Company Quick10K Filing
Wipro
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 6,034 $23,894
20-F 2019-06-11 Annual: 2019-03-31
20-F 2018-06-28 Annual: 2018-03-31
20-F 2017-06-02 Annual: 2017-03-31
20-F 2016-05-26 Annual: 2016-03-31
20-F 2015-05-26 Annual: 2015-03-31
20-F 2014-05-19 Annual: 2014-03-31
20-F 2013-06-12 Annual: 2013-03-31
20-F 2012-05-16 Annual: 2012-03-31
20-F 2011-06-16 Annual: 2011-03-31
20-F 2010-11-12 Annual: 2010-03-31
WIT 2019-03-31
Part I
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on The Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
Item 12.A. Debt Securities
Item 12.B. Warrants and Rights
Item 12.C. Other Securities
Item 12.D. American Depositary Shares
Item 12.D.1.
Item 12.D.2.
Item 12.D.3. Fees and Charges for Holders of American Depositary Receipts
Item 12.D.4. Fees Paid By Depositary To The Company
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From The Listing Standards for Audit Committees
Item 16E. Purchase of Equity Securities By The Issuer and Affiliated Purchasers
Item 16F. Changes in Registrant's Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Item 19. Exhibits
EX-12.1 d714359dex121.htm
EX-12.2 d714359dex122.htm
EX-13.1 d714359dex131.htm
EX-15.1 d714359dex151.htm
EX-15.2 d714359dex152.htm

Wipro Earnings 2019-03-31

WIT 20F Annual Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
FISV 62,042 77,864 44,012 7,693 1,801 959 1,413 83,095 23% 58.8 1%
CTSH 34,247 15,844 5,142 16,628 3,124 2,095 2,977 32,613 19% 11.0 13%
VRSN 22,770 1,887 3,339 921 787 464 676 21,531 85% 31.8 25%
VRSK 25,949 6,289 4,225 1,930 1,213 318 677 28,331 63% 41.9 5%
WIT 23,894 833,171 262,418 0 0 0 0 -18,072 0%
CERN 22,108 6,937 2,526 5,616 3,457 506 1,124 22,651 62% 20.1 7%
DXC 8,421 29,516 20,646 20,199 0 -1,207 1,347 14,023 0% 10.4 -4%
LDOS 12,721 9,410 6,164 8,140 1,121 489 813 15,007 14% 18.5 5%
OTEX 11,102 8,020 4,111 2,898 1,966 324 775 13,455 68% 17.4 4%
JKHY 11,076 2,226 749 1,598 649 278 369 10,979 41% 29.8 12%

20-F 1 d714359d20f.htm 20-F 20-F
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 20-F

 

 

(Mark One)

 

Registration statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

OR

 

Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended March 31, 2019

OR

 

Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                          to                         

OR

 

Shell Company Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of event requiring this shell company report                         

Commission File Number 001-16139

 

 

WIPRO LIMITED

(Exact name of Registrant as specified in its charter)

 

 

Not Applicable

(Translation of Registrant’s name into English)

Bengaluru, Karnataka, India

(Jurisdiction of incorporation or organization)

Doddakannelli

Sarjapur Road

Bengaluru, Karnataka 560035, India

+91-80-2844-0011

(Address of principal executive offices)

Jatin Pravinchandra Dalal, Chief Financial Officer

Phone: +91-80-2844-0011; Fax: +91-80-2844-0054

(Name, telephone, email and/or facsimile number and address of company contact person)

 

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

American Depositary Shares, each represented by  one
Equity Share, par value 
 2 per share.

 

WIT

 

New York Stock Exchange

Title of each class   Trading Symbol   Name of each exchange on which registered

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

 

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Not Applicable

(Title of Class)

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 6,033,935,388 Equity Shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes   ☒    No  ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act, 1934.    Yes  ☐    No  ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

  

Accelerated Filer

 

Non-accelerated filer

 

  

Emerging growth company

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to
Section 13(a) of the Exchange Act.  ☐

 

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP ☐    International Financial Reporting Standards as issued by the International Accounting Standards Board ☒    Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    ☐    No  ☒

 

 

 


Table of Contents

Currency of Presentation and Certain Defined Terms

In this Annual Report on Form 20-F, references to “U.S.” or “United States” are to the United States of America, its territories and its possessions. References to “India” are to the Republic of India. References to “U.K.” are to the United Kingdom. Reference to “$” or “US$” or “dollars” or “U.S. dollars” are to the legal currency of the United States, references to “£” or “Pound Sterling” or “GBP” are to the legal currency of United Kingdom and references to “Rs.” or or “rupees” or “Indian rupees” are to the legal currency of India. All amounts are in Indian rupees or in U.S. dollars unless stated otherwise. Our financial statements are presented in Indian rupees and translated into U.S. dollars solely for the convenience of the readers and are prepared in accordance with the International Financial Reporting Standards and its interpretations (“IFRS”), as issued by the International Accounting Standard Board (“IASB”). References to a particular “fiscal” year are to our fiscal year ended March 31 of such year.

All references to “we,” “us,” “our,” “Wipro” or the “Company” shall mean Wipro Limited and, unless specifically indicated otherwise or the context indicates otherwise, our consolidated subsidiaries. “Wipro” is our registered trademark in the United States and India. All other trademarks or trade names used in this Annual Report on Form 20-F are the property of their respective owners.

Except as otherwise stated in this Annual Report, all convenience translations from Indian rupees to U.S. dollars are based on the certified foreign exchange rates published by Federal Reserve Board of Governors on March 31, 2019, which was  69.16 per US$ 1. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United States dollars at such a rate or any other rate. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Information contained in our website, www.wipro.com, is not part of this Annual Report.

Forward-Looking Statements May Prove Inaccurate

In addition to historical information, this Annual Report on Form 20-F contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not historical facts but instead represent our beliefs regarding future events, many of which are, by their nature, inherently uncertain and outside our control. As a result, the forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements, and reported results should not be viewed as an indication of future performance. For a discussion of some of the risks and important factors that could affect the Company’s future results and financial condition, please see the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosure About Market Risk.”

The forward-looking statements contained herein are identified by the use of terms and phrases such as “ambition,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “objectives,” “outlook,” “probably,” “project,” “will,” “seek,” “target” and similar terms and phrases. Such forward-looking statements include, but are not limited to, statements concerning:

 

   

our strategy to finance our operations, including our planned construction and expansion;

 

   

future marketing efforts, advertising campaigns, and promotional efforts;

 

   

future growth and market share projections, including projections regarding developments in technology and the effect of growth on our management and other resources;

 

   

the effect of facility expansion on our fixed costs;

 

   

our future expansion plans;

 

   

our future acquisition strategy, including plans to acquire or make investments in complementary businesses, technologies, services or products, or enter into strategic partnerships with parties who can provide access to those assets;

 

   

the future impact of our acquisitions;

 

   

our strategy and intentions regarding new product branding;

 

   

the future competitive landscape and the effects of different pricing strategies;

 

   

the effect of current tax laws, including the branch profit tax;

 

-1-


Table of Contents
   

the effect of future tax laws on our business;

 

   

the outcome of any legal proceeding, hearing, or dispute (including tax hearings) and the resulting effects on our business;

 

   

our ability to implement and maintain effective internal control over financial reporting;

 

   

projections that the legal proceedings and claims that have arisen in the ordinary course of our business will not have a material and adverse effect on the results of operations or the financial position of the Company;

 

   

expectations of future dividend payout or other corporate actions such as a buyback, bonus issue, etc.;

 

   

projections that our cash and cash equivalent along with cash generated from operations will be sufficient to meet our working capital requirements and certain of our obligations;

 

   

our compensation strategy;

 

   

projections regarding currency transactions, including the effect of exchange rates on the Indian rupee and the U.S. dollar;

 

   

the nature of our revenue streams, including the portion of our IT Services revenue generated from a limited number of corporate clients;

 

   

the effect of a strategically located network of software development centers, and whether it will provide us with cost advantages;

 

   

our ability to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology;

 

   

projections regarding future economic policy, legislation, foreign investment, currency exchange and other policy matters that may affect our business;

 

   

the nature and flexibility of our business model;

 

   

expectations as to our future revenue, margins, expenses and capital requirements; and

 

   

our exposure to market risks.

We wish to ensure that all forward-looking statements are accompanied by meaningful cautionary statements, so as to ensure to the fullest extent possible the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. Accordingly, all forward looking statements are qualified in their entirety by reference to, and are accompanied by, the discussion of certain important factors that could cause actual results to differ materially from those projected in such forward-looking statements in this report, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution the reader that this list of important factors may not be exhaustive. We operate in rapidly changing businesses, and new risk factors emerge from time to time. We cannot predict every risk factor, nor can we assess the impact, if any, of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements.

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. In addition, readers should carefully review the other information in this Annual Report on Form 20-F and in the Company’s periodic reports and other documents filed with the Securities and Exchange Commission (“SEC”) from time to time.

 

-2-


Table of Contents

TABLE OF CONTENTS

 

            Page  

PART I

   
  Item 1.   Identity of Directors, Senior Management and Advisers     4  
  Item 2.   Offer Statistics and Expected Timetable     4  
  Item 3.   Key Information     5  
  Item 4.   Information on the Company     28  
  Item 4A.   Unresolved Staff Comments     43  
  Item 5.   Operating and Financial Review and Prospects     43  
  Item 6.   Directors, Senior Management and Employees     63  
  Item 7.   Major Shareholders and Related Party Transactions     74  
  Item 8.   Financial Information     75  
  Item 9.   The Offer and Listing     76  
  Item 10.   Additional Information     79  
  Item 11.   Quantitative and Qualitative Disclosures About Market Risk     101  
  Item 12.   Description of Securities Other Than Equity Securities     103  

PART II

   
  Item 13.   Defaults, Dividend Arrearages and Delinquencies     105  
  Item 14.   Material Modifications to the Rights of Security Holders and Use of Proceeds     105  
  Item 15.   Controls and Procedures     105  
  Item 16A.   Audit Committee Financial Expert     107  
  Item 16B.   Code of Ethics     107  
  Item 16C.   Principal Accountant Fees and Services     107  
  Item 16D.   Exemptions from the Listing Standards for Audit Committees     108  
  Item 16E.   Purchase of Equity Securities by the Issuer and Affiliated Purchasers     108  
  Item 16F.   Changes in Registrant’s Certifying Accountant     108  
  Item 16G.   Corporate Governance     108  
  Item 16H.   Mine Safety Disclosure     109  

PART III

   
  Item 17.   Financial Statements     110  
  Item 18.   Financial Statements     110  
  Item 19.   Exhibits     173  

 

-3-


Table of Contents

PART I

 

Item 1.

Identity of Directors, Senior Management and Advisers

Not applicable.

 

Item 2.

Offer Statistics and Expected Timetable

Not applicable.

 

-4-


Table of Contents
Item 3.

Key Information

Summary of Selected Consolidated Financial Data

The selected consolidated financial data should be read in conjunction with the consolidated financial statements, the related notes and operating and financial review and prospects which are included elsewhere in this Annual Report. The selected consolidated statement of income data for each of the two years ended March 31, 2018 and March 31, 2019 and selected consolidated statements of financial position data as of March 31, 2018 and March 31, 2019 have been derived from our consolidated financial statements and related notes audited by Deloitte Haskins & Sells LLP. The selected consolidated statements of income for each of the three years ended March 31, 2015, 2016, and 2017 and selected consolidated statements of financial position data as of March 31, 2015, 2016 and 2017 have been derived from the consolidated financial statements and related notes audited by KPMG. The audited consolidated financial statement for each of the periods have been prepared and presented in accordance with IFRS, as issued by the IASB. Historical results are not necessarily indicative of future results.

 

     ( in millions, except per  equity share data)  
     2015     2016(5)     2017     2018     2019     2019
Convenience
Translation
into US$(1)
 

Consolidated Statements of Income data:

            

Revenues

   469,545     512,440     550,402     544,871     585,845     US$ 8,471  

Cost of revenues

     (321,284     (356,724     (391,544     (385,575     (413,033     (5,972
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

   148,261     155,716     158,858     159,296     172,812     US$ 2,499  

Selling and marketing expenses

     (30,625     (34,097     (40,817     (42,349     (44,510     (644

General and administrative expenses

     (25,850     (28,626     (32,021     (34,141     (35,951     (520

Foreign exchange gains/(losses), net

     3,637       3,867       3,777       1,488       3,215       46  

Other operating income (7)

     —           —         4,082       —         4,344       63  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Results from operating activities

   95,423     96,860     93,879     84,294     99,910     US$ 1,444  

Finance expense

     (3,501     (5,378     (5,942     (5,830     (7,375     (107

Finance and other income

     19,761       23,451       22,419       23,999       22,923       331  

Share of profit /(loss) of equity accounted investee

     —         —         —         11       (43     (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before tax

   111,683     114,933     110,356     102,474     115,415     US$ 1,667  

Income tax expense

     (24,624     (25,366     (25,213     (22,390     (25,242     (365
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year from continuing
operations

   87,059     89,567     85,143     80,084     90,173     US$ 1,302  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations

            

Profit after tax for the year from discontinued operations

     —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year

   87,059     89,567     85,143     80,084     90,173     US$ 1,302  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit attributable to:

            

Equity holders of the Company

     86,528       89,075       84,895       80,081       90,031     US$ 1,300  

Non-controlling interest

     531       492       248       3       142       2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year

   87,059     89,567     85,143     80,084     90,173     US$ 1,302  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit from continuing operations attributable to:

            

Equity holders of the Company

     86,528       89,075       84,895       80,081       90,031     US$ 1,300  

Non-controlling interest

     531       492       248       3       142       2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year from continuing operations

   87,059     89,567     85,143     80,084     90,173     US$ 1,302  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic Earnings per equity share (8):

            

Attributable to equity share-holders of the Company

            

Continuing operations

   13.22     13.60     13.11     12.64     14.99     US$ 0.22  

Discontinuing operations

     —         —         —         —         —         —    

Continuing and discontinuing operations

   13.22     13.60     13.11     12.64     14.99     US$ 0.22  

Diluted Earnings per equity share (8):

            

Attributable to equity share-holders of the Company

            

Continuing operations

   13.18     13.57     13.07     12.62     14.95     US$ 0.22  

Discontinuing operations

     —         —         —         —         —         —    

Continuing and discontinuing operations

   13.18     13.57     13.07     12.62     14.95     US$ 0.22  

Weighted average number of equity shares used in computing earnings per equity share:

            

Basic

     6,545,817,733       6,550,825,067       6,476,108,013       6,333,391,200       6,007,376,837       6,007,376,837  

Diluted

     6,566,877,763       6,564,506,421       6,495,129,517       6,344,482,633       6,022,304,367       6,022,304,367  

Cash dividend per equity share paid

   10.00     12.00     3.00     1.00     1.00     US$ 0.01  

 

-5-


Table of Contents
     ( in millions, except per  equity share data)  
     2015     2016(5)     2017     2018     2019     2019
Convenience
Translation
into US$(1)
 

Additional data:

            

Revenue by segment (2) (3)

            

IT Services

   440,180     487,316     519,196     517,716     568,253     US$ 8,216  

IT Products

     34,006       29,722       25,922       17,998       12,312       178  

ISRE

     NA       NA       9,244       10,694       8,544       124  

Reconciling items

     (1,004     (731     (183     (49     (49     (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   473,182     516,307     554,179     546,359     589,060     US$ 8,517  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment results (2) (3) (6)

            

IT Services

   96,434     98,253     98,391     83,159     102,503     US$ 1,482  

IT Products

     374       (1,007     (1,680     362       (1,047     (15

ISRE

     NA       NA       (2,326     454       (1,829     (26

Reconciling items

     (1,385     (386     (506     319       283       4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   95,423     96,860     93,879     84,294     99,910     US$ 1,445  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Statements of Financial Position Data:

            

Cash and cash equivalents

   158,940     99,049     52,710     44,925     158,529     US$ 2,292  

Investments

     57,775       209,151       299,133       257,968       228,867       3,309  

Working capital (4)

     272,463       284,264       309,355       292,649       357,556       5,169  

Total assets

     600,033       724,003       793,516       760,640       833,171       12,045  

Total debt

     78,913       125,221       142,412       138,259       99,467       1,438  

Total equity

     409,628       467,384       522,695       485,346       570,753       8,252  

Number of shares outstanding

     2,469,043,038       2,470,713,290       2,430,900,565       4,523,784,491       6,033,935,388       6,033,935,388  

 

Notes:

1.

