Wipro Annual Report

Transcript

Wipro Limited (NYSE:WIT) provides comprehensive IT Solutions and Services, including Systems Integration, Information Systems Outsourcing, IT Enabled Services, Package Implementation, Software Application development and maintenance, and Research and Development Services to corporations globally. Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services Company globally. In the Indian market, Wipro is a leader in providing IT Solutions and Services for the corporate segment in India, offering System Integration, Network Integration, Software Solutions and IT Services. In the Asia Pacific and Middle East markets, Wipro provides IT Solutions and Services for global corporations. Wipro also has a profitable presence in niche market segments of Consumer Products, Lighting, Furniture, Eco Energy, Water treatment and Hydraulic business. About us 1 Business success is an evolving science. At Wipro, we believe, by nature, it is really a human one. It involves analyzing the unpredictable, anticipating change and deciding in real-time to act with flexibility and purpose. For Wipro, it amounts to doing all these on a global scale. And while one can measure an organization’s success by various indicators, very rarely is it measured by its most fundamental driver: the energy and intellectual capital of its people. Or as we would like to describe it: The Human Quotient or HQ. The Human Quotient is not a number. It’s a value. At the heart of this value is the insight that given the opportunity, people treat work less as a job, and more as an inner calling. That if empowered, they would lead far more than they would choose to follow. So, more than a workspace, we built a place for people to play. And created channels that encourage them to share ideas and collaborate. We created a culture of openness that celebrates and thrives in diversity. ‘Glocalisation’ isn’t a term we invented, but it certainly describes our practice. We created a seamlessness that integrates our various businesses and aligns it to the shared organization goal – to deliver greater customer value. A shared purpose that believes sustainability is at the core of profitability. And translates this through solutions that benefit our customers. Even as it transforms the community. It’s a HQ that finds its finest expression in our people taking ownership of the success and growth of our customers’ business. And leaves no stone unturned to achieve it. Business success is an evolving science. 966,523 $ 21,509* 2010 600,245 2009 773,255 2008 816,164 2007 797,995 2006 Market Capitalization in Rs. Mn * Based on exchange rate as on March 31, 2010 - Rs. 44.935/USD 271,414 $ 6,040* 2010 255,442 2009 199,575 2008 149,751 2007 106,164 2006 5 Year CAGR 26% Revenue in Rs. Mn Market Capitalization in Rs. Mn 46,310 $ 1,031* 2010 38,999 2009 32,829 2008 29,421 2007 20,674 2006 5 Year CAGR 22% Profit After Tax in Rs. Mn Financial Highlights (Rs. in Mn except per share data) March 31st 2009 2010 *Based on closing price in NSE as on June 1, 2010 Financial Performance Revenue 271,414 255,442 Profit Before Tax 55,095 45,196 Provision for Tax 9,163 6,460 Profit After Tax before minority interest/share in earnings of associates 45,932 38,736 Profit After Tax 46,310 38,999 Earnings Per Share Basic 31.78 26.81 Diluted 31.56 26.72 Operating Cashflows 50,998 36,099 Capital Expenditures, net (10,632) (16,388) Dividends payout (including distribution tax) 10,092 6,856 Rate of Dividend 300% 200% Financial Position Cash and Investments 106,610 69,793 Goodwill 53,346 56,521 Net Fixed Assets (including CWIP) 56,294 52,563 Net Working Capital 91,389 61,313 Capital Employed 245,393 193,427 Networth 182,425 136,284 Debt 62,513 56,892 Market Capitalization* 966,523 600,245 2 3 Investor Relations: Thank you very much for talking to us today in your first ever internal interview. Let me start off with your recent trip. You have just come back from the US, the Europe and the Middle East. How is the environment looking now compared to what you had seen three months ago in your last trip or even a year ago? Azim Premji: Europe is doing a slow turnaround. One expects it to be slow, irrespective of the crisis which is being faced in Greece. It will settle in. We should be able to see a one to two percent growth rate varying from country to country. The US to me was surprisingly bullish. I met a lot of people there. It turned out more bullish than what I thought it to be. The CEO is confident. Her organisation is far more leaner, far more efficient and far more focused. They have a pent up demand of the previous year in terms of CAPEX investments and decisions are getting made. And unlike the previous year, specifically for IT and IT services where even budgets were not getting released, budgets are getting released. We are seeing the first signs of discretionary investments taking place. So all in all, the mood is positive. A CONVERSATION WITH OUR CHAIRMAN 4 There is a huge opportunity for leading Indian Services companies and it is upto us to be able to meet those opportunities. I think there is a huge opportunity for global partnering. There is a huge opportunity for leading Indian Services companies and it is upto us to be able to meet those opportunities. Investor Relations: It’s great that the mood has turned around. If I were to take you back by 18 months when the world was falling apart it was a very humbling experience for many organizations including Wipro. What do you think are some of the key learnings for Wipro as an organization and personally for you? Azim Premji: I have been through cycles before. It seems to be happening in a periodicity of 5 to 10 years. But this was not just a recession cycle, it was a reset cycle. It is of an intensity far deeper, far more widespread across the globe than one has ever experienced in the past. I think the smart thing we did at Wipro is we saw it coming earlier than our competition. That was very fortunate. So we started putting actions in place three to six months before most of our competitors did. The major take aways were, I think it has resulted in a new set of revised, realistic expectations created among young people, that stable and good leadership companies who look after people are very valuable to work for and build a career. 5 We want to be leaders in growth rate with quality, with value and with value addition to the customer. Because companies that come in and go out or companies which are short term can get very ruthless and very knee jerk when it comes to a crisis, to be able to manage the crisis. Two, it forced us to look at fundamentals in terms of our training methods, intensifying more training to re-position people and re-calibrate them to the changing environment. Three, we intensified focus in innovation and prioritizing the right themes in innovation like Green and Cloud Computing both of which we have become industry leading in terms of thought. And finally, focusing with renewed intensity on building pricing and delivery models which are much more non-linear in the sense that they have much more higher output of revenue, customer value, customer satisfaction as well as profits per person. So the constant dependence that if you increase sales 10% you will have to increase headcount 10%, that equation gets significantly changed going forward. So as a company we have emerged far stronger as a result of this reset than we were at the beginning of it and we feel far more competent including our consulting business which we have built, the excellent domain understanding we have built.... plus we used this opportunity to really recruit some outstanding global talent because global talent was available. And that talent has been inducted at top management level, at a senior management level, at middle management level as well as the sales level - good, solid sales people and above them very good, solid, broad-based profit-oriented customer engagement partners. Investor Relations: The new reset you talk about, what do you think will drive the growth this year? Azim Premji: Customers are looking for partners versus suppliers. Large companies who have a breadth of services and who have an approach on relationships make better partners than they make suppliers. Two is that customers are looking for companies which are end-to-end. They don’t have to deal with a multiplicity of companies for their requirement. So companies like us which have a very integrated offering of IT and BPO, of IT and infrastructure, of consultancy, of specialization in various strategic business units offering deep domain solutions to customers are going to get preferred. I think customers are also looking for companies which have part solution to their problem and then are able to customize those solutions to their specialized requirements. This gives an opportunity for intellectual property, build solutions, take those to market, customize and system integrate those solutions and give a turnkey output of value. And customers are looking for models which are non-linear where a significant cost is people and you are able to reduce that percentage of cost through non-linearity and offer pricing which is outcome linked and share part of the benefit with the customer. Both sides end up in a win-win situation including employees because they start doing more higher value add work versus doing pure programming work. Investor Relations: Are there any targets or ambitions you can share with us on a three year vision? Something you aspire to be in each of these businesses? Azim Premji: One thing is very clear. In each of our businesses our target is to grow significantly ahead of competition. When I say competition, I am talking general industry and am talking about top three or four companies we benchmark with. We want to be leaders in growth rate with quality, with value and with value addition to the customer. Second thing which we are very clear is in our IT Services business, we aim to be among the top five in terms of market capitalization. 6 As a matter of fact we are already in the top seven or eight in terms of revenue. I think a good, simple definition of leadership is that are we called on the table by leading clients as one of the top three, when they are looking for partners for complex solutions for their requirements. And we must get onto that table. In India we are on that table. There would be no large, complex systems integration where the customer has not proactively invited Wipro to be on the table to provide that solution in terms of a competitive bid. What we have done India, what we are now achieving in the Middle East, we have to achieve in all the markets we operate in. Then we are in a true leadership position. Investor Relations: We would like to talk about one of the diversifications Wipro has made into the EcoEnergy business. There is a new leadership heading that business. What is the rationale for diversifying into that business? Where do you see that business going? Azim Premji: We see it as a huge opportunity in terms of unfulfilled customer requirement. Maybe we are uniquely positioned compared to any other company, certainly any other company from India, to be able to offer solutions to customers. It is today a market which is about US $ 1.5 Trillion and in ten years time it is a market which is going to be double that. What we are trying to do there is to combine our expertise in IT Services, our expertise in IT hardware manufacturing including complex equipment manufacturing and our expertise in discreet engineering because of our infrastructure business, our water company and our LED business in Lighting. We bring all the technologies, all the competencies required to give integrated solutions to customers. Our approach is selectively pick customers which have a very high energy and water requirement. Analyze their requirements through consultancy and give them a set of recommendations where we believe that they can save anywhere from 10% to 30% on the cost of energy and at the end of it have a more sustainable and greener organization. If they approve in principle...the next step...systems integrate a solution for them to be able to achieve the end objective. Implement that solution and then get managed services revenue from managing that solution partly onsite, but mostly on an offshore and remote basis. We launched the business about 14-15 months back. We believe we have a first mover advantage. We have an extremely strong brand in Middle East and India, and will select high energy customers globally including telecom customers. We have had order wins, we have had implementation track record to our success. We are broad-basing this business and we are putting together a world class team. Investor Relations: The focus today is in having a diverse and multinational work force and Wipro has been ahead of the curve. What is the rationale for this and how are you promoting it? Secondly, when will we see a woman CEO or a woman director on our board? Azim Premji: We today have over a 100,000 people globally, out of that little over 20,000 people are based overseas. Of the people based overseas about 40% are locals. When I say locals I’m just not talking about foot soldiers, I’m talking about top to bottom - top management, senior management, middle management, customer engagement managers. Our objective is this: 40% people we will take to 50 to 60%, certainly 50% in the next 12 to 18 months. This is country by country. We are also globalizing our delivery centres because customers want geographical risk distribution, customers want language flexibility, and customers want localization requirements. So we now have multiple centres all over the world whether it be in China, Philippines, Brazil, Portugal, Mexico, Eastern Europe, Saudi Arabia, UAE or Egypt. We bring all the technologies, all the competencies required to give integrated solutions to customers. 7 I think the important thing is the Spirit of Wipro. It is something which we expect everyone to follow in letter and in spirit and we have been reasonably successful in doing this. In terms of leadership I think we have moved very well in the past 18 months in either promoting from within like we just did with our Head of Europe or selectively going into the market and hiring the best talent in leadership. We also see more women in senior leadership positions at Wipro and this will only continue to grow. We have also been very sensitive to the fact that wherever we have organized in a country, we want local leadership. As an example, if you look at Britain our leadership is British, if you look at Germany our leadership is German, if you look at France our leadership is French, if you look at Japan our leadership is Japanese. Investor Relations: Our theme for the Annual Report this year is Human Quotient which in essence is celebrating the spirit of people. One of the elements of that theme is really the ownership mindset that people bring to their jobs whether it be running a Profit Centre or performing their function. Wipro quite uniquely has had people at all levels who take a very ownership oriented approach to their jobs. Why do you think it is so? Azim Premji: One is because all our middle management and above have stock awards in the company. They are part of the destiny and significant part of their wealth creation has come from the appreciation of the stock. They have held on to it. They have encashed it and bought homes and they have bought homes for their children. That is an important element. I think more important than that we have seen to it that the whole company we have broken into individual businesses and they work as a whole. At the same time there is complete responsibility for the heads of each of these businesses to run each of these like an independent unit, and therefore people take ownership like mini CEOs would take. We are trying to do the same with our customer engagement managers, where we already now have about 55 of them. We will very soon have 75 of them. We want to make them empowered to be mini-CEOs. So concurrent with this is the fact that we empower people when they are in these positions. We are trying to keep the bureaucracy at a minimum. I am not saying it works perfectly. But it is getting there because our information systems are getting more and more sophisticated to be able to give this empowerment to people with accountability. I think the important thing is the Spirit of Wipro. It is something which we expect everyone to follow in letter and in spirit and we have been reasonably successful in doing this and we take feedback on this in leadership feedbacks and employee perception surveys. Leadership feedback once a year and employee perception survey once in 12 to 24 months. So we measure it. If there are areas of the organization where the enculturisation has not taken place we coach leadership or we change leadership so that it becomes part of what gets transferred from top down as a matter of how the organization is built. Net-net, I think it is a combination of everything which creates an environment where people feel that they own the company and people feel that they are very much a part of the company. But interestingly what is unique about our company is unlike some of our competitors is that the culture is very porous – porous with the result we are able to induct non-Indians, we are able to induct people from different nationalities, people even at a very senior management into this culture. Investor Relations: Talking of ownership and the amount of leadership you have created inside the organization, what does Wipro as an organization, and you personally, think about succession and succession planning? 8 Azim Premji: You know we have been fanatic about this now over 12-13 years and it is very much integrated as part of our management style, in terms of leadership within the company, and part of the review process and evaluation process and planning process with the Board of Directors. And the Board of Directors are actively involved in succession planning of atleast the top 150 people in the organisation, that is the Vice President levels and above and there is a detailed stock taking in July which is at the end of our financial year in March and a detailed interim stock taking during the midway through the year. What we do in terms of our succession planning is that every position we have to have atleast three successors to that position – one on an immediacy basis, one within one to two years and one within two to four years. And we get into a lot of depth vis-à-vis the track record of candidates with respect to the candidates put up for succession. And this applies to my position too. It’s a rigor process. It’s a thorough process. We get a lot of 360 degrees feedback. We get a lot of informal comments and we rotate these people into jobs much more. We expand their responsibilities much faster because we want them to bloom much faster. Investor Relations: Many analysts and investors we talk to give us a push back in terms of the sentimental attachment to the Consumer Care business and why this is a part of the IT business atleast from a Wipro stock perspective. Why don’t we spin off the non-IT business? Their concern is that you can unlock a lot more shareholder value by doing that. Do you agree with that? Do you think there is some level of sentiment that restricts you from doing that, and is that rational? Azim Premji: Let us get it down to some practical terms. The non-IT part of the business in terms of revenue is around 10%. In terms of management effort the top management spends on it, it may be 10 or 15%. So it is not a major distraction. Its total capital employment is probably about less than 10% or about 10%. We as a company are sitting on 30 to 40% cash in terms of our total balance sheet. People who are getting confused whether it is profitable deployment of cash...they should not get excessively agitated that it’s a big distraction in terms of all the sophisticated analytics they put the company through because we report on each of our business on a segment basis with an enormous amount of depth to avoid any confusion and we have been doing it for 20 years. Second, consistently we have talked to the best specialists in the world including investment bankers on what will improve market value of the company and upto now the recommendation is not to spin it off. But it’s like an economist...you are either right or you are wrong. You have left arm and a right arm. At this point of time we have no plans to spin it off. But nothing is permanent in this world. As and when the requirement forces us to spin it off we will be to open to it. We can do a reverse merger. There are simple technical solutions to it. I don’t think we should get overly concerned with back pressure which is building up by a few people. Investor Relations: Thank you for your time. That brings us to the end of the questions we wanted to ask. Azim Premji: Thank you. We expand people’s responsibilities much faster because we want them to bloom much faster. N Vaghul Independent Non-Executive Director 1 Girish S Paranjpe Executive Director & Joint CEO, IT Business 2 Bill Owens Independent Non-Executive Director 3 Suresh Vaswani Executive Director & Joint CEO, IT Business 4 Azim Premji Chairman 5 P M Sinha Independent Non-Executive Director 6 1 2 3 4 5 6 7 8 9 10 11 BOARD OF DIRECTORS Dr. Ashok Ganguly Independent Non-Executive Director 7 B C Prabhakar Independent Non-Executive Director 8 Dr. Henning Kagermann Independent Non-Executive Director 9 Suresh C Senapaty Executive Director & CFO 10 Dr. Jagdish N Seth Independent Non-Executive Director 11 Martha Bejar President, Global Sales & Operations (From Left to Right) Sambuddha Deb Chief Global Delivery Officer Girish S Paranjpe Executive Director & Joint CEO, IT Business Azim Premji Chairman Suresh Vaswani Executive Director & Joint CEO, IT Business CORPORATE EXECUTIVE COUNCIL Pratik Kumar Executive Vice President, Human Resources Suresh C Senapaty Executive Director & CFO T K Kurien President, Wipro EcoEnergy (Effective April 1, 2010) Vineet Agrawal President, Wipro Consumer Care & Lighting Anurag Behar Chief Executive, Wipro Infrastructure Engineering LETTER FROM JOINT CEOs, IT BUSINESS Dear Fellow Stakeholders, Wipro ended the FY09-10 on a strong note despite challenging economic conditions. The decisions we had taken over the last two years have enabled us to enhance customer engagement and achieve higher profitability. We will continue to build on these as we go forward. Our key thrust areas: Customer focus: Customers see us an integral partner in their future plans. In response to customer feedback, we have invested in advisory and program management capability by hiring 38 Consulting Partners in USA and Europe, thus strengthening our client management. This is in addition to an increase of 100 plus people in the program management cadre. We understand our customer’s business better and are offering domain specific solutions like improving claim handling accuracy or optimizing inventory using our BPO solutions. Technology innovation: We believe certain core technologies have a significant impact on business applications. Towards that direction, we have invested in Cloud Computing, Collaboration, Green Technologies, Mobility Applications, Social Computing, Information Management and Security. We reduced the application infrastructure cost for a large energy major by 50% by integrating a hybrid Cloud solution. We were able to leverage solutions like Digital Customer Experience and Loss Prevention that integrate social media and personalization to help retailers cut ‘time to value’ by half with minimal capital spend and a pay-per-use model. 14 (L) Girish S Paranjpe Joint CEO, IT Business & Executive Director (R) Suresh Vaswani Joint CEO, IT Business & Executive Director Our success is linked to the customer’s success. Non-linearity: These initiatives focus on profitable growth in revenues without proportionate increase in people and are enabled through automation and standardized shared service platforms. We are committed to driving operational efficiencies with a service outcome-based business model rather than an effort-based one. It allows our people to be more productive. The Centre for Integrated Management of Applications (CIGMA), an initiative in this direction, won the NASSCOM IT Innovation Award in the process innovation category for the year. Our Flex Delivery Model which provides fast application start-up, predictable time of delivery, reduced total cost of operation through well defined processes, tools, and a centralized scalable team has been adopted by many customers. Non-linear initiatives contributed to 7% of our revenues. Looking ahead, we expect significant increase in non-linear revenues. Diversity in the workplace: As a global business, we believe our ability to understand, embrace and operate in a multicultural world - both in the marketplace and in the workplace - is critical to our success. Wipro is committed to promoting and improving its gender and demographic diversity at every level of the organization. In the next couple of years, we have set a target of 50% of our workforce overseas to come from the local countries we operate in, up from the current 39%. Leadership in global markets: We continue to invest strongly in our customers in the mature markets of US & Europe. These investments are directed in the areas of domain and technology innovation as well as business process improvement. From a delivery perspective, we have scaled up our delivery centers across the globe whether it is Chengdu in China, Atlanta in United States or Curitiba in Brazil. Our Atlanta center has grown to 500+ people from about 20 in March 2009. We are collaborating with local universities in building local talent to meet our requirements. We also won the Global Impact Award from the Atlanta Chamber of Commerce under the category of Economic Development - Foreign Direct Investment - for success in job creation and positive impact on Atlanta’s economy in 2009. This clearly indicates that our initiative is being appreciated on the ground. Innovation in emerging markets: Our focus in emerging markets is centered around business model innovation and market development. During the year, we built on our dominant position in India and Middle East with marquee government and telecom project wins. We see a trend in reverse innovation, where solutions developed in these emerging markets have great potential in mature markets. In India, we are investing in our Cloud offering to Small and Medium Businesses through six key clusters. We will enhance our presence in the newer markets of China and LATAM. Finally, the success of our organization is built on a strong foundation of talented and committed people. The credit for our achievements during the year goes to the passion and the ‘never say die’ spirit of Team Wipro. We will continue to invest even more in strengthening our ability to attract, develop and retain this talent. An Employee Perception Survey launched by us earlier this year showed that the engagement index has gone up. It also gave us insights about where we could do more. We have built a strong foundation, and with IT spending on a rebound, the outlook for the future is robust. We believe that with our diverse portfolio of services, domain expertise and the increasing value-add to customers, we are best suited to be a strategic partner to our customers. We thank all our stakeholders for their support last year, and look forward to the same this year too. Dear Fellow Stakeholders, The year 2009-10 was a defining year for Wipro Consumer Care and Lighting and personally a very satisfying one, given our strong performance despite the challenges of a global recession. We crossed US$ 500 Mn in revenue, and the acquisition of the iconic Yardley brand in December 2009, marked our entry into the premium toiletries market. We continued to invest in our brands despite the slowdown, and this helped us not only grow ahead of the market and gain market share in FY10, but will also position us strongly for FY11. LETTER FROM PRESIDENT *Source: AC Nielsen retail audit Jan-Mar 2010 Vineet Agrawal President, Consumer Care & Lighting Our business has three main segments - Our Indian Household business (including Personal Care and Domestic Lighting), Unza - our International Personal Care business, that spans across Asia and Africa and the Indian Office Solutions business. I will talk about each of them briefly. Our flagship Indian Household business had a strong year. The Personal Care business focuses on toilet soaps, toiletries, deodorants and wellness categories. This business grew 23% led by our Santoor and Chandrika brands, and rural distribution expansion. Santoor is India’s third largest toilet soap brand*. This year we have rolled out an exciting new range of deodorants, in six fragrances under the Santoor brand. Our Glucovita brand, a leading Glucose powder brand in South & East India, has in 2009-10 been extended nationally, and the response has been very positive. The Yardley brand has shown good promise and it will be a key part of our plans in 2010-11. Our Domestic Lighting business, which includes modular switches, incandescent light bulbs, Compact Fluorescent Lamps (CFLs) and luminaries, also saw robust growth - primarily led by CFLs (grew 42%) and Lighting accessories (grew 25%). Unza, our International Personal Care business focuses on personal wash, fragrances, deodorants, skincare and haircare categories. Here, we had a good year growing by 14%, with leading growths from Vietnam (38%), China (25%) and Indonesia (21%). Our strategy to focus on key brands and push for distribution expansion has worked well in countries like Vietnam and Indonesia. Our lead brands in Unza were Enchanteur - a female toiletries brand (grew 23%), Safi - a Halal toiletries brand (grew 25%) and Romano - a male toiletries brand (grew 29%). Our Office Solutions business which includes commercial lighting, office modular furniture and security solutions had a challenging year, given the environment of lower infrastructure investments. However, we have seen demand pick up in this business segment in Q4 and have taken a number of steps to realign the business strategy with emerging infrastructure opportunities. We focused on Green buildings, and 42 of the 71 certified ‘Green Buildings’ in India now use Wipro Lighting. We are also focusing on new emerging technologies of LEDs with a range of street lights, office lighting and façade lighting. We have also seen success with our new designer furniture range ‘Startline’ and are now rolling out a new range of premium chairs. Today, we are India’s second largest Office Modular Furniture company. We have five manufacturing facilities in South Asia and eight in India where our focus has been on improving productivity & operational efficiencies. We have added capacities in each of our plants to support our growth plans going forward. It has been an exciting year for the Consumer Care & Lighting business and I look forward to another promising year in FY11. LETTER FROM CEO Dear Fellow Stakeholders, As I look back at FY10, I see a year which has been the proverbial roller-coaster for WIN (Wipro Infrastructure Engineering). The first two quarters saw us living through the heart of darkness, a recession the kind of which had not been seen in decades - with investments in some of our core end markets at an absolute standstill. The second half of the year was much more positive. Despite the times, we have been unflinching in our commitment to building a sound business. Since WIN is really three distinct business: the High-precision Hydraulics business, the newly launched EcoEnergy business and the Water Treatment business, let me brief you on each of them. We first entered the Hydraulics business in 1978 and this year we became the world’s largest 3rd party manufacturer of Hydraulic Cylinders. These are high- precision, custom engineered products, which are critical components of heavy machines like Excavators, Cranes, Off-highway Trucks, Forklifts, Tippers, etc. 18 Anurag Behar Chief Executive, Wipro Infrastructure Engineering Winners of Customer Recognition Awards Ecology is one of the defining issues for humanity. Our strategy and investment in this business continued to pay off, resulting in our gaining market share consistently for the past three years, including through the global recession. Today, almost all leading global OEMs are our clients. While India and China saw a robust uptick in demand in FY10, it continued to be a difficult year in the European market. The ‘free-fall’ that we witnessed in the European market in FY09 came to a halt in FY10 and we saw some initial signs of recovery in the fourth quarter. Despite our No. 1 global position in this market, we have a ~5% global share. This presents a significant opportunity for share growth, driven by our proven and validated strategy. Wipro believes and it’s my personal conviction that Ecology is one of the defining issues for humanity. This has led us to a very significant Sustainability initiative within Wipro. It has also led us to investing in businesses that help our clients, and the world, become Ecologically Sustainable. This is the genesis of our EcoEnergy and Water Businesses. The EcoEnergy business only started in FY10, and we finished the year with an order book of Rs. 1850 million, ahead of expectations. Our offerings are highly differentiated and leverage deeply, Wipro’s capabilities built over decades. We are offering these services in India, Europe and North America. We Consult, Engineer, System Integrate/Build, and then Manage energy systems for our clients, such that we make them energy efficient and use an optimal mix of clean energy - delivering to them cost optimization and Green House Gas reduction. We impact all of the energy demand side, e.g. lighting, heating/cooling, equipment, processes, etc. Equally we offer a range of energy generation technologies, e.g. Solar (thermal and photo-voltaic), Biomass, Biogas, Geothermal, Wind, etc. We entered the Water business in FY08, with an acquisition. We offer high purity water treatment systems to industrial clients across a range of segments - Power Plants, Oil and Gas facilities, Pharmaceutical facilities, Manufacturing units, etc. Our technological ability ranges from desalination to ultra-filtration and reverse-osmosis, and beyond. In FY10 we crossed a major milestone by winning a contract of a comprehensive water solution for a large scale (2400 Mw) Power Plant. We have continued to grow our share across other segments. Starting in FY11 Wipro EcoEnergy will be a distinct business of Wipro Ltd., and Wipro Infrastructure Engineering will consist of the Hydraulics and the Water business. We are very excited about the prospects of these businesses; which will be driven by some very fundamental vectors - shift towards clean energy, energy and water efficiency and investment in infrastructure. These are an important part of the long term future of Wipro and we will build them with tenacity and passion. LETTER FROM CFO Dear Fellow Stakeholders, I completed 30 years with Wipro earlier this year and what still makes me proud is that our commitment to transparency and the highest standards of Corporate Governance has remained unchanged in this time. What continues is our drive to re-evaluate our practices and seek new ways to further strengthen Corporate Governance. I am glad that our efforts have been rewarded. Today, Wipro is globally recognized for being amongst the best-in-class companies for Corporate Governance and transparency. I will spend most of this letter talking about Corporate Governance, but before that I would like to share some financial highlights for FY10. We had a good year despite the economic reset that we witnessed. Revenues for Wipro Ltd. grew 6% Year on Year (YoY) and Net Income increased by 18% YoY. Cash flow from operations was Rs. 51Billion. Our IT Services business grew 1.6% YoY and our margins increased by 243 basis points to 23.4%. IT Products grew by 11% YoY and Earnings Before Income Tax (EBIT) increased by 29% YoY. Our Consumer Care and Lighting business grew by 17% YoY and EBIT increased by 19% YoY. 20 Suresh C Senapaty Executive Director & CFO Our commitment to transparency and the highest standards of Corporate Governance have remained unchanged through 30 years. Back to Corporate Governance. Our Corporate Governance ethos is built on four pillars - Independence, Transparency, Accountability and Corporate Social Responsibility. I have come across multiple incidents that have reinforced and strengthened these concepts and would like to share a few of those experiences with you. Wipro has a highly respected Global Board with a decisive majority of Non-Executive, Independent Directors (7 out of 11) including majority of the sub-committees of the Board which exclusively comprise Independent Directors. As an Executive Director on the Board, I have seen this independence play out on many occasions whether it be challenging a strategic approach, an acquisition candidate being turned down, or the simple recording of a differing view by a Board Member by casting of a dissenting vote on an issue on which we could not arrive at a consensus. This spirit of independence is what keeps the Corporate Governance alive and thriving in Wipro. Transparency is an area where I as the CFO have a direct role to play. We were the pioneers in India for publishing consolidated accounts from early 1980s, and on the segment reporting front, our disclosures exceeded even the global best practices. Also, we have always strived to provide timely, adequate and equivalent access to information to all stakeholders. We take this responsibility very seriously and have a disclosure committee whose sole objective is to define clear criteria and make decisions on disclosures. It was this same high standard we followed in publicly disclosing the matter of an embezzlement of funds by a junior employee - though the amounts were not material - that we discovered in December 2009. As soon as the fraud was discovered, we followed all the right steps in informing the Audit Committee immediately and putting together an investigation team to investigate the matter. When this investigation was complete, we shared this incident publicly in February 2010. In parallel, we enhanced our internal controls and procedures. Accountability is at the heart of Corporate Governance. In order to provide complete and direct visibility to the key risks within the organization, Internal Audit reports directly to the Audit Committee of the Board. While the Head of Internal Audit administratively reports to me, he would meet independently with the Audit Committee of the Board on a quarterly basis, if not more, to share inputs as requested by them or to discuss key audit findings during the course of the quarter. This helps build true accountability and comfort with the Board that matters are directly in their control. No large business is an island. Especially in a country like India that is home to the largest number of poor and hungry. We are also aware that no single company can with a magic wand wave the problems and challenges aside. Realizing this, we have consciously picked on two initiatives as part of our Corporate Social Responsibility (CSR) efforts. The first is Wipro Cares and the second is Wipro Applying Thought in Schools (WATIS), both of which are covered in more detail later in this report. As I look back on the year gone by, an eventful one, I am proud of our organization and the highest standards of transparency and integrity that we stand for. The quest for the best Corporate Governance and transparency is a journey. There are no destinations, only milestones to cross. With all humility, I rededicate myself and my organization to move towards this horizon of perfection. 21 ALL BUSINESS STRATEGIES ARE ESSENTIALLY, HUMAN STRATEGIES! The nature of business as we know it has transformed. A reset of the economic order has brought greater focus to the fact that the fate of all major economies is inexorably intertwined. Quite naturally, organizations across the world have seen seismic shifts in the way they perceive business processes, growth possibilities and by consequence, their engagement with business partners. This ‘new norm’ has brought with it new expectations. With cost optimization and demand generation being the popular catchphrases, the role that an IT services partner has to play is more value driven; where ownership of success and failure is shared. This onus on ownership will ensure engagements are more evolved and mutually beneficial. The 21st Century Virtual Corporation! Leading businesses around the world are planning dramatic changes to their business models and intend to ‘partner’ more extensively. This has come from the realization that most businesses today are still locked up in 20th century, mass production, push-based business models. A model that depends on the ‘more demand than supply’ scenario, as it was for much of the last century. Today, however, the opposite is true. With more supply of products and services than there is demand, the customer is in a position to demand an ever changing array of tailored products and services. In order to be successful, businesses need to be much more client centric and far more agile and flexible than ever before. Wipro is responding to this need for radical change by taking an objective approach to the matter. By lending a patient ear to our clients and analyzing dozens of outperforming companies, we have realized that businesses must become far more customer centric and develop a highly flexible value chain that can sense and respond with new products and services quickly as market conditions change. Outperforming companies in every industry are trying to accomplish these objectives by partnering with third party organizations that can perform certain value chain functions better, more flexibly and at a lower cost than the company itself. In effect, these businesses are working towards a model of optimizing what the company does best and partnering the rest. In essence, this suggests that the fundamental business practice in the 21st Century will be multiple entities working together, as one value chain, to create superior flexibility, productivity and financial performance - The 21st Century Virtual Corporation. The characteristics of the 21st Century Virtual Corporation Considering the Virtual Corporation as the dominant business model in the 21st Century, the characteristics of such an entity would then be the following: 1. Obsess about customer research, invest in customers and understand their business better than they do 2. Move to variable costs wherever possible 3. Stay dynamic and flexible and not held hostage by assets 4. Rationalize and identify what is core and non-core to business success 5. Make the goal of higher productivity, flexibility and financial performance the shared business imperative of ‘business partners’ 6. Create dynamic, agile business models where virtualization combined with 4th Generation Partnering are the key to increasing Returns on Equity, reducing Debt to Equity and increasing Revenue and Free Cash Flow More than an IT edge, enabling business results! The transformation and success of the 21st Century Virtual Corporation will also set an imperative on its IT partner. An expectation to be the ‘transformation catalyst’ who enables business results rather than achieving IT milestones. We enable business results by being a ‘transformation catalyst’. 22 Increasingly, it is our ability to deliver multiple integrated service lines as part of our offerings that has been our differentiator: A comprehensive solution that holds at its root, a ‘collaborative enterprise’. A seamless integration of our various services from Consulting to IT Services, Product Engineering and BPO to EcoEnergy and Lighting Solutions results not only in a value-added transformational solution, it also throws up innovative execution options. The key tenets of our solution approach are domain-led integrated offerings that bring the benefits of non-linearity, technology innovation and globalization to the 21st Century Virtual Corporation. Our strategy is aligned to the needs of the 21st Century Virtual Corporation, the key elements of which include: 1. Client Engagement Strategy 4. Globalization 2. Ecosystem of Alliances 5. Innovative Services & Delivery Models 3. Technology & Innovation 6. Leadership in Product Engineering Services 1. Client Engagement Strategy: Consultative and committed A transformational partner needs deep client relationships and a consultative approach. An intensive account management program ensures that the Client Engagement Manager (CEM) acts as the ‘CEO’ of the account, responsible for both sales and delivery. Our consulting led proposition ensures that we have consulting partners for each strategic account. Our partners connect in a two way engagement process: with the account team and with clients (outside IT operations teams). How can we make a difference to your business? How can we ensure that the outcomes are our focus not the inputs? What is the business result that needs to be delivered by the IT teams? These are some of the proactive questions which our consulting partners ask our clients. They enable service innovation, right-fit services and solutions in the given business context, thereby enhancing the value of our solutions. The result: an increase in our share of transformational engagements, system integration projects and multi-service integrated projects. Transformational Engagement Case Study - Taking Ownership Wipro was chosen to handle the entire IT infrastructure for Unitech Wireless, a joint venture between Unitech Ltd., a large Indian property developer and Norway's Telenor ASA. The deal linked Wipro's revenue to the success of Unitech's cellular network rollout. Unitech Wireless, with licenses to operate in all 22 telecom circles across India, planned to launch state-of-the-art telecommunications services to provide advanced wireless voice, data and International Long Distance (ILD)/National Long Distance (NLD) services. Wipro would be responsible for implementing the Enterprise Resource Planning (ERP) applications, Customer Relationship Management (CRM), Operations Support System (OSS)/Business Support System (BSS) and subsequently, the management of these applications. Wipro will also run and manage Unitech's datacenter and set up the customer contact center. 2. Ecosystem of Alliances: Creating value through collaboration The changing needs of the 21st Century Virtual Corporation demands new business designs that facilitate faster and more extensive collaboration on a global scale. Given this demand, we believe that our mega alliance strategy of 360º relationships is a unique differentiator. It’s a strategy targeted to achieve an enhanced customer value proposition, for increased customer penetration and global market reach through co-innovation and co-creation of solutions. “We chose Wipro as our partner because among the service providers in this field, we felt Wipro brought a unique combination of domain expertise, market knowledge and a customer-centric approach that allows us to grow together.” Rohit Chandra, COO, Unitech Wireless 23 A Case Study in Scalability Wipro developed a Hosted Document Management Solution along with alliance partner EMC Corporation, the leading storage technology company, to help enterprises address the need for robust and scalable Enterprise Content Management (ECM) solutions and to manage the increasing demand for transactional content and business process efficiencies. This Software-as-a-Service (SaaS) solution has been well received by customers in the wake of recessionary trends and IT budget capital expenditure cuts during FY09. 3. Technology & Innovation: Strategic investments for the future At Wipro, we have always invested in the latest technologies and applied research. We believe this fosters a spirit of innovation and shapes our organizational capability and strengthens our long-term plans. Our current focus in Applied Research is around Content Analytics, Enterprise Blog characterization and Enterprise System performance in a Cloud environment. Our collaboration with leading academic institutes like Georgia Tech and IIIT-B has led to publications and participation in research conferences such as COMAD 2009, ACM India and Compute 2010. We are investing in the following technologies that will enable the 21st Century Virtual Corporation. Cloud Computing - to transform enterprise applications and infrastructure to operate in a hybrid Cloud. Our implementation of a Cloud services solution for our internal IT process for infrastructure provisioning reduced the average time from 46 days to 35 minutes via a self-service portal environment. The Private Cloud increased flexibility in allocation, as well as allowed for additional provisioning based on usage patterns. This enabled an increase of the overall utilization levels of the hardware from less than 10% to more than 40%. The Private Cloud allows IT administrators to monitor the utilization and forecast of capacity. Additional hardware capacity is added before the available capacity falls below 20%. This implementation helped us reduce new server procurement costs by 30% in the first year of operation, with additional capacity to spare. This success has enabled us to develop Cloud Computing prototypes for our customers. Collaboration - to deliver business process efficiency and enhanced user experience to global enterprises. Apart from IP telephony, we have also developed Telepresence solutions across different locations for collaboration between onsite and offshore employees. Green Technologies - to achieve the sustainability goals of enterprises using a combination of IT and non-IT solutions. We are implementing an energy-capture dashboard and have deployed an online carbon management solution across all our business units. Mobility - to deliver enterprise and consumer applications for mobile platforms, apps stores and manage enterprise mobile infrastructure. Our mobility middleware solutions have helped telecom operators create new revenue streams by offering business-to-business applications. Enterprises have leveraged our home-grown accelerators to implement mobile work force applications across multiple industries. Social Computing - to leverage the collective intelligence of communities for enterprise products & services. Our brand management solution garners collective intelligence by analyzing social networks, blogs, wikis, forums and online information sources to provide insights about customer sentiments, product feedback and brand perception. This helps in rapid response to market needs and ability to design product and services specific to markets. Information Management - to manage information in hybrid environments & apply multimedia analytics for business insights. Mr PS Nair, CEO, DIAL "Our vision is geared towards providing a future-proof strategy to become one of the top airport operators globally. Wipro's proven expertise in managing large IT enabled environments coupled with a vibrant innovation culture will be the core driver of this joint venture." 24 We continue to invest in Innovative Delivery Models targeted towards an outcome-based service. Wipro is piloting a Video Analytics solution as part of its internal security surveillance infrastructure and is implementing a Healthcare Analytics solution for a large Hospital chain in the US. 4. Globalization: Building scale and competencies Competition is not only intense, it is intensely global. Shrinking distances will be one of the key factors that amplify competitive advantage in the future. Developing a focused globalized strategy to address it is the only way to prepare for this challenge. At Wipro, we have identified select nodes across the globe where we are investing proactively in delivery centers that provide scale & a wide range of competencies. These centers will have a significantly higher share of local talent. We have made proactive investments in the Indian and Middle East markets, which has significantly strengthened our pre-eminent leadership status and resulted in some of our largest customer wins in India. We continue to invest in newer industry verticals - Education, Government, Utilities & Infrastructure and new service lines such as Security & Datacenter services. Strategic acquisitions have helped us globalize faster - access to local talent, local delivery base & data centers along with access to local markets. As we move ahead, we are enhancing our presence in China and Latin America. 5. Innovative Services & Delivery Models: Enabling transformational outcomes The need to deliver superior value to customers and be more efficient operationally resulted in Non-Linear Initiatives which focus on profitable growth in revenues without proportionate increase in billable headcount. This could take the shape of single ownership intellectual assets like an IP or a shared business value like platforms. Non-Linear Initiatives in Wipro are divided into two broad categories. Revenue Initiatives: Wipro pursues differentiated services which deliver value-adds either from a domain or technology perspective to customers through niche services, combinatorial services and investment led services. Wipro is also building a portfolio of productized solutions to cater to specific needs of industry or technology segments. One of our productized solution in the Identity Management space won the Global Product Excellence Award 2010. Delivery Initiatives: Wipro has been offering multi-tenanted managed services like the Flex Delivery Model which has gained wide acceptance among customers for its unique value proposition of just-in-time capacity & predictable high quality deliverables for standardized services. Wipro is also building accelerators to improve the effort and delivery schedule through investments in Centers of Excellence and widely available third party tools. Several of these offerings are through Alternate Commercial Models and align closely with customer’s business Key Performance Indicators (KPI), while enabling more control to Wipro in choosing the appropriate mechanism to offer the service. 6. Leadership in Product Engineering Services (PES) Wipro PES built one of the first indigenous Intel-based mini computers in India in 1981. Almost 30 years later, it again built a High Performance Computing Server 200 million times faster, one third its size and one fourth its power consumption. This journey reflects the sophistication of Wipro’s design capabilities and its global dominance in Product Engineering Services. Wipro is present in diverse markets and is building products and intellectual properties for its customers. Many products of daily use - cell phones, automobile navigation systems, TVs, set top boxes, refrigerators, microwaves, computing servers, printers, airplanes, drug delivery devices - will find a Wipro component in them. 25 We morph into a ‘Proactive Value Adding Service Partner’ to enhance customer experience and enable proactive value creation. Wipro wins the Asian MAKE 2009 Award, seventh time in a row, for excellence in Knowledge Management The four cornerstones of Wipro’s success in product design have been alliances, innovation, investment and trust. Wipro’s alliances with leading technology companies include Philips to offer Blu-ray middleware, Texas Instruments (TI) to offer services on the OMAP™ processors and Microsoft to address the growing High Performance Computing (HPC) and parallel computing segment. From introducing the digital home entertainment center to developing wireless medical gateways to enable remote health monitoring, Wipro’s Product Engineering Innovation Centres and Centres of Excellence (CoE) have invested in technology development and solutions for the future. Wipro is a founding partner in India’s first public-private partnership - the Aerospace Network Research Consortium, which has successfully completed two years of cutting-edge research. Wipro is also a member of the Open Handset Alliance™ helping customers to quickly bring Android-based products into the market. Wipro has been rated the No. 1 R&D Services provider globally by Zinnov, a leading analyst firm. A wide range of Product & Engineering Services are provided to firms across semiconductor, technology, telecom, health, manufacturing, energy & utilities, transportation, retail and process industries. Wipro also provides technology management and consulting services that help its customers reduce their product development life cycle. Today, Wipro’s Product Engineering Services business accounts for ~16% of overall IT Services revenue. QUALITY, LIKE EXCELLENCE, IS THE HUMAN DESIRE TO PERSONIFY PERFECTION. Quality leads to Business Excellence leads to Quality As the world’s first SEI CMM Level 5 Company, Wipro endeavors to deliver reliability and effectiveness to its customers by maintaining high standards in service offerings and products, with robust internal processes and people management systems. We believe business success and market leadership comes through innovation and a culture of excellence driven by our well crafted Quality Management System for business excellence - The Wipro Way. Business Excellence – The Wipro Way A proprietary Business Excellence framework established as early as 2006, the ‘Wipro Way’ enhances the value and experience that customers derive from Wipro, and helps us achieve operational excellence. By leveraging the strong process driven culture of Wipro, it brings an outward-in transformation and a culture of service excellence. Under the Wipro Way Customer Centricity program, we morph into a ‘Proactive Value Adding Service Partner’ to enhance customer experience. Wipro now offers its customers value additon and a steadily improving level of experience across multiple touch points, using a unique set of tools and processes for service excellence and the voice of the customer captured through multiple channels. Over 15,000 people are proficient at using these tools and a year-on-year improvement in customer satisfaction for two years in a row has validated the value of the program. The Business Excellence framework has also helped Wipro and its customers get more from its various process excellence methodologies. From Agile to Lean to Six Sigma, all are closely aligned to the daily work management practices and integrated into the Quality Management System. A few Quality Accolades Winner for Best Project Achievement in Customer Experience at ‘The Global Six Sigma & Business Improvement Award 2009’ at Orlando for a Six Sigma project which improved on time delivery from 78% to 98% 26 Winner of ‘SCMHRD Lean–Six Sigma Award 2009’ in a competition held at Symbiosis Institute of Management, Pune in a contest that had 114 project entries from 65 companies in India and neighbouring countries. Wipro was granted a patent on ‘Business aligned Organizational KM System’ by the US Patent and Trademark Office covering the framework, methodologies and toolkit for implementing a comprehensive Knowledge Management programme in organizations. Quality Management System Our Quality Management System targets results in project satisfaction scores, customer experience as reflected in the Annual Satisfaction Surveys and Process Excellence across key business processes. Our customers trust the strength of our quality processes that assure timely, defect-free delivery of products and services. Wipro’s scores on various quality parameters have steadily improved over the years Customer Project Satisfaction rating has improved from 5.9 to 6.36 on a scale of 7 The Annual Customer Experience Index moved by a factor of 2x and the Net Promotor scores improved by 800 basis points The delivery defects in software development projects were at a low of 0.08 defect/Kilo lines of code The managed services SLA adherence improved from 90 to 97% over the last year IN DIVERSITY IS REFLECTED, THE BEAUTY OF HUMAN NATURE We are in business. The people business. In a knowledge economy, it is people who make all the difference. People who bring with them different assets - world views, skills, knowledge, talents, working styles and cultures - thus forming responsive winning teams to come up with innovative solutions. Diverse people working together make a workplace exciting and engaging. Mutual respect, bursts of creativity and congruence of vision and values become the order of the day, increasing effectiveness and productivity. As a global business, our ability to understand, embrace and operate in a multicultural world - both in the marketplace and in the workplace - is critical to our continued success. To translate this knowledge into results, an organization needs to create, cultivate, reward, guide and thrive in an environment that is inclusive and collaborative. Inclusive in Thought, Speech and Action In the past year, we took on an important goal of increasing diversity in Wipro and making it a more inclusive workplace. Today, 29% of our workforce are women. 10% of Wipro’ s total workforce comprise of non-Indian nationalities. Inclusivity at Wipro permeates across all levels and is not restricted to certain bands or roles. Our Global Sales and Operations Head is a woman and a non-Indian. Our country heads in China, Japan, France, Germany, the head for Europe Geography, the head for Global Media & Telecom and the global head for Wipro Consulting Services belong to various nationalities outside India. At entry levels, we recruit engineering and management graduates from both Indian and overseas universities. In our BPO business, we have 98% local talent comprising of 27 nationalities in 15 centers across Americas, Australia, Central & Eastern Europe and Asia. Our BPO business won the Global Impact Awards 2009 by the Metro Atlanta Chamber of Commerce for Economic Development for success in job creation and positive impact on Atlanta's economy. Women of Wipro: Empowering Women to Create their Future The Women of Wipro (WOW) council launched various initiatives to facilitate, enable and empower women employees. Panel discussions with internal women leaders, mentoring programs for high potential women, workshops and development programs and a Women of Wipro website enable women to grow in their careers. 29% of employees across Wipro are women. 70 nationalities across Wipro. 27 These initiatives have ensured a consistent increase in women representation in various levels in the company over the last few years. Representation of women in Wipro has increased from 19% in 2004 to 29% in 2010. Enabling people with disabilities While Wipro has always attempted to be an equal opportunity employer with zero tolerance for discrimination of any kind, we have added greater focus by consciously creating more career opportunities in Wipro for people with disabilities. As a visible change, access guidelines have been made an integral part of our building guidelines so every new building is designed for better accessibility. The changes we have made to our recruitment, training and other policies enable persons with disabilities to build meaningful careers in Wipro. The past year saw us recruiting from management and technical campuses and through consultants to welcome persons with disabilities into mainstream roles. We have recruited 20 such people in the last 2 years. We’ve also begun structured education to sensitize our managers on diversity, anti-discrimination and anti-harassment through classrooms as well as online programs. We believe that these efforts have laid the foundation for a diverse talent team in the future. Our efforts were recognized in the form of NCPEDP Shell Helen Keller Award for 2009 given to Wipro as an organization and to one of our employees for being a positive Role Model amongst the physically challenged people. Talent Accquisition Our global leadership status can only be attributed to the diverse and highly talented people in our team. This robust pool of talent has been built by a committed effort to attract, transform and retain the finest talent in the industry. Talent Acquisition at Wipro has measured up to the changing market scenario in augmenting resources at significantly lower cycle times. From a very few in April 2009 to thousands in the month of March 2010, Talent Acquisition has recruited over 16,000 employees during the year. Key highlights: 68% of hiring in Europe and US were local nationalities, and a significant ramp-up was seen in emerging markets like Malaysia, Australia, Indonesia, China, Thailand, etc. Talent Transformation Talent Transformation is at the heart of building human capital in Wipro, where the focus is on transforming employees by engaging them in multi-pronged Learning & Development initiatives. The learning needs of an evolving Wiproite lay the foundation of a kaleidoscopic training structure, which starts off with a 10-week long Induction Training Program and the Spirit of Wipro evangelization for fresh campus recruits. Project Readiness Program (PRP), Pre-Assessments and Programming Evaluation Tool (PET) are enablers for fresh recruits who are hired from 500 engineering colleges across India. PRP polishes their project management skills and prepares them to face and handle their first projects as professionals. Wipro Academy of Software Excellence (WASE), a pioneering 4 year MS program in partnership with BITS Pilani, provides higher education to science graduates through online assessments and a residential model of training. Started in 1995, this program is based on an innovative work-integrated off-campus education model. Till date, 2,200 students have graduated and 4,100 students are currently undergoing the program. Domain expertise is facilitated through courses which are created by the Wipro Sales Academy in collaboration with subject matter experts, drawn from within and outside Wipro. 