Wipro Limited — Form 20-F summary
Business context and reporting period
This is Wipro’s audited annual report for the fiscal year ended March 31, 2018, prepared under IFRS—not a standalone 2017 fourth-quarter filing. Amounts are in Indian rupees (₹) millions unless stated otherwise; U.S. dollar figures are convenience translations. Wipro is a global IT services, consulting and business-process-services company. IT Services generated 96.7% of FY2018 revenue; IT Products generated 3.3%.
Key financial metrics
| Metric | FY2018 | Change vs. FY2017 |
|---|---|---|
| Revenue, consolidated income statement | ₹544,871 million (US$8.37 billion) | Down 1.0% |
| Gross profit | ₹159,296 million | Up 0.3% |
| Operating income | ₹84,294 million | Down 10.2% |
| Profit before tax | ₹102,474 million | Down 7.1% |
| Profit for the year | ₹80,084 million | Down 5.9% |
| Profit attributable to equity holders | ₹80,081 million | Down 5.7% |
| Basic / diluted EPS | ₹16.86 / ₹16.83 | Down from ₹17.48 / ₹17.43 |
| Operating cash flow | ₹84,233 million | Down ₹8,540 million |
| Cash and cash equivalents | ₹44,925 million | Down from ₹52,710 million |
| Total investments | ₹256,762 million | Down from ₹299,133 million |
| Total debt | ₹138,259 million | Down from ₹142,412 million |
| Working capital | ₹292,649 million | Down from ₹309,355 million |
Management reports gross margin of 29.43% and operating margin of 15.43%, with operating margin down 139 basis points. The filing also reports segment revenue of ₹546,359 million, which includes exchange-rate effects and segment-reporting adjustments; this differs from consolidated income-statement revenue. Cash, cash equivalents and short-term investments totaled ₹294,019 million; net of debt, this was ₹155,760 million. The company reported ₹53,483 million in unused credit lines, subject to lender consent and covenants.
Investing activities generated ₹35,578 million, primarily because investment sales exceeded purchases; capital expenditure was ₹21,870 million. Financing activities used ₹129,978 million, including ₹110,000 million for the share buyback. Total equity was ₹485,346 million and total assets were ₹760,640 million.
Material changes versus the prior year
- Consolidated revenue fell 1.0%; IT Services revenue was essentially flat at ₹528,410 million, while IT Products revenue fell 30.6% to ₹17,998 million.
- Within IT Services, BFSI revenue rose to ₹148,062 million; Healthcare and Lifesciences fell to ₹74,177 million and Communications to ₹33,710 million. Management cited a bankrupt client and project ramp-downs in Communications, and ACA-related uncertainty and currency effects in Healthcare.
- Operating income declined 10.2%, and operating margin fell to 15.43%. The FY2017 comparison included a ₹4,082 million gain on the EcoEnergy sale, which did not recur.
- Two customer insolvencies led to ₹4,612 million of provisions for receivables and deferred contract costs. Excluding this impact, management estimated FY2018 operating income at ₹88,906 million, down 5.3%.
- General and administrative expense rose 6.6%, with expected-credit-loss and deferred-contract-cost charges increasing to ₹6,565 million. Finance and other income rose to ₹23,999 million, while income tax expense fell to ₹22,390 million; the effective tax rate was 21.85% versus 22.85%.
Outlook, commentary, risks and unusual items
- No numerical revenue or earnings guidance is provided in the supplied filing text. Management says cash and operating cash generation are expected to cover working capital and debt obligations, while noting pressure on margins from wage growth, currency movements, pricing limits and acquisition mix.
- Strategy emphasizes digital, cloud, automation, AI and intellectual property, alongside localization and cost/productivity initiatives. Management cited more than 90,000 employees trained in digital technologies and 18 global Digital Pods.
- Wipro completed a 1:1 bonus issue and bought back 343.75 million shares at ₹320 per share, for ₹110 billion. The FY2018 dividend was ₹1 per share, recommended as the final dividend.
- After year-end, Wipro’s hosted data-center services sale to Ensono closed on June 27, 2018; its holding in Wipro Airport IT Services was reduced from 74% to 11% on April 5, 2018. These activities were classified as held for sale at year-end, not discontinued operations.
- Significant risks include client concentration and cancellations, pricing and wage pressure, foreign-exchange exposure, cybersecurity and data privacy, talent retention, project delivery, acquisitions, and regulatory and tax changes. The largest client represented 3% of IT Services revenue; the ten largest represented 18%.
- Tax disputes include ₹64,643 million of disputed income-tax claims, excluding interest, not recognized as debt; reported related interest was ₹36,797 million. Management expects its position to be upheld, but outcomes are uncertain. A separate National Grid claim seeks US$140 million (₹9,124 million) plus additional costs; Wipro says it will defend the claim and believes it will not succeed.
- IFRS 15 adoption from April 1, 2018 was expected to reduce opening retained earnings by approximately ₹2,239 million, mainly due to contract costs that would not qualify as fulfillment assets. Management was still assessing the impact of U.S. tax reform, although FY2018 included a ₹1,563 million tax benefit from deferred-tax remeasurement.
- The financial statements received an unqualified audit opinion; management and the auditor concluded internal control over financial reporting was effective as of March 31, 2018.
Most important facts for investors to verify
- Reconcile consolidated revenue of ₹544,871 million with segment-reporting revenue of ₹546,359 million and understand the exchange-rate and reconciliation adjustments.
- Assess whether IT Services growth and margins recover, particularly in Communications and Healthcare, and whether the ₹4,612 million customer-insolvency charges recur.
- Review cash conversion, investment liquidity and classification, near-term debt maturities, and the conditions attached to unused credit lines.
- Track the tax assessments and appeals, including the size and status of disputed claims and any potential cash or earnings impact.
- Monitor the National Grid litigation, Ensono transaction and partnership, and the financial effects of the data-center divestiture.
- Confirm the realized benefits of the buyback, bonus issue, acquisitions and digital/automation investments against future earnings and cash generation.