Solely for the convenience of the readers, the selected consolidated financial data as of and for the year ended March 31, 2019, has been translated into United States dollars at the certified foreign exchange rate of US$1 =  69.16, as published by Federal Reserve Board of Governors on March 31, 2019.

2.

Effective October 1, 2018, we carved out India State Run Enterprise (“ISRE”) as a separate segment from our global IT Services business. The ISRE segment consists of IT services offerings to entities and/or departments owned or controlled by the Government of India (the “GoI”) and/or any Indian State Governments (“ISRE Customers”). We made this decision because we changed our strategy for providing services to ISRE Customers. Historically, projects in our ISRE business have been primarily system integration (“SI”) projects that have complex deliverables and, compared to our IT Services segment, longer working capital cycles and different downstream processes, including billing and collections. Most ISRE deals come in the form of a tender process, with little room to negotiate the terms and conditions. We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles. Segment revenue and results for each of the years ended March 31, 2017 and March 31, 2018 have been restated to reflect the above changes. The segment revenue and results for each of the years ended March 31, 2015 and March 31, 2016 have not been restated and include ISRE as part of the IT Services segment as restated segment revenues for such periods could not be prepared without unreasonable effort and expense.

3.

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations in revenue. Further, finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items. Please see Note 30 of the Notes to the Consolidated Financial Statements for additional details.

4.

Working capital equals current assets less current liabilities.

5.

We elected to early-adopt IFRS 9, Financial Instruments effective April 1, 2016, with retrospective application from April 1, 2015. Financial data above has been adjusted for the year ended March 31, 2016 to reflect this.

6.

Effective April 1, 2016, the segment results are measured after including the amortization charge for acquired intangibles to the respective segments. Such costs were classified under reconciling items until the fiscal year ended March 31, 2016. The Company has restated segment results for years ended March 31, 2015 and 2016 to reflect this change.

7.

Represents net gain on sale of the EcoEnergy division during the year ended March 31, 2017 and net gain on sale of our hosted data center services business and the Workday and Cornerstone OnDemand business during the year ended March 31, 2019.

8.

Earnings per share and weighted average number of equity shares used in computing earnings per equity share for the years ended March 31, 2015, 2016, 2017, 2018 and 2019 have been proportionately adjusted for the bonus issue in the ratio of 1:3 as approved by the shareholders on February 22, 2019.

 

-6-


Table of Contents

Exchange Rates

Fluctuations in the exchange rate between the Indian rupee and the U.S. dollar will affect the U.S. dollar equivalent of the Indian rupee price of our equity shares on the Indian stock exchanges and, as a result, will likely affect the market price of our American Depositary Shares (“ADSs”), listed on the New York Stock Exchange, and vice versa. Such fluctuations will also affect the U.S. dollar conversion by our depositary for the ADSs, JPMorgan Chase Bank, N.A. (“Depositary”), of any cash dividends paid in Indian rupees on our equity shares represented by the ADSs.

The following table sets forth, for the fiscal years indicated, information concerning the amount of Indian rupees for which one U.S. dollar could be exchanged based on the certified foreign exchange rates published by the Federal Reserve Board of Governors. The column titled “Average” in the table below is the average of the certified foreign exchange rates on the last business day of each month during the year.

 

Fiscal Year Ended March 31,

   Period End      Average      High      Low  

2019

   69.16      69.88      74.33      64.92  

2018

     65.11        64.48        65.71        63.38  

2017

     64.85        66.96        68.86        64.85  

2016

     66.25        65.58        68.84        61.99  

2015

     62.31        61.34        63.67        58.30  

On May 31, 2019, the certified foreign exchange rate published by the Federal Reserve Board of Governors was 69.63.

The following table sets forth the high and low exchange rates for the previous six months based on the certified foreign exchange rates published by the Federal Reserve Board of Governors on each business day during the period:

 

Month

   High      Low  

May 2019

   70.62      69.08  

April 2019

     70.19        68.58  

March 2019

     70.91        68.60  

February 2019

     71.66        70.56  

January 2019

     71.40        69.63  

December 2018

     72.44        69.58  

Capitalization and Indebtedness

Not applicable.

Reasons for the Offer and Use of Proceeds

Not applicable.

 

-7-


Table of Contents

RISK FACTORS

This Annual Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in the following risk factors and elsewhere in this Annual Report. The following risk factors should be considered carefully in evaluating us and our business.

Risks Related to Our Company and Our Industry

Our revenues and expenses are difficult to predict because they can fluctuate significantly given the nature of the markets in which we operate. This increases the likelihood that our results could fall below our projections, ambition and expectations of investors and market analysts, which could cause the market price of our equity shares and American Depositary Shares (“ADSs”) to decline.

Our results historically have fluctuated, may fluctuate in the future and may fail to match our past performance, our projections or ambition or guidance, our internal expectations or the expectations of investors due to a number of factors, including:

 

   

the size, complexity, timing, pricing terms and profitability of significant projects, as well as changes in the corporate decision-making process of our clients;

 

   

increased pricing pressure from our competitors;

 

   

our ability to increase sales of our services to new customers and expand sales to our existing customers;

 

   

industry consolidation leading to stronger competitors that are able to compete better;

 

   

competitors being more established in certain markets, making our geographic expansion strategy in those markets more challenging;

 

   

the proportion of services we perform at our clients’ sites rather than at our offshore facilities;

 

   

seasonal changes that affect the mix of services we provide to our clients or the relative proportion of services and product revenue;

 

   

seasonal changes that affect purchasing patterns among our consumers of servers, communication devices and other products;

 

   

unanticipated cancellations, contract terminations or deferral of projects or those occurring as a result of our clients reorganizing their operations;

 

   

our ability to accurately forecast our client’s demand patterns to ensure the availability of trained employees to satisfy such demand;

 

   

the effect of increased wage pressure in India and other locations and the time we require to train and productively utilize our new employees;

 

   

our ability to generate historical levels of yield on our investments; and

 

   

our ability to identify and acquire new businesses.

A significant portion of our total operating expenses, particularly personnel and facilities, are fixed in advance of any particular quarter. As a result, unanticipated variations in the number and timing of our projects may cause significant variations in operating results in any particular quarter. Our pricing remains competitive and clients remain focused on cost reduction and capital conservation. While we believe that we have a flexible business model which can mitigate the negative impact of an uncertain or slow growing economy, we may not be able to sustain historical levels of profitability.

There are also other factors that are not within our control that could cause significant variations in our results in any particular quarter. These include:

 

   

the duration of tax holidays or exemptions and the availability of other Indian Government incentives;

 

   

currency exchange fluctuations, specifically movement of the Indian Rupee against the U.S. Dollar, the U.K. Pound Sterling, the Euro, the Canadian Dollar and the Australian Dollar, as significant portion of our revenues are in these currencies;

 

   

political uncertainties or changes in regulations in India, the United States, the United Kingdom and other countries that we operate in;

 

-8-


Table of Contents
   

other economic factors, including the economic conditions in United States, Europe, Middle East and other geographies in which we operate;

 

   

uncertain or changing economic conditions particular to a business segment or to particular customer markets within that segment; and

 

   

increase in cost of operations in countries that we operate in on account of changes in minimum wage regulations.

Therefore, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. Thus, it is possible that in the future some of our periodic results of operations may be below the expectations of public market analysts and investors, and the market price of our equity shares and ADSs could decline.

Our business will suffer if we fail to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology and the industries on which we focus.

The IT services market is characterized by rapid technological changes, evolving industry standards, changing client preferences and new product and service introductions. Our future success will depend on our ability to anticipate these advances and enhance our existing offerings or develop new product and service offerings to meet client needs. We may not be successful in anticipating or responding to these advances on a timely basis, or, if we do respond, the services or technologies we develop may not be successful in the marketplace. We may also be unsuccessful in stimulating customer demand for new and upgraded products, or seamlessly managing new product introductions or transitions. Further, products, services or technologies that are developed by our competitors may render our services non-competitive or obsolete. Our failure to address the demands of the rapidly evolving information technology environment, particularly with respect to digital technology, the internet of things, artificial intelligence, cloud computing, storage, mobility and applications, analytics, augmented reality, automation, blockchain and quantum computing could have a material adverse effect on our business, results of operations and financial condition.

If our pricing structures do not accurately anticipate the cost and complexity of performing our work, then our contracts could be unprofitable.

We negotiate pricing terms with our clients utilizing a range of pricing structures and conditions. Depending on the particular contract, we may use time and materials pricing, fixed-price arrangements, or hybrid contracts with features of both pricing models. We also undertake element or transaction based pricing, which relies on a certain scale of operations to be profitable for us. Our pricing is highly dependent on the client and our internal forecasts and predictions about our projects and the marketplace, which might be based on limited data and could be inaccurate.

There is a risk that we will underprice our contracts, fail to accurately estimate the duration and costs of performing the work or fail to accurately assess the risks associated with potential contracts. The risk is greatest when pricing our outsourcing contracts, as many of our outsourcing projects entail the coordination of operations and workforces in multiple locations, utilizing workforces with different skill sets and competencies across geographically-distributed service centers. Furthermore, when work gets outsourced, we occasionally takeover employees/assets from our clients and assume responsibility for one or more of our clients’ business processes. Our pricing, cost and profit margin estimates on outsourced work frequently include anticipated long-term cost savings from transformational initiatives and other endeavors that we expect to achieve and sustain over the life of the outsourcing contract, but may not generate revenue in the short term.

We may also fail to obtain renewals or provide ongoing services, the loss of which prevents us from realizing from long-term cost savings. In particular, any increased or unexpected costs, or wide fluctuations compared to our original estimates, delays or failures to achieve anticipated cost savings, or unexpected risks we encounter in connection with the performance of this work, including those caused by factors outside our control, could make these contracts less profitable or unprofitable, which could have an adverse effect on our profit margin.

Our failure to complete fixed-price, fixed-time frame contracts within the budget and on time may negatively affect our profitability.

We offer a portion of our services on a fixed-price, fixed-time frame basis, rather than on a time-and-materials basis. Although we use our specified software engineering processes and rely on our past project experience to reduce the risks associated with estimating, planning and performing fixed-price or fixed-time frame projects, we bear the risks of cost overruns, including increased costs of third parties, completion delays and wage inflation in connection with these projects, which may have a material adverse effect on our profitability.

 

-9-


Table of Contents

Errors, defects or disruptions in our services could raise our costs, diminish our service capacities and harm our financial results.

If flaws in design, function or maintenance of our services were to occur, we could experience a rate of failure that would result in substantial repair, replacement or service costs and potential damage to our reputation. Continued improvement of our services and control of quality, costs and product testing are critical factors in our future growth. There can be no assurances that our efforts to monitor, develop, modify and implement appropriate testing for errors and upgrading processes will be sufficient to prevent us from having to incur substantial repair, replacement or service costs, or from a disruption in our ability to provide services, either of which could have a material adverse effect on our business, results from operations or financial condition.

Our profitability could suffer if we are unable to continue to successfully manage our costs.

Our ability to improve or maintain our profitability is dependent on successful management of our costs. Our cost management strategies include maintaining appropriate alignment between the demand for our services and our resource capacity, optimizing the costs of service delivery through automation and deployment of tools, and effectively leveraging our sales and marketing and general and administrative costs. We also have to manage additional costs to replace the unsatisfactory solutions or services if our clients are not satisfied or if we fail to properly understand their needs and develop solutions accordingly. We have also taken actions to reduce certain costs, including increasing productivity from fixed costs such as better utilization of existing facilities, investing in automation and relocating non-client-facing employees to lower-cost locations. There is no guarantee that these, or other cost- management efforts will be successful, that our efficiency will be enhanced, or that we will achieve desired levels of profitability. If we are not able to mitigate rising employee compensation costs by passing such increases to clients, or increase our revenues sufficiently to offset increasing costs, our results of operations could be adversely affected. Additionally, if we are not able to maintain high utilization rates for our employees, our profit margin and our profitability may suffer.

Our success depends in large part upon the strength of our management team and other highly skilled professionals. If we fail to attract, retain and manage transition of these personnel, our business may be unable to grow and our revenue could decline.

The continued efforts of the senior members of our management team are critical to our success. Our ability to execute project engagements and to obtain new clients depends in large part on our ability to attract, train, motivate and retain highly skilled professionals, especially senior technical personnel, project managers and software engineers. If we cannot hire and retain additional qualified personnel, our ability to bid on and obtain new projects and to continue to expand our business will be impaired and our revenue could decline. Our compensation policies include equity-based incentive compensation plans that are designed to reward high- performing personnel for their contributions and provide incentives for them to remain with us. If the anticipated value of such incentives does not materialize because of volatility or lack of positive performance in our stock price, or if our total compensation package is not viewed as being competitive, our ability to attract and retain personnel could be adversely affected. We believe that there is significant competition for professionals with the skills necessary to perform the services we offer, particularly in the locations in which we have operations.

