36,910 271,760 27,258 10,896 1,073 (153,446) (32,843) (186,289) (15,142) (10,160) (1,217) (12,642) (1,284) (13,926) (7,514) (491) (241) (15,355) (1,174) (16,529) (1,152) (342) (316) 53,407 1,609 55,016 3,450 (97) (701) Entity Total 310,987 (212,808) (22,172) (18,339) 57,668 (1,933) 6,652 648 63,035 (9,714) 53,321 8,211 371,443 131,072 259,063 293,176 276,119 21% 54 36 14,645 7,088 183,961 60,998 109,487 126,929 118,208 47% 54 28 12,647 433 26,506 5,726 19,269 20,926 20,097 17% 8 400 328 9,978 5,343 5,414 6,922 6,168 (2)% 707 362 150,998 59,005 124,893 138,399 131,646 891 Year ended March 31, 2012 IT Services and Products Consumer Others Reconciling Entity Items Total Total Care and IT IT Lighting Services Products Revenues 284,313 38,436 322,749 33,401 18,565 534 375,249 Cost of revenues (191,713) (34,080) (225,793) (18,945) (17,302) (1,133) (263,173) Selling and marketing expenses (16,114) (1,395) (17,509) (9,195) (620) (453) (27,777) General and administrative expenses (17,221) (1,174) (18,395) (1,305) (533) (53) (20,286) Operating income of segment 59,265 1,787 61,052 3,956 110 (1,105) 64,013 Finance expense (3,491) Finance and other income 8,895 Share of profits of equity accounted 333 investees Profit before tax 69,750 Income tax expense (13,763) Profit for the year 55,987 Depreciation and amortization expense 8,768 428 481 452 10,129 Total assets 222,792 29,815 15,767 167,627 436,001 Total liabilities 74,287 7,270 6,661 61,620 149,838 Opening capital employed 126,929 20,926 6,922 138,399 293,176 Closing capital employed 152,757 22,669 11,875 157,820 345,121 Average capital employed 139,843 21,798 9,398 148,110 319,149 Return on capital employed 44% 18% 1% 20% Additions to:   Goodwill 5,524 47 341 5,912   Intangible assets 824 29 108 961   Property, plant and equipment 12,757 624 1,139 344 14,864 Annual Report 2011-12 234 Consolidated Financial Statements Under IFRS The Company has four geographic segments: India, the United States, Europe and Rest of the world. Revenues from the geographic segments based on domicile of the customer are as follows: Year ended March 31, 2010 2011 2012 ` 62,179 ` 67,904 ` 80,135 119,870 129,217 148,160 56,780 68,159 87,186 32,745 45,707 59,768 ` 271,574 ` 310,987 ` 375,249 c) For the purpose of segment reporting only, the Company has included the impact of ‘foreign exchange gains / (losses), net’ in revenues (which is reported as a part of operating profit in the statement of income). d) For evaluating performance of the individual business segments, stock compensation expense is allocated on the basis of straight line amortization. The incremental impact of accelerated amortization of stock compensation expense over stock compensation expense allocated to the individual business segments is reported in reconciling items. e) For evaluating the performance of the individual business segments, amortization of intangibles acquired through business combinations are reported in reconciling items. f ) For evaluating the performance of the individual business segments, loss on disposal of subsidiaries are reported in reconciling items. g) The Company generally offers multi-year payment terms in certain total outsourcing contracts. These payment terms primarily relate to IT hardware, software and certain transformation services in outsourcing contracts. Corporate treasury provides internal financing to the business units offering multi-year payment terms. Accordingly, such receivables are reflected in capital employed in reconciling items. As of March 31, 2010, 2011 and 2012, capital employed in reconciling items includes ` 8,516, ` 12,255 and ` 13,562, respectively, of such receivables on extended collection terms. The finance income on deferred consideration earned under these contracts is included in the revenue of the respective segment and is eliminated under reconciling items. h) Operating income of segments is after recognition of stock compensation expense arising from the grant of options: Segments IT Services IT Products Consumer Care and Lighting Others Reconciling items Total ` Year ended March 31, 2010 2011 2012 1,159 ` 1,214 ` 871 93 90 62 71 112 89 18 (39) 1,302 ` 31 (355) 1,092 ` 26 (99) 949 India United States Europe Rest of the world No client individually accounted for more than 10% of the revenues during the year ended March 31, 2010, 2011 and 2012. Notes: a) The Company has the following reportable segments: i) IT Services: The IT Services segment provides IT and IT enabled services to customers. Key service offering includes software application development, application maintenance, research and development services for hardware and software design, data center outsourcing services and business process outsourcing services. ii) IT Products: The IT Products segment sells a range of Wipro personal desktop computers, Wipro servers and Wipro notebooks. The Company is also a value added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to these items is reported as revenue from the sale of IT Products. iii) Consumer care and lighting: The Consumer Care and Lighting segment manufactures, distributes and sells personal care products, baby care products, lighting products and hydrogenated cooking oils in the Indian and Asian markets. iv) The Others’ segment consists of business segments that do not meet the requirements individually for a reportable segment as defined in IFRS 8. v) Corporate activities such as treasury, legal and accounting, which do not qualify as operating segments under IFRS 8, and elimination of inter-segment transactions have been considered within ‘reconciling items’. b) Revenues include excise duty of ` 842, ` 1,007 and ` 1,205 for the year ended March 31, 2010, 2011 and 2012, respectively. For the purpose of segment reporting, the segment revenues are net of excise duty. Excise duty is reported in reconciling items. ` i) Management believes that it is currently not practicable to provide disclosure of geographical location wise assets, since the meaningful segregation of the available information is onerous. Wipro Limited 235 Glossary A&D ADM ADR APAC ASEAN BFSI BPO BPS CAGR CCLG CEM CFL CMSP COSO CPG CSAT CTI FMCG Aerospace & Defence Application Development & Maintenance American Depository Receipt Asia Pacific Association of Southeast Asian Nations Banking & Financial Services Business Process Outsourcing Basis Point Compounded Annual Growth Rate Consumer Care & Lighting Client Engagement Manager Compact Fluorescent Lamps Communication & Service Provider Company of Sponsoring Trade way Organisation Consumer Packaged Goods Customer Satisfaction Computer Telephony Interface Fast Moving Consumer Goods M2M FPP IFRS IP IT IT ITES LAN LATAM LED LEED Fixed Price Projects International Financial Reporting Standards Intellectual Property Products Information Technology Products Services Information Technology Services Information Technology Enabled Services Local Area Network Latin America Light Emitting Diode Leadership in Energy and Environmental Designs Machine to Machine NASSCOM National Association of Software and Services Companies NUI OEM RSU WAN WIN Natural User Interface Original Equipment Manufacturer Restricted Stock Unit Wide Area Network Wipro Infrastructure Engineering NOTES NOTES NOTES NOTES CORPORATE INFORMATION Board of Directors Azim H. Premji - Chairman B. C. Prabhakar Narayanan Vaghul Dr. Jagdish N. Sheth Dr. Ashok Ganguly Priya Mohan Sinha William Arthur Owens Suresh C. Senapaty Dr. Henning Kagermann Shyam Saran T. K. Kurien M. K. Sharma Company Secretary V. Ramachandran Registered & Corporate Office Doddakannelli, Sarjapur Road, Bangalore – 560 035, India Ph: +91 (80) 28440011 Fax: +91 (80) 28440054 Website: http: / /www.wipro.com Executive Director and Chief Financial Officer Suresh C. Senapaty Statutory Auditors BSR & Co. Chartered Accountants Auditors- IFRS KPMG Depository for American Depository Shares J. P. Morgan Chase Bank N.A. Registrar and Share Transfer Agents Karvy Computershare Private Ltd. SPIRIT OF WIPRO RUN 2011 6 CONTINENTS 21 COUNTRIES 56 CITIES 25000 PARTICIPANTS Doddakannelli, Sarjapur Road, Bangalore-560035, India. www.wipro.com