56% of sales team in Wipro Technologies are local nationals. 39% of global workforce in Wipro IT Business are local nationals. 28 Managerial and Behavioral development needs of employees are addressed by the Line Behavioral Skills (LBS) group and the Wipro Behavior School (WBS), through multi-faceted interventions. These are co-designed with internationally renowned institutions such as Harvard Business School Publishing, Dale Carnegie and Edward De Bono to name a few, and encompass cross culture appreciation, communication & presentation skills, and customer excellence. Certified Talent Transformer program is another key initiative where in-house specialists are encouraged to adopt the pedagogic approach of ‘Learning through Teaching’. 185 employees have been certified in this initiative. The Integrated Talent Management System (ITMS) forms the backbone for Wipro’s unified learning environment, providing anytime-anywhere learning to our employees, thus enabling them with the relevant skill set at every point of learning. The learning content is created and delivered through Rapid Learning, m-Tube (mobile enabled learning), Video Enabled Learning Solutions and On Demand Learning (ODL). Talent Transformation is expanding its wings across the globe, setting up services for new learning centers and classrooms nationally and internationally. The Operations Support Group (OSG) has been shouldering this responsibility, ensuring seamless functioning of the Talent Transformation team. THE TRUE SUCCESS OF A LEADER IS IN THE LEADERS SHE CREATES. People leadership – a responsibility At Wipro, we have always been known for creating entrepreneurs and leaders. Our model for leadership development coaches leaders to develop a multi-business, multi-function and multi-geography perspective. Our flagship programs reflect this design. Wipro was featured among Asia’s Top 10 in the Hewitt Top Companies for Leaders Study, 2009. Wipro was chosen on account of going beyond the basics of nurturing strong leaders and having come up with new, innovative ways to create great leaders not just leadership. A Senior Leaders Program was conducted in conjunction with our consortium partners and held at Bangalore and Hyderabad. The partner companies included Dr. Reddy’s Lab, Colgate Palmolive, Genpact, Mahindra and Mahindra, HDFC Bank, Aditya Birla Group and Wipro. An Advanced Leadership Program by Prof. Henry Mintzberg concluded in May 2009 in Lake District, England. The consortium partners in this program were Alcan Packaging and Pharmaceuticals, IMC Pan Asia Alliance, Singapore and Rio Tinto. An Accelerated Leadership Development Program (ALDP) was conducted during 2009-10 after rigorous identification of high potential leaders in the Business Units. A personalized diagnosis of each leader’s development needs was followed by deep inputs specific to these needs. A long history of developing leadership through the Wipro Leaders Program reached a milestone when we conducted the 50th batch of this program in December 2009. Creating Customer Satisfaction Leaders 2009 also saw the undertaking of a key initiative to strengthen the consulting and customer management skills of our frontline employees by running an academy. The Customer Leadership team of CHRD in conjunction with Enterprise Application Services (EAS) business, in its drive to create world-class consultants launched the EAS Consulting Academy. The objective of the academy was to inculcate the right engagement behavior at an early stage that goes beyond customer satisfaction. We conducted 500,000 person days of training last year. We have the capacity to train 5,000 employees every day. 29 Our journey towards ecological and social sustainability is an integral part of Wipro’s view of Good Citizenship. The Voice of Wipro - the first step to a better workplace. At Wipro, we believe that people are more willing to share their ideas if they know you're really listening. By being an active listener, we have improved the quality of the relationship with our people, and expressed our willingness to find constructive solutions and change for the better. The Voice of Wipro (VOW), our biennial Employee Perception Survey was rolled out in November 2009. Wiproites all over the world participated in the survey and our engagement scores have gone up by 12 points since the 2007 survey. The high scoring areas are Team Spirit, Social Responsibility, Diversity and Empowerment. Wipro BPO was ranked among the top 3 in Dataquest Top 20 Best Employers Survey 2009. Creating a world-class HR system As we grow globally, we have been investing in scaling our internal systems, specially the HR systems to provide the same experience to employees around the world. Our HR and IS teams have been automating many of our HR processes and are currently upgrading our SAP system. Rewards and recognition Every year we celebrate the best talent we have in Wipro through our rewards program. The Best People Manager (BPM) Award is one such program which felicitates 60 exceptional people managers from IT Business every year for their contributions in adopting and institutionalizing best people practices to engage, motivate and retain talent. This year too, the BPM Award ceremony was a grand event where the winners and their spouses were felicitated by the Chairman, Mr. Azim Premji. This year we instituted the first Joint CEO Awards. These awards honor exemplary performance, team work and innovation in nine categories. 140 teams competed for these awards and nine of them were selected after a rigorous screening process by a mix of internal and external jury members. The Jt. CEOs presented these awards in a spectacular ceremony. IT IS FAR GREATER TO SUSTAIN THAN IT IS TO CREATE. Wipro is built on a foundation of values - Spirit of Wipro. These values drive Wipro. Acting with Sensitivity is one of the three values and is manifested in our approach to stakeholders & ecology. Our journey towards ecological and social sustainability is an integral part of Wipro’s view of Good Citizenship. As a responsible global organization Wipro would like to lead the way in sustainability practices. Ecological Sustainability at Wipro. Guided by our conscience. It is an accepted fact that the current path to economic progress is ecologically unsustainable. This brings us to the moot point of choices. The most obvious being that if each one of us - organizations and individuals in the global society, adopt an ecologically sustainable path, we have the best chance of shaping a secure and happy future. EcoEye is Wipro’s initiative towards ecological sustainability that has today become a concerted organization-wide program. It’s this lens of ecological sustainability that is transforming the way we do business and engage with all our stakeholders. Our sustainability framework is pivoted on engaging with multiple stakeholders in areas of vital and common interest, founded on an unchanging bedrock of integrity and values. For more on our Sustainability initiatives visit: http://www.wipro.com/sustaina bilityreport The UN Habitat award 2009 for LEED, the National Energy Management Award (CII) from 2006-2009 and the Srishti award for Good Green Governance (2009) are testimony to the solid foundation that we have built in ecological sustainability and motivate us to constantly set the bar higher. Our customer stewardship program in Sustainability offers an integrated portfolio of solutions in Clean Energy, Energy Efficiency, Water Treatment, Green Lighting, Green PCs, Green Datacenters and IT for Green Software Solutions. Wipro’s Green PC is a complete case study in sustainable product design, energy efficient operations and extended responsibility for e-waste. Wipro’s Green PC models are 100% Restriction of Hazardous Substances (RoHS) compliant. Recently we launched a model that goes beyond RoHS compliance and is PolyVinylChloride (PVC) and Brominated Flame Retardants (BFR) free. 100% of our laptop models and 70% of our desktop models are Energy Star 5 rated. These ratings represent an energy efficiency of 10-15% and thus enable customers to save energy and reduce their corresponding Green House Gas (GHG) emissions. Wipro was the first Indian IT company to launch an extensive ‘take back’ program in 2006 for customers to return their end-of-life desktops and laptops. With more than 16 such collection centers across India, it has set the standard for responsible e-waste management. Some highlights of our progress on key ecological dimensions and the associated goals: Dimension Energy & GHG efficiency Waste Management Water efficiency Progress highlight(s) Goal(s) i. An improvement of nearly 25% in energy efficiency in the last 6 years. 16 of our buildings are LEED certified with 4 more in progress ii. In 2009-10, multiple efficiency programs helped reduce about 15 million units of electricity and a corresponding 12000 tons of GHG emissions iii. A reduction of 44% in the usage of printing paper. This translates into the conservation of approximately1000 trees i. 4 Biogas plants for converting food waste to a source of cooking fuel: Our four plants help save between 2 to 4 nos of 19 KG LPG cylinders per day, translating into a net GHG reduction of 100 tons per annum ii. Our paper recycling plant at Bangalore processes about 20 tons of paper waste per annum. This effectively saves about 50 tons of dry timber and 500,000 gallons of water per annum To ensure by 2013 that not more than 5% of the total waste reaches landfills; 95% of the waste to be processed are within Wipro or through partners and either recycled for further use or safely disposed. i. To improve water efficiency by 5% YoY as measured on a per employee basis (Base year is 2008-09) ii. To collaborate with proximate communities in optimal management of local water resources iii. Zero impact on the local water table by recharging equivalent amount of water withdrawn locally; to procure water only from responsible sources for our operations i. At an aggregate level, 32% of our water requirements is met through recycling and reuse ii. High grade treatment plants in all our campuses help recycle and reuse water extensively. In addition, judicious conservation practices and rainwater harvesting help in keeping our water consumption levels consistently low at a level of 44 liters per employee per day i. To reduce Wipro’s GHG intensity to 2.5 tons per employee by 2015 ii. To achieve a total reduction of 55000 tons from the base figure of 455000 tons (2008-09) by 2015 iii. To reach above goal through a combination of Energy Efficiency and investments in Renewable Energy 30 31 We try and engage in deeper issues like education that pose an important challenge to our future in bringing about long-term social change. WE LIVE IN THE COMMUNITY. THE COMMUNITY LIVES IN US. Social Sustainability A sustainable business does not exist in a vacuum. Its sustainability is directly related to the well being and sustainability of the society in which it is embedded. Wipro's social and community initiatives are based on the belief that business has a clear responsibility to contribute to the creation of a just, equitable and humane society. For almost a decade now, we have been engaged in social transformation initiatives. From the time we began, we decided to engage in social issues with sensitivity, rigor and an open mind, and most importantly with responsibility. This led to wide consultations and brainstorming, resulting in our decision to work in three areas: School education, through Wipro Applying Thought in Schools Towards increasing employability, through Mission10X Towards addressing the immediate concerns in society, through Wipro Cares Wipro Applying Thought in Schools (WATIS) WATIS is a focused initiative towards systemic reform in school education in India, to improve the quality of education. A partnership of over 30 organizations with specific projects on the ground is at the core of this initiative, involving over 1000 schools across 17 states. We continued our journey this year by expanding our reach to a wider community. Some of the key themes of the work were: An initiative to create quality literature for children and about education We supported a two year project for writing a book titled ‘What Did You Ask At School Today?’ by Kamala V. Mukunda and was published by Harper Collins. Strengthening the Wipro Education Fellowship network Launched in 2007, this program provides individuals with opportunities to create shareable learning for schools and the larger education community. The assignments are either commissioned books, research/documentation assignments, creating good educational literature or even working on a specific school intervention or Wipro project based on needs. Two Junior Fellows have completed their Fellowship and we currently have 7 Fellows working on projects in two broad areas: – learning, observing and documenting the experience in some of our school projects – a project of own interest, related to school education or children’s literature Expanding the community of partner organizations A new Holistic School Engagement project was initiated with Center for Education and Voluntary Action (CEVA) in Chandigarh. We work with the New Public School (NPS), Chandigarh in creating a teaching-learning environment based on experiential and participative practices. We partnered with Udaan-Janvikas, Ahmedabad to help the organization build a resource center for educators. Udaan’s work is with children who primarily depend on government schools and the work is focused on influencing the government school system. We initiated a new project with The Teacher Foundation in 12 schools in Bangalore which aims at making schools emotionally safe places, where the interaction with children is sensitive. We are currently working on 22 long-term projects with 20 partner organizations,10 of which are Holistic School Engagements. 32 Extending advocacy efforts to parents and teachers on the importance of conceptual understanding in the learning process This year we reached out further by recording student misconceptions as videos to schools and also conducted teacher and parent workshops. We engaged with around 500 schools and educators through these sessions. This gives teachers and parents insights into how children think about various concepts and thus better support the learning process. We have made these videos available to more than 9,000 schools. Mission10X Mission10X, a not-for-profit trust of Wipro, places great emphasis on the creativity of the learner. It also aims at enhancing the learning ability of engineering institutions in India and their response to the challenges of employability. Our affiliations with institutes and universities saw distinguished thinkers, educationists and leaders from the academia provide the necessary stimulus to be thrust into the right path. To facilitate this exchange and create a web enabled community of engineering faculties, we augmented the Mission10X portal with storage and access mechanisms. Faculties across the country are now able to create engineering assets, document and share them using the portal. Currently the number of innovative assets (in 18 engineering disciplines) stands at 3,370. Mission10X set out to reach and empower 10,000 engineering faculties with innovative learning methodologies by September 2010. The year 2009-10 saw an accelerated growth aided by affiliations with reputed universities and by end of year the mission has successfully empowered over 7,777 faculties across 19 states in India. Wipro Cares The focus of Wipro Cares is on education & healthcare for marginalized communities, and environment & disaster rehabilitation. Education: We work with partners to create an engaging atmosphere where children can spend a few hours a day at informal learning centres. These centres double up as bridge schools and aim to get out-of-school children back into the mainstream. Some of our initiatives aim to provide additional support to bright students from poor families by providing books or opening up their world through interactions and motivation. Healthcare: Our mobile clinics reach the communities around our factories and provide healthcare to those who cannot come to the centre. We provide primary health care services and focus on both preventive and curative treatment. Environment: Wipro Cares undertakes activities in the community under its EcoEye charter. We have adopted and developed Lake Manikonda in Hyderabad. This year we worked to increase its water holding capacity, built a bio-fence and installed a water purifier system to ensure that the incoming water is clean. Disaster Rehabilitation: In areas affected by disasters, Wipro Cares works on rehabilitation, to provide long term support to the community, to restart their lives. In 2009-10, Wipro Cares ran a pilot project in parts of Bihar affected by the Kosi river breach. We provided ecologically sustainable infrastructure such as eco-sanitation, solar lights and rain water harvesting in the community of Mandal Thola in Puraini village. We have also provided solar street lights, cobbled streets, raised platforms as shelters for animals, raised hand-sets and cleaned open wells among other activities. Our pilot project is approved by the state government to take it forward in all flood affected areas of Bihar. Dr. Giri Tiruvuri, HOD, Aditya Engineering College, Surampalaem “Mission10X gave me the wisdom to ask the right questions and equipped me with the methodologies to find the answer myself... we need to stress on how well engineering concepts are discovered rather than look at how much (syllabus) is being covered.” 33 JOINT CEO AWARDS This year we instituted the Joint CEO Awards. These awards honor exemplary performance, team work and innovation in nine categories. 140 teams competed for these awards and nine of them were selected after a rigorous screening process by a mix of internal and external jury members. The Jt. CEOs presented these awards in a spectacular ceremony. Best Large Complex Project Execution Retail, CPG, Transportation & Government (RCTG) Best Business Unit Enterprise Application Services (EAS) Excellence in Diversity Wipro Infotech – Open Source Project (ESIC) Best Innovative Solution PES – High Performance Computing Server Development Project Best Transformational Deal Manufacturing - Centre for Integrated Global Management of Applications (CIGMA) Best Non-Linear Solution Wipro Infotech – Delhi International Airport Ltd. Best Outsourcing Deal Finance Function Best Support Function Energy & Utilities – Shell Account Best Managed Account Wipro Infotech – Uninor Project 34 Business Unit Performance Consumer Care & Lighting Business IT Products Business IT Services Business Technology, Media, Telecom Services 26% Financial Services 26% Mnaufacturing & Healthcare Services 24% Retail, Transportation & Services 15% Energy & Utilities 9% Enterprise Products 44% Personal Computers 36% Network Products 5% Others 6% Business Solutions Products 9% *IT Services & Products In Rs. Mn Description 2010 2009 Revenue 202,469 191,661 PBIT 47,749 40,323 Operating Margin 23.6% 21.0% Capital Employed* 133,489 114,447 ROCE* 40% 40% In Rs. Mn Description 2010 2009 Revenue 38,322 34,552 PBIT 1,752 1,481 Operating Margin 4.6% 4.3% In Rs. Mn Description 2010 2009 Revenue 23,774 20,830 PBIT 3,100 2,548 Operating Margin 13.0% 12.2% Capital Employed 20,003 18,689 ROCE 16% 14% Personal Care Products 80% Lighting & Furniture 18% Others 2% Business Composition 35 IT Services North America 58% Testing Services 12% Package Implementation 13% Engineering Graduates 40% Other Graduates 27% Post Graduates 21% BPO 11% Consulting 2% Product Engineering 4% Application Development & Maintenance 37% Technology Infrastructure Services 21% Others 12% Rest of the World 14% Europe 26% Japan 2% IT Services Revenue in USD Mn 5 year CAGR 22% 4,390 2010 4,323 2009 3,647 2008 2,611 2007 1,952 2006 PBIT in Rs. Mn 47,749 2010 40,323 2009 31,290 2008 28,115 2007 20,679 2006 Employees* *Excludes subsidiaries and Indian IT operations **Employee mix excludes subsidiaries and Indian IT Revenue Mix Geographical Distribution Service Line-wise Distribution Employee Mix** $1,063 Mn 91,696 IT BPO 2010 84,020 2009 82,515 2008 67,818 2007 53,742 2006 1 6 , 0 8 7 3 7 , 6 5 5 2 2 , 8 2 4 6 1 , 1 9 6 1 7 , 4 6 4 5 0 , 3 5 4 2 0 , 4 4 5 6 2 , 0 7 0 2 5 , 6 4 9 6 6 , 0 4 7 36 37 (Rs. in Mn except Per Share data) 2006 2007 2008 2009 2010 66,053 95,960 116,914 136,284 182,425 $ 4,060* Networth 2006 2007 2008 2009 2010 37,931 48,851 9,599 12,901 44,097 $ 981* Cash and Investments (Net of debt) 2006 2007 2008 2009 2010 8,129 9,965 10,254 6,856 10,092 $ 225* Dividend (including distribution tax) *Based on exchange rate as on March 31, 2010 - Rs.44.935/USD Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 Performance for the year Sales 271,414 255,442 199,575 149,751 106,164 Revenue of IT Services in $ Mn 4,390 4,323 3,647 2,611 1,952 Profit before Depreciation, Interest and Tax 59,335 50,868 40,546 34,384 25,602 Depreciation 7,543 6,864 5,359 3,978 3,096 Profit Before Interest and Tax 51,792 44,004 35,187 30,406 22,506 Effective Tax rate (%) 16.6 14.3 12.3 11.7 14.3 Profit After Tax 46,310 38,999 32,829 29,421 20,674 Dividend (including distribution tax) 10,092 6,856 10,254 9,965 8,129 Return on Average Networth (%) 29.1 30.8 30.8 36.3 34.8 ROCE (%) 23.6 24.8 26.9 36.4 37.3 Earnings Per Share data EPS Basic 31.78 26.81 22.62 20.62 14.70 Diluted 31.56 26.72 22.51 20.41 14.48 Financial position Share Capital 2,934 2,928 2,923 2,918 2,852 Networth 182,425 136,284 116,914 95,960 66,053 Total Debt 62,513 56,892 44,850 3,827 757 Fixed assets, net 56,294 52,563 41,583 28,485 18,155 Cash and Investments 106,610 69,793 54,449 52,678 38,688 Goodwill 53,346 56,521 42,209 9,477 3,528 Net Current Assets 91.389 61,313 61,577 27,400 13,796 Capital Employed 245,393 193,427 161,920 99,852 66,884 Shareholding related Number of Shareholders (Nos.) 179,438 228,456 232,932 197,774 155,832 Market Capitalization 966,523** 600,245 773,255 816,164 797,995 Historical Performance for Five Years ** Based on closing price in NSE as on June 1, 2010. 38 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 Financial Performance - Growth (%) Revenue 6 28 33 41 30 Profit Before Interest and Tax 18 25 16 35 24 Profit After Tax 19 19 12 42 27 Financial Position Cash and Investments to Capital Employed 43 36 34 53 58 Current Ratio 2.13 1.72 2.12 1.66 1.44 Days Sales Outstanding (in days) 66 67 64 60 62 Returns - (%) Return on Capital Employed 24 25 27 36 37 Return on Average Networth 29 31 36 35 36 Return on Invested Capital 37 37 45 80 84 Operating Cashflow to PBIT 98 82 66 92 87 Per Share - Rs. Book Value 124 93 80 66 46 Dividend Per Share 6 4 6 6 5 Market Price as on March 31 659* 410 529 559 560 PE Ratio 21 15 22 27 38 Market Cap in Rs. Million 966,523* 600,245 773,255 816,164 797,995 Segment Level IT Services Revenue growth (%) - in dollar terms 2 19 40 34 34 PBIT growth (%) 18 29 11 36 25 ROCE (%) - IT Services & Products 40 40 44 62 60 Consumer Care & Lighting Revenue growth (%) 14 37 86 36 27 PBIT growth (%) 22 34 89 25 20 ROCE (%) )16 14 19 48 76 * Based on closing price in NSE as on June 1, 2010 Ratios Risk management is intrinsically embedded in all our business processes & functions. We adopt a 4E approach: Engage, Educate, Enable & Enforce. Risk Management Vision & Charter Our approach is to enable & support business growth through intelligent risk assessment and mitigation mechanisms seeking to provide re-assurance to all stakeholders, especially our Customers, Investors & Employees. A • Key business & operational processes to be risk assessed & mitigated • Build common unified framework across risk management lifecycle • Enable risk identification, monitoring, controlling & reporting by all businesses & functions B • Enculturize risk management & compliance across the organization • Enhance risk & compliance competency • Build platform for knowledge sharing & best practices adoption • Develop performance measures C • Be the benchmark in risk management • Demonstrate thought leadership • Benchmark with best-in-class global practitioners • Win global awards The Enterprise Risk Management Function Our Enterprise Risk Management function is led by senior business leaders and supported by specialists in Center of Excellence and risk champions within business units. Key Risks & Mitigation Programs The chart below depicts the key risks which were in focus in the financial year 2009-10 impact delivering on customer commitments and achieving operational parameters. People Safety and Physical Security We have responded with firmness to the increased threat perspective in our countries of operations, in protecting all people within or visiting our campuses. People safety continues to be an area of paramount importance and all screening and monitoring processes have been bolstered and upgraded with recommendations from experts. This includes securing our campuses, increased vigilance, use of state-of-the-art alert and detection devices, and communication of responsibility and reassurance to all employees and visitors. People & Operational Risk Management We strengthened the process of recruitment and background verification of candidates with cutting-edge risk and quality management methodologies. We continue to enhance our whistle-blower (Ombuds process) channel to escalate concerns on compliance to the Spirit of Wipro, the way we conduct our business and our commitment to ethics and integrity. Fraud Risk Management A risk mitigation program to address fraud risk was drawn up during the year and would continue to be driven on priority. The program is aimed at enhancing transparency and propriety in all commercial processes through a thorough reassessment of failure modes, implementation of corrective and preventive measures, and random checks. Information Security & Business Continuity A comprehensive information security and business continuity program is in place, in compliance with ISO 27001. Core focus areas include physical & data security, access control, intellectual property protection, security training & awareness. These are audited regularly by internal and external auditors as well as our customers. This program helped us effectively manage the H1N1 pandemic last year. Teams have also been able to handle city-specific disruption scenarios with timely emergency response procedures and crisis communication steps. Employees are provided mandatory online E-learning curriculum on information security in enhancing their security quotient and building awareness against policy violations. Employees also undertake electronic sign-off on compliance to security policies as part of induction process. Thought Leadership During the year, we participated in key forums such as the NASSCOM Data Security Council of India (DSCI), NASSCOM risk-based study of the Indian IT Outsourcing Industry and hosted the Annual India Council of Corporate Governance and Risk Management (CGRM) of the Conference Board. Safeguarding Brand and Reputation though Enterprise Risk Management The Risk Management Operating plan current financial year (2010-11) embeds the central theme of upholding the Spirit of Wipro and strengthening our brand and reputation. M in o r L o w M e d iu m B u s in e s s s I m p a c t H ig h V H ig h Very Low Very High Probability of Occurrence 11. Conveyance Policy & Process Compliance 7. Regulatory Compliance 8. M&A Integration 9. People Supply Chain 4. Intellectual Property Protection 5. Information Security & Data Privacy 12. Recruitment 13. Climate Change & Sustainability 14. Emerging Technologies (Cloud, SoA, SaaS) 10. Business Continuity & Disaster Recovery 15. Employment and Taxation Law Changes 2. Physical Security 1. Economic Uncertainty over Growth & Customer Creditworthiness 3. Large Program: Pricing, Contract and Delivery 6. Forex Volatility & Treasury Management An overview of the key risk mitigation programs currently in progress: Business (Sales & Delivery) Risk Management Risks in specific markets, technology, and domains are captured in the annual strategic and operational plans of each Business Unit and specific investments to mitigate/optimize the risks are evaluated & implemented. In response to the recent global credit crisis, we deployed an index to measure customer creditworthiness risk, to assess customer liquidity & potential bankruptcy. This strengthened the existing risk management practices on containing our receivables exposure. Delivery risk assessment is performed on an ongoing basis on large/strategic engagements to identify possible threats which could 39 RISK MANAGEMENT INITIATIVES WIPRO LIMITED 40 DIRECTORS’ REPORT Dear Shareholders, I am happy to present on behalf of the Board of Directors, the 64th Directors’ Report for the year ended March 31, 2010, along with the Balance Sheet and Profit and Loss Account for the year. Financial Performance Key aspects of your Company’s consolidated financial performance for Wipro and its group companies and standalone financial results for Wipro Limited for the year 2009-10 are tabulated below: (Rs. in Million) Consolidated Results Standalone Results 2010 2009 2010 2009 Sales and Other Income 276,505 259,616 237,973 210,269 Profit before Tax 55,095 45,196 56,888 35,479 Provision for Tax 9,163 6,460 7,908 5,741 Minority interest and equity in earnings/(losses) in affiliates 378 263 - - Profit for the year 46,310 38,999 48,980 29,738 Appropriations Proposed Dividend on equity shares 8,809 5,860 8,809 5,860 Corporate Tax on distributed dividend 1,283 996 1,283 996 Transfer to General Reserve 36,218 32,143 38,888 22,882 * Profit for the year in Standalone Result is after Rs 4,534 million (March 2009: Rs (7,454) million) of gains/(losses) relating to translation of foreign currency borrowings and mark to market losses of related cross currency swaps. In the Consolidated Accounts, these are considered as hedges of net investment in overseas operations and are recognized directly in shareholders' funds. (Refer note 4 on page 79). Global and Industry outlook According to NASSCOM Strategic Review Report 2010, IDC forecasts a cumulative annual growth rate (CAGR) of over 4.08% in worldwide IT services and IT enabled services (IT-ITeS) spending and a CAGR of over 6.18% in offshore IT spending, for the period 2008-13. The combined market for Indian IT-ITeS in fiscal 2010 was nearly $ 63 billion. Key factors supporting this projection are the growing impact of technology led innovation, the increasing demand for global sourcing and gradually evolving socio-political attitudes. IDC forecasts worldwide IT services spending of approximately $695 billion by 2013, reflecting a compound annual growth rate, or CAGR, of 3.3%. However, Forrester US and Global IT Market Outlook Q4 2009 , predicts that U.S. IT market will grow by 6.6% in 2010 following a drop of 8.2% in 2009. Companies are increasingly turning to offshore technology service providers in order to meet their need for high quality, cost competitive technology solutions. Technology companies have been outsourcing software research and development and related support functions to offshore technology service providers to reduce cycle time for introducing new products and services. Subsidiary Companies Wipro is a global corporation having operations in more than 35 countries through 80 subsidiary companies, a few joint ventures and associate companies. Section 212 of the Companies Act, 1956, requires that we attach the Directors’ Report, Balance Sheet and Profit and Loss Account of our subsidiary companies. We believe that the Consolidated Financial Statements present a more comprehensive picture rather than the standalone financial statements of Wipro Limited and each of its subsidiaries. We, therefore, applied to the Ministry of Corporate Affairs, Government of India and sought an exemption from the requirement to present detailed financial statements of each subsidiary. The Ministry of Corporate Affairs, Government of India, has granted the exemption. In compliance with the terms of the exemption, your Company presented in page nos. 151 & 152, 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 and upon written request from a shareholder, your Company will arrange to send the financial statements of subsidary companies to the said shareholder. WIPRO LIMITED 41 Consolidated Results Our Sales for the current year grew by 7% to Rs. 276,505 million and our Profit for the year was Rs. 46,310 million, increase of 19% over the previous year. Over the last 10 years, our Sales have grown at a compounded annual growth rate (CAGR) of 28% and Profit after Tax at 31%. Dividend Your Board of Directors recommend a final Dividend of 300% (Rs. 6 per equity share of Rs. 2/- each) to be appropriated from the profits of the year 2009-10 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 2009-10, unclaimed dividend of Rs. 1,995,655 transferred to the Investor Education and Protection Fund, as required by the Investor Education and Protection Fund (Awareness and Protection of Investor) Rules, 2001. Issue of Bonus equity shares/American Depository Shares Your Board of Directors has approved issue of Bonus Shares in the ratio of two equity shares for every three existing equity shares outstanding as on the record date and two American Depositary Shares for every three existing American Depository Shares outstanding as on the record date. Issue of Bonus Shares has also been approved by the shareholders of the Company through Postal Ballot on June 4, 2010. Subsequent to this approval, the record date to determine the eligible shareholders who are entitled to receive the Bonus Shares fixed as June 16, 2010. Acquisitions and Joint Ventures Your Company has continued to pursue the strategy of “string of pearls acquisitions” by acquiring businesses which complement our service offerings, provide access to niche skill sets and expand our presence in select geographies. Your Company has a dedicated team of professionals who identify businesses which meet our strategic requirements and are cultural fit to Wipro. In August 2009, your Company had entered into partnership with Lavasa Corporation Limited for planning, implementing and managing Information and Communication Technology services across Lavasa City. Wipro will support Lavasa City in the areas of City Management system and services, E Governance, Information and Communication Technology services and other value added services. In October 2009, your Company signed an agreement to form a joint venture with Delhi International Aiport Private Limited. This Joint Venture Company is named as Wipro Airport IT Services Limited. Wipro holds 74% in the Joint Venture and Delhi International Airport Private Limited holds 26% stake. This partnership assumes significance as IGI airport’s new integrated terminal (T3) will be the gateway for the Commonwealth Games scheduled to be held in New Delhi. In October 2009, Wipro GE Healthcare Private Limited, the Joint Venture between Wipro Limited and GE Healthcare, transformed its business by integrating several existing stand-alone business units and manufacturing plants of GE Healthcare in India under Wipro GE Healthcare Entity. This strategic move will lead to more effective management and resources utilization and help accelerate growth, through Wipro GE Healthcare’s large distribution network. This move will define the next stage of market leadership for Wipro GE Healthcare. In November 2009, your Company had signed an agreement to acquire the “Yardley” Brand business in Asia, Middle East, Australia and certain African markets from UK based Lornamead Group. This transaction adds another jewel to Wipro Consumer Care and Lighting (FMCG arm of Wipro Limited). All the subsidiaries of the Company are unlisted and none of them are material unlisted subsidiaries as per Clause 49 of the Listing Agreement. Investments in direct subsidiaries During the year under review, your Company has made acquisitions and investments of an aggregate of US$ 171 Million as equity in its direct subsidiaries Wipro Cyprus Private Limited, Wipro Inc and Wipro Yardley Consumer Care Private Limited. Your Company has also invested Rs. 37 Million as equity in Wipro Airport IT Services Limited, a newly formed joint venture company with Delhi International Airport (P) Limited. Apart from this, the Company has funded its subsidiaries, from time to time, as per the funding requirements, through loans, guarantees and other means. Corporate Governance & Corporate Social Responsibility Your Company believes Corporate Governance is at the core of stakeholder satisfaction. Your Company's governance practices are described separately in page 57 of this Annual Report. Your Company has obtained a certification from Sreedharan & Associates, Company Secretaries on our compliance with Clause 49 of the Listing Agreement with Indian Stock Exchanges. This certificate is given in page 84. WIPRO LIMITED 42 With a view to strengthening the Corporate Governance framework, the Ministry of Corporate Affairs has incorporated certain provisions in the Companies Bill, 2009. The Ministry of Corporate Affairs has also issued a set of Voluntary Guidelines on Corporate Governance and Corporate Social Responsibility in December 2009 for adoption by the companies. The Guidelines broadly outline conditions for appointment of directors, guiding principles to remunerate directors, responsibilities of the Board, Risk Management, rotation of audit partners, audit firms, conduct of secretarial audit and other Corporate Governance and Corporate Social Responsibility related disclosures. Your Company has by and large complied with various requirements and is in the process of initiating appropriate action, for the other applicable requirements. Corporate Governance is also related to Innovation and Strategy as the organisation’s ideas of Innovation and strategies are driven to enhance stakeholder satisfaction for all stakeholders. 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, have Wipro Employee Stock Option Plans/Restricted Stock Unit Plans Information relating to stock options program of the Company is provided in page 7 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 Rs. 168,469 million and the outgoings in foreign exchange were Rs. 71,739 million, including outgoings on materials imported and dividend. 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 47 of the Annual Report, to the extent applicable. Conservation of Energy The Company has taken several steps to conserve energy through its “Eco Eye and Sustainability” initiatives disclosed separately as part of this Annual Report. The information on Conservation of Energy 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 44 of this Annual Report. Directors’ Re-appointment Articles of Association of the Company provide that at least two-thirds 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 re-election. Mr N Vaghul, Dr Ashok Ganguly and Mr P M Sinha, retire by rotation and being eligible offer themselves for re-appointment at this Annual General Meeting. Since the Board Governance and Nomination Committee members were interested in the resolution of re-appointment, Board of Directors have recommended their re-appointment for consideration of the Shareholders. Directors’ Appointment Dr Henning Kagermann was appointed as an Additional Director of the Company with effect from October 27, 2009 in accordance with Section 260 of the Companies Act, 1956. Dr Henning Kagermann would hold office till the conclusion of the Annual General Meeting of the Company scheduled to be held on July 22, 2010. The requisite notices together with necessary deposits have been received from a member pursuant to Section 257 of the Companies Act, 1956, proposing the election of Dr Henning Kagermann as a Director of the Company. Mr. Shyam Saran, Former Foreign Secretary, Government of India was appointed as an Additional Director of the Company in accordance with Section 260 of the Companies Act, 1956 by the Board of Directors with effect from July 1, 2010. The Additional Director would hold office till the date of the Annual General Meeting of the Company scheduled to be held on July 22, 2010. The requisite notices together with necessary deposit have been received from a member pursuant to Section 257 of the Companies Act, 1956 proposing the election of Mr. Shyam Saran. Group The names of the Promoters and entities comprising “group” as defined under the Monopolies and Restrictive Trade Practices (“MRTP”) Act, 1969, for the purposes of been provided as an additional booklet. WIPRO LIMITED 43 Section 3(1)(e)(i) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, include: Sl. No. Name of the shareholder No. of shares 1 Azim H Premji 56,043,060 2 Yasmeen A Premji 637,600 3 Rishad Azim Premji 568,000 4 Tariq Azim Premji 159,000 5 Mr Azim Hasham Premji Partner Representing Hasham Traders 326,259,000 6 Mr Azim Hasham Premji Partner Representing Prazim Traders 325,017,000 7 Mr Azim Hasham Premji Partner Representing Zash Traders 324,244,800 8 Regal Investments & Trading Company Pvt. Ltd. 51,014,200 9 Vidya Investment & Trading Company Pvt. Ltd. 38,860,600 10 Napean Tr adi ng & I nves t ment Company Pvt. Ltd. 38,263,000 11 Azim Premji Foundation (I) Pvt. Ltd. 6,506,000 12 Azim Premji Trust Nil 13 Azim Premji Trustee Company Private Limited Nil 14 Azim Premji Foundation for Development Nil 15 Azim Premji Foundation Nil 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 on pages 26 through 33 of this Annual Report. Re-appointment of Statutory Auditor The auditors, M/s. BSR & Co., 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. Re-appointment of Cost Auditor Pursuant to the direction from the Ministry of Corporate Affairs for appointment of Cost Auditors, your Board of Directors has re-appointed P.D. Dani & Co., as the Cost Auditor for the year ended March 31, 2011. Fixed Deposits Your Company has not accepted any fixed deposits. Hence, there is no outstanding amount as on the Balance Sheet date. 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; b) 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; c) 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 d) We have prepared the annual accounts on a going concern basis. 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 for their hard work and commitment. Their dedication and competence has ensured that the Company continues to 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 21, 2010 WIPRO LIMITED 44 D. CONSUMPTION PER UNIT PRODUCTION (Wipro Consumer Care and Lighting Division) Vanaspati Electricity Liquid Diesel Oil (KWH/Tonne) (Litres/Tonne) ACT STD ACT STD 2009-10 130.53 109 NA - 2008-09 138.42 109 NA - C. DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY (Wipro Consumer Care and Lighting Division) Electricity 2009 - 2010 2008 - 2009 a Purchased Unit KWH 18,104,719 14,848,463 Total Amount Rs. 81,983,935 65,068,207 Rate/unit Rs. 4.53 4.38 b Own generation Through Diesel Generator Unit KWH 1,047,006 859,456 Unit/litre of diesel Units 3.15 3.04 Cost per unit Rs. 10.90 11.27 Coal Quantity Tones 2,594 3,187 Total Cost Rs. 12,115,327 15,909,865 Av. Rate Rs. 4,671 4,992 Furnace Oil Quantity FO Ltrs. 4,546,900 3,903,204 Total Cost Rs. 120,679,932 113,006,503 Av. Rate Rs. 26.54 28.95 Quantity Kgs. 697,410 594,221 Total Cost Rs. 24,944,813 24,718,033 Av. Rate Rs. 35.77 41.60 H2 Gas Quantity CMT 107,623 109,981 Total Cost Rs. 3,670,983 3,672,356 Av. Rate Rs. 34.11 33.39 ANNEXURE "A" FORMING PART OF THE DIRECTORS’ REPORT A. DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY (Wipro Infrastructure Engineering Division) Electricity 2009 - 2010 2008 - 2009 a Purchased Unit KWH 5,683,709 4,872,613 Total Amount Rs. 30,024,982 23,746,108 Rate/unit Rs. 5.28 4.87 b Own generation Through Diesel Generator Unit KWH 824,978 398,638 Unit/litre of diesel Units 2.53 2.17 Cost per unit Rs. 13.87 16.68 B. CONSUMPTION PER UNIT PRODUCTION (Wipro Infrastructure Engineering Division) Electricity (kwh/cyl.) Diesel (Lts/Cyl.) 2009-10 20.61 1.03 2008-09 19.05 0.66 WIPRO LIMITED 45 Wipro’s Research & Development focus is to strengthen the portfolio of Applied Research, Centers of Excellence (CoE), Solution Accelerators and Software Engineering Tools & Methodologies. Applied Research Our current area of activities in Applied Research is around Content Analytics, Enterprise Blog characterization and Enterprise system performance in Cloud. Investments in Applied Research has helped in collaboration with academic institutes like Georgia Tech, IIIT-B and enabled publication and participation in research conferences such as COMAD 2009, ACM India and Compute 2010. Centers of Excellence (CoE) The goal of a CoE is to create competencies in emerging areas of technologies & industry domain and incubate new practices for business growth. In order to enhance focus, few technologies are driven centrally as Theme initiatives. For Financial Year 2009-10, the Technology themes identified were Cloud Computing, Green IT, Social Computing, Information Management, Mobility, Collaboration and Open Source. Investments in Cloud and Green IT CoE have enabled deployment of private cloud infrastructure as well as energy & carbon management solution within Wipro. Solution Accelerators Your Company continued to invest in reusable IP’s/solution accelerators (components, tools, frameworks) which help in accelerating the implementation of solutions in customer engagements. Industry solution accelerators are specific to a particular industry segment whereas Functional and Technology solution accelerators can be used across industry segments. Sample examples of technology solution accelerator include SaaS enabler, Social Media platform, Open Source UC and Mobility framework. One solution accelerator in enterprise security space – IDAM in a Rack – won Info Security Global Product Excellence Award 2010 Software Engineering Tools & Methodologies Your Company continued to invest in in-house development of software engineering tools to improve productivity and Quality; Examples include Wipro style, Wipro Accelerator, Wipro Unit Test and Wipro code checker. These tools have been widely deployed across projects with Wipro. Your Company developed an unique approach to speed up knowledge transition in customer projects by using reverse engineering capability to view the architecture of application as well as collaboration and recording tools for speedy and effective communication. Your Company has developed an approach for Flex shared delivery with innovative solution for effective queue and capacity management for reduced cost. Delivery Model Innovation Your Company continued to invest in Innovative delivery models targeted towards outcome based as against head count based Service Delivery & Pricing. One such initiative – CIGMA – won NASSCOM Innovation Award 2009 in Process category. Patents In Financial Year 2009-10, we have filed for 7 patents and 6 patents have been granted. Expenditure on R&D During the year under review, your Company incurred an expenditure of Rs. 993 million including capital expenditure in continued developement of R&D activities. FORM B Wipro’s Research and Development Activities: 2009-10 WIPRO LIMITED 46 A N N E X U R E B F O R M I N G P A R T O F T H E C O R P O R A T E G O V E R N A N C E R E P O R T D i s c l o s u r e i n c o m p l i a n c e w i t h C l a u s e 1 2 o f t h e S E B I ( E m p l o y e e S t o c k O p t i o n S c h e m e ) a n d ( E m p l o y e e S t o c k P u r c h a s e S c h e m e ) G u i d e l i n e s , 1 9 9 9 a s a m e n d e d S l . N o . D e s c r i p t i o n W E S O P 1 9 9 9 W E S O P 2 0 0 0 A D S 2 0 0 0 S t o c k O p t i o n P l a n W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 4 W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 5 A D S R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 4 W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 7 1 T o t a l N u m b e r o f o p t i o n s u n d e r t h e P l a n 3 0 , 0 0 0 , 0 0 0 ( A d j u s t e d f o r t h e i s s u e o f b o n u s s h a r e s i n t h e y e a r s 2 0 0 4 a n d 2 0 0 5 ) 1 5 0 , 0 0 0 , 0 0 0 ( A d j u s t e d f o r t h e i s s u e o f b o n u s s h a r e s i n t h e y e a r s 2 0 0 4 a n d 2 0 0 5 ) 9 , 0 0 0 , 0 0 0 A D S r e p r e s e n t i n g 9 , 0 0 0 , 0 0 0 u n d e r l y i n g e q u i t y s h a r e s ( A d j u s t e d f o r t h e i s s u e f o b o n u s s h a r e s o f t h e y e a r s 2 0 0 4 a n d 2 0 0 5 ) 1 2 , 0 0 0 , 0 0 0 ( A d j u s t e d f o r t h e i s s u e o f b o n u s s h a r e s o f t h e y e a r s 2 0 0 4 a n d 2 0 0 5 ) 1 2 , 0 0 0 , 0 0 0 ( A d j u s t e d f o r t h e i s s u e o f b o n u s s h a r e s o f t h e y e a r 2 0 0 5 ) 1 2 , 0 0 0 , 0 0 0 A D S r e p r e s e n t i n g 1 2 , 0 0 0 , 0 0 0 u n d e r l y i n g e q u i t y s h a r e s ( A d j u s t e d f o r t h e i s s u e o f b o n u s s h a r e s o f t h e y e a r s 2 0 0 4 a n d 2 0 0 5 ) 1 0 , 0 0 0 , 0 0 0 2 O p t i o n s / R S U s g r a n t s a p p r o v e d d u r i n g t h e y e a r - - - - 5 , 0 0 0 1 3 7 , 1 0 0 - 3 P r i c i n g f o r m u l a F a i r m a r k e t v a l e i . e . t h e m a r k e t p r i c e a s d e i n f e d b y t h e S e c u r i t i e s a n d E x c h a n g e B o a r d o f I n d i a F a i r m a r k e t v a l e i . e . t h e m a r k e t p r i c e a s d e i n f e d b y t h e S e c u r i t i e s a n d E x c h a n g e B o a r d o f I n d i a E x e r c i s e p r i c e b e i n g n o t l e s s t h a n 9 0 % o f t h e m a r k e t p r i c e o n t h e d a t e o f g r a n t F a c e v a l u e o f t h e s h a r e F a c e v a l u e o f t h e s h a r e F a c e v a l u e o f t h e s h a r e F a c e v a l u e o f t h e s h a r e 4 O p t i o n s V e s t e d d u r i n g t h e y e a r - - - 2 , 0 7 2 , 1 5 2 2 , 4 0 8 , 5 2 4 9 3 0 , 4 4 8 - 5 O p t i o n s e x e r c i s e d d u r i n g t h e y e a r - - 2 , 0 7 6 , 1 2 1 6 6 2 , 3 0 3 4 9 2 , 0 1 9 - 6 T o t a l n u m b e r o f s h a r e s a r i s i n g a s a r e s u l t o f e x e r c i s e o f o p t i o n ( a s o f M a r c h 3 1 , 2 0 1 0 ) - - - 2 , 0 7 6 , 1 2 1 6 6 2 , 3 0 3 4 9 2 , 0 1 9 - 7 O p t i o n s l a p s e d / f o r f e i t e d d u r i n g t h e y e a r * - 1 , 1 4 0 - 2 3 5 , 9 0 1 5 6 9 , 8 2 1 3 4 8 , 4 0 1 - 8 V a r i a t i o n o f t e r m s o f o p t i o n s u p t o M a r c h 3 1 , 2 0 1 0 - - - - - - - 9 M o n e y r e a l i s e d b y e x e r c i s e o f o p t i o n s d u r i n g t h e y e a r ( R s . ) - - - 4 , 1 5 2 , 2 4 2 1 , 3 2 4 , 6 0 6 9 8 4 , 0 3 8 - WIPRO LIMITED 47 S l . N o . D e s c r i p t i o n W E S O P 1 9 9 9 W E S O P 2 0 0 0 A D S 2 0 0 0 S t o c k O p t i o n P l a n W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 4 W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 5 A D S R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 4 W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 7 1 0 T o t a l n u m b e r o f o p t i o n s i n o p t i o n s i n f o r c e a t t h e e n d o f t h e y e a r ( g r a n t e d , v e s t e d a n d u n e x e r c i s e d / u n v e s t e d a n d u n e x e r c i s e d - - 1 , 6 0 6 3 , 3 5 3 , 2 2 6 7 , 0 0 1 , 1 2 4 1 , 8 3 2 , 1 7 0 - 1 1 E m p l o y e e w i s e d e t a i l s o f o p t i o n s g r a n t e d t o : - - - - - - - i . S e n i o r M a n a g e m e n t d u r i n g t h e y e a r a . M a r t h a B e j a r - - - - - 5 0 , 0 0 0 - i i . E m p l o y e e s h o l d i n g 5 % o r m o r e o f t h e t o t a l n u m b e r o f o p t i o n s g r a n t e d d u r i n g t h e y e a r a . M a r t h a B e j a r 5 0 , 0 0 0 i i i . I d e n t i fi e d e m p l o y e e s w h o w e r e g r a n t e d o p t i o n , d u r i n g a n y o n e y e a r , e q u a l t o o r e x c e e d i n g 1 % o f t h e i s s u e d c a p i t a l ( e x c l u d i n g o u t s t a n d i n g w a r r a n t s a n d c o n v e r s i o n s ) o f t h e C o m p a n y a t t h e t i m e o f g r a n t - - - - - - - 1 2 D i l u t e d E a r n i n g p e r S h a r e p u r s u a n t o t i s s u e o f s h a r s o n e x e r c i s e o f o p t i o n c a l c u l a t e d i n a c c o r d a n c e w i t h A c c o u n t i n g S t a n d a r d ( A S ) 2 0 3 3 . 3 8 3 3 . 3 8 3 3 . 3 8 3 3 . 3 8 3 3 . 3 8 3 3 . 3 8 3 3 . 3 8 WIPRO LIMITED 48 S l . N o . D e s c r i p t i o n W E S O P 1 9 9 9 W E S O P 2 0 0 0 A D S 2 0 0 0 S t o c k O p t i o n P l a n W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 4 W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 5 A D S R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 4 W i p r o R e s t r i c t e d S t o c k U n i t P l a n 2 0 0 7 1 3 W h e r e t h e C o m p a n y h a s c a l c u l a t e d t h e e m p l o y e e s c o m p e n s a t i o n c o s t u s i n g t h e i n s t r i n s i c v a l u e o f t h e s t o c k o p i t o n s , t h e d i f f e r e n c e b e t w e e n t h e e m p l o y e e c o m p e n s a t i o n c o s t s o c o m p u t e d a n d t h e e m p l o y e e c o m p e n s a t i o n c o s t t h a t s h a l l h a v e b e e n r e c o g n i s e d i f i t h a d u s e d t h e f a i r v a u l e o f t h e o p t i o n s . T h e i m p a c t o f t h i s d i f f e r e n c e o n p r o fi t s a n d o n E P S o f t h e C o m p a n y N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n S i n c e t h e s e o p t i o n s w e r e g r a n t e d a t a n o m i n a l e x e r c i s e p r i c e , i n t r i n s i c v a l u e o n t h e d a t e o f g r a n t a p p r o x i m a t e s t h e f a i r v a l u e o f o p t i o n s S i n c e t h e s e o p t i o n s w e r e g r a n t e d a t a n o m i n a l e x e r c i s e p r i c e , i n t r i n s i c v a l u e o n t h e d a t e o f g r a n t a p p r o x i m a t e s t h e f a i r v a l u e o f o p t i o n s S i n c e t h e s e o p t i o n s w e r e g r a n t e d a t a n o m i n a l e x e r c i s e p r i c e , i n t r i n s i c v a l u e o n t h e d a t e o f g r a n t a p p r o x i m a t e s t h e f a i r v a l u e o f o p t i o n s N o t a p p l i c a b l e a s n o o p t i o n s a r e g r a n t e d u n d e r t h i s P l a n 1 4 W e i g h t e d a v e r a g e e x e r c i s e p r i c e s a n d w e i g h t e d a v e r a g e f a i r v a l u e s o f o p t i o n s s e p a r a t e l y f o r o p t i o n s w h o s e e x e r c i s e p r i c e e i t h e r e q u a l s o r e x c e e d s o r i s l e s s t h a n t h e m a r k e t p r i c e s o f t h e s t o c k N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n E x e r c i s e p r i c e R s . 2 / - p e r o p t i o n . F a i r v a l u e R s . 7 0 6 . 9 5 / - a s o n M a r c h 3 1 , 2 0 1 0 E x e r c i s e p r i c e R s . 2 / - p e r o p t i o n . F a i r v a l u e R s . 7 0 6 . 9 5 / - a s o n M a r c h 3 1 , 2 0 1 0 E x e r c i s e p r i c e R s . 2 / - p e r o p t i o n . F a i r v a l u e $ 2 3 . 3 1 / - a s o n M a r c h 3 1 , 2 0 1 0 N o t a p p l i c a b l e a s n o o p t i o n s a r e g r a n t e d u n d e r t h i s P l a n 1 5 A d e s c r i p t i o n o f m e t h o d a n d s i g n i fi c a n t a s s u m p t i o n s u s e d d u r n g t h e y e a r t o e s t i m a t e t h e fi a r v a l u e s o f o p t i o n s , i n c l u d i n g t h e f o l l o w i n g w e i g h t e d a v e r a g e i n f o r m a t i o n : ( a ) r i s k f r e e i n t e r e s t r a t e N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n N o t A p p l i c a b l e a s t h e r e w e r e n o g r a n t s d u r i n g t h e y e a r u n d e r t h i s P l a n S i n c e t h e s e o p t i o n s w e r e g r a n t e d a t a n o m i n a l e x e r c i s e p r i c e , i n t r i n s i c v a l u e o n t h e d a t e o f g r a n t a p p r o x i m a t e s t h e f a i r v a l u e o f o p t i o n s S i n c e t h e s e o p t i o n s w e r e g r a n t e d a t a n o m i n a l e x e r c i s e p r i c e , i n t r i n s i c v a l u e o n t h e d a t e o f g r a n t a p p r o x i m a t e s t h e f a i r v a l u e o f o p t i o n s S i n c e t h e s e o p t i o n s w e r e g r a n t e d a t a n o m i n a l e x e r c i s e p r i c e , i n t r i n s i c v a l u e o n t h e d a t e o f g r a n t a p p r o x i m a t e s t h e f a i r v a l u e o f o p t i o n s N o t a p p l i c a b l e a s n o o p t i o n s a r e g r a n t e d u n d e r t h i s P l a n ( b ) e x p e c t e d l i f e ( c ) e x p e c t e d v o l a t i l i t y ( d ) e x p e c t e d d i v i d e n d s a n d ( e ) t h e p r i c e f o t h e u n d e r l y i n g s h a r e i n m a r k e t a t t h e t i m e o f o p t i o n g r a n t * A s p e r t h e P l a n , O p t i o n s / R S U s l a p s e o n l y o n t e r m i n a t i o n o f t h e P l a n . I f a n O p t i o n / R S U e x p i r e s o r b e c o m e s u n e x e r c i s a b l e w i t h o u t h a v i n g b e e n e x e r c i s e d i n f u l l , s u c h o p t i o n s s h a l l b e c o m e a v a i l a b l e f o r f u t u r e g r a n t u n d e r t h e P l a n . WIPRO LIMITED - CONSOLIDATED 49 MANAGEMENT'S DISCUSSION AND ANALYSIS IT Services 75% IT Products 14% Consumer Care and Lighting & Others 11% Segment-wise contribution to Revenue IT Services 92% IT Products 3% Consumer Care and Lighting & Others 5% Segment-wise contribution to EBIT I. Segment-wise performance Segment-wise contributions in 2009-10 We are a leading global information technology, or IT, services company, headquartered in Bangalore, India. We provide a comprehensive range of IT services, consulting, systems integration, BPO, software solutions and research and development services in the areas of hardware and software design to leading companies worldwide. We use our development centers located around the world, quality processes and global resource pool to provide cost effective IT solutions and deliver time-to- market and time-to-development advantages to our clients. Our IT Products segment is a leader in the Indian IT market and focuses primarily on meeting requirements for IT products of companies in India and the Middle East region. We also have a notable presence in the markets for consumer products and lighting and infrastructure engineering. In the subsequent section of this report, we will report for each of our business segment separately, the industry structure and developments, opportunities and threats, and risk and concerns. II. Industry Overview IT Services The shift in the role of Information and Technology (IT) from merely supporting business to transforming business, is driving productivity gains and helping create new business models. This has led to an increase in the importance of IT. The increasing acceptance of outsourcing and off-shoring of activities as an economic necessity has contributed to the continued growth in our revenue. As corporate and businesses adjust to “new normal” post the recent global recession, they will need to transform their business models to the changed economic and business environment. Consequently, they will have to make significant investments in IT. This opens up opportunities for us to offer our consulting, Systems Integration services and leverage our Global Delivery footprint and thus help our customers in their transformation journey. These opportunities are also reflected in the forecasts of market growth. IDC forecasts worldwide IT services spending of approximately $695 billion by 2013, reflecting a compounded annual growth rate or CAGR of 3.3%. However, Forrester US and Global IT Market Outlook Q4 2009 , predicts that U.S. IT market will grow by 6.6% in 2010 following a drop of 8.2% in 2009. Similarly, according to NASSCOM Strategic Review Report 2010, the worldwide BPO market is expected to touch $ 148 billion by 2013, representing a CAGR, of 6.11% .Key factors supporting this projection are the growing impact of technology led innovation, the increasing demand for global sourcing and gradually evolving socio-political attitudes. Global Delivery led organizations are expected to get an increased share of the IT services spends due to the powerful combination of scale, quality and cost embedded in their business model. In India, the IT services market is estimated to account for 39% of the domestic IT industry. The key verticals driving the growth of the IT services market are Retail, Government, Healthcare, Telecom and Manufacturing. However, according to IDC’s report - India domestic IT/ITeS market top 10 predictions for 2010, the India domestic IT/ITeS market growth rate will come down from an average of 24% recorded during 2003-08 to 14.6% over the next five years to 2013. IT Products According to NASSCOM Strategic Review Report 2010, IDC forecasts that worldwide hardware spending will increase from $600 billion in 2008 to $680 billion in 2013, representing a CAGR of 2.53%. According to NASSCOM Strategic Review Report 2010, the hardware market in India is estimated to account for 39% of the domestic IT industry, growing at about 3% in 2010. Personal computers (including desktops and notebooks) continue to be purchased at higher rates than other products in the hardware market. As prices come down, notebooks are increasingly being adopted as the computing device of choice. For the desktop segment, consumers are showing an increasing trend of moving away from locally assembled items towards branded products with relatively higher end configurations. Consumer Care and Lighting The consumer care market includes personal care products, soaps, toiletries, infant care products, modular switch lights and modular office furniture. We have a strong brand presence in a niche segment and have significant market share in select regions WIPRO LIMITED - CONSOLIDATED 50 in India. In addition, we have a strong presence in the market for personal care products in south-east Asia and Middle-East Asia. AC Nielsen estimates that India is amongst the fastest growing geographies for FMCG, with a 2009 growth rate of 14.0% for the non-food segment, largely led by price increases. This market is estimated to grow at a CAGR of 8% - 10% for the period 2010- 2013. The household and personal care FMCG market in the other Asian countries in which we operate including Malaysia, Vietnam and Indonesia, are expected to grow at a CAGR of 8% for the period 2010-2013. The Indian domestic market for institutional lighting and office modular furniture is estimated at U.S. $ 600 million and is expected to grow at the rate of 10% to 15% for the period 2010-2011. Key sectors contributing to the growth are expected to be modern work spaces, IT-ITeS, Retail, Healthcare and Government Infrastructure spending. We expect to increase our market share organically in our identified geographies. In addition we continue to look at acquiring established brands which complement our brand presence and distribution strengths. Others In the other segment, Wipro Infrastructure Engineering (WIN) is the key business segment. We sell hydraulic cylinders and truck tipping systems that are used in variety of earth moving, material handling, mining and construction equipments. III. Opportunity and Threats IT Services Global companies are increasingly turning to offshore technology service providers in order to meet their need for high quality, cost competitive technology solutions. Technology companies have been outsourcing software research and development and related support functions to offshore technology service providers to reduce cycle time for introducing new products and services. According to NASSCOM Strategic Review Report 2009, IDC forecasts a CAGR of over 6.18% in offshore IT spending, for the period 2008-13. As a de-risking strategy, companies have moved from giving mega large orders to breaking up of deals to get better price advantage. This has opened up opportunities for Indian IT companies to participate in these large multi-million dollar deals. Global companies are expanding their outsourcing activities to leverage the high quality, cost competitive IT services from India. We believe our strong brand, robust quality process and access to skilled talent base at lower costs places us in a unique position to take advantage of the trend towards outsourcing IT services. We believe that our global delivery model allows us to provide services on a best shore basis. Customers benefit from round the clock execution schedules, quality control measures and best in class resources pooled in across geographies for high quality delivery and risk management practices to ensure uninterrupted services. 