We may not be able to hire and retain enough skilled and experienced employees to replace those who leave. Increasing competition for technology professionals may also impact our ability to retain personnel. Changes in government policies may also affect our ability to attract, hire and retain personnel. Additionally, we may not be able to reassign or retain our employees to keep pace with continuing changes in technology, evolving standards and changing client preferences. Our revenues, results of operations and financial condition could be adversely affected if we are unable to manage employee hiring and attrition to achieve a stable and efficient workforce structure.

If we do not effectively manage our growth, including, among other things by improving our administrative, operational and financial processes and systems to manage our growth, the value of our shareholders’ investment may be harmed.

Our expected growth will continue to place significant demands on our management and other resources. This will require us to continue to develop and improve our operational, financial and other internal controls. As a result of our growing operations, we face and expect to continue to face challenges such as:

 

   

recruiting, training and retaining sufficiently skilled technical, marketing and management personnel;

 

   

maintaining an effective internal control system and properly educating and training employees to mitigate the risk of individuals engaging in unlawful or fraudulent activity or otherwise exposing us to unacceptable business risks;

 

-10-


Table of Contents
   

maintaining our high quality standards of service;

 

   

maintaining high levels of client satisfaction;

 

   

developing and improving our internal administrative infrastructure, particularly our financial, operational, communications and other internal systems including data management in our IT applications and Management Information Systems;

 

   

preserving our culture, values and entrepreneurial environment;

 

   

assimilating and integrating disparate IT systems, personnel and employment practices, and operations of acquired companies; and

 

   

managing our procurement, supply chain and vendor management processes.

We are making substantial investments in new facilities and physical infrastructures, and our profitability could be reduced if our business does not grow proportionately.

We have invested substantially in construction or expansion of software development facilities and physical infrastructure in anticipation of growth in our business. The total amount of investment made to purchase property, plant and equipment in fiscal year 2019 was  22,781 million (US$ 329.4 million). Additionally, as of March 31, 2019, we had contractual commitments of  12,443 million (US$179.9 million) related to capital expenditures on construction or expansion of our software development and other facilities. We may encounter cost overruns or project delays in connection with new facilities and these expansions may increase our fixed costs. If we are unable to grow our business and revenues to sufficiently offset the increased expenditures, our profitability could be reduced.

Cyber attacks and other security incidents, both real and perceived, impacting confidentiality and integrity of our information technology and digital infrastructure could lead to loss of reputation and financial obligations.

Considering the high business dependency on our information technology and digital infrastructure to interconnect offices, employee systems, partners and clients for day to day business operations, as well as our hosting of data and service delivery, any potential cyber event impacting the confidentiality, integrity and availability of this environment could lead to financial loss, disclosure of data, breaches of privacy or security, reputational and customer loss, and legal, regulatory and contractual obligations to Wipro and may directly impact our customers and partners.

Given the rise of connected devices and transition to cloud, the impact of threats continue to increase while the threat attack area is evolving and increasing beyond the enterprise. Attempts for unauthorized access, malware, fraud, leakage, misuse/loss/tampering of personal and business data, denial of services exploiting weakness in the systems or programs, errors, omissions, deliberate or accidental act of our employees or former employees, partners, third-party business providers or other stakeholders both internal and external are on the rise.

We often have access to or are required to collect and store confidential client and customer data. As a service provider in the healthcare industry, we are also subject to data privacy and security regulations by both the federal and state governments in which we conduct our business, including the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information. We are also subject to the European Union General Data Protection Regulations.

We face a number of threats to our data centers and networks such as unauthorized access, security breaches and other system disruptions. It is critical to our business that our infrastructure remains secure and is perceived by customers to be secure. Despite our security measures, our infrastructure may be vulnerable to attacks by hackers or other disruptive problems, such as a ‘Zero Day’ attack, for which no remedies are available with network security service providers. The IT Services industry may be an attractive target of cyber attacks designed to impede the performance of our products, penetrate our network security or the security of our internal systems, or that of our customers, misappropriate proprietary information and/or cause interruption to our services. While we continue to deploy industry best practices and the latest technology, we cannot provide absolute assurance that our systems are fully protected against third-party intrusions, viruses, hacker attacks, information or data theft or other similar threats. For example, in April 2019, we became aware that our system was subject to a cyber attack by a coordinated and advanced phishing campaign, which was reportedly directed against several major companies, including Wipro. Upon learning of this attack, we collaborated with a forensic firm to investigate the incident and have worked closely with our anti-virus provider and our security team to counter the malware found in our system and implement a series of additional precautionary and containment measures across our system. Our investigation into this attack remains ongoing. However, any third-party intrusions, viruses, hacker attacks, information or data theft or similar threats against us and our systems may have a material adverse effect on our business, financial condition and results of operations.

 

-11-


Table of Contents

Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of confidential customer data could expose us, our customers or the affected parties to a risk of loss or misuse of this information. We could be subject to termination of contracts for non-compliance with our client’s information security policies and procedures. If additional safeguards are required to comply with laws relating to privacy, security and data protection, our costs could increase further, which would negatively affect our results of operations.

Many of our client agreements do not limit our potential liability for breaches of confidentiality. If any person, including any of our employees or former employees, penetrates our network security or misappropriates sensitive data, we could be subject to significant liability from our clients or from our clients’ customers for breaching contractual confidentiality provisions or privacy laws. Unauthorized disclosure of sensitive or confidential client and customer data, whether through breach of our computer systems, systems failure, loss or theft of assets containing confidential information or otherwise, could damage our reputation and cause us to lose clients.

While various security control mechanisms are deployed and periodically re-enforced, these security control mechanisms may not always be successful, considering the complexity of the environments, inter-dependencies, sophisticated attack methodologies, highly dynamic heterogeneous systems and global digital presence hosted both in cloud and on premise. Our service operations and delivery is aligned to various industry, geographical and regional regulations, privacy, security, reporting, data localization, standards and legal requirements which are continuously evolving and changing, mandating us to enforce required security and privacy controls and frameworks.

We may face difficulties in providing end-to-end business solutions for our clients that could cause clients to discontinue their work with us, which in turn could impact our business.

As we have increased the breadth of our service offerings, we have engaged in larger and more complex projects with our clients. This requires us to establish closer relationships with our clients, develop a thorough understanding of their operations, and take higher commercial risks in our contracts with such clients, including penalty clauses in our agreements, larger upfront investments and compensation based on our client’s financial or business outcomes. Our ability to establish such relationships will depend on a number of factors, including the proficiency of our IT professionals and our management personnel. Our failure to understand and successfully implement our client’s requirements, the domain and country-specific laws and regulations which govern the products and services that we provide, or our failure to deliver services which meet the requirements specified by our clients could result in termination of client contracts, reputational harm and/or imposition of penalties or the payment of damages. Additionally, we may experience financial losses in contracts which are linked to our client’s future business outcomes or based on assumptions which are not realized. We may also be subject to loss of clients due to dependence on alliance partners, subcontractors or third-party product vendors.

Larger projects may involve multiple engagements or stages, and there is a risk that a client may choose not to retain us for subsequent stages or may cancel or delay subsequent planned engagements. Further, we may not be able to sell additional services to existing clients. Unsatisfied clients might seek to terminate existing contracts prior to the completion of the services or relationship. This may further damage our business by affecting our ability to compete for new contracts with current and prospective clients. We may also experience terminations, cancellations or delays as a result of the business or financial condition of our clients or the economy generally, as opposed to factors related to the quality of our services. Such cancellations or delays make it difficult to plan for project resource requirements, and inaccuracies in such resource planning may have a negative impact on our profitability.

We may be subject to litigation and be required to pay damages for deficient services or for violating intellectual property rights.

We may be subject to customer audits on quality of service and required to pay damages or face litigations for losses caused by deficient services. We may be liable to our clients for damages or termination of contract if we are unable to address disruption in services to our clients with adequate business continuity plans. We may also be subject to litigations or damages for violating or misusing our clients’ intellectual property rights or for breaches of third-party intellectual property rights or confidential information (including but not limited to proprietary data and personally identifiable information). Further, our contracts often contain provisions pursuant to which we must indemnify our clients for such third-party breaches of intellectual property pursuant to our contracts. Additionally, any failure in a client’s system could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we attempt to limit our contractual liability for consequential damages in rendering our services, we cannot be assured that such limitations on liability will be enforceable in all cases, or that they will otherwise protect us from liability for damages. Such scenarios could require us to pay damages, enter into expensive arrangements or modify our products and services, causing significant damage to our reputation and adversely affecting our results from operations.

 

-12-


Table of Contents

Our insurance coverage may not be adequate to protect us against all potential losses to which we may be subject, and this may have a material adverse effect on our business.

Our insurance policies cover physical loss or damage to our property and equipment arising from a number of specified risks and certain consequential losses, including business interruption, arising from the occurrence of an insured event under the policies. Under our property and equipment policies, damages and losses caused by certain natural disasters, such as earthquakes, acts of terrorism, floods and windstorms are also covered. We also maintain various other types of insurance including, but not limited to, directors’ and officers’ liability insurance, workmen’s compensation insurance, errors and omissions insurance, cyber insurance and marine insurance. We maintain insurance on property and equipment in amounts believed to be consistent with industry practices, but we are not fully insured against all such risks. Notwithstanding the insurance coverage that we carry, the occurrence of an event that causes losses in excess of the limits specified in our policies, or losses arising from events not covered by insurance policies, could materially harm our financial condition and future operating results. There can be no assurance that any claims filed, under our insurance policies will be honored fully or timely. Also, our financial condition may be affected to the extent we suffer any loss or damage that is not covered by insurance or which exceeds our insurance coverage. A successful assertion of one or more large claims against us that results in changes to our insurance policies, including premium increases or the imposition of a large deductible or co-insurance requirement, could also adversely affect our revenues and operating results.

If we fail to or are unable to implement and maintain effective internal controls over financial reporting, the accuracy and timeliness of our financial reporting may be adversely affected.

We are subject to reporting obligations under U.S. securities laws. The SEC, as required under Section 404 of the Sarbanes- Oxley Act of 2002, has adopted rules requiring every public company to include a report of management on the effectiveness of such company’s internal control over financial reporting in its annual report. In addition, an independent registered public accounting firm must issue an attestation report on the effectiveness of the company’s internal control over financial reporting.

We recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. If we fail to maintain effective internal control over financial reporting in the future, we and our independent registered public accounting firm may not be able to conclude that we have effective internal control over financial reporting at a reasonable assurance level. This could in turn result in the loss of investor confidence in the reliability of our financial statements. Furthermore, we have incurred and anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act. If we are not able to continue to meet the requirements of Section 404 in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by the SEC, the New York Stock Exchange (the “NYSE”)or other regulatory authorities. Any such action could adversely affect the accuracy and timeliness of our financial reporting.

We may invest in companies for strategic reasons that may not be successful or meet our expectations.

We make non-controlling investments in companies which are important to our business strategy and to complement some of our business initiatives. These may include investments in non-marketable securities of early stage companies that carry a significant degree of risk and may not become liquid for several years from the date of investment. These investments may not generate financial returns or may not yield the desired business outcome. The success of our investment in a company is sometimes dependent on the availability of additional funding on favorable terms or a liquidity event such as an initial public offering. We may record impairment charges in relation to our strategic investments which will have a negative impact on our financial results.

Investments in companies where we do not have majority ownership expose us to decisions made by others. This could impact our ability to align the strategic goals of the companies with our goals and this may impact the returns on our investment. We may also be required to exit such investments at inopportune times or make further investments based on current shareholder agreements. Such further investments may have to be made at a time when the venture is financially struggling and this may erode or dilute its value to our shareholders.

We may engage in future acquisitions that may not be successful or meet our expectations.

We have acquired, and in the future may acquire or make investments in, complementary businesses, technologies, services or products, or enter into strategic partnerships or joint ventures with parties that we believe can provide access to new markets, capabilities or assets. The acquisition of new businesses subjects us to many risks, and we can provide no assurances that any such acquisition will be successful or meet our expectations. If it does not, we may suffer losses, dilute value to shareholders, may not be able to take advantage of appropriate investment opportunities or complete transactions on terms commercially acceptable to us. Changes in competition laws in India and abroad could also impact our acquisition plans by prohibiting potential transactions which could otherwise be beneficial for us.

 

-13-


Table of Contents

Despite our due diligence process, we may fail to discover significant issues around an acquired company’s intellectual property, service offerings, customer relationships, employee matters, accounting practices or regulatory compliances. We may also fail to discover liabilities that are not properly disclosed to us or we inadequately assess in our due diligence efforts or liabilities that may arise out of regulatory non-compliance, contractual obligations or breaches. We cannot predict or guarantee that our efforts will be effective or will protect us from liability. If we are unable to get indemnification protection or other contractual protections or relief for any material liabilities associated with our acquisitions or investments, it could harm our operating results.

We may increase our interest expense and leverage if we incur additional debt to pay for an acquisition. Use of cash to pay for acquisitions may limit other potential uses of cash, including stock repurchases and dividend payments.

Integration of acquired entities is often a time-consuming and expensive process. We could have difficulty in integrating the acquired products, services, solutions or technologies into our operations. We could also have difficulties in assimilating and retaining the key personnel, consolidating and integrating IT infrastructure or operations of the acquired companies. We may face difficulties in meeting the needs of the acquired company’s customers and partners following completion of the acquisition. We may face litigation or other claims arising out of our acquisitions, including disputes with regard to earn-outs or other closing adjustments. These difficulties could disrupt our ongoing business, distract our management and employees, and increase our expenses.

Further, we may be required to integrate any acquired entities into our framework of internal control over financial reporting and disclosure controls and procedures. Integration, compliance and review of other entities’ internal control frameworks could be a time consuming and expensive process.

Goodwill and acquisition related intangibles that we carry on our balance sheet could give rise to significant impairment charges in the future.

The amount of goodwill and intangible assets in our consolidated financial statements has increased significantly in recent years, primarily on account of acquisitions. Goodwill and acquisition related intangibles are subject to impairment review at least annually. Impairment testing under IFRS may lead to impairment charges in the future. For example, for one of our acquisitions, we recorded impairment charges on certain intangible assets as a result of uncertainties around regulatory changes relating to the Affordable Care Act. Any significant impairment charges could have a material adverse effect on our results of operations.

Our business depends on a strong brand, and failing to maintain and enhance our brand would impact our ability to expand our business.

We continue to share the “Wipro” brand with Wipro Enterprises (P) Limited, which was formed following the demerger of the Company’s consumer care and lighting, infrastructure engineering and other non-IT business segments. Our brand may be negatively impacted by a number of factors, including, among others, reputational issues and performance failures, some of which may be outside of our control. Further, if we fail to maintain and enhance the quality of our brand, our business and operating results may be materially and adversely affected. Maintaining and enhancing our brand will depend largely on our ability to remain a technology leader and continue to provide high quality, innovative services and solutions to our customers.

Our revenue depends to a large extent on a limited number of clients, and our revenue could decline if we lose a major client.

