Business context and reporting period
Wipro Limited filed this audited Form 20-F for the fiscal year ended March 31, 2019—not a standalone 2018 fourth-quarter report. The company provides IT services, consulting and business process services globally; its financial statements are prepared under IFRS and presented in Indian rupees. Convenience translations use ₹69.16 per US$1.
Effective October 1, 2018, Wipro reported India State Run Enterprise (ISRE) as a separate segment, restating comparative segment information. It also adopted IFRS 15 using a cumulative catch-up method; opening retained earnings fell by ₹2,279 million, while the company reported no material impact on FY2019 income or EPS.
Financial performance and position
Amounts below are in ₹ millions except per-share data. The filing’s segment-reporting revenue includes foreign-exchange effects and differs from revenue in the IFRS income statement.
| Metric | FY2019 | FY2018 | Change |
|---|---|---|---|
| Revenue, segment-reporting basis | 589,060 | 546,359 | +7.82% |
| Revenue, IFRS income statement | 585,845 | 544,871 | +7.52% |
| Gross profit, IFRS income statement | 172,812 | 159,296 | +8.5% |
| Operating income | 99,910 | 84,294 | +18.53% |
| Profit attributable to equity holders | 90,031 | 80,081 | +12.42% |
| Basic / diluted EPS | ₹14.99 / ₹14.95 | ₹12.64 / ₹12.62 | Increased |
| Net cash from operating activities | 116,316 | 84,233 | +32,083 |
| Capital expenditure | 22,781 | 21,870 | +911 |
IFRS gross profit was approximately 29.5% of IFRS revenue. The filing reports operating margin of 16.84% for FY2019 versus 15.43% for FY2018, calculated on segment-reporting revenue including other operating income. Effective tax rate was 21.87%, essentially unchanged from 21.85%.
At March 31, 2019, cash and cash equivalents were ₹158,529 million, investments ₹228,867 million and working capital ₹357,556 million. Total debt was ₹99,467 million and total equity ₹570,753 million. Management’s net-cash measure—cash plus investments less debt—was ₹279,778 million. Unutilized credit lines were ₹41,955 million, subject to lender consent and financial covenants.
Material changes and unusual items
- IT Services revenue rose 9.76% to ₹568,253 million, led by BFSI (+21.59%) and Consumer (+14.63%). IT Products revenue fell 31.59% to ₹12,312 million; ISRE revenue fell 20.10% to ₹8,544 million.
- IT Services segment results rose 23.26% to ₹102,503 million. IT Products recorded a ₹1,047 million segment loss, and ISRE a ₹1,829 million loss; ISRE cited project delays, scaled-down engagements and cost overruns.
- Operating income included ₹4,344 million of net gains associated with divestitures and a reduction in Wipro’s airport-services holding. General and administrative expenses included ₹5,141 million paid to National Grid to settle a legal claim.
- Operating cash flow increased, which management attributed primarily to working-capital optimization. Investing cash inflow included ₹26,103 million from the hosted data-center divestment; financing cash outflow was ₹49,369 million.
- Wipro issued one bonus share for every three shares held. The Board later proposed, and shareholders approved, a buyback of up to 323,076,923 shares at ₹325 each, for a maximum ₹105,000 million; completion remained subject to regulatory steps.
Outlook, risks and contingencies
The filing gives no quantified FY2020 revenue or earnings guidance. Management emphasized investment in digital, cloud, cybersecurity and engineering, while noting constraints on margin improvement from wage increases, pricing pressure, currency movements, research and development spending and acquisitions. It also identified cost optimization, automation, employee utilization and differentiated services as priorities.
- In April 2019, Wipro identified a coordinated phishing-related cyberattack. Investigation was ongoing as of the filing; the company reported containment measures and additional precautions.
- Income-tax demands not acknowledged as debt totaled ₹66,441 million at March 31, 2019, down from ₹101,440 million a year earlier. Appeals were pending; management expected its position to be upheld, but outcomes cannot be assured. Other disputed indirect-tax and related contingencies totaled ₹8,477 million.
- Key business risks include client concentration and termination or delay of projects, fixed-price contract cost overruns, talent and wage pressures, currency and interest-rate exposure, data security and privacy, regulation and tax changes, and economic conditions in the Americas and Europe.
- Capital commitments were ₹12,443 million; non-cancelable operating lease obligations were ₹19,741 million and purchase obligations ₹23,041 million. IFRS 16 adoption from April 1, 2019 was expected to recognize right-of-use assets of about ₹13,266 million and lease liabilities of about ₹15,867 million.
- Management and the independent auditor concluded internal control over financial reporting was effective at March 31, 2019. The auditor issued an unqualified opinion on the IFRS financial statements and controls; the report notes adoption of IFRS 15.
Most important facts for investors to verify
- Reconcile segment-reporting revenue of ₹589,060 million with IFRS revenue of ₹585,845 million, and assess the underlying growth excluding currency effects and divestitures.
- Separate recurring operating performance from the ₹4,344 million divestiture-related gain and the ₹5,141 million legal settlement; review segment profitability, particularly ISRE and IT Products losses.
- Review cash conversion, working-capital sustainability and the composition and liquidity of the ₹228,867 million investment balance.
- Track the cyberattack investigation, any customer or regulatory consequences, and the final status and cost of the approved share buyback.
- Assess the ₹66,441 million disputed tax demands, other contingencies, and the effect of tax incentives expiring over time.