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. In an economic slowdown, our clients may reduce or postpone their technology spending significantly. Reduction in spending on IT services may lower the demand for our services and negatively affect our revenues and profitability. According to World Economic Outlook Update published by International Monetary Fund in April 2010, GDP of United States is projected to grow by 3.1% in calendar 2010 and during the same period GDP of Euro area is projected to grow by 1%. 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 in-house information services departments. We may also face competition from IT and ITES companies operation from merging low cost destination like China, Philippines, Brazil, Romania, Poland etc. Recently, some countries and organizations have expressed concerns about a perceived association between offshore outsourcing and the loss of jobs. 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. This may adversely impact our ability to do business in these jurisdictions and could adversely affect our revenues and operating profitability. These risks are broadly country risks. At an organisational 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. We derive approximately 58% of our IT Services revenue from United States and 26% of our IT Services revenue from Europe. The recent crisis in the financial and credit markets in the United States, Europe have contributed significantly to a global economic slowdown, with Europe continuing to show significant signs of weakness and US showing signs of growth. IT products 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. We provide our offerings to enterprises in the Government, defence, IT and IT - enabled services, telecommunications/telecom service providers, manufacturing and banking sectors. For the last several years, India has achieved healthy economic growth rates in the range 7.5-8%. The growth has been contributed by robust services sector performance as well as WIPRO LIMITED - CONSOLIDATED 51 cyclically strong manufacturing output. Increased revenue and profitability growth has created opportunities for companies to invest in IT infrastructure. Some sectors such as Telecom service providers, Banking, Retail and IT/ITES require significantly higher per capita IT investment. India is being viewed as a key market among the emerging economies. Several multinational IT Companies and Indian IT Services companies are focusing on the Indian markets. This could affect our growth and profitability. 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 higher pricing pressures due to commoditization of manufactured products business and higher focus on Indian markets by all leading IT companies. We are favorably positioned due to our quality leadership, our ability to create client loyalty and our expertise in select markets. Consumer care and lighting Our Consumer Care and Lighting business segment focuses on niche profitable market segments in personal care in specific geographies in Asia 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 and housing lighting products. Our Santoor brand is the third largest in India in the soap category, and Safi brand is the largest Halal toiletries brand of Malaysia. With the acquisition of Yardley, we have a stronger presence in the Middle East, and have made our first foray into the luxury segment of personal care. We have constantly expanded our brand portfolio by entering newer categories. We have successfully built brands both organically and through acquisition. Each brand in our Brand basket has a distinctive positioning, catered to and addressing a specific consumer need. 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 through lower 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. Others Our Others segment includes our infrastructure engineering business. We are the world’s largest third-party manufacturer of hydraulic cylinders. The Others segment is centered on our mobile construction equipment business and our material handling business. We manufacture and sell cylinders and truck hydraulics, and we also distribute hydraulic steering equipment and pumps, motors and valves for international companies. We have a global footprint in terms of manufacturing facilities in Europe and India and sell to customers across the globe. While the current financial year has seen a decline in global sales volumes, we believe that the fundamentals of infrastructure engineering business remain intact. We are also in the water solutions business, which addresses the entire spectrum of treatment solutions, systems and plants for water and waste water for industries. We also provide consulting on comprehensive renewable energy and efficiency solutions. If current slowdown is prolonged it would translate in to lower growth for our customers and in turn reduce our growth prospects. IV. Outlook During the financial year ending March 2010, we grew our Revenues by 6% to Rs. 271,414 million and Profit After Tax (PAT) by 19% to Rs. 46,310 million. Over the last decade, we have grown our Revenues at the CAGR of 28% and PAT at the CAGR of 31%. 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 23, 2010, along with our earnings release for quarter ended March 31, 2010, we provided our most recent quarterly guidance. Revenue from IT Services segment for the quarter ending June 30, 2010 is likely to be ranged between USD 1,161- 1,183 million on a constant currency basis. V. 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 : 1. Management to establish, maintain, assess and report on effectiveness of internal controls over financial reporting and; 2. Independent auditors to opine on effectiveness of internal controls over financial reporting. 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. The entire evaluation of internal controls was carried out by a central team reporting into the Chief Financial Officer. WIPRO LIMITED - CONSOLIDATED 52 VI. Discussion on financial performance with respect to operational performance 1. Authorised share capital The Company has an authorised share capital of Rs. 3,550 million comprising 1,650 million equity shares of Rs. 2/- each and 25 million 10.25% redeemable cumulative preference shares of Rs. 10/- each as of March 31, 2010. 2. Paid up Share Capital The Company has a paid-up capital of Rs. 2,934 million, an increase of Rs. 6 million during this year. The Company has instituted various Employee Stock Option Plans (ESOP). These options vest over a specified period subject to employee fulfilling certain conditions. Upon vesting, the employees are eligible to apply and secure allotment of the Company’s equity shares at a price determined on the date of grant of options. During the year, 3.2 million shares were allotted on exercise of the options under various Employee Stock Option Plans instituted by the Company. 3. Reserves and Surplus A. Securities Premium Account Addition to securities premium account comprises of premium received on exercise of stock options, amounting to Rs. 1,909 million. B. Restricted Stock Units The Company has granted total 0.14 million restricted stock units under the Wipro ADS Restricted Stock Unit Plan, 2004. During the year ended March 31, 2010 the Company has charged to profit and loss account Rs. 1,317 million of deferred compensation cost as employee compensation. The cumulative charge to profit and loss account would be treated as share premium on allotment of shares. 4. Secured Loan Secured loans have increased by Rs. 261 million, primarily on account of securitization of receivable on recourse basis amounting to Rs. 752 Million which is partly offset by repayment of loan amounting to Rs 491 Million. 5. Unsecured Loan Unsecured loans have increased by Rs. 5,360 million. The increase is mainly due to additional PCFC loan availed in the current year, impact of reinstating ECB loan (denominated in Japanese Yen) at the exchange rates prevailing on March 31, 2010 and borrowings made for Delhi International Airport (P) Limited asset acquisition. 6. Fixed Assets A. Goodwill on Consolidation The excess of consideration paid over the book value of assets acquired has been recognised as goodwill in accordance with Accounting Standard (AS) 21 ‘Consolidated Financial Statements’. Goodwill arising on account of acquisition of subsidiaries and affiliates is not amortised but reviewed for impairment if there are indicators of impairment. Upon review for impairment, if the carrying value of the goodwill exceeds its fair value, goodwill is considered to be impaired and the impairment is charged to the income statement for the year. Goodwill has decreased by Rs. 3,175 million during the year, of which decrease of Rs. 4,877 million is mainly due to impact of reinstating goodwill relating to non-integral overseas operations at the exchange rates prevailing on March 31, 2010 and an increase of Rs.1,712 million on account of acquisition of Yardley group. B. Addition to Fixed Assets During the year, the Company invested Rs. 10,900 million on Fixed Assets. The unit-wise spends are outlined below : (Rs. in Million) Business Unit 2010 IT services & products 9,774 Consumer Care and Lighting 711 Others 417 C. Depreciation The Company has provided depreciation either at the rates specified in Schedule XIV of the Companies Act, 1956, or at commercial rates which are higher than the rates specified in Schedule XIV. Depreciation as a percentage of sales remained at 2% in fiscal year 2010. 7. Investments Purchase of Investments - During the year surplus cash generated by operations were invested in short-term mutual funds and term deposits with financial institutions. The internal investment norms restrict investments to only those mutual funds which have corpus in excess of a specific threshold and the investment is limited to a specified percentage of overall investments of Wipro. Further, we place deposits only with those institutions having a specified credit rating and we have internal limits of maximum deposit that can be placed with financial institutions. Investments in units of liquid mutual funds have increased from Rs. 15,136 million in fiscal 2009 to Rs. 19,147million in fiscal 2010. Investment in Certificate of deposits have increased from Rs. 947 million in fiscal 2009 to Rs. 11,088 million in fiscal 2010. 8. Inventories Inventories comprises computers and spares of IT Products and raw material and finished stocks of Wipro Consumer Care and Lighting and Wipro Infrastructure Engineering (WIN). Inventories have increased from Rs. 7,587 million as on March 31, 2009 to Rs. 7,926 million as on March 31, 2010. WIPRO LIMITED - CONSOLIDATED 53 Inventory of IT products and Consumer care and lighting increased respectively by Rs. 329 million and Rs. 324 million in line with growth in revenues and inventories sourced to service large total outsourcing deals. This was offset by Rs. 313 million decrease in inventory in WIN primarily due to the reduction in business as result of economic slowdown. 9. Sundry Debtors Sundry Debtors (net of provision) for the current year is at Rs. 51,150 million against Rs. 50,370 million in the previous year. Segment-wise break-up of sundry debtors is outlined below: (Rs. in Million) Particulars 2010 2009 Increase (%) IT Services and Products 46,622 47,188 (1) Cons umer Car e and Lighting 3,000 2,414 24 Others 1,528 768 99 Total 51,150 50,370 2 Changes in sundry debtors in Consumer Care and Lighting and Others are in line with the revenue growth during the quarter ended March 31, 2010. Provision for doubtful debts has increased from Rs 1,919 million to Rs. 2,327 million in fiscal 2010. The provision for doubtful debts primarily includes provision recorded upon a major customer opting for bankruptcy protection. 10. Cash and Bank Balances Cash and bank balances have increased from Rs. 49,117 million to Rs. 64,878 million, an increase by Rs. 15,761 million. The increase is primarily to meet operational requirements and pursue strategic acquisition opportunities. The surplus cash is been primarily invested in demand deposits. 11. Loans and advances (Rs. in Million) Particulars 2010 2009 Increase (%) Advances recoverable 14,434 12,873 12 Unbilled revenue 16,708 14,108 18 Others 27,033 16,592 63 Total 58,175 43,573 34 º lncrease in aJvances recoverable is primarily Jue to increase in net investment in lease by Rs. 837 million. The net investment in lease primarily relate to equipments delivered in certain large IT outsourcing contracts in India. Further increase is mainly due to unamortized expenses 795 million. º LnbilleJ revenue las increaseJ on account of increase in revenues from Fixed Price Projects from 34% in the previous year to 41.5% in the current year in IT Services where certain customers are billed after the end of the month. We have entered into several multi-year large deals (including infrastructure) with Telecom companies where the billings are based on milestones and with deferred payment terms. º lncrease of ls. 1O,++1 million in 'Òtlers' is mainly due to increase in Advance tax by Rs. 1,902 million, deposits with financial institutions by Rs. 5,800 million and derivative assets by Rs. 2,482 million. 12. Current Liabilities & Provisions A. Current Liabilities (Rs. in Million) Particulars 2010 2009 Increase (%) Sundry Creditors 19,133 19,081 0 Advances from customers 1,786 824 117 Unearned revenues 7,462 8,734 (15) Other Liabilities 28,961 37,830 (23) Total 57,342 66,469 (14) Sundry Creditors represent the amount payable to vendors and employees for supply of goods and services. Other liabilities comprise amounts due for operational expenses. Other liabilities have decreased by Rs. 8,781 million during the year ended March 31, 2010 primarily due to Rs. 7,872 million decrease in derivative liabilities relating to mark to market losses on derivative instruments designated as cash flow/ capital hedges and non-designated forward contracts. The remaining increase is primarily due to increase in subcontracting expenses, administrative expenses, withholding taxes, employee incentives which are in line with increase in employee base, infrastructure and business growth. B. Provisions (Rs. in Million) Particulars 2010 2009 Increase (%) Empl oyee r et i r ement benefits 2,967 3,111 (5) Warranty provision 611 768 (26) Provision for tax 7,915 6,493 18 Proposed Dividend 8,809 5,860 33 Tax on proposed dividend 1,283 996 22 Others 1,763 1,387 21 Total 23,348 18,615 20 º lrovisions of ls. 2,967 million for employee retirement benefit relate to liability for employee leave encashment, gratuity and superannuation benefits. º lor nscal 2O1O, tle Directors of tle Company lave proposed a cash dividend of Rs. 6/- per share on equity shares. WIPRO LIMITED - CONSOLIDATED 54 Mar-10 Mar-09 Offshore Onsite-Offshore Mix IT Services Onsite 46.9% 53.1% 49.8% 50.2% Revenue IT Service Our IT Services segment Revenue was Rs. 202,469 million as compared to Rs. 191,661 million in the last year, a growth of 6% as compared to last year. During the current year, we realised 49.8% of revenue from work done in locations outside India (“Onsite”) and remaining 50.2% of revenue was realised from the work performed from our development centers in India (“Offshore”). Onsite-Offshore Mix Solutions Business provides IT services to customers in Financial Services industry - namely, Banking, Securities and Insurance. Revenue Mix Service Line wise Distribution Financial Services 26% Retail 15% Energy & Utilities 9% Manufacturing & Health Care Services 24% Technology, Media, Telecom Services 26% Revenue Mix Vertical Distribution We continued to expand and grow our Services portfolio. For the current financial year, we derived 21% of Revenues from Technology Infrastructure Services, an increase of 1% from previous year; 12% from Testing Services an increase of 1% from previous year; 13% from Package Implementation Services, an increase of 1% from previous year; 11% from BPO an increase of 2% as previous year ; 37% from Application Development & Maintenance (ADM) a reduction of 3% over the previous year; 2% Consulting Services, at the same level in the previous year and 4% from product engineering, a reduction of 2% over the previous year . Based on geographical destination, 58% of our revenue came from the Americas, a decrease of 2% as previous year ; 26% from Europe at the same level as previous year. Revenue from Japan at 2%, a decrease of 1% from previous year. Revenue from India and Middle East region at 8%, at the same level as previous year. Rest of the World contributed 6%, an increase of 2% over the previous year. The contribution of our top customer is at the same level as in the previous year. Our top customer contributed 2.6% of revenue, top 5 customers 11% of revenue, at the same level as previous year and the top 10 customers accounted for 20% of the revenue, at the same level as previous year. Revenue contributed by the customers added during the year was at 2%, at the same level as in the previous year. IT Product During the current year we grew our Products segment Revenues by 11%. We grew across the board. Revenue from Personal Computers was 15% higher than in the previous year, Enterprise Products grew 3% and our network products dropped by 37%. Consumer Care and Lighting segment Revenues of our Consumer Care and Lighting segment grew by 14% in the current year over the previous year Our revenue CAGR during last 4 years in this business has been 18% excluding acquisition during the year. Our flagship brand ‘Santoor’ is now India’s 3rd largest soap brand by value. Application development & maintenance 37% Consulting 2% Technology Infrastructure Services Package Implementation 13% BPO 11% Product Engineering 4% Testing Services 12% Revenue Mix Service Line wise Distribution 21% Approximately 41.5% of our IT Services Revenues were from Fixed Priced Projects (“FPP”). In FPP, we undertake to complete project within agreed timeline for a given scope of work. The economic gains or losses realised from completing the project earlier or later than initially projected timelines accrues to us. Percentage of FPP in the previous year was lower at 34%. Revenue Mix Vertical Distribution In the current year, 48% of our IT Services revenues is derived from our Enterprise Solutions Business, 3% increase over the previous year; 26% from Technology Business a reduction of 3% over the previous year and 26% of Revenues from Financial Solutions Business, at the same level as compared to last year. Our Enterprise Solutions Business serves customers in all the other industry segments, principal being Retail, Manufacturing, Energy & Utilities, Healthcare Services. Our Technology Business provides product engineering services to product companies across the globe. It also provides enterprise IT services offering to Telecom Service Providers industry. Our Financial WIPRO LIMITED - CONSOLIDATED 55 Others segment Revenues from Wipro Infrastructure Engineering (WIN) reduced by 20% during the current year over the previous year. This is mainly due to lower demand of capital goods in the current year due to economic slowdown. Acquisitions Details of the key acquisitions made by your Company during the year ended March 31, 2010 are as follows: Acquired Entity Acqui r ed during Nature of business Consumer Care & Lighting Business 1 Lornamead FZE Dec-09 Personal care category wi t h f r a g r a n c e products, bath & shower products and skin care. 2 Lornamead Personal Care Private Limited Dec-09 Personal care category wi t h f r a g r a n c e products, bath & shower products and skin care. In addition, the company has paid Rs. 2,385 million relating earn-outs related to previous acquisitions. Costs IT Services 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 employee-travel cost. The operational drivers for these costs are Utilisation of employees, Onsite: Offshore composition and the composition of experience profile of employees called ‘Bulge-mix’. During the current year gross Utilisation was 72% compared to 69% an year ago. As of March 31, 2010 approximately 40% of our employees had less than 3 years of work-experience, as compared to 47% as of March 31, 2009. IT Product In our IT Products segment, material cost as a percentage of revenue was at approximately 89%. Consumer Care and Lighting In our Consumer Care and Lighting segment, the largest cost is packing material and manufacturing cost, accounting for 46% of the Revenues. Other key costs include advertising and sales promotion at 18% of Revenues and manpower cost at 8% of the Revenues. Others In this segment WIN is the largest component. For WIN the largest cost component is raw materials, accounting for approximately 63% of the Revenues, Material and manufacturing costs taken together accounts for 64% of the Revenues. Other key costs include manpower cost at 26% of Revenues and cost of sub-contracted processes at 5% of the Revenues. Margins IT Services The gross margin was 35%, an increase of 3% in comparison to last year. The improvement in gross margin as percentage of revenue is primarily on account of improvement in average USD/INR realization and improvement in utilization rates. Our average utilization of billable employees improved from 69% for the year ended March 31, 2009 to 72% for the year ended March 31, 2010. These improvements were offset by the increase in personnel costs due to annual salary increase. At the Operating Margin (Profit before interest and tax) level the margins have increased by 2.6%, from 21.0% in last year to 23.6% for financial year 2010. IT Products In this segment our gross margins for the current year was 11% constant compared to the last year. Our gross margin in this business segment increased mainly due to increase in proportion of revenues from outsourcing and system integration contract, which was offset by increase in personnel costs due to annual salary increase. Is is also impacted by the proportion of our business derived from the sale of traded and manufactured products. Operating Margins during the year were at 4.6%, an increase of 0.3% compared to previous year. Consumer Care and Lighting Our gross margin for this year was at 49% for this segment compared to 44% in the previous year. The expansion in gross margin is primarily due to a decrease in major input costs and a change in mix of products sold in favour of products which typically have higher gross margins in both Indian and South Asian markets. Operating Margins for the current year was 13%, an increase of 0. 8% compared to previous year Others Operating Margins for our Wipro Infrastructure Engineering business for the current year was -10% against -2.5% in last financial year. This sector is impacted by sharp global slowdown in investment in multiple sectors, driven by economic uncertainty. However, fundamentals of this sector remain intact. Infrastructure spends in India, China and US would positively impact this business. VII. Liquidity and interest rate risk As of March 31, 2010, we had cash and bank balances of Rs. 64,878 million, investments in liquid and short-term mutual funds and certificate of deposits of Rs. 30,235 million. This cash is retained in the business to ensure specified level of cash balance to manage operations and pursue strategic acquisition opportunities. Our investment policy is to protect capital and focus on liquidity while determining the class of instruments to invest in. We primarily invest in debt mutual funds and deposits with financial institutions. WIPRO LIMITED - CONSOLIDATED 56 VIII. Material developments in Human resources/Industrial Relations front (including number of people employed) In our IT Services and Products Business segments, we had 108,071 employees, comprising 25,649 employees in BPO. Attrition for the year in our IT Services business segment (excluding BPO operations, Indian IT operations and other overseas subsidiaries) was 13.6% compared with 13.2% last year. Voluntary attrition stood at 12.1% compared with 11.3% last year, while involuntary attrition was 6% compared with 8% last year. Compensation/People practices We have continued to develop innovative methods for accessing and attracting skilled IT professionals. We partnered with a leading Indian university to establish a program for on the job training and a Masters degree in software engineering. We believe that our ability to retain highly skilled personnel is enhanced by our leadership position, opportunities to work with leading edge technologies and focus on training and compensation. In February 2007, we were awarded the Dale Carnegie Global Leadership Award in recognition of our emphasis on the development of human resources, innovation and organizational creativity. We have designed our compensation to attract and retain top quality talent and motivate higher levels of performance. Our compensation packages include a combination of salary, stock options, pension, and health and disability insurance. 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. We measure our compensation packages against industry standards and seek to match or exceed them. We periodically reward high performers with long-term incentives in the form of restricted stock units (RSU). RSU is a powerful retention tool and aligns employees with the long-term goals of the Company. WIPRO LIMITED 57 REPORT OF CORPORATE GOVERNANCE 2009-10 The Spirit of Wipro represents the core values of Wipro. The three values encapsulated in the Spirit of Wipro are: Intensity to Win º Make customers successful º Team, innovate anJ excel Act with Sensitivity º lespect for tle inJiviJual º Tlou,ltful anJ responsible Unyielding Integrity º Deliverin, on commitments º Honesty anJ fairness in action Tlis las been articulateJ tlrou,l tle Company's CoJe of Lusiness ConJuct anJ Ltlics, Corporate Covernance ,uiJelines, clarters of various sub-committees of tle LoarJ anJ Company's Disclosure policy. Tlese policies seek to focus on enlancement of lon,-term slarelolJer value witlout compromisin, on Ltlical StanJarJs anJ Corporate Social lesponsibilities. Tlese practices form an inte,ral part of tle Company's strate,ic anJ operatin, plans. Corporate Covernance plilosoply is put into practice in Wipro tlrou,l tle followin, four layers, namely, 1. Covernance by SlarelolJers, 2. Covernance by LoarJ of Directors, 3. Covernance by Sub-committee of LoarJ of Directors, anJ +. Covernance of tle mana,ement process Dele,ation of autlority tlrou,l tlese sub commitees anJ tlrou,l tle mana,ement proviJes tle requireJ clarity anJ Jirections to tle or,anisation. FIRST LAYER: GOVERNANCE BY SHAREHOLDERS Annual General Meeting /nnual Ceneral meetin, for tle 2OO9-1O is scleJuleJ on July 22, 2010, at 4.30 PM. Tle meetin, will be conJucteJ at Wipro Campus, Cafeteria Hall, EC-3, Ground Floor, Opp. Tower 8, No. 72, Keonics Electronics city, Hosur Road, Bangalore 561 229. lor tlose of you, wlo cannot make it to tle meetin,, please remember tlat you can appoint a proxy to represent you in tle meetin,. lor tlis you neeJ to nll in a proxy form encloseJ witl tle notice for tle meetin, anJ senJ it to us. Tle last Jate for receipt of proxy forms by us is July 2O, 2O1O, before +.3O p.m. Annual General Meetings and other General Body meeting of the last three years lor tle nnancial year 2OO6-O7, we laJ our /nnual Ceneral Meetin, on July 18, 2OO7, at +.3O.lM. Tle meetin, was lelJ at Wipro's Campus, Cafeteria Hall, LC-3, CrounJ lloor, Òpp. Tower 8, No. 72, leonics Llectronic City, Hosur loaJ, Lan,alore - 561 229. /part from tle usual business, tle followin, ei,lt resolutions were passeJ (all except tle nrst were Special lesolutions): º le-appointment of Mr. /zim H. lremji as Clairman anJ Mana,in, Director of tle Company as well as tle payment of salary, commission anJ perquisites. º /ppointment of Mr. lislaJ lremji, son of Mr. /zim lremji, Clairman of tle Company, to lolJ an Òfnce or llace of lront as tle Lusiness Mana,er. º /menJment to tle Wipro Lmployee Stock Òption llan 1999. º /menJment to tle Wipro Lmployee Stock Òption llan 2OOO. º /menJment to /DS Stock Òption llan 2OO+. º /menJment to Wipro lestricteJ Stock Lnit llan 2OO+. º /menJment to Wipro lestricteJ Stock Lnit llan 2OO5. º /menJment to /DS lestricteJ Stock Lnit llan 2OO+. º /pproval for tle new Wipro lestricteJ Stock Lnit llan 2OO7. Òn tle same Jate at tle same venue we laJ a Court Convened Extraordinary General Meeting. ln tlis meetin, tle sclemes of /mal,amation of Wipro lnfrastructure Ln,ineerin, limiteJ, Wipro Healtlcare lT limiteJ anJ Quantecl Clobal Services limiteJ witl Wipro limiteJ; Mpact Teclnolo,y Services lnJia lrivate limiteJ, mlower Software Services (lnJia) lrivate limiteJ, CMan,o lnJia lrivate limiteJ witl Wipro limiteJ were taken up. lor tle nnancial year 2OO7-O8, we laJ our /nnual Ceneral Meetin, on July 17, 2OO8, at +.3O.lM. Tle meetin, was lelJ at Wipro's Campus, Cafeteria Hall LC-3, CrounJ lloor, Òpp. Tower 8, No. 72, leonics Llectronic City, Hosur loaJ, Lan,alore - 561229. /part from tle usual business, tle followin, four resolutions were passeJ (last one was Special lesolution): º /ppointment of Mr. Suresl C Senapaty as Director of tle Company anJ payment of remuneration. º /ppointment of Mr. Cirisl S laranjpe as Director of tle Company anJ payment of remuneration. º /ppointment of Mr. Suresl Vaswani as Director of tle Company anJ payment of remuneration. º /menJment to /rticles of /ssociation for increase in tle number of Jirectors to 15. lor tle nnancial year 2OO8-O9 we laJ our /nnual Ceneral Meetin, on July 21, 2OO9, at +.3O.lM. Tle meetin, was lelJ at Wipro's Campus, Cafeteria Hall LC-3, CrounJ lloor, Òpp. Tower 8, No. 72, leonics Llectronic City, Hosur loaJ, Lan,alore - 561229. /part from tle usual business, tle followin, resolution was passeJ (tlere were no Special lesolutions): º le-appointment of Mr. /zim H lremji as Clairman anJ Mana,in, Director of tle Company as well as tle payment of salary, commission anJ perquisites. WIPRO LIMITED 58 Òn tle same Jate at tle same venue we laJ a Court ConveneJ LxtraorJinary Ceneral Meetin,. ln tlis meetin, tle scleme of /mal,amation of lnJian brancl ofnces of subsiJary companies viz. Wipro Networks lte ltJ., Sin,apore anJ WMNetserv limiteJ, Cyprus witl Wipro limiteJ were taken up. Financial Calendar Òur tentative calenJar for Jeclaration of results for tle nnancial year 2O1O-11 is as ,iven below: Table 01: Calendar for Reporting Quarter ending Release of results lor tle quarter enJin, June 3O, 2O1O lourtl week of July 2O1O lor tle quarter anJ lalf year enJin, September 3O, 2O1O lourtl week of Òctober 2O1O lor tle quarter anJ nine montl enJin, December 31, 2O1O TlirJ week of January 2O11 lor tle year enJin, Marcl 31, 2O11 lourtl week of /pril 2O11 ln aJJition, tle LoarJ may meet on otler Jates if tlere are special requirements. Final Dividend Your LoarJ of Directors las recommenJeJ a linal DiviJenJ of ls. 6 per slare on equity slares of ls. 2 eacl. Date of Book closure Òur le,ister of members anJ slare transfer books will remain closeJ from July 19, 2O1O to July 22, 2O1O (botl Jays inclusive). Final Dividend Payment Date DiviJenJ on equity slares as recommenJeJ by tle Directors for tle year enJeJ Marcl 31, 2O1O, wlen JeclareJ at tle meetin,, will be paiJ on or before /u,ust 21, 2O1O; (i) to tlose members wlose names appear on tle Company's re,ister of members, after ,ivin, effect to all valiJ slare transfers in plysical form loJ,eJ witl M/s larvy Computerslare lrivate limiteJ, le,istrar anJ Slare Transfer /,ent of tle Company on or before June 16, 2O1O. (ii) ln respect of slares lelJ in electronic form, to tlose ¨JeemeJ members" wlose names appear in tle statements of benencial ownerslip furnisleJ by National Securities Depository limiteJ (NSDl) anJ Central Depository Services (lnJia) limiteJ (CDSl) as on June 16, 2O1O. National ECS facility /s per lLl notincation, witl effect from Òctober 1, 2OO9, tle remittance of money tlrou,l LCS is replaceJ by National Llectronic Clearin, Services (NLCS) anJ banks lave been instructeJ to move to tle NLCS platform. NLCS essentially operates on tle new anJ unique bank account number, allotteJ by banks post implementation of Core Lankin, Solutions (CLS) for centralizeJ processin, of inwarJ instructions anJ efnciency in lanJlin, bulk transaction. ln tlis re,arJ, slarelolJers lolJin, slares in electronic form are requesteJ to furnisl tle new 1O-Ji,it Lank /ccount Number allotteJ to you by your bank, (after implementation of CLS), alon, witl plotocopy of a cleque pertainin, to tle concerneJ account, to your Depository larticipant (Dl). llease senJ tlese Jetails to tle Company/le,istrars, only if tle slares are lelJ in plysical form, immeJiately. lf your bank particulars lave clan,eJ for any reason, please arran,e to re,ister tle NLCS witl tle reviseJ bank particulars. Tle Company will use tle NLCS manJate for remittance of JiviJenJ eitler tlrou,l NLCS or otler electronic moJes failin, wlicl tle bank Jetails available witl Depository larticipant will be printeJ on tle JiviJenJ warrant. /ll tle arran,ements are subject to lLl ,uiJelines, issueJ from time to time. Special Resolution passed through the Postal Ballot Procedure Tlere was no Special lesolution passeJ tlrou,l postal ballot proceJure Jurin, tle year 2OO9-1O. lor tle nnancial year 2O1O-11, we laJ obtaineJ approval on June +, 2O1O for issue of Lonus Slares anJ relateJ resolutions tlrou,l tle lostal Lallot. Awards and Rating Tle Company las been awarJeJ tle li,lest ratin, of StakelolJer Value anJ Corporate latin, 1 (calleJ SVC 1) by lCl/ limiteJ, a ratin, a,ency in lnJia bein, an associate of MooJy's. Tlis ratin, implies tlat tle Company belon,s to tle Hi,lest Cate,ory on tle composite parameters of stakelolJer value creation anJ mana,ement as also Corporate Covernance practices. Tle Company las been awarJeJ tle National awarJ for excellence in Corporate Covernance from lCSl Jurin, tle year 2OO+. Tle Company las also been assi,neJ l/// ratin, to Wipro's lon, term creJit. Tlis is tle li,lest creJit quality ratin, assi,neJ by lCl/ limiteJ to lon, term instruments. Tle Company was rankeJ amon, tle Top 5 in Creenpeace lnternational lankin, CuiJe anJ re,aineJ its top position amon, lnJian lT LranJs. Corporate Social Responsibility and Sustainability Reporting Wipro's sustainability reportin, articulates our perspective on tle emer,in, forces in tle ,lobal sustainability lanJscape anJ Wipro's response on multiple fronts. lor eacl of tle tlree Jimensions of economic, ecolo,ical anJ social sustainability, we state tle possible risks as well as tle opportunities tlat we are tryin, to levera,e. Òur seconJ 'Sustainability leport' releaseJ in Marcl 2O1O Jetails various sustainability-relateJ activities anJ aclievements tlrou,l tle nnancial year 2OO8-O9. Tle report also outlines our broaJ ,oals anJ tar,ets for tle next few years unJer various sustainability Jimensions incluJin, Lner,y, Creenlouse Cas lntensity, Water Lfficiency, Waste Mana,ement, Diversity, LJucation anJ Community. Tle report is baseJ on tle tleme of 'Tlrivin, in a Clan,in, WorlJ', it Jows from tle last report's tleme tlat unJerscoreJ tle spirit of mutualism as a cornerstone of a more sustainable WIPRO LIMITED 59 planet anJ an inclusive society. Tle attempt in tlis report is to illustrate low sucl a spirit of mutualism can lelp current anJ future ,enerations not merely survive but tlrive in tle face of some unpreceJenteJ clallen,es bein, faceJ by lumanity. / unique feature of tlis report tlat reJects tle tleme of 'Tlrivin, in a Clan,in, WorlJ' is a compilation of 28 best practices in tle areas of ecolo,ical anJ social sustainability implementeJ by inJiviJuals anJ communities across tle ,lobe. Tlese stories are about commitment anJ passion tlat be,an by clartin, tle way to clan,e minJsets nrst anJ tlen JisplayeJ low tle seemin,ly improbable tasks were not only practical, but benencial too. Wipro's ali,nment witl overarclin, ,lobal clarters anJ pro,rams on sustainability is brou,lt out by our enJorsement of clarters anJ memberslip in key boJies tlat are leaJin, tle way e.,. we are members of several forums like tle L.N. Clobal Compact, tle Cll Mission on Sustainable Development etc. Your Company's Sustainability leport for 2OO8-O9 las been assesseJ by DNV at tle /+ level, wlicl represents tle li,lest levels of transparency, covera,e anJ quality of reportin,. You can know more about our Sustainability anJ Social lntiatives in our website www.wipro.com/corporate/investors/sustainability- wipro.ltm Shareholders’ Satisfaction Survey Tle Company conJucteJ a SlarelolJers' Satisfaction survey in July 2OO9 seekin, views on various matters relatin, to investor services. /bout 19OO slarelolJers participateJ anJ responJeJ to tle survey. Tle analysis of tle responses reJects an avera,e ratin, of about 3.+ on a scale of 1 to +. /rounJ 73% of tle slarelolJers inJicateJ tlat tle services renJereJ by tle Company were ,ooJ/ excellent anJ were satisneJ. We are constantly in tle process of enlancin, our service levels to furtler improve tle satisfaction levels baseJ on tle feeJback receiveJ from our slarelolJers. We woulJ welcome any su,,estions from your enJ to improve our services furtler. Means of Communication with Shareholders/Analysis We lave establisleJ proceJures to Jisseminate, in a planneJ manner, relevant information to our slarelolJers, analysts, employees anJ tle society at lar,e. Òur /uJit Committee reviews tle earnin,s press releases, SLC nlin,s anJ annual anJ quarterly reports of tle Company, before tley are presenteJ to tle LoarJ of Directors for tleir approval for release. News Releases, Presentations, etc.: All our news releases and presentations maJe at investor conferences anJ to analysts are posteJ on tle Company's website at www.wipro.com/corporate/ investors. Quarterly results: Òur quarterly results are publisleJ in wiJely circulateJ national newspapers sucl as Tle Lusiness StanJarJ anJ tle local Jaily lannaJa lrabla. Website: Tle Company's website contains a separate JeJicateJ section ¨lnvestor" wlere slarelolJers information is available. Tle /nnual report of tle Company, earnin,s press releases, SLC nlin,s anJ quarterly reports of tle Company are also available on tle website in a user-frienJly anJ JownloaJable form at www. wipro.com/corporate/investors-inJex.ltm Annual Report: /nnual leport containin, auJiteJ stanJalone accounts, consoliJateJ financial statements to,etler witl Directors' report, /uJitors' report anJ otler important information are circulateJ to members anJ otlers entitleJ thereto. Table 02: Communication of Results Means of communications Number of times during 2009-10 Larnin,s Calls 4 lublication of results 4 /nalysts meet 2 Listing on Stock Exchanges, Stock Codes, International Securities Identification Number (ISIN) and Cusip Number for ADRs Your Company's slares are listeJ in tle followin, exclan,es as of Marcl 31, 2O1O anJ tle stock coJes are: Table 03: Stock codes Equity shares Stock Codes Lombay Stock Lxclan,e limiteJ (LSL) 5O7685 National Stock Lxclan,e of lnJia limiteJ (NSL) Wipro American Depository Receipts New York Stock Lxclan,e (NYSL) WIT Notes: 1. listin, fees for tle year 2O1O-11 las been paiJ to tle lnJian Stock Lxclan,es 2. listin, fees to NYSL for tle calenJar year 2O1O las been paid. 3. Tle stock coJe on leuters is WllÒ©lN anJ on Lloomber, is Wlll.LÒ International Securities Identification Number (ISIN) lSlN is an iJentincation number for tle traJeJ slares. Tlis number neeJs to be quoteJ in eacl of tle transaction relatin, to tle JematerializeJ equity slares of tle Company. Òur lSlN number for our equity slares is INE075A01022. CUSIP Number for American Depository Shares Tle Committee on Lniform Security lJentincation lroceJures (CLSll) of tle /merican Lankers /ssociation las JevelopeJ a unique numberin, system for /merican Depository Slares. Tlis number iJentines a security anJ its issuer anJ is reco,nizeJ ,lobally by or,anizations aJlerin, to stanJarJs issueJ by tle lnternational Securities Òr,anization. Cusip number for our /merican Depository Scrip is 97651M1O9. WIPRO LIMITED 6O Corporate Identity Number (CIN) Òur Corporate lJentity Number (ClN), allotteJ by Ministry of Company /ffairs, Covernment of lnJia is L32102KA1945PLC020800, anJ our Company le,istration Number is 2O8OO. Registrar and Transfer Agents The power of share transfer and related operations have been Jele,ateJ to le,istrar anJ Slare Transfer /,ents larvy Computerslare lrivate limiteJ, HyJerabaJ. Share Transfer System Tle turnarounJ time for completion of transfer of slares in plysical form is ,enerally less tlan 7 Jays from tle Jate of receipt, if tle Jocuments are clear in all respects. We lave also internally nxeJ turnarounJ times for closin, tle queries/complaints receiveJ from tle slarelolJers witlin 7 Jays if tle Jocuments are clear in all respects. Address for correspondence Tle aJJress of our le,istrar anJ Slare Transfer /,ents is ,iven below. Karvy Computershare Private Ltd. larvy House larvy Computer Slare lrivate limiteJ, Lnit: Wipro limiteJ, llot No: 17-2+, Vittal lao Na,ar, MaJlapur, HyJerabaJ: 5OO O81. Tel: +91 +O 23+2O815 lax: +91 +O 23+2O81+ Lmail iJ: malenJer©karvy.com Contact person: Mr. V l Jayaraman or Mr. l MalenJer leJJy. Overseas depository for ADSs JP Morgan Chase Bank 6O, Wall Street New York, NY 1O26O Tel: +1 212 6+8 32O8 lax: +1 212 6+8 5576 Indian custodian for ADSs India sub custody Jl Mor,an Clase Lank N./. 6tl lloor, laraJi,m, L Win, LelinJ Toyota Slowroom MinJspace, MalaJ (W) Mumbai +OO O6+ Tel: +91 22 66+92588 lax: +91 22 66+925O9 Web-based Query Redressal System Members may utilize tlis new facility extenJeJ by tle le,istrars c Transfer /,ents for reJressal of tleir queries. llease visit http://karisma.karvy.com anJ click on ¨investors" option for query re,istration tlrou,l free iJentity re,istration to lo, on. lnvestor can submit tle query in tle ¨QLLllLS" option proviJeJ on tle website, wlicl woulJ ,ive tle ,rievance re,istration number. lor accessin, tle status/response to your query, please use tle same number at tle option ¨VlLW lLllY" after 24 hours. The investors can continue to put additional queries relatin, to tle case till tley are satisneJ. SlarelolJers can also senJ tleir corresponJence to tle Company witl respect to tleir slares, JiviJenJ, request for annual reports anJ slarelolJer ,rievance anJ tle contact Jetails are proviJeJ below: Mr. V lamaclanJran, Company Secretary Wipro limiteJ DoJJakannelli Sarjapur loaJ Lan,alore 56O O35 ll: +91 8O 28++OO11 (Lxtn. 226185) lax: +91 8O 28++OO51 Lmail: ramaclanJran.venkatesan©wipro.com Mr. C lotlanJaraman, Senior Mana,er- Secretarial & Compliance Wipro limiteJ DoJJakannelli Sarjapur loaJ Lan,alore 56O O35 ll: +91 8O 28++OO11 (Lxtn. 226183) lax: +91 8O 28++OO51 Lmail: kotlanJaraman.,opal©wipro.com SlarelolJer ,rievance can also be sent tlrou,l email to tle followin, Jesi,nateJ email iJ: mailmana,er©karvy.com /nalysts can reacl our lnvestor lelations Team for any queries anJ clarincation on linancial/lnvestor lelations relateJ matters: Mr. lajenJra lumar Slreemal Vice lresiJent c Corporate Treasurer Wipro limiteJ DoJJakannelli Sarjapur loaJ Lan,alore 56O O35 ll: +91 8O 28++OO11 (Lxtn 226186) lax: +91 8O 28++OO51 Lmail: rajenJra.slreemal©wipro.com Mr l SriJlar ClÒ c lnvestor lelations, /mericas c Lurope Wipro limiteJ Last Lrunswick Tower 2 New Jersey LS ll: +1 65O-316-3537 Lmail : sriJlar.ramasubbu© wipro.com WIPRO LIMITED 61 Description of voting rights /ll our slares carry votin, ri,lts on a pari-passu basis. Table 04 Distribution of Shareholding and categories of Shareholders as per Clause 35 of the Listing Agreement as on March 31, 2010 31-Mar-10 31-Mar-09 Category No. of Shareholders %age of Shares No. of Shares % of Total Equity No. of Shareholders %age of Shares No. of Shares % of Total Equity O-5OOO 176,3O1 98.25 15,O8+,678 1.O3 22+,776 98.39 18,553,9O1 1.27 5OO1 - 1OOOO 1,233 O.69 +,388,56O O.3O 1,55+ O.68 5,569,668 O.38 1OOO1 - 2OOOO 719 O.+O 5,O8O,5+O O.35 957 O.+2 6,752,389 O.+6 2OOO1 - 3OOOO 277 O.15 3,397,271 O.23 33O O.1+ +,O57,+28 O.28 3OOO1 - +OOOO 155 O.O9 2,7O+,8+7 O.18 161 O.O7 2,83+,328 O.19 +OOO1 - 5OOOO 76 O.O+ 1,738,89O O.12 89 O.O+ 1,997,58O O.1+ 5OOO1 - 1OOOOO 2O5 O.11 7,1O8,6O9 O.+8 195 O.O9 6,75O,762 O.+6 1OOOO1 anJ above 472 O.27 1,+28,7O7,79+ 97.31 39+ O.17 1,+18,+6+,69O 96.82 Total 179,438 100.00 1,468,211,189 100.00 228,456 100.00 1,464,980,746 100.00 We lave about +13O slarelolJers lolJin, one slare eacl of tle company. Table 05 Distribution of shareholding – City-wise as of March 31, 2010 S. No. City No. of Shareholders Percentage No. of Equity Shares Percentage 1 /Cl/ +6+ O.26 27,627 O.OO2 2 /HMLD/L/D 6,7O1 3.73 71O,682 O.O+8 3 /HMLDN/C/l 345 O.19 33,O55 O.OO2 4 /lÒl/ 2+9 O.1+ 38,O35 O.OO3 5 /ll/H/L/D 326 O.18 19,69O O.OO1 6 /lW/YL 2O+ O.11 29,1+6 O.OO2 7 /ML/l/ ClTY 269 O.15 21,571 O.OO1 8 /MllTS/l 222 O.12 12,921 O.OO1 9 /N/ND 682 O.38 77,675 O.OO5 1O /Ll/NC/L/D 321 O.18 97,657 O.OO7 11 L/NC/lÒlL 17,399 9.7O 1,188,751,8+1 8O.966 12 L/ll/CllÒlL 278 O.15 1O,9+O O.OO1 13 LLlC/LM 334 O.19 16,8++ O.OO1 14 LH/lLCH 25O O.1+ 1O,9+1 O.OO1 15 LH/VN/C/l 381 O.21 1O1,+O3 O.OO7 16 LHÒl/l 63O O.35 +7,713 O.OO3 17 LHLL/NLSHW/l 373 O.21 26,588 O.OO2 18 LHLS/W/l 471 O.26 99O,656 O.O67 19 LLlDW/N 413 O.23 2+,229 O.OO2 2O C/lCLTT/ 6,19O 3.45 689,1+9 O.O+7 21 C/llCLT 351 O.2O 33,589 O.OO2 22 CH/NDlC/lH 679 O.38 119,7O5 O.OO8 23 CHLNN/l 8,57O +.78 3,O+6,576 O.2O8 24 CHlNSLl/ +68 O.26 22,278 O.OO2 25 CÒCHlN 899 O.5O 12O,66+ O.OO8 26 CÒlML/TÒlL 1,O9+ O.61 98,187 O.OO7 27 DLHl/DLN 323 O.18 23,392 O.OO2 28 DH/lW/D 257 O.1+ 17,11+ O.OO1 29 DÒMLlV/ll 1,O52 O.59 73,972 O.OO5 3O LlLlL 277 O.15 26,O69 O.OO2 31 LlÒDL 233 O.13 8,OO3 O.OO1 32 l/llD/L/D 457 O.25 +O,7O1 O.OO3 WIPRO LIMITED 62 S. No. City No. of Shareholders Percentage No. of Equity Shares Percentage 33 lÒlLlCN /DDlLSSLS 2,11O 1.18 685,77O O.O+7 34 C/NDHl N/C/l 1,121 O.62 65,258 O.OO+ 35 CH/zl/L/D 6O8 O.3+ 62,1O7 O.OO+ 36 CÒDHl/ 2O8 O.12 13,111 O.OO1 37 CLNTLl 235 O.13 15,952 O.OO1 38 CLlC/ÒN 1,O39 O.58 216,72O O.O15 39 CLW/H/Tl 242 O.13 16,+57 O.OO1 +O CW/llÒl 261 O.15 11,877 O.OO1 41 HlM/TN/C/l 291 O.16 16,+O5 O.OO1 42 HÒWl/H 63O O.35 +1,888 O.OO3 43 HLLll +85 O.27 76,695 O.OO5 44 HYDLl/L/D 5,118 2.85 1,228,698 O.O8+ 45 lNDÒlL 87+ O.+9 72,229 O.OO5 +6 J/llLl 1,199 O.67 82,361 O.OO6 47 J/l/NDH/l 257 O.1+ 33,5O8 O.OO2 +8 J/lC/ÒN 395 O.22 2,+53,873 O.167 +9 J/MML 2+8 O.1+ 1+,9+9 O.OO1 5O J/MN/C/l 424 O.2+ 26,816 O.OO2 51 J/MSHLDlLl 445 O.25 58,+96 O.OO+ 52 JÒDHlLl +59 O.26 16,7+9 O.OO1 53 l/lY/N 793 O.++ 196,628 O.O13 54 l/NlLl 851 O.+7 55,OO5 O.OO+ 55 l/ll/l/ / D/lSHlN/ l/N 586 O.33 38,+5+ O.OO3 56 lÒlH/lLl ++O O.25 22,356 O.OO2 57 lLClNÒW 1,2+1 O.69 1O7,+26 O.OO7 58 lLDHl/N/ 288 O.16 18,217 O.OO1 59 M/DLl/l 535 O.3O 5+,268 O.OO+ 6O M/NC/lÒlL 1,3+6 O.75 1+8,681 O.O1O 61 M/lC/ÒN 277 O.15 +9,O79 O.OO3 62 MLLlLT 333 O.19 +5,927 O.OO3 63 MLHS/N/ 589 O.33 ++,829 O.OO3 6+ MLML/l 38,699 21.57 2+5,6O3,3O5 16.728 65 MYSÒlL 853 O.+8 88,O97 O.OO6 66 N/Dl/D 399 O.22 31,2O8 O.OO2 67 N/ClLl 1,O9+ O.61 151,8+6 O.O1O 68 N/Sll 1,279 O.71 97,925 O.OO7 69 N/V/S/ll +67 O.26 +9,92O O.OO3 7O N/Vl MLML/l 1,++6 O.81 177,7++ O.O12 71 NLW DLlHl 8,672 +.83 1,9OO,663 O.129 72 NÒlD/ 961 O.5+ 12+,96O O.OO9 73 l/lCH/T 243 O.1+ 2+,692 O.OO2 74 l/N/Jl 512 O.29 65,366 O.OO+ 75 l/NVLl 62+ O.35 28,729 O.OO2 76 l/lC/N/S - lÒll/T/ 5O3 O.28 26,852 O.OO2 77 l/TN/ 629 O.35 39,+99 O.OO3 78 lÒNDlCHLllY 2O9 O.12 2O,+98 O.OO1 79 lLNL 8,89O +.95 1,61+,75O O.11O 8O l/JlÒT 1O26 O.57 126,6OO O.OO9 81 l/NCHl 321 O.18 1+,535 O.OO1 82 S/lLM +96 O.28 87,+OO O.OO6 83 S/T/l/ 559 O.31 22,772 O.OO2 8+ SHlMÒC/ 2O7 O.12 1O,82+ O.OO1 85 SÒl/lLl 3O7 O.17 12,+76 O.OO1 WIPRO LIMITED 63 S. No. City No. of Shareholders Percentage No. of Equity Shares Percentage 86 SLl/T 2,892 1.61 11,658,6O+ O.79+ 87 TH/NL 3,575 1.99 ++3,85+ O.O3O 88 TllLCHll/ll/lll 55O O.31 +1,659 O.OO3 89 TllLV/ll/ 265 O.15 18,+23 O.OO1 9O TllCHLl 623 O.35 ++,265 O.OO3 91 TllV/NDlLM 829 O.+6 68,719 O.OO5 92 LD/llLl 336 O.19 22,151 O.OO2 93 LDLll +38 O.2+ 5+,+17 O.OO+ 9+ LlH/SN/C/l 212 O.12 9,663 O.OO1 95 V/DÒD/l/ 3,3+9 1.87 +56,O77 O.O31 96 V/lS/D 453 O.25 275,595 O.O19 97 V/l/N/Sl 316 O.18 16,116 O.OO1 98 VlJ/Y/W/D/ 372 O.21 26,8O1 O.OO2 99 VlS/lH/l/TN/M 522 O.29 5+,252 O.OO+ 1OO ÒTHLlS 21,22O 11.83 3,3+O,53O O.228 TOTAL 179,438 100.00 1,468,211,189 100.00 Category code (I) Category of shareholder (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 As a percentage of (A+B) As a percentage of (A+B+C) Number of Shares As a Percentage (A) Shareholding of Promoter and Promoter Group (1) Indian (a) lnJiviJuals/HinJu LnJiviJeJ lamily 4 57,+O7,66O 57,O88,+6O 3.98 3.91 Nil Nil (b) Central Covernment/ State Covernment(s) Nil Nil Nil Nil Nil Nil Nil (c) LoJies Corporate (lromoter in lis capacity as Director of lrivate limiteJ/ Section 25 Companies)* 4 13+,6+3,8OO 13+,6+3,8OO 9.32 9.17 (J) linancial lnstitutions/ Lanks Nil Nil Nil Nil Nil Nil Nil (e) /ny Òtler -- lartnerslip nrms (lromoter in lis capacity as partner of lartnerslip nrms) 3 975,52O,8OO 975,52O,8OO 67.56 66.++ Sub-Total (A)(1) 11 1,167,572,260 1,167,253,060 80.86 79.52 Nil Nil (2) Foreign (a) lnJiviJuals (Non- lesiJent lnJiviJuals/ lorei,n lnJiviJuals) Nil Nil Nil Nil Nil (b) LoJies Corporate Nil Nil Nil Nil Nil (c) Institutions Nil Nil Nil Nil Nil (J) /ny Òtler (specify) Nil Nil Nil Nil Nil Sub-Total (A)(2) NIL NIL NIL NIL NIL I a) Shareholding Pattern as of March 31, 2010 under Clause 35 of the Listing Agreement WIPRO LIMITED 6+ Category code (I) Category of shareholder (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 As a percentage of (A+B) As a percentage of (A+B+C) Number of Shares As a Percentage Total Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2) 11 1,167,572,26O 1,167,253,O6O 8O.86 79.52 Nil Nil (L) lublic SlarelolJin, NA NA (1) Institutions NA NA (a) Mutual lunJs/ LTl 115 9,252,865 9,25,2865 O.6+ O.63 (b) linancial lnstitutions/ Lanks 17 518,O75 518,O75 O.O+ O.O+ (c) Central Covernment/ State Covernment(s) Nil Nil Nil Nil (J) Venture Capital lunJs Nil Nil Nil Nil (e) lnsurance Companies 1 15,261,863 15,261,863 1.O6 1.O+ (f) lorei,n lnstitutional lnvestors (exclusive of /Dl) 332 1O6,1O9,353 1O6,1O9,353 7.35 7.23 (,) lorei,n Venture Capital Investors Nil Nil Nil Nil (l) /ny Òtler (specify) Nil Nil Nil Nil Sub-Total (B)(1) 465 131,142,156 131,142,156 9.08 8.93 (2) Non-institutions NA NA (a) LoJies Corporate 1745 +1,O6O,212 3O,615,91O 2.8+ 2.88 (b) Individuals (c) i. Individual shareholders lolJin, nominal slare capital up to ls. 1 lakl. 173617 32,91O,889 31,618,35O 2.28 2.24 ii. Individual shareholders lolJin, nominal slare capital in excess of ls. 1 lakl. 189 +7,7O8,26+ 28,966,38+ 3.3O 3.25 /ny Òtler (specify) (i) Non resiJent lnJians 3228 131,9O,7O8 2,856,9O8 O.91 O.9O (ii) Trusts ** (a) Wipro lnc Lenent Trust 1 968,8O3 - O.O7 O.O7 (b) Òtler Trust 2O 7,973,568 7,973,568 O.55 O.5+ (iii) Non-Lxecutive Directors anJ Lxecutive Directors c lelatives*** 6 161,218 161,218 O.O1 O.O1 (iv) Clearin, Members 147 1,325,+99 1,325,+99 O.O9 O.O9 (v) lorei,n Nationals 8 1,35+2 1,35+2 O.O6 O.OO Sub-Total (B)(2) 178,961 145,312,703 103,531,379 10.06 9.99 Total lublic SlarelolJin, (L)= (L)(1)+(L)(2) 179,+26 276,+5+,859 23+,673,535 19.1+ 18.83 NA NA TOTAL (A)+(B) 179437 1,444,027,119 1,401,926,595 100.00 98.35 Nil Nil (C) Slares lelJ by CustoJians anJ a,ainst wlicl Depository leceipts lave been issueJ 1 2+,18+,O7O 2+,18+,O7O 1.67 1.65 NA NA GRAND TOTAL (A)+(B)+(C) 179,438 1,468,211,189 1,426,110,665 100 Nil Nil WIPRO LIMITED 65 (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 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 /merican Depository lecepits (Depository - Jl Mor,an Clase Lank) 2+,18+,O7O 2+,18+,O7O 1.65 TOTAL 24,184,070 24,184,070 1.65 (II)(b) Statement showing Holding of Depository Receipts (DRs), where underlying shares are 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.) Number of outstanding DRs Number of shares underlying outstanding DRs 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 Nil Nil Nil Nil Nil I)(b) Statement showing Shareholding of persons belonging to the category “Promoter and lromoter Croup" Sr. No. Name of the shareholder Number of shares Shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (A)(1) above} Shares Pledged or otherwise encumbered (l) (ll) (lll) (lV) Number (V) 1 /zim H lremji 56,O+3,O6O 3.82 Nil 2 Yasmeen / lremji 637,6OO O.O+ Nil 3 lislaJ /zim lremji 568,OOO O.O+ Nil 4 Tariq /zim lremji 159,OOO O.O1 Nil 5 Mr /zim H lremji partner representin, Haslam TraJers 326,259,OOO 22.22 Nil 6 Mr /zim H lremji partner representin, lrazim TraJers 325,O17,OOO 22.14 Nil 7 Mr /zim H lremji partner representin, zasl TraJers 32+,2++,8OO 22.O8 Nil 8 le,al lnvestment c TraJin, Company lvt. ltJ. 51,O1+,2OO 3.47 Nil 9 ViJya lnvestment c TraJin, Company lvt. ltJ. 38,86O,6OO 2.65 Nil 1O Napean TraJin, c lnvestment Company lvt. ltJ. 38,263,OOO 2.61 Nil 11 /zim lremji lounJation (l) lvt. ltJ. 6,5O6,OOO O.++ Nil TOTAL 1,167,572,260 79.52 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 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 life lnsurance Corporation of lnJia 15,261,863 1.O+% TOTAL 15,261,863 1.04% (I)(d) Statement showing details of locked-in shares Sr. No. Name of the shareholder Category of Shareholders (Promoters / Public) Number of locked-in shares Locked-in 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 Wipro lnc Lenent Trust (lelJ tlrou,l trustees for sole benenciary of Wipro, lnc) lublic 2+2,2O1 O.O17 TOTAL 242,201 0.017 * Òut of 13+,6+3,8OO equity slares slown unJer l(/)( c), 6,5O6,OOO equity slares are lelJ by /zim lremji lounJation (l) lvt. ltJ. Mr. lremji is also tle lromoter Director of /zim lremji lounJation (l) lvt. ltJ. Tlese slares are incluJeJ unJer ¨lromoter cate,ory". ** Òut of 8,9+2,371 slares lelJ by otler Trusts, 968,8O3 equity slares are lelJ by Wipro Lquity lewarJ Trust. ***Tle slarelolJin, comprises of 2+,OOO slares lelJ by 3 Non-Lxecutive Directors c relatives anJ 137,218 slares lelJ by 3 Lxecutive Directors and relatives. Tlese Jirectors not bein, lromoter Directors anJ in as mucl as tley Jo not exercise any si,nincant control over tle company, tley are classineJ unJer ¨/ny Òtler" cate,ory. Note : "lromoter slarelolJin," anJ "lromoter Croup" anJ "lublic slarelolJin," as per Clause +O/ of tle listin, /,reement as on Marcl 31, 2O1O . WIPRO LIMITED 66 Tle Jetails of outstanJin, employee stock options as on Marcl 31, 2O1O are proviJeJ in /nnexure / to tle Director's leport, as per SLLl (LSÒl c LSll) CuiJelines, 1999 as amenJeJ from time to time. Dematerialization of shares and liquidity /bout 97% of outstanJin, equity las been JematerializeJ upto Marcl 31, 2O1O, Table 06 List of top Ten shareholders of the Company as at March 31, 2010 Sl. No. Name of the shareholder No. of shares % 1 Mr. /zim Haslam lremji lartner lepresentin, Haslam TraJers 326,259,OOO 22.22 2 Mr. /zim Haslam lremji lartner lepresentin, lrazim TraJers 325,O17,OOO 22.14 3 Mr. /zim Haslam lremji lartner lepresentin, zasl TraJers 32+,2++,8OO 22.O8 4 /zim H lremji *57,+O7,66O 3.91 5 le,al lnvestment c TraJin, Company lrivate limiteJ 51,O1+,2OO 3.47 6 ViJya lnvestment c TraJin, Company lvt. ltJ. 38,86O,6OO 2.65 7 Napean TraJin, c lnvestment Company lvt. ltJ. 38,263,OOO 2.61 8 Jl Mor,an Clase Lank as overseas Jepository for /Dl lolJers 2+,18+,O7O 1.65 9 life lnsurance Corporation of lnJia 15,261,863 1.O+ 1O Maskati lnvestment lvt. ltJ. 1O,+16,OOO O.7O * lncluJes slares lelJ jointly witl relatives. SECOND LAYER: GOVERNANCE BY THE BOARD OF DIRECTORS /s on Marcl 31, 2O1O, we laJ seven non-executive Directors, four executive Directors of wlicl one executive Director is also tle Clairman of our LoarJ. /ll tle seven non-executive Jirectors are inJepenJent Jirectors i.e. inJepenJent of mana,ement anJ free from any business or otler relationslip tlat coulJ materially inJuence tleir juJ,ment. /ll tle inJepenJent Jirectors satisfy tle criteria of inJepenJence as JenneJ unJer listin, a,reement witl lnJian Stock Lxclan,es anJ New York Stock Lxclan,e Corporate Covernance stanJarJs. Tle pronle of our Directors are ,iven below as of Marcl 31, 2O1O. Azim H. Premji las serveJ as our Clief Lxecutive Òfncer, Clairman anJ Mana,in, Director (Desi,nateJ as Clairman) since September 1968. Mr. lremji lolJs a Laclelor of Science Je,ree in Llectrical Ln,ineerin, from StanforJ Lniversity, L.S./. Dr. Ashok Ganguly las serveJ as a Director on our LoarJ since 1999. He is tle Clairman of our LoarJ Covernance c Nomination Committee anJ Compensation Committee. He is currently tle Clairman of lirst Source Solutions limiteJ anJ /Ll lvt. ltJ. (/nanJa Lazar latrika Croup). Dr. Can,uly also currently serves as a non-executive Director of MalinJra c MalinJra limiteJ, Tata /lC life lnsurance Co. ltJ., Hemo,enomics lvt. ltJ., Tle Llackstone Croup(/Jvisory), Dr. leJJy laboratories limiteJ, anJ Director on tle /Jvisory LoarJ of Microsoft Corporation (lnJia) lvt. ltJ. Dr. Can,uly is also tle Clairman of tle Compensation anJ LoarJ Covernance Committee, lnvestors/SlarelolJers Crievances Committee of lirst Source Solutions limiteJ. He is also clairman of lesearcl anJ Development Committee of MalinJra anJ MalinJra ltJ anJ lemuneration Committee of Tata /lC life lnsurance Company limiteJ. He is a member of tle lrime Minister's Council on TraJe anJ lnJustry anJ tle lnJia-LS/ CLÒ Council, set up by tle lrime Minister of lnJia anJ tle lresiJent of tle LS/. Dr. Can,uly is a lajya Sabla Member. He is a former member of tle LoarJ of Lritisl /irways llc (1996-2OO5) anJ Lnilever llc/NV (199O-97); Dr Can,uly was formerly Clairman of HinJustan Lnilever limiteJ (198O-9O). Dr. Can,uly was on tle Central LoarJ of Directors of tle leserve Lank of lnJia (2OOO-2OO9). ln 2OO6, Dr. Can,uly was awarJeJ tle CLL (Hon) by tle LniteJ lin,Jom. ln 2OO8, Dr. Can,uly receiveJ tle Lconomic Times lifetime /clievement /warJ anJ, more recently, le was tle recipient of tle laJma Vibluslan, lnJia's seconJ li,lest civilian awarJ Jurin, tle year 2OO8-O9. B.C. Prabhakar las serveJ as a Director on our LoarJ since lebruary 1997. He las been a practicin, lawyer since /pril 197O. Mr. lrablakar lolJs a L./. in lolitical Science anJ Sociolo,y anJ a Ll. from Mysore Lniversity, lnJia. Mr. L. C. lrablakar serves as a non-executive Director of /utomotive /xles limiteJ anJ 3M lnJia limiteJ. He is also a member of tle /uJit, lisk anJ Compliance Committee anJ Clairman of tle /Jministrative anJ SlarelolJer / lnvestor Crievances Committee. Dr. Jagdish N. Sheth las serveJ as a Director on our LoarJ since January 1999. He las been a professor at Lmory Lniversity since July 1991. Dr. Sletl is also on tle LoarJs of lnnovolt lnc anJ Safari lnJustries ltJ. Dr. Sletl lolJs a L. Com (Honors.) from MaJras Lniversity, a M.L./. anJ a ll.D in Lelavioral Sciences from tle Lniversity of littsbur,l, L.S./. Narayanan Vaghul las serveJ as a Director on our LoarJ since June 1997. He is tle Clairman of our /uJit, lisk anJ Compliance Committee, member of tle LoarJ Covernance c Nomination Committee anJ member of tle Compensation Committee. He was tle Clairman of tle LoarJ of lClCl Lank limiteJ from September 1985 till /pril 2OO9. Mr. Va,lul is also on tle LoarJs of MalinJra anJ MalinJra ltJ., MalinJra WorlJ City Developers limiteJ, liramal Healtlcare limiteJ, anJ /pollo Hospitals Lnterprise limiteJ. Mr. Va,lul is tle Clairman of tle Compensation Committee of MalinJra anJ MalinJra limiteJ anJ Niclolas liramal lnJia limiteJ. Mr. N Va,lul is also tle member of tle /uJit Committee in Niclolas liramal lnJia limiteJ. Mr. N. Va,lul is also tle leaJ inJepenJent Director of our Company. Mr. Va,lul lolJs Laclelor (Honors.) Je,ree in Commerce from MaJras Lniversity, Mr Va,lul was tle recipient of tle laJma Lluslan, lnJia's tlirJ li,lest civilian awarJ Jurin, tle year 2OO9-1O. Mr. Va,lul also receiveJ tle Lconomic Times lifetime /clievement /warJ. Priya Mohan Sinha became a Director of our company on January 1, 2OO2. He is a member of our /uJit, lisk anJ Compliance Committee, LoarJ Covernance c Nomination Committee anJ Compensation Committee. He las serveJ as tle Clairman of lepsiCo lnJia HolJin,s limiteJ anJ lresiJent of lepsi looJs limiteJ since July 1992. lrom Òctober 1981 to November 1992, le was on tle Lxecutive LoarJ of Directors of HinJustan lever WIPRO LIMITED 67 limiteJ (currently HinJustan Lnilever limiteJ). lrom 1981 to 1985 le also serveJ as Sales Director of HinJustan lever limiteJ (currently HinJustan Lnilever limiteJ). Currently, le is also on tle LoarJs Lata lnJia limiteJ, lafar,e lnJia lvt. limiteJ. He was also tle Clairman of leckett Coleman lnJia limiteJ anJ Clairman of Steplan Clemicals lnJia limiteJ. Mr. Sinla lolJs a Laclelor of /rts from latna Lniversity anJ le las also attenJeJ /JvanceJ Mana,ement lro,ram in tle Sloan Sclool of Mana,ement, Massaclusetts lnstitute of Teclnolo,y. Mr. Sinla is also tle Clairman of tle Nomination, Covernance anJ Compensation Committee of Lata lnJia limiteJ. Mr. Sinla is also on tle /Jvisory LoarJ of lieter lnJia. William Arthur Owens las serveJ as a Director on our LoarJ since July 1, 2OO6. He is also a member of LoarJ Covernance anJ Nomination Committee. He las lelJ senior leaJerslip positions at lar,e multinational corporations. lrom /pril 2OO+ to November 2OO5, Mr. Òwens serveJ as Clief Lxecutive Òfncer anJ Vice Clairman of tle LoarJ of Directors of Nortel Networks Corporation, a networkin, communications company. lrom /u,ust 1998 to /pril 2OO+, Mr. Òwens serveJ as Clairman of tle LoarJ of Directors anJ Clief Lxecutive Òfncer of TeleJesic llC, a satellite communications company. lrom June 1996 to /u,ust 1998, Mr. Òwens serveJ as lresiJent, Clief Òperatin, Òfncer anJ Vice Clairman of tle LoarJ of Directors of Science /pplications lnternational Corporation (S/lC), a researcl anJ en,ineerin, nrm. lresently, Mr. Òwens serves as a member of tle LoarJ of Directors of lolycom lnc, lntelius anJ Clairman of Century link lnc, a meJia communications company. Mr. Òwens lolJs a M.L./. (Honors.) Je,ree from Ceor,e Waslin,ton Lniversity, a L.S. in Matlematics from tle L.S. Naval /caJemy anJ a L./. anJ M./. in lolitics, llilosoply anJ Lconomics from ÒxforJ Lniversity. Suresh C. Senapaty las serveJ as our Clief linancial Òfncer anJ Lxecutive Director since /pril 2OO8 anJ serveJ witl us in otler positions since /pril 198O. He is a member of tle /Jministrative/SlarelolJers c lnvestor Crievance Committee. Mr. Senapaty lolJs a L. Com. from Ltkal Lniversity in lnJia, anJ is a lellow Member of tle lnstitute of ClartereJ /ccountants of lnJia. Mr. Senapaty is on tle LoarJs of tle followin, lnJian subsiJiary companies: Wipro TraJemarks HolJin, limiteJ, Wipro ClanJrika limiteJ, Wipro Travel Services limiteJ, Cy,nus Ne,ri lnvestments lrivate limiteJ, Wipro Teclnolo,y Services limiteJ, Wipro Consumer Care limiteJ anJ Wipro CL Healtlcare lrivate limiteJ. Mr. Senapaty is also tle Clairman of tle /uJit Committee of Wipro Teclnolo,y Services limiteJ. He is also a Jirector on some of our overseas subsiJiary companies. Suresh Vaswani las serveJ as our Joint CLÒ (lT Lusiness) anJ Lxecutive Director since /pril 2OO8 anJ serveJ witl us in otler positions since 1985. He is a member of our /Jministrative/ SlarelolJers c lnvestor Crievance Committee. Mr. Vaswani lolJs a Laclelor of Teclnolo,y, or L.Tecl. from tle lnJian lnstitute of Teclnolo,y, or llT, llara,pur, lnJia anJ a lost CraJuate Diploma in Mana,ement from tle lnJian lnstitute of Mana,ement, /lmeJabaJ, lnJia. He is also a Jirector on tle LoarJ of a few of our overseas subsiJiary companies. Girish S Paranjpe las serveJ as our Joint CLÒ (lT Lusiness) anJ Lxecutive Director since /pril 2OO8 anJ serveJ witl us in otler positions since 199O. Mr. laranjpe lolJs a L.Com. from Lombay Lniversity, lnJia anJ is a lellow Member of lnstitute of ClartereJ /ccountants of lnJia anJ lnstitute of Cost anJ Works /ccountants of lnJia. He is also a Jirector on tle LoarJ of a few of our overseas subsiJiary companies. Dr. Henning Kagermann became an /JJitional Director of tle Company on Òctober 27, 2OO9. He las serveJ as Clief Lxecutive Òfncer of S/l /C till 2OO9. He las been a member of S/l Lxecutive LoarJ since 1991. He is also lresiJent of /catecl (Cerman /caJemy of Science anJ Teclnolo,y) anJ currently a member of supervisory boarJs of Deutscle Lank /C, Municl le, Deutscle lost anJ LMW Croup in Cermany. Dr. Hennin, la,ermann is extra-orJinary professor for Tleoretical llysics at tle Teclnical Lniversity Lraunsclwei,, Cermany anJ las receiveJ lonorary Joctorate from tle university of Ma,Jebur,, Cermany. /ll our Jirectors inform tle LoarJ every year about tle LoarJ memberslip anJ LoarJ Committee memberslip tley occupy in otler companies incluJin, Clairmanslips in LoarJ/Committees of sucl companies. Tley notify us of any clan,e as anJ wlen tley take place anJ tlese Jisclosures are placeJ at tle boarJ meetin,. Information flow to the Board Members We present our annual Strate,ic llan anJ Òperatin, llans of our businesses to tle LoarJ for tleir review, inputs anJ approval. likewise, our quarterly nnancial statements anJ annual nnancial statements are nrst presenteJ to tle /uJit Committee anJ subsequently to tle LoarJ of Directors for tleir approval. ln aJJition specinc cases of acquisitions, important mana,erial Jecisions, material positive/ne,ative Jevelopments anJ statutory matters are presenteJ to tle LoarJ anJ Committees for tleir approval. /s a system, in most cases information to Jirectors is submitteJ alon, witl tle a,enJa papers well in aJvance of tle LoarJ meetin,. lecently, we lave starteJ tle practice of review meclanism of LoarJ lapers by tle Clairman of LoarJ Covernance anJ Nomination Committee before it is sent to LoarJ Members. ln some instances Jocuments are tableJ Jurin, tle course of tle LoarJ meetin,s or tle appropriate Committees of tle LoarJ. We scleJule meetin,s of our business leaJs anJ functional leaJs witl tle Directors prior to tle LoarJ meetin, Jates. Tlese meetin,s facilitate Directors to proviJe tleir inputs anJ su,,estions on various strate,ic anJ operational matters Jirectly to tle business anJ functional leaJs. Meetin, witl Jirectors entluse anJ motivate our business leaJers. Board Meetings We JeciJe on tle boarJ meetin, Jates in consultation witl LoarJ Covernance c Nomination Committee anJ all our Jirectors, consiJerin, tle practices of earlier years. Ònce approveJ by tle LoarJ Covernance c Nomination Committee, tle scleJule of tle LoarJ meetin, anJ LoarJ Committee meetin,s is communicateJ in aJvance to tle Directors to enable tlem to scleJule tleir meetin,s. Òur LoarJ met four times in tle nnancial year 2OO9-1O, on /pril 21-22, July 21-22, Òctober 26-27 anJ January 18-2O, 2O1O. Òur LoarJ meetin,s are normally scleJuleJ for two Jays. WIPRO LIMITED 68 Post-meeting follow-up system /fter tle boarJ meetin,s, we lave a formal system of follow up, review anJ reportin, on actions taken by tle mana,ement on tle Jecisions of tle LoarJ anJ sub-committees of tle LoarJ. Disclosure of materially significant related party transactions Durin, tle year 2OO9-1O, no transactions of material nature laJ been entereJ into by tle Company witl tle Mana,ement or tleir relatives tlat may lave a potential conJict witl interest of tle Company. None of tle Non-Lxecutive Directors lave any pecuniary material relationslip or transactions witl tle Company for tle year enJeJ Marcl 31, 2O1O, anJ lave ,iven unJertakin,s to tlat effect. Details of transactions of a material nature witl any of tle relateJ parties (incluJin, transactions wlere Directors may lave a pecuniary interest) as specineJ in /ccountin, StanJarJ 18 of tle Companies (/ccountin, StanJarJs) lules, 2OO6, lave been reporteJ in tle Notes to tle /ccounts anJ tley are not in conJict witl tle interest of tle Company at lar,e. le,ister unJer Section 3O1 of tle Companies /ct, 1956 is maintaineJ anJ particulars of transactions covereJ by tlis section are entereJ in tle le,ister, wlerever applicable. Sucl transactions are proviJeJ to tle LoarJ, anJ tle interesteJ Directors neitler participate in tle Jiscussion, nor Jo tley vote on sucl matters. 