We currently derive, and believe that we will continue to derive, a significant portion of our revenue from a limited number of corporate clients. The loss of a major client or a significant reduction in the service performed for a major client could result in a reduction of our revenue. Significant pricing or margin pressure exerted by our largest clients would also adversely affect our operating results. Our largest client accounted for 3%, 3% and 4% of our IT Services revenue for the years ended March 31, 2017, 2018 and 2019, respectively. Our ten largest IT Services clients accounted for approximately 17%, 18% and 19.5% of our IT Services revenues for the years ended March 31, 2017, 2018 and 2019, respectively. The volume of work we perform for specific clients may vary from year to year, particularly since we typically are not the exclusive external technology service provider for these clients. Thus, any major client during one year may not provide the same level of revenue in a subsequent year.

There are a number of factors other than our performance that could cause the loss of a client, such as a reduction in our clients’ IT budgets due to macroeconomic factors or otherwise, shifts in corporate priorities and political or economic factors, including bankruptcy and/or liquidation of our large clients. These factors may not be predictable or under our control. We cannot assure you that our large clients will not terminate their arrangements with us or significantly change, reduce or delay the amount of services ordered from us, any of which would reduce our revenue.

 

-14-


Table of Contents

Companies in the industries that we serve may also seek to achieve economies of scale and other synergies by combining with or acquiring other companies. If two or more of our current clients merge or consolidate and combine their operations, it may decrease the overall amount of work that we perform for such clients. If one of our current clients merges or consolidates with a company that relies on another provider for its consulting, systems integration, technology or outsourcing services, we may lose work from that client or lose the opportunity to gain additional work. The increased market power of larger companies could also increase pricing and competitive pressures on us.

Our revenue and operating results may be affected by the rate of growth in the use of technology in business and the type and level of technology spending by our clients.

Our business depends, in part, upon continued reliance on the use of technology in business by our clients and prospective clients as well as their customers and suppliers. We have invested, and will continue to invest, in research and development and in initiatives to expand our capabilities or offerings around new technologies. The effort and initiatives may not be successful or could yield sub-optimal results, which would negatively impact our revenues and profitability. In particular, the success of our new service offerings requires continued demand for such services and our ability to meet this demand in a cost-effective manner. In challenging economic environments, prospective clients may reduce or defer their spending on new technologies in order to focus on other priorities or may decide not to engage our services. Also, many companies have already invested substantial resources in their current means of conducting commerce and exchanging information, and they may be reluctant or slow to adopt new approaches that could disrupt existing personnel, processes and infrastructures. If the growth of technology usage in business, or our clients’ spending on such technology, declines, or if we cannot convince our clients or potential clients to embrace new technological solutions, our revenue and operating results could be adversely affected.

Some of our long-term client contracts contain benchmarking and most favored customer provisions which, if triggered, could result in lower contractual revenues and profitability in the future.

Some of our client contracts contain benchmarking and most favored customer provisions. The benchmarking provisions allow a customer in certain circumstances to request a study prepared by an agreed upon third-party comparing our pricing, performance and efficiency gains for delivered contract services against the comparable services of an agreed upon list of other service providers. Based on the results of the benchmark study and depending on the reasons for any unfavorable variance, we may be required to reduce our pricing for future services to be performed for the remainder of the contract term, which could have an adverse impact on our revenues and results. Most favored customer provisions require us to give existing customers updated terms in the event we enter into more favorable agreements with certain other customers, which limits our ability to freely enter into agreements and could have an adverse impact on our revenues and results.

Our work with government clients exposes us to additional risks inherent in the government contracting environment.

Our clients include national, provincial, state and local governmental entities. Our government work carries various risks inherent in the government contracting process, which may affect our operating profitability. These risks include, but are not limited to, the following:

 

   

Government entities often reserve the right to audit our contract costs, including allocated indirect costs, and conduct inquiries and investigations of our business practices with respect to our government contracts. If the client finds that the costs are not chargeable, then we will not be allowed to bill for them or the cost must be refunded to the client if it has already been paid to us. Findings from an audit may also result in prospective adjustments of previously agreed upon rates for our work and may affect our future margins.

 

   

If a government client discovers improper or illegal activities in the course of audits or investigations, we may become subject to various civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions or unilateral debarment from doing business with other agencies of that government. The inherent limitations of internal controls may not prevent or detect all improper or illegal activities, regardless of their adequacy, and therefore we can only mitigate, and not eliminate, this risk.

 

   

Government contracts are often subject to more extensive scrutiny and publicity than contracts with commercial clients. Negative publicity related to our government contracts, regardless of its accuracy, may further damage our business by affecting our ability to compete for new contracts among commercial and governmental entities.

 

   

Political and economic factors such as pending elections, changes in leadership among key governmental decision makers, revisions to governmental tax policies and reduced tax revenues can affect the number and terms of new government contracts signed.

 

-15-


Table of Contents
   

Terms and conditions of government contracts tend to be more onerous and are often more difficult to negotiate than those for commercial contracts.

 

   

Government contracts may not include a cap on direct or consequential damages, which could cause additional risk and expense in these contracts.

If our clients are unable to pay our dues and receivables, our results of operations and cash flows could be adversely affected.

Our business depends on our ability to successfully obtain payments from our clients of the amounts they owe us for work performed. We evaluate the financial condition of our clients and usually bill and collect on relatively short cycles. We maintain provisions against receivables and unbilled services. Actual losses on client balances could differ from those that we currently anticipate and as a result we might need to adjust our provisions. For example, in the year ended March 31, 2018, two of our customers filed for bankruptcy/liquidation, which adversely affected our results for that year. There is no guarantee that we will accurately assess the creditworthiness of our clients. Macroeconomic conditions, such as a potential credit crisis in the global financial system, could also result in financial difficulties for our clients, including limited access to the credit markets, insolvency or bankruptcy. Such conditions could cause clients to delay payment, request modifications of their payment terms, or default on their payment obligations to us, all of which could increase our receivables. Additionally, if we are unable to meet our contractual obligations, we might experience delays in the collection of or be unable to collect our client balances, which may adversely affect our results from operations and cash flows.

Many of our client contracts can be terminated without cause, with little or no notice and without termination charges, which could negatively impact our revenue and profitability.

Our clients typically retain us on a non-exclusive, project-by-project basis. Some of our client contracts, including those that are on a fixed-price, fixed-time frame basis, can be terminated with or without cause, with as little as 15 days’ notice and without termination-related penalties. Most of our contracts with clients are typically limited to discrete projects without any commitment to a specific volume of business or future work. Our business is dependent on the decisions and actions of our clients, and there are a number of factors that might result in the termination of a project or the loss of a client that are outside of our control, including:

 

   

the business or financial condition of our clients or the economy generally;

 

   

a change in strategic priorities, resulting in a reduced level of IT spending;

 

   

a demand for price reductions; and

 

   

a change in outsourcing strategy such as moving to client in-house IT departments or to our competitors.

Larger projects may involve multiple engagements or stages, and there is a risk that a client may choose not to retain us for subsequent stages or may cancel or delay subsequent planned engagements. Further, we may not be able to sell additional services to existing clients.

Termination of client relationships, particularly relationships with our significant customers, would have a material adverse effect on our business, results from operations and financial condition.

Adverse changes to our relationships with key alliance partners could adversely affect our revenues and results of operations.

We have alliances with companies whose capabilities complement our own. A significant portion of our service offerings are based on technology or software provided by our alliance partners. The priorities and objectives of our alliance partners may differ from ours. As most of our alliance relationships are non-exclusive, our alliance partners are not prohibited from competing with us or aligning more closely with our competitors. In addition, our alliance partners could experience reduced demand for their technology or software, including responses to changes in technology, which could impact related demand for our services. If we do not obtain the expected benefits from our alliance relationships, or if we are unable to enter into new alliances for any reason, we may be less competitive, our ability to offer attractive service offerings to our clients may be negatively affected, and our revenues and results of operations could be adversely affected.

Our dependencies on “open source” software programs and platforms could impose limitations on our ability to commercialize our products and services, require us to re-engineer our products and services, or subject our proprietary software to general release.

Certain products and services we offer to our clients incorporate open source software licensed without warranties, indemnification, or other contractual protections regarding infringement claims, security, upgrades or the quality of the code. Although we monitor our use of open source software to avoid subjecting our products to conditions we do not intend, the terms of many open source licenses have not been interpreted by United States or foreign

 

-16-


Table of Contents

courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products and services. There can be no assurance that our processes for controlling our use of open source software in our products and services will be effective. If we are held to have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to potentially re-engineer or discontinue the sale of our products or to make generally available, in source code form, our proprietary software if we combine it with open source software in a certain manner, any of which could adversely affect our business, operating results, and financial condition.

The laws of India do not protect intellectual property rights to the same extent as those of the United States, and we may be unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property may result in development of technology, products or services which compete with our products. We may also be subject to third-party claims of intellectual property infringement.

Our intellectual property rights are important to our business. We rely on a combination of patent, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property. However, we cannot be certain that the steps we have taken will prevent unauthorized use of our intellectual property. Furthermore, the laws of India do not protect proprietary rights to the same extent as laws in the United States. Therefore, our efforts to protect our intellectual property may not be adequate. Our competitors may independently develop similar technology or duplicate our products or services. Unauthorized parties may infringe upon or misappropriate our products, services or proprietary information.

The misappropriation or duplication of our intellectual property could disrupt our ongoing business, distract our management and employees, reduce our revenue and increase our expenses. The competitive advantage that we derive from our intellectual property may also be diminished or eliminated. We may need to litigate to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Any such litigation could be time-consuming and expensive. As the number of patents, copyrights and other intellectual property rights in our industry increases, and as the coverage of these rights increases, we believe that companies in our industry will face more frequent infringement claims. Defending against these claims, even if not meritorious, could be expensive and divert our attention and resources from operating our company. Also, there can be no assurance that, as our business expands into new areas, we will be able to independently develop the technology necessary to conduct our business or that we can do so without infringing on the intellectual property rights of others.

Although we believe that our intellectual property rights do not infringe on the intellectual property rights of any other party, infringement claims may be asserted against us in the future. If we become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial damage award and be forced to develop non-infringing technology, obtain a license or cease selling the applications or products that contain the infringing technology. We may be unable to develop non-infringing technology or to obtain a license on commercially reasonable terms, or at all. Further, we may be required to provide indemnification to clients for third-party breaches of intellectual property pursuant to our contracts with such parties.

Changes in financial reporting standards, management’s use of accounting estimates may affect our operating results and financial position.

To comply with IFRS, management is required to make various estimates, judgments and assumptions. The facts and circumstances on which management bases these estimates, judgments, assumptions, and management’s judgment of the facts and circumstances, may change from time to time and this may result in significant changes in the estimates, with an impact on our assets or income. Current and future accounting pronouncements and other financial reporting standards may adversely affect the financial information we present. We regularly monitor our compliance with all of the financial reporting standards that are applicable to us and any new pronouncements that are relevant to us. Findings of our monitoring activity or new financial reporting standards may require us to change our internal accounting policies and to alter our operational policy so that it reflects new or amended financial reporting standards. We cannot exclude the possibility that this may have a material impact on our assets, income, or cash flows. For a summary of significant accounting policies, refer to Note 3 of the Notes to the Consolidated Financial Statements section.

Our revenues are highly dependent on clients primarily located in the Americas (including the United States) and Europe, as well as on clients concentrated in certain industries; therefore, an economic slowdown or factors that affect the economic health of the United States, Europe or these industries would adversely affect our business.

We derive approximately 55% of our IT Services revenue from the Americas (including the United States) and 25% of our IT Services revenue from Europe. Our business and financial performance is and will continue to be affected by economic conditions globally. Increased protectionism and the risk of global trade war, resulting in weaker global trade and economic activity could adversely affect our business. If the economy in the Americas or Europe continues to be volatile or uncertain or conditions in the global financial market deteriorate, pricing for our services may become less attractive and our clients located in these geographies 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.

 

-17-


Table of Contents

Further, in June 2016, a referendum was held on the United Kingdom’s membership in the European Union, the outcome of which was a vote in favor of leaving the European Union (commonly referred to as “Brexit”). In March 2017, the UK government subsequently notified the European Union of the United Kingdom’s intention to withdraw, triggering under the treaties governing the European Union a two-year period of negotiation between the UK government and the other European Union member states, during which the terms of Brexit are to be agreed. Although the withdrawal of the United Kingdom from the European Union was scheduled to take effect on March 29, 2019, the withdrawal date was extended until April 12, 2019 and further extended until October 31, 2019, though it could occur earlier if the United Kingdom so determines.

The effects of Brexit will depend on any agreements that the UK government makes to retain access to European Union markets either during a transitional period or more permanently. We are unable to predict what the terms of those agreements will be and its effect on our business in United Kingdom and European Union. Brexit therefore creates an uncertain political and economic environment in the United Kingdom and potentially across other European Union member states for the foreseeable future, including during any period while the terms of the United Kingdom’s exit from the European Union are being negotiated and/or during any transitional period connected to the United Kingdom’s eventual withdrawal from the European Union. Our operations in the United Kingdom and the European Union may be impacted by such uncertainties. Further, Brexit could adversely affect European and worldwide economic or market conditions and could contribute to instability in global financial markets, and the value of the Pound Sterling currency or other currencies, including the Euro. We are exposed to the economic, market and fiscal conditions in the United Kingdom and the European Union and to changes in any of these conditions. Depending on the terms reached regarding Brexit, it is possible that there may be adverse practical and/or operational implications on our business.

Our clients are concentrated in certain key industries. Any significant decrease in the growth of any one of these industries, or widespread changes in any such industry, may reduce or alter the demand for our services and adversely affect our revenue and profitability. For instance, fluctuations in global crude oil prices have significantly impacted the companies operating in the energy industry, impacting revenue and profitability of our Energy, Natural Resources and Utilities industry vertical. Furthermore, some of the industries in which our clients are concentrated, such as the financial services industry, health care industry or the energy and utilities industry, are, or may be, increasingly subject to governmental regulation and intervention. For instance, clients in the financial services sector have been subject to increased regulations following the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States. Similarly, clients in the health care industry are subject to additional federal, state and foreign laws and regulations, such as the Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the “ACA”). Furthermore, the regulatory and legislative environment surrounding the health care industry is facing uncertainty due to the continuing lack of clarity surrounding the future of the ACA. Increased regulation, changes in existing regulation or increased governmental intervention in the industries in which our clients operate may adversely affect the growth of their respective businesses and therefore negatively impact our revenues.

Wage increases in India may diminish our competitive advantage against companies located in the United States and Europe and may reduce our profit margins.