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. Tle Company las complieJ witl tle requirements of tle Stock Lxclan,e or SLLl on matters relateJ to Capital Markets, as applicable. Whistle Blower policy and affirmation that no personnel has been denied access to the Audit, Risk & Compliance Committee Tle Company las aJopteJ an ÒmbuJs process wlicl is a clannel for receivin, anJ reJressin, of employees' complaints. Tle Jetails are proviJeJ in tle section titleJ compliance witl non-manJatory requirements of tlis report. No personnel of tle Company was JenieJ access to tle /uJit/lisk c Compliance Committee. Details of compliance with mandatory requirements and adoption of the non-mandatory requirements of this clause Your Company las complieJ witl all tle manJatory requirements of tle Clause +9 of tle listin, /,reement. Tle Jetails of tlese compliances lave been ,iven in tle relevant sections of tlis leport. Tle status on compliance witl tle Non-manJatory requirements are ,iven at tle enJ of tle leport. leport on tle status of compliance witl tle Voluntary Corporate Covernance CuiJelines anJ Corporate Social lesponsibility issueJ by Ministry of Corporate /ffairs, Covernment of lnJia, is also provided elsewhere in this report. Lead Independent Director Tle LoarJ of Directors of tle Company lave Jesi,nateJ Mr. N Va,lul as tle leaJ lnJepenJent Director. Tle role of tle leaJ lnJepenJent Director is JescribeJ in tle Corporate Covernance ,uiJelines of your Company. Particulars of directors proposed for re-appointment Mr. N Va,lul, Dr. /slok Can,uly anJ Mr. l M Sinla, Directors, retire by rotation anJ bein, eli,ible offer tlemselves for re-appointment at tlis /nnual Ceneral Meetin,. Tle LoarJ of Directors lave recommenJeJ tleir re-appointment for consideration of the Shareholders. Lrief resume of tle Directors proposeJ for re-appointment at tle ensuin, /nnual Ceneral Meetin, is proviJeJ as an /nnexure to tle Notice convenin, tle /nnual Ceneral Meetin,. Particulars of director proposed for appointment Dr. Hennin, la,ermann was appointeJ as an /JJitional Director of tle Company in accorJance witl Section 26O of tle Companies /ct, 1956 by tle LoarJ of Directors witl effect from Òctober 27, 2OO9. Tle /JJitional Director woulJ lolJ ofnce till tle Jate of tle /nnual Ceneral Meetin, of tle Company scleJuleJ to be lelJ on July 22, 2O1O. Tle requisite notices to,etler witl necessary Jeposit lave been receiveJ from members pursuant to Section 257 of tle Companies /ct, 1956 proposin, tle election of Dr. Hennin, la,ermann. Mr. Slyam Saran, lormer lorei,n Secretary, Covernment of lnJia was appointeJ as an /JJitional Director of tle Company in accorJance witl Section 26O of tle Companies /ct, 1956 by tle LoarJ of Directors witl effect from July 1, 2O1O. Tle /JJitional Director woulJ lolJ ofnce till tle Jate of tle /nnual Ceneral Meetin, of tle Company scleJuleJ to be lelJ on July 22, 2O1O. Tle requisite notices to,etler witl necessary Jeposit lave been receiveJ from a member pursuant to Section 257 of tle Companies /ct, 1956 proposin, tle election of Mr. Slyam Saran. Remuneration Policy and criteria of making payments Directors Compensation Committee recommenJs tle remuneration, incluJin, tle commission baseJ on tle net profits of tle Company for tle Clairman anJ Mana,in, Director anJ Lxecutive Directors. Tlis is tlen approveJ by tle LoarJ anJ slarelolJers. lrior approval of slarelolJers is obtaineJ in case of remuneration to Non-Lxecutive Directors. Tle remuneration paiJ to Clairman anJ Mana,in, Director anJ Lxecutive Directors is JetermineJ keepin, in view tle inJustry benclmark, tle relative performance of tle Company to tle inJustry performance, anJ macro economic review on remuneration packa,es of CLÒs of otler or,anizations. lerquisites anJ retirement benents are paiJ accorJin, to tle Company policy as applicable to all employees. lnJepenJent Non-Lxecutive Directors are appointeJ for tleir professional expertise in tleir inJiviJual capacity as inJepenJent professionals / Lusiness Lxecutives. lnJepenJent Non-Lxecutive Directors receive sittin, fees for attenJin, tle meetin, of tle WIPRO LIMITED 69 Details of Remuneration to all Directors Table O7 proviJes tle remuneration paiJ to tle Directors for tle services renJereJ Jurin, tle nnancial year 2OO9-1O. No stock options were ,ranteJ to any of tle Directors Jurin, tle nnancial year 2OO9-1O. Table 07: Directors remuneration paid and grant of stock options during the financial year 2009-10 (Rs) A z i m H P r e m j i N V a g h u l B C P r a b h a k a r D r J a g d i s h N S h e t h D r A s h o k S G a n g u l y P M S i n h a B i l l O w e n s S u r e s h C S e n a p a t y G i r i s h S P a r a n j a p e S u r e s h V a s w a n i H e n n i n g K a g e r m a n n lelationslip witl directors None None None None None None None None None None None Salary 3,OOO,OOO - - - - - - 3,6OO,OOO 3,963,2OO +,216,+OO Allowances 1,31O,18+ - - - - - - 5,+97,8+1 6,717,+67 7,3+8,158 Commission/ Incentives 65,1+8,O96 22,OO,OOO 1,2OO,OOO 1OO,OOO* 2,OOO,OOO 1,8OO,OOO 125,OOO* 7,1O2,973 7,86+,56+ 8,361,++8 53,852* Òtler annual compensation +,73+,58+ - - - - - - 11,+95,532 685,286 7,755,755 DeferreJ benents +,5O+,O61 - - - - - - 1,739,16O 1,91+,226 1,9+6,29O Stock options ,ranteJ Jurin, tle year - - - - - - - - - Sittin, fees - 28O,OOO 2+O,OOO 8O,OOO 18O,OOO 26O,OOO 8O,OOO - - - +O,OOO Notice period for Lxcutive Directors Lpto 6 Montls Lpto 6 Montls Lpto 6 Montls Lpto 6 Montls * li,ures mentioneJ in $ - as amounts payable in $. Tle remuneration by way of commission paiJ to tle lnJepenJent Non-Lxecutive Jirectors is JetermineJ perioJically c revieweJ baseJ on tle inJustry benclmarks. LoarJ anJ LoarJ Committees anJ commission as approveJ by tle LoarJ anJ slarelolJers. Tlis remuneration approveJ by tle LoarJ subject to tle conJition tlat cumulatively it slall not exceeJ 1% of tle net pronts of tle Company for all lnJepenJent Non-Lxecutive Directors in a,,re,ate for one nnancial year, subject to an inJiviJual limit for eacl of tle Non-Lxecutive Directors. WIPRO LIMITED 7O T a b l e 0 8 K e y I n f o r m a t i o n p e r t a i n i n g t o d i r e c t o r s a s o n M a r c h 3 1 , 2 0 1 0 A z i m H P r e m j i N V a g h u l B C P r a b h a k a r D r J a g d i s h N S h e t h D r A s h o k S G a n g u l y P M S i n h a B i l l O w e n s S u r e s h C S e n a p a t y G i r i s h S P a r a n j a p e S u r e s h V a s w a n i H e n n i n g K a g e r m a n n C a t e g o r y P r o m o t e r D i r e c t o r I n d e p e n d e n t N o n - E x e c u t i v e D i r e c t o r I n d e p e n d e n t N o n - E x e c u t i v e D i r e c t o r I n d e p e n d e n t N o n - E x e c u t i v e D i r e c t o r I n d e p e n d e n t N o n - E x e c u t i v e D i r e c t o r I n d e p e n d e n t N o n - E x e c u t i v e D i r e c t o r I n d e p e n d e n t N o n - E x e c u t i v e D i r e c t o r E x e c u t i v e D i r e c t o r E x e c u t i v e D i r e c t o r E x e c u t i v e D i r e c t o r I n d e p e n d e n t N o n - E x e c u t i v e D i r e c t o r D a t e o f a p p o i n t m e n t O 1 . O 9 . 1 9 6 8 O 9 . O 6 . 1 9 9 7 2 O . O 2 . 1 9 9 7 O 1 . O 1 . 1 9 9 9 O 1 . O 1 . 1 9 9 9 O 1 . O 1 . 2 O O 2 O 1 . O 7 . 2 O O 6 1 8 . O + . 2 O O 8 1 8 . O + . 2 O O 8 1 8 . O + . 2 O O 8 2 7 . 1 O . 2 O O 9 D i r e c t o r s l i p i n o t l e r c o m p a n i e s * 1 4 5 2 1 8 2 - 7 - - - C l a i r m a n s l i p i n C o m m i t t e e s o f L o a r J o f o t l e r c o m p a n i e s * - 2 - - 3 2 - 1 - - - M e m b e r s l i p i n C o m m i t t e e s o f L o a r J o f o t l e r c o m p a n i e s * - 3 3 1 1 1 - - - - - N o . o f L o a r J m e e t i n , s a t t e n J e J 4 4 4 4 4 4 3 * * 4 4 4 2 A t t e n d a n c e a t t h e l a s t / C M l e l J o n J u l y 2 1 , 2 O O 9 Y e s Y e s Y e s Y e s Y e s Y e s N o Y e s Y e s Y e s N A N u m b e r o f s l a r e s l e l J a s o n M a r c l 3 1 , 2 O 1 O © 5 7 , + O 7 , 6 6 O - 3 , O O O - 1 , O O O 2 O , O O O - 7 8 , O 5 O 1 2 , O O O + 7 , 1 6 8 - D i r e c t o r l J e n t i n c a t i o n n u m b e r O O 2 3 + 2 8 O O O O O 2 O 1 + O O O + O O 5 2 O O 3 3 2 7 1 7 O O O 1 O 8 1 2 O O O 3 5 2 5 7 O O + 2 2 9 7 6 O O O 1 8 7 1 1 O 2 1 7 2 7 2 5 O 2 1 7 6 5 2 8 O 2 + + 9 1 2 8 * T l i s J o e s n o t i n c l u J e f o r e i , n c o m p a n i e s a n J c o m p a n i e s u n J e r S e c t i o n 2 5 o f t l e C o m p a n i e s / c t , 1 9 5 6 b u t i n c l u J e s p r i v a t e c o m p a n i e s . * N o n e o f t l e D i r e c t o r s o f o u r C o m p a n y w e r e m e m b e r s i n m o r e t l a n 1 O c o m m i t t e e s n o r a c t e J a s c l a i r m a n o f m o r e t l a n n v e c o m m i t t e e s a c r o s s a l l c o m p a n i e s i n w l i c l t l e y w e r e D i r e c t o r s . T l e C o m m i t t e e m e m b e r s l i p a n J c o m m i t t e e C l a i r m a n s l i p s l o w n a b o v e i n c l u J e s / u J i t C o m m i t t e e , C o m p e n s a t i o n C o m m i t t e e , L o a r J C o v e r n a n c e / N o m i n a t i o n C o m m i t t e e a n J S l a r e l o l J e r s a n J l n v e s t o r C r i e v a n c e C o m m i t t e e . * * Ò n e m e e t i n , a t t e n J e J o v e r t e l e p l o n e ( n o t i n c l u J e J i n t l r e e a b o v e ) . © l n c l u J e s S l a r e s l e l J j o i n t l y w i t l i m m e J i a t e f a m i l y m e m b e r s . WIPRO LIMITED 71 THIRD LAYER: GOVERNANCE BY THE SUB- COMMITTEE OF THE BOARD OF DIRECTORS Òur LoarJ las constituteJ sub-committees to focus on specinc areas anJ make informeJ Jecisions witlin tle autlority Jele,ateJ to eacl of tle Committees. Lacl Committee of tle LoarJ is ,uiJeJ by its Clarter, wlicl Jennes tle scope, powers anJ composition of tle Committee. /ll Jecisions anJ recommenJations of tle Committees are placeJ before tle LoarJ eitler for information or approval. We lave four sub-committees of tle LoarJ as at Marcl 31, 2O1O. 1. /uJit/lisk anJ Compliance Committee 2. LoarJ Covernance anJ Nomination Committee 3. Compensation Committee +. /Jministrative/SlarelolJers' Crievance Committee Audit/Risk and Compliance Committee Tle /uJit/lisk anJ Compliance Committee of tle LoarJ of Directors, wlicl was formeJ in 1987, reviews, acts on anJ reports to our LoarJ of Directors witl respect to various auJitin, anJ accountin, matters, Tlis Committee was renameJ as /uJit/lisk anJ Compliance Committee witl effect from /pril 22, 2OO9. Tle primarily responsibilities for inter-alia, are: º /uJitin, anJ accountin, matters, incluJin, recommenJin, tle appointment of our inJepenJent auJitors to tle shareholders º Compliance witl le,al anJ statutory requirements º lnte,rity of tle Company's nnancial statements, Jiscussin, with the independent auditors the scope of the annual auJits, anJ fees to be paiJ to tle inJepenJent auJitors º lerformance of tle Company's lnternal /uJit function, lnJepenJent /uJitors anJ accountin, practices º leview of relateJ party transactions, functionin, of Wlistle Llower meclanism, anJ º lmplementation of tle applicable provisions of tle Sarbanes Òxley /ct 2OO2 incluJin, review on tle pro,ress of internal control meclanism to prepare for certification unJer Section +O+ of tle Sarbanes Òxley /ct 2OO2. Tle Clairman of tle /uJit/lisk anJ Compliance Committee is present at tle /nnual Ceneral Meetin,. Tle JetaileJ clarter of tle Committee is posteJ at our website anJ available at www. wipro.com/corporate/investors/corporate-,overnance.ltm. /ll members of our /uJit/lisk anJ Compliance Committee are inJepenJent non-executive Jirectors anJ nnancially literate. Tle Clairman of our /uJit/lisk anJ Compliance Committee las tle accountin, or relateJ nnancial mana,ement expertise. Statutory /uJitors as well as lnternal /uJitors always lave inJepenJent meetin,s witl tle /uJit/lisk anJ Compliance Committee anJ also participate in tle /uJit/lisk anJ Compliance Committee meetin,s. Òur ClÒ c Lxecutive Director anJ otler Corporate Òfncers make perioJic presentations to tle /uJit/lisk anJ Compliance Committee on various issues. Tle /uJit/lisk anJ Compliance Committee is compriseJ of tle followin, tlree non-executive Jirectors: Mr. N Va,lul - Clairman Mr. l M Sinla anJ Mr. L C lrablakar - Members /uJit/lisk anJ Compliance Committee met seven times Jurin, tle nnancial year on - /pril 2O, May 15, July 2O, Òctober 16, 2OO9, January 17-18, lebruary 1, 2O1O anJ lebruary 22, 2O1O. /uJit/lisk anJ Compliance Committee of May 15, 2OO9 anJ lebruary 1, 2O1O were over teleplone. Tle composition of tle /uJit/lisk anJ Compliance Committee anJ tleir attenJance are ,iven in Table O9. Table 09 Name Position Number of meetings attended N Va,lul** Clairman 5 l M Sinla* Member 4 L C lrablakar** Member 5 * /ttenJeJ 3 meetin,s over plone ** /ttenJeJ 2 meetin,s over plone Board Governance and Nomination Committee ln /pril, 2OO9 tle LoarJ Covernance anJ Compensation Committee was split into two separate committees anJ reconstituteJ as (a) LoarJ Covernance anJ Nomination Committee (b) Compensation Committee /fter tlis reconstitution, tle members of tle LoarJ Covernance anJ Nomination Committee are as follows: Dr. /slok Can,uly - Clairman Mr. N. Va,lul, Mr. l. M. Sinla anJ Mr. Lill Òwens - Members. /ll members of tle LoarJ Covernance anJ Nomination Committee are inJepenJent non-executive Jirectors. Tle primary responsibilities of tle LoarJ Covernance anJ Nomination Committee are: º Develop anJ recommenJ to tle LoarJ Corporate Covernance CuiJelines applicable to tle Company. º Lvaluation of tle LoarJ on a continuin, basis incluJin, an assessment of tle effectiveness of tle full boarJ, operations of tle LoarJ Committees anJ Contributions of lnJiviJual directors. º lay Jown policies anJ proceJures to assess tle requirements for inclusion of new members on tle LoarJ. º lmplementin, policies anJ processes relatin, to corporate ,overnance principles. º Lnsurin, tlat appropriate proceJures are in place to access LoarJ memberslip neeJs anJ LoarJ effectiveness. º leviewin, tle Company's policies tlat relate to matters of corporate social responsibility, incluJin, public issues of si,nincance to tle company anJ its stakelolJers. º lormulatin, tle Jisclosure lolicy, its review anJ approval of disclosure. WIPRO LIMITED 72 Tle LoarJ Covernance anJ Nomination Committee of tle LoarJ met four times on - /pril 2O, July 2O, Òctober 21, anJ January 19, 2O1O, Jurin, tle nnancial year 2OO9-1O. Tle meetin, lelJ on Òctober 21, 2OO9 was over teleplone. Table 10 provides the composition and attendance of the Board Governance and Nomination Committee. Name Position Number of meetings attended Dr. /slok S Can,uly Clairman 4 l M Sinla Member 4 N Va,lul Member 4 Lill Òwens Member 2 Tle JetaileJ clarter of tlis Committee is posteJ on our website anJ available atwww.wipro.com/corporate/investors/corporate- ,overnance.ltm. Compensation Committee Òur Lxecutive Vice lresiJent-Human lesources makes perioJic presentations to tle Compensation Committee on compensation reviews anJ performance linkeJ compensation. Tle members of tle Compensation Committee are as follows: Dr. /slok Can,uly - Clairman Mr. N Va,lul anJ Mr. l M Sinla - Members. /ll members of tle Compensation Committee are inJepenJent non-executive Jirectors. Tlis Committee of tle LoarJ met four times on - /pril 2O, July 2O, Òctober 21, anJ January 19, 2O1O, Jurin, tle nnancial year 2OO9-1O. Tle meetin, lelJ on Òctober 21, 2OO9 was over teleplone. Table 11 provides the composition and attendance of the Compensation Committee. Tle members of tle Compensation Committee are as unJer: Name Position Number of meetings attended Dr. /slok S Can,uly Clairman 4 l M Sinla Member 4 N Va,lul Member 4 Tle primary responsibilites of tle Compensation Committee, inter-alia: º Determine anJ approve salaries, benents anJ stock options ,rants anJ otler compensation plans, policies anJ pro,rams of senior Mana,ement employees anJ Directors of our Company. Tle JetaileJ clarter of tlis Committee is posteJ on our website anJ available atwww.wipro.com/corporate/investors/corporate- ,overnance.ltm. Administrative/Shareholders & Investors Grievance Committee: Tle members of tle Committee are as unJer: Mr. L C lrablakar - Clairman Mr. Suresl C Senapaty - Member Mr. Suresl Vaswani - Member Tle SlarelolJers' / lnvestors' Crievance c /Jministrative Committee is responsible for resolvin, investor's complaints pertainin, to slare transfers, non-receipt of annual reports, DiviJenJ payments, issue of Juplicate slare certincates, transmission of slares anJ otler slarelolJer relateJ queries, complaints. ln aJJition to above, tlis Committee is also empowereJ to oversee aJministrative matters like openin, / closure of Company's Lank accounts, ,rant anJ revocation of ,eneral, specinc anJ bankin, powers of attorney, consiJer anJ approve allotment of equity slares pursuant to exercise of stock options, settin, up brancl ofnces anJ otler aJministrative matters as Jele,ateJ by LoarJ from time to time, etc. Tle Clairman of tle Committee is an inJepenJent non- executive Jirector. Tle /Jministrative anJ SlarelolJers Crievance Committee met four times in tle nnancial year on - /pril 2O, July 2O, Òctober 16, 2OO9 anJ January 19, 2O1O. ln aJJition, tle SlarelolJers Crievance Committee, once in 15 Jays, reviews tle reJressal of slarelolJers anJ investor complaints/queries. Table 12 provides the composition and attendance of the Shareholders / Investors Grievance Committee. Name Position Number of meetings attended L C lrablakar Clairman 4 Suresl C Senapaty Member 4 Suresl Vaswani Member 4 Table 13 The status on the shareholder queries and complaints the Company received during the financial year, and Company's response to the complaints and the current status of pending queries is given below. Description Nature leceiveJ leplieJ lenJin, Non-receipt of Securities Complaint 9 9 O Non-receipt of annual reports Complaint 59 59 O Correction/ levaliJation of DiviJenJ Warrants lequest 361 361 O SLLl/Stock Lxclan,e Complaints Complaint 3 3 O Non-receipt of DiviJenJ Warrant Complaint 255 255 O lectincation of Name lequest 1 1 O Financial Connrmation statement of /DS HolJin,s Query 1 1 O Òtlers lequest 11 11 O Total 7OO 7OO O Tlere are certain penJin, cases relatin, to Jispute over title to slares in some of tle cases wlere tle Company las been maJe a party to tle suit. However, tlese cases are not material in nature. WIPRO LIMITED 73 Mr. V lamaclanJran, Company Secretary is our Compliance Òfncer for tle listin, /,reement. Unclaimed Dividends LnJer tle Companies /ct, 1956, DiviJenJs tlat are unclaimeJ for a perioJ of seven years is requireJ to be transferreJ to tle lnvestor LJucation anJ lrotection lunJ aJministereJ by tle Central Covernment. Table 14 We give below a table providing the dates of declaration of Dividend since 2002-03 as on March 31, 2010 and the corresponding dates when unclaimed dividend are due to be transferred to the central government. Financial Year Date of declaration of Dividend Last date for claiming unpaid Dividend Unclaimed amount (Rs.) (number to be updated) Due date for transfer to Investor Education and Protection Fund 2OO2-2OO3 July 17, 2OO3 July 16, 2O1O 137,6O5 /u,ust 15, 2O1O 2OO3-2OO+ June 11, 2OO+ June 1O, 2O11 1,768,+27 July 9, 2O11 2OO+-2OO5 July 21, 2OO5 July 2O, 2O12 1,139,885 /u,ust 19, 2O12 2OO5-2OO6 July 18, 2OO6 July 17, 2O13 3,O7O,58O /u,ust 16, 2O13 2OO6-2OO7 (lnterim DiviJenJ) Marcl 23, 2OO7 Marcl 22, 2O1+ 2,131,+8O /pril 21, 2O1+ 2OO6-2OO7 (linal DiviJenJ) July 18, 2OO7 July 17, 2O1+ 1,1O7,99+ /u,ust 16, 2O1+ 2OO7-2OO8 (lnterim DiviJenJ) Òctober 19, 2OO7 Òctober 18, 2O1+ 2,657,3O+ November 17, 2O1+ 2OO7-2OO8 (linal DiviJenJ) July 17, 2OO8 July 16, 2O15 2,7O7,18+ /u,ust 15, 2O15 2OO8-2OO9 (linal DiviJenJ) July 21, 2OO9 July 2O, 2O16 2,223,1O8 /u,ust 19, 2O16 Separate letters will be sent to tle SlarelolJers wlo are yet to encasl tle DiviJenJ inJicatin, tlat DiviJenJ yet to be encasleJ by tle concerneJ slarelolJer anJ tle amount remainin, unpaiJ will be transferreJ as per tle above Jates. Members are requesteJ to utilize tlis opportunity anJ ,et in toucl witl Company's le,istrar anJ Slare Transfer /,ent, M/s larvy Computerslare lvt. limiteJ, HyJerabaJ for encaslin, tle unclaimeJ DiviJenJ stanJin, to tle creJit of tleir account. /fter completion of seven years as per tle above table, no claims slall lie a,ainst tle saiJ lunJ or tle Company for tle amounts of DiviJenJ so transferreJ nor slall any payment be maJe in respect of sucl claims. Secretarial Audit / qualifieJ practicin, Company Secretary las carrieJ out secretarial auJit every quarter to reconcile tle total aJmitteJ capital witl National Securities Depository limiteJ (NSDl) anJ Central Depository Services (lnJia) limiteJ (CDSl) anJ tle total issueJ anJ listeJ capital. Tle auJit connrms tlat tle total issueJ/paiJ up capital is in a,reement witl tle a,,re,ate total number of slares in plysical form, slares allotteJ c aJviseJ for Jemat creJit but penJin, execution anJ tle total number of JematerializeJ slares lelJ witl NSDl anJ CDSl. Compliance Tle certincate obtaineJ from V SreeJlaran c /ssociates, Company Secretaries is ,iven at pa,e no. 8+ of tle /nnual leport. Subsidiary Monitoring Framework /ll tle subsiJiary companies of tle Company are LoarJ mana,eJ witl tleir LoarJs lavin, tle ri,lts anJ obli,ations to mana,e tlese companies in tle best interest of tleir stakelolJers. Tle Company nominates its representatives on tle LoarJ of subsiJiary companies anJ monitors performance of sucl companies, inter alia, by; a. leviewin, tle linancial statements, in particular tle investment maJe by tle unlisteJ subsiJiary companies, statement containin, all si,nificant transactions anJ arran,ements entereJ into by tle unlisteJ subsiJiary companies formin, part of tle nnancials bein, revieweJ by tle /uJit Committee of your Company on a quarterly basis. b. leviewin, tle Minutes of tle meetin,s of tle unlisteJ subsiJiary companies, are placeJ before tle Company's LoarJ re,ularly. FOURTH LAYER: GOVERNANCE OF THE MANAGEMENT PROCESS Corporate Executive Council of the Company (CEC) Tle Jay-to-Jay mana,ement is vesteJ witl tle CLC of tle Company comprisin, of Lusiness anJ lunctional leaJs wlo work unJer tle overall superintenJence anJ control of tle LoarJ. Tle CLC is leaJeJ by tle Clairman, Mr. /zim H lremji. Tle list of CLC members is ,iven below: º /zim H lremji, Clairman anJ Mana,in, Director º Suresl Senapaty, ClÒ anJ Lxecutive Director º Suresl Vaswani, Joint CLÒ lT Lusiness anJ Director º Cirisl laranjpe, Joint CLÒ lT Lusiness anJ Director º Vineet /,rawal, lresiJent, Wipro Consumer Care anJ li,ltin, º /nura, Lelar, Clief Lxecutive, Wipro lnfrastructure Ln,ineerin, º lratik lumar, Lxecutive Vice lresiJent-Hl, LranJ c Corporate Communications º T l lurien, lresiJent, Clobal lro,rammes, Consultin, lractice c New lnitiatives WIPRO LIMITED 74 º S Deb, Clief Clobal Delivery Òfncer, Wipro Teclnolo,ies º Martla Lejar, lresiJent, Clobal Sales c Òperations, Wipro Teclnolo,ies Code of Business Conduct and Ethics ln 1983, we articulateJ 'Wipro Leliefs' consistin, of six statements. /t tle core of beliefs was inte,rity articulateJ as º Òur inJiviJual anJ Company relationslip sloulJ be ,overneJ by tle li,lest stanJarJ of conJuct anJ inte,rity. Òver years, tlis articulation las evolveJ in form but remaineJ constant in substance. ToJay we articulate it as CoJe of Lusiness ConJuct anJ Ltlics. ln our company, tle LoarJ of Directors anJ all employees lave a responsibility to unJerstanJ anJ follow tle CoJe of Lusiness ConJuct. /ll employees are expecteJ to perform tleir work witl lonesty anJ inte,rity. Wipro's CoJe of Lusiness ConJuct reJects ,eneral principles to ,uiJe employees in makin, etlical Jecisions. Tlis coJe is also applicable to our representatives. Tle CoJe outlines funJamental etlical consiJerations as well as specinc consiJerations tlat neeJ to be maintaineJ for professional conJuct. Tlis CoJe las been JisplayeJ on tle Company's website. www.wipro.com/investors. lurtler, compliance to CoJe of Lusiness ConJuct anJ Ltlics (CÒLC) is monitoreJ tlrou,l: a. Òur employees are annually requireJ to ,o tlrou,l tle trainin, anJ awareness moJules createJ on CÒLC anJ unJerstanJ tle principles of eacl of tle lolicies briefeJ unJer CÒLC. b. lanJomly selecteJ employees are testeJ on tle compliance effectiveness of tle lolicies covereJ unJer CÒLC; tlis primarily enables tle Company to analyze tle ,aps anJ create trainin,/awareness moJules to aJJress tle same. c. /nnually ,roup Jiscussions are lelJ witl select employees to unJerstanJ tle ,rey areas in compliance to furtler renne the code. Tle Clairman las afnrmeJ to tle LoarJ of Directors tlat tlis CoJe of Lusiness ConJuct anJ Ltlics las been complieJ by tle LoarJ members anJ Senior Mana,ement. Ombudsmen process We lave aJopteJ an ÒmbuJsmen process wlicl is tle clannel for receivin, anJ reJressin, employees' complaints. LnJer tlis policy, we encoura,e our employees to report any reportin, of frauJulent nnancial or otler information to tle stakelolJers, any conJuct tlat results in violation of tle Company's CoJe of Lusiness ConJuct anJ Ltlics, to mana,ement (on an anonymous basis, if employees so Jesire). likewise, unJer tlis policy, we lave prolibiteJ Jiscrimination, retaliation or larassment of any kinJ a,ainst any employees wlo, baseJ on tle employee's reasonable belief tlat sucl conJuct or practice lave occurreJ or are occurrin,, reports tlat information or participates in tle investi,ation. No inJiviJual in tle Company las been JenieJ access to tle /uJit/lisk anJ Compliance Committee or its Clairman. Meclanism followeJ unJer ÒmbuJsmen process is appropriately communicateJ witlin tle Company across all levels anJ las been JisplayeJ on Wipro's intranet anJ on Wipro's website at www.wipro.com Tle /uJit/lisk anJ Compliance Committee perioJically reviews tle functionin, of tlis meclanism. Compliance Committee We lave a Compliance Committee wlicl consiJers matters relatin, to Wipro's CoJe of Lusiness ConJuct, ÒmbuJs process, CoJe for lrevention of lnsiJer TraJin, anJ otler applicable statutory matters. Tle Compliance Committee consists of Clairman, ClÒ anJ Lxecutive Director, Lxecutive Vice lresiJent-Human lesources, Sr. Vice lresiJent-le,al anJ Ceneral Counsel, Clief lisk Òfncer c Corporate ÒmbuJs lerson anJ Sr. Vice lresiJent-lnternal /uJit. Durin, tle nnancial year 2OO9-1O, tle Compliance Committee met four times anJ submitteJ reports to tle /uJit Committee for its review and consideration. Compliance with adoption of mandatory requirements Your Company las complieJ witl all tle manJatory requirements of Clause +9 of tle listin, /,reement. Non Compliance on matters related to capital markets Your Company las complieJ witl tle requirements of tle Stock Lxclan,e or SLLl on matters relateJ to Capital Markets, as applicable. Compliance report on Non-mandatory requirements under Clause 49 1. The Board – Chairman’s Office Tle Clairman of Wipro is an Lxecutive Director anJ tlis provision is not applicable to Wipro. Some of our inJepenJent Jirectors lave completeJ a tenure exceeJin, a perioJ of nine years on tle LoarJ of Directors of tle Company. 2. Remuneration Committee Tle LoarJ of Directors constituteJ a Compensation Committee, wlicl is entirely composeJ of inJepenJent Jirectors. Tle Committee also Jisclar,es tle Juties anJ responsibilities as JescribeJ unJer non-manJatory requirements of Clause +9. Tle Jetails of tle Compensation Committee anJ its powers lave been JiscusseJ in tlis section of tle /nnual leport. 3. Shareholders rights We Jisplay our quarterly anJ lalf yearly results on our website, www.wipro.com anJ also publisl our results in wiJely circulateJ newspapers. We JiJ not senJ lalf yearly results to eacl louselolJ of tle slarelolJers in tle nnancial year 2OO9-1O. 4. Audit Qualifications Tle /uJitors lave issueJ an unqualineJ /uJit leport on tle statutory nnancial statements of tle Company. 5. Training of Board Members Tle boarJ of Jirectors is responsible for supervision of tle Company. To aclieve tlis, boarJ unJertakes perioJic review of various matters incluJin, business wise performance, risk mana,ement, borrowin,s, internal auJit/external auJit reports etc. ln orJer to enable tle Jirectors to fulnll tle ,overnance role, comprelensive presentations are maJe on tle various businesses, WIPRO LIMITED 75 business moJels, risk minimization proceJures anJ new initiatives of tle Company. Clan,es in Jomestic/overseas corporate anJ inJustry scenario incluJin, tleir effect on tle company, statutory matters are also presenteJ to tle Jirectors on a perioJic basis. 6. Mechanism for evaluation: Independent Board members ln line witl our corporate ,overnance ,uiJelines, evaluation of all LoarJ members is Jone on an annual basis. Tlis evaluation is leaJ by tle Clairman of tle LoarJ Covernance anJ Nomination Committee witl specinc focus on tle performance anJ effective functionin, of tle LoarJ, Committees of tle LoarJ anJ report tle recommenJation to tle LoarJ. Tle evaluation process also consiJers tle time spent by eacl of tle LoarJ members, core competencies, personal claracteristics, accomplislment of specinc responsibilities anJ expertise. 7. Whistle Blower Policy Tle Jetails of tle ÒmbuJsmen process anJ its functions lave been JiscusseJ earlier in tlis section. Disclosures by the Management Durin, tle year 2OO9-1O, tlere lave been no transactions of material nature entereJ into by tle Company witl tle Mana,ement or tleir relatives tlat may lave a potential conJict witl interest of tle Company. None of tle Non-Lxecutive Directors lave any pecuniary material relationslip or transaction witl tle Company for tle year enJeJ Marcl 31, 2O1O anJ lave ,iven unJertakin,s to tlat effect. Code for prevention of Insider Trading We lave comprelensive ,uiJelines on preventin, insiJer traJin,. Òur ,uiJelines are in compliance witl tle SLLl ,uiJelines on prevention of lnsiJer TraJin,. NYSE Corporate Governance Listing Standards Tle Company las maJe tlis Jisclosure of compliance witl tle status in its website: www.wipro.com/corporate/investors/corp- ,overnance.ltm anJ las nleJ tle same witl tle New York Stock Lxclan,e (NYSL). Declaration as required under Clause 49 (I)(D)(ii) of the Stock Exchange Listing Agreement /ll Directors anJ senior mana,ement personnel of tle Company lave afnrmeJ compliance witl Wipro's CoJe of Lusiness ConJuct anJ Ltlics for tle nnancial year enJeJ Marcl 31, 2O1O. SJ/- Azim H Premji Date: June 21, 2O1O Clairman WIPRO LIMITED 76 Share Data Tle performance of our stock in tle nnancial year is tabulateJ in Table 15. Table 15: Monthly high and low price points and volume in National Stock Exchange and New York Stock Exchange is provided Month April May June July August September October November December January February Mar-10 Volume traJeJ NSL 37,52+,362 39,29+,535 35,7+2,967 3+,359,O59 26,O53,186 23,886,596 29,197,+O1 21,95O,2+7 25,629,829 33,633,36O 15,992,11O 18,+15,37+ Price in NSE during each Month : Hi,l 333.45 +59.95 455 +96 575.7 6O5.9 639.+ 66+.7 699.9 755.85 69+ 75O Date 29-/pr-O9 18-May-O9 1O-Jun-O9 31-Jul-O9 28-/u,-O9 3O-Sep-O9 3O-Òct-O9 23-Nov-O9 2+-Dec-O9 19-Jan-1O 2-leb-1O 18-Mar-1O Volume traded on that date 1,898,867 +O,O39 3,1O2,869 1,O33,317 7+9,5+2 2,678,652 2,572,287 8O+,523 1,O21,398 922,176 936,22O 5+6,63+ low 2+O.15 33O.2 366.8 365.5 +76.85 538.1 5+8 575.1 63O 631.5 63O.15 675 Date 1-/pr-O9 +-May-O9 18-Jun-O9 8-Jul-O9 +-/u,-O9 9-Sep-O9 9-Òct-O9 3-Nov-O9 2-Dec-O9 29-Jan-1O 8-leb-1O 2-Mar-1O Volume trade on that date 1,718,2O2 2,2++,118 1,66+,3O1 95O,995 758,837 998,712 2,7++,O91 1,536,6+6 781,179 2,21O,51+ 1,O66,8+9 1,O71,++1 S&P CNX Nifty Index during each month: Hi,l 3517.25 +5O9.+ +,693.2 +,669.75 +,7+3.75 5,O87.6 5,181.95 5,138 5,221.85 5,31O.85 +992 5,329.55 low 2,965.7 3,+78.7 +,1+3.25 3,918.75 +,353.+5 +,576.6 +,687.5 +,538.5 +,9+3.95 +,766 +,675.+ +,935.35 Wipro Price Movement vis-à-vis Previous Month High/Low (%) : Hi,l % 26% 38% -1% 9% 16% 5% 6% +% 5% 8% -8% 8% low % 22% 37% 11% O% 3O% 13% 2% 5% 1O% O% O% 7% S&P CNX Nifty Index Movement vis-à-vis Previous Month High/Low % Hi,l % 13% 28% +% O% 2% 7% 2% -1% 2% 2% -6% 7% low % 17% 17% 19% -5% 11% 5% 2% -3% 9% -+% -2% 6% Graph :01 Wipro share price movements in NSE compared with S&P CNX Nifty (to be inserted) -20 -10 0 10 20 30 40 50 March February January December November October September August July June May April Wipro Share S & P CNS Nifty Month & Year 2009-10 Relative performance of Wipro Share Vs. S & P CNX Nifty WIPRO LIMITED 77 Table 16 : ADS Share Price during financial year 2009-10 Month April May June July August September October November December January February March Wipro /DS price in NYSL Jurin, eacl Montl closin, ($) (*) 9.38 11.8 11.8 14.52 15.75 17.95 17.15 2O.OO 22.27 19.69 21.62 23.31 NYSL TMT lnJex Jurin, eacl montl closin, ($) +,186.18 +,396.35 +,+1+.85 +,77O.39 +,875.O5 5,O68.81 +,9O8.52 5,165.16 5,3+2.78 5,OO2.39 5,1O9.11 5,388.72 Wipro /DS lrice Movement (%) vis a vis lrevious montl Closin, $ (*) 31.93% 25.8O% O.OO% 23.O5% 8.+7% 13.97% -+.+6% 16.62% 11.35% -11.59% 9.8O% 7.82% NYSL TMT lnJex Movement (%) vis a vis previous montl Closin, $ (*) 9.12% 5.O2% O.+2% 8.O5% 2.19% 3.97% -3.16% 5.23% 3.++% -6.37% 2.13% 5.+7% Graph 02: Wipro Share price movements in NYSE compared with TMT index -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% March February January December November October September August July June May April Month & Year 2009-10 Wipro ADS Price NYSE TMT Relative performance of Wipro ADS Vs. NYSE TMT Index WIPRO LIMITED 78 Graph 03: Wipro ADS premium over Equity share price in NSE during the year 2009-10 2 0 % 2 5 % 3 0 % 3 5 % 4 0 % 4 5 % 5 0 % 5 5 % 6 0 % 6 5 % 1 - A p r - 0 9 1 - M a y - 0 9 1 - J u n - 0 9 1 - J u l - 0 9 1 - A u g - 0 9 1 - S e p - 0 9 1 - O c t - 0 9 1 - N o v - 0 9 1 - D e c - 0 9 1 - J a n - 1 0 1 - F e b - 1 0 1 - M a r - 1 0 W i p r o A D S P r e m i u m A D S p r e m i u m M o v e m e n t a s P e r c e n t a g e o v e r E q u i t y S h a r e P r i c e i n I n d i a d u r i n g t h e y e a r 2 0 0 9 - 1 0 WIPRO LIMITED 79 Other Information a. Table 17 Share Capital History History of llÒ/ lrivate llacement/Lonus lssues/Stock Split//llotment of Slares pursuant to Lxercise of Stock Òptions Type Of Issue Year of Issue Bonus shares/ Stock split ratio Face Value of Shares (Rs.) Shares Allotted No. of Shares Total Total Paid Up Capital (Rs.) Number Nominal Value llÒ 19+6 1OO/- 17,OOO 1,7OO,OOO 17,OOO 1,7OO,OOO Lonus issue 1971 1:3 1OO/- 5,667 566,7OO 22,667 2,266,7OO Lonus issue 198O 1:1 1OO/- 22,667 2,266,7OO +5,33+ +,533,+OO Lonus issue 1985 1:1 1OO/- +5,33+ +,533,+OO 9O,668 9,O66,8OO Issue of shares to Wipro Lquity lewarJ Trust 1985 1OO/- 1,5OO 1,5O,OOO 92,168 9,216,8OO Lonus issue 1987 1:1 1OO/- 92,168 9,216,8OO 18+,336 18,+33,6OO Stock split 199O 1O:1 1O/- 1,8+3,36O 18,+33,6OO Lonus issue 199O 1:1 1O/- 1,8+3,36O 18,+33,6OO 3,686,72O 36,867,2OO Lonus issue 1992 1:1 1O/- 3,686,72O 36,867,2OO 7,373,++O 73,73+,+OO Issue of shares pursuant to mer,er of Wipro lnfotecl limiteJ anJ Wipro Systems limiteJ witl tle Company 1995 1O/- 265,1O5 2,651,O5O 7,638,5+5 76,385,+5O Lonus issue 1995 1:1 1O/- 7,638,5+5 76,385,+5O 15,277,O9O 152,77O,9OO Lonus issue 1997 2:1 1O/- 3O,55+,18O 3O5,5+1,8OO +5,831,27O +58,312,7OO Stock split 1999 5:1 2/- 229,156,35O +58,312,7OO /Dl 2OOO 1:1 $+1.375 3,162,5OO 6,325,OOO 232,318,85O +6+,637,7OO /llotment of equity shares pursuant to exercise of stock options Òn various Jates (Lpto tle recorJ date for issue of bonus slares in tle year 2OO+) 2/- +96,78O 993,56O 232,815,63O +65,631,26O Lonus 2OO+ 2:1 2/- +65,631,26O 931,262,52O 698,++6,89O 1,396,893,78O /llotment of equity shares pursuant to exercise of stock options Òn various Jates (Lpto Marcl 31, 2OO5) 2/- 5,123,632 1O,2+7,26+ 7O3,57O,522 1,+O7,1+1,O++ /llotment of equity shares pursuant to exercise of stock options Òn various Jates (Lpto tle recorJ date for issue of bonus slares in tle year 2OO5) 2/- 2,323,O52 +,6+6,1O+ 7O5,893,57+ 1,+11,787,1+8 Lonus 2OO5 1:1 2/- 7O5,893,57+ 1,+11,787,1+8 1,+11,787,1+8 2,823,57+,296 /llotment of equity shares pursuant to exercise of stock options Òn various Jates (Lpto Marcl 31, 2OO6) 2/- 13,967,119 27,93+,238 1,+25,75+,267 2,851,5O8,53+ /llotment of Lquity Shares pursuant to exercise of Stock Òptions Òn various Jates upto Marcl 31, 2OO7 2/- 33,2+5,383 66,+9O,766 1,+58,999,65O 2,917,999,3OO WIPRO LIMITED 8O Type Of Issue Year of Issue Bonus shares/ Stock split ratio Face Value of Shares (Rs.) Shares Allotted No. of Shares Total Total Paid Up Capital (Rs.) Number Nominal Value /llotment of Lquity Shares pursuant to exercise of Stock Òptions Òn various Jates upto Marcl 31,2OO8 2/- 2,+53,67O +,9O7,3+O 1,+61,+53,32O 2,922,9O6,6+O /llotment of Lquity Shares to shareholders of subsiJiary companies arisin, from mer,er Marcl 26, 2OO9 2/- 968,8O3 1,937,6O6 1,+62,+22,123 2,926,781,952 /llotment of Lquity Shares pursuant to exercise of Stock Òptions Òn various Jates upto Marcl 31,2OO9 2/- 2,558,623 5,117,+26 1,+6+,98O,7+6 2,929,961,+92 /llotment of Lquity Shares pursuant to exercise of Stock Òptions Òn various Jates upto Marcl 31,2O1O 2/- 3,23O,++3 6,+6O,886 1,+68,211,189 2,936,+22,378 History of Bonus issues and stock split Year Ratio 1971 1:3(Lonus) 198O 1:1(Lonus) 1985 1:1(Lonus) 1987 1:1(Lonus) 199O 1O:1 (Stock split) 199O 1:1(Lonus) 1992 1:1(Lonus) 1995 1:1(Lonus) 1997 2:1(Lonus) 1999 5:1 (stock split) 2OO+ 2:1(Lonus) 2OO5 1:1(Lonus) 2O1O 2:3 (Lonus) WIPRO LIMITED 81 History of Dividend declared for the last twelve years Financial Year Dividend amount per share and rate (%) Percentage 1997-98 ls. 1.5O ler Slare (lace Value ls. 1O) 15% 1998-99 ls. 1.5O ler Slare (lace Value ls. 1O) 15% 1999-OO ls. O.3O ler Slare (lace Value ls. 2) 15% 2OOO-O1 ls. O.5O ler Slare (lace Value ls. 2) 25% 2OO1-O2 ls. 1.OO ler Slare (lace Value ls. 2) 5O% 2OO2-O3 ls. 1.OO ler Slare (lace Value ls. 2) 5O% 2OO3-O+ ls. 29.OO ler Slare (lace Value ls. 2) 1+5O% 2OO+-O5 ls. 5.OO ler Slare (lace Value ls. 2) 25O% 2OO5-O6 ls. 5.OO ler Slare (lace Value ls. 2) 25O% 2OO6-O7 (lnterim DiviJenJ) ls. 5.OO ler Slare (lace Value ls. 2) 25O% 2OO6-O7 (linal DiviJenJ) ls. 1.OO ler Slare (lace Value ls. 2) 5O% 2OO7-O8 (lnterim DiviJenJ) ls. 2.OO ler Slare (lace Value ls. 2) 1OO% 2OO7-O8 (linal DiviJenJ) ls. +.OO ler Slare (lace Value ls. 2) 2OO% 2OO8-O9 ls. +.OO ler Slare (lace Value ls. 2) 2OO% 2OO9-1O ls. 6 ler Slare (lace Value ls. 2) 3OO% Table 18 : Mergers and Demergers Since tle miJ-199Os, Company's ,rowtl las been botl or,anic anJ tlrou,l mer,ers anJ Jemer,ers. Tle table below ,ives tle relevant Jata on sucl mer,ers/Jemer,ers from tle year 199+ onwarJs. Merging Company Merger/Demerger Appointed Date Wipro lnfotecl limiteJ Mer,er /pril 1, 199+ Wipro Systems limiteJ Mer,er /pril 1, 199+ Wipro Computers limiteJ Mer,er /pril 1, 1999 Wipro Net limiteJ Demer,er /pril 1, 2OO1 Wipro LlÒ Solutions limiteJ Mer,er /pril 1, 2OO5 SpectraminJ limiteJ, LermuJa Mer,er /pril 1, 2OO5 SpectraminJ limiteJ, Mauritius Mer,er /pril 1, 2OO5 Wipro lnfrastructure Ln,ineerin, limiteJ Mer,er /pril 1, 2OO7 Wipro HealtlCare lT limiteJ Mer,er /pril 1, 2OO7 Quantecl Clobal Services limiteJ Mer,er /pril 1, 2OO7 Ml/CT Teclnolo,y Services lrivate limiteJ Mer,er /pril 1, 2OO7 mlower Software Services (lnJia) lrivate limiteJ Mer,er /pril 1, 2OO7 CMan,o lnJia lrivate limiteJ Mer,er /pril 1, 2OO7 lnJian Lrancles of Wipro Networks lte limiteJ anJ WMNLTSLlV limiteJ Mer,er /pril 1, 2OO9 WIPRO LIMITED 82 Table No.19: Plant locations Sl. No. Address City 1 3rJ, +tl, 5tl anJ 6tl lloor, S L Towers, 88, M C loaJ Lan,alore 56O OO1 2 No. 8, 7tl Main, 1st Llock, (l-2) loraman,ala Lan,alore 56O O95 3 26, Sri ClamunJi Complex, (M-2), Lommanalalli, Hosur Main loaJ Lan,alore 56O O68 4 No.1, 2, 3, + anJ 5+/1, Survey No. 2O1/C, (M-3) MaJivala, Hosur Main loaJ, Lan,alore 56O O68 5 No.1, 2, 3, + anJ 5+/1, Survey No. 2O1/C, (M-+) MaJivala, Hosur Main loaJ, Lan,alore 56O O68 6 No.1, 2, 3, + anJ 5+/3, Survey No. 2O1/C, (M-3) lesearcl anJ Development, MaJivala, Hosur Main loaJ, Lan,alore 56O O68 7 No. 319/1, (/Jea LuilJin,) Lomanalalli, Hosur Main loaJ, Lan,alore 56O O68 8 2nJ, 3rJ, +tl lloor, Si,ma Tecl lark, Leta Towers, No. 7 WlitenelJ Main loaJ, Lan,alore 56O O66 9 Llectronics City 1 - No.72, leonics Llectronic City, Hosur loaJ Lan,alore 56O 1OO 1O Llectronics City - 2, leonics Llectronic City, Hosur loaJ Lan,alore 56O 1OO 11 Llectronics City - 3, leonics Llectronic City, Hosur loaJ Lan,alore 56O 1OO 12 Llectronics City - +, leonics Llectronic City, Hosur loaJ Lan,alore 56O 1OO 13 3rJ lloor, /lmeJ llaza, No. 38/1c2, Lertenna /,ralara, Hosur Main loaJ Lan,alore 56O 1OO 14 6O8-61O, Carlton Towers, No. 1 /irport loaJ Lan,alore 56O OO1 15 Wipro SLz LNlT 1, DoJJatlo,ur Villa,e, Le,ur Hobli/ Llectronic City, Lan,alore 56O 1OO 16 Wipro SLz (Sl), DoJJakannelli, Sarjapur loaJ, Lan,alore 56O O35 17 111, (CDC-1) Mount loaJ, CuinJy Clennai 6OO O32 18 1O5, (Sterlin, LuilJin,) Mount loaJ, CuinJy Clennai 6OO O32 19 +75/, Slollin,anallur, ÒlJ Malabalipuram loaJ (CDC-2) Clennai 6OO O19 2O +75/, Slollin,anallur, ÒlJ Malabalipuram loaJ (WLlÒ) Clennai 6OO O19 21 LTl SLz, No. 12, SeconJ lloor, Tluraipakkam, Clennai 6OO 119 22 LlCÒT SLz, Sy. No. 6O2/3, Slollin,anallur Villa,e, Tambaram Taluk, lancleepuram District Clennai 6OO 119 23 lNlÒl/ll SLz, lusuma,iri, lakkanaJ, Coclin Coclin 682 O37 24 lnfotecl lark, +tl lloor, Vismaya LuilJin,, lakkanaJ Coclin 682 O3O 25 Teclnopolis, CSLz, 2nJ lloor, lakkanaJ, Coclin 682 O37 26 1-8-++8, lakslmi LuilJin,s, S l loaJ, Le,umpet HyJerabaJ 5OO OO3 27 Survey Nos. 6+, Serilin,ampali ManJal, MaJlapur, HyJerabaJ 5OO O33 28 Wipro SLz, S.No. 2O3/1, ManikonJa Ja,ir Villa,e, lajenJrana,ar ManJal, ll District HyJerabaJ 5OO O19 29 llot No. 2, MlDC, lajeev CanJli lnfotecl lark-1, HinjewaJi lune +11 O27 3O llot No. 2, MlDC, lajeev CanJli lnfotecl lark-1, Hin,ewaJi (WLlÒ) lune +11 O27 31 Wipro SLz, llot No. 31, MlDC, lajeev CanJli lnfotecl lark-2, Hin,ewaJi lune +11 O27 32 1+6/1+7, Metta,alli lnJustrial /rea, Metta,alli Mysore 57O O16 33 No. +8O-+81, LJyo, Vilar, llase-lll, Cur,oan Haryana 122 O15 34 llot No. 1, 7, 8 c 9, Llock-DM, Sector-V, Saltlake lolkata 7OO O91 35 llot No. 2 (l), lDCÒ lnfo City, lnJustrial Lstate ClanJaka Llubaneswar 751 O22 36 2nJ , 3rJ, +tl lloor, Spectra LuilJin,, HirananJani CarJerns, lowai (WLlÒ) Mumbai +OO O76 37 3rJ lloor ClDCÒ LuilJin,, Lelapur lailway Station Complex (WLlÒ) Navi Mumbai +OO 61+ 38 Wirpo, SLz, Lnit lll,DoJJakannelli Villa,e, Vartlur Hobli, Sarjapur loaJ Lan,alore 56O O35 39 Wirpo, SLz, Lnit lV,DoJJakannelli Villa,e, Vartlur Hobli, Sarjapur loaJ Lan,alore 56O O35 +O LlCÒT SLz, Lnit lll Sy. No. 6O2/O3, Slolin,anallur Villa,e, Tambaram Taluk, lancleepuram District Clennai 6OO 119 WIPRO LIMITED 83 Sl. No. Address City 41 Wipro limiteJ SLz Lnit, MalinJra WorlJ City Special Lconomic zone, lanclepuram District Clennai 42 237, 238 anJ 239 Òklla lnJustrial Lstate, llase-lll (WLlÒ) New Delli 11O O2O 43 Wipro limiteJ SLz Lnit, LlCÒT SLz, Vilankuricli Villa,e, Coimbatore (N) Taluk Coimbatore 44 Wipro SLz Lnit-ll, S.No.2O3/1, ManikonJa Ja,ir Villa,e, lajenJrana,ar ManJal, ll District HyJerabaJ 5OO O19 45 Wipro SLz Lnit-1, Sy. No. 12+/l, Copanapally Villa,e, 132/l, Vattina,ulappally Villa,e, Serilin,amapply ManJal, ll District, HyJerabaJ HyJerabaJ +6 llot No. 2 (l), lDCÒ SLz lnfo City, lnJustrial Lstate ClanJaka, Llubaneswar 751O22 47 Wipro SLz, llot No. 2,3 c +, lnowleJ,e lark, Creater NoiJa, Ll Creater NoiJa +8 SDl No. L-13 c 1+, NoiJa SLz NoiJa 682 O37 +9 185, lin,s Court, lin,s loaJ, leaJin, lC 1+ LX LniteJ lin,Jom 5O Tle loyal, 25 Lank llain, Norwicl, Norfolk, Nl2 +Sl LniteJ lin,Jom 51 Clrysler LuilJin,, 6tl lloor, 1 liversiJe Drive West, WlNDSÒl ÒNN5/5l+ CanaJa 52 Web Campus, laistrasse, 1O1 liel 2+11+ Cermany 53 Municl Òfnce (Cermany) Willy-LranJt-/llee +, D-81829 Munclen Cermany 54 Tlurn-unJ-Taxis Str 12 9O+11 Number, Cermany 55 lrykJalsbacken 12-1+, Stocklolm, Sweden 56 Yokolama lanJmark Tower 9l = 911/, Minato-Mirai, Nisli-ku, Yokolama, lana,awa Japan 57 level-6, 8O, Ceor,e Street, laramatta NSW, /ustralia 58 levels 1 anJ 3, 19 Crenfell Street, /JelaiJe, S/ 5OOO /JelaiJe, /ustralia 59 level 3, 8O Dorcas Street, Soutl Melbourne, Victoria - 32O5 Melbourne, /ustralia The Company’s manufacturing facilities are located at: Sl. No. Address City 1 l Ò Lox No.12, Dist. Jal,aon /malner +25 +O1 2 l-8, MlDC, Waluj /uran,abaJ +31 136 3 1O5, Hoota,alli lnJustrial /rea Mysore 571 186 4 /-28, TlattanclavaJy lnJustrial Lstate lonJiclerry 56O O58 5 12O/1, Vellancleri, CuJuvanclery 6O3 2O2 6 llot No.+, /ntlrasanalalli lnJustrial /rea Tumkur 572 1O6 7 9//1OL, leenya lnJustrial /rea Lan,alore 8 llot no.226C/226D, lnJustrial Development /rea, /lllC, HinJupur - 515211, /nJlra lraJesl HinJupur - 515211, 9 llot C-1, SllCÒT lnJustrial lark, lrrun,attukottai, SriperumbaJur Taluk, lancleepuram Dist. Tamil NaJu - 6O21O5. 1O LaJJi lnJustrial /rea, LaJJi, Himaclal lraJesl Lttranclal 11 llot No.99-1O+, Sector 6/, llL, SlDCLl, HariJwar LttaraklanJ 2+9+O3 12 llot No. C1 to C6, C65 to C71, /6-/7, Si,,aJi Crowtl Centre, lotJwara, LttaraklanJ 2+61+9 WIPRO LIMITED 8+ CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE To the Members of Wipro Limited We lave examineJ all tle relevant recorJs of Wipro limiteJ for tle purpose of certifyin, compliance of tle conJitions of tle Corporate Covernance unJer Clause +9 of tle listin, /,reement witl tle Stock Lxclan,es for tle nnancial year enJeJ Marcl 31, 2O1O. We lave obtaineJ all tle information anJ explanations wlicl to tle best of our knowleJ,e anJ belief were necessary for tle purposes of certincation. Tle compliance of conJitions of corporate ,overnance is tle responsibility of tle Mana,ement. Òur examination was limiteJ to tle proceJure anJ implementation process aJopteJ by tle Company for ensurin, tle compliance of tle conJitions of tle corporate ,overnance. Tlis certincate is neitler an assurance as to tle future viability of tle Company nor of tle efncacy or effectiveness witl wlicl tle mana,ement las conJucteJ tle affairs of tle Company. ln our opinion anJ to tle best of our information anJ accorJin, to tle explanations ,iven to us, we certify tlat tle Company las complieJ witl all tle manJatory conJitions of Corporate Covernance as stipulateJ in tle saiJ listin, /,reement. /s re,arJs /nnexure 1D of non-manJatory requirements, tle Company las complieJ witl items 2, +, 5, 6 anJ 7 of sucl non-manJatory requirements. Lan,alore, June 21, 2O1O For V. Sreedharan & Associates Company Secretaries SJ/- (V. Sreedharan) lartner FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 85 AUDITORS’ REPORT To the Members of WIPRO LIMITED We have audited the attached balance sheet of Wipro Limited (“the Company”) as at March 31, 2010 and the profit and loss account 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 (“the Order”), as amended, issued by the Central Government 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. 2. Further to our comments in paragraph 1 above, we report that: a) 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; b) 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; c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; d) in our opinion, the balance sheet, profit and loss account 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; e) on the basis of written representations received from the directors as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as at March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and f) 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: i) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010; ii) in the case of the profit and loss account, of the profit of the Company for the year ended on that date; and iii) in the case of cash flow statement, of the cash flows for the year ended on that date. for B S R & Co. Chartered Accountants Firm registration number: 101248W Akeel Master Partner Membership No. : 046768 Bangalore April 23, 2010 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 86 ANNEXURE TO THE 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, 2010 1. 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. No material discrepancies were noticed on such verification. c) Fixed assets disposed of during the year were not substantial, and therefore, do not affect the going concern assumption. 2. a) The inventory, except goods-in-transit and stocks lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained. 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. The discrepancies noticed on physical verification between the physical stocks and the book records were not material. 3. a) The Company has granted loans to 3 wholly owned subsidiaries covered in the register maintained under Section 301 of the Companies Act, 1956 (“the Act”). The maximum amount outstanding during the year and the year-end balance of such loans are as follows: (Rs. million) Name of the Entity Maximum amount outstanding during year Year-end balance Wipro Cyprus Private Limited 1,568 1,568 Enthink Inc. 42 42 Wipro Singapore Pte Limited 22 22 Wipro Holdings (Mauritius) Limited 3 3 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 listed 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, wherever applicable, are being repaid regularly in accordance with the agreed contractual terms. Accordingly, paragraphs 4(iii)(d) of the Order are 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. 4. 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 regards 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. 5. 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 and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakh with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for purchases of certain services which are for the Company’s specialized requirements and similarly for sale of certain goods and services for the specialized requirements of the buyers and for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided, the same appear reasonable. 6. The Company has not accepted any deposits from the public. 7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 87 8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government under Section 209(1)(d) of the Act for maintenance of cost records in respect of Vanaspati, Toilet soaps, Lighting products and Mini computers/ Microprocessor based system and Data communication system 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. 9. 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, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty and other material statutory dues were outstanding as at March 31, 2010 for a period of more than six months from the date they became payable. There were no dues on account of cess under Section 441A of the Act since the date from which the aforesaid Section comes into force has not yet been notified by the Central Government. b) According to the information and explanations given to us, 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: Name of the Statute Nature of the dues Amount unpaid * (Rs. million) Period to which the amount relates (Assessment year) Forum where dispute is pending Income Tax Act, 1961 Income tax 857.32 2005-06 Commissioner of Income Tax (Appeals) The Central Excise Act, 1944 Excise duty 47.49 1997-98 to 2008-09 Assistant commissioner/ Appellate/Commissioner/ CESTAT (Appeals) Customs Act, 1957 Customs duty 557.76 1990-91 to 2008-09 Assistant commissioner/ Appellate/Commissioner/ CESTAT (Appeals) Customs Act, 1957 Customs duty 64.30 1990-91 to 2008-09 High Court/ Supreme Court Sales Tax Act, 1956 Sales tax 48.81 1988-89 to 2008-09 Assistant Commissioner/ Appellate/Commissioner/ CESTAT (Appeals) Sales Tax Act, 1956 Sales tax 49.00 1999-00 to 2005-06 High Court/ Supreme Court Sales Tax Act, 1956 Sales tax 1151.04 1986-87 to 2007-08 First Appellate/Joint Commissioner Commercial Taxes Finance Act, 1994 Service tax 378.85 2001-02 to 2007-08 Assistant Commissioner/ Appellate/ Commissioner/ CESTAT (Appeals) * The amounts paid under protest have been reduced from the amounts demanded in arriving at the aforesaid disclosure. 10. 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. 11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of any dues to any financial institution or bank. The Company did not have any outstanding debentures during the year. 12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion and according to the explanations given to us, the Company is not a chit fund/nidhi/mutual benefit fund/ society. ANNEXURE TO THE AUDITORS’ REPORT FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 88 ANNEXURE TO THE AUDITORS’ REPORT 14. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. 15. 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. 16. 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 purpose for which they were raised. 17. 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. 18. 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. 19. The Company did not have any outstanding debentures during the year. 20. The Company has not raised any money by public issues during the year. 21. We have been informed that a junior level employee of the Company had embezzled funds amounting to Rs 228 million over a period of three years from November 2006 to December 2009. The Companys’ internal investigation under the direct supervision of the Company’s Audit Committee related to this embezzlement has been completed. for B S R & Co. Chartered Accountants Firm registration number: 101248W Akeel Master Partner Membership No. : 046768 Bangalore April 23, 2010 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 89 BALANCE SHEET (Rs in Million) As of March 31, Schedule 2010 2009 SOURCES OF FUNDS Shareholders’ Funds Share capital 1 2,936 2,930 Share application money pending allotment 18 15 Reserves and surplus 2 173,968 122,204 176,922 125,149 Loan Funds Unsecured loans 3 55,302 50,139 55,302 50,139 232,224 175,288 APPLICATION OF FUNDS Goodwill 447 447 Fixed Assets Gross block 4 67,166 56,986 Less: Accumulated depreciation and amortisation 31,050 25,637 Net block 36,116 31,349 Capital work-in-progress and advances 9,911 13,118 46,027 44,467 Investments 5 89,665 68,845 Deferred Tax Asset (Net) 18 (23) 348 577 Current Assets, Loans And Advances Inventories 6 6,069 4,596 Sundry debtors 7 47,547 44,464 Cash and bank balances 8 56,643 44,092 Loans and advances 9 54,846 41,442 165,105 134,594 Less: Current Liabilities and Provisions Liabilities 10 47,060 55,643 Provisions 11 22,308 17,999 69,368 73,642 Net Current Assets 95,737 60,952 232,224 175,288 Notes to accounts 18 The schedules referred to above form an integral part of the balance sheet As per our report attached for BSR & Co., Chartered Accountants FirmRegistration number: 101248W Akeel Master Partner Membership No. 046768 Bangalore April 23, 2010 For and on behalf of the Board of Directors Azim Premji Girish S. Paranjpe Suresh C. Vaswani Suresh C. Senapaty Chairman Joint CEO, IT Business Joint CEO, IT Business Chief Financial Officer & Director & Director & Director B. C. Prabhakar V. Ramachandran Director CompanySecretary FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 90 PROFIT AND LOSS ACCOUNT (Rs in Million except share data) For the year ended March 31, Schedule 2010 2009 INCOME Gross sales and services 230,063 216,128 Less: Excise duty 843 1,055 Net sales and services 229,220 215,073 Other income, net 12 8,753 (4,804) 237,973 210,269 EXPENDITURE Cost of sales and services 13 154,436 148,070 Selling and marketing expenses 14 14,022 13,373 General and administrative expenses 15 11,543 11,379 Interest 16 1,084 1,968 181,085 174,790 PROFIT BEFORE TAXATION 56,888 35,479 Provision for taxation including deferred tax and fringe benefit tax 18(23) 7,908 5,741 PROFIT FOR THE PERIOD 48,980 29,738 Appropriations Proposed dividend 8,809 5,860 Tax on dividend 1,283 996 TRANSFER TO GENERAL RESERVE 38,888 22,882 EARNINGS PER SHARE - EPS [Refer note 18(14)] Equity shares of par value Rs. 2/- each Basic (in Rs.) 33.61 20.44 Diluted (in Rs.) 33.38 20.38 Number of shares for calculating EPS Basic 1,457,421,994 1,454,662,502 Diluted 1,467,298,404 1,459,352,869 Notes to accounts 18 The schedules referred to above form an integral part of the profit and loss account As per our report attached for BSR & Co., Chartered Accountants FirmRegistration number: 101248W Akeel Master Partner Membership No. 046768 Bangalore April 23, 2010 For and on behalf of the Board of Directors Azim Premji Girish S. Paranjpe Suresh C. Vaswani Suresh C. Senapaty Chairman Joint CEO, IT Business Joint CEO, IT Business Chief Financial Officer & Director & Director & Director B. C. Prabhakar V. Ramachandran Director CompanySecretary FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 91 CASH FLOW STATEMENT (Rs. in Million) Year ended March 31, 2010 2009 A. Cash flows from operating activities: Profit before tax 56,888 35,479 Adjustments: Depreciation and amortisation 5,796 5,337 Amortisation of stock compensation expense 1,224 1,685 Exchange differences - net (5,614) 10,680 Impact of cash flow hedges 5,858 (11,357) Interest on borrowings 1,084 1,968 Dividend / interest - net (3,979) (4,145) Loss/(profit) on sale of investments (308) (696) Gain on sale of fixed assets - net (22) (24) Working capital changes : Sundry debtors and unbilled revenue (6,627) (11,518) Loans and advances (1,713) 9,490 Inventories (1,385) (116) Current liabilities & provisions 238 13,023 Net cash generated from operations 51,440 49,806 Direct taxes (paid)/refund-net (6,666) (6,361) Net cash generated by operating activities 44,774 43,445 B. Cash flows from investing activities: Acquisition of fixed assets (including capital advances) (8,219) (14,058) Proceeds from sale of fixed assets 300 204 Purchase of investments (337,926) (342,859) Proceeds from sale / maturity of investments 323,482 341,687 Investment in inter-corporate deposits (10,750) (3,750) Refund of inter-corporate deposits 4,950 - Payment for acquisition/merger of businesses (52) (20) Investment in subsidiaries (6,096) (21,976) Dividend / interest income received 3,665 4,145 Net cash used in investing activities (30,646) (36,627) C. Cash flows from financing activities: Proceeds from exercise of employee stock options 7 63 Share application money pending allotment 3 15 Interest paid on borrowings (1,046) (1,733) Dividends paid (including distribution tax) (6,858) (6,826) Repayment of borrowings / loans (52,690) (73,246) Proceeds of borrowings / loans 59,622 81,020 Net cash used in financing activities (962) (707) Net increase in cash and cash equivalents during the period 13,166 6,111 Cash acquired upon Merger 256 - Cash and cash equivalents at the beginning of the period 44,092 37,321 Effect of exchange rate changes on cash balance (871) 660 Cash and cash equivalents at the end of the period 56,643 44,092 As per our report attached for BSR & Co., Chartered Accountants FirmRegistration number: 101248W Akeel Master Partner Membership No. 046768 Bangalore April 23, 2010 For and on behalf of the Board of Directors Azim Premji Girish S. Paranjpe Suresh C. Vaswani Suresh C. Senapaty Chairman Joint CEO, IT Business Joint CEO, IT Business Chief Financial Officer & Director & Director & Director B. C. Prabhakar V. Ramachandran Director CompanySecretary FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 92 SCHEDULES TO BALANCE SHEET (Rs. in Million, except sharedata) As of March 31, SCHEDULE 1 SHARE CAPITAL 2010 2009 Authorised capital 1,650,000,000 (2009: 1,650,000,000) equity shares of Rs. 2 each 3,300 3,300 25,000,000 (2009: 25,000,000) 10.25 % redeemable cumulative preference shares of Rs. 10 each 250 250 3,550 3,550 Issued, subscribed and paid-up capital 1,468,211,189 (2009: 1,464,980,746) equity shares of Rs 2 each [Refer note 18(2)] 2,936 2,930 2,936 2,930 SCHEDULE 2 RESERVES AND SURPLUS Capital reserve Balance brought forward from previous year 1,144 1,144 Additions during the year - - 1,144 1,144 Securities premium account Balance brought forward from previous year 27,279 25,373 Add: Exercise of stock options by employees 1,909 1,906 29,188 27,279 Restricted stock units reserve [Refer note 18(11)] Employee stock options outstanding 4,366 6,693 Less: Deferred employee compensation expense 2,643 4,380 1,723 2,313 General reserve Balance brought forward from previous year 108,327 85,367 Additions [Refer note 18 (3) (ii)] 38,685 22,960 147,012 108,327 Hedging reserve [Refer note 18(4)] Balance brought forward from previous year (16,859) (1,097) Movement during the year 11,760 (15,762) Unrealised loss on cash flow hedging derivatives, net (5,099) (16,859) Summary of reserves and surplus Balance brought forward from previous year 122,204 112,604 Movement during the year 51,764 9,600 173,968 122,204 SCHEDULE 3 UNSECURED LOANS From Banks External commercial borrowings [Refer note 18(19)] 16,844 18,052 Borrowing from banks (repayable within one year) 37,555 30,983 Other Loans Interest free loan from state governments 37 37 Others (repayable within one year Rs 263 million) 866 1,067 55,302 50,139 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 93 S C H E D U L E 4 F I X E D A S S E T S ( R s . i n M i l l i o n ) P A R T I C U L A R S G R O S S B L O C K A C C U M U L A T E D D E P R E C I A T I O N N E T B L O C K A s o f A p r i l 1 , 2 0 0 9 # A d d i t i o n s D e d u c t i o n s A s o f M a r c h 3 1 , 2 0 1 0 A s o f A p r i l 1 , 2 0 0 9 D e p r e c i a t i o n f o r t h e y e a r D e d u c t i o n s / a d j u s t m e n t s A s o f M a r c h 3 1 , 2 0 1 0 A s o f M a r c h 3 1 , 2 0 1 0 A s o f M a r c h 3 1 , 2 0 0 9 ( a ) T a n g i b l e fi x e d a s s e t s * * L a n d @ 3 , 8 5 2 5 8 - 3 , 9 1 0 1 3 8 4 - 9 7 3 , 8 1 3 3 , 8 3 9 B u i l d i n g s 1 2 , 4 2 1 3 , 7 0 4 5 1 1 6 , 0 7 4 6 4 6 2 6 3 ( 1 ) 9 0 8 1 5 , 1 6 6 1 1 , 7 7 5 P l a n t & m a c h i n e r y * 2 9 , 6 1 3 5 , 0 2 7 1 8 5 3 4 , 4 5 5 1 9 , 3 7 7 3 , 9 7 0 ( 7 0 ) 2 3 , 2 7 7 1 1 , 1 7 8 1 0 , 2 3 6 F u r n i t u r e , fi x t u r e a n d e q u i p m e n t s 7 , 3 0 2 1 , 6 6 6 1 6 7 8 , 8 0 1 3 , 9 1 7 9 2 9 ( 1 2 0 ) 4 , 7 2 6 4 , 0 7 5 3 , 3 8 5 V e h i c l e s 2 , 5 8 0 4 3 4 3 1 4 2 , 7 0 0 1 , 4 2 6 4 8 7 ( 1 9 2 ) 1 , 7 2 1 9 7 9 1 , 1 5 4 ( b ) I n t a n g i b l e fi x e d a s s e t s T e c h n i c a l k n o w - h o w 4 7 8 - 5 5 4 5 1 - 4 6 9 2 B r a n d s , p a t e n t s , t r a d e m a r k s a n d r i g h t s 1 , 1 7 1 - - 1 , 1 7 1 2 1 3 6 2 - 2 7 5 8 9 6 9 5 8 5 6 , 9 8 6 1 0 , 8 9 7 7 1 7 6 7 , 1 6 6 2 5 , 6 3 7 5 , 7 9 6 ( 3 8 3 ) 3 1 , 0 5 0 3 6 , 1 1 6 3 1 , 3 4 9 P r e v i o u s y e a r - 3 1 M a r c h 2 0 0 9 4 2 , 9 9 2 1 4 , 4 7 1 4 7 7 5 6 , 9 8 6 2 0 , 5 9 7 5 , 3 3 7 ( 2 9 7 ) 2 5 , 6 3 7 3 1 , 3 4 9 @ I n c l u d e s G r o s s b l o c k o f R s 1 , 2 7 0 m i l l i o n a n d A c c u m u l a t e d d e p r e c i a t i o n o f R s 9 8 m i l l i o n b e i n g l e a s e h o l d l a n d . * P l a n t a n d m a c h i n e r y i n c l u d e s c o m p u t e r s a n d c o m p u t e r s o f t w a r e * * I n c l u d e s G r o s s b l o c k o f R s 7 5 m i l l i o n a n d A c c u m u l a t e d d e p r e c i a t i o n o f R s 5 5 m i l l i o n o n a c c o u n t o f m e r g e r [ R e f e r n o t e 1 8 ( 6 ) ] * I n t e r e s t c a p i t a l i z e d w a s o f R s 9 5 m i l l i o n a n d R s 3 1 4 m i l l i o n f o r t h e y e a r e n d e d M a r c h 3 1 , 2 0 0 9 , r e s p e c t i v e l y . # I n c l u d e s P l a n t & M a c h i n e r y o f R s 1 7 m i l l i o n a n d F u r n i t u r e , fi x t u r e s & e q u i p m e n t o f R s 4 m i l l i o n f o r r e s e a r c h a n d d e v e l o p m e n t a s s e t s . FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 94 SCHEDULES TO BALANCE SHEET (Rs. in Million) As of March 31, 2010 2009 SCHEDULE 5 INVESTMENTS Long term investments - (at cost) [Refer note 18(20)] Unquoted Investments in subsidiary companies Equity shares 58,565 52,526 Preference shares 57 - Investment in associates - Non trade Wipro GE Healthcare Private Limited 1 227 49 Current investments - Non trade Quoted Investments in Indian money market mutual funds [Refer note 18(21)] 18,548 15,132 Unquoted Certificates of deposit 11,568 947 Other investments-unquoted [Refer note 18(20)] 808 299 89,773 68,953 Less: Provision for diminution in value of long term investments 108 108 89,665 68,845 Aggregate market value of quoted investments and mutual funds 18,558 15,211 1 Equity investments in this company carry certain restrictions on transfer of shares as provided for in the shareholders’ agreements SCHEDULE 6 INVENTORIES Finished goods 3,058 1,978 Raw materials 1,467 1,446 Stock in process 543 425 Stores and spares 1,001 747 6,069 4,596 SCHEDULE 7 SUNDRY DEBTORS (Unsecured) Debts outstanding for a period exceeding six months Considered good 6,070 5,151 Considered doubtful 1,841 964 7,911 6,115 Other debts Considered good 41,477 39,313 Considered doubtful 10 486 41,487 39,799 Less: Provision for doubtful debts 1,851 1,450 47,547 44,464 SCHEDULE 8 CASH AND BANK BALANCESS Cash and cheques on hand 531 641 Balances with scheduled banks In current account 3,601 2,786 In deposit account 37,260 25,071 Balances with other banks in current account* 15,251 15,594 56,643 44,092 *Bankwise breakup and the maximum balances are given in note 18(18) FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 95 SCHEDULES TO BALANCE SHEET (Rs. in Million) As of March 31, 2010 2009 SCHEDULE 9 LOANS AND ADVANCES Unsecured, considered good unless otherwise stated Advances recoverable in cash or in kind or for value to be received Considered good - Prepaid expenses 3,040 2,772 - Employee travel & other advances 1,462 1,243 - Advance to suppliers/expenses 409 639 - Others 1,708 1,572 6,619 6,226 Considered doubtful 297 160 6,916 6,386 Less: Provision for doubtful advances 297 160 6,619 6,226 Advances to / dues from subsidiaries 2,531 2,890 Other deposits 1,530 1,248 Derivative asset 3,903 1,421 Finance lease receivables 4,442 3,605 Advance income tax 9,520 8,370 Inter corporate deposit 10,050 4,250 Interest accrued but not due 793 516 Inter corporate deposit with subsidiary 273 273 Balances with excise and customs 690 745 Unbilled revenue 14,495 11,898 54,846 41,442 SCHEDULE 10 LIABILITIES Sundry creditors - dues to micro and small enterprise [Refer Note 18(17)] 5 - - dues to other than micro and small enterprise 14,952 15,252 Accrued expenses 16,164 17,558 Statutory liabilities 3,397 2,550 Unearned revenue 7,215 7,368 Advances from customers 903 611 Derivative liabilities 4,385 12,257 Unclaimed dividends 17 17 Interest accrued but not due 22 30 47,060 55,643 SCHEDULE 11 PROVISIONS Proposed dividend 8,809 5,860 Tax on proposed dividend 1,283 996 Provision for tax 7,375 6,434 Employee retirement benefits 2,546 2,637 Warranty 532 685 Others 1,763 1,387 22,308 17,999 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 96 SCHEDULES TO PROFIT AND LOSS ACCOUNT (Rs. in Million) For the year ended March 31, 2010 2009 SCHEDULE 12 OTHER INCOME Income from current investments - Dividend on mutual fund units 1,442 2,265 - Profit on sale of investments (net) 308 696 Interest on debt instruments and others* 2,537 1,879 Exchange differences, net 2,193 (5,737) Exchange fluctuations on foreign currency borrowings (net) 1,910 (4,445) Miscellaneous income 363 538 8,753 (4,804) *Tax deducted at source on interest received Rs 303 million (2009 : Rs. 366 million) SCHEDULE 13 COST OF SALES AND SERVICES Employee compensation 74,350 77,146 Contribution to provident and other funds 1,589 1,623 Workmen and staff welfare 1,235 1,260 Raw materials, finished and process stocks consumed (refer schedule 17) 39,910 34,075 Sub contracting / technical fees / third party application services 14,775 12,092 Travel 4,972 5,846 Depreciation 5,471 5,009 Repairs 1,578 954 Communication 1,484 1,372 Power and fuel 1,414 1,540 Outsourced technical services 1,348 1,442 Rent 1,003 913 Stores and spares 384 351 Insurance 332 330 Rates and taxes 226 285 Miscellaneous expenses 4,365 3,832 154,436 148,070 SCHEDULE 14 SELLING AND MARKETING EXPENSES Employee compensation 7,539 7,350 Contribution to provident and other funds 82 112 Workmen and staff welfare 173 188 Advertisement and sales promotion 2,499 1,753 Travel 687 816 Carriage and freight 928 876 Commission on sales 354 455 Rent 387 396 Communication 338 352 Depreciation 195 201 Insurance 53 23 Rates and taxes 36 50 Miscellaneous expenses 751 801 14,022 13,373 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 97 SCHEDULES TO PROFIT AND LOSS ACCOUNT (Rs. in Million) For the year ended March 31, 2010 2009 SCHEDULE 15 GENERAL AND ADMINISTRATIVE EXPENSES Employee compensation 4,505 3,752 Contribution to provident and other funds 272 193 Workmen and staff welfare 883 874 Travel 1,039 1,219 Legal and professional charges 1,218 1,180 Provision / write off of bad debts 453 791 Staff recruitment 473 404 Communication 244 241 Manpower outside services 199 238 Depreciation 130 126 Rates and taxes 95 38 Insurance 53 48 Rent 393 171 Auditors’ remuneration Audit fees 10 10 For certification including tax audit 2 2 Out of pocket expenses 1 1 Repairs and mantainance 10 27 Miscellaneous expenses 1,563 2,064 11,543 11,379 SCHEDULE 16 INTEREST Cash credit and others 1,084 1,968 1,084 1,968 SCHEDULE 17 RAW MATERIALS, FINISHED AND PROCESSED STOCKS Consumption of raw materials and bought out components : Opening stocks 1,446 1,604 Add: Purchases 9,913 7,664 Less: Closing stocks 1,467 1,446 9,892 7,822 Purchase of finished products for sale 31,128 26,215 (Increase) / Decrease in finished and process stocks : Opening stock In process 425 432 Finished products 1,978 2,009 Stock taken over on merger In process 6 - Finished products 82 - 2,491 2,441 Less: Closing stock In process 543 425 Finished products 3,058 1,978 (1,110) 38 39,910 34,075 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 98 SCHEDULE 18 – NOTES TO ACCOUNTS Company overview Wipro Limited (Wipro or the Company), 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. 1. 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 specified in the Companies (Accounting Standards) Rules, 2006, Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and other generally accepted accounting principles in India. ii. 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 and expenses. 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 amortised and is tested for impairment if indicators of impairment exist. iv. Fixed assets, intangible assets and work-in-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. Advances paid towards the acquisition of fixed assets outstanding as of each balance sheet date and the cost of fixed assets not ready for use before such date are disclosed under capital work-in-progress. v. Investments Long term investments are stated at cost less any other than temporary decline in the value of such investments. 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. vi. 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. 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: Revenue from Software development services comprises revenue from time and material and fixed-price contracts. Revenue from time and material contracts is recognised as related services are performed. Revenue from fixed- price, fixed-time frame contracts is generally recognised in accordance with the “Percentage of Completion” method. Revenues from BPO services are derived from both time- based and unit-priced contracts. Revenue is recognised as the related services are performed, in accordance with the specific terms of the contract with the customers. Revenue from application maintenance services is recognised over the period of the contract. Revenue from customer training, support and other services is recognised as the related services are performed. Provision for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the current contract estimates. ‘Unbilled revenues’ included in loans and advances represent cost and earnings in excess of billings as at the balance sheet date. ‘Unearned revenues’ included in current liabilities represent billing in excess of revenue recognised. 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. FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 99 Profit on sale of investments is recorded upon transfer of title by the Company. It is determined as the difference between the sales price and carrying amount of the related investment. Interest is recognized using the time-proportion method, based on rates implicit in the transaction. Dividend income is recognized where 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 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 accounts 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 profit and loss account. Translation: Monetary foreign currency assets and liabilities at period- end are restated at the closing rate. The difference arising from the restatement is recognized in the profit and loss account. In March 2009, Ministry of Corporate affairs issued a notification amending AS 11, ‘The effects of changes in foreign exchange rates’. Before the amendment, AS 11 required the exchange gain/ losses on the long term foreign currency monetary asset/ liability to be recorded in the profit and loss account. 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, 2011, 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. 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 early adopted AS 30 and the limited revisions to other accounting standards which come into effect upon adoption of AS 30 from April 1, 2008. 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. Changes in fair value relating to the ineffective portion of the hedges and derivatives not designated as hedges are recognised in the profit and loss account as they arise. AS 30 states that particular sections of other accounting standards; AS 4, Contingencies and Events Occurring after Balance Sheet Date, to the extent it deals with contingencies, AS 11 (revised 2003), The Effects of Changes in Foreign Exchange Rates, to the extent it deals with the ‘forward exchange contracts’ and AS 13, Accounting for Investments, except to the extent it relates to accounting for investment properties, will stand withdrawn only from the date AS 30 becomes mandatory (April 1, 2011 for the Company). Accordingly, the Company continues to comply with the guidance in AS 4 – relating to contingencies, AS 11 – relating to forward contracts and AS 13 – relating to investments until AS 30 becomes mandatory. 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, FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 100 sundry debtors, 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 loans, sundry creditors, accrued expenses and derivative financial instruments with a negative fair value. Financial assets / liabilities are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when all of risks and rewards of the ownership have been transferred. The transfer of risks and rewards is evaluated by comparing the exposure, before and after the transfer, with the variability in the amounts and timing of the net cash flows of the transferred assets. 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. Non-interest- bearing deposits are discounted to their present value. Integral operations: In respect of 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 profit and loss account are translated at the average exchange rate during the period. The differences arising out of the translation are recognised in the profit and loss account. 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 Estimated useful life Computer and Computer Software 2-6 years Furniture and fixtures 5-6 years Electrical installations 5 years Office equipment 5 years Vehicles 4 years Fixed assets individually costing Rs. 5,000/- or less are depreciated at 100%over a period of one year. Assets under capital 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 profit and loss account. 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 profit and loss account. 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 equal to 12% of the covered employee’s salary. 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. Compensated absences: The employees of the Company are entitled to compensated absence. The employees can carry-forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 101 that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. Long term compensated absences is accrued based on actuarial valuation at the balance sheet date carried out by an independent actuary. 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 profit and loss account. Superannuation: The employees of the Company also participate in a defined contribution plan maintained by the Company. This plan 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. Income tax & fringe benefit tax Income tax: The current charge for income taxes is calculated in accordance with the relevant tax regulations. 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 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. 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 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 period excluding equity shares held by controlled trust. Diluted: The number of equity shares used in computing diluted earnings per share comprises the weighted average 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. FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 102 NOTES TO ACCOUNTS 2. Share Capital The following are the details for 1,468,211,189 (2009: 1,464,980,746) equity shares as of March 31, 2010. No. of shares Description 1,399,355,659 Equity shares / American Depository Receipts (ADRs) (2009: 1,399,355,659) have been allotted as fully paid bonus shares / ADRs by capitalization of Securities premium account and Capital redemption reserve 1,325,525 Equity shares (2009: 1,325,525) have been allotted as fully paid-up, pursuant to scheme of amalgamation, without payment being received in cash. 968,803 Equity shares ( 2009: 968,803) allotted to the Wipro Inc Trust, the sole beneficiary of which is Wipro Inc, wholly owned subsidiary of the Company, without payment being received in cash, in consideration of acquisition of inter- company investments. 3,162,500 Equity shares (2009: 3,162,500) representing American Depository Receipts issued during 2000-2001 pursuant to American Depository offering by the Company 63,398,702 Equity shares (2009: 60,168,259) issued pursuant to Employee Stock Option Plan 3. Note on Reserves: i) Restricted stock units reserve includes Deferred Employee Compensation, which represents future charge to the profit and loss account and employee stock options outstanding to be treated as securities premium at the time of allotment of shares. ii) Additions to General Reserve include: (Rs in Million) Particulars For the year ended March 31, 2010 2009 Transfer from Profit and Loss Account 38,888 22,882 Additional dividend paid for the previous year (3) (3) Interest borne by Wipro Equity Reward Trust - 235 Adjustment on account of merger [refer note 18(6) (199) - Adjustment on adoption of AS 30 - (154) Others (1) - 38,685 22,960 4. Adoption of AS 30 The Company has adopted AS 30 and the limited revisions to other accounting standards which come into effect upon adoption of AS 30 from April 1, 2008. AS 30 states that particular sections of other accounting standards; AS 4, Contingencies and Events Occurring after Balance sheet Date, to the extent it deals with contingencies, AS 11 (revised 2003), The Effects of Changes in Foreign Exchange Rates, to the extent it deals with the ‘forward exchange contracts’ and AS 13, Accounting for Investments, except to the extent it relates to accounting for investment properties, would stand withdrawn only from the date AS 30 becomes mandatory (April 1, 2011 for the Company). Accordingly, the Company continues to comply with the guidance under these accounting standards; AS 4 – relating to Contingencies, AS 11 – relating to Forward Contracts and AS 13 – relating to Investments until AS 30 becomes mandatory. The Company has designated USD 262 Million (2009: USD 267 Million) and Euro 40 Million (2009: 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 18 Billion (2009: JPY 27 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 (2009: 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 the 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 Rs 4,378 Million for the year ended March 31, 2010 has been recorded in the profit and loss account as part of other income (2009: Rs (7,454) Million). 5. Derivatives As of March 31, 2010 the Company has recognised losses of Rs 5,099 Million (2009: Rs 16,859 Million) relating to derivative financial instruments (comprising of 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 at: (In Million) Particulars As at March 31, 2010 2009 Designated derivative instruments Sell $1,518 $1,060 £31 £54 ¥4,578 ¥6,130 AUD 7 AUD 3 - CHF 2 - SGD 1 Non designated derivative instruments Cross currency swaps ¥ 33,014 ¥35,016 Sell $307 $879 €69 €79 £38 £53 Buy $492 $438 - ¥23,170 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 103 6. Merger and Acquisition Pursuant to the scheme of amalgamation approved by the Honorable High Court of Karnataka, Indian undertakings of Wipro Networks Pte Limited, Singapore, and WMNETSERV Limited, Cyprus have been merged with the Company with retrospective effect from April 1, 2009, the Appointed Date. The amalgamation has been accounted as ‘amalgamation in the nature of merger’ in accordance with the terms of the Order. The excess of purchase consideration over the net assets of the undertaking amounting to Rs. 199 Million has been adjusted against general reserve of the Company. 7. 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 are 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, 2010, the Company transferred financial assets of Rs. 1,666 Million (2009: Rs. 539), 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 Rs. (21) Million for the year ended March 31, 2010 (2009: Rs. (35) Million,). As at March 31, 2010, the maximum amounts of recourse obligation in respect of the transferred financial assets are Rs. Nil (March 31, 2009: Nil). 8. 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: (Rs. in Million) Particulars As of March 31, 2010 2009 Gross investment in lease for the period 5,616 4,376 Not later than one year 774 1,024 Later than one year and not later than five years 4,652 3,180 Unguaranteed residual values 190 172 Unearned finance income (1,174) (771) Net investment in finance receivables 4,442 3,605 Present value of minimum lease receivables are as follows: (Rs. in Million) Particulars As of March 31, 2010 2009 Present value of minimum lease payments receivables 4,442 3,605 Not later than one year 608 960 Later than one year and not later than five year 3,675 2,522 Unguaranteed residual values 159 123 9. Assets taken on lease 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 Rs 1,783 Million and Rs 1,479 Million during the years ended March 31, 2010 and 2009 respectively. Details of contractual payments under non-cancelable leases are given below: (Rs. in Million) Particulars As of March 31, 2010 2009 Not later than one year 666 461 Later than one year and not later than five years 1,770 1,364 Thereafter 520 416 Total 2,956 2,241 10. Employee Benefit Plans 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 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 104 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. (Rs. in Million) Change in the benefit obligation As of March 31, 2010 2009 Projected Benefit Obligation (PBO) at the beginning of the year 1,820 1,506 Service cost 313 368 Interest cost 132 134 Benefits paid (212) (118) Actuarial loss/(gain (30) (70) PBO at the end of the year 2,023 1,820 (Rs. in Million) Change in plan assets As of March 31, 2010 2009 Fair value of plan assets at the beginning of the year 1,394 1,242 Expected return on plan assets 121 88 Employer contributions 611 153 Benefits paid (212) (118) Actuarial gain/ (loss 18 29 Fair value of plan assets at the end of the year 1,932 1,394 Present value of unfunded obligation (91) (426) Recognised liability (91) (426) 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, 2010 is Rs 454 Million. Net gratuity cost for the year ended March 31, 2010 and 2009 are as follows: (Rs. in Million) Particulars For the year ended March 31, 2010 2009 Service cost 313 368 Interest cost 132 134 Expected return on plan assets (121) (88) Actuarial loss / (gain (48) (99) Net gratuity cost 276 315 The weighted average actuarial assumptions used to determine benefit obligations and net periodic gratuity cost are: Assumptions As of March 31, 2010 2009 Discount rate 7.15% 6.75% Rate of increase in compensation levels 5% 5% Rate of return on plan assets 8% 8% As at March 31, 2010 and 2009, 100% of the plan assets were invested in the insurer managed funds. (Rs. in Million) Particulars As of March 31, 2010 2009 2008 Experience Adjustments: On Plan Liabilities 84 (59) 117 On Plan Assets 18 26 77 Present value of benefit obligation 2,023 1,820 1,403 Fair value of plan assets 1,932 1,394 1,153 Excess of (obligations over plan assets)/ plan assets over obligations (91) (426) (250) 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, 2010, the Company contributed Rs 246 Million (2009: Rs 211 Million) to superannuation fund. 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. The Guidance on implementing AS 15, Employee Benefits issued by the Accounting Standards Board (ASB) provides that exempt provident funds which require employers to FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 105 meet the interest shortfall are in effect defined benefit plans. The Company believes that it is not practicable to determine the interest shortfall obligation. The computation of liability and disclosure in accordance with the provisions of AS 15 cannot be implemented. For the year ended March 31, 2010, the Company contributed Rs 1,422 Million (2009: Rs 1,402 Million) to PF. 11. Employee stock option i) Employees covered under Stock Option Plans and Restricted Stock Unit (RSU) 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 aforementioned 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. For the year ended March 31, 2010, the Company has recorded stock compensation expense of Rs. 1,224 Million, (2009: Rs 1,685 Million). 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). Activity under Stock Option plans Particulars Year Ended March 31, 2010 Year Ended March 31, 2009 Shares Wt. average exercise price Shares Wt. average exercise price Outstanding at the beginning of the year 122,746 484 1,228,625 264 Granted - - 120,000 489 Exercised - - 349,499 263 Forfeited and lapsed 1,140 254 876,380 264 Outstanding at the end of the year 121,606 485 1,22,746 484 Exercisable at the end of the year 1,606 212 2,746 245 Activity under Restricted Stock Option plans Particulars Year Ended March 31, 2010 Year Ended March 31, 2009 Shares Wt. average exercise price Shares Wt. average exercise price Outstanding at the beginning of the year 16,270,226 2 11,585,399 2 Granted 142,100 2 8,366,676 2 Exercised 3,230,443 2 2,209,124 2 Forfeited and lapsed 1,154,123 2 1,472,725 2 Outstanding at the end of the year 12,027,760 2 16,270,226 2 Exercisable at the end of the year 5,365,080 2 3,184,399 2 The following table provides details in respect of range of exercise price and weighted average remaining contractual life (in months) for the options outstanding as at March 31, 2010. Range of exercise price Year ended March 31, 2010 Year ended March 31, 2009 Shares Wt. average remaining life Shares Wt. average remaining life Rs 2 12,027,760 37.98 16,270,225 44.85 Rs 172-255 - - 1,140 2.93 Rs. 489 120,000 49 120,000 61 $ 3.46-5.01 1,606 1 1,606 11.90 The movement in Restricted stock unit reserve is summarized below: (Rs. in Million) Particulars For the year ended March 31, 2010 2009 Opening balance 2,313 1,817 Less: Amount transferred to share premium 1,909 1,274 Add: Amortisation* 1,319 1,770 Closing balance 1,723 2,313 *Includes amortization expense relating to options granted to employees of the Company’s subsidiaries, amounting to Rs. 95 Million (2009: Rs. 85 Million). This expense has been debited to respective subsidiaries FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 106 12. The Company had received tax demands from the Indian income tax authorities for the financial years ended March 31, 2001, 2002, 2003 and 2004 aggregating to Rs. 11,127 Million (including interest of Rs. 1,503 Million). The tax demand was primarily on account of denial of deduction claimed by the Company under Section 10A of the Income Tax Act 1961, in respect of profits earned by its undertakings in Software Technology Park at Bangalore. The appeals filed by the Company for the above years to the first appellate authority were allowed in favour of the Company, thus deleting substantial portion of the demand raised by the Income tax authorities. On further appeal filed by the income tax authorities, the second appellate authority upheld the claim of the company for the years ended March 31, 2001, 2002, 2003 and 2004. In December 2008, the Company received, on similar grounds, an additional tax demand of Rs. 5,388 Million (including interest of Rs. 1,615 Million) for the financial year ended March 31, 2005. The Company has filed an appeal against the said demand which is pending before the first appellate authority. During December 2009, the company received the draft assessment order, on similar grounds, with a demand of Rs. 6,757 Million (including interest of Rs. 2,050 Million) for the financial year ended March 31, 2006. The Company has filed an objection against the said demand before the Dispute Resolution Panel and the Assessing officer within the time limits permitted under the statute. Considering the facts and nature of disallowance and the order of the first appellate authority upholding Company’s claims for earlier years, the Company expects the final outcome of the above disputes in Wipro’s favour. 13. 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 year. 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: (Rs in Million) Particulars For the year ended March 31, 2010 For the year ended March 31, 2009 Provision for Warranty Others Provision for Warranty Others Provision at the beginning of the year 685 1,387 671 802 Additions during the year, net 469 394 621 585 Utilised during the year (622) (18) (607) - Provision at the end of the year 532 1,763 685 1,387 14. The computation of equity shares used in calculating basic & diluted earnings per share is set out below: Particulars For the year ended March 31, 2010 2009 Weighted average equity shares outstanding 1,466,352,557 1,462,624,262 Share held by a controlled trust (8,930,563) (7,961,760) Weighted average equity shares for computing basic EPS 1,457,421,994 1,454,662,502 Dilutive impact of employee stock options 9,876,410 4,690,367 Weighted average equity shares for computing diluted EPS 1,467,298,404 1,459,352,869 Net income considered for computing diluted EPS (Rs in Million) 48,980 29,738 15. Estimated amount of contracts remaining to be executed on capital accounts and contingent liabilities: (Rs in Million) Particulars As at March 31, 2010 2009 Esti mated amount of contracts remaining to be executed on Capital account and not provided for 2,648 5,089 Contingent liabilities in respect of: a) Disputed demands for excise duty, customs duty, income tax, sales tax and other matters 1,384 872 b) Perf ormance and f i nanci al guarantees given by the Banks on behalf of the Company 13,760 6,103 c) Guarantees given by the Company on behalf of subsidiaries 3,748 4,493 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 financial statements of the Company. The Company’s Indian operations have been established as a Software Technology Park Unit under a plan formulated by the Government of India. As per the plan, the Company’s India operations have export obligations to the extent of 1.5 times the employee costs for the year on an annual basis and 5 times the amount of foreign exchange released for capital goods imported, 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 computer hardware previously imported duty free. As at March 31, 2010, the Company has met all commitments required under the plan. FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 107 16. Managerial Remuneration Computation of net profit in accordance with section 198 read with section 349 of the Companies Act, 1956 for the purpose of managerial remuneration is given below: (Rs in Million) Particulars For the year ended March 31, 2010 2009 Profit before taxation 56,888 35,479 Add: Depreciation as per accounts 5,797 5,337 Managerial Remuneration* 163 76 Provision for doubtful debts / advances 453 791 Less: Depreciation as per section 350 of the Companies Act, 1956 5,797 5,337 Bad debts written off 97 267 Profit on sale of investment/ fixed assets 330 721 Net profit for section 198 of the Companies Act, 1956 57,077 35,358 Commission payable to: Azim Premji, Chairman 65 5 Managerial remuneration comprises of: Salaries and allowances 61 58 Commission to Chairman 65 5 Pension Contribution 6 5 Contribution to Provident Fund 2 2 Perquisites 29 6 Total 163 76 Maximum allowable to wholetime/ managing directors (10%) 5,708 3,536 Commission payable to non whole time directors 19 15 Maximum allowed as per Companies Act, 1956 571 354 * The managerial remuneration includes remuneration payable to Mr Girish S Paranjpe, Mr Suresh Vaswani and Mr Suresh C Senapaty who were appointed as directors with effect from April 18, 2008. Managerial remuneration does not include provision for leave encashment and gratuity payable as, the same are actuarially determined for the Company as a whole and separate figures for them are not available. The managerial remuneration is based on the terms approved by the shareholders in the Annual General meeting held on July 21, 2009. The commission to Chairman is 0.3% of the incremental net profits over the previous year further adjusted as per the method approved by the Board of Governance and Compensation Committee. 17. 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 at March 31, 2010 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. (Rs in Million) Particulars For the year ended March 31, 2010 2009 The principal amount remaining unpaid to any supplier as at the end of each accounting year; 3 - The interest due remaining unpaid to any supplier as at the end of each accounting year; 2 - 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 111 9 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 2 - 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. - - 18. The list of balances with other banks in current account is given below. (Rs in Million) Name of the Bank Balances as at March 31, 2010 2009 Wells Fargo 13,648 13,648 HSBC 784 1,310 Bank of America 197 385 Bank of Montreal 96 88 Saudi British Bank 64 48 Standard Chartered Bank 89 46 RABO Bank, 222 22 Dresdner Bank 3 18 Citi Bank 136 17 Standard Bank 12 7 Bahrain Saudi Bank 21 3 Caja Madrid Bank 4 1 Merill Lynch 9 - US Bank 7 1 UniCredit Banca 4 - Total 15,251 15,594 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 108 Maximum balances during the year are given below. (Rs Million) Name of the Bank Maximum balance during the year ending March 31, 2010 2009 Wells Fargo 13,648 13,648 HSBC 2,486 1,497 Standard Chartered Bank 120 891 Bank of America 487 753 Bank of Montreal 153 274 US Bank 44 61 Saudi British Bank 69 48 RABO Bank, 510 47 UniCredit Banca 8 30 Bahrain Saudi Bank 27 29 Citi Bank 176 25 Merill Lynch 31 - Dresdner Bank 33 25 Caja Madrid Bank 26 11 Standard Bank 12 7 19. Borrowings The Company entered into an arrangement with a consortium of banks to obtain External Commercial Borrowings (ECB) during the year ended March 31, 2008. Pursuant to this arrangement the Company has availed ECB of approximately 35 billion Yen repayable in full in March 2013. 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. 20. The details of investment in subsidiaries and other investments are given below. Preference Shares (Fully paid up) (Rs in Million) Name of the subsidiary No. of shares Currency Face value As at March 31, 2010 2009 2010 2009 9% cumulative redeemable preference shares held in Wipro Trademarks Holding Limited 1,800 1,800 Rs. 10 - - Lornamead Personal Care Private Limited 5,720,764 - Rs. 10 57 - 57 - Equity shares (Fully paid up) (Rs in Million) Name of the subsidiary No. of shares Currency Face value As at March 31, 2010 2009 2010 2009 Wipro Consumer Care Limited 50,000 50,000 Rs. 10 1 1 Wipro Chandrika Limited 900,000 900,000 Rs. 10 7 7 Wipro Trademarks Holding Limited 93,250 93,250 Rs. 10 22 22 Wipro Travel Services Limited 66,171 66,171 Rs. 10 1 1 Wipro Technology Services Limited. 39,284,680 39,284,680 Rs 10 6,205 6,205 Wipro Holdings (Mauritius) Limited 30,448,318 30,448,318 USD 1 1,391 1,391 Wipro Australia Pty Limited 25,000 25,000 AUD 1 1 1 Wipro Inc 150,378 129,241 USD 2,500 16,101 13,631 Wipro Japan KK 650 650 JPY 50,000 10 10 Wipro Shanghai Limited not applicable 9 9 Wipro Cyprus Private Limited 148,319 139,092 Euro 1 33,215 29,784 3D Networks Pte Limited 28,126,108 28,126,108 Sing $ 1 1,271 1,271 Planet PSG Pte Limited 1,472,279 1,472,279 Sing $ 1 94 94 Cmango Pte Limited 2 2 USD 1 16 16 WMNETSERV Limited 24,000 24,000 USD 1 83 83 Spectramind Inc 175,000,000 175,000,000 USD 0.01 - - Wipro Chengdu Limited not applicable 24 - Wipro Airport IT Services Limited 3,700,000 - Rs. 10 37 - Lornamead Personal Care Private Limited 7,706,090 - Rs. 10 77 - 58,565 52,526 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 109 Investment in associates (Fully paid up) (Rs in Million) Particulars No. of shares Currency Face value As at March 31, 2010 2009 2010 2009 Wipro GE Healthcare Private Limited 5,150,597 4,900,000 Rs. 10 227 49 Other Investments – unquoted (Fully paid up) (Rs in Million) Particulars No. of shares/units Currency Face value As at March 31, 2010 2009 2010 2009 Debentures in Citicorp Finance (India) Limited 2,500 - Rs. 100,000 241 - Debentures in Citicorp Finance (India) Limited - 50 Rs. 5,000,000 - 250 Debentures in Morgan Stanley 500 - Rs. 1,000,000 481 - Equity shares in WeP Peripherals Limited 3,060,000 3,060,000 Rs. 10 41 41 Others 45 8 808 299 21. The details of Quoted- Current investments in money market mutual funds are given below. A) Closing position (Rs. in Million, except share numbers) Fund House Number of Units as at March 31, Balances as at March 31, 2010 2009 2010 2009 AIG Mutual Fund - 100,000 - 100 Birla Mutual Fund 150,477,088 136,705,372 1,524 1,424 DBS Cholamandalam Mutual Fund - 10,000,000 - 100 DWS Mutual Fund 56,560,196 20,000,000 567 200 DSP BlackRock Mutual Fund - 20,000,000 - 200 Fidelity Mutual Fund - 15,000,000 - 150 HDFC Mutual Fund - 203,104,025 - 2,196 HSBC Mutual Fund - 30,000,000 - 300 ING Mutual Fund - 17,000,000 - 171 J M Mutual Fund - 18,301 - - Kotak Mutual Fund 94,007,724 41,873,553 943 460 LIC Mutual Fund 812,696,841 12,181,604 11,196 120 Principal PNB Mutual Fund - 15,000,985 - 150 ICICI Prudential Mutual Fund 1,497,039 365,818,721 158 4,054 Reliance Mutual Fund 74,066,833 120,136,821 793 1,645 IDFC Mutual Fund 283,951,663 37,796,456 2,841 403 Sundaram BNP Paribas Mutual Fund - 5,005,952 - 50 Tata Mutual Fund - 20,000,000 - 200 Franklin Templeton Mutual Fund 517,125 93,217,555 521 1,271 UTI Mutual Fund 4,085 97,825,538 5 1,938 Total 1,473,778,594 1,260,784,883 18,548 15,132 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 110 B) Fundwise details of units purchased and sold during the year Fund House Purchased Redeemed 2010 2009 2010 2009 Fortis Mutual Fund (ABN) 300,366,144 530,361,805 300,366,144 560,426,853 AIG Mutual Fund - 78,699,116 100,000 78,599,116 Birla Mutual Fund 2,125,282,052 2,437,748,629 2,111,510,336 2,367,119,852 Can Liquid Mutual Fund - 107,972,817 - 107,972,817 DBS Cholamandalam Mutual Fund - 165,539,730 10,000,000 155,539,729 DWS Mutual Fund 334,293,147 628,326,890 297,732,952 626,271,668 DSP BlackRock Mutual Fund - 64,190,322 20,000,000 64,694,304 Fidelity Mutual Fund - 15,000,000 15,000,000 - HDFC Mutual Fund 2,834,429,983 2,899,292,008 3,037,534,008 2,745,308,330 HSBC Mutual Fund - 693,353,706 30,000,000 768,862,439 ING Mutual Fund - 260,088,099 17,000,000 323,088,099 J M Mutual Fund 88 185,589,816 18,388 276,671,370 JP MORGAN 80,668,938 98,295,900 80,668,938 98,295,900 Kotak Mutual Fund 1,609,283,936 938,320,062 1,557,149,765 967,968,579 LIC Mutual Fund 4,366,563,455 1,660,650,849 3,566,048,218 1,669,711,786 Religare Aegon Mutual Fund (Lotus) 149,062,198 717,391,159 149,062,198 828,982,154 Mirae Mutual Fund - 17,366,638 - 17,366,638 Principal PNB - 685,505,840 15,000,985 680,504,855 ICICI Prudential 5,954,564,798 7,910,627,877 6,318,886,480 7,630,801,899 Reliance Mutual Fund 2,981,569,371 1,652,581,512 3,027,639,358 1,657,631,850 SBI Mutual Fund - 337,168,112 - 372,893,376 IDFC Mutual Fund 1,078,183,112 955,005,227 832,027,904 1,002,324,255 Sundaram BNP Paribas Mutual Fund - 432,254,430 5,005,952 437,248,478 Tata Mutual Fund 125,058,296 906,944,031 145,058,296 1,017,437,787 Franklin Templeton Mutual Fund 1,318,500,362 1,885,717,603 1,411,200,792 1,937,165,381 UTI Mutual Fund 28,275,807 350,490,889 126,097,261 358,361,200 Total 23,286,101,687 26,614,483,067 23,073,107,975 26,751,248,715 22. Related party relationships and transactions The list of subsidiaries are : Direct Subsidiaries Step Subsidiaries Country of Incorporation Wipro Inc. USA Wipro Gallagher Solutions Inc USA Enthink Inc. USA Infocrossing Inc USA Infocrossing, LLC USA cMango Pte Limited Singapore Wipro Japan KK Japan Wipro Shanghai Limited China FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 111 Direct Subsidiaries Step Subsidiaries Country of Incorporation Wipro Trademarks Holding Limited India Cygnus Negri Investments Private Limited India Wipro Travel Services Limited India Wipro Consumer Care Limited India Wipro Holdings (Mauritius) Limited Mauritius Wipro Holdings UK Limited UK Wipro Technologies UK Limited UK BVPENTEBeteiligun gsverwaltung GmbH Austria New Logic Technologies GmbH Austria NewLogic Technologies SARL France 3D Networks (UK) Limited UK Wipro Cyprus Private Limited Cyprus Wipro Technologies S.A DE C.V Mexico Wipro BPO Philippines LTD. Inc Philippines Wipro Holdings Hungary Korlátolt Felelösségü Társaság Hungary Wipro Technologies Argentina SA Argentina Wipro Information Technology Egypt SAE Egypt Wipro Arabia Limited (a) Dubai Wipro Poland Sp Zoo Poland Wipro Information Technology Netherlands BV (Formely Retail Box BV) Netherlands Wipro Portugal S.A. (Formerly Enabler Informatics SA ) Portugal SAS Wipro France (Formerly Enabler France SAS) France Wipro Retail UK Limited (Formerly Enabler UK Ltd ) UK Wipro do Brazil Technologia Ltda (Formerly Enabler Brazil Ltda) Brazil Wipro Technologies Gmbh.(formely Enabler & Retail Consult Gmbh) Germany Wipro Technologies Limited, Russia Russia Wipro Technologies OY (formerly Saraware OY) Finland Wipro Infrastructure Engineering AB Sweden Wipro Infrastructure Engineering OY Finland Hydrauto Celka San ve Tic Turkey Wipro Technologies SRL Romania Wipro Singapore Pte Limited Singapore PT WT Indonesia Indonesia Unza Holdings Limited (A) Singapore Wipro Technocentre (Singapore) Pte Limited Singapore FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 112 Direct Subsidiaries Step Subsidiaries Country of Incorporation Wipro (Thailand) Co Limited Thailand Wipro Bahrain Limited WLL Bahrain Wipro Yardley FZE Dubai Wipro Australia Pty Limited Australia Wipro Networks Pte Limited (formerly 3D Networks Pte Limited) Singapore Planet PSG Pte Limited Singapore Planet PSG SDN BHD Malaysia Wipro Chengdu Limited China Wipro Chandrika Limited (b) India WMNETSERV Limited Cyprus WMNETSERV (UK) Ltd. UK WMNETSERV INC. USA Wipro Technology Services Limited India Wipro Airport IT Services Limited (c) India Lornamead Personal Care Private Limited India All the above subsidiaries are 100% held by the Company except the following: a) 66.67% held in Wipro Arabia Limited b) 90% held in Wipro Chandrika Limited c) 74% held in Wipro Airport IT Services Limited (A) Step Subsidiary details of Unza Holdings Limited are as follows : Step subsidiaries Step subsidiaries Country of Incorporation Unza Company Pte Ltd Singapore Unza Indochina Pte Ltd Singapore Unza Vietnam Co., Ltd Vietnam Unza Cathay Ltd Hong Kong Unza China Ltd Hong Kong Dongguan Unza Consumer Products Ltd. China PT Unza Vitalis Indonesia Unza Thailand Limited Thailand Unza Overseas Ltd British virgin islands Unza Africa Limited Nigeria Unza Middle East Ltd British virgin islands Unza International Limited British virgin islands Positive Equity Sdn Bhd Malaysia Unza Nusantara Sdn Bhd Malaysia Unza Holdings Sdn Bhd Malaysia Unza Malaysia Sdn Bhd Malaysia UAA (M) Sdn Bhd Malaysia Manufacturing Services Sdn Bhd Malaysia Shubido Pacific Sdn Bhd (a) Malaysia Gervas Corporation Sdn Bhd Malaysia Gervas (B) Sdn Bhd Malaysia Formapac Sdn Bhd Malaysia FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 113 a) All the above subsidiaries are 100% held by the Company except Shubido Pacific Sdn Bhd in which the holding is 62.55% Name of the other related party Nature % of holding Country of Incorporation Wipro Equity Reward Trust Trust Fully controlled trust India Wipro Inc Trust Trust Fully controlled trust USA Wipro GE Healthcare Private Limited Associate 49% India Azim Premji Foundation Entity controlled by Director Hasham Premji (partnership firm) Entity controlled by Director Prazim Traders (partnership firm) Entity controlled by Director Zash Traders (partnership firm) Entity controlled by Director Regal Investment & Trading Company Private Limited Entity controlled by Director Vidya Investment & Trading Company private Limited Entity controlled by Director Napean Trading & Investment Company Private Limited Entity controlled by Director Key management personnel Azim Premji Chairman and Managing Director Suresh C Senapaty Chief Financial Officer & Director Suresh Vaswani Jt CEO, IT Business & Director Girish S Paranjpe Jt CEO, IT Business & Director Relative of key management personnel Rishad Premji Relative of the director The Company has the following related party transactions: (Rs in Million) Transaction / Balances Subsidiaries/ Trusts Associates Entities controlled by Directors Key Management Personnel@ 2010 2009 2010 2009 2010 2009 2010 2009 Sales of services 4,967 5,295 7 15 - - - - Sale of goods - 369 - - 1 1 - - Purchase of services 3,541 2,223 - - - - - - Purchase of goods 35 18 - - - - - - Dividend received 5 5 Dividend payable 33# 36# - - 6,661 4,418 344 234 Interest income 27 16 Others 94 208 33 36 - - - - Balances as on March 31, Receivables 9,721* 7,448* 1 - - - - - Payables 1,808 1,009 - - 6,663 4,418 388 238 # Represents dividend payable to Wipro Inc Trust and Wipro Equity Reward Trust. @ Including relative of key management personnel. FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 114 Remuneration to key management personnel and relative of key management personnel is summarized below: (Rs. in Million) Name For the year ended March, 31 2010 2009 Azim Premji 81 14 Suresh Senapaty 31 21 Girish Paranjpe 20 20 Suresh Vaswani 31 21 Rishad Premji 4 3 * Includes the following balances being in the nature of loans given to subsidiaries of the Company including interest accrued, where applicable. (Rs. in Million) Name of the entity As at March 31, 2010 2009 Wipro Cyprus Private Limited 1,569 1,176 Wipro Chandrika Limited 367 285 Wipro Singapore Pte Limited 22 22 Wipro Holdings (Mauritius) Limited 3 2 Wipro Consumer Care Limited 2 2 The following are the significant transactions during the year ended March 31, 2010 and 2009: (Rs. in Million) Name of the entity Sale of services Sale of goods Purchase of services Purchase of goods 2010 2009 2010 2009 2010 2009 2010 2009 Wipro Inc 3,519 3,737 - - 254 202 - - Wipro Japan KK - - - - 186 259 - - Wipro Shanghai Limited 108 79 - - 112 150 - - Wipro Technologies Gmbh. 44 - - - 1 - - - Unza Holdings Limited - 117 - - - - 35 18 Wipro Portugal S. A. 536 29 - - 1,369 699 - - New Logic Technologies GmbH 97 114 - - 77 - - - Wipro Technologies S.A DE C.V 68 136 - - 37 - - - Wipro Technocentre (Singapore) Pte Limited 33 - - - - - - - Wipro Information Technology, Netherlands BV 136 - - - - - - - Wipro Technologies Limited, Russia 23 - - - - - - - Wipro Technologies OY 65 - - - 297 - - - Wipro Gallagher Solutions Inc 60 - - - 15 - - - Wipro Holdings UK Limited 222 - - - - - - - Wipro Arabia - 81 - 369 - - - - FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 115 23. 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’). Income from STPs is eligible for 100% deduction for the earlier of 10 years commencing from the fiscal year in which the unit commences operations or March 31, 2011. The Company also has operations in Special Economic Zones (SEZ’s). 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. 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 Rs. 195 Million (March 31, 2009: Rs. 126 Million) is included under ‘Loans and Advances’ in the balance sheet as of March 31, 2010. i) Provision for tax has been allocated as follows: (Rs in Million) Particulars For the year ended March 31, 2010 2009 Net Current tax 7,679 5,395 Deferred tax 229 (60) Fringe benefit tax - 406 Total income taxes 7,908 5,741 Current tax provision includes reversal of tax provision in respect of earlier periods no longer required amounting to Rs 476 Million for the year ended March 31, 2010 (2009: Rs 369 Million). ii) The components of the net deferred tax asset are as follows: (Rs in Million) Particulars As of March 31, 2010 2009 Fixed assets (549) (328) Accrued expenses and liabilities 644 687 Allowances for doubtful debts 253 234 Others - (16) Net deferred tax assets 348 577 24. The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with the accounting standard 17, Segment Reporting, the company has disclosed the segment information in the consolidated financial statements. 25. Corresponding figures for previous periods presented have been regrouped, where necessary, to conform to the current period classification. 26. Additional Information Schedule VI. FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 116 QUANTITATIVE INFORMATION PURSUATNT TO SCHEDULE VI i) Licensed / registered / installed capacities Licensed Capacity** Installed capacity @ 31-Mar-10 31-Mar-09 31-Mar-10 31-Mar-09 Vanaspati / Hydrogenated oils T P A * NA NA 45,000 45,000 Toilet Soaps T P A * NA NA 128,430 72,084 Leather shoe uppers 000s NA NA 750 750 Fatty acids T P A * NA NA 68,650 68,650 Glycerine T P A * NA NA 1,000 1,000 General lighting systems lamps 000s NA NA 110,305 110,300 Tube light shells 000s NA NA - - Fluorescent tube lights 000s NA NA 27,097 27,096 Compact flourescent lamps 000s NA NA 14,595 14,595 Mini computers / micro processor based systems and data communication systems N P A # NA NA 691,200 691,200 Hydraulic and Pneumatic tubes N P A # NA NA 649,320 609,120 Tipping Gear systems N P A # NA NA 35,000 35,000 @ Installed capacities are as per certificate given by management on which auditors have relied. * TPA indicates tons per annum # NPA indicates nos. per annum ** The company is exempt from the licensing provisions of the Industries (Development Regulation) Act, 1951. ii) Production 31-Mar-10 31-Mar-09 Unit Quantity Quantity Mini computers/micro processor based systems and data communication systems Nos. 224,744 204,939 Toilet soaps Tons 64,486 53,777 Vanaspati / hydrogenated oils Tons 4,714 4,398 Shoe uppers 000s 97 166 Fluorescent tube lights 000s 6,084 6,261 Fatty acids Tons 41,788 32,857 Glycerine Tons 1,309 868 Hydraulic and pneumatic tubes Nos. 301,323 263,404 Tipping Gear systems Nos. 14,532 13,239 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 117 iii) Sales 31-Mar-10 31-Mar-09 Unit Quantity Rs. in Mn Quantity Rs. in Mn Software services - 176,740 - 157,355 Mini computers / micro processor based systems and data communication systems Nos. 224,886 18,496 204,242 28,167 IT enabled services - 16,836 - 15,126 Toilets soaps (a) Tons 63,376 7,479 54,682 6,350 Vanaspati / hydrogenated oils Tons 4,767 235 4,398 252 Shoe uppers 000s 97 38 166 77 Glycerine Tons 321 11 570 34 Lighting products (b) - 1,570 - 1,282 Reagent Kits/ Spares of Analytical instruments (b) - - - - Hydraulic and Pneumatic equipment 305,348 3,761 265,126 2,977 Tipping Gear Systems 14,532 290 13,239 328 Spares/components for Tippers/cylinders - - - 80 Others (b) - 4,607 - 4,099 Total - 2,30,063 - 216,128 Less: Excise Duty - 843 - 1,055 Total - 229,220 - 215,072 (a) Includes samples and shortages (b) It is not practicable to give quantitative information in the absence of common expressible unit. iv) Closing stocks 31-Mar-10 31-Mar-09 Unit Quantity Rs in Mn Quantity Rs in Mn Mini computers / micro processor based systems and data communication systems * Nos. 3,228 2,269 3,370 1,339 Toilets soaps Tons 2,452 135 1,842 107 Lighting products * - 207 - 106 Hydraulic and Pneumatic equipment 11,838 70 15,863 110 Others (b) - 52 - 172 - 2,733 - 1,834 Closing stock of traded goods - 325 - 144 Total - 3,058 - 1,978 * Includes traded products; bifurcation between manufactured and traded products not practicable. (b) It is not practicable to give quantitative information in the absence of common expressible unit. v) Purchases for trading 31-Mar-10 31-Mar-09 Quantity Rs in Mn Quantity Rs in Mn Computer units/printers/software products* - 27,625 - 23,783 Lighting products * - 580 - 408 Spares/ components / seal kits for cylinders & tippers * - 97 - 77 Others * - 2,826 - 1,947 31,128 26,215 *It is not practicable to give quantitative information in the absence of common expressible unit. FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 118 viii) Value of imports on CIF basis (Rs. in million) 31-Mar-10 31-Mar-09 (Does not include value of imported items locally purchased) Raw materials, components and peripherals 17,484 9,137 Stores and spares 43 13 Capital goods 715 244 18,242 9,394 ix) Activities in foreign currency (Rs. in million) 31-Mar-10 31-Mar-09 a) Expenditures Traveling and onsite allowance 49,093 51,218 Interest 853 1,906 Royalty 518 - Professional fees 6,458 6,257 Subcontracting charges 5,858 5,585 Dividend * 95 93 Others 8,864 5,290 71,739 70,349 b) Earnings Export of goods on F.O.B basis 4,186 5,958 Services 163,390 159,963 Agency commission 353 308 168,469 166,229 * Amount remitted in foreign currency on account of payment of dividend vi) Raw Material consumed 31-Mar-10 31-Mar-09 Unit Quantity Rs in Mn Quantity Rs in Mn Peripherals/Components for computers* - 3,052 - 2,153 Oil and fats Tons 53,871 1,870 45,994 1,904 Tubes Mts 276,936 470 194,836 325 Rounds and rods Tons 7,548 323 4,949 237 Casting and forging Nos 190,306 102 169,534 93 Bearings, seals and wipers Nos 9,032,671 183 8,030,606 235 Others * 3,892 2,875 9,892 7,822 *It is not practicable to give quantitative information in the absence of common expressible unit. vii) Value of imported and indigenous materials consumed 31-Mar-10 31-Mar-09 % Rs. in Mn % Rs. in Mn Raw Materials Imported 37 3,644 45 3,520 Indigenous 63 6,248 55 4,302 100 9,892 100 7,822 Stores and Spares Imported 4 16 3 18 Indigenous 96 368 97 333 100 384 100 351 Dividend remitted in foreign currencies 31-Mar-10 31-Mar-09 Net amount remitted (in Rs million) 95 93 Number of shares held by non-resident shareholders 23,799,222 23,271,010 No of foreign shareholders 1 Financial year to which dividend relates 2008-09 2007-08 FINANCIAL STATEMENTS OF WIPRO LIMITED - STANDALONE 119 ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956 BALANCE SHEET ABSTRACT AND THE COMPANY’S GENERAL BUSINESS PROFILE I. Registration Details CIN L32102KA1945PLC020800 Registration No. 20800 State Code 08 Balance Sheet Date 31st March 2010 II. Capital raised during the year (Rs. in Million) Public issue Nil Bonus issue Nil Rights issue Nil Private Placement Nil Issue of shares on exercise of Employee Stock Options 5.4 American Depository Offering 1.0 III. Position of mobilisation of and deployment of funds (Rs. in Million) Total Liabilities 232,224 Total Assets 232,224 Sources of funds Application of Funds Paid-up capital 2,936 Goodwill 447 Share application money pending Net Fixed Assets 46,027 allotment 18 Investments 89,665 Reserves and Surplus 173,968 Deferred tax assets 348 Secured Loans - Net Current Assets 95,737 Unsecured Loans 55,302 IV. Performance of the Company (Rs. in Million) Turnover 237,973 Total Expenditure 181,085 Profit before Tax 56,888 Profit after Tax 48,980 Earnings per share (basic) 33.61 Dividend 300% V. Generic names of three principal products/services of the Company (as per monetary terms) i) Item code no (ITC Code) 84713010 Product description Personal Computer ii) Item code no (ITC Code) 85249113 Product description I.T. Software iii) Item code no (ITC Code) 15162011 Product description Vegetable fats and oils (Edible Grade) As per our report attached for BSR & Co., Chartered Accountants FirmRegistration number: 101248W Akeel Master Partner Membership No. 046768 Bangalore April 23, 2010 For and on behalf of the Board of Directors Azim Premji Girish S. Paranjpe Suresh C. Vaswani Suresh C. Senapaty Chairman Joint CEO, IT Business Joint CEO, IT Business Chief Financial Officer & Director & Director & Director B. C. Prabhakar V. Ramachandran Director CompanySecretary CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 120 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 at March 31, 2010, the consolidated profit and loss account and the consolidated 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 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 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. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements and Accounting Standard (AS) 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 4 of the Notes to Accounts that describes the early adoption by the Company of Accounting Standard (AS) 30, Financial Instruments: Recognition and Measurements, along with limited revisions to other accounting standards, issued by the Institute of Chartered Accountants of India. AS 30, along with limited revisions to the other accounting standards, have not currently been notified by the National Advisory Council for Accounting Standards (NACAS) pursuant to the Companies (Accounting Standards) Rules, 2006 as per Section 211(3C) of the Companies Act, 1956. Had the Company not early adopted AS 30 and the related limited revisions, profit after taxation for the year ended March 31, 2010 would have been higher by Rs 1,736 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 at March 31, 2010; (b) in the case of the consolidated profit and loss account, 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 number: 101248W Akeel Master Partner Membership No. 046768 Bangalore April 23, 2010 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 121 CONSOLIDATED BALANCE SHEET As per our report attached for BSR & Co., Chartered Accountants FirmRegistration number: 101248W Akeel Master Partner Membership No. 046768 Bangalore April 23, 2010 For and on behalf of the Board of Directors Azim Premji Girish S. Paranjpe Suresh C. Vaswani Suresh C. Senapaty Chairman Joint CEO, IT Business Joint CEO, IT Business Chief Financial Officer & Director & Director & Director B. C. Prabhakar V. Ramachandran Director CompanySecretary (Rsin Million) Asof March 31, Schedule 2010 2009 SOURCES OF FUNDS Shareholders’ Funds Share capital 1 2,934 2,928 Share application money pending allotment 18 15 Reserves and surplus 2 179,491 133,356 182,443 136,299 Loan Funds Secured loans 3 2,119 1,858 Unsecured loans 4 60,394 55,034 62,513 56,892 Minority interest 437 236 245,393 193,427 APPLICATION OF FUNDS Goodwill 53,346 56,521 Fixed Assets And Intangible Assets Gross block 5 86,253 75,353 Less: Accumulated depreciation and amortisation 42,314 36,342 Net block 43,939 39,011 Capital work-in-progress and advances 12,355 13,552 56,294 52,563 Investments 6 34,060 18,096 Deferred Tax Asset (Net) 18(13) 254 684 Current Assets, LoansAnd Advances Inventories 7 7,926 7,587 Sundry debtors 8 51,150 50,370 Cash and bank balances 9 64,878 49,117 Loans and advances 10 58,175 43,573 182,129 150,647 Less: Current Liabilitiesand Provisions Liabilities 11 57,342 66,469 Provisions 12 23,348 18,615 80,690 85,084 Net Current Assets 101,439 65,563 245,393 193,427 Notes to accounts 18 The schedules referred to above form an integral part of the consolidated balance sheet CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 122 CONSOLIDATED PROFIT AND LOSS ACCOUNT As per our report attached for BSR & Co., Chartered Accountants FirmRegistration number: 101248W Akeel Master Partner Membership No. 046768 Bangalore April 23, 2010 For and on behalf of the Board of Directors Azim Premji Girish S. Paranjpe Suresh C. Vaswani Suresh C. Senapaty Chairman Joint CEO, IT Business Joint CEO, IT Business Chief Financial Officer & Director & Director & Director B. C. Prabhakar V. Ramachandran Director CompanySecretary (Rsin Million, except sharedata) Year ended March 31, Schedule 2010 2009 INCOME Gross sales and services 272,972 258,050 Less: Excise duty 843 1,055 Net sales and services 272,129 256,995 Other income, net 13 4,376 2,621 276,505 259,616 EXPENDITURE Cost of sales and services 14 185,649 179,246 Selling and marketing expenses 15 19,147 17,796 General and administrative expenses 16 15,382 14,978 Interest 17 1,232 2,400 221,410 214,420 PROFIT BEFORE TAXATION 55,095 45,196 Provision for taxation including fringe benefit tax 18(13) 9,163 6,460 Profit beforeminority interest / sharein earningsof associates 45,932 38,736 Minority interest (185) (99) Share in earnings of associates 563 362 PROFIT FOR THE PERIOD 46,310 38,999 Appropriations Proposed dividend 8,809 5,860 Tax on dividend 1,283 996 TRANSFER TO GENERAL RESERVE 36,218 32,143 EARNINGS PER SHARE - EPS 18(16) Equity shares of par value Rs. 2/- each Basic (in Rs.) 31.78 26.81 Diluted (in Rs.) 31.56 26.72 Number of shares for calculating EPS Basic 1,457,421,994 1,454,662,502 Diluted 1,467,298,404 1,459,352,869 Notes to accounts 18 The schedules referred to above form an integral part of the consolidated profit and loss account CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 123 CONSOLIDATED CASH FLOW STATEMENT As per our report attached for BSR & Co., Chartered Accountants FirmRegistration number: 101248W Akeel Master Partner Membership No. 046768 Bangalore April 23, 2010 For and on behalf of the Board of Directors Azim Premji Girish S. Paranjpe Suresh C. Vaswani Suresh C. Senapaty Chairman Joint CEO, IT Business Joint CEO, IT Business Chief Financial Officer & Director & Director & Director B. C. Prabhakar V. Ramachandran Director CompanySecretary (Rs. in Million) Year Ended March 31, 2010 2009 A. Cash flowsfrom operatingactivities: Profit before tax 55,095 45,196 Adjustments: Depreciation and amortisation 7,543 6,864 Amortisation of stock compensation expense 1,317 1,767 Exchange differences - net (1,394) 3,702 Impact of cash flow and net investment hedges 6,017 (12,196) Interest on borrowings 1,232 2,400 Dividend / interest income - net (4,052) (3,664) (Profit) / loss on sale of investments - net (308) (681) Gain on sale of fixed assets - net (43) (28) Working capital changes : Sundry debtors and unbilled (4,724) (13,766) Loans and advances (2,203) (1,622) Inventories (218) (922) Current liabilities and provisions 650 16,233 Net cash generated from operations 58,912 43,283 Direct taxes (paid)/refund-net (7,914) (7,184) Net cash generated by operating activities 50,998 36,099 B. Cash flowsfrom investingactivities: Acquisition of fixed assets (including capital advances) (11,029) (16,746) Proceeds from sale of fixed assets 397 358 Advance / lease transactions (1,950) - Purchase of investments (340,891) (342,717) Proceeds from sale / maturity of investments 325,770 341,687 Investment in inter-corporate deposits (10,750) (3,750) Refund of inter-corporate deposits 4,950 - Payment for acquisition of businesses, net of cash acquired (4,051) (6,679) Dividend / interest income received 3,739 3,664 Net cash (used in)/generated by investing activities (33,815) (24,183) C. Cash flowsfrom financingactivities: Proceeds from exercise of employee stock options 7 63 Share application money pending allotment 3 15 Interest paid on borrowings (1,194) (2,400) Dividends paid (including distribution tax) (6,823) (6,829) Repayment of borrowings / loans (55,664) (80,229) Proceeds from borrowings / loans 63,430 86,648 Proceeds from issuance of shares by subsidiary 77 - Net cash (used in)/generated by financing activities (164) (2,732) Net (decrease) / increase in cash and cash equivalents during the period 17,019 9,184 Cash and cash equivalents at the beginning of the period 49,117 39,270 Effect of exchange rate changes on cash balance (1,258) 663 Cash and cash equivalents at the end of the period 64,878 49,117 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 124 SCHEDULES TO CONSOLIDATED BALANCE SHEET (Rs. in Million, except sharedata) Asof March 31, 2010 2009 SCHEDULE 1 SHARE CAPITAL Authorised capital 1,650,000,000 (2009: 1,650,000,000) equity shares of Rs 2 each 3,300 3,300 25,000,000 (2009: 25,000,000) 10.25 % redeemable cumulative preference shares of Rs. 10 each 250 250 3,550 3,550 Issued, subscribed and paid-up capital [Refer note 18 (2)] 1,468,211,189 (2009: 1,464,980,746) equity shares of Rs 2 each 2,936 2,930 Less: 968,803 (2009: 968,803) equity shares issued to and held by controlled trust (2) (2) 2,934 2,928 SCHEDULE 2 RESERVES AND SURPLUS Capital reserve Balance brought forward from previous year 1,144 1,144 Addition during the period - - 1,144 1,144 Securitiespremium account Balance brought forward from previous year 27,279 25,373 Add: Shares issued to controlled trust - 540 Add: Exercise of stock options by employees 1,909 1,366 29,188 27,279 Less: Shares issued to controlled trust [Refer note 18(2)] (540) (540) 28,648 26,739 Translation reserve Balance brought forward from previous year 1,233 (10) Movement during the period (1,015) 1,243 218 1,233 Restricted stock unitsreserve[Refer note 18(12)] Employee stock options outstanding 4,366 6,693 Less: Deferred employee compensation expense 2,643 4,380 1,723 2,313 General reserve Balance brought forward from previous year 118,813 86,764 Additions [Refer note 18 (3) (ii)] 33,899 32,049 152,712 118,813 Hedgingreserve[Refer note 18(5)] Balance brought forward from previous year (16,886) (1,097) Movement during the period 11,932 (15,789) Unrealised losson cash flowhedgingderivatives, net (4,954) (16,886) Summary of reservesand surplus Balance brought forward from previous year 133,356 113,991 Movement during the period 46,135 19,365 179,491 133,356 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 125 SCHEDULES TO CONSOLIDATED BALANCE SHEET (Rs. in Million) Asof March 31, 2010 2009 SCHEDULE 3 SECURED LOANS Term loans 1 164 233 Cash credit 1 1,243 643 Finance lease obligation 2 712 982 2,119 1,858 1 Term loans and cash credit facility are secured by hypothecation of stock-in-trade, book debts, immovable/movable properties and other assets. 