Our wage costs in India have historically been significantly lower than wage costs in the U.S. and Europe for comparably skilled professionals, and this has been one of our competitive advantages. However, wage increases in India may prevent us from sustaining this competitive advantage and may negatively affect our profit margins. We may need to increase the levels of our employee compensation more rapidly than in the past to retain talent. Unless we are able to continue to increase the efficiency and productivity of our employees over the long term, wage increases may reduce our profit margins. Furthermore, increases in the proportion of employees with less experience, or source talent from other low cost locations, like Eastern Europe, China or Southeast Asia could also negatively affect our profits.

Our international operations subject us to risks inherent in doing business on an international level, including geopolitical volatilities, which could harm our operating results.

The majority of our software development facilities are in India. Currently, we also have facilities in several countries around the world. As we continue to increase our presence outside India through our strategic development centers worldwide, we are subject to additional risks, including risks related to complying with a wide variety of national and local laws, localization requirements, restrictions on the import and export of certain technologies, data privacy and protection regulations, currency fluctuations, economic and political volatility, pending elections, changes in trade and foreign exchange policies, restrictions on repatriation of funds to India and multiple and possibly overlapping tax structures.

 

-18-


Table of Contents

Our current international operations and future initiatives will involve a variety of risks including (i) government trade restrictions, including those which may impose restrictions, including prohibitions, on the exportation, re-exportation, sale, shipment or other transfer of programming, technology, components and/or services to foreign persons and (ii) changes in diplomatic and trade relationships, including new tariffs, trade protections measures, import or export licensing requirements, trade embargoes and other trade barriers. Emerging nationalist trends in countries may also significantly and adversely alter the trade environment. These conditions may add uncertainty to the timing and budget for technology investment decisions by our customers, and may impact our ability to do business in some markets or with some public-sector customers.

We may face competition in other countries from companies that may have more experience with operations in such countries or with international operations in general. We may also face difficulties integrating new facilities in different countries into our existing operations, as well as integrating employees that we hire in different countries into our existing corporate culture. Our international expansion plans may not be successful, and we may not be able to compete effectively in other countries.

Terrorist attacks and other acts of violence or war have the potential to directly impact our clients. To the extent that such attacks affect or involve the U.S. or Europe, our business may be significantly impacted, as the majority of our revenue is derived from clients located in those regions.

Further, South Asia has from time to time experienced instances of civil unrest and hostilities among neighboring countries. Such activities could disrupt communications, make travel more difficult, and create a greater perception that investments in Indian companies involve a higher degree of risk. This, in turn, could have a material adverse effect on the market for the securities of Indian companies, including our equity shares and our ADSs, and on the market for our services.

The markets in which we operate are subject to the risks of earthquakes, floods and other natural disasters, the occurrence of which could cause our business to suffer.

Some of the regions that we operate in are prone to earthquakes, hurricanes, tsunamis, flooding and other natural disasters. In the event that any of our business centers are affected by such disasters, as occurred in Chennai in late 2015, we may sustain damage to our operations and properties, suffer significant financial losses and be unable to complete our client engagements in a timely manner, if at all. Further, in the event of a natural disaster, we may also incur costs in redeploying personnel and property. In addition, if there is a major earthquake, a flood, or other natural disaster in any of the locations in which our significant clients are located, we face the risk that our clients may incur losses or sustained business interruption which may materially impair their ability to continue their purchase of our products or services. The long-term effects of climate change on the global economy or the IT industry, in particular, are unclear. A major earthquake, flood or other natural disaster including as a result of climate changes in the locations in which we operate could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Restrictive changes to immigration laws may hamper our growth and cause our revenue to decline.

The success of our business is dependent on our ability to attract and retain talented and experienced professionals and be able to mobilize them around the world to meet our clients’ needs. Immigration laws in the countries we operate in are subject to legislative changes, as well as to variations in the standards of application and enforcement due to political forces and economic conditions. A few countries have introduced new provisions and standards in immigration law which can impact our ability to provide services in those countries due to restrictive policies and additional costs involved. It is difficult to predict the political and economic events that could affect immigration laws, or the restrictive impact they could have on obtaining or renewing work visas for our technology professionals.

Since a large part of our business centers around the United States, changes to U.S. immigration laws could make it more difficult to obtain the required nonimmigrant work authorizations for our employees that allow us to compete for and provide timely and cost-effective services to our clients in the United States. There have been and will continue to be calls for extensive changes to U.S. immigration laws regarding the admission of highly skilled temporary and permanent workers. There are some legislative proposals which, if passed and signed into law, could add further costs and/or restrictions to some of the high-skilled temporary worker categories. In turn, our cost of doing business in the United States may increase further, which may discourage some customers from seeking our services. This could have a material and adverse effect on our business, revenues and operating results.

We currently have sufficient personnel with valid nonimmigrant worker visas and are also increasing hiring in the United States to continue services to clients. However, the uncertainty around whether we will continue to be able to obtain adequate number of nonimmigrant worker visas for our onsite employees on the same timeframe as we currently maintain, could affect our ability to be responsive to business needs and cause our revenue to decline.

 

-19-


Table of Contents

Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements. Violation of these regulations could harm our business.

Since we provide services to clients throughout the world, we are subject to numerous, and sometimes conflicting, legal requirements on matters as diverse as import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, government affairs, anti-corruption, whistle blowing, internal and disclosure control obligations, data protection and privacy and labor relations and certain regulatory requirements that are specific to our client’s industry. Non-compliance with these regulations in the conduct of our business could result in fines, penalties, criminal sanctions against us or our officers, disgorgement of profits, prohibitions on doing business and adverse impact to our reputation. Gaps in compliance with these regulations in connection with the performance of our obligations to our clients could also result in exposure to monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations. Many countries also seek to regulate the actions that companies take outside of their respective jurisdictions, subjecting us to multiple and sometimes competing legal frameworks in addition to our home country rules. Due to the varying degree of development of the legal systems of the countries in which we operate, local laws might be insufficient to defend us and preserve our rights. We could also be subjected to risks to our reputation and regulatory action on account of any unethical acts by any of our employees, partners or other related individuals.

We have more than 38,000 employees located outside India. We are subject to risks relating to compliance with a variety of national and local laws including multiple tax regimes, labor laws, and employee health, safety, wages and benefits laws. We may, from time to time, be subject to litigation or administrative actions resulting from claims against us by current or former employees individually or as part of class actions, including claims of wrongful terminations, discrimination, misclassification or other violations of labor law or other alleged conduct. We may also, from time to time, be subject to litigation resulting from claims against us by third parties, including claims of breach of non-compete and confidentiality provisions of our employees’ former employment agreements with such third parties or claims of breach by us of their intellectual property rights. Our failure to comply with applicable regulatory requirements could have a material adverse effect on our business, results of operations and financial condition.

Also, regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants may differ as compared to that of the United States. The Securities and Exchange Board of India (“SEBI”) has prescribed regulations and guidelines in relation to disclosure requirements, insider dealing and other matters relevant to the Indian securities market. There may, however, be less publicly available information about Indian companies than is regularly made available by public companies in the United States.

Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance.

Changing laws, regulations and standards relating to accounting, corporate governance and public disclosure, including the Sarbanes Oxley Act of 2002, new SEC regulations, NYSE rules, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (“Insider Trading Regulations”), and the Indian Companies Act, 2013 (“Companies Act, 2013”) are creating uncertainty for companies like ours. These new or changed laws, regulations and standards may lack specificity and are subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards. For example, SEBI has recently notified the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018 which prescribe various new concepts and compliance requirements for Indian listed companies. Impact of such regulations may be far-reaching and often untested since they are of recent origin. Introduction of such regulations have added complexity to our corporate compliance regime.

In particular, continuing compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of our internal controls over financial reporting requires the commitment of significant financial and managerial resources. With respect to our Form 20-F for the year ended March 31, 2019, our management has performed an assessment of the effectiveness of the internal control over financial reporting. We have determined that the internal controls are effective.

We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses and significant management time and attention. In addition, the new laws, regulations and standards regarding corporate governance may make it more difficult for us to obtain or maintain directors’ and officers’ liability insurance. Further, our board members, chief executive officer and chief financial officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may face difficulties attracting and retaining qualified board members and executive officers, which could harm our business. In certain instances, the compliance requirements under the SEBI Listing Regulations, Companies Act, 2013, and the rules under the NYSE are more onerous than those under the Sarbanes-Oxley Act of 2002. For example, our Board of Directors is required to state that they have established internal financial controls to be followed by the

 

-20-


Table of Contents

Company and that such internal financial controls are adequate and were operating effectively. Additionally, under the SEBI Listing Regulations, the Chief Executive Officer, the Managing Director or a full time director appointed under the Companies Act, 2013 and the Chief Financial Officer are required to certify to the Board that (i) they accept responsibility for establishing and maintaining internal controls for financial reporting, (ii) that they have evaluated the effectiveness of the internal control systems of the company pertaining to financial reporting, and (iii) they have disclosed to the auditors and the Audit Committee any significant changes in internal control over financial reporting during the year, instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company’s internal control system over financial reporting, deficiencies in the design or operation of such internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify these deficiencies.

Furthermore, with respect to material related party transactions, the Company is required to obtain approval from its non-controlling shareholders if the controlling shareholders are related parties. Obtaining the approval of non-controlling shareholders is not guaranteed and may be time consuming, which could affect the Company’s ability to carry out the decisions of the Board of Directors in a timely manner. Additionally, under the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018, the Company is required to establish mechanisms for prevention of insider trading. In this regard, with effect from April 1, 2019, the chief executive officer, managing director or such other analogous person of every Indian listed company must put in place an adequate and effective system of internal controls to ensure compliance with the Insider Trading Regulations. The Company’s audit committee is required to review the compliance with the said provisions at least once in each financial year and verify that the systems for internal control are adequate and are operating effectively. If we fail to comply with new or changed laws or regulations and standards, our business and reputation may be harmed.

We may incur substantial costs for environmental regulatory compliance.

We are subject to various federal, state, local and foreign laws relating to protection of the environment. We may incur substantial fines, civil or criminal sanctions, including fines and sanctions against our directors and officers, or third-party claims for property damage or personal injury if we are held liable under environmental laws and regulations. Our current compliance with environmental laws and regulations is not expected to have a material adverse effect on our financial position, results of operations or competitive position.

Legislation in certain countries in which we operate, including the United States, may restrict companies in those countries from outsourcing work.

Some countries and organizations have expressed concerns about a perceived connection between offshore outsourcing and the loss of jobs domestically. With high domestic unemployment levels in many countries and increasing political and media attention on the outsourcing of services internationally by domestic corporations, there have been concerted efforts in many countries to enact new legislations to restrict offshore outsourcing or impose restrictions on companies that outsource. Recently, in addition to calls for changes to U.S. immigration laws regarding the admission of highly-skilled temporary and permanent workers, restrictive outsourcing legislation has been considered by federal and state authorities in the United States. In the event any of these measures become law, our ability to do business in these jurisdictions could be adversely impacted, which in turn could adversely affect our revenues and operating profitability.

In addition, from time to time, negative experiences associated with offshore outsourcing, such as theft and misappropriation of sensitive client data, have been publicized, including reports involving service providers in India. Our current or prospective clients may elect to perform certain services themselves or may be discouraged from transferring services from onshore to offshore service providers to avoid harmful publicity or any negative perceptions that may be associated with using an offshore service provider. Any slowdown or reversal of existing industry trends towards offshore outsourcing would seriously harm our ability to compete effectively with competitors that provide services from within the countries in which our clients operate.

Further, under the United Kingdom’s Transfer of Undertakings (Protection of Employees) Regulations, 2006, as well as similar regulations in European Union member countries, employees who are dismissed by an outsourcing vendor could seek compensation from their current or new employer. This could adversely impact our customers’ ability to outsource and also result in additional costs due to redundant payment liabilities. Such events could have an adverse impact on our results of operations and our financial position.

We would realize lower tax benefits if the special tax holiday scheme for units set up in Special Economic Zones is substantially modified.

Currently, we benefit from tax incentives under Indian tax laws. We qualify for a deduction from taxable income on profits attributable to our status as a developer of Special Economic Zones (“SEZs”) or from operation of units located in SEZs. The tax deduction for SEZ developers is available for any ten consecutive years out of fifteen years, commencing from the year in which the SEZ is notified. The tax deduction for a unit in an

 

-21-


Table of Contents

SEZ is equal to 100% of profits from the export of services for the first five years after the commencement of operations in the SEZ, and thereafter is equal to 50% of profits from the export of services for a subsequent period of ten years, subject to meeting specified re-investment conditions and earmarking of specified reserves in the last five years. This tax deduction will terminate if our operations are no longer located in an SEZ, fail to comply with rules required for an SEZ or fail to meet certain conditions prescribed under the Income Tax Act, 1961 of India. These tax benefits of units are conditioned upon our ability to generate positive net foreign exchange within five years of the commencement of our operations in the SEZ. If we fail to generate positive net foreign exchange within five years, or thereafter fail to maintain it, we will be subject to penalties under the Foreign Trade (Development and Regulation) Act, 1992, or the Indian Foreign Trade Act. The maximum penalty that may be imposed is equal to five times the gross value of the goods and services that we purchase with duty exemptions. We were subject to a Minimum Alternate Tax (“MAT”) at a fixed rate of approximately 21.34% until March 31, 2018 on our net profits as adjusted by certain prescribed adjustments. Where any tax is paid under MAT, such tax will be eligible for adjustment against regular income tax liability computed under the Income Tax Act, 1961 of India, for the following fifteen years as MAT credit. We cannot assure you that the Government of India will continue these special tax exemptions or that we will continue to qualify for such tax benefits and other incentives. If we no longer receive these tax benefits and other incentives, or if the MAT rate of taxation is increased, our financial results may be adversely affected.

In the past, there have been demands by legislators and various political parties in India for the Government of India to actively regulate the development of SEZs by private entities. There have also been demands to impose strict conditions which need to be complied with before economic zones developed by private entities are designated as SEZs. If such regulations or conditions are imposed, it would adversely impact our ability to set up new units in such designated SEZs and avail ourselves of the tax benefits associated with SEZs.

If the Government of India modifies dividend distribution tax rates or introduces new forms of taxes on distribution of profits or changes the basis of application of these taxes, the same could materially affect the returns to our shareholders.

The Government of India, through Finance Act, 2016, has introduced a tax on dividends accrued to non-corporate resident investors in excess of  1 million per annum at the rate of 10% (plus applicable surcharge and education cess). This is in addition to a dividend distribution tax payable by us at the rate of 20.56%. If the effective rate of a dividend distribution tax increases further or any new form of taxes on distribution of profits is introduced, the dividend amount receivable by our shareholders after taxes may decrease.

You may be subject to Indian taxes arising out of capital gains on the sale of the shares. Capital gains arising from the sale of shares are generally taxable in India.