2 Secured by underlying assets. SCHEDULE 4 UNSECURED LOANS External commercial borrowings 16,844 18,052 Borrowing from banks 40,595 35,829 Others 2,955 1,153 60,394 55,034 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 126 S C H E D U L E S T O C O N S O L I D A T E D B A L A N C E S H E E T S C H E D U L E 5 F I X E D A S S E T S & I N T A N G I B L E A S S E T S ( R s i n M i l l i o n ) P A R T I C U L A R S G R O S S B L O C K A C C U M U L A T E D D E P R E C I A T I O N A N D A M O R T I S A T I O N N E T B L O C K A s o f A p r i l 1 , 2 0 0 9 A d d i t i o n s E f f e c t o f T r a n s a l a t i o n * D e d u c t i o n s A s o f M a r c h 3 1 , 2 0 1 0 A s o f A p r i l 1 , 2 0 0 9 D e p r e c i a t i o n a n d a m o r t i s a t i o n f o r t h e p e r i o d E f f e c t o f T r a n s a l a t i o n * D e d u c t i o n s / a d j u s t m e n t s A s o f M a r c h 3 1 , 2 0 1 0 A s o f M a r c h 3 1 , 2 0 1 0 A s o f M a r c h 3 1 , 2 0 0 9 ( a ) T a n g i b l e f i x e d a s s e t s L a n d ( i n c l u d i n g l e a s e h o l d ) 4 , 0 5 2 6 6 ( 8 ) - 4 , 1 1 0 1 9 9 7 ( 1 ) - 1 1 5 3 , 9 9 5 4 , 0 3 3 B u i l d i n g s 1 5 , 3 2 9 4 , 0 7 0 ( 1 3 0 ) ( 5 5 ) 1 9 , 2 1 4 1 , 6 5 9 4 1 3 ( 5 8 ) 1 2 , 0 1 5 1 7 , 1 9 9 1 3 , 6 7 0 P l a n t & m a c h i n e r y # 4 2 , 0 3 7 6 , 6 8 5 ( 1 , 1 2 6 ) ( 5 9 0 ) 4 7 , 0 0 6 2 7 , 1 7 8 5 , 3 2 3 ( 7 1 7 ) ( 3 4 7 ) 3 1 , 4 3 7 1 5 , 5 6 9 1 4 , 8 5 9 F u r n i t u r e , fi x t u r e a n d e q u i p m e n t s 8 , 1 6 0 1 , 9 2 7 ( 4 9 ) ( 1 7 7 ) 9 , 8 6 1 4 , 6 1 9 1 , 0 7 2 ( 3 0 ) ( 1 1 8 ) 5 , 5 4 3 4 , 3 1 8 3 , 5 4 1 V e h i c l e s 2 , 8 6 4 4 6 2 ( 4 ) ( 3 8 1 ) 2 , 9 4 1 1 , 7 5 9 5 1 3 7 ( 2 6 0 ) 2 , 0 1 9 9 2 2 1 , 1 0 5 ( b ) I n t a n g i b l e f i x e d a s s e t s T e c h n i c a l k n o w - h o w 3 8 4 3 0 ( 3 7 ) - 3 7 7 3 8 4 2 ( 3 7 ) 6 3 5 5 2 2 - B r a n d s , p a t e n t s , t r a d e m a r k s a n d r i g h t s * * 2 , 5 2 7 3 5 4 ( 1 3 7 ) - 2 , 7 4 4 7 2 4 1 2 3 ( 1 9 ) 2 8 3 0 1 , 9 1 4 1 , 8 0 3 7 5 , 3 5 3 1 3 , 5 9 4 ( 1 , 4 9 1 ) ( 1 , 2 0 3 ) 8 6 , 2 5 3 3 6 , 3 4 2 7 , 5 4 3 ( 8 5 5 ) ( 7 1 6 ) 4 2 , 3 1 4 4 3 , 9 3 9 3 9 , 0 1 1 P r e v i o u s y e a r - 3 1 M a r c h 2 0 0 9 @ 5 6 , 2 8 0 1 7 , 6 0 7 2 , 2 6 5 ( 7 9 9 ) 7 5 , 3 5 3 2 8 , 0 6 7 6 , 8 6 4 1 , 2 1 2 1 9 9 3 6 , 3 4 2 3 9 , 0 1 1 * R e p r e s e n t s t r a n s l a t i o n o f fi x e d a s s e t s o f n o n - i n t e g r a l o p e r a t i o n s i n t o I n d i a n R u p e e # P l a n t a n d m a c h i n e r y i n c l u d e s c o m p u t e r s a n d c o m p u t e r s o f t w a r e * * B r a n d s m a r k s i n c l u d e R s 3 4 8 r e l a t e d t o Y a r d l e y a c q u i s i t i o n m a d e d u r i n g t h e y e a r e n d e d 3 1 M a r c h 2 0 1 0 @ A d d i t i o n s i n c l u d e G r o s s B l o c k o f R s 8 5 9 a n d a d j u s t m e n t s i n c l u d e A c c u m u l a t e d d e p r e c i a t i o n o f R s 6 1 3 i n r e s p e c t o f a s s e t s o f e n t i t i e s a c q u i r e d d u r i n g t h e y e a r e n d e d 3 1 M a r c h 2 0 0 9 . I n t e r e s t c a p i t a l i s e d w a s R s 9 5 a n d R s 3 1 4 f o r t h e y e a r e n d e d 3 1 M a r c h 2 0 1 0 a n d 2 0 0 9 r e s p e c t i v e l y . CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 127 SCHEDULES TO CONSOLIDATED BALANCE SHEET (Rs. in Million) Asof March 31, 2010 2009 SCHEDULE 6 INVESTMENTS Longterm - unquoted Investment in associates[Refer note 18(6)] Wipro GE Healthcare Private Limited 3 2,378 1,670 2,378 1,670 Current investments- quoted [Refer note 18(21)] Investments in Indian money market mutual funds 19,147 15,136 Current investments- unquoted[Refer note 18(21)] Certificates of deposit 11,088 947 Other investments[Refer note 18(21)] 1,447 343 31,682 16,426 34,060 18,096 Aggregate market value of quoted investments and mutual funds 19,156 15,211 3 Equity investments in this company carry certain restrictions on transfer of shares as provided for in the shareholders’ agrements. SCHEDULE 7 INVENTORIES Finished goods 3,937 3,696 Raw materials 2,212 2,448 Stock in process 776 695 Stores and spares 1,001 748 7,926 7,587 SCHEDULE 8 SUNDRY DEBTORS Unsecured Debtsoutstandingfor aperiod exceedingsix months Considered good 6,858 5,832 Considered doubtful 2,283 1,433 9,141 7,265 Other debts Considered good 44,292 44,538 Considered doubtful 44 486 53,477 52,289 Less: Provision for doubtful debts 2,327 1,919 51,150 50,370 SCHEDULE 9 CASH AND BANK BALANCES Balances with bank: In current account 23,608 22,264 In deposit account 40,723 26,173 Cash and cheques on hand 547 680 [Refer note 18(20)] 64,878 49,117 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 128 SCHEDULES TO CONSOLIDATED BALANCE SHEET (Rs. in Million) Asof March 31, 2010 2009 SCHEDULE 10 LOANS AND ADVANCES (Unsecured, considered good unlessotherwisestated) Advancesrecoverablein cash or in kind or for valueto bereceived Considered good - Prepaid expenses 4,781 3,986 - Advance to suppliers 584 706 - Employee travel & other advances 1,524 1,359 - Others 3,103 3,217 9,992 9,268 Considered doubtful 297 160 10,289 9,428 Less: Provision for doubtful advances 297 160 9,992 9,268 Other deposits 1,780 1,586 Derivative assets 3,903 1,421 Finance lease receivables 4,442 3,605 Advance income taxes 10,383 8,481 Inter corporate deposits 10,050 4,250 Balances with excise and customs 917 854 Unbilled revenues 16,708 14,108 58,175 43,573 SCHEDULE 11 LIABILITIES Accrued expenses 19,615 21,110 Statutory liabilities 4,001 3,455 Sundry creditors 19,133 19,081 Unearned revenues 7,462 8,734 Advances from customers 1,786 824 Derivative liabilities 4,385 12,257 Unclaimed dividends 17 17 Others 943 991 57,342 66,469 SCHEDULE 12 PROVISIONS Employee retirement benefits 2,967 3,111 Warranty 611 768 Provision for tax 7,915 6,493 Proposed dividend 8,809 5,860 Tax on proposed dividend 1,283 996 Others 1,763 1,387 23,348 18,615 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 129 SCHEDULES TO CONSOLIDATED PROFIT & LOSS ACCOUNT (Rsin Million) Year ended March 31, 2010 2009 SCHEDULE 13 OTHER INCOME, NET Incomefrom current investments - Dividend on mutual fund units 1,442 2,265 - Profit/ (loss) on sale of investments 308 681 Interest on debt instruments and others 2,610 1,964 Exchange differences, net (716) (1,553) Exchange fluctuations on foreign currency borrowings, net 174 (1,465) Miscellaneous income/(expense) 558 729 4,376 2,621 SCHEDULE 14 COST OF SALES AND SERVICES Employee compensation 90,356 91,293 Raw materials, finished and process stocks consumed 50,376 45,770 Sub contracting / technical fees / third party application 16,000 14,184 Travel 5,830 6,684 Depreciation and amortisation 6,935 6,367 Repairs 4,011 3,142 Communication 2,779 2,610 Power and fuel 1,797 1,863 Outsourced technical services 1,348 1,442 Rent 2,033 1,667 Stores and spares 709 629 Insurance 356 372 Rates and taxes 276 313 Miscellaneous expenses 2,843 2,910 185,649 179,246 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 130 SCHEDULES TO CONSOLIDATED PROFIT & LOSS ACCOUNT (Rsin Million) Year ended March 31, 2010 2009 SCHEDULE 15 SELLING AND MARKETING EXPENSES Employee compensation 9,130 8,982 Advertisement and sales promotion 4,831 3,470 Travel 858 1,037 Carriage and freight 1,083 1,005 Sales commission 885 886 Rent 466 477 Communication 378 396 Conveyance 144 157 Depreciation and amortisation 265 265 Repairs 109 123 Insurance 54 26 Rates and taxes 38 59 Miscellaneous expenses 906 913 19,147 17,796 SCHEDULE 16 GENERAL AND ADMINISTRATIVE EXPENSES Employee compensation 7,759 6,790 Travel 1,232 1,435 Legal and professional charges 1,593 1,502 Repairs and mantainance 900 780 Provision for doubtful debts 566 939 Staff recruitment 485 411 Manpower outside services 232 264 Depreciation and amortisation 343 232 Rates and taxes 160 72 Insurance 148 125 Rent 563 382 Auditors’ remuneration 26 23 Miscellaneous expenses 1,375 2,023 15,382 14,978 SCHEDULE 17 INTEREST Cash credit and others 1,232 2,400 1,232 2,400 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 131 Index of Notesto Accounts NoteReference PageNo. Significant Accounting Policies .......................................................................................................... 1 132-135 Equity Shares, Reserves, Financial Instruments ......................................................................... 2, 3, 4 136 Financial Instruments, Equity in Affiliate ...................................................................................... 5, 6 137 Merger and Acquisition ...................................................................................................................... 7 137-138 Sale of financial assets ......................................................................................................................... 8 138 Leases ............................................................................................................................................. 9, 10 138-139 Employee Benefit Plans ..................................................................................................................... 11 139-140 Employee Stock Options ................................................................................................................... 12 140-141 Income Taxes ..................................................................................................................................... 13 141 Tax Demands ..................................................................................................................................... 14 141-142 Provisions, Computation of Equity Shares ................................................................................. 15, 16 142 List of Subsidiaries ............................................................................................................................. 17 143-145 Related Party Relationships and Transactions .................................................................................. 18 145-146 Contingencies .................................................................................................................................. 19 146 Segment Information ........................................................................................................................ 20 146-149 Cash and Bank .................................................................................................................................. 21 149 Investments ....................................................................................................................................... 22 150 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 132 SCHEDULE 18 – NOTES TO ACCOUNTS Company overview Wipro Limited (Wipro or the Parent), together with its subsidiaries and associates (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. 1. Significant accountingpolicies i. Basis of preparation of financial statements The consolidated financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention and 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 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 inter-company balances / transactions and resulting unrealized gain / loss. 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 and expenses. 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. Fixed assets, intangible assets and capital work-in-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. Advances paid towards the acquisition of fixed assets outstanding as of each balance sheet date and the cost of fixed assets not ready for use before such date are disclosed under capital work-in-progress. v. Investments Long term investments (other than investment in associate) are stated at cost less any other than temporary decline in the value of such investments. Current investments are valued at lower of cost and fair value determined by category of investment. The fair value is determined using quoted market prices/market observable information adjusted for cost of disposal. Investment in associate is accounted under the equity method. vi. 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. 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: Revenue from Software development services comprises revenue from time and material and fixed-price contracts. Revenue from time and material contracts is recognised as related services are performed. Revenue from fixed- price, fixed-time frame contracts is generally recognised in accordance with the “Percentage of Completion” method. Revenues from BPO services are derived from both time- based and unit-priced contracts. Revenue is recognised as the related services are performed, in accordance with the specific terms of the contract with the customers. Revenue from application maintenance services is recognised over the period of the contract. Revenue from customer training, support and other services is recognised as the related services are performed. Provision for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the current contract estimates. CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 133 ‘Unbilled revenues’ included in loans and advances represent cost and earnings in excess of billings as at the balance sheet date. ‘Unearned revenues’ included in current liabilities represent billing in excess of revenue recognised. 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. Profit on sale of investments is recorded upon transfer of title by the Company. It is determined as the difference between the sales price and carrying amount of the related investment. Interest is recognised using the time-proportion method, based on rates implicit in the transaction. Dividend income is recognised where 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 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 Transaction: Foreign currency transactions are accounted in the books of accounts 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 recognised in the profit and loss account. Translation: Monetary foreign currency assets and liabilities at period- end are translated at the closing rate. The difference arising from the translation is recognised in the profit and loss account, 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 non-integral 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 profit and loss account on occurrence of the underlying hedged transaction or on disposal of the investment, respectively. 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 profit and loss account are translated at the average exchange rate during the period. The differences arising out of the translation are recognised in the profit and loss account. Non-integral operations: Assets and liabilities are translated at the exchange rate prevailing at the date of the balance sheet. The items in the profit and loss account 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. Derivativeinstrumentsand Hedgeaccounting: 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 early adopted AS 30 and the limited revisions to other accounting standards which come into effect upon adoption of AS 30 from April 1, 2008. 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 profit and loss account upon sale or disposal of related non-integral foreign operation. Changes in fair value relating to the ineffective portion of the hedges and derivatives not designated as hedges are recognised in the profit and loss account as they arise. CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 134 AS 30 states that particular sections of other accounting standards; AS 4, Contingencies and Events Occurring after Balance Sheet Date, to the extent it deals with contingencies, AS 11 (revised 2003), The Effects of Changes in Foreign Exchange Rates, to the extent it deals with the ‘forward exchange contracts’ and AS 13, Accounting for Investments, except to the extent it relates to accounting for investment properties, will stand withdrawn only from the date AS 30 becomes mandatory (April 1, 2011 for the Company). Accordingly, the Company continues to comply with the guidance in AS 4 – relating to contingencies, AS 11 – relating to forward contracts and AS 13 – relating to Investments until AS 30 becomes mandatory. 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-DerivativeFinancial 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, sundry debtors, 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 loans, sundry creditors, accrued expenses and derivative financial instruments with a negative fair value. Financial assets / liabilities are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when all of risks and rewards of the ownership have been transferred. The transfer of risks and rewards is evaluated by comparing the exposure, before and after the transfer, with the variability in the amounts and timing of the net cash flows of the transferred assets. 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. Non-interest- bearing deposits are discounted to their present value. xii. Depreciation and amortisation Depreciation is provided on straight line method based on the estimated useful life of the asset. Management estimates the useful life of various assets as follows: Nature of asset Life of asset Building ............................................ 30 – 60 years Plant and machinery ........................ 5 – 21 years Office equipment ............................. 3 - 10 years Vehicles ............................................ 4 years Furniture and fixtures ....................... 3 - 10 years Computer and software .................... 2 – 6 years Fixed assets individually costing Rs 5,000/- or less are depreciated at 100%. Assets under capital 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, the 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 profit and loss account. If at the balance sheet date there is any indication that 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 profit and loss account. 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 equal to 12% of the covered employee’s salary. 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. CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 135 Compensated absences: The employees of the Company are entitled to compensated absence. The employees can carry-forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase 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. Long term compensated absences is accrued based on actuarial valuation at the balance sheet date carried out by an independent actuary. 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 profit and loss account. Superannuation: The employees of the Company also participate in a defined contribution plan maintained by the Company. This plan 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. 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, the 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 period excluding equity shares held by controlled trust. Diluted: The number of equity shares used in computing diluted earnings per share comprises the weighted average 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. CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 136 2. Sharecapital The following are the details for 1,468,211,189 (2009: 1,464,980,746) equity shares as of March 31, 2010 No. of shares Description 1,399,355,659 Equity shares / American Depository Receipts (ADRs) (2009: 1,399,355,659) have been allotted as fully paid bonus shares / ADRs by capitalization of Securities premium account and Capital redemption reserve. 1,325,525 Equity shares (2009: 1,325,525) have been allotted as fully paid-up, pursuant to scheme of amalgamation, without payment being received in cash. 968,803 Equity shares (2009: 968,803) allotted to the Wipro Inc Trust, the sole beneficiary of which is Wipro Inc, wholly owned subsidiary of the Company, without payment being received in cash, in consideration of acquisition of inter-company investments. 3,162,500 Equity shares (2009: 3,162,500) representing American Depository Receipts issued during 2000-2001 pursuant to American Depository offering by the Company. 63,398,702 Equity shares (2009: 60,168,259) issued pursuant to Employee Stock Option Plan. 3. Noteon Reserves i) Restricted stock units reserve includes Deferred Employee Compensation, which represents future charge to the profit and loss account and employee stock options outstanding to be treated as securities premium at the time of allotment of shares. ii) Additions to General Reserve include: (Rsin Million) Particulars For theyear ended March 31, 2010 2009 Transfer from Profit and Loss Account 36,218 32,143 Adjustment on adoption of AS 30 - (89) Additional purchase consideration [refer note 18(7)] (2,385) - Dividend paid to Wipro Equity Reward Trust and Wipro Inc Trust 67 - Others (1) (5) 33,899 32,049 4. The Company has adopted AS 30 and the limited revisions to other accounting standards which come into effect upon adoption of AS 30. AS 30 states that particular sections of other accounting standards; AS 4, Contingencies and Events Occurring after Balance sheet Date, to the extent it deals with contingencies, AS 11 (revised 2003), The Effects of Changes in Foreign Exchange Rates, to the extent it deals with the ‘forward exchange contracts’ and AS 13, Accounting for Investments, except to the extent it relates to accounting for investment properties, would stand withdrawn only from the date AS 30 becomes mandatory (April 1, 2011 for the Company). Accordingly, the Company continues to comply with the guidance under these accounting standards; AS 4 – relating to Contingencies, AS 11 – relating to Forward Contracts and AS 13 – relating to Investments until AS 30 becomes mandatory. i) As permitted by AS 30 and the consequent limited revisions to other accounting standards, the Company has designated a yen-denominated foreign currency borrowing amounting to JPY 18 Billion (2009: JPY 27 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 yen-denominated foreign currency borrowing amounting to JPY 8 Billion (2009: 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. ii) 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 non-integral operation and cash flow hedge of yen-denominated borrowings aggregating to Rs. 1,736 Million for the year ended March 31, 2010 (March 31, 2009: Rs. (3,044) Million) was recognised in translation reserve / hedging reserve in shareholders’ funds. The amount of gain/ (loss) of Rs 1,564 Million for the year ended March 31, 2010 (March 31, 2009: Rs. (3,017) Million) 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 Rs. 172 Million for year ended March 31, 2010 (March 31, 2009: Rs. (27) Million) recognised in the hedging reserve would be transferred to profit and loss upon occurrence of the hedged transaction. iii) In accordance with AS 11, if the Company had continued to recognize translation (losses)/ gains on foreign currency borrowing in the profit and loss account, 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 profit and loss account. As a result profit after tax would have been higher/ (lower) by Rs 1,736 Million for the year ended March 31, 2010 (March 31, 2009: Rs. (3,044) Million). CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 137 5. Derivatives As of March 31, 2010, the Company has recognised losses of Rs 4,954 Million (March 31, 2009: Rs 16,886 Million) 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 4, the Company has also designated certain foreign currency forward contracts to hedge its net investment in non-integral foreign operations. The Company has recognized gain/ (loss) of Rs. 2,642 Million for the year ended March 31, 2010 (March 31, 2009: Rs (4,410) Million) 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 at: (In Million) Asat March 31, Particulars 2010 2009 Designated cash flow hedging derivative instruments Sell $1,518 $1,060 £31 £54 ¥4,578 ¥6,130 AUD 7 AUD 3 - CHF 2 - SGD 1 Net investment hedges in foreign operations Cross currency swaps ¥26,014 ¥35,016 Others $262 $267 €40 €40 Non designated derivative instruments Sell $45 $612 £38 £53 €29 €39 Buy $492 $438 - ¥23,170 Cross currency swaps ¥7,000 - 6. 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 interim financial statements”. Wipro GE had received tax demands from the Indian income tax authorities for the financial years ended March 31, 2001, 2002, 2003 and 2004 aggregating to Rs. 903 Million including interest. The tax demands were primarily on account of transfer pricing adjustments and the denial of export benefits and tax holiday benefits claimed by Wipro GE under the Indian Income Tax Act, 1961 (the “Act”). Wipro GE appealed against the said demands before the first appellate authority. The first appellate authority has vacated the tax demands for the years ended March 31, 2001, 2002, 2003 and 2004. The income tax authorities have filed an appeal for the years ended March 31, 2001, 2002, 2003 and 2004. In December 2008, Wipro GE received, on similar grounds, additional tax demand of Rs. 552 Million (including interest) for the financial year ended March 31, 2005. Wipro GE has filed an appeal against the said demand within the time limits permitted under the statute. In December 2009, Wipro GE received a draft assessment order, on similar grounds, with a demand of Rs. 299 Million (including interest) for the financial year ended March 31, 2006. Wipro GE has filed an objection against the said demand before the Dispute Resolution Panel and the Assessing officer within the time limit permitted under the statute. 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 its favour and will not have any material adverse effect on its financial position and results of operations. 7. Merger and Acquisition (i) In December 2009, the Company has entered into a sale and purchase agreement with Lornamead Group Limited to acquire the entire share capital of Lornamead FZE (an entity incorporated in Dubai) and Lornamead Personal Care Private Limited (an entity incorporated in India) for cash consideration including earnout amounting to Rs. 1,766 Million. The Company has also paid Rs. 348 Million for acquisition of Yardley Trademark, which has been recorded as an intangible assets. Yardley is a strong heritage global brand established since 1770 in the personal care category with fragrance products, bath & shower products and skin care. This acquisition adds to the Company’s strong brand portfolio of personal care products and would increase its presence in the Middle East and other Asian markets. The Company has recorded a goodwill of Rs. 1,712 Million in respect of this acquisition. (ii) Pursuant to the scheme of amalgamation approved by the Honorable High Court of Karnataka, Indian undertakings of Wipro Networks Pte Limited, Singapore, and WMNETSERVE Limited, Cyprus have been merged with the Company with retrospective effect from April 1, 2009, the Appointed Date. The amalgamation has been accounted as ‘amalgamation in the nature of merger’. These transactions had no impact on the consolidated financial statements. CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 138 (iii) During the year ended March 31, 2007, the Company acquired certain entities providing computer aided design and engineering services for a consideration of Rs.142 Million, and additional consideration based on achievement of specified revenues and profit milestone over a period of 3 years. The additional consideration payable is recognized when the payment is probable and can be reasonably estimated. During the year ended March 31, 2008, these acquired entities were merged with other entities of Wipro. The merger was accounted as ‘amalgamation in the nature of merger’ in accordance with AS 14, Accounting for Amalgamation, and the goodwill relating to the acquisition was adjusted against general reserve. During the year ended March 31, 2010, the Company determined that Rs. 2,385 Million, of additional consideration is payable. Pursuant to the merger of acquired entities, this additional consideration would have resulted in an increase in investment/goodwill, which has also been adjusted against the general reserve in the current year consistent with the previous accounting of the amalgamation. 8. Saleof 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 are 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. During the year ended March 31, 2010, the Company transferred financial assets of Rs. 3,552 (March 31, 2009: Rs. 539 Million), 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. These transfers resulted in a net gain / (loss) of Rs. 13 Million for the year ended March 31, 2010 (March 31, 2009: Rs. (35) Million). As at March 31, 2010, the maximum amounts of recourse obligation in respect of the transferred financial assets are Rs. 657 Million (March 31, 2009: Nil). 9. Financeleasereceivables 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: (Rsin Million) Particulars Asof March 31, 2010 2009 Gross investment in lease 5,616 4,376 Not later than one year 774 1,024 Later than one year and not later than five years 4,652 3,180 Unguaranteed residual values 190 172 Unearned finance income (1,174) (771) Net investment in finance receivables 4,442 3,605 Present value of minimum lease receivables are as follows: (Rsin Million) Particulars Asof March 31, 2010 2009 Present value of minimum lease payments receivables 4,442 3,605 Not later than one year 608 960 Later than one year and not later than five years 3,675 2,522 Unguaranteed residual value 159 123 10. Assetstaken on lease Finance leases: The following is a schedule of present value of future minimum lease payments under capital leases, together with the value of the minimum lease payments as of March 31, 2010 (Rsin Million) Particulars Asof March 31, 2010 2009 Present value of minimum lease payments Not later than one year 229 348 Later than one year and not later than five years 424 563 Thereafter 59 71 Total present value of minimum lease payments 712 982 Add: Amount representing interest 69 127 Total value of minimum lease payments 781 1,109 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 139 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 Rs. 3,062 Million and Rs. 2,526 Million during the years ended March 31, 2010 and 2009 respectively. Details of contractual payments under non-cancelable leases are given below: (Rsin Million) Particulars Asof March 31, 2010 2009 Not later than one year 1,396 1,064 Later than one year and not later than five years 4,319 3,669 Thereafter 2,554 3,168 Total 8,269 7,901 11. EmployeeBenefit Plan 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. (Rsin Million) Changein thebenefit obligation Asof March 31, 2010 2009 Projected Benefit Obligation (PBO) at the beginning of the year 1,858 1,515 Acquisitions - 34 Service Cost 328 369 Interest Cost 133 135 Benefits paid (214) (118) Actuarial loss/(gain) (45) (77) PBO at the end of the year 2,060 1,858 (Rsin Million) Changein plan assets Asof March 31, 2010 2009 Fair value of plan assets at the beginning of the year 1,416 1,244 Acquisitions - 19 Expected return on plan assets 122 92 Employer contribution 625 154 Benefits paid (214) (118) Actuarial (loss)/gain 18 25 Fair value of the plan assets at the end of the year 1,967 1,416 Present value of unfunded obligation/ Recognised Liability (93) (442) 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, 2011 is Rs 454 Million. Net gratuity cost for the year ended March 31, 2010 and 2009 are as follows: (Rsin Million) Particulars For theyear ended March 31, 2010 2009 Service cost 328 369 Interest cost 133 135 Expected return on plan assets (122) (92) Actuarial loss/(gain) (63) (102) Net gratuity cost 276 310 The weighted average actuarial assumptions used to determine benefit obligations and net periodic gratuity cost are: Assumptions Asof March 31, 2010 2009 Discount rate 7.15% 6.75% Rate of Increase in compensation levels 5% 5% Rate of return on plan assets 8% 8% CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 140 As at March 31, 2010 and 2009, 100% of the plan assets were invested in the insurer managed funds. (Rsin Million) Particulars Asof March 31, 2010 2009 2008 Experience Adjustments: On Plan Liabilities 94 (53) 117 On Plan Assets 18 26 77 Present value of benefit obligation 2,060 1,858 1,515 Fair value of plan assets 1,967 1,416 1,244 Excess of (obligations over plan assets)/plan assets over obligations (93) (442) (271) 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, 2010, the Company contributed Rs. 726 Million to superannuation fund (2009: Rs. 814 Million). 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. The Guidance on implementing AS 15, Employee Benefits issued by the Accounting Standards Board (ASB) provides that exempt provident funds which require employers to meet the interest shortfall are in effect defined benefit plans. The Company believes that it is not practicable to reliably determine the interest shortfall obligation. Accordingly, the computation of liability and disclosure in accordance with the provisions of AS 15 cannot be implemented. For the year ended March 31, 2010, the Company contributed Rs 1,732 Million to PF (2009: Rs 1,613 Million). 12. Employeestock option i) Employees covered under Stock Option Plans and Restricted Stock Unit (RSU) 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. 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. For the year ended March 31, 2010, the Company has recorded stock compensation expense of Rs. 1,317 Million (2009: Rs. 1,770 Million). 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). Activity under Stock Optionsplans Particulars For theyear ended March 31, 2010 For theyear ended March 31, 2009 Shares Wt. average exercise price Shares Wt. average exercise price Outstanding at the beginning of the year 122,746 484 1,228,632 264 Granted - - 120,000 489 Exercised - - 349,499 263 Forfeited and lapsed 1,140 254 876,387 264 Outstanding at the end of the year 121,606 485 122,746 484 Exercisable at the end of the year 1,606 223 2,746 245 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 141 Activity under Restricted Stock Unit Option plans Particulars For theyear ended March 31, 2010 For the year ended March 31, 2009 Shares Wt. average exercise price Shares Wt. average exercise price Outstanding at the beginning of the year 16,270,226 2 11,585,399 2 Granted 142,100 2 8,366,676 2 Exercised 3,230,443 2 2,209,124 2 Forfeited and lapsed 1,154,123 2 1,472,725 2 Outstanding at the end of the year 12,027,760 2 16,270,226 2 Exercisable at the end of the year 5,365,080 2 3,184,399 2 The following table provides details in respect of range of exercise price and weighted average remaining contractual life (in months) for the options outstanding as at period end: Range of exercise price Asof March 31, 2010 As of March 31, 2009 Shares Wt. average remaining life Shares Wt. average remaining life Rs 2 12,027,760 37.98 16,270,225 44.85 Rs 172 – 255 - - 1,140 2.93 Rs 489 120,000 49 120,000 61 $ 3.46 – 5.01 1,606 1 1,606 11.90 13. Incometax 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’). Income from STPs is eligible for 100% deduction for the earlier of 10 years commencing from the fiscal year in which the unit commences operations or March 31, 2011. The Company also has operations in Special Economic Zones (SEZ’s). 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. 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 Rs. 363 Million (March 31, 2009: Rs 126 Million) is included under ‘Loans and Advances’ in the balance sheet as of March 31, 2010. (i) Provision for tax has been allocated as follows: (Rsin Million) Particulars Year Ended March 31, 2010 2009 Net current tax * 8,665 6,203 Deferred tax 498 (155) Fringe benefit tax - 412 Total income taxes 9,163 6,460 * Current tax provision includes reversal / (charge) of tax provision in respect of earlier periods no longer required amounting to Rs. 476 Million for the year ended March 31, 2010 (2009: Rs. 369 Million). (ii) The components of the net deferred tax asset are as follows: (Rs. in Million) Particulars Asof March 31, 2010 2009 Fi xed assets and i ntangi bl es – depreciation (747) (548) Accrued expenses and liabilities 482 715 Provision for doubtful debts 268 260 Amortisable goodwill (177) (213) Carry – forward business losses 399 497 Others 29 (27) Net deferred tax assets 254 684 Deferred tax asset on carry forward business losses is recognised to the extent of deferred tax liabilities, that are virtually certain of realization in accordance with AS 22 – Accounting for Taxes on Income. 14. The Company had received tax demands from the Indian income tax authorities for the financial years ended March 31, 2001, 2002, 2003 and 2004 aggregating to Rs. 11,127 Million (including interest of Rs. 1,503 Million). The tax demand was primarily on account of denial of deduction claimed by the Company under Section 10A of the Income Tax Act 1961, in respect of profits earned by its undertakings in Software Technology Park at Bangalore. The appeals filed by the Company for the above years to the first appellate authority were allowed in favour of the Company, thus deleting substantial portion of the demand raised by the Income tax authorities. On further appeal filed by the income tax authorities, the second appellate authority upheld the claim of the Company for the years ended March 31, 2001, 2002, 2003 and 2004. In December 2008, the Company received, on similar grounds, an additional tax demand of Rs. 5,388 Million (including interest of Rs. 1,615 Million) for the financial year ended March 31, 2005. The Company has filed an appeal against CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 142 the said demand which is pending before the first appellate authority. During December 2009, the Company received the draft assessment order, on similar grounds, with a demand of Rs. 6,757 Million (including interest of Rs. 2,050 Million) for the financial year ended March 31, 2006. The Company has filed an objection against the said demand before the Dispute Resolution Panel and the Assessing officer within the time limits permitted under the statute. Considering the facts and nature of disallowance and the order of the first appellate authority upholding Company’s claims for earlier years, the Company expects the final outcome of the above disputes in its favour. 15. 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. 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: (Rsin Million) Particulars For theyear ended March 31, 2010 For the year ended March 31, 2009 Provision for Warranty Others Provision for Warranty Others Provision at the beginning of the year 768 1,387 720 802 Additions during the year 477 394 730 585 Utilised during the year (634) (18) (682) - Provision at the end of the year 611 1,763 768 1,387 16. The computation of equity shares used in calculating basic and diluted earnings per share is set out below: Particulars For theyear ended March 31, 2010 2009 Weighted average equity shares outstanding 1,466,352,557 1,462,624,262 Shares held by a controlled trust (8,930,563) (7,961,760) Weighted average equity shares for computing basic EPS 1,457,421,994 1,454,662,502 Dilutive impact of employee stock options 9,876,410 4,690,367 Weighted average equity shares for computing diluted EPS 1,467,298,404 1,459,352,869 Net Income considered for computing diluted EPS (Rs in Million) 46,310 38,999 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 143 17. The list of subsidiaries as of March 31, 2010 is as follows: Direct Subsidiaries Step Subsidiaries Country of Incorporation Wipro Inc. USA Wipro Gallagher Solutions Inc USA Enthink Inc. USA Infocrossing Inc USA Infocrossing, LLC USA cMango Pte Limited Singapore Wipro Japan KK Japan Wipro Shanghai Limited China Wipro Trademarks Holding Limited India Cygnus Negri Investments Private Limited India Wipro Travel Services Limited India Wipro Consumer Care Limited India Wipro Holdings (Mauritius) Limited Mauritius Wipro Holdings UK Limited UK Wipro Technologies UK Limited UK BVPENTEBeteiligun gsverwaltung GmbH Austria New Logic Technologies GmbH Austria NewLogic Technologies SARL France 3D Networks (UK) Limited UK Wipro Cyprus Private Limited Cyprus Wipro Technologies S.A DE C.V Mexico Wipro BPO Philippines LTD. Inc Philippines Wipro Holdings Hungary Korlátolt Felelõsségû Társaság Hungary Wipro Technologies Argentina SA Argentina Wipro Information Technology Egypt SAE Egypt Wipro Arabia Limited (a) Saudi Arabia Wipro Poland Sp Zoo Poland Wipro Information Technology Netherlands BV (Formely Retail Box BV) Netherlands Wipro Portugal S.A. (Formerly Enabler Informatics SA ) Portugal SAS Wipro France (Formerly Enabler France SAS) France Wipro Retail UK Limited (Formerly Enabler UK Ltd ) UK Wipro do Brazil Technologia Ltda (Formerly Enabler Brazil Ltda) Brazil Wipro Technologies Gmbh (Formerly Enabler and Retail Consult Gmbh) Germany Wipro Technologies Limited, Russia Russia CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 144 Direct Subsidiaries Step Subsidiaries Country of Incorporation Wipro Technologies OY Finland Wipro Infrastructure Engineering AB Sweden Wipro Infrastructure Engineering OY Finland Hydrauto Celka San ve Tic Turkey Wipro Technologies SRL Romania Wipro Singapore Pte Limited Singapore PT WT Indonesia Indonesia Unza Holdings Limited (A) Singapore Wipro Technocentre (Singapore) Pte Limited Singapore Wipro (Thailand) Co Limited Thailand Wipro Bahrain Limited WLL Bahrain Wipro Yardley FZE Dubai Wipro Australia Pty Limited Australia Wipro Networks Pte Limited (formerly 3D Networks Pte Limited) Singapore Planet PSG Pte Limited Singapore Planet PSG SDN BHD Malaysia Wipro Chengdu Limited China Wipro Chandrika Limited (b) India WMNETSERV Limited Cyprus WMNETSERV (UK) Ltd. UK WMNETSERV INC. USA Wipro Technology Services Limited India Wipro Airport IT Services Limited (c) India Lornamead Personal Care Private Limited India All the above subsidiaries are 100% held by the Company except the following: a) 66.67% held in Wipro Arabia Limited b) 90% held in Wipro Chandrika Limited c) 76% held in Wipro Airport IT Services Limited A. Step Subsidiary details of Unza Holdings Limited are as follows : CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 145 Step subsidiaries Step subsidiaries Country of Incorporation Unza Company Pte Ltd Singapore Unza Indochina Pte Ltd Singapore Unza Vietnam Co., Ltd Vietnam Unza Cathay Ltd Hong Kong Unza China Ltd Hong Kong Dongguan Unza Consumer Products Ltd. China PT Unza Vitalis Indonesia Unza Thailand Limited Thailand Unza Overseas Ltd British virgin islands Unza Africa Limited Nigeria Unza Middle East Ltd British virgin islands Unza International Limited British virgin islands Positive Equity Sdn Bhd Malaysia Unza Nusantara Sdn Bhd Malaysia Unza Holdings Sdn Bhd Malaysia Unza Malaysia Sdn Bhd Malaysia UAA (M) Sdn Bhd Malaysia Manufacturing Services Sdn Bhd Malaysia Shubido Pacific Sdn Bhd (a) Malaysia Gervas Corporation Sdn Bhd Malaysia Gervas (B) Sdn Bhd Malaysia Formapac Sdn Bhd Malaysia a) All the above subsidiaries are 100% held by the Company except Shubido Pacific Sdn Bhd in which the holding is 62.55% The list of controlled trusts are: Name of entity Nature Country of Incorporation Wipro Equity Reward Trust Trust India Wipro Inc Trust Trust USA 18. Related party relationshipsand transactions The related parties are: Nameof entity Nature %of holding Country of Incorporation Wipro GE Healthcare Private Limited Associate 49% India Azim Premji Foundation Entity controlled by Director Hasham Premji (partnership firm) Entity controlled by Director Prazim Traders (partnership firm) Entity controlled by Director Zash Traders (partnership firm) Entity controlled by Director Regal Investment & Trading Company Private Limited Entity controlled by Director Vidya Investment & Trading Company private Limited Entity controlled by Director Napean Trading & Investment Company Private Limited Entity controlled by Director Key management personnel Azim Premji Chairman and Managing Director Suresh C Senapaty Chief Financial Officer & Director Suresh Vaswani Jt CEO, IT Business & Director Girish S Paranjpe Jt CEO, IT Business & Director Relative of key management personnel Rishad Premji Relative of the director CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 146 The Company has the following related party transactions: (Rs. in Million) Transaction/ Balances Associate Entitiescontrolled by Directors Key Management Personnel* 2010 2009 2010 2009 2010 2009 Sale of services 7 - - - - - Sale of goods - 15 1 1 - - Dividend - - 6,661 4,418 344 234 Royalty income 32 36 - - - - Balances as on March 31, Receivables 1 - - - - - Payables - - 6,663 4,418 388 238 * Including relative of key management personnel. Remuneration to key management personnel and relative of key management personnel is summarized below: (Rsin Million) Name For theyear ended March, 31 2010 2009 Azim Premji 81 14 Suresh Senapaty 31 21 Girish Paranjpe 20 20 Suresh Vaswani 31 21 Rishad Premji 4 3 19. Estimated amount of contracts remaining to be executed on capital accounts and contingent liabilities (Rsin Million) Particulars Asat March 31, 2010 2009 Esti mated amount of contracts remaining to be executed on Capital account and not provided for 2,782 5,371 Contingent liabilities in respect of: a) Disputed demands for excise duty, custom duty, income tax, sales tax and other matters 1,384 872 b) Perf ormance and f i nanci al guarantee given by the banks on behalf of the Company 14,525 8,305 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 consolidated financial statements of the Company. The Company’s Indian operations have been established as a Software Technology Park Unit under a plan formulated by the Government of India. As per the plan, the Company’s India operations have export obligations to the extent of 1.5 times the employee costs for the year on an annual basis and 5 times the amount of foreign exchange released for capital goods imported, 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 computer hardware previously imported duty free. As at March 31, 2010, the Company has met all commitments required under the plan. 20. 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 and chief executive officer and are considered to be primary segments. The secondary segment is identified based on the geographic location of the customer. 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. Consumer careand 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. CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 147 The segment information for the year ended March 31, 2010 is as follows: (Rs. in Million) Particulars Year ended March 31, 2010 2009 Variance (%) Revenues IT Services 202,469 191,661 6% IT Products 38,322 34,552 11% Consumer Care and Lighting 23,774 20,830 14% Others 7,589 9,144 Eliminations (740) (745) TOTAL 271,414 255,442 6% Profit beforeInterest and Tax - PBIT IT Services 47,749 40,323 18% IT Products 1,752 1,481 18% Consumer Care and Lighting 3,100 2,548 22% Others (809) (348) TOTAL 51,792 44,004 18% Interest and Other Income, Net 3,303 1,192 Profit beforetax 55,095 45,196 22% Income Tax expense (9,163) (6,460) Profit beforesharein earningsof associatesand minority interest 45,932 38,736 19% Share in earnings of associates 563 362 Minority interest (185) (99) PROFIT AFTER TAX 46,310 38,999 19% OperatingMargin IT Services 23.6% 21.0% IT Products 4.6% 4.3% Consumer Care and Lighting 13.0% 12.2% TOTAL 19.1% 17.2% CAPITAL EMPLOYED AS AT PERIOD END IT Services and Products 133,489 114,447 Consumer Care and Lighting 20,003 18,689 Others 91,901 60,291 TOTAL 245,393 193,427 CAPITAL EMPLOYED COMPOSITION AS AT PERIOD END IT Services and Products 54% 59% Consumer Care and Lighting 8% 9% Others 38% 32% TOTAL 100% 100% RETURN ON AVERAGE CAPITAL EMPLOYED IT Services and Products 40% 40% Consumer Care and Lighting 16% 14% TOTAL 24% 25% CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 148 Notesto Segment Report a) The segment report of Wipro Limited and its consolidated subsidiaries and associates has been prepared in accordance with the AS 17 “Segment Reporting” issued pursuant to the Companies (Accounting Standard) Rules, 2006 and by The Institute of Chartered Accountants of India. b) Segment wisedepreciation isasfollows: (Rsin Million) Particulars Year ended March 31, 2010 2009 IT Services 6,711 6,067 IT Products 75 88 Consumer Care & Lighting 444 420 Others 313 289 7,543 6,864 c) Segment PBIT includes Rs. 558 Million for the year ended March 31, 2010, (March 31, 2009: Rs. 581 Million) of certain operating other income / (loss) which is reflected in other income in the Financial Statements. d) Capital employed of segments is net of current liabilities. The net current liability of segments is as follows : (Rsin Million) Particulars Asof March 31, 2010 2009 IT Services and Products 41,093 58,564 Consumer Care & Lighting 5,097 4,026 Others 34,500 22,494 80,690 85,084 e) Segment assets and liabilities are as follows: (Rsin Million) Particulars Asof March 31, 2010 As of March 31, 2009 Segment Assets Segment Liabilities Segment Assets Segment Liabilities IT Services and Products 189,288 55,085 180,374 64,834 Consumer Care & Lighting 25,098 5,096 22,718 4,029 Others 112,723 20,994 76,374 16,634 Total 327,109 81,175 279,466 85,497 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 geographic segments based on domicile of the customers is outlined below: (Rsin Million) Particulars Year ended March 31, 2010 % 2009 % India 61,897 23 54,608 21 United States of America 119,588 44 115,105 45 Europe 56,780 21 57,109 22 Rest of the world 33,149 12 28,620 12 271,414 100 255,442 100 g) 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 other income in the profit and loss account). Further, the Company obtains short-term CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 149 foreign currency borrowings for its working capital requirements. A portion of these foreign currency borrowings is used as a natural hedge for the foreign currency monetary assets. For segment purposes, exchange fluctuations relating to such foreign currency borrowings amounting to Rs. 333 Million and Rs. Nil is recorded in the respective segment of the underlying monetary assets, and is subsequently adjusted as part of eliminations for the year ended March 31, 2010 and 2009, respectively. h) 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 and accordingly such receivables are reflected in Capital Employed of “Others”. As of March 31, 2010, Capital Employed of Others includes Rs. 8,516 Million (2009: Rs. 5,549 Million) of such receivables on extended collection terms. i) For the purpose of reporting, business segments are considered as primary segments and geographic segments are considered as secondary segments. 21. Cash and Bank Details of balances with banks as of March 31, 2010 are as follows: (Rs. in Million) Bank Name In Current Account In Deposit Account Total Wells Fargo Bank 13,810 - 13,810 HSBC Bank 2,595 9 2,604 HDFC Bank 2,447 - 2,447 Citi Bank 1,168 42 1,210 The Saudi British Bank 315 1,318 1,633 Standard Chartered Bank 132 81 213 Bank of America 197 - 197 State Bank of India 237 - 237 DBS Bank 173 - 173 Rabo Bank 222 - 222 Bank of Montreal 96 - 96 ING Vysya Bank 142 800 942 IDBI Bank 18 3,920 3,938 Bank of India 3 2,548 2,551 Canara Bank - 13,118 13,118 Oriental Bank of Commerce - 9,106 9,106 Central Bank of India - 2,027 2,027 Punjab National Bank - 2,120 2,120 UCO Bank - 5,180 5,180 Others 2,053 454 2,507 Cash and cheques on hand - - 547 Total 23,608 40,723 64,878 CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 150 22. Investments (a) Investments in Indian money market mutual funds as on March 31, 2010: (Rs. in Million) Fund House Asof March 31, 2010 LIC 11,197 IDFC 2,841 Birla Sunlife 1,524 Franklin Templeton 1,118 Kotak 943 Reliance 793 DWS 567 ICICI Prudential 158 UTI 5 ING 1 Total 19,147 (b) Investment in Certificates of Deposit as on March 31, 2010: (Rs. in Million) Particulars Asof March 31, 2010 Central Bank of India 3,209 Punjab National Bank 1,376 Axis Bank 996 Exim Bank 996 IDBI Bank 983 ICICI Bank 710 Allahabad Bank 596 State Bank of Patiala 548 Syndicate Bank 497 State Bank of Travancore 248 State Bank of Hyderabad 247 State Bank of Mysore 244 Life Insurance Corporation 239 Rural Electrification Corporation 199 Total 11,088 (c) Other investments as of March 31, 2010: (Rs. in Million) Particulars Asof March 31, 2010 Non-Convertible Debentures - Citicorp Finance 241 Non-Convertible Debentures - Morgan Stanley 481 Bond/Non-Convertible Debentures - ETHL Corporation Holding Limited 437 Bond/Non-Convertible Debentures - LIC 155 Others 133 Total 1,447 23. Corresponding figures for previous periods presented have been regrouped, where necessary, to confirm to the current period classification. CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 151 P u r s u a n t t o t h e e x e m p t i o n b y t h e D e p a r t m e n t o f C o m p a n y a f f a i r s , G o v e r n m e n t o f I n d i a , t h e C o m p a n y i s p r e s e n t i n g s u m m a r y fi n a n c i a l i n f o r m a t i o n a b o u t i n d i v i d u a l s u b s i d i a r i e s a s a t M a r c h 3 1 , 2 0 1 0 . T h e d e t a i l e d fi n a n c i a l s t a t e m e n t s , d i r e c t o r s ’ r e p o r t a n d a u d i t o r s ’ r e p o r t o f t h e i n d i v i d u a l s u b s i d i a r i e s a r e a v a i l a b l e f o r i n s p e c t i o n a t t h e r e g i s t e r e d o f fi c e o f t h e C o m p a n y . U p o n w r i t t e n r e q u e s t f r o m a s h a r e h o l d e r w e w i l l a r r a n g e t o d e l i v e r c o p i e s o f t h e fi n a n c i a l s t a t e m e n t , d i r e c t o r s ’ r e p o r t a n d a u d i t o r s ’ r e p o r t f o r t h e i n d i v i d u a l s u b s i d i a r i e s . I n f o r m a t i o n r e l a t i n g t o S u b s i d i a r i e s a s a t M a r c h 3 1 , 2 0 1 0 S r . N o . N a m e o f t h e S u b s i d i a r y R e p o r t i n g C u r r e n c y E x c h a n g e r a t e a s o n M a r c h , 3 1 2 0 1 0 S h a r e C a p i t a l R e s e r v e s & S u r p l u s T o t a l A s s e t s T o t a l L i a b i l i t i e s [ e x c l . ( 4 ) & ( 5 ) ] I n v e s t m e n t s - o t h e r t h a n i n s u b s i d i a r i e s % o f H o l d i n g S a l e s & O t h e r I n c o m e P r o fi t b e f o r e t a x a t i o n P r o v i s i o n f o r t a x a t i o n P r o fi t a f t e r t a x a t i o n P r o p o s e d D i v i d e n d ( i n c l . d i v i d e n d t a x ) ( 1 ) ( 2 ) ( 3 ) ( 4 ) ( 5 ) ( 6 ) ( 7 ) ( 8 ) ( 9 ) ( 1 0 ) ( 1 1 ) ( 1 2 ) ( 1 3 ) ( 1 4 ) 1 W i p r o I n c . U S D 4 4 . 9 4 1 6 , 1 0 1 ( 7 , 5 5 1 ) 2 7 , 5 9 7 1 9 , 5 8 6 5 4 0 1 0 0 % 4 , 8 2 8 ( 6 4 4 ) - ( 6 4 4 ) - 2 E n t h i n k I n c . ( a ) U S D 4 4 . 9 4 1 0 5 ( 9 3 ) 1 2 0 - 1 0 0 % - ( 2 ) - ( 2 ) - 3 W i p r o J a p a n K K J P Y 4 8 . 0 9 1 0 ( 1 7 0 ) 1 2 6 2 8 7 - 1 0 0 % 1 9 3 ( 1 2 8 ) - ( 1 2 8 ) - 4 W i p r o C h a n d r i k a L i m i t e d I N R 1 . 0 0 1 0 ( 1 7 7 ) 2 0 1 3 6 8 - 9 0 % 0 ( 3 1 ) - ( 3 1 ) - 5 W i p r o T r a d e m a r k s H o l d i n g L i m i t e d I N R 1 . 0 0 1 3 5 3 8 2 - 1 0 0 % 0 ( 0 ) - ( 0 ) - 6 W i p r o T r a v e l S e r v i c e s L i m i t e d I N R 1 . 0 0 1 1 5 1 8 1 1 6 5 - 1 0 0 % 3 6 ( 4 ) - ( 4 ) - 7 W i p r o H o l d i n g s ( M a u r i t i u s ) L i m i t e d U S D 4 4 . 9 4 1 , 3 9 1 ( 4 ) 1 , 3 9 1 4 - 1 0 0 % 0 ( 1 ) - ( 1 ) - 8 W i p r o H o l d i n g s ( U K ) L i m i t e d ( b ) U S D 4 4 . 9 4 1 , 3 9 0 ( 5 0 ) 2 , 0 4 4 7 0 4 - 1 0 0 % 2 7 2 ( 1 ) - ( 1 ) - 9 W i p r o T e c h n o l o g i e s U K L i m i t e d ( c ) U S D 4 4 . 9 4 1 3 2 ( 1 1 2 ) 3 5 8 3 3 8 - 1 0 0 % 0 ( 2 ) - ( 2 ) - 1 0 W i p r o C o n s u m e r C a r e L i m i t e d I N R 1 . 0 0 1 ( 2 ) 1 2 - 1 0 0 % - ( 0 ) - ( 0 ) - 1 1 C y g n u s N e g r i I n v e s t m e n t s P r i v a t e L i m i t e d ( d ) I N R 1 . 0 0 1 2 5 3 - 1 0 0 % 0 ( 0 ) 0 ( 0 ) - 1 2 W i p r o S h a n g h a i L i m i t e d R M B 6 . 5 8 9 ( 4 0 ) 2 2 2 2 5 2 - 1 0 0 % 4 4 1 ( 4 ) - ( 4 ) - 1 3 B V P E N T E B e t e i l i g u n g s v e r w a l t u n g G m b H ( e ) E U R 6 0 . 5 5 2 1 , 1 2 8 1 , 1 4 3 1 3 - 1 0 0 % 0 ( 3 ) 0 ( 3 ) - 1 4 N e w L o g i c T e c h n o l o g i e s G m b H E U R 6 0 . 5 5 1 , 1 7 8 ( 1 , 9 0 7 ) 3 1 8 1 , 0 4 9 3 1 0 0 % 8 8 0 ( 1 8 8 ) - ( 1 8 8 ) - 1 5 N e w L o g i c T e c h n o l o g i e s S A R L E U R 6 0 . 5 5 0 ( 4 6 8 ) 4 1 5 0 9 - 1 0 0 % 2 3 4 ( 7 8 0 ) 1 ( 7 8 1 ) - 1 6 c M a n g o P t e L i m i t e d S G D 3 2 . 0 9 0 1 0 1 2 2 - 1 0 0 % - ( 8 ) - ( 8 ) - 1 7 W i p r o C y p r u s P r i v a t e L i m i t e d E U R 6 0 . 5 5 1 , 4 4 9 3 2 , 2 5 3 3 6 , 0 1 7 2 , 3 1 4 - 1 0 0 % 4 1 5 3 9 1 - 3 9 1 5 1 8 W i p r o T e c h n o l o g i e s S R L ( e ) R O N 1 4 . 9 2 1 6 9 ( 1 1 5 ) 3 8 1 3 2 7 - 1 0 0 % 5 8 3 ( 1 1 ) - ( 1 1 ) - 1 9 W i p r o I n f o r m a t i o n T e c h n o l o g y N e t h e r l a n d s B V ( F o r m e l y R e t a i l B o x B V ) ( e ) E U R 6 0 . 5 5 4 3 4 4 4 7 1 1 2 2 - 1 0 0 % 1 5 3 1 2 4 9 - 2 0 E n a b l e r I n f o m a t i c s S A ( e ) E U R 6 0 . 5 5 3 1 , 4 7 5 1 , 8 9 2 4 1 4 - 1 0 0 % 3 , 1 7 4 6 2 6 1 3 6 4 9 0 - 2 1 W i p r o d o B r a s i l T e c h n o l o g i a L t d a ( e ) B R L 2 5 . 1 1 1 0 2 2 6 7 3 7 5 0 2 - 1 0 0 % 9 9 7 1 6 2 5 2 1 1 0 - 2 2 W i p r o T e c h n o l o g i e s G m b h . ( f o r m e l y E n a b l e r & R e t a i l C o n s u l t G m b h ) ( e ) E U R 6 0 . 5 5 5 6 1 1 0 2 1 4 4 8 - 1 0 0 % 8 3 9 1 0 6 2 9 7 7 - 2 3 E n a b l e r F r a n c e S A S ( e ) E U R 6 0 . 5 5 2 ( 7 6 ) 3 8 1 1 2 - 1 0 0 % 1 1 3 ( 1 0 ) ( 0 ) ( 1 0 ) - 2 4 E n a b l e r U K L t d . ( e ) G B P 6 8 . 0 7 0 ( 1 1 7 ) 1 4 6 2 6 2 - 1 0 0 % 8 4 7 ( 2 3 0 ) ( 2 3 ) ( 2 0 7 ) - 2 5 W M N E T S E R V L i m i t e d U S D 4 4 . 9 4 1 6 7 6 9 1 - 1 0 0 % 9 1 9 1 - 9 1 - 2 6 W M N E T S E R V ( U K ) L t d . U K U S D 4 4 . 9 4 9 1 9 4 0 1 2 - 1 0 0 % 1 7 ( 1 ) - ( 1 ) - 2 7 W i p r o T e c h n o l o g i e s O Y E U R 6 0 . 5 5 4 ( 1 7 8 ) 2 7 1 4 4 5 - 1 0 0 % 8 7 4 ( 4 9 0 ) 1 7 ( 5 0 7 ) - 2 8 3 D N e t w o r k s ( U K ) L i m i t e d G B P 6 8 . 0 7 7 ( 3 ) 5 1 - 1 0 0 % ( 2 ) ( 3 ) - ( 3 ) - 2 9 W i p r o N e t w o r k s P t e L i m i t e d ( f o r m e r l y 3 D N e t w o r k s P t e L i m i t e d ) S G D 3 2 . 0 9 8 0 7 ( 2 9 ) 9 3 3 1 5 5 - 1 0 0 % 7 1 2 8 1 0 8 0 - 3 0 P l a n e t P S G P t e L i m i t e d S G D 3 2 . 0 9 4 2 ( 2 0 ) 3 7 1 5 - 1 0 0 % 4 5 1 3 2 1 1 - 3 1 P l a n e t P S G S d n B h d M Y R 1 3 . 7 7 - ( 6 ) 1 2 1 8 - 1 0 0 % 6 4 - 4 - 3 2 W i p r o I n f r a s t r u c t u r e E n g i n e e r i n g O y ( f o r m e r l y H y d r a u t o O y A b P e r n i o n ) E U R 6 0 . 5 5 8 8 1 5 2 , 0 9 7 1 , 9 9 4 0 1 0 0 % 1 , 0 0 9 ( 1 2 3 ) ( 0 ) ( 1 2 3 ) - 3 3 W i p r o I n f r a s t r u c t u r e E n g i n e e r i n g A B ( f o r m e r l y H y d r a u t o G r o u p A b ) S E K 6 . 2 2 1 , 8 7 3 ( 7 1 2 ) 3 , 7 8 5 2 , 6 2 4 0 1 0 0 % 2 , 1 3 5 ( 7 8 4 ) 8 6 ( 8 7 1 ) - 3 4 I n f o c r o s s i n g I n c U S D 4 4 . 9 4 0 2 , 7 4 6 8 , 6 4 6 5 , 9 0 0 - 1 0 0 % 5 , 5 6 5 6 1 1 0 0 ( 3 9 ) - 3 5 I n f o c r o s s i n g , L L C U S D 4 4 . 9 4 0 4 , 9 2 7 5 , 5 4 9 6 2 2 - 1 0 0 % 6 , 3 7 4 7 8 0 - 7 8 0 - 3 6 U n z a H o l d i n g L t d S G D 3 2 . 0 9 1 , 9 0 1 8 4 0 4 , 5 5 5 1 , 8 1 4 - 1 0 0 % 1 , 4 7 5 1 , 3 7 0 1 0 1 , 3 6 1 - 3 7 U n z a C o m p a n y P t e L t d S G D 3 2 . 0 9 5 7 ( 3 0 ) 9 0 6 2 - 1 0 0 % 3 2 2 1 1 - 1 1 - 3 8 U n z a I n d o c h i n a P t e L t d S G D 3 2 . 0 9 8 6 1 9 9 2 9 9 1 5 - 1 0 0 % 2 9 0 1 4 7 ( 1 ) 1 4 8 1 6 6 3 9 U n z a V i e t n a m C o m p a n y L i m i t e d V N D 0 . 0 0 8 4 1 5 7 4 7 3 2 3 2 - 1 0 0 % 1 , 6 6 6 2 2 4 7 4 1 5 1 1 8 4 4 0 U n z a C a t h a y L i m i t e d H K D 5 . 7 9 5 6 4 5 2 4 6 1 4 4 - 1 0 0 % 5 9 5 6 1 5 - 4 1 U n z a C h i n a L i m i t e d H K D 5 . 7 9 1 1 4 1 7 1 5 3 2 2 - 1 0 0 % 3 2 1 5 - 1 5 - 4 2 D o n g g u a n U n z a C o n s u m e r P r o d u c t s L t d R M B 6 . 5 8 3 2 9 ( 1 9 2 ) 3 7 1 2 3 4 - 1 0 0 % 9 8 5 9 3 7 - 4 3 P T U n z a V i t a l i s I D R 0 . 0 0 2 3 9 1 5 7 3 8 4 8 4 - 1 0 0 % 1 , 0 2 8 1 9 9 1 0 - ( R s . i n M i l l i o n ) CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 152 S r . N o . N a m e o f t h e S u b s i d i a r y R e p o r t i n g C u r r e n c y E x c h a n g e r a t e a s o n M a r c h , 3 1 2 0 1 0 S h a r e C a p i t a l R e s e r v e s & S u r p l u s T o t a l A s s e t s T o t a l L i a b i l i t i e s [ e x c l . ( 4 ) & ( 5 ) ] I n v e s t m e n t s - o t h e r t h a n i n s u b s i d i a r i e s % o f H o l d i n g S a l e s & O t h e r I n c o m e P r o fi t b e f o r e t a x a t i o n P r o v i s i o n f o r t a x a t i o n P r o fi t a f t e r t a x a t i o n P r o p o s e d D i v i d e n d ( i n c l . d i v i d e n d t a x ) 4 4 U n z a ( T h a i l a n d ) L i m i t e d T H B 1 . 3 9 3 4 ( 1 0 3 ) 1 8 8 8 - 1 0 0 % 4 2 ( 5 ) - ( 5 ) - 4 5 U n z a O v e r s e a s L t d U S D 4 4 . 9 4 0 4 7 1 6 9 1 2 2 - 1 0 0 % 3 0 9 1 7 - 1 7 7 3 4 6 U n z a A f r i c a L i m i t e d U S D 4 4 . 9 4 - 4 7 2 - 1 0 0 % - ( 0 ) - ( 0 ) - 4 7 U n z a M i d d l e E a s t L t d U S D 4 4 . 9 4 0 ( 1 1 ) 3 1 5 3 2 5 - 1 0 0 % 7 0 3 2 0 - 2 0 1 5 0 4 8 U n z a I n t e r n a t i o n a l L i m i t e d U S D 4 4 . 9 4 4 4 1 7 9 7 1 , 5 4 6 3 0 9 - 1 0 0 % 3 5 0 2 9 9 4 1 2 5 7 9 1 1 4 9 U n z a N u s a n t r a S d n B h d M Y R 1 3 . 7 7 1 , 1 9 2 9 3 5 3 , 9 0 4 1 , 7 7 7 - 1 0 0 % 3 1 4 2 1 5 3 3 1 8 2 - 5 0 U n z a H o l d i n g s S d n B h d M Y R 1 3 . 7 7 0 2 , 5 7 8 2 , 5 7 9 1 - 1 0 0 % - ( 0 ) - ( 0 ) - 5 1 U n z a M a l a y s i a S d n B h d M Y R 1 3 . 7 7 5 5 6 9 7 1 , 0 9 9 3 4 7 - 1 0 0 % 3 , 6 5 8 3 2 0 7 7 2 4 2 - 5 2 U A A S d n B h d M Y R 1 3 . 7 7 2 2 4 7 1 , 1 2 4 8 7 5 - 1 0 0 % 3 , 6 6 0 3 5 8 2 6 - 5 3 M a n u f a c t u r i n g S e r v i c e s S e n d i r i a n B e r h a d M Y R 1 3 . 7 7 4 3 1 1 8 0 8 4 9 3 - 1 0 0 % 2 , 1 2 6 8 6 1 9 6 6 - 5 4 S h u b i d o P a c i fi c S d n B h d M Y R 1 3 . 7 7 4 6 3 8 9 5 4 3 3 2 6 2 . 5 5 % 2 1 9 4 0 1 0 3 0 4 2 5 5 G e r v a s C o r p o r a t i o n S d n B h d M Y R 1 3 . 7 7 3 6 1 3 1 3 6 8 7 - 1 0 0 % 8 9 8 3 2 1 3 1 - 5 6 G e r v a s ( B ) S d n B h d B N D 3 1 . 7 8 0 0 0 0 - 1 0 0 % - ( 0 ) - ( 0 ) - 5 7 F o r m a p a c S d n B h d M Y R 1 3 . 7 7 3 6 1 6 9 3 3 3 1 2 8 - 1 0 0 % 6 5 3 3 2 4 2 8 - 5 8 W i p r o T e c h n o l o g i e s S . A D E C . V M X N 3 . 6 3 2 ( 1 4 ) 3 4 3 3 5 5 - 1 0 0 % 1 9 0 ( 3 3 ) 4 7 ( 8 1 ) - 5 9 W i p r o S i n g a p o r e P t e . L t d . S G D 3 2 . 0 9 1 0 , 7 6 2 ( 4 ) 1 0 , 7 7 5 2 6 9 1 0 0 % - ( 3 ) 2 ( 5 ) - 6 0 W i p r o A u s t r a l i a P t y L i m i t e d A U D 4 1 . 1 5 1 2 2 7 2 5 - 1 0 0 % 3 4 ( 4 ) - ( 4 ) - 6 1 W i p r o A r a b i a L i m i t e d S A R 1 1 . 9 8 3 5 8 7 4 8 4 , 2 9 2 3 , 1 8 6 - 6 6 . 6 7 % 6 , 5 8 5 8 4 9 1 7 7 6 7 3 3 6 9 6 2 W i p r o H o l d i n g s H u n g a r y K o r l a t o l t F e l e l . s s e g . T a r s a s a g H U F 0 . 2 3 0 1 7 , 2 2 6 1 7 , 4 4 6 2 2 0 - 1 0 0 % 6 1 3 6 1 1 9 8 5 1 3 - 6 3 W i p r o T e c h n o c e n t r e ( S i n g a p o r e ) P t e L i m i t e d S G D 3 2 . 0 9 5 4 2 1 1 2 2 4 8 - 1 0 0 % 1 2 7 ( 6 7 ) 1 ( 6 8 ) - 6 4 W i p r o B P O P h i l i p p i n e s L t d . I n c U S D 4 4 . 9 4 1 8 3 5 0 7 1 2 4 7 9 - 1 0 0 % 6 5 6 1 2 2 - 1 2 2 - 6 5 W i p r o T e c h n o l o g i e s L i m i t e d - R u s s i a R U B 1 . 5 2 0 5 9 1 9 3 1 3 4 - 1 0 0 % 1 0 2 3 4 8 2 5 - 6 6 W i p r o G a l l a g h e r S o l u t i o n s I n c U S D 4 4 . 9 4 7 5 2 8 1 7 4 1 8 3 1 1 2 1 0 0 % 5 6 7 3 5 - 3 5 - 6 7 W i p r o T e c h n o l o g i e s A r g e n t i n a S A A R S 1 1 . 6 4 0 ( 1 6 ) 8 9 1 0 5 - 1 0 0 % 7 7 4 - 4 - 6 8 W i p r o P o l a n d S p Z o o P L N 1 5 . 6 5 1 4 4 2 5 7 2 1 3 - 1 0 0 % 2 6 7 3 1 2 1 1 0 - 6 9 W i p r o I n f o r m a t i o n T e c h n o l o g y E g y p t S A E E G P 8 . 2 4 7 ( 9 ) 5 5 5 7 - 1 0 0 % 6 9 ( 8 ) 4 ( 1 2 ) - 7 0 W i p r o ( T h a i l a n d ) C o L i m i t e d T H B 1 . 3 9 1 8 3 2 0 3 1 2 0 - 1 0 0 % 2 3 4 1 0 5 2 1 8 4 - 7 1 W i p r o T e c h n l o g i e s S e r v i c e s L i m i t e d I N R 1 . 0 0 3 9 3 3 , 2 4 6 5 , 0 1 8 1 , 3 7 9 - 1 0 0 % 4 , 1 0 6 1 , 6 4 5 2 6 3 1 , 3 8 2 - 7 2 W i p r o C h e n g d u L i m i t e d R M B 6 . 5 8 2 4 ( 5 1 ) 1 2 1 1 4 8 - 1 0 0 % 2 0 ( 5 1 ) - ( 5 1 ) - 7 3 L o r n a m e a d P e r s o n a l C a r e P r i v a t e L i m i t e d I N R 1 . 0 0 1 3 4 ( 7 4 ) 1 4 3 8 3 - 1 0 0 % 2 9 7 ( 2 8 ) - ( 2 8 ) - 7 4 W i p r o Y a r d l e y F Z E U S D 4 4 . 9 4 1 3 2 4 5 4 7 2 2 1 5 - 1 0 0 % 9 3 8 ( 4 2 ) - ( 4 2 ) - 7 5 W i p r o B a h r a i n L i m i t e d W L L B H D 1 1 9 . 1 8 6 ( 1 ) 5 - - 1 0 0 % - ( 0 ) - ( 0 ) - 7 6 W i p r o A i r p o r t I T S e r v i c e s L i m i t e d I N R 1 . 0 0 5 0 ( 1 ) 2 , 2 0 7 2 , 1 5 7 - 7 6 % - ( 1 ) - ( 1 ) - 7 7 P T W T I n d o n e s i a ( f ) - - - - - - - 1 0 0 % - - - - - 7 8 H y d r a u t o C e l k a S a n v e T i c ( g ) - - - - - - - 1 0 0 % - - - - - 7 9 W M N E T S E R V I n c ( g ) - - - - - - - 1 0 0 % - - - - - a ) M a j o r i t y o w n e d b y W i p r o I n c . b ) F u l l y o w n e d b y W i p r o H o l d i n g s ( M a u r i t i u s ) L i m i t e d c ) F u l l y o w n e d b y W i p r o H o l d i n g s ( U K ) L i m i t e d d ) F u l l y o w n e d b y W i p r o T r a d e m a r k s H o l d i n g L i m i t e d e ) T h e fi n a n c i a l r e s u l t s a r e a s o f a n d f o r t h e y e a r e n d e d M a r c h , 3 1 2 0 1 0 . f ) P T W T I n d o n e s i a i s y e t t o c o m m e n c e o p e r a t i o n s g ) H y d r a u t o C e l k a S a n v e T i c a n d W M N E T S E R V I n c a r e n o t o p e r a t i v e a n d h e n c e n o t i n c l u d e d a b o v e h ) A s o n M a r c h 3 1 , 2 0 0 9 , w e h a d 7 6 s u b s i d i a r i e s . W e h a v e p r o v i d e d t h e s u m m a r y o f fi n a n c i a l s o f t h e s e 7 6 s u b s i d i a r i e s a s a g a i n s t 8 4 s u b s i d i a r i e s f o r w h i c h a p p r o v a l w a s g i v e n b y t h e M i n i s t r y o f c o r p o r a t e A f f a i r s s i n c e 8 c o m p a n i e s h a d m e r g e d / w o u n d u p p r i o r t o M a r c h 3 1 , 2 0 0 9 . T h e c o m p a n i e s t h a t w e r e m e r g e d a r e a s f o l l o w s : ( i ) S p e c t r a m i n d I n c . ( i i ) I n f o c r o s s i n g E A S I n c ( i i i ) I n f o c r o s s i n g S e r v i c e s I n c ( i v ) I n f o c r o s s i n g W e s t I n c ( v ) I n f o c r o s s i n g H e a l t h c a r e S e r v i c e s I n c ( v i ) I n f o c r o s s i n g i C o n n e c t i o n , I n c ( v i i ) I n f o c r o s s i n g S e r v i c e s W e s t I n c ( v i i i ) S e r v i c e s S o u t h e a s t I n c i ) T h e C o m p a n y h a s s o l d o f f o n e o f i t s s u b s i d i a r y , v i z ; P o s i t i v e E q u i t y S d n B h d , d u r i n g t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 0 . A c c o r d i n g l y i t h a s p r e s e n t e d t h e s u m m a r y fi n a n c i a l i n f o r m a t i o n f o r 7 9 s u b s i d i a r i e s , a s a g a i n s t t h e e x e m p t i o n o b t a i n e d f o r 8 0 s u b s i d i a r i e s . CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO LIMITED AND SUBSIDIARIES 153 RECONCILIATION OF PROFITS BETWEEN IFRS AND INDIAN GAAP (Rs. in millions) Notes Fiscal 2010 Fiscal 2009 Profit after tax as per Indian GAAP 46,310 38,999 Intangible asset amortisation A (259) (43) Difference in revenue recognition norms B 26 (32) Stock Compensation Expense C 15 (101) Others D (21) (75) Tax adjustments (140) 13 Net Income as per IFRS 45,931 38,761 A. Under IFRS, a portion of the purchase consideration in a business acquisition is allocated to intangible assets which meets the criteria for being recognized as an asset apart from goodwill. These intangible assets are amortised over their useful life in proportion to the economic benefits consumed in each reporting period. The increase in intangible amortization is primarily due to acquisition of CITI Technologies in fiscal 2009. B. Under IFRS, revenue relating to product installation services is recognized when the installation services are performed. Under Indian GAAP, the entire revenue relating to the supply and installation of products is recognized when products are delivered since installation services are considered to be incidental / perfunctory to product delivery and the cost of installation services is also accrued upon delivery of the product. C. Under IFRS, the Company amortizes stock compensation expense relating to share options which vest in a graded manner on an accelerated basis, as compared to straight-line basis under Indian GAAP. Also under IFRS, the stock compensation expense is recognized net of expected attrition as compared to Indian GAAP, where stock compensation expense is reversed for options which do not vest due to attrition at actuals. D. This includes difference in accounting for certain foreign currency forward contracts and basis of interest capitalization under IFRS and Indian GAAP. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 154 AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATMENTS OF WIPRO LIMITED AND ITS SUBSIDIARIES We have audited the attached Consolidated Statement of Financial Position of Wipro Limited and its subsidiaries (“the Company”) as of March 31, 2010, and the related Consolidated Statement of Income, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows 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 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. 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 International Financial Reporting Standards as issued by International Accounting Standards Board (“IFRS”): (a) in the case of the Consolidated Statement of Financial Position, of the financial position of the Company as of March 31, 2010; (b) in the case of the Consolidated Statement of Income and Consolidated Statement of Comprehensive Income, of the financial performance of the Company for the year ended on that date; (c) in the case of the Consolidated Statement of Changes in Equity, of the changes in equity of the Company for the year ended on that date; and (d) in the case of the Consolidated Statement of Cash Flows, of the cash flows of the Company for the year ended on that date. for B S R & Co. Chartered Accountants Firm registration No: 101248W Akeel Master Partner Membership No.: 046768 Bangalore May 31, 2010 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 155 WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Rupees in millions, except share and per share data, unless otherwise stated) As of April 1, As of March 31, Notes 2008 2009 2010 Assets : Goodwill ............................................................... 5 42,635 56,143 53,802 Intangible assets ................................................... 5 1,866 3,493 4,011 Property, plant and equipment ............................ 4 39,478 49,794 53,458 Investment in equity accounted investees ........... 16 1,343 1,670 2,345 Derivative assets ................................................... 15 - 543 1,201 Deferred tax assets ................................................ 18 1,508 4,369 1,686 Non-current tax assets ......................................... 2,833 2,690 3,464 Other non-current assets...................................... 11 4,050 7,378 8,784 Total non-current assets ................................................ 93,713 126,080 128,751 Inventories ........................................................... 9 6,664 7,587 7,926 Trade receivables .................................................. 8 40,353 50,123 50,928 Other current assets ............................................. 11 11,269 14,664 21,106 Unbilled revenues ................................................ 8,514 14,108 16,708 Available for sale investments ............................. 7 15,247 16,293 30,420 Current tax assets ................................................. 4,157 5,664 6,596 Derivative assets ................................................... 15 64 619 2,615 Cash and cash equivalents ................................... 10 39,270 49,117 64,878 Total current assets ....................................................... 125,538 158,175 201,177 Total Assets ................................................................... 219,251 284,255 329,928 Equity : Share capital......................................................... 2,923 2,930 2,936 Share premium ..................................................... 25,373 27,280 29,188 Retained earnings................................................. 94,728 126,646 165,789 Share based payment reserve ............................... 3,149 3,745 3,140 Other components of equity ................................ (704) (12,915) (4,399) Shares held by controlled trust ............................ - (542) (542) Equity attributable to the equity holders of the Company .............................................................. 125,469 147,144 196,112 Minority interest………………………….. 116 237 437 Total equity ................................................................... 125,585 147,381 196,549 Liabilities : Loans and borrowings .......................................... 12 15,317 19,681 18,107 Derivative liabilities ............................................. 15 - 8,767 2,882 Deferred tax liabilities .......................................... 18 - 474 380 Non-current tax liabilities ................................... 2,227 2,321 3,065 Other non-current liabilities................................ 14 3,789 4,332 3,233 Provisions ............................................................. 14 396 448 503 Total non-current liabilities .......................................... 21,729 36,023 28,170 Loans and borrowings and bank overdraft 12 29,533 37,211 44,404 Trade payables and accrued expenses .................. 13 27,873 40,191 38,748 Unearned revenues .............................................. 4,269 8,734 7,462 Current tax liabilities ........................................... 1,786 4,171 4,850 Derivative liabilities ............................................. 15 2,571 3,255 1,375 Other current liabilities ....................................... 14 4,558 5,582 6,499 Provisions ............................................................. 14 1,347 1,708 1,871 Total current liabilities ................................................. ` 71,937 100,852 105,209 Total Liabilities ............................................................. 93,666 136,875 133,379 Total Equity And Liabilities ......................................... 219,251 284,255 329,928 The accompanying notes form an integral part of these consolidated financial statment. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 156 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 2009 2010 Revenues ...................................................................................................... 21 256,891 271,957 Cost of revenues ............................................................................................. 22 (180,215) (186,299) Gross profit ..................................................................................................... 76,676 85,658 Selling and marketing expenses ............................................................ 22 (17,313) (18,608) General and administrative expenses ................................................... 22 (14,510) (14,823) Foreign exchange losses ........................................................................ (1,553) (716) Results from operating activities ................................................................... 43,300 51,511 Finance expense .................................................................................... 23 (3,824) (991) Finance and other income .................................................................... 24 5,057 4,360 Share of profits of equity accounted investees ...................................... 16 362 530 Profit before tax .............................................................................................. 44,895 55,410 Income tax expense............................................................................... 18 (6,035) (9,294) Profit for the year ........................................................................................... 38,860 46,116 Attributable to: Equity holders of the Company ............................................................ 38,761 45,931 Minority interest ................................................................................... 99 185 Profit for the year .................................................................................. 38,860 46,116 Earnings per equity share: 25 Basic ..................................................................................................... 26.66 31.52 Diluted................................................................................................... 26.50 31.25 Weighted-average number of equity shares used in computing earnings per equity share: Basic ...................................................................................................... 1,454,135,089 1,457,415,146 Diluted................................................................................................... 1,462,636,212 1,469,830,993 The accompanying notes form an integral part of these consolidated financial statements. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 157 WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Rupees in millions, except share and per share data, unless otherwise stated) Year ended March 31, Notes 2009 2010 Profit for the year ........................................................................................... 38,860 46,116 Other comprehensive income, net of taxes: Foreign currency translation differences: Translation difference relating to foreign operations ........................... 17 8,992 (5,522) Net change in fair value of hedges of net investment in foreign operations .............................................................................................. 17 (7,427) 4,202 Net change in fair value of cash flow hedges ............................................ 15, 18 (13,436) 9,841 Net change in fair value of available for sale investments ....................... 7, 18 (320) (50) Total other comprehensive income, net of taxes .......................................... (12,191) 8,471 Total comprehensive income for the year ..................................................... 26,669 54,587 Attributable to: Equity holders of the Company ..................................................................... 26,548 54,447 Minority interest ............................................................................................ 121 140 26,669 54,587 The accompanying notes form an integral part of these consolidated financial statements. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 158 W I P R O L I M I T E D A N D S U B S I D I A R I E S C O N S O L I D A T E D S T A T E M E N T S O F C H A N G E S I N E Q U I T Y ( R u p e e s i n m i l l i o n s , e x c e p t s h a r e a n d p e r s h a r e d a t a , u n l e s s o t h e r w i s e s t a t e d ) O t h e r c o m p o n e n t s o f e q u i t y N o . o f s h a r e s S h a r e c a p i t a l S h a r e p r e m i u m R e t a i n e d e a r n i n g s S h a r e b a s e d p a y m e n t r e s e r v e F o r e i g n c u r r e n c y t r a n s l a t i o n r e s e r v e C a s h fl o w h e d g i n g r e s e r v e O t h e r r e s e r v e S h a r e s h e l d b y c o n t r o l l e d T r u s t E q u i t y a t t r i b u t a b l e t o t h e e q u i t y h o l d e r s o f t h e C o m p a n y M i n o r i t y i n t e r e s t T o t a l e q u i t y A s a t A p r i l 1 , 2 0 0 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 , 4 6 1 , 4 5 3 , 3 2 0 2 , 9 2 3 2 5 , 3 7 3 9 4 , 7 2 8 3 , 1 4 9 ( 1 0 ) ( 1 , 0 9 7 ) 4 0 4 - 1 2 5 , 4 6 9 1 1 6 1 2 5 , 5 8 5 C a s h d i v i d e n d p a i d ( i n c l u d i n g d i v i d e n d t a x t h e r e o n ) ( 6 , 8 4 2 ) ( 6 , 8 4 2 ) ( 6 , 8 4 2 ) I s s u e o f e q u i t y s h a r e s o n e x e r c i s e o f o p t i o n s . . . . . . . . . . . . . 2 , 5 5 8 , 6 2 3 5 1 , 3 6 7 ( 1 , 2 7 2 ) 1 0 0 1 0 0 P r o fi t f o r t h e y e a r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 8 , 7 6 1 3 8 , 7 6 1 9 9 3 8 , 8 6 0 O t h e r c o m p r e h e n s i v e i n c o m e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 , 5 4 3 ( 1 3 , 4 3 6 ) ( 3 2 0 ) ( 1 2 , 2 1 3 ) 2 2 ( 1 2 , 1 9 1 ) S h a r e s i s s u e d a n d h e l d b y c o n t r o l l e d t r u s t . . . . . . . . . . . . . . . 9 6 8 , 8 0 3 2 5 4 0 ( 5 4 2 ) - - C o m p e n s a t i o n c o s t r e l a t e d t o e m p l o y e e s h a r e b a s e d p a y m e n t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - 1 , 8 6 8 - - - - 1 , 8 6 8 - 1 , 8 6 8 A s a t M a r c h 3 1 , 2 0 0 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 , 4 6 4 , 9 8 0 , 7 4 6 2 , 9 3 0 2 7 , 2 8 0 1 2 6 , 6 4 6 3 , 7 4 5 1 , 5 3 3 ( 1 4 , 5 3 3 ) 8 5 ( 5 4 2 ) 1 4 7 , 1 4 4 2 3 7 1 4 7 , 3 8 1 A s a t A p r i l 1 , 2 0 0 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 , 4 6 4 , 9 8 0 , 7 4 6 2 , 9 3 0 2 7 , 2 8 0 1 2 6 , 6 4 6 3 , 7 4 5 1 , 5 3 3 ( 1 4 , 5 3 3 ) 8 5 ( 5 4 2 ) 1 4 7 , 1 4 4 2 3 7 1 4 7 , 3 8 1 C a s h d i v i d e n d p a i d ( i n c l u d i n g d i v i d e n d t a x t h e r e o n ) ( 6 , 7 8 8 ) ( 6 , 7 8 8 ) ( 6 , 7 8 8 ) I s s u e o f e q u i t y s h a r e s o n e x e r c i s e o f o p t i o n s . . . . . . . . . . . . . 3 , 2 3 0 , 4 4 3 6 1 , 9 0 8 ( 1 , 9 0 8 ) 6 - 6 P r o fi t f o r t h e y e a r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 , 9 3 1 4 5 , 9 3 1 1 8 5 4 6 , 1 1 6 O t h e r c o m p r e h e n s i v e i n c o m e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 1 , 2 7 5 ) 9 , 8 4 1 ( 5 0 ) 8 , 5 1 6 ( 4 5 ) 8 , 4 7 1 I n f u s i o n o f c a p i t a l , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 0 6 0 C o m p e n s a t i o n c o s t r e l a t e d t o e m p l o y e e s h a r e b a s e d p a y m e n t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - 1 , 3 0 2 - - - - 1 , 3 0 2 - 1 , 3 0 2 A s a t M a r c h 3 1 , 2 0 1 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 , 4 6 8 , 2 1 1 , 1 8 9 2 , 9 3 6 2 9 , 1 8 8 1 6 5 , 7 8 9 3 , 1 4 0 2 5 8 ( 4 , 6 9 2 ) 3 5 ( 5 4 2 ) 1 9 6 , 1 1 2 4 3 7 1 9 6 , 5 4 9 T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e s e C o n s o l i d a t e d fi n a n c e S t a t m e n t s . CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 159 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, 2009 2010 Cash flows from operating activities: Profit for the year ................................................................................................... 38,860 46,116 Adjustments to reconcile profit for the year to net cash generated from operating activities: Gain on sale of property, plant and equipment ..................................................... (28) (43) Depreciation and amortization .............................................................................. 6,948 7,831 Unrealized exchange (gain) / loss ......................................................................... 3,728 (1,462) Impact of cash flow/net investment hedging activities ......................................... (12,196) 6,017 Gain on sale of investments .................................................................................. (681) (308) Share based compensation .................................................................................... 1,868 1,302 Income tax expense ............................................................................................... 6,035 9,294 Share of profits of equity accounted investees ...................................................... (362) (530) Dividend and interest (income)/expenses, net ..................................................... (1,331) (2,820) Changes in operating assets and liabilities: Trade and other receivables ................................................................................... (8,024) (2,150) Unbilled revenues .................................................................................................. (5,594) (2,600) Inventories ............................................................................................................. (922) (218) Other assets ............................................................................................................ (1,663) (2,203) Trade payables and accrued expenses .................................................................... 12,260 (66) Unearned revenues ................................................................................................ 2,465 (1,272) Other liabilities ...................................................................................................... 1,986 2,024 Cash generated from operating activities before taxes ................................................ 43,349 58,912 Income taxes paid, net ........................................................................................... (7,250) (7,914) Net cash generated from operating activities ........................................................ 36,099 50,998 Cash flows from investing activities: Expenditure on property, plant and equipment and intangible assets .................. (16,746) (12,631) Proceeds from sale of property, plant and equipment ........................................... 358 397 Purchase of available for sale investments ............................................................ (342,717) (340,891) Proceeds from sale of available for sale investments ............................................. 341,687 325,770 Investment in inter-corporate deposits ................................................................. (3,750) (10,750) Refund of inter-corporate deposits ........................................................................ - 4,950 Payment for business acquisitions, net of cash acquired ....................................... (6,679) (4,399) Interest received .................................................................................................... 1,398 2,297 Dividend received .................................................................................................. 2,266 1,442 Net cash used in investing activities ..................................................................... (24,183) (33,815) Cash flows from financing activities: Proceeds from issuance of equity shares ................................................................ 100 6 Proceeds from issuance of equity shares by a subsidiary ........................................ - 60 Repayment of loans and borrowings ..................................................................... (80,251) (55,661) Proceeds from loans and borrowings ..................................................................... 86,121 63,011 Payment of cash dividend (including dividend tax thereon) ............................... (6,829) (6,823) Interest paid on loans and borrowings .................................................................. (2,400) (1,194) Net cash used in financing activities ..................................................................... (3,259) (601) Net increase in cash and cash equivalents during the year ......................................... 8,657 16,582 Effect of exchange rate changes on cash and cash equivalents ............................ 663 (1,258) Cash and cash equivalents at the beginning of the year ....................................... 38,912 48,232 Cash and cash equivalents at the end of the year (Note 10) ................................ 48,232 63,556 The accompanying notes form an integral part of these consolidated financial statements CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 160 Index of Notes to Accounts Note Reference Page No. Overview ............................................................................................................................................. 1 161 Basis of preparation of financial statements ........................................................................................ 2 161-162 Significant accounting policies ........................................................................................................... 3 162-176 Property, Plant and equipment ........................................................................................................... 4 176-177 Goodwill and Intangible Assets .......................................................................................................... 5 177-178 Business Combination ......................................................................................................................... 6 178-179 Available for sale investments, Trade receivables and Inventories ........................................... 7, 8, 9 180 Cash and cash equivalents ................................................................................................................ 10 180-181 Other Assets ...................................................................................................................................... 11 181 Loans and Borrowings ....................................................................................................................... 12 182-183 Trade payables and accrued expenses, Other Liablities and Provisions .................................... 13, 14 183 Financial instruments ........................................................................................................................ 15 183-188 Investment in equity accounted investees ........................................................................................ 16 188-189 Foreign currency translation reserve ................................................................................................. 17 189 Income taxes...................................................................................................................................... 18 189-191 Dividends, Additional capital disclosures and Revenues ..................................................... 19, 20, 21 191 Expenses by nature, Finance expense, Finance and other income and Earnings per equity share ................................................................................................ 22, 23, 24, 25 192 Employee stock incentive plans ........................................................................................................ 26 192-194 Employee benefits .............................................................................................................................. 27 194-195 Related party relationships and transactions .................................................................................... 28 196-199 Commitment and contingencies....................................................................................................... 29 199-200 Segment Information ........................................................................................................................ 30 200-203 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 161 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: 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 31, 2010. 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 are covered by IFRS 1, “First Time Adoption of IFRS”, as they are the Company’s first consolidated IFRS financial statements for the year ended March 31, 2010. 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 transition to IFRS has been carried out from the accounting principles generally accepted in India (Indian GAAP), which is considered as the “Previous GAAP”, for purposes of IFRS 1. An explanation of the effect of the transition from Previous GAAP to IFRS on the Company’s equity and profit is provided in Note 3 (xix). The preparation of these consolidated financial statements resulted in changes to the Company’s accounting policies as compared to most recent annual financial statements prepared under Previous GAAP. Accounting policies have been applied consistently to all periods presented in the consolidated financial statements including the preparation of the IFRS opening statement of financial position as at April 1, 2008 (“Transition Date”) for the purpose of the transition to IFRS and as required by IFRS 1. These accounting policies have been applied consistently by all entities within the Group. 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 that have been measured at fair value as required by relevant IFRS:- a. Derivative financial instruments; b. Available-for-sale financial assets; and c. Share based payment transaction. (iv) 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) to measure progress towards completion in respect of fixed price contracts. Percentage of completion method accounting relies on estimates CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 162 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 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) Busi ness combi nati on: In accounting for business combination, 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. Significant accounting policies: (i) Basis of consolidation: a) 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. b) 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. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 163 (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 in finance expense. 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. 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 of, 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 of, 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 all of the risks and rewards of ownership have been transferred. 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 other comprehensive income is transferred to statement of income. C. Others: Other non-derivative financial instruments are measured at amortized cost using the effective interest method, less any impairment losses. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 164 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 presented within equity in the cash flow hedging reserve 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. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then 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. 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 and the ineffective portion of cash flow hedges are recognized in the statement of income and reported within foreign exchange gains/(losses), net under results from operating activities. Changes in fair value and gains/(losses) on settlement of foreign currency derivative instruments relating to borrowings, which have been not 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 1,650,000,000 equity shares, par value Rs. 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 8,930,563 treasury shares as of March 31, 2009 and 2010, respectively. Treasury shares are recorded at acquisition cost. During the year ended March 31, 2009, the Company completed the merger of certain subsidiaries with itself. Pursuant to the terms of merger approved by the courts in India, the Company issued 968,803 fully paid equity shares amounting to Rs. 542 to a controlled trust. This transaction was determined to be a common control transfer, in accordance with the guidance in IFRS 3 “Business combination”. Accordingly, no adjustments were made to the carrying value of assets and liabilities. c) Retained earnings: Retained earnings comprises of the Company’s prior years’ undistributed earnings after taxes. A portion of these earnings amounting to Rs. 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, 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. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 165 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 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 Useful life Buildings 30 to 60 years Plant and machinery 2 to 21 years Computer equipment and software 2 to 6 years Furniture, fixtures and equipment 3 to 10 years Vehicles 4 years 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 consummated subsequent to the Transition Date (i.e. April 1, 2008) 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, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the date of acquisition. Contingent consideration is recorded when it is probable that such consideration would be paid and can be measured reliably. In respect of acquisitions prior to the Transition Date, goodwill is included on the basis of its deemed costs, which represents the amount recognized under the Company’s Previous GAAP. a) Goodwill: The excess of the cost of 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 acquisition. Intangible assets acquired in a business combination are measured at fair value as at the date of 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 finite useful life 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 Useful life Customer-related intangibles 2 to 11 years Marketing related intangibles 20 to 30 years (viii) Leases 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 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 166 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 recognises 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 (iv) 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 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 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. 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 or pension and recognizes such shortfall, if any, as an expense in the year it is incurred. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 167 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 profit-sharing 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 unutilised accumulating compensated absences and utilise 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. Non-accumulating 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. (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. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 168 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 are 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. 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. 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. 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. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 169 Deferred income tax liabilities are recognized for all taxable temporary differences except in respect of taxable temporary differences associated with investments in subsidiaries and associates 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. (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. (xix) Transition to IFRS As stated in Note 2 (ii), the Company’s consolidated financial statements for the year ended March 31, 2010 are the first annual consolidated financial statements prepared in compliance with IFRS. The adoption of IFRS was carried out in accordance with IFRS 1, using April 1, 2008 as the transition date. IFRS 1 requires that all IFRS standards and interpretations that are effective for the first IFRS Consolidated Financial Statements for the year ended March 31, 2010, be applied consistently and retrospectively for all fiscal years presented. All applicable IFRS have been applied consistently and retrospectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the consolidated financial statements under both IFRS and Previous GAAP as of the Transition Date have been recognized directly in equity at the Transition Date. In preparing these consolidated financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with IFRS 1 as explained below: a) Exemptions from retrospective application: A. Business combination exemption: The Company has applied the exemption as provided in IFRS 1 on non-application of IFRS 3, “Business Combinations” to business combinations consummated prior to the date of Transition (April 1, 2008). Pursuant to this, exemption, goodwill arising from business combination has been stated at the carrying amount under Previous GAAP. Further, intangible assets net of related taxes, which were subsumed in goodwill under Previous GAAP, were not recognized in the opening statement of financial position as at April 1, 2008 since these did not qualify for recognition in the separate statement of financial position of the acquired entities. The Company has adjusted goodwill relating to past business combinations, for contingent consideration, if it is probable that such consideration would be paid and can be measured reliably as of the Transition Date. B. Share-based payment exemption: The Company has elected to apply the share based payment exemption available under IFRS 1 on application of IFRS 2,”Share Based Payment”, to only grants made after November 7, 2002, which remained unvested as of the Transition date. C. Borrowing costs: The Company had the policy of capitalizing borrowing costs for all qualifying assets under its Previous GAAP. Accordingly, the Company has capitalized borrowing cost in respect of qualifying costs prior to the Transition date. However, there is a difference in the basis of capitalizing such costs between IFRS and Previous GAAP, which has been recorded as a reconciling item as a part of the transition. b) Exceptions from full retrospective application: A. Hedge accounting exception: The Company had followed hedge accounting under Previous GAAP which is aligned to IFRS. Accordingly, this exception of not reflecting in its opening IFRS statement of financial position a hedging relationship of a type that does not qualify for hedge accounting under IAS 39, is not applicable to the Company. B. Estimates exception: Upon an assessment of the estimates made under Previous GAAP, the Company has concluded that there was no necessity to revise such estimates under IFRS, except where estimates were required by IFRS and not required by Previous GAAP. Reconciliations: The following reconciliations provide a quantification of the effect of significant differences arising from the transition from Previous GAAP to IFRS in accordance with IFRS 1: – equity as at April 1, 2008; – equity as at March 31, 2009; – profit for the year ended March 31, 2009; and – explanation of material adjustments to cash flow statements. In the reconciliations mentioned above, certain reclassifications have been made to Previous GAAP financial information to align with the IFRS presentation. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 170 Reconciliation of Equity as at April 1, 2008 Particulars Amount as per Previous GAAP Effect of Transition to IFRS Amount as per IFRS Relevant Notes for adjustments Goodwill Rs. 42,209 Rs. 426 Rs. 42,635 8 Property, plant and equipment and intangible assets.... 41,583 (239) 41,344 1,2 Available for sale investments 14,679 568 15,247 3 Investment in equity accounted investees. 1,343 - 1,343 Inventories 6,664 - 6,664 Trade receivables 40,453 (100) 40,353 4 Unbilled revenues 8,514 - 8,514 Cash and cash equivalents 39,270 - 39,270 Net tax assets (including deferred taxes) 3,632 854 4,486 5 Other assets 13,980 1,399 15,379 2(a),4,9,10,13 TOTAL ASSETS Rs. 212,327 Rs. 2,908 Rs. 215,235 Share capital and share premium (net of shares issued to controlled trust) Rs. 28,296 Rs. - Rs. 28,296 Share application money pending allotment 40 (40) - 12 Retained earnings 87,908 6,820 94,728 Cash flow hedging reserve (1,097) - (1,097) Other reserves 1,807 1,851 3,658 3,7,11 Total equity (A) 116,954 8,631 125,585 Minority interest 116 (116) - 11 Loans and borrowings 44,850 - 44,850 Trade payables and accrued expenses 27,873 - 27,873 Unearned revenues 4,269 - 4,269 Other liabilities and provisions 18,265 (5,607) 12,658 6,8,10,12 Total liabilities (B) 95,373 (5,723) 89,650 TOTAL LIABILITIES AND EQUITY (A)+(B) Rs. 212,327 Rs. 2,908 Rs. 215,235 Notes: 1) Under IFRS, the amortization charge in respect of finite life intangible assets is recorded in proportion of economic benefits consumed during the period to the expected total economic benefits from the intangible asset. Under Previous GAAP, finite life intangible assets are amortized usually on a straight line basis over their useful life. As a result, the accumulated amortization under IFRS is lower by Rs. 101 as at April 1, 2008. 2) Listed below are the key differences in property, plant and equipment between IFRS and Previous GAAP: a) Under IFRS, leases of land are classified as operating leases unless the title to the leasehold land is expected to be transferred to the Company at the end of the lease term. Lease rentals paid in advance and lease deposits are recognized as other assets. Under Previous GAAP, the lease rentals paid in advance and lease deposits are recognized in property, plant and equipment. Under IFRS, Rs. 645 of such payments towards lease of land has been reclassified from property, plant and equipment to other assets. This adjustment has no impact on equity. b) Difference in the basis of interest capitalization between Previous GAAP and IFRS resulted in higher interest capitalization by Rs. 305 under IFRS, net of related depreciation impact. 3) Under IFRS, available for sale investments are measured at fair value at each reporting date. The changes in fair value of such investments, net of taxes, are recognized directly in equity. Under Previous GAAP, short-term investments are measured at lower of cost or fair value. Consequently, carrying value of the available for sale investments under IFRS is higher by Rs. 568 (tax effect Rs. 165). 4) Under IFRS an entity is required to allocate revenue to separately identifiable components of a multiple deliverable customer arrangement. The revenue relating to these components are recognized when the appropriate revenue recognition criteria is met. Under IFRS, in respect of multiple CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 171 element arrangements comprising delivered products and installation services, the Company defers and recognizes revenue relating to installation services when those services are rendered. Under Previous GAAP, installation services are considered to be incidental / perfunctory to product delivery. Entire revenue is recognized, when the products are delivered in accordance with the contractual terms, and expected cost of installation services is also accrued. Consequently, under IFRS the Company has unearned revenue of Rs. 100 and reversed Rs. 78 of cost accrued for installation services. The deferred revenues are recognized when the related installation services is performed. 5) Under IFRS, tax benefits from carry forward tax losses is recognized if it is probable that sufficient taxable profits would be available in the future to realize the tax benefits. Under Previous GAAP, deferred tax asset in respect of carry forward tax losses is recognized if it is virtually certain that sufficient future taxable income would be available in the future to realize the tax benefits. Further, Previous GAAP requires an entity to follow the income statement approach for recognizing deferred taxes, while IFRS mandates the balance sheet approach in recognizing deferred taxes. As a result, net deferred tax assets under IFRS are higher by Rs. 854. 6) Under Previous GAAP, a liability is recognized in respect of proposed dividend on Company’s equity shares, even- though the dividend is expected to be approved by the shareholders subsequent to the reporting date. Under IFRS, liability for dividend is recognized only when it is approved by shareholders. Accordingly, provisions under IFRS is lower by Rs. 6,842. 7) The Company grants share options to its employees. These share options vest in a graded manner over the vesting period. Under IFRS, each tranche of vesting is treated as a separate award and the stock compensation expense relating to that tranche is amortized over the vesting period of the underlying tranche. This results in accelerated amortization of stock compensation expense in the initial years following the grant of share options. Previous GAAP permits an entity to recognize the stock compensation expense, relating to share options which vest in a graded manner, on a straight-line basis over the requisite vesting period for the entire award. However, the amount of compensation cost recognized at any date must at least equal the portion of the grant-date value of the award that is vested at that date. Accordingly, the stock compensation expense recognized under IFRS is higher by Rs. 1,332 as at April 1, 2008 in respect of the unvested awards. 8) Under IFRS, contingent consideration relating to acquisitions is recognized if it is probable that such consideration would be paid and can be measured reliably. Under Previous GAAP, contingent consideration is recognized after the contingency is resolved and additional consideration becomes payable. As a result, under IFRS, the Company has recognized Rs. 426 of contingent consideration as additional goodwill and liability. This adjustment has no impact on equity. 9) Under IFRS, loans and receivables are recognized at amortized cost, which is carried at historical cost under Previous GAAP. As a result, the carrying value of such loans and receivables under IFRS is lower by Rs. 154. 10) Indian tax laws, levies Fringe benefit Tax (FBT) on all stock options exercised on or after April 1, 2007. The Company has modified share options plan to recover FBT from the employees. Under IFRS 2, Share based payment, the FBT paid to the tax authorities is recorded as a liability over the period that the employee renders services. Recovery of the FBT from the employee is accounted as a reimbursement right under IAS 37, Provisions, contingent liabilities and contingent assets, as it is virtually certain that the Company will recover the FBT from the employee. Accordingly, under IFRS, the Company has recognized the reimbursement right as a separate asset, not to exceed the FBT liability recognized at each reporting period. Under Previous GAAP, FBT liability and the related FBT recovery from the employee is recorded at the time of exercise of stock option by the employee. Accordingly, under IFRS the Company has recognized Rs. 766 as other liabilities and reimbursement right in respect of outstanding stock options. This adjustment has no impact on equity. 11) Under IFRS, minority interest is reported as a separate item within equity, whereas Previous GAAP requires minority interest to be presented separately from equity. This presentation difference between IFRS and Previous GAAP has resulted in an increase in equity under IFRS by Rs. 116 as at April 1, 2008. 12) Under IFRS, share application money received and pending allotment is reported under other liabilities, whereas Previous GAAP requires share application money pending allotment to be presented as a separate item within equity. This presentation difference between IFRS and Previous GAAP has resulted in a decrease in equity under IFRS by Rs. 40 as at April 1, 2008. 13) Difference in accounting for certain foreign currency forward contracts has resulted in an increase in other assets by Rs. 64 under IFRS as of April 1, 2008. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 172 Reconciliation of Equity as at March 31, 2009 Particulars Amount as per Previous GAAP Effect of Transition to IFRS Amount as per IFRS Relevant Notes for adjustments Goodwill Rs. 56,521 Rs. (378) Rs. 56,143 1,10 Property, plant and equipment and intangible assets 52,563 724 53,287 1,2,3 Available for sale investments 16,426 (133) 16,293 4 Investment in equity accounted investees 1,670 - 1,670 Inventories 7,587 - 7,587 Trade receivables 50,370 (247) 50,123 5 Unbilled revenues 14,108 - 14,108 Cash and cash equivalents 49,117 - 49,117 Net tax assets (including deferred taxes) 2,672 3,087 5,759 6 Other assets 20,984 2,219 23,203 3(a),5, 9, 13 TOTAL ASSETS Rs. 272,018 Rs. 5,272 Rs. 277,290 Share capital and share premium (net of shares issued to controlled trust) Rs. 29,667 Rs. - Rs. 29,667 Share application money pending allotment 15 (15) - 12 Retained earnings 119,957 6,689 126,646 Cash flow hedging reserve (16,886) 2,353 (14,533) 6 Other reserves 3,546 2,055 5,601 4, 8,11 Total equity (A) 136,299 11,082 147,381 Minority interest 237 (237) - 11 Loans and borrowings 56,892 - 56,892 Trade payables and accrued expenses 40,191 - 40,191 Unearned revenues 8,734 - 8,734 Other liabilities and provisions 29,665 (5,573) 24,092 7,9,10,12, 13 Total liabilities (B) 135,719 (5,810) 129,909 TOTAL LIABILITIES AND EQUITY (A)+(B) Rs. 272,018 Rs. 5,272 Rs. 277,290 Notes: 1) Under IFRS, all the assets and liabilities arising from a business combination are identified and recorded at fair value. Accordingly, a portion of purchase price is allocated towards customer related intangible in respect of business combination consummated subsequent to the Transition date. Under Previous GAAP, assets and liabilities arising from a business combination are recognized at carrying value in the books of the acquired entity. Internally generated intangible assets would not have been recognized by the acquired entity and therefore customer related intangible arising from the business combination is not recognized under Previous GAAP. Accordingly, goodwill under IFRS is lower by Rs. 1,139 (net of deferred taxes) and intangible assets are higher by Rs. 1,535 (net of amortization of Rs. 91). 2) Under IFRS, the amortization charge in respect of finite life intangible assets is recorded in the proportion of economic benefits consumed during the period to the expected total economic benefits from the intangible asset. Under Previous GAAP, finite life intangible assets are amortized usually on a straight line basis over their useful life. As a result the accumulated amortization under IFRS is lower by Rs. 149 as at March 31, 2009. 3) Listed below are the key differences in property, plant and equipment between IFRS and Previous GAAP: a) Under IFRS, leases of land are classified as operating leases unless the title to the leasehold land is expected to be transferred to the Company at the end of the lease term. Lease rentals paid in advance and lease deposits are recognized as other assets. Under Previous GAAP, the lease rentals paid in advance and lease deposits are recognized in property, plant and equipment. Under IFRS, Rs. 1,293 of such payments towards lease of land has been reclassified CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 173 from property, plant and equipment to other assets. This adjustment has no impact on equity. b) Difference in the basis of interest capitalization between Previous GAAP and IFRS resulted in higher interest capitalization by Rs. 331 under IFRS, net of related depreciation impact. 4) Under IFRS, available for sale investments are measured at fair value at each reporting date. The changes in fair value of such investments net of taxes, are recognized directly in equity. Under Previous GAAP, short-term investments are measured at lower of cost or fair value. Consequently, available for sale investments under IFRS is higher by Rs. 117 (tax effect Rs. 33). Additionally, investment in non convertible debentures amounting to Rs. 250 is classified as investments under Previous GAAP whereas the same is shown under other assets in IFRS. This has no impact on equity. 5) Under IFRS, an entity is required to allocate revenue to separately identifiable components of a multiple deliverable customer arrangement. The revenue relating to these components are recognized when the appropriate revenue recognition criteria is met. Under IFRS, in respect of multiple element arrangements comprising delivered products and installation services, the Company defers and recognizes revenue relating to installation services when those services are rendered. Under Previous GAAP, installation services are considered to be incidental / perfunctory to product delivery. Entire revenue is recognized, when the products are delivered in accordance with the contractual terms, and expected cost of installation services is also accrued. Consequently, under IFRS the Company has deferred revenue of Rs. 247 and reversed Rs. 195 of cost accrued for installation services. The deferred revenues are recognized when the related installation services is performed. 6) Under IFRS, tax benefits from carry forward tax losses is recognized if it is probable that sufficient taxable profits would be available in the future to realize the tax benefits. Under Previous GAAP, deferred tax asset in respect of carry forward tax losses is recognized if it is virtually certain that sufficient future taxable income would be available in the future to realize the tax benefits. Further, Previous GAAP requires an entity to follow the income statement approach for recognizing deferred taxes, while IFRS mandates balance sheet approach in recognizing deferred taxes. As a result, net deferred tax assets under IFRS are higher by Rs. 3,087 (including impact of foreign currency translation adjustment, where necessary). 7) Under Previous GAAP, liability is recognized in respect of proposed dividend on Company’s equity share, even though the dividend is expected to be approved by the shareholders subsequent to the reporting date. Under IFRS, liability for dividend is recognized only when it is approved by shareholders. Accordingly, provisions under IFRS are lower by Rs. 6,856. 8) The Company grants share options to its employees. These share options vest in a graded manner over the vesting period. Under IFRS, each tranche of vesting is treated as a separate award and the stock compensation expense relating to that tranche is amortized over the vesting period of the underlying tranche. This results in accelerated amortization of stock compensation expense in the initial years following grant of share options. Previous GAAP permits an entity to recognize the stock compensation expense, relating to share options which vest in a graded manner, on a straight-line basis over the requisite vesting period for the entire award. However, the amount of compensation cost recognized at any date must at least equal the portion of the grant-date value of the award that is vested at that date. Accordingly, the stock compensation expense recognized under IFRS is higher by Rs. 1,432 as at March 31, 2009, in respect of unvested awards. 9) Indian tax laws levy Fringe Benefit Tax (FBT) on all stock options exercised on or after April 1, 2007. The Company has modified share options plan to recover FBT from the employees. Under IFRS 2, Share based payment, the FBT paid to the tax authorities is recorded as a liability over the period that the employee renders services. Recovery of the FBT from the employee is accounted as a reimbursement right under IAS 37, Provisions, contingent liabilities and contingent assets, as it virtually certain that the Company will recover the FBT from the employee. Accordingly, under IFRS, the Company has recognized the reimbursement right as a separate asset, not to exceed the FBT liability recognized at each reporting period. Under Previous GAAP, FBT liability and the related FBT recovery from the employee is recorded at the time of exercise of stock option by the employee. Accordingly, under IFRS, the Company has recognized Rs. 741 as other liabilities and reimbursement right in respect of outstanding stock options. This adjustment has no impact on equity. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 174 10) Under IFRS, contingent consideration relating to acquisitions is recognized if it is probable that such consideration will be paid and can be measured reliably. Under Previous GAAP, contingent consideration is recognized after the contingency is resolved and additional consideration becomes payable. As a result, under IFRS, the Company has recognized Rs. 761 of contingent consideration as additional goodwill and liability. This adjustment has no impact on equity. 11) Under IFRS, minority interest is reported as a separate item within equity, whereas Previous GAAP requires minority interest to be presented separately from equity. This presentation difference between IFRS and Previous GAAP has resulted in an increase in equity under IFRS by Rs. 237 as at March 31, 2009. 12) Under IFRS, share application money received and pending allotment is reported under other liabilities, whereas Previous GAAP requires share application money pending allotment to be presented as a separate item within equity. This presentation difference between IFRS and Previous GAAP has resulted in a decrease in equity under IFRS by Rs. 15 as at March 31, 2009. 13) Difference in accounting for certain foreign currency forward contract has resulted in a decrease in other assets by Rs. 260 and other liabilities by Rs. 236 under IFRS as of March 31, 2009. Reconciliation of Profit for the Year Ended March 31, 2009 Particulars Amount as per Previous GAAP Effect of Transition to IFRS Amount as per IFRS Relevant Notes for adjustments Revenues Rs. 256,995 Rs. (104) Rs. 256,891 1 Cost of revenues (179,230) (985) (180,215) 1,2, 5 Gross profit 77,765 (1,089) 76,676 Selling and marketing expenses (17,853) 540 (17,313) 1(c ),2,3,5 General and administrative expenses (14,356) (154) (14,510) 2,5 Foreign exchange gains/(losses), net (1,553) - (1,553) Results from operating activities 44,004 (704) 43,300 Finance expense (3,865) 41 (3,824) 4 Finance and other income 5,057 - 5,057 Share of profits of equity accounted investees 362 - 362 Profit before tax 45,558 (663) 44,895 Income tax expense (6,460) 425 (6,035) 5 Profit for the year Rs. 39,098 Rs. (238) Rs. 38,860 Attributable to: Equity holders of the Company Rs. 38,999 Rs. 38,761 Minority Interest 99 99 Notes: 1) The following are the primary differences in revenue between IFRS and Previous GAAP: a) Under Previous GAAP, revenue is reported net of excise duty charged to customers. Under IFRS, revenue includes excise duty charged to customers. As a result, revenues and cost of revenues under IFRS is higher by Rs. 1,055. b) Under IFRS, revenue relating to product installation services is recognized when the installation services are performed. Under Previous GAAP, the entire revenue relating to the supply and installation of products is recognized when products are delivered in accordance with the terms of contract. Installation services are considered to be incidental / perfunctory to product delivery and the cost of installation services is accrued upon delivery of the product. Accordingly, CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 175 revenue and cost of revenue under IFRS is lower by Rs. 147 and Rs. 117, respectively. c) Under IFRS, generally cash payments to customers pursuant to sales promotional activities are considered as sales discounts and reduced from revenue. Under Previous GAAP, such payments are considered as cost of revenue and selling and marketing expense. As a result, under IFRS, revenue is lower by Rs. 1,011 and cost of revenues and selling and marketing expenses are lower by Rs. 275 and Rs. 736, respectively. 2) Under IFRS, the Company amortizes stock compensation expense, relating to share options, which vest in a graded manner, on an accelerated basis. Under Previous GAAP, the stock compensation expense is recorded on a straight-line basis. As a result, under IFRS the Company has recognized additional stock compensation expense of Rs. 40 in cost of revenue, Rs. 30 in selling and marketing expenses and Rs. 30 in general and administrative expenses. 3) Under IFRS, the amortization charge in respect of finite life intangible assets is recorded in the proportion of economic benefits consumed during the period to the expected total economic benefits from the intangible asset. Under Previous GAAP, such finite life intangible assets are amortized on a straight-line basis over the life of the asset. Further, the Company recorded additional amortization in respect of customer related intangible arising out of business combination consummated subsequent to the Transition date. Accordingly, amortization under IFRS is higher by Rs. 43. 4) This includes difference in accounting for certain foreign currency forward contracts and basis of interest capitalization under IFRS and Previous GAAP. 5) Under Indian tax laws, the Company is required to pay Fringe Benefit Tax (FBT) on certain expenses incurred by the Company. Under Previous GAAP, FBT is reported in the income statement as a separate component of income tax expense. Under IFRS, FBT does not meet the definition of income tax expense and is recognized in the related expense line items. Accordingly, the cost of revenue, selling and marketing expenses and general and administrative expenses under IFRS are higher by Rs. 165, Rs. 124 and Rs. 124, respectively and income tax expense is correspondingly lower. Explanation of material adjustments to the cash flow statements Under Previous GAAP, changes in amount of bank overdraft balances are reported as financing activity. Under IFRS, bank overdraft is included in cash and cash equivalent, and consequently the cash flow from financing activities are reported on a different basis. New Accounting standards not yet adopted by the Company: In January 2008, the IASB issued the revised standards IFRS 3, “Business Combinations” (“IFRS 3,( 2008)”) and IAS 27, “Consolidated and Separate Financial Statements” (“IAS 27, (2008)”). The revisions result in several changes in the accounting for business combinations. IFRS 3, (2008) and IAS 27, (2008) will be effective for fiscal years beginning on or after July 1, 2009, with early adoption permitted. Major changes relate to the measurement of non-controlling interests, the accounting for business combinations achieved in stages as well as the treatment of contingent consideration and acquisition-related costs. Based on the new standard, non- controlling interests may be measured at their fair value (full-goodwill-methodology) or at the proportional fair value of assets acquired and liabilities assumed. In respect of business combinations achieved in stages, any previously held equity interest in the acquiree is remeasured to its acquisition date fair value. Any changes to contingent consideration classified as a liability at the acquisition date are recognized in the statement of income. Acquisition-related costs are expensed in the period incurred. The Company will adopt IFRS 3, (2008) and IAS 27, (2008) to prospective transactions from fiscal year beginning April 1, 2010. In July 2008, the IASB issued an amendment to IAS 39, “Financial Instruments: Recognition and Measurement: Eligible Hedged Items” (“amendment to IAS 39”). The amendment addresses the designation of a one-sided risk in a hedged item in particular situations. The amendment applies to hedging relationships in the scope of IAS 39. The amendment is effective for fiscal years beginning on or after July 1, 2009. Earlier application is permitted. The adoption of this amendment on April 1, 2010 is not expected to have any material impact on the Company’s consolidated financial statements. In April 2009, the IASB issued “Improvements to IFRSs” – a collection of amendments to twelve International Financial Reporting Standards – as part of its program of annual improvements to its standards, which is intended to make necessary, but non-urgent, amendments to standards that will not be included as part of another major project. The latest amendments were included in exposure drafts of proposed amendments to IFRS published in October 2007, August 2008, and January 2009. The amendments resulting from this standard are mainly applicable to the Company from fiscal year beginning April 1, 2010. The Company is evaluating the impact, these amendments will have on the Company’s consolidated financial statements. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 176 In November 2009, the IASB issued an amendment to IAS 24 (revised 2009) “Related Party Disclosures” (“IAS 24”). The purpose of the revision is to simplify the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition. The revision is effective for fiscal years beginning on or after January 1, 2011. 