Any gain realized on the sale of the Shares on an Indian stock exchange held for more than 12 months will not be subject to capital gains tax in India if the securities transaction tax has been paid on the transaction. The securities transaction tax will be levied on and collected by the Indian stock exchange on which the Shares are sold. Any gain realized on the sale of Shares held for more than 12 months on which no securities transaction tax has been paid will be subject to capital gains tax in India. Furthermore, any gain realized on the sale of the Shares held for a period of 12 months or less will be subject to capital gains tax in India. Under the Finance Act, 2018, gains of more than  1 lakh from sale of shares after April 1, 2018 held over one year will be taxed. See Item 10 of this annual report on Form 20-F for further information on the application of capital gains tax in India to our shareholders and ADS holders. Investors are advised to consult their own tax advisers and to carefully consider the potential tax consequences of an investment in shares and ADSs.

We operate in jurisdictions that impose transfer pricing and other tax related regulations on us, and any changes in the regulations or failure to comply could materially and adversely affect our profitability.

We are required to comply with various transfer pricing regulations in India and other countries. Failure to comply with such regulations may impact our effective tax rates and consequently affect our net margins. Additionally, we operate in several countries and our failure to comply with the local tax regime may result in additional taxes, penalties and enforcement actions from local authorities. In the event that we do not properly comply with transfer pricing and tax-related regulations, our profitability may be adversely affected. The Finance Act 2012 extended the applicability of transfer pricing regulations to domestic transactions entered into with related parties and certain specified transactions.

Section 59A of the Tax Cuts and Jobs Act of 2017 imposes a tax equal to the “base erosion minimum amount” on certain “applicable taxpayers.” This may have an impact on payments made to non-US corporations if they don’t meet the exemption criteria.

 

-22-


Table of Contents

Taxation laws are susceptible to frequent changes. The overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty about taxation in many jurisdictions. For example, some countries are unilaterally amending their tax laws to adopt the new guidelines by The Organization for Economic Cooperation and Development (“OECD”). In India, changes in taxation law are announced on an annual basis in February, when the Union Budget is presented. These changes in law, including recent changes in foreign jurisdictions, may affect the accuracy of our estimated tax obligations, or the obligations of holders of our equity shares and ADSs. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities. We are regularly under audit by tax authorities and those authorities may not agree with positions taken by us on our tax returns. Although we believe that our estimates are reasonable, there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

Political considerations in the Government of India could delay the liberalization of the Indian economy and adversely affect economic conditions in India in general, which could in return impact our financial results and prospects.

Despite economic liberalization policies, the Indian central and state governments remain a significant part of the Indian economy as producers, consumers and regulators. Although we believe that the process of economic liberalization will continue, the rate of economic liberalization could change, and specific laws and policies affecting technology companies, foreign investment, currency exchange and other matters affecting investment in our securities could change as well. A significant change in India’s economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and our business in particular.

For instance, in April 2007, the Government of India announced a number of changes in its policy relating to SEZs, including specifying a cap on land available for SEZs. The Government of India is currently considering making further changes in its SEZ policy. Finance Act, 2017 has prescribed a cut-off date of March 31, 2021 for setting up new SEZs. We currently have several facilities operating within SEZs and any adverse change in policy relating to SEZs could affect our profitability.

Indian law limits our ability to raise capital outside India and may limit the ability of others to acquire us, which could prevent us from operating our business or entering into a transaction that is in the best interests of our shareholders.

Indian law constrains our ability to raise capital outside of India through the issuance of equity or convertible debt securities. Generally, any foreign investment in, or an acquisition of, an Indian company under the applicable foreign exchange regulations does not require approval from the Reserve Bank of India and relevant government authorities in India, subject to compliance of prescribed conditions. The Government of India currently does not mandate prior approvals for IT companies such as ours. If we are required to seek the approval of the Government of India and the Government of India does not approve the proposed investment or implements a limit on the foreign equity ownership of IT companies, our ability to seek and obtain additional equity investment by foreign investors will be limited. In addition, these restrictions, if applied to us, may prevent us from entering into a transaction, such as an acquisition by a non-Indian company, which would otherwise be beneficial for our Company and the holders of our equity shares and ADSs.

Our ability to invest outside India, including acquiring companies organized outside India, depends on the approval of the Government of India and/or the Reserve Bank of India. Our failure to obtain approval from the Government of India for the acquisition of companies organized outside India may restrict our international growth, which could negatively affect our revenue.

The Ministry of Finance of the Government of India and/or the Reserve Bank of India must approve our acquisition of any company organized outside of India or grant general or special permission for such acquisition. The Reserve Bank of India permits acquisitions of companies organized outside India by an Indian party without approval, inter alia, in the following circumstances:

 

   

if the transaction consideration is paid in cash, up to 400% of the net worth of the acquiring company as per its latest audited financial statement; or

 

   

if the acquisition is funded with cash from the acquiring company’s existing foreign currency accounts or with cash proceeds from the issue of ADRs, Global Depositary Receipts, External Commercial Borrowings or Foreign Currency Convertible Bonds.

However, any financial commitment exceeding U.S. $ 1 billion or its equivalent in a financial year would require prior approval of the Reserve Bank of India (“RBI”) even if the total financial commitment of the Indian party is within 400% of the net worth as per its latest audited financial statements. Further, our investments in foreign operations may be subject to restrictions imposed by the RBI. We cannot assure you that any necessary approval from the Reserve Bank of India or the Ministry of Finance or any other Government agency can be obtained. Our failure to obtain such approvals from the Government of India for acquisitions of/investments in companies organized outside India may restrict our international growth, which could negatively affect our revenue.

 

-23-


Table of Contents

It may be difficult for you to enforce any judgment obtained in the United States against us, our directors or executive officers or our affiliates.

We are incorporated under the laws of India and many of our directors and executive officers reside outside the United States. A substantial portion of our assets and the assets of many of these persons are also located outside the United States. As a result, you may be unable to effect service of process upon us outside of India or upon such persons outside their jurisdiction of residence. In addition, you may be unable to enforce against us in courts outside of India, or against these persons outside the jurisdiction of their residence, judgments obtained in courts of the United States, including judgments predicated solely upon the federal securities laws of the United States.

We have been advised by our Indian counsel that the United States and India do not currently have a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the United States on civil liability, whether or not predicated solely upon the federal securities laws of the United States, would not be enforceable in India. However, the party in whose favor such final judgment is rendered may bring a new suit in a competent court in India based on a final judgment that has been obtained in the United States. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. A party seeking to enforce a foreign judgment in India is required to obtain approval from the Reserve Bank of India under the Foreign Exchange Management Act, 1999, to execute such a judgment or to repatriate any amount recovered.

Our stock price continues to be volatile.

Our stock price is affected by factors outside our control. A share buyback program could also affect the price of our stock and increase volatility. Such volatility could negatively impact the perceived value and stability of our equity shares and ADSs. Further, the Indian stock exchanges have, in the past, experienced substantial fluctuations in the prices of their listed securities. The Indian stock exchanges, on which our equity shares are listed, including the BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), have experienced problems that, if they continue or reoccur, could affect the market price and liquidity of the securities of Indian companies, including our equity shares and ADSs. These problems in the past included temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Furthermore, from time to time disputes have occurred between listed companies and stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on market sentiment.

Any adverse change in India’s debt rating or our credit rating by a domestic or international rating agency could negatively impact our business and profitability.

Any adverse revisions to India’s credit ratings for domestic and international debt or our credit rating by domestic or international rating agencies could adversely impact our ability to raise additional financing, as well as the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our access to debt market, results of operations and financial condition.

There are risks associated with our outstanding and future indebtedness

There can be no assurance that our business, results of operations and financial condition will not be adversely affected by our incurrence of indebtedness. Our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our operations and generate sufficient cash flows to service such debt. In addition, the agreements that govern the terms of our indebtedness may contain a number of restrictive covenants imposing significant operating and financial restrictions. In the event that we fail in the future to make any required payment under the agreements governing our indebtedness or if we fail to comply with the financial and operating covenants contained in those agreements, we would be in default with respect to that indebtedness and the lenders could declare such indebtedness to be immediately due and payable, which could have an impact on our results of operations. There can be no assurance that we will be able to manage any of these risks successfully.

Exchange rate fluctuations in various currencies in which we do business could negatively impact our revenue and operating results / net income. Our financial condition and results of operations may be harmed if we do not successfully reduce such risks through the use of derivative financial instruments.

Our IT Services business contributes approximately 96.4% of our revenue. A significant portion of our revenue from this segment is derived from transactions in foreign currencies, including the U.S. Dollar, the United Kingdom Pound Sterling, the Euro, the Canadian Dollar and the Australian Dollar while a large portion of our costs are in Indian Rupees. The exchange rate between the Indian Rupee and foreign currencies has fluctuated significantly in recent years and may continue to fluctuate in the future. As our financial statements are presented in Indian Rupees, such fluctuations could have a material impact on our reported results. Due to these exchange rate fluctuations, there has been an increased demand from our clients that all risks associated with such fluctuations be borne by us. Appreciation of the Indian Rupee against foreign currencies can therefore adversely affect our revenue and competitive position, and can adversely impact our operating results. We generate approximately 39% of our IT Services revenues in non-U.S. Dollar currencies, and the exchange rate fluctuations between these currencies and the U.S. Dollar can affect our revenues and growth, as expressed in U.S. Dollar terms.

 

-24-


Table of Contents

A significant portion of our debt is in various foreign currencies. We also undertake hedging strategies to mitigate exposure of exchange rate risk relating to foreign currency borrowings, including entering into cross-currency interest rate swaps. As mentioned above, the exchange rate between the Indian Rupee and foreign currencies has fluctuated significantly in recent years and will likely continue to fluctuate in the future. If the value of the Indian Rupee declines, the size of our debt obligations and interest expenses in Indian Rupees may increase. This will adversely impact our net income. We also experience other market risks, including changes in the interest rates of the securities that we own. We may use derivative financial instruments to reduce or mitigate these risks where possible. See “Risk Factors—Our global operations may expose us to increased risks associated with changes in the global political environment, which could have a material adverse effect on our business” above. However, if our strategies to reduce market risks are not successful, our financial condition and operating results may be harmed.

There are risks associated with the use of such hedging instruments. While hedging instruments may mitigate our exposure to fluctuations in currency exchange rates to a certain extent, we potentially forego benefits that might result from market fluctuations in currency exposures. These hedging transactions can also result in substantial losses. Such losses could occur under various circumstances, including, without limitation, any circumstances in which a counterparty does not perform its obligations under the applicable hedging arrangement (despite having International Swaps and Derivatives Association agreements in place with each of our hedging counterparties), there are currency fluctuations or the arrangement is imperfect or ineffective. Further, the policies of the RBI may change from time to time which may limit our ability to hedge our foreign currency exposures adequately.

Our defined benefit plan assets are subject to market volatility.

Our employee compensation policies include certain defined benefit plans where it is our obligation to provide agreed benefits to the employees. These obligations are funded through certain plan assets which carry actuarial and investment risks. These risks include adverse salary growth or demographic experience, which can result in an increase in cost of providing these benefits to employees in future. The valuation of plan assets considers an expected return which is based on expectation of the average long term rate of return on investments of the fund during the estimated term of the obligations. Should we not achieve the expected rate of return on the plan assets or if the plan experiences a decline in the fair value of its assets, we may be required to contribute assets to the plan which could adversely affect our results of operations.

We are exposed to fluctuations in the market values of our investment portfolio.

We maintain an investment portfolio of various holdings, types, and maturities. These investments are subject to general credit, liquidity, market, and interest rate risks. Deterioration of the credit as well as debt and capital markets due to economic turmoil could result in volatility of our investment earnings and impairments to our investment portfolio, which could negatively impact our financial condition and reported income. Further, fluctuations in the interest rate environment based on changes in Reserve Bank of India’s monetary policy could affect the interest income and thereby our profitability.

Disruptions in telecommunications and operations infrastructure could harm our service model, which could result in a reduction of our revenue.

A significant element of our business strategy is to continue to leverage and expand our offshore development centers in Bengaluru, Chennai, Hyderabad, Kolkata, Pune, Delhi, Mumbai and other cities in India, as well as near-shore development centers outside of India. We believe that the use of a strategically located network of software development centers provides us with cost advantages, the ability to attract highly skilled personnel from various regions of India and the world, the ability to service clients on a regional and global basis and the ability to provide services to our clients 24 hours a day, seven days a week. Part of our service model is to maintain active voice and data communications between our main office in Bengaluru, our clients’ offices, and our software development and support facilities. Although we maintain redundancy facilities and satellite communications links, any significant loss in our ability to transmit voice and data through satellite and telephone communications could result in a disruption in business, thereby hindering our performance or our ability to complete client projects on time. This, in turn, could lead to a reduction of our revenue.

 

-25-


Table of Contents

Risks Related to Investments in Indian Companies and International Operations Generally.

We are incorporated in India, and a substantial portion of our assets and our employees are located in India. Consequently, our financial performance and the market price of our ADSs will be affected by political, social and economic developments affecting India, Government of India policies such as taxation and foreign investment policies, Government of India currency exchange control and changes in exchange rates and interest rates.

Risks Related to the ADSs

Sale of our equity shares may adversely affect the prices of our equity shares and ADSs.

Sale of substantial amounts of our equity shares in the public market, including sales by insiders, or the perception that such sales may occur, could adversely affect the prevailing market price of our equity shares or our ADSs or our ability to raise capital through an offering of our securities. In the future, we may also sponsor the sale of shares currently held by some of our shareholders, or issue new shares. We can make no prediction as to the timing of any such sales or the effect, if any, that future sales of our equity shares, or the availability of our equity shares for future sale, will have on the market price of our equity shares or ADSs prevailing from time to time.

The Government of India has notified implementation of the Depository Receipts Scheme, 2014, which permits liberalized rules for sponsored and unsponsored secondary market issue of depository receipts up to the sectorial cap of foreign investment as per the prescribed regulations. This scheme is subject to guidelines and regulations to be enacted by the regulators like Reserve Bank of India, Ministry of Corporate Affairs, Ministry of Finance and Securities and Exchange Board of India. Once the regulations are fully notified, our shares can be freely convertible into depository receipts, which would impact the share price and available float in Indian as well as the price and availability of ADSs on NYSE.

Indian law imposes foreign investment restrictions that limit a holder’s ability to convert equity shares into ADSs, which may cause our ADSs to trade at a premium or discount to the market price of our equity shares.

Under certain circumstances, the Reserve Bank of India must approve the sale of equity shares underlying ADSs by a non-resident of India to a resident of India. The Reserve Bank of India has given general permission to effect sales of existing shares or certain other capital instruments of an Indian company by a non-resident to a resident, subject to certain conditions, including the price at which the shares may be sold. Additionally, except under certain limited circumstances, if an investor seeks to convert the Indian Rupee proceeds from a sale of equity shares in India into foreign currency and then repatriate that foreign currency from India, he or she will have to obtain additional approval from the Reserve Bank of India for each transaction. Required approval from the Reserve Bank of India or any other government agency may not be obtained on terms which are favorable to a non-resident investor or may not be obtained at all.

Pursuant to the provisions of the Companies Act, 2013, where the name of a person is entered in the register of members as a registered owner of shares but such person does not hold the beneficial interest in such shares, both the registered owner and the beneficial owner of such equity shares are required to disclose to the company the nature of their interest, particulars of the person in whose name the shares stand registered in the books of company and other certain details. Investors who exchange ADSs for the underlying equity shares of the company may be subject to the provisions of the Companies Act, 2013 and to the disclosure obligations that may be necessary as pursuant to the Depository Agreement. Any person who fails to comply with beneficial ownership disclosure requirements under Companies Act, 2013 may be liable for a fine of up to  50,000 and where failure is a continuing one, with a further fine up to  1,000 for each day such failure continues. Such restrictions on foreign ownership of the underlying equity shares may cause our ADSs to trade at a premium or discount to the equity shares. Such restrictions may change in the future, including under the Depository Receipt Scheme, 2014, and may affect the trading value of our ADSs relative to our equity shares.

The price of our ADSs and the U.S. Dollar value of any dividends we declare may be negatively affected by fluctuations in the U.S. Dollar to Indian Rupee exchange rate.

Our ADSs trade on the NYSE in U.S. Dollars. Since the equity shares underlying the ADSs are listed in India on the BSE and the NSE and trade in Indian Rupees, the value of the ADSs may be affected by exchange rate fluctuations between the U.S. Dollar and the Indian Rupee. In addition, dividends declared, if any, are denominated in Indian Rupees, and therefore the value of the dividends received by the holders of ADSs in U.S. Dollars will be affected by exchange rate fluctuations. If the Indian Rupee depreciates against the U.S. Dollar, the price at which our ADSs trade and the value of the U.S. Dollar equivalent of any dividend will decrease accordingly.

 

-26-


Table of Contents

Our ADSs have historically traded at a significant premium to the trading prices of our underlying equity shares on Indian stock exchanges, but may not continue to do so in the future.

Historically, our ADSs have traded at a premium to the trading prices of our underlying equity shares on Indian stock exchanges due to the relatively small portion of our market capitalization represented by ADSs, restrictions imposed by Indian law on the conversion of equity shares into ADSs, and the potential preference of some investors to trade securities listed on U.S. exchanges. The completion of any additional secondary ADS offering will increase the number of our outstanding ADSs. Further, the restrictions on the issuance of ADSs imposed by Indian law may be relaxed in the future, including by the Depository Receipts Scheme, 2014. Over a period of time, investor preferences may also change. Therefore, the historical premium of our ADSs as compared to the trading prices of our underlying equity shares on Indian stock exchanges may be reduced or eliminated.

Negative media coverage and public scrutiny may adversely affect the prices of our equity shares and ADSs.

Media coverage, including social media coverage such as blogs, of our business practices, employees, policies and actions has increased dramatically over the past several years. Any negative media coverage, regardless of the accuracy of such reporting, may have an initial adverse impact on our reputation and investor confidence, resulting in a decline in the share price of our equity shares and our ADSs.

Holders of ADSs are subject to the Securities and Exchange Board of India’s Takeover Code with respect to their acquisitions of ADSs or the underlying equity shares, and this may impose requirements on such holders with respect to disclosure and offers to purchase additional ADSs or equity shares.

The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “Takeover Code”) is applicable to publicly listed Indian companies such as Wipro and to any person acquiring our equity shares or voting rights in our company, including ADSs.

Under the Takeover Code, persons who acquire 5% or more of the shares of a company are required, within two working days of such acquisition, to disclose the aggregate shareholding and voting rights in the company to the company and to the stock exchanges on which the shares of the company are listed.

Additionally, holders of 5% or more of the shares or voting rights of a company who acquire or dispose of shares representing 2% or more of the shares or voting rights of the company must disclose, within two working days of such transaction their revised shareholding to the company and to the stock exchanges on which the shares of the company are listed. This disclosure is required even if the transaction is a sale which results in the holder’s ownership falling below 5%. The Takeover Code may also impose conditions that discourage a potential acquirer, which could prevent an acquisition of our company in a transaction that could be beneficial for our equity holders.

An investor in our ADSs may not be able to exercise preemptive rights for additional shares and may thereby suffer dilution of his or her equity interest in us.

Under the Indian Companies Act, 2013, a company incorporated in India must offer its holders of equity shares preemptive rights to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages prior to the issuance of any new equity shares, unless such preemptive rights have been waived by three-fourths of the shares voting on the resolution to waive such rights. Holders of ADSs may be unable to exercise preemptive rights for the equity shares underlying ADSs unless a registration statement under the Securities Act is effective with respect to such rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to prepare and file such a registration statement, and our decision to do so will depend on the costs and potential liabilities associated with any such registration statement, as well as the perceived benefits of enabling the holders of ADSs to exercise their preemptive rights, and any other factors we consider appropriate at the time. No assurance can be given that we would file a registration statement under these circumstances. If we issue any such securities in the future, such securities may be issued to the Depositary, which may sell such securities for the benefit of the holders of the ADSs. There can be no assurance as to the value, if any, the Depositary would receive upon the sale of such securities. To the extent that holders of ADSs are unable to exercise preemptive rights granted in respect of the equity shares represented by their ADSs, their proportional interests in the Company would be diluted.

ADS holders may be restricted in their ability to exercise voting and other rights.

At our request, the Depositary will mail to you any notice of shareholders’ meeting received from us along with information explaining how to instruct the Depositary to exercise the voting rights of the securities represented by ADSs. If the Depositary receives voting instructions from you prior

 

-27-


Table of Contents

to such shareholders’ meeting, relating to matters that have been forwarded to you, it will endeavor to vote the securities represented by your ADSs in accordance with such voting instructions. However, the ability of the Depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure that you will receive voting materials in time to enable you to return voting instructions to the Depositary in a timely manner. Securities for which no voting instructions have been received will not be voted. There may be other communications, notices or offerings that we only make to holders of our equity shares, which will not be forwarded to holders of ADSs. Accordingly, you may not be able to participate in all offerings, transactions or votes that are made available to holders of our equity shares including share buyback programs in which the Company buys back equity shares. Because ADS holders may not directly participate in the share buyback program, a notice of such program must be mailed to all ADS holders in advance of the program in order to give the ADS holders who want to participate the opportunity to convert their ADSs into equity shares.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequence to U.S. holders.

Based on the current price of our ADSs and the composition of our income and assets, we do not believe that we are a Passive Foreign Investment Company (“PFIC”) for U.S. federal income tax purposes for our current taxable year ended March 31, 2019. However, a separate determination must be made after the close of each taxable year as to whether we are a PFIC. We cannot assure you that we will not be a PFIC for any future taxable year. If we were treated as a PFIC for any taxable year during which a U.S. holder held an equity share or an ADS, certain adverse U.S. federal income tax consequences could apply to the U.S. holder. See “Taxation — Material U.S. Federal Tax Consequences — Passive Foreign Investment Company.”

 

Item 4.

Information on the Company

Company Overview

Wipro Limited is a leading global information technology (“IT”), consulting and business process services company. We harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful.

A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, we have over 170,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

History and Development of the Company

Wipro was incorporated on December 29, 1945, as Western India Vegetable Products Limited under the Indian Companies Act, VII of 1913, which is now superseded by the Indian Companies Act, 2013 (“Companies Act, 2013”). Today, Wipro is a public limited company deemed to be registered under the Companies Act 2013, and is registered with the Registrar of Companies, Bengaluru, Karnataka, India as Company No. 20800. In 1946, we held our initial public offering in India of our equity shares. In October 2000, Wipro raised capital in the initial U.S. public offering of American Depositary Shares (“ADSs”) that were listed on the New York Stock Exchange. We are listed on the National Stock Exchange and Bombay Stock Exchange in India and Wipro’s ADSs are listed on the New York Stock Exchange (“NYSE”). Wipro is a constituent of the Nifty and the NYSE TMT Indices. Our registered office is in Bengaluru, India. The senior management operates from local offices in key regions of operations such as North America, Europe, Australia, Africa, Latin America and Asia as well as from Bengaluru, India.

We began business as a vegetable oil manufacturer in 1945 in Amalner, Maharashtra, India and later expanded into manufacturing soaps and other consumer care products. During the late 1970s and early 1980s, under the leadership of Azim H Premji, the company further expanded into the IT industry in India. We began selling personal computers in India in 1985. In the 1990s, the company leveraged its hardware expertise and began offering software services to clients across the world. During the 2000s, our IT business scaled significantly by acquiring new clients, scaling relationship with existing customers and acquiring capabilities in emerging technologies, assets in focus markets and local talent in new geographies. In 2013, we demerged our non-IT business segments to focus solely on our IT business.

Over the last few years, we have been transforming our portfolio of services such as digital, cloud and advisory by investing in new technologies organically as well as through acquisitions. Wipro is now a leading information technology, consulting and business process services company. Our range of services includes digital strategy, customer-centric design, consulting, infrastructure services, business process services, research and development, cloud, mobility and advanced analytics and product engineering. We offer our customers a variety of commercial models including time and material, fixed price, capacity based, pay-per-use, as-a-service and outcome based models. We offer all of these services and models globally by leveraging our proprietary products, platforms, partnerships and solutions, including state of the art automation technologies such as our proprietary cognitive intelligence tool, Wipro HOLMES Artificial Intelligence PlatformTM (“Wipro HOLMESTM”).

 

-28-


Table of Contents

In May 2017, we unveiled our contemporary new brand identity and logo. The new logo represents the deep connectedness between people, ideas, communities and the environment. We believe the synergy among these various elements is what drives transformation at Wipro. Our brand promises to bring a pioneering, entrepreneurial, innovative spirit to solve complex business problems for our customers.

The rearticulated Spirit of Wipro resonates with our new identity. It is the indivisible synthesis of four values:

 

   

Be passionate about clients’ success;

 

   

Treat each person with respect;

 

   

Be global and responsible; and

 

   

Have unyielding integrity in everything we do.

Our business comprises of the IT Services, IT Products and India State Run Enterprise (“ISRE”) segments.

The ISRE segment consists of IT services offerings to entities and/or departments owned or controlled by the Government of India (the “GoI”) and/or any Indian State Governments (“ISRE Customers”). Effective October 1, 2018, we carved out ISRE as a separate segment from our global IT Services business. We made this decision because we changed our strategy for providing services to ISRE Customers. Historically, projects in our ISRE business have been primarily system integration (“SI”) projects that have complex deliverables and, compared to our IT Services segment, longer working capital cycles and different downstream processes, including billing and collections. Most ISRE deals come in the form of a tender process, with little room to negotiate the terms and conditions. We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

For the fiscal year ended March 31, 2019, the IT Services segment generated 96.5% of our revenue and 102.6% of our operating income. For the same period, the IT Products segment generated 2.1% of revenue and (1.0%) of operating income and ISRE services segment generated 1.5% of our revenue and (1.8%) of our operating income. Reconciling Items constitute 0.3% of our operating income. (Refer Note 30 of the Notes to consolidated financial statements).

We organize our customer-facing functions of sales, marketing and business development into teams that focus primarily on industry verticals, enabling us to deliver services to customers based on deep domain insight. Our customer-facing functions in markets such as the United States, Latin America, Continental Europe, India, the Middle East and Africa are predominantly locally staffed.

Ethisphere Institute, the global leader in defining and advancing the standards of ethical business practices, recognized Wipro as the World’s Most Ethical Company for the eighth successive year in 2019. Further, Wipro has been recognized as a member of the global Dow Jones Sustainability Index for the ninth year in succession.

There has not been any indication of any public takeover offers by third parties in respect of the Company’s shares or by the Company in respect of other companies’ shares during the last and current fiscal years.

Wipro Limited’s registered office is located at Doddakannelli, Sarjapur Road, Bengaluru, Karnataka 560 035, and the telephone number of the registered office is +91-80-28440011. The name and address of Wipro’s registered agent in the United States is CT Corporation System, located at 111 8th Avenue, 13th Floor, New York, New York 10011-5252.

Capital Expenditures and Divestitures

Acquisitions (“M&A”)

In the last three fiscal years, we have completed several mergers and acquisitions, including the acquisitions of:

 

   

Cooper Software Inc. (“Cooper”), an award-winning design and business strategy consultancy, which expands our digital reach in North America and adding capabilities in professional design education;

 

   

InfoSERVER S.A. (“Infoserver”), an IT services provider providing custom application development and software deployment services in the Brazilian market; and

 

   

Appirio Inc. (“Appirio”), a global cloud services company that creates next generation worker and customer experiences.

On June 4, 2019, the Company entered into a definitive agreement to acquire International TechneGroup Incorporated (“ITI”), a global digital engineering and manufacturing solutions company for a consideration of US$45 million. ITI is a world leader in Computer Aided Design and Product Lifecycle Management interoperability software services. Through its key solutions for Model Based Enterprise, data interoperability and data migration, ITI provides the building blocks for Industry 4.0, to help build ‘next generation’ digital enterprises. The acquisition is subject to customary closing conditions and regulatory approvals and is expected to close in the quarter ending September 30, 2019.

 

-29-


Table of Contents

Divestitures

In the last three fiscal years, we have completed the divestiture of:

 

   

Workday and Cornerstone OnDemand business to Alight Solutions LLC (“Alight”) in various jurisdictions, except Portugal, France and Sweden, effective March 31, 2019. The divestment of business in Portugal, France and Sweden was subject to completion of requisite regulatory formalities and customary closing conditions and was subsequently completed on May 31, 2019. This divestment will further strengthen our partnership with Alight. In addition, we have maintained our partnership with Workday and will continue to offer Workday application maintenance services, testing and integration services to Wipro’s client base;

 

   

Data center services business, to Ensono Holdings, LLC (“Ensono”), a leading hybrid IT services provider. This divestment will help us accelerate investments in the digital space. At the same time, Wipro remains committed to serving its hosted data center customers and the market through its business partnership with Ensono; and

 

   

EcoEnergy Division, which we determined during the year ended March 31, 2017 was neither core nor strategic to overall IT services.

Additionally, we have reduced our equity holding in Wipro Airport IT Services Limited (“WAISL”), which was a joint venture between Wipro Limited and Delhi International Airport Limited, from 74% to 11%, by selling our stake to Antariksh Softtech Private Limited. Even after this divestment, WAISL will continue to outsource IT services of the airport to Wipro Limited as per the existing arrangement.

Please see Note 6 of the Notes to the Consolidated Financial Statements for additional information regarding our acquisitions and Note 22 of the Notes to the Consolidated Financial Statements for additional information about our divestitures.