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 IFRS 9 “Financial Instruments on the classification and measurement of financial assets”. The new standard represents the first part of a three-part 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 instruments (its business model) and the contractual cash flow characteristics of the financial assets. IFRS 9 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. 4. Property, Plant and equipment Land Buildings Plant and machinery* Furniture fixtures and equipment Vehicles Total Gross carrying value: As at April 1, 2008 Rs. 2,091 Rs.10,067 Rs. 31,065 Rs. 7,329 Rs. 2,566 Rs. 53,118 Translation adjustment 21 293 1,459 309 32 2,114 Additions 636 5,019 9,138 514 567 15,874 Disposal / adjustments (8) (82) (213) (163) (333) (799) Acquisition through business combination - 87 174 124 21 406 As at March 31, 2009 Rs. 2,740 Rs. 15,384 Rs. 41,623 Rs. 8,113 Rs. 2,853 Rs. 70,713 Accumulated depreciation/impairment: As at April 1, 2008 Rs. - Rs. 1,238 Rs. 20,930 Rs. 3,600 Rs. 1,416 Rs. 27,184 Translation adjustment - 97 850 168 11 1,126 Depreciation - 330 5,078 824 531 6,763 Disposal / adjustments - (34) (130) (53) (210) (427) As at March 31, 2009 Rs. - Rs. 1,631 Rs. 26,728 Rs. 4,539 Rs. 1,748 Rs. 34,646 Capital work-in-progress 13,727 Net carrying value as at March 31, 2009 Rs. 49,794 Gross carrying value: As at April 1, 2009 Rs. 2,740 Rs.15,384 Rs. 41,623 Rs. 8,113 Rs. 2,853 Rs. 70,713 Translation adjustment (6) (130) (1,126) (49) (4) (1,315) Additions 60 4,160 6,744 1,959 459 13,382 Acquisition through business combination. - - 6 9 2 17 Disposal / adjustments - (55) (590) (177) (381) (1,203) As at March 31, 2010 Rs. 2,794 Rs.19,359 Rs. 46,657 Rs. 9,855 Rs. 2,929 Rs. 81,594 Accumulated depreciation/impairment: As at April 1, 2009 Rs. - Rs. 1,631 Rs. 26,728 Rs. 4,539 Rs. 1,748 Rs. 34,646 Translation adjustment - (58) (716) (30) 7 (797) Depreciation - 426 5,329 1,106 512 7,373 Disposal / adjustments - (1) (346) (118) (263) (728) As at March 31, 2010 Rs. - Rs. 1,998 Rs. 30,995 Rs. 5,497 Rs. 2,004 Rs. 40,494 Capital work-in-progress 12,358 Net carrying value as at March 31, 2010 Rs. 53,458 *Including net carrying value of computer equipment and software amounting to Rs. 3,414, Rs. 3,249 and Rs. 2,928 as at April 1, 2008, March 31, 2009 and 2010, respectively. The Capital work in progress balance as at April 1, 2008 was Rs 13,544. The Company through its wholly owned subsidiary entered into a outsourcing arrangement with one of its customers, who is also a minority interest partner in this wholly-owned subsidiary. Pursuant to this arrangement, the Company paid Rs. 1,950 during the year ended March 31, 2010 towards purchase of assets. This amount has been reported as ‘capital work-in-progress’ in the consolidated financial statements as of March 31, 2010, as the same is not available for use at the date of statement of financial position. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 177 Interest capitalized by the Company was Rs. 314 and Rs. 95 for the year ended March 31, 2009 and 2010, respectively. The capitalization rate used to determine the amount of borrowing cost capitalized for the year ended March 31, 2009 and 2010 are 4.36% and 2.20%, respectively. 5. Goodwill and Intangible Assets The movement in goodwill balance is given below: Year ended March 31, 2009 2010 Balance at the beginning of the year Rs. 42,635 Rs. 56,143 Translation adjustment 8,071 (4,917) Acquisition through business combination, net 5,437 2,576 Balance at the end of the year Rs. 56,143 Rs. 53,802 Goodwill as at April 1, 2008, March 31, 2009 and 2010 has been allocated to the following reportable segments: Segment As at April 1, As at March 31, 2008 2009 2010 IT Services Rs. 29,775 Rs. 41,769 Rs. 39,056 IT Products 237 544 476 Consumer Care and Lighting 10,937 12,242 12,670 Others 1,686 1,588 1,600 Total Rs. 42,635 Rs. 56,143 Rs. 53,802 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, 2010. The goodwill held in these CGUs are as follows: CGUs As at March 31, 2010 Infocrossing Rs. 11,682 Healthcare 10,036 Unza 11,676 Goodwill was 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 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. b) Terminal value arrived by extrapolating last forecasted year cash flows to perpetuity using long-term growth rates: [2%-5%]. These long-term growth rates takes 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 [10.5%- 15%]. Based on the above, no impairment was identified as of March 31, 2010 as the recoverable value of the CGUs exceeded the carrying value. 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. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 178 Intangible assets Customer related Marketing related Total Gross carrying value: As at April 1, 2008 Rs. - Rs. 2,639 Rs. 2,639 Translation adjustment - 148 148 Acquisition through business combination 1,629 - 1,629 Additions - 124 124 As at March 31, 2009 Rs. 1,629 Rs. 2,911 Rs. 4,540 Accumulated amortization and impairment: As at April 1, 2008 Rs. - Rs. 773 Rs. 773 Translation adjustment - 101 101 Amortization 91 82 173 As at March 31, 2009 Rs. 91 Rs. 956 Rs. 1,047 Net carrying value as at March 31, 2009 Rs. 1,538 Rs. 1,955 Rs. 3,493 Gross carrying value: As at April 1, 2009 Rs. 1,629 Rs. 2,911 Rs. 4,540 Translation adjustment (19) (174) (193) Acquisition through business combination 322 691 1,013 Additions - 36 36 As at March 31, 2010 Rs. 1,932 Rs. 3,464 Rs. 5,396 Accumulated amortization and impairment: As at April 1, 2009 Rs. 91 Rs. 956 Rs. 1,047 Translation adjustment - (48) (48) Amortization 301 85 386 As at March 31, 2010 Rs. 392 Rs. 993 Rs. 1,385 Net carrying value as at March 31, 2010 Rs. 1,540 Rs. 2,471 Rs. 4,011 Net carrying value of marketing-related intangibles includes indefinite life intangible assets (brands and trade-marks) of Rs. nil, Rs. nil and Rs. 691 as of April 1, 2008, March 31, 2009 and 2010, 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. As of March 31, 2010, no impairment loss was recognized on the indefinite life intangibles. Amortization expense on intangible assets is included in selling and marketing expenses in the statement of income. As of March 31, 2010, the estimated remaining amortization period for customer-related intangibles acquired on acquisition of Citi Technology Services Limited is approximately 4.75 years. 6. Business Combination Citi Technology Services Limited: On January 1, 2009, the Company acquired 100% of the equity of Citi Technology Services Limited (Subsequently renamed as Wipro Technology Services Limited — WTS). WTS is an India based provider of information technology services and solutions to Citi Group worldwide. WTS was acquired for cash consideration (including direct acquisition costs) amounting to Rs. 6,205. The Company believes that the acquisition will enhance Wipro’s capabilities to address Technology Infrastructure Services (TIS) and Application Development and Maintenance Services (ADM) in the financial services industry. Factors that contributed to the recognition of goodwill were expected synergies from combining the activities of the Company and acquired entity, as well as intangible assets which cannot be recognized separately apart from goodwill such as skilled workforce. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 179 The following table presents the allocation of purchase price: Descriptions Preacquisition carrying amount Fair value adjustments Purchase price allocated Cash and cash equivalents Rs. 1,342 Rs. - Rs. 1,342 Property, plant and equipment 403 - 403 Customer-related intangibles - 1,413 1,413 Other assets 1,150 - 1,150 Loans and borrowings (23) - (23) Deferred income taxes, net 19 (480) (461) Other liabilities (1,200) - (1,200) Total Rs. 1,691 Rs. 933 Rs. 2,624 Goodwill 3,581 Total purchase price Rs. 6,205 1770 and operates in the personal care category marketing fragrance products, bath and shower products and skin care products. Lornamead FZE and Lornamead Personal Care Private Limited were acquired for cash consideration (including direct acquisition costs) of Rs. 2,161 and contingent consideration based on annual revenue targets of Rs. 179. The Company believes that the acquisition will enhance Wipro’s strong brand portfolio of personal care products and would result in synergy benefit, and have contributed to the recognition of goodwill. The following table presents the allocation of purchase price: Descriptions Pre acquisition carrying amount Fair value adjustments Purchase price allocated Cash and cash equivalents Rs. 55 Rs. - Rs. 55 Property, plant and equipment 17 - 17 Marketing - related intangibles - 691 691 Customer - related intangibles - 322 322 Other assets 390 30 420 Other liabilities (184) - (184) Total Rs. 278 1,043 Rs. 1,321 Goodwill 1,019 Total purchase price Rs. 2,340 None of the goodwill is expected to be deductible for income tax purposes. Others The Company has re-estimated the earn-out consideration (contingent consideration) payable in respect of a previous acquisition consummated in fiscal year 2006 comprising of computer aided design and engineering services business. Consequently, the Company has recognized additional goodwill of Rs. 761 and Rs. 1,624 during the year ended March 31, 2009 and 2010, respectively. None of the goodwill is expected to be deductible for income tax purposes. Lornamead Personal Care Private Limited On December 9, 2009, the Company acquired 100% of the equity of Lornamead FZE (an entity incorporated in Dubai) and Lornamead Personal Care Private Limited (an entity incorporated in India) from UK-based Lornamead Group Limited. Yardley is a strong heritage global brand that was established in approximately CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 180 7. Available for sale investments Available for sale investments consists of the following: As at April 1, 2008 As at March 31, 2009 As at March 31, 2010 Cost Gross gain recognized directly in equity Gross loss recognized directly in equity Fair Value Cost Gross gain recognized directly in equity Gross loss recognized directly in equity Fair Value Cost Gross gain recognized directly in equity Gross loss recognized directly in equity Fair Value Investment in liquid and short-term mutual funds and others Rs. 14,679 Rs. 568 Rs. - Rs. 15,247 Rs. 15,225 Rs. 320 Rs. (220) Rs. 15,325 Rs. 9,279 Rs. 52 Rs. (4) Rs. 19,327 Certificate of deposits - - - - 947 21 - 968 11,088 5 - 11,093 Total Rs. 14,679 Rs. 568 Rs. - Rs. 15,247 Rs. 16,172 Rs. 341 Rs. (220) Rs. 16,293 Rs. 30,367 Rs. 57 Rs. (4) Rs. 30,420 8. Trade receivables As at April 1, As at March 31, 2008 2009 2010 Trade receivables Rs. 41,449 Rs. 52,042 Rs. 53,255 Allowance for doubtful accounts receivable (1,096) (1,919) (2,327) Rs. 40,353 Rs. 50,123 Rs. 50,928 The activity in the allowance for doubtful accounts receivable is given below: Year ended March 31, 2009 2010 Balance at the beginning of the year Rs. 1,096 Rs. 1,919 Additions during the year, net 939 566 Uncollectable receivables charged against allowance (116) (158) Balance at the end of the year Rs. 1,919 Rs. 2,327 9. Inventories Inventories consist of the following: As at April 1, As at March 31, 2008 2009 2010 Stores and spare parts Rs. 455 Rs. 748 Rs. 1,001 Raw materials and components 2,761 2,448 2,212 Work in progress 1,078 695 776 Finished goods 2,370 3,696 3,937 Rs. 6,664 Rs. 7,587 Rs. 7,926 10. Cash and cash equivalents Cash and cash equivalents as of April 1, 2008, March 31, 2009 and 2010 consist of cash and balances on deposit with banks. Cash and cash equivalents consist of the following: As at April 1, As at March 31, 2008 2009 2010 Cash and bank balances Rs. 11,166 Rs. 22,944 Rs. 24,155 Demand deposits with banks (1) 28,104 26,173 40,723 Rs. 39,270 Rs. 49,117 Rs. 64,878 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 181 (1) These deposits can be withdrawn by the Company at any time without prior notice and without any penalty on the principal. Cash and cash equivalent consists of the following for the purpose of the cash flow statement: As at April 1, As at March 31, 2008 2009 2010 Cash and cash equivalents (as per above) Rs. 39,270 Rs. 49,117 Rs. 64,878 Bank overdrafts (358) (885) (1,322) Rs. 38,912 Rs. 48,232 Rs. 63,556 11. Other Assets As at April 1, As at March 31, 2008 2009 2010 Current Interest bearing deposits with corporates (1) Rs. 500 Rs. 4,250 Rs. 10,050 Prepaid expenses 2,203 2,197 2,923 Due from officers and employees 1,288 1,085 1,244 Finance lease receivables 214 967 632 Advance to suppliers 1,545 736 1,194 Deferred contract costs 1,526 1,094 943 Interest receivable 592 540 822 Deposits 644 712 1,057 Balance with excise and customs 548 854 917 Non-convertible debentures - 250 155 Others 2,209 1,979 1,169 Rs. 11,269 Rs. 14,664 Rs. 21,106 Non current Prepaid expenses including rentals for leasehold land Rs. 1,791 Rs. 3,085 Rs. 3,059 Due from officers and employees 766 741 - Finance lease receivables 451 2,638 3,810 Deposits 565 874 724 Non-convertible debentures - - 1,159 Others 477 40 32 Rs. 4,050 Rs. 7,378 Rs. 8,784 Total Rs. 15,319 Rs. 22,042 Rs. 29,890 (1) Such deposits earn a fixed rate of interest and will be liquidated within 12 months. Finance lease receivables: Finance lease receivables consist of assets that are leased to customers, with lease payments due in monthly, quarterly or semi-annual installments for periods ranging from 3 to 5 years. Details of finance lease receivables are given below: Minimum lease payment Present value of minimum lease payment As at April 1, As at March 31, As at April 1, As at March 31, 2008 2009 2010 2008 2009 2010 Not later than one year Rs. 197 Rs. 1,024 Rs. 774 Rs. 181 Rs. 960 Rs. 608 Later than one year but not later than five years 555 3,180 4,652 423 2,522 3,675 Unguaranteed residual values 84 172 190 61 123 159 Gross investment in lease 836 4,376 5,616 - - - Less: Unearned finance income (171) (771) (1,174) - - - Present value of minimum lease payment receivable Rs. 665 Rs. 3,605 Rs. 4,442 Rs. 665 Rs. 3,605 Rs. 4,442 Included in the financial statements as follows: Current finance lease receivables Rs. 214 Rs. 967 Rs. 632 Non-current finance lease receivables 451 2,638 3,810 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 182 12. Loans and Borrowings Short-term loans and borrowings The Company had short-term borrowings including bank overdrafts amounting to Rs. 28,804, Rs. 36,472 and Rs. 43,836 as at April 1, 2008, March 31, 2009 and 2010, respectively. Short-term borrowings from banks as of March 31, 2010 primarily consist of lines of credit of approximately Rs. 56,893, US$ 1,824 million, SEK 85 million, SAR 90 million, Euro 20 million, GBP 14 million, IDR (Indonesian Rupee) 5,000 million, MYR (Malaysian Ringgit) 27 million and RM (Chinese Yuan) 22 million from bankers primarily for working capital requirements. As of March 31, 2010, the Company has unutilized lines of credit aggregating Rs. 49,945, US$ 1,060 million, SEK 7 million, SAR 90 million, GBP 9 million, and IDR 4,992 million, respectively. To utilize these unused lines of credit, the Company requires consent of the lender and compliance with the 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 Rs. 26,448 for operational requirements that can be used for the issuance of letters of credit and bank guarantees. As of March 31, 2010, an amount of Rs. 11,922 was unutilized out of these non-fund based facilities. Long-term loans and borrowings A summary of long- term loans and borrowings is as follows: Currency As at April 1, 2008 As at March 31, 2009 As at March 31, 2010 Foreign currency in millions Indian Rupee Foreign currency in millions Indian Rupee Foreign currency in millions Indian Rupee Interest rate Final maturity Uns ecur ed ext er nal commercial borrowing Japanese Yen 35,016 Rs. 14,070 35,016 Rs. 18,052 35,016 Rs.16,844 1.93% 2013 Unsecured term loan Indian Rupee NA 245 NA 631 NA 509 6.05% 2014 Others 280 523 445 0 - 2% 2010 – 2017 Other secured term loans 427 232 165 1.46 - 4.5% 2010 – 2016 Rs. 15,022 Rs. 19,438 Rs.17,963 Obl i g a t i ons unde r finance leases 1,024 982 712 Rs. 16,046 Rs. 20,420 Rs.18,675 Cur r ent por t i on of long term loans and borrowings Rs. 729 Rs. 739 Rs. 568 Non-current portion of long term loans and borrowings 15,317 19,681 18,107 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, 2010, 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 Rs. 2,072, Rs. 1,858 and Rs. 2,119 as at April 1, 2008, March 31, 2009 and 2010, respectively, are secured by inventories, accounts receivable, certain property, plant and equipment and underlying assets. Interest expense was Rs. 2,333 and Rs. 1,232 for the year ended March 31, 2009 and 2010, 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 April 1, 2008, March 31, 2009 and 2010: CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 183 Minimum lease payment Present value of minimum lease payment As at As at April 1, 2008 March 31, 2009 March 31, 2010 April 1, 2008 March 31, 2009 March 31, 2010 Not later than one year Rs. 401 Rs. 420 Rs. 257 Rs. 323 Rs. 396 Rs. 228 Later than one year but not later than five year 709 619 461 629 515 425 Later than five years 113 70 62 72 71 59 Total minimum lease payments 1,223 1,109 780 - - - Less: Amount representing interest (199) (127) (68) - - - Present value of minimum lease payments Rs. 1,024 Rs. 982 Rs. 712 Rs. 1,024 Rs. 982 Rs. 712 Included in the financial statements as follows: Current finance lease payables Rs. 323 Rs. 396 Rs. 228 Non-current finance lease payables 701 586 484 13. Trade payables and accrued expenses Trade payables and accrued expenses consist of the following: As at April 1, As at March 31, 2008 2009 2010 Trade payables Rs. 13,082 Rs. 19,081 Rs. 19,133 Accrued expenses 14,791 21,110 19,615 Rs. 27,873 Rs. 40,191 Rs. 38,748 14. Other Liabilities and Provisions As at April 1, As at March 31, 2008 2009 2010 Other liabilities: Current: St at ut or y and other liabilities Rs. 2,522 Rs. 3,455 Rs. 4,001 Advance f rom customers 954 824 1,786 Others 1,082 1,303 712 Rs. 4,558 Rs. 5,582 Rs. 6,499 Non-current: Statutory liabilities Rs. 766 Rs. 741 Rs. - Employee benefit obligations 2,737 3,111 2,967 Others 286 480 266 Rs. 3,789 Rs. 4,332 Rs. 3,233 Total Rs. 8,347 Rs. 9,914 Rs. 9,732 Provisions: Current: Provision for warranty Rs. 545 Rs. 320 Rs. 108 Others 802 1,388 1,763 Rs. 1,347 Rs. 1,708 Rs. 1,871 Non-current: Provision for warranty Rs. 396 Rs. 448 Rs. 503 Total Rs. 1,743 Rs. 2,156 Rs. 2,374 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 year. 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. A summary of activity for provision for warranty and other provisions is as follows: Year ended March 31, 2010 Provision for warranty Others Total Balance at the beginning of the year Rs. 768 Rs. 1,388 Rs. 2,156 Additional provision during the year, net 477 393 870 Provision used during the year (634) (18) (652) Balance at the end of the year Rs. 611 Rs. 1,763 Rs. 2,374 15. Financial instruments Financial assets and liabilities (Carrying value/Fair value): As at April 1, As at March 31, 2008 2009 2010 Assets: Trade receivables Rs. 40,353 Rs. 50,123 Rs. 50,928 Unbilled revenues 8,514 14,108 16,708 Cash and cash equivalents 39,270 49,117 64,878 Available for sale financial investments 15,247 16,293 30,420 Derivative assets 64 1,162 3,816 Other assets 8,175 13,081 20,124 Total Rs. 111,623 Rs. 143,884 Rs. 186,874 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 184 As at April 1, As at March 31, 2008 2009 2010 Liabilities: Loans and borrowings Rs. 44,850 Rs. 56,892 Rs. 62,511 Trade payables and accrued expenses 27,873 40,191 38,748 Derivative liabilities 2,571 12,022 4,257 Other liabilities 1,232 876 126 Total Rs. 76,526 Rs. 109,981 Rs. 105,642 By Category (Carrying value/Fair value): As at April 1, As at March 31, 2008 2009 2010 Assets: Loans and receivables Rs. 96,312 Rs. 126,429 Rs. 152,638 Derivative assets 64 1,162 3,816 Available for sale financial assets 15,247 16,293 30,420 Total Rs. 111,623 Rs. 143,884 Rs. 186,874 Liabilities: Financial liabilities at amortized cost Rs. 44,850 Rs. 56,892 Rs. 62,511 Trade and other payables 29,105 41,067 38,874 Derivative liabilities 2,571 12,022 4,257 Total Rs. 76,526 Rs. 109,981 Rs. 105,642 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 creditworthiness of customers. Based on this evaluation, Company records allowances for expected losses on these receivables. As of April 1, 2008, March 31, 2009 and 2010, 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). The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2010 # : Particulars Total Fair value measurements at reporting date using Level 1 Level 2 Level 3 Assets Derivative instruments - Cash flow hedges Rs. 2,684 Rs. - Rs. 2,684 Rs. - - Net investment hedges 702 - 702 - - Others 430 - 430 - Available for sale financial assets: - Investment in liquid and short- term mutual funds 19,157 19,157 - - - Investment in certificate of deposits and other investments 11,263 - 11,263 - Liabilities Derivative instruments - Cash flow hedges 1,818 - 1,818 - - Net investment hedges 1,578 - 1,578 - - Others 861 - 861 - # In accordance with the transition provisions of Improving Disclosures about Financial Instruments (Amendment in IFRS 7), the Company has applied these amendments for annual periods beginning April 1, 2009. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 185 Derivatives assets and liabilities: The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency and net investment in foreign operations. The Company follows established risk management policies, including the use of derivatives to hedge foreign currency assets / liabilities, foreign currency forecasted cash flows and net investment in foreign operations. The counter party in these derivative instruments is a bank and the Company considers the risks of non-performance by the counterparty as non-material. The following table presents the aggregate contracted principal amounts of the Company’s derivative contracts outstanding: As at April 1, As at March 31, 2008 2009 2010 Designated derivative instruments Sell $ 2,930 $ 1,060 $ 1,518 € 24 € - € - £ 84 £ 54 £ 31 ¥ 7,682 ¥ 6,130 ¥ 4,578 AUD - AUD 3 AUD 7 CHF - CHF 2 CHF - SGD - SGD 1 SGD - Net investment hedges in foreign operations Cross-currency swaps ¥ - ¥ 35,016 ¥ 26,014 Others $ 281 $ 267 $ 262 € 65 € 40 € 40 Non designated derivative instruments Sell $ 205 $ 612 $ 45 £ 61 £ 53 £ 38 € 40 € 39 € 29 Buy $ 435 $ 438 $ 492 ¥ 7,580 ¥ 23,170 ¥ - Cross-currency swaps ¥ - ¥ - ¥ 7,000 The following table summarizes activity in the cash flow hedging reserve within equity related to all derivative instruments classified as cash flow hedges: As at April 1, As at March 31, 2008 2009 2010 Balance as at the beginning of the period Rs. 72 Rs. (1,097) Rs. (16,886) Net (gain)/ loss reclassified into statement of income on occurrence of hedged transactions (1) (72) 1,019 5,201 Deferred cancellation gains/(losses) relating to roll - over hedging - (11,357) 551 Changes in fair value of effective portion of derivatives (1,097) (5,451) 6,180 Gains/ (losses) on cash flow hedging derivatives, net Rs. (1,169) Rs. (15,789) Rs. 11,932 Balance as at the end of the period Rs. (1,097) Rs. (16,886) Rs. (4,954) (1) On occurrence of hedge transactions, net (gain)/loss was included as part of revenues. As at April 1, 2008, March 31, 2009 and 2010, there were no significant gains or losses on derivative transactions or portions thereof that have become ineffective as hedges, or associated with an underlying exposure that did not occur. 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 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. Accordingly, in such cases the amounts received are recorded as borrowings in the statement of financial position and cash flows from financing activities. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 186 During the year ended March 31, 2009 and 2010, the Company transferred and recorded as sale of financial assets of Rs. 539 and Rs. 3,552, respectively, under arrangements without recourse and has included the proceeds from such sale in net cash provided by operating activities. These transfers resulted in gain/(loss) of Rs. (35) and Rs. 13 for the year ended March 31, 2009 and 2010, respectively. As at March 31, 2009 and 2010, the maximum amount of recourse obligation in respect of the transferred financial assets (recorded as borrowings) are Rs. Nil and Rs. 657, 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 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 enter 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, 2010, Rs.1 increase / decrease in the exchange rate of Indian Rupee with U.S. dollar would result in approximately Rs. 1,071 decrease / increase in the fair value of the Company’s foreign currency dollar denominated derivative instruments. As at March 31, 2010, 1% change in the exchange rate between U.S. Dollar and Yen would result in approximately Rs. 160 increase/decrease in the fair value of cross-currency interest rate swaps. The below table presents foreign currency risk from non derivative financial instruments as of March 31, 2009 and 2010: As at March 31, 2009 USD Euro Pound Sterling Japanese Yen Other currencies # Total Trade receivables Rs. 24,121 Rs. 3,338 Rs. 3,236 Rs. 415 Rs. 434 Rs. 31,544 Unbilled revenues 3,848 24 124 - 34 4,030 Cash and cash equivalents 13,584 326 623 458 85 15,076 Other assets 688 202 187 56 6 1,139 Loans and borrowings Rs. (17,502) Rs. (297) Rs. (6) Rs. (30,004) Rs. - (47,809) Trade payables and accrued expenses (15,761) (1,134) (1,105) (174) (115) (18,289) Other liabilities (199) - - - (21) (220) Net assets/(liabilities) Rs. 8,779 Rs. 2,459 Rs. 3,059 Rs.(29,249) Rs. 423 Rs.(14,529) CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 187 As at March 31, 2010 USD Euro Pound Sterling Japanese Yen Other currencies # Total Trade receivables Rs. 20,639 Rs. 4,607 Rs. 3,879 Rs. 269 Rs. 343 Rs. 29,737 Unbilled revenues 4,986 67 269 - 4 5,326 Cash and cash equivalents 14,709 346 446 175 77 15,753 Other assets 705 408 201 33 2 1,349 Loans and borrowings Rs.(34,856) Rs.(1,007) Rs. (341) Rs. (16,839) Rs. (361) (53,404) Trade payables and accrued expenses (14,442) (1,940) (1,530) (227) (196) (18,335) Other liabilities (20) - - - - (20) Net assets / (liabilities) Rs. (8,279) Rs. 2,481 Rs. 2,924 Rs. (16,589) Rs. (131) Rs. (19,594) Financial assets that are neither past due nor impaired Cash and cash equivalents, available-for-sale financial assets, investment in certificates of deposits and interest bearing deposits with corporates are neither past due nor impaired. Cash and cash equivalents with banks and interest-bearing deposits are placed with corporates, which have high credit-ratings assigned by international and domestic credit-rating agencies. Available- for-sale financial assets substantially include investment in liquid mutual fund units. Certificates of deposit represent funds deposited with banks or other financial institutions for a specified time period. Financial assets that are past due but not impaired There is no other class of financial assets that is past due but not impaired except for trade receivables and finance receivables of Rs. 1,919 and Rs. 2,327 as of March 31, 2009 and 2010, respectively. Of the total receivables, Rs. 33,499 and Rs. 34,608 as of March 31, 2009 and 2010, respectively, were neither past due nor impaired. The company’s credit period generally ranges from 45-60 days. The aging analysis of the receivables have been considered from the date of the invoice. The age wise break up of receivables, net of allowances that are past due, is given below: As at March 31, 2009 2010 Financial assets that are neither past due nor impaired Rs. 33,499 Rs. 34,608 Financial assets that are past due but not impaired Past due 0 – 30 days 4,969 3,816 Past due 31 – 60 days 5,021 4,468 Past due 61 – 90 days 2,893 2,489 Past due over 90 days 8,117 11,163 Total past due and not impaired Rs. 21,000 Rs. 21,936 Counterparty risk Counterparty risk encompasses issuer risk on marketable securities, settlement risk on derivative and money market # Other currencies reflects currencies such as Singapore dollars, Saudi Arabian riyals etc. For the year ended March 31, 2009 and 2010 respectively, every 1% increase/decrease of the respective foreign currencies compared to functional currency of the Company would impact our result from operating activities by approximately Rs.145 and Rs. 196 respectively. Interest rate risk Interest rate risk primarily arises from floating rate borrowing, including various revolving and other lines of credit. The Company’s investments are primarily in short-term investments, which do not expose it to significant interest rate risk. The Company manages its net exposure to interest rate risk relating to borrowings, by balancing the proportion of fixed rate borrowing and floating rate borrowing in its total borrowing portfolio. To manage this portfolio mix, the Company may enter into interest rate swap agreements, which allows the Company to exchange periodic payments based on a notional amount and agreed upon fixed and floating interest rates. As of March 31, 2010, substantially all of the Company borrowings was subject to floating interest rates, which reset at short intervals. If interest rates were to increase by 100 bps from March 31, 2010, additional annual interest expense on the Company’s floating rate borrowing would amount to approximately Rs. 584. Credit risk Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly. No single customer accounted for more than 10% of the accounts receivable as at April 1, 2008, March 31, 2009 and 2010, respectively and revenues for the year ended March 31, 2009 and 2010, respectively. There is no significant concentration of credit risk. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 188 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 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, 2010, our cash and cash equivalents are held with major banks and financial institutions. The table below provided details regarding the contractual maturities of significant financial liabilities as of March 31, 2010#. As at March 31, 2010 Less than 1 year 1-2 years 2-4 years 4-7 years Total Loans and borrowings Rs. 44,404 Rs. 17,769 Rs. 265 Rs. 73 Rs. 62,511 Trade payables and accrued expenses 38,748 - - - 38,748 Derivative liabilities 1,375 487 2,395 - 4,257 # In accordance with the transition provisions of Improving Disclosures about Financial Instruments (Amendment in IFRS 7), the Company has applied these amendments for annual periods beginning April 1, 2009. 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: As at March 31, 2009 2010 Cash and cash equivalents Rs. 49,117 Rs. 64,878 Interest bearing deposits with corporates 4,250 10,050 Available for sale investments 16,293 30,420 Loans and borrowings (56,892) (62,511) Net cash position Rs. 12,768 Rs. 42,837 16. Investment in equity accounted investees 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 April 1, 2008, March 31, 2009 and 2010 was Rs. 1,343, Rs. 1,670 and Rs. 2,345, respectively. The Company’s share of profits of Wipro GE for the year ended March 31, 2009 and 2010 was Rs. 362 and Rs. 530, respectively. The aggregate summarized financial information of Wipro GE is as follows: Year ended March 31, 2009 2010 Revenue Rs. 10,611 Rs. 12,567 Gross profit 3,269 3,573 Profit for the year 875 934 As at March 31, 2009 2010 Total assets Rs. 8,796 Rs. 11,518 Total liabilities 5,255 6,709 Total equity Rs. 3,541 Rs. 4,809 Wipro GE had received tax demands from the Indian income tax authorities for the financial years ended March 31, 2001, 2002, 2003 and 2004 aggregating to Rs. 903, including interest. The tax demands were primarily on account of transfer pricing adjustments and the denial of export benefits and tax holiday benefits claimed by Wipro GE under the Indian Income Tax Act, 1961 (the “Act”). Wipro GE appealed against the said demands before the first appellate authority. The first appellate authority has vacated the tax demands for the years ended March 31, 2001, 2002, 2003 and 2004. The income tax authorities have filed an appeal for the years ended March 31, 2001, 2002, 2003 and 2004. In December 2008, Wipro GE received, on similar grounds, additional tax demand of Rs. 552 (including interest) for the financial year ended March 31, 2005. Wipro GE has filed an appeal against the said demand within the time limits permitted under the statute. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 189 In December 2009, Wipro GE received a draft assessment order, on similar grounds, with a demand of Rs. 299 (including interest) for the financial year ended March 31, 2006. Wipro GE has filed an objection against the said demand before the Dispute Resolution Panel and the Assessing officer within the time limit permitted under the statute. 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 its favour and will not have any material adverse effect on its financial position and results of operations. 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, 2009 2010 Balance at the beginning of the year Rs. (10) Rs. 1,533 Translation difference related to foreign operations 8,970 (5,477) Change in effective portion of hedges of net investment in foreign operations (7,427) 4,202 Total change during the year Rs. 1,543 Rs. (1,275) Balance at the end of the year Rs. 1,533 Rs. 258 18. Income taxes Income tax expense/(credit) have been allocated as follows: Year ended March 31, 2009 2010 Profit for the year Rs. 6,035 Rs. 9,294 Other comprehensive income: unrealized gain/(loss) on investment securities (131) (14) unrealized gain/(loss) on cash flow hedging derivatives (2,353) 2,091 Total income taxes Rs. 3,551 Rs. 11,371 Income tax expense/(credit) from continuing operations consist of the following: Year ended March 31, 2009 2010 Current taxes Domestic Rs. 3,656 Rs. 5,461 Foreign 2,538 3,403 Rs. 6,194 Rs. 8,864 Deferred taxes Domestic Rs. (24) Rs. 40 Foreign (135) 390 Rs. (159) Rs. 430 Total income tax expense Rs. 6,035 Rs. 9,294 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, 2009 2010 Profit before taxes Rs. 44,895 Rs. 55,410 Enacted income tax rate in India 33.99% 33.99% Computed expected tax expense 15,260 18,834 Effect of: Income exempt from tax (10,368) (10,802) Basis differences that will reverse during a tax holiday period 328 898 Income taxed at higher/ (lower) rates (166) (475) Income taxes relating to prior years (370) (442) Changes i n unr ecogni z ed deferred tax assets 314 811 Expenses disallowed for tax purposes 1,024 456 Others, net 13 14 Total income tax expense Rs. 6,035 Rs 9,294 The components of deferred tax assets and liabilities are as follows: As at April 1, As at March 31, 2008 2009 2010 Carry-forward business losses Rs. 1,605 Rs. 2,185 Rs. 1,817 Accrued expenses and liabilities 514 715 482 Allowances for doubtful accounts receivable 194 260 268 Cash flow hedges - 2,353 262 Minimum alternate tax 126 126 363 Others - 11 34 2,439 5,650 3,226 Property, plant and equipment Rs. (293) Rs. (421) Rs. (576) Amortizable goodwill (131) (213) (178) Intangible assets (180) (789) (734) Investment in equity accounted investee (260) (332) (432) Others (67) - - (931) (1,755) (1,920) Net deferred tax assets Rs. 1,508 Rs. 3,895 Rs. 1,306 Amounts presented in statement of financial position: Deferred tax assets Rs. 1,508 Rs. 4,369 Rs. 1,686 Deferred tax liabilities Rs. - Rs. (474) Rs. (380) CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 190 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 acquisition is recorded through goodwill. Apart from these, the changes 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 and projected future taxable income 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 Rs. 932 and Rs. 1,743 as of March 31, 2009 and 2010, respectively have not been recognized by the Company. The Company has recognized deferred tax assets of Rs. 1,793 in respect of its U.S. subsidiary that has incurred losses during the year ended March 31, 2009 and 2010. 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 in fiscal 2007, Minimum Alternate Tax (MAT) has been extended to income in respect of which deduction is claimed under Sections 10A and 10B 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 Rs. 126 and Rs. 363 has been recognized in the statement of financial position as of March 31, 2009 and 2010, 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 and Hardware Technology Parks. 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 and Hardware Technology Parks were scheduled to expire in stages with mandated maximum expiry period of March 31, 2010. However, the Finance (No. 2) Act, 2009 has extended the availability of the 10-year tax holiday by a period of one year such that the tax holiday will now be available until the earlier of fiscal year 2011 or ten years after the commencement of a tax holiday for an individual undertaking. Additionally, under the Special Economic Zone Act, 2005 scheme, units in 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 Rs. 4,415 and Rs. 9,622 as of March 31, 2009 and 2010, respectively has not been recognized. Further it is not practicable to estimate the amount of the unrecognized deferred tax liabilities for these undistributed earnings. 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 till year ended March 31, 2010. 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. The Indian tax laws levy an additional income tax on companies called a “Fringe Benefit Tax” or FBT. Pursuant to this tax, companies are deemed to have provided fringe benefits to their CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 191 employees if certain defined expenses and employee stock option expenses are incurred. These expenses, or a portion thereof, are deemed to be fringe benefits to the employees and subject the Company to tax at a rate of 30%, exclusive of applicable surcharge and cess. The Finance Act (No. 2), 2009 has abolished the levy of FBT. The perquisites provided to the employees are taxable as salary in the hands of employees. 19. Dividends The Company declares and pays dividend 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 Rs. 4 and Rs. 4 during the years ended March 31, 2009 and 2010, respectively. The Board of directors in their meeting on April 23, 2010 proposed a final dividend of Rs. 6 per equity share. The proposal is subject to approval of shareholders at the Annual General Meeting to be held on July 22, 2010, and if approved, would result in a cash outflow of approximately Rs. 10,092, including corporate dividend tax thereon. The Board of Directors in their meeting on April 23, 2010 also approved a stock dividend, commonly known as issue of bonus shares in India, which is subject to the approval of shareholders. The proposed stock dividend has been submitted to shareholders for approval through Postal Ballot and the announcement of results is scheduled to be held on June 4, 2010. If approved, the stock dividend to be declared is 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, if approved, will not affect the ratio of ADSs to equity shares, such that each ADS after the stock dividend will continue to represent one equity share of par value of Rs.2 per share. 20. Additional capital disclosures The key objective of the Company’s capital management is to ensure that it maintain 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, 2009 and 2010, the Company distributed Rs. 4 and Rs. 4, respectively in dividend per equity share. 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, 2009 and 2010 was as follows: As at March 31, 2009 2010 % Change Total equity attributable to the equity shareholders of the Company Rs. 147,144 Rs. 196,112 33.28% As percentage of total capital 72% 76% Current loans and borrowings 37,211 44,404 Non-current loans and borrowings 19,681 18,107 Total loans and borrowings 56,892 62,511 9.88% As percentage of total capital 28% 24% Total capital (loans and borrowings and equity) Rs. 204,036 Rs. 258,623 26.75% The Company is predominantly equity-financed. This is also evident from the fact that loans and borrowings represented only 20% and 19% of total assets as of March 31, 2009 and 2010, respectively. Further, the Company have consistently been a net cash company with our cash and bank balance along with available for sale investments being in excess of debt. 21. Revenues Year ended March 31, 2009 2010 Rendering of services Rs. 193,009 Rs. 202,990 Sale of goods 63,882 68,967 Total revenues Rs. 256,891 Rs. 271,957 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 192 22. Expenses by nature Year ended March 31, 2009 2010 Employee compensation Rs. 107,266 Rs. 107,230 Raw materials, finished goods, process stocks and stores and spares consumed 47,179 51,813 Sub contracting/technical fees/ third party application 15,890 17,527 Travel 9,313 8,064 Depreciation and amortization 6,948 7,831 Repairs 4,045 5,020 Advertisement 3,221 4,534 Communication 3,006 3,157 Rent 2,526 3,062 Power and fuel 1,863 1,797 Legal and professional fees 1,502 1,593 Rates, taxes and insurance 955 1,023 Carriage and freight 885 950 Provision for doubtful debt 939 566 Sales commission 515 459 Miscellaneous expenses 5,985 5,104 Total cost of revenues, selling and marketing expenses and general and administrative expenses Rs. 212,038 Rs. 219,730 23. Finance expense Year ended March 31, 2009 2010 Interest expense Rs. 2,333 Rs. 1,232 Exchange fluctuation on foreign currency borrowings, net 1,491 (241) Total Rs. 3,824 Rs. 991 24. Finance and other income Year ended March 31, 2009 2010 Interest income Rs. 1,964 Rs. 2,610 Dividend income 2,265 1,442 Gain on sale of investments 681 308 Others 147 - Total Rs. 5,057 Rs. 4,360 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 exercised through a non- recourse loan by the Wipro Equity Reward Trust (‘WERT’), have been reduced from the equity shares outstanding for computing basic earnings per share. Year ended March 31, 2009 2010 Profit attributable to equity holders of the Company Rs. 38,761 Rs. 45,931 Weighted average number of equity shares outstanding 1,454,135,089 1,457,415,146 Basic earnings per share Rs. 26.66 Rs. 31.52 Diluted: Diluted earnings per share is calculated adjusting the weighted average number of equity shares outstanding during the period for assumed conversion of all dilutive potential equity shares. Shares exercised through a non-recourse loan by the WERT and 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, 2009 2010 Profit attributable to equity holders of the Company Rs. 38,761 Rs. 45,931 Weighted average number of equity shares outstanding 1,454,135,089 1,457,415,146 Effect of dilutive equivalent share options 8,501,123 12,415,847 Weighted average number of equity shares for diluted earnings per share 1,462,636,212 1,469,830,993 Diluted earnings per share Rs. 26.50 Rs. 31.25 26. Employee stock incentive plans The stock compensation expense recognized for employee services received during the year ended March 31, 2009 and 2010 is Rs. 1,868 and Rs. 1,302, respectively. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 193 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, 2009 2010 Shares held at the beginning of the period 7,961,760 7,961,760 Shares granted to employees - - Grants forfeited by employees - - Shares held at the end of the period 7,961,760 7,961,760 Wipro Employee Stock Option Plan and Restricted Stock Unit Option Plan 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 Range of Exercise Prices Wipro Employee Stock Option Plan 1999 (1999 Plan) 30,000,000 Rs. 171 - 490 Wipro Employee Stock Option Plan 2000 (2000 Plan) 150,000,000 Rs. 171 - 490 Stock Option Plan (2000 ADS Plan) 9,000,000 $ 3 - 7 Wipro Restricted Stock Unit Plan (WRSUP 2004 plan) 12,000,000 Rs. 2 Wipro ADS Restricted Stock Unit Plan (WARSUP 2004 plan) 12,000,000 $ 0.04 Wipro Employee Restricted Stock Unit Plan 2005 (WSRUP 2005 plan) 12,000,000 Rs. 2 Wipro Employee Restricted Stock Unit Plan 2007 (WSRUP 2007 plan) 10,000,000 Rs. 2 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 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: For the year ended March 31, 2009 2010 Weighted Weighted Average Average Range of Exercise Range of Exercise Exercise Prices Number Price Exercise Prices Number Price Outstanding at the beginning of the period Rs. 229 - 265 1,219,926 Rs. 264 Rs. 229 - 265 1,140 Rs. 254 Rs. 489 - Rs. - Rs. 489 120,000 Rs. 489 $ 4 - 6 8,706 $ 5 $ 4 - 6 1,606 $ 4.7 Rs. 2 9,700,163 Rs. 2 Rs. 2 13,799,549 Rs. 2 $ 0.04 1,885,236 $ 0.04 $ 0.04 2,470,641 $ 0.04 Granted Rs. 229 - 265 - Rs. - Rs. 229 - 265 - Rs. - Rs. 489 120,000 Rs. 489 Rs. 489 - Rs. - $ 4 - 6 - $ - $ 4 - 6 - $ - Rs. 2 6,882,415 Rs. 2 Rs. 2 5,000 Rs. 2 $ 0.04 1,484,261 $ 0.04 $ 0.04 137,100 $ 0.04 Exercised Rs. 229 - 265 (345,099) Rs. 263 Rs. 229 - 265 - Rs. - Rs. 489 - Rs. - Rs. 489 - Rs. - $ 4 - 6 (4,400) $ 4.7 $ 4 - 6 - $ - Rs. 2 (1,762,283) Rs. 2 Rs. 2 (2,736,924) Rs. 2 $ 0.04 (446,841) $ 0.04 $ 0.04 (493,519) $ 0.04 Forfeited and lapsed Rs. 229 - 265 (873,687) Rs. 264 Rs. 229 -265 (1,140) Rs. 254 Rs. 489 - Rs. - Rs. 489 - Rs. - $ 4 - 6 (2,700) $ 5.82 $ 4 - 6 - $ - Rs. 2 (1,020,746) Rs. 2 Rs. 2 (805,722) Rs. 2 $ 0.04 (452,015) $ 0.04 $ 0.04 (348,401) $ 0.04 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 194 For the year ended March 31, 2009 2010 Weighted Weighted Average Average Range of Exercise Range of Exercise Exercise Prices Number Price Exercise Prices Number Price Outstanding at the end of the period Rs. 229 - 265 1,140 Rs. 254 Rs. 229 - 265 - Rs. - Rs. 489 120,000 Rs. 489 Rs. 489 120,000 Rs. 489 $ 4 - 6 1,606 $ 4.7 $ 4 - 6 1,606 $ 4.7 Rs. 2 13,799,549 Rs. 2 Rs. 2 10,261,903 Rs. 2 $ 0.04 2,470,641 $ 0.04 $ 0.04 1,765,821 $ 0.04 Exercisable at the end of the period Rs. 229 - 265 1,140 Rs. 254 Rs. 229 - 265 - Rs. - Rs. 489 - Rs. - Rs. 489 - Rs. - $ 4 - 6 1,606 $ 4.7 $ 4 - 6 1,606 $ 4.7 Rs. 2 2,975,987 Rs. 2 Rs. 2 4,719,739 Rs. 2 $ 0.04 208,412 $ 0.04 $ 0.04 645,341 $ 0.04 The following table summarizes information about outstanding stock options: As of April 1, As of March 31, 2008 2009 2010 Range of Exercise price Numbers Weighted average remaining Life (Months) Weighted Average Exercise Price Numbers Weighted average remaining Life (Months) Weighted Average Exercise Price Numbers Weighted average remaining Life (Months) Weighted Average Exercise Price Rs. 229 - 265 1,219,926 14 Rs. 264 1,140 3 Rs. 254 - - - Rs. 489 - - - 120,000 61 Rs. 489 120,000 49 Rs. 489 $ 4 - 6 8,706 14 $ 5 1,606 12 $ 4.70 1,606 1 $ 4.70 Rs. 2 9,700,163 42 Rs. 2 13,799,549 44 Rs. 2 10,261,903 37 Rs. 2 $ 0.04 1,885,236 51 $ 0.04 2,470,641 51 $ 0.04 1,765,821 44 $ 0.04 The weighted-average grant-date fair value of options granted during the year ended March 31, 2009 and 2010 was Rs. 319 and Rs. 814 for each option, respectively. The weighted average share price of options exercised during the year ended March 31, 2009 and 2010 was Rs. 360.96 and Rs. 557.52 for each option, respectively. The fair value of 120,000 options granted during the year ended March 31, 2009 (other than at nominal exercise price) has been estimated on the date of grant using the Binomial option pricing model. The fair value of share options has been determined using the following assumptions: Expected term 5-7 years Risk free interest rates 7.36 - 7.42 Volatility 35.81 - 36.21 Dividend yield 1% 27. Employee benefits a) Employee costs include: Year ended March 31, 2009 2010 Salaries and bonus Rs. 102,661 Rs. 103,194 Employee benefit plans Defined benefit plan 310 276 Contribution to provident and other funds 2,427 2,458 Share based compensation 1,868 1,302 Rs. 107,266 Rs. 107,230 The employee benefit cost is recognized in the following line items in the statement of income: Year ended March 31, 2009 2010 Cost of revenues Rs. 90,321 Rs. 90,350 Selling and marketing expenses 10,594 9,126 General and administrative expenses 6,351 7,754 Rs. 107,266 Rs. 107,230 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 195 Defined benefit plans: Amount recognized in the statement of income in respect of gratuity cost (defined benefit plan) is as follows: Year ended March 31, 2009 2010 Interest on obligation Rs. 135 Rs. 133 Expected return on plan assets (92) (122) Actuarial losses/(gains) recognized (102) (63) Current service cost 369 328 Net gratuity cost/(benefit) Rs. 310 Rs. 276 Actual return on plan assets Rs. 106 Rs. 138 The principal assumptions used for the purpose of actuarial valuation are as follows: As at March 31, 2009 2010 Discount rate 6.75% 7.15% Expected return on plan assets 8% 8% Expected rate of salary increase 5% 5% 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. Change in present value of defined benefit obligation is summarized below: As at March 31, 2009 2010 Defined benefit obligation at the beginning of the year Rs. 1,515 Rs. 1,858 Acquisitions 34 - Current service cost 369 328 Interest on obligation 135 133 Benefits paid (118) (214) Actuarial losses/(gains) (77) (45) Defined benefit obligation at the end of the year Rs. 1,858 Rs. 2,060 Change in plan assets is summarized below: As at March 31, 2009 2010 Fair value of plan assets at the beginning of the year Rs. 1,244 Rs. 1,416 Acquisitions 19 - Expected return on plan assets 92 122 Employer contributions 154 625 Benefits paid (118) (214) Actuarial gains/(losses) 25 18 Fair value of plan assets at the end of the year 1,416 1,967 Present val ue of unf unded obligation Rs. (442) Rs. (93) Recognized liability Rs. (442) Rs. (93) 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, 2009 2010 Difference between expected and actual developments: of fair value of the obligation (59) (84) of fair value of plan assets 26 18 As at March 31, 2009 and 2010, 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, 2011 Rs. 454 Estimated benefit payments from the fund for the year ending March 31: 2011 Rs. 303 2012 351 2013 411 2014 429 2015 465 Thereafter 2,054 Total Rs. 4,013 The expected benefits are based on the same assumptions used to measure the Company’s benefit obligations as of March 31, 2010. In May 2010, the Government of India has amended the Payment of Gratuity Act, 1972 to increase the limit of gratuity payment from Rs. three lacs fifty thousand to Rs. ten lacs. The effect of this amendment would be accounted in Fiscal 2011. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 196 28. Related party relationships and transactions List of subsidiaries as of March 31, 2010 are provided in the table below. Direct Subsidiaries Step Subsidiaries Country of Incorporation Wipro Inc. U.S. Wipro Gallagher Solutions Inc. U.S. Enthink Inc. U.S. Infocrossing Inc. U.S. Infocrossing. LLC, U.S. cMango Pte Limited Singapore Wipro Japan KK Japan Wipro Shanghai Limited China Wipro Trademarks Holding Limited India Cygnus Negri Investments Private Limited India Wipro Travel Services Limited India Wipro Consumer Care Limited India Wipro Holdings (Mauritius) Limited Mauritius Wipro Holdings UK Limited U.K. Wipro Technologies UK Limited U.K. BVPENTE Beteiligungsverwaltung GmbH (A) Austria 3D Networks (UK) Limited U.K. Wipro Cyprus Private Limited Cyprus Wipro Technologies S.A DE C.V Mexico Wipro BPO Philippines Ltd. Inc. Philippines Wipro Holdings Hungary Korlátolt Felelösségü Társaság Hungary Wipro Technologies Argentina SA Argentina Wipro Information Technology Egypt SAE Egypt Wipro Arabia Limited* Saudi Arabia Wipro Poland Sp Zoo Poland Wipro Information Technology Netherlands BV (formerly RetailBox BV) Netherland Wipro Portugal S.A. (A) (Formerly Enabler Informatica SA) Portugal Wipro Technologies Limited, Russia Russia Wipro Technologies Oy Finland Wipro Infrastructure Engineering AB Sweden Wipro Infrastructure Engineering Oy Finland Hydrauto Celka San ve Tic Turkey Wipro Technologies SRL Romania Wipro Singapore Pte Limited Singapore PT WT Indonesia Indonesia Unza Holdings Limited (A) Singapore CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 197 Direct Subsidiaries Step Subsidiaries Country of Incorporation Wipro Technocentre (Singapore) Pte Limited Singapore Wipro (Thailand) Co Limited Thailand Wipro Bahrain Limited WLL Bahrain Wipro Yardley FZE Dubai Wipro Australia Pty Limited Australia Wipro Networks Pte Limited (formerly 3D Networks Pte Limited) Singapore Planet PSG Pte Limited Singapore Planet PSG SDN BHD Malaysia Wipro Chengdu Limited China Wipro Chandrika Limited India WMNETSERV Limited Cyprus WMNETSERV (U.K.) Limited U.K. WMNETSERV INC U.S. Wipro Technology Services Limited India Wipro Airport IT Services Limited India Wipro Yardley Consumer Care Private Limited India *All the above direct subsidiaries are 100% held by the Company except that the Company hold 66.67% of the equity securities of Wipro Arabia Limited, 90% of the equity securities of Wipro Chandrika Limited and 76% of the equity securities of Wipro Airport IT Services Limited. As of March 31, 2010, the Company also held 49% of the equity securities of Wipro GE Medical Systems Private Limited that is accounted for as an equity method investment. (A) Step Subsidiary details of Unza Holdings Limited, BVPENTE Beteiligungsverwaltung GmbH and Wipro Portugal S.A, are as follows : Step Subsidiaries Step Subsidiaries Country of Incorporation Unza Company Pte Limited Singapore Unza Indochina Pte Limited Singapore Unza Vietnam Co., Limited Vietnam Unza Cathay Limited Hong Kong Unza China Limited Hong Kong Dongguan Unza Consumer Products Limited China PT Unza Vitalis Indonesia Unza Thailand Limited Thailand Unza Overseas Limited British virgin islands Unza Africa Limited Nigeria Unza Middle East Limited British virgin islands Unza International Limited British virgin islands Unza Nusantara Sdn Bhd Malaysia Unza Holdings Sdn Bhd Malaysia Unza Malaysia Sdn Bhd Malaysia CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 198 Step Subsidiaries Step Subsidiaries Country of Incorporation UAA (M) Sdn Bhd Malaysia Manufacturing Services Sdn Bhd Malaysia Shubido Pacific Sdn Bhd (a) Malaysia Gervas Corporation Sdn Bhd Malaysia Gervas (B) Sdn Bhd Malaysia Formapac Sdn Bhd Malaysia BVPENTE Beteiligungsverwaltung GmbH Austria New Logic Technologies GmbH Austria New Logic Technologies SARL France Wipro Portugal S.A. SAS Wipro France (formerly Enabler France SAS) France Wipro Retail UK Limited (formerly Enabler UK Limited) U.K. Wipro do Brasil Technologia Ltda (formerly Enabler Brazil Ltda) Brazil Wipro Technologies GmbH (formerly Enabler & Retail Consult GmbH) Germany (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 Nature Country of Incorporation Wipro Equity Reward Trust Trust India Wipro Inc Trust Trust USA The other related parties are: Name of entity Nature % of holding Country of Incorporation Wipro GE Healthcare Private Limited Associate 49% India Azim Premji Foundation Entity controlled by Director Hasham Premji (partnership firm) Entity controlled by Director Prazim Traders (partnership firm) Entity controlled by Director Zash Traders (partnership firm) Entity controlled by Director Regal Investment & Trading Company Private Limited Entity controlled by Director Vidya Investment & Trading Company Private Limited Entity controlled by Director Napean Trading & Investment Company Private Limited Entity controlled by Director Key management personnel – Azim Premji Chairman and Managing Director – Suresh C. Senapaty Chief Financial Officer and Director – Suresh Vaswani Jt CEO, IT Business and Director – Girish S. Paranjape Jt CEO, IT Business and Director – Dr. Ashok Ganguly Non-Executive Director – Narayan Vaghul Non-Executive Director CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 199 Name of entity Nature % of holding Country of Incorporation Dr. Jagdish N. Sheth Non-Executive Director P.M. Sinha Non-Executive Director B.C. Prabhakar Non-Executive Director Bill Owens Non-Executive Director Dr. Henning Kagermann Non-Executive Director Relative of Key management personnel – Rishad Premji Relative of the director The Company has the following related party transactions: Transaction/ Balances Associate Entities controlled by Directors Key Management Personnel 2009 2010 2009 2010 2009 2010 Sale of goods and services 15 7 1 1 - - Dividend - - 4,418 4,418 230 234 Royalty income 36 32 - - - - Key management personnel # Remuneration and short-term benefits 85 175 Other benefits 32 34 Remuneration to relative of key management personnel 3 4 Balances as on March 31, Receivables - 1 - - - - Payables - - - 2 4 44 # Post employment benefit comprising gratuity, and compensated absences are not disclosed as these are determined for the Company as a whole. 29. Commitments and contingencies 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 were Rs. 2,526 and Rs. 3,062, for the year ended March 31, 2009 and 2010, respectively. Details of contractual payments under non-cancelable leases are given below: As at April 1, As at March 31, 2008 2009 2010 Not later than one year Rs. 773 Rs. 1,064 Rs. 1,396 Later than one year but not later than five years 2,433 3,670 4,319 Later than five years 2,826 3,168 2,554 Rs. 6,032 Rs. 7,902 Rs. 8,269 Capital commitments: As at April 1, 2008, March 31, 2009 and 2010, the Company had committed to spend approximately Rs. 7,266, Rs. 5,371 and Rs. 2,782, respectively, under agreements to purchase property and equipment. These amounts are net of capital advances paid in respect of these purchases. Guarantees: As at April 1, 2008, March 31, 2009 and 2010, performance and financial guarantees provided by banks on behalf of the Company to the Indian Government, customers and certain other agencies amount to approximately Rs. 4,392, Rs. 6,103 and Rs. 14,526, respectively, as part of the bank line of credit. Contingencies and lawsuits: The Company had received tax demands from the Indian income tax authorities for the financial years ended March 31, 2001, 2002, 2003 and 2004 aggregating to Rs. 11,127 (including interest of Rs. 1,503). The tax demands were primarily on account of the Indian income tax authority’s denial of deductions claimed by the Company under Section 10A of the Income Tax Act 1961, in respect of profits earned by the Company’s undertakings in Software Technology Park CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 200 at Bangalore. The appeals filed by the Company for the above years to the first appellate authority were allowed in favour of the Company, thus deleting a substantial portion of the demands raised by the Income tax authorities. On further appeal filed by the income tax authorities, the second appellate authority upheld the claims of the Company for the years ended March 31, 2001, 2002, 2003 and 2004. In December 2008, the Company received, on similar grounds, an additional tax demand of Rs. 5,388 (including interest of Rs. 1,615) for the financial year ended March 31, 2005. The Company has filed an appeal against the said demand within the time limits permitted under the statute. In December 2009, the Company received the draft assessment order, on similar grounds, with a demand of Rs. 6,757 (including interest of Rs. 2,050) for the financial year ended March 31, 2006. The Company has filed an objection against the said demand before the Dispute Resolution Panel and the Assessing officer within the time limits permitted under the statute. 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 favour 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, customs duty, income tax, sales tax and other matters amounts to Rs. 872 and Rs. 1,384 as of March 31, 2009 and 2010, 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. Other commitments: The Company’s Indian operations have been established as a Software Technology Park Unit under a plan formulated by the Government of India. As per the plan, the Company’s India operations have export obligations to the extent of 1.5 times the employee costs for the year on an annual basis and 5 times the amount of foreign exchange released for capital goods imported, 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 computer hardware previously imported duty free. As at March 31, 2010, 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’. 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 less all liabilities, excluding loans and borrowings. CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 201 Information on reportable segments is as follows: Year ended March 31, 2009 IT Services and Products Others Reconciling Items Entity Total IT Services IT Products Total Consumer Care and Lighting Revenues 191,613 34,277 225,890 19,249 8,995 1,204 255,338 Cost of revenues (128,473) (30,886) (159,359) (10,782) (8,679) (1,395) (180,215) Selling and marketing expenses (10,672) (1,361) (12,033) (4,750) (294) (236) (17,313) General and administrative expenses (12,271) (667) (12,938) (1,125) (316) (131) (14,510) Operating income of segment 40,197 1,363 41,560 2,592 (294) (558) 43,300 Finance expense (3,824) Finance and other income 5,057 Share of profits of equity accounted investees 362 Profit before tax 44,895 Income tax expense (6,035) Profit for the year 38,860 Depreciation and amortization expense 6,283 377 268 20 6,948 Total assets 181,303 22,862 6,748 73,342 284,255 Total liabilities 70,869 5,803 2,465 57,738 136,875 Opening capital employed 93,845 17,359 6,149 53,080 170,433 Closing capital employed 115,089 18,782 5,638 64,763 204,272 Average capital employed 104,467 18,070 5,893 58,923 187,353 Return on capital employed 40% 14% (5)% - 23% Additions to: Goodwill 5,437 - - - 5,437 Intangible assets 1,629 124 - - 1,753 Property, plant and equipment 14,463 726 445 646 16,280 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 202 Year ended March 31, 2010 IT Services and Products Others Reconciling Items Entity Total IT Services IT Products Total Consumer Care and Lighting Revenues 202,490 38,205 240,695 22,584 7,143 819 271,241 Cost of revenues (132,144) (34,151) (166,295) (11,805) (7,446) (753) (186,299) Selling and marketing expenses (10,492) (1,275) (11,767) (6,492) (323) (26) (18,608) General and administrative expenses (12,446) (1,015) (13,461) (1,207) (210) 55 (14,823) Operating income of segment 47,408 1,764 49,172 3,080 (836) 95 51,511 Finance expense (991) Finance and other income 4,360 Share of profits of equity accounted investees 530 Profit before tax 55,410 Income tax expense (9,294) Profit for the year 46,116 Depreciation and amortization expense 7,095 424 294 18 7,831 Total assets 191,535 25,233 8,779 104,381 329,928 Total liabilities 61,009 5,707 4,284 62,379 133,379 Opening capital employed 115,089 18,782 5,638 64,763 204,272 Closing capital employed 135,829 20,074 7,068 96,092 259,063 Average capital employed 125,459 19,428 6,353 80,427 231,667 Return on capital employed 39% 16% (13)% - 22% Additions to: Goodwill 1,557 1,019 - - 2,576 Intangible assets 18 1,031 - - 1,049 Property, plant and equipment 12,223 627 538 11 13,399 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, 2009 2010 India Rs. 54,945 Rs. 62,179 United States 115,022 119,537 Europe 57,109 56,780 Rest of the world 28,262 32,745 Rs. 255,338 Rs. 271,241 No client individually accounted for more than 10% of the revenues during the year ended March 31, 2009 and 2010. 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 CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS - WIPRO LIMITED 203 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, have been considered as ‘reconciling items’. b) Revenues include excise duty of Rs. 1,054 and Rs. 842 for the year ended March 31, 2009 and 2010, respectively. For the purpose of segment reporting, the segment revenues are net of excise duty. Excise duty are reported in reconciling items. 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). Further, the Company obtains short-term foreign currency borrowings for its working capital requirements. A portion of these foreign currency borrowings is used as a natural hedge for the foreign currency monetary assets. For segment purposes, exchange fluctuations relating to such foreign currency borrowings amounting to Rs. Nil and Rs. 333 is recorded in the respective segment of the underlying monetary assets, and eliminated in reconciling items for the year ended March 31, 2009 and 2010, respectively. 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) 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 payments terms. Accordingly, such receivables are reflected in capital employed in reconciling items. As of March 31, 2009 and 2010, capital employed in reconciling items includes Rs. 5,549 and Rs. 8,516 respectively, of such receivables on extended collection terms. f) Operating income of segments is after recognition of stock compensation expense arising from the grant of options: Segments Year ended March 31, 2009 2010 IT Services Rs. 1,523 Rs. 1,159 IT Products 112 93 Consumer Care and Lighting 76 71 Others 21 18 Reconciling items 136 (39) Total Rs. 1,868 Rs. 1,302 g) 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. 204 Notes 205 Notes 206 Notes 207 Notes