Capital Expenditure

We incurred total cash outflow of  20,853 million,  21,870 million and  22,781 million during the fiscal years ended March 31, 2017, 2018 and 2019, respectively. We incurred these capital expenditures primarily on new software development facilities in India and investments in IT assets. As of March 31, 2019, we had contractual commitments of  12,443 million related to capital expenditures on construction or expansion of software development facilities. We expect these expenditures to be funded largely through cash generated from operations, existing investible surplus in the form of cash and cash equivalents, short-term investments and other external financing sources.

Bonus issuance

During the fiscal year ended March 31, 2019, we issued a stock dividend, which is commonly known as an issuance of bonus shares in India, in the proportion of one equity share for every three equity shares held (including ADS holders) as of March 7, 2019, the record date fixed for this purpose. The issue of stock dividend was approved by the shareholders of the Company vide resolution dated February 22, 2019 that was passed through postal ballot and electronic voting. The Company allotted 1,508,469,180 shares for the bonus issuance.

Buy-back of equity shares

On April 16, 2019, the Board of Directors approved a buyback proposal, subject to the approval of shareholders through postal ballot, for purchase by the Company from the shareholders of the Company of up to 323,076,923 equity shares of face value of  2 each (representing 5.35% of the total paid up equity capital), on a proportionate basis, by way of a tender offer. The buyback price is  325 (approximately $4.70) per equity share payable in cash for an aggregate amount not exceeding  105,000 million (approximately $1.5 billion). The buyback was approved by the shareholders vide resolution dated June 1, 2019 through postal ballot/e-voting.

Industry Overview

IT Services

The fast-evolving technology landscape, dynamic economic environment and increasing imperative for enterprises to transform into digital businesses has led to the need for enterprises to seek partners in the areas of advisory, design and execution of their business and technology transformation and support programs. Large multinational enterprises are thus reimagining multiple aspects of their business leveraging digital technologies and are engaging global IT services companies who can deliver high quality service on a global scale and at competitive price points. Corporate spending is shifting toward areas such as next generation customer experience, re-architecture of data for delivering insights and micro-services.

 

-30-


Table of Contents

The market is shifting from traditional services to digital technologies, DevOps and as-a-service models. We believe that the IT Services industry has significant growth potential and the next wave of growth will come from digital technologies. According to the Strategic Review 2019 published by NASSCOM (the “NASSCOM Report”), “Digital” continues to drive growth (more than 30% of growth in fiscal year 2019) and now contributes $33 billion to the overall IT industry in India. Technologies such as industrial automation, robotics, cloud, Internet of things (“IoT”), augmented reality (“AR”) /virtual reality (“VR”) and blockchain continue to fuel growth. In 2018, there was a 45% increase in as-a-service deals, according to the NASSCOM Report. Cloud platforms are driving growth in managed services for security and data platforms. Digital and automation has moved from point deployments to enterprise-wide adoption.

Global IT service providers offer a range of end–to-end software development, digital services, IT business solutions, research and development services, technology infrastructure services, business process services, consulting and related support functions. According to the NASSCOM Report, IT export revenues from India grew by 8.3% to an estimated $136 billion in fiscal year 2019.

The markets we serve are undergoing rapid changes due to the pace of development in technology, innovation in business models and changes in clients’ sourcing strategies. Pressures on cost-competitiveness, an uncertain economic environment and immigration restrictions are causing clients to develop new business models. Digital business has changed the nature of demand for IT services. Development of technologies such as cloud-based offerings, big data analytics, mobile applications and the growth of social media is making technology an integral part of our clients’ business models. In addition to a company’s Chief Information Officer, newer offices such as the Chief Marketing Officer, Chief Digital Officer or Chief Risk Officer play key roles in shaping our clients’ individual technology roadmaps. These trends for new business models, emerging technologies and sourcing patterns provide us with significant growth opportunities going forward.

IT Products

The key components of the hardware industry are servers, desktops, notebooks and tablet computers, storage devices, peripherals, printers and networking equipment. According to the NASSCOM Report, the domestic market in India for hardware was estimated to be $15 billion in fiscal year 2019. The emergence of cloud computing technologies is negatively affecting the demand for IT products such as servers.

ISRE

In the government sector, spending on IT and IT services is expected to grow much faster in the coming years given the focus on ‘Digital India’ initiative by the government. Digital India is a flagship program of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy. Some of the key initiatives under the program include e-Governance, which is reforming government through technology in the areas of heath care, passports, land records and education, among others. The Government of India is also driving large scale transformation by adopting cloud technologies and a mobile-first approach.

Business Overview

We are a global technology services firm, with employees across more than 50 countries and serving enterprise clients across 27 industry verticals. We provide our clients with competitive advantages by applying various emerging technologies and ensuring cyber resilience and cyber assurance. We work with our clients not only to enable their digital future, but also to drive hyper efficiencies across their technology infrastructure, applications and core operations, enabling them to achieve cost leadership in their businesses.

We are recognized by our clients for our ability to bring in “an integrated perspective”, i.e., our ability to bring together broad and deep technology and domain expertise, our ability to draw learnings and apply insights from one company or sector to another and our ability to provide end-to-end services. Our clients value our consistent excellence in execution and our ability to proactively incorporate relevant innovation.

Going forward, digital enterprises will increasingly require partners, such as Wipro, who are able to bring capabilities that span across consultancy, design, engineering, systems integration and operations to enable them to achieve digital transformation. Such digital transformation can only be effective if delivered in the context of the relevant industry or domain, hence it is critical to us that we provide strong domain expertise along with “Digital.” We have invested significantly in building domain expertise and we will continue to strengthen our domain capabilities.

The vision for our business is “to earn our clients’ trust and maximize value of their businesses by helping them in their journey to ‘re-invent’ their business and operating models with our “Digital first” approach and best in class execution”.

 

-31-


Table of Contents

Our IT Services business provides a range of IT and IT-enabled services which include digital strategy advisory, customer-centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, global infrastructure services, analytics services, business process services, research and development and hardware and software design to leading enterprises worldwide.

Our IT Products segment provides a range of third-party IT products, which allows us to offer comprehensive IT system integration services. These products include computing, platforms and storage, networking solutions, enterprise information security and software products, including databases and operating systems. We continue to focus on being a system integrator of choice where we provide IT products as a complement to our IT services offerings rather than sell standalone IT products.

Our ISRE segment consists of IT Services offerings to organizations owned or controlled by the GoI and/or any Indian State Governments. Our ISRE strategy focuses on consulting and digital engagements, and we are selective in bidding for SI projects with long working capital cycles.

Our Business Strategy

Our customers today are undergoing an unprecedented change and transformation in their businesses led by forces such as the rise of digital strategies for enterprises, increasing consumerization of IT, emergence of new platforms such as cloud services and increasing disruptions and competition from new-age companies. Technology access and usage has been largely democratized and mainstreamed. There has been a profound change in how technology is developed, delivered and consumed. The pace of change has accelerated significantly across all industries, but particularly so in the technology industry, requiring companies like us to be much more agile in dealing with changing technology and user preferences.

Our strategy is about driving a “Digital first” approach through four foundational pillars, i.e., Business Re-imagination, Engineering Transformation and Modernization, Connected Intelligence and Trust. As part of this approach, we are prioritizing and investing significantly to drive growth in key strategic fields such as digital, cloud, cybersecurity and industrial and engineering services through our “Big Bet” program, under which we prioritize investments in certain high potential growth areas. For example, our “Big Bet” in each of digital and cloud is at the heart of our Business Re-imagination and Engineering Transformation and Modernization pillars, while our “Big Bet” in industrial and engineering services is central to our Connected Intelligence pillar and our “Big Bet” in cybersecurity is central to our Trust pillar. Talent, IPs and Platforms, and Open Innovation are our underlying strategies that support the four pillars.

Business Re-imagination

Business Re-imagination is about transforming the customer experience at scale and generating new revenue models by deploying talent at the intersection of strategy, design and technology.

We are scaling our design capability through acquisitions, where required. By taking over the strategic design team of Syfte, an Australian design agency which leverages human-centered design thinking to solve compelling client challenges, we have strengthened Wipro’s design and innovation capabilities in the Australia and Asia Pacific markets.

Engineering Transformation and Modernization

Engineering Transformation and Modernization is about taking an integrated “cloud first” approach across applications, infrastructure and data to modernize the IT landscape, while leveraging HOLMESTM, new ways of working, Application Programming Interface (“API”) and microservices.

We are investing in cloud studios across various geographies, which provides services such as cloud assessment, cloud migration (Lift and Shift), cloud native, Agile and DevOps, among others.

Wipro HOLMESTM helps enterprises hyper-automate processes and offload specific cognitive tasks to the artificial intelligence (“AI”) platform to gain cost efficiencies, agility and enhanced user experience. Wipro HOLMESTM helps businesses adopt a hybrid mode of operation (i.e., pairing automation and human effort), which is achieved through a combination of virtual agents, predictive systems, cognitive process automation, visual computing applications, knowledge virtualization and AI reasoning.

We also offer automation advisory services to help clients in their journey of AI/automation through designing automation roadmaps and setting up Digital Centers of Excellence for automation initiatives. In addition to the Wipro HOLMESTM platform, we are building a collaboration ecosystem for automation, working with partners such as Robotics Process Automation providers (e.g. Automation Anywhere, Inc.), start-ups (e.g., Avaamo, Inc. and Arago, GmbH) and established partners (e.g., IBM, Amazon.com, Inc., Google LLC, Microsoft Corporation, SAP SE, Oracle Corporation and ServiceNow, Inc.).

 

-32-


Table of Contents

For our API and microservices, we have significantly scaled our consulting talent pool and solutions, which includes our Digital Modernization platform.

Connected Intelligence

Connected Intelligence is about driving outcomes through HOLMESTM, our Data Discovery Platform and use-case based AI solutions and building strong industrial and engineering service capabilities and assets in areas such as Autonomous systems, IoT,5G, etc. We have adopted an “AI First” strategy, which entails acquiring and assimilating data, driving accurate decisions and delivering measurable business outcomes, e.g., faster time-to-market.

We continue to invest in scaling end-to-end capabilities across sensors, gateways, connectivity, platforms, analytics, machine learning (“ML”) and artificial intelligence to drive transformation in a hyper-connected world. We are scaling assets and capabilities in emerging areas such as IoT, 5G, and autonomous systems.

Trust

Trust is about addressing a changing security, privacy and regulatory landscape, driven by ubiquitous technology through a consulting led approach to cybersecurity.

We have adopted a consulting-led approach in areas such as enterprise risk management, data privacy and control assurance and we have leveraged cognitive automation, e.g., automated incident detection and response, to drive security.

We are scaling assets such as our cyber defense assurance platform (“CDAP”) and working with security ecosystem partners and governing bodies, such as Cloud Security Alliance and Wipro Ventures Portfolio (Emailage, Vectra).

Underlying Strategies that support the four pillars

Talent

Talent strategy is about building a robust ‘re-skill & recruit’ engine and scaling global, diverse, local and distributed talent pool. We are scaling p-shaped talent (i.e., people with “double-stemmed” skill sets), product managers, scrum masters and full stack engineers. We are driving re-skill programs for our employees, such as our Digital Academy. We are hiring and training new employees locally through Wipro’s Ascent program and driving scale in our various geographic segments through employee trainings in areas such as Digital, Analytics, Engineering Services and Cybersecurity.

As of March 31, 2019, we trained over 133,000 professionals in digital technologies. We are expanding our innovation labs and digital pods to offer enhanced transformation services to global customers.

IPs and Platforms

IPs and Platforms is about driving differentiation and non-linear revenues. We are scaling IPs, platforms and solutions to drive differentiation in our as-a-service offerings. We are integrating IPs to drive greater impact across domains and technology. Examples of our domain and industry IPs are Netoxygen in our Banking, Financial Services and Insurance business unit and Medicare Advantage in our Health Business Unit, and examples of our technology-based IP include Cyber Defense Platform and Virtuadesk.

Open Innovation

Open Innovation is about tapping the innovation ecosystem to bring the best solutions to our customers through vehicles such as Wipro Ventures, through which we invest in start-ups relevant to enterprises, partner ecosystem, academia partnerships, our Horizon Program, which is our organic intrapreneurship initiative, our crowdsourcing model (Topcoder), expert networks and M&A.

 

   

Wipro Ventures: The strategic investment arm of Wipro, Wipro Ventures is a $100 million fund that invests in early to mid-stage enterprise software startups. As of March 31, 2019, Wipro Ventures has active investments in and partnered with 13 startups in the following areas — AI (Avaamo, Inc., Vicarious FPC, Inc.), Business Commerce (Tradeshift, Inc.), Cybersecurity (IntSights Cyber Intelligence Ltd., Vectra Networks, Inc., CyCognito), Data Management (Imanis Data, Inc.), Industrial IoT (Altizon Systems Private Ltd.), Fraud & Risk Mitigation (Emailage Corp.), Testing Automation (Headspin, Inc., Tricentis GmbH) and Cloud Infrastructure (CloudGenix, Moogsoft)). In addition to direct investments in emerging startups, Wipro Ventures has invested in four enterprise-focused venture funds: TLV Partners, Work-Bench Ventures, Glilot Capital Partners and Boldstart Ventures. During year ended March 31, 2019, one of our portfolio companies, Demisto, was acquired.

 

-33-


Table of Contents
   

Partner Ecosystem: We have a dedicated unit to drive and deepen our partner ecosystem to drive creation of new markets and solutions, expand in key verticals and geographies, drive innovation in our offerings and drive go-to-market outcomes. We have subdivided the partner ecosystem into the following categories:

 

  a.

Strategic Partners: Multiple product lines with relevance across multiple practices and industry domains with significant business volume and potential.

 

  b.

Growth Partners: Typically, single practice alliances with already reasonable volumes of business and quick growth potential.

 

  c.

Niche Partners: Niche products with differentiated solutions.

 

   

Academia Partnerships: Collaboration with academic institutions and associations in the United States, Europe, Israel and India in the fields of computer and electrical engineering to promote innovative technology research and capability.

 

   

Horizon Program: The goal of the Horizon Program is to drive organic incubation in emerging areas covering products, platforms, solutions and capabilities. In order to achieve this objective, we are investing in key areas such as AI, AR/VR, IoT, cloud computing, software-defined everything, autonomous vehicle, cybersecurity, digital experience, digital marketing and commerce and Industry 4.0. During the year ended March 31, 2019, we funded 16 projects as part of this program.

 

   

Crowdsourcing (Topcoder): A community and crowdsourcing platform with over one million developers, designers, data scientists and testers. Topcoder provides focused enterprise offerings around AI/ML and analytics, digital experience (“DX”), Quality as a Service (“QaaS”), workforce transformation, Talent as a Service (“TaaS”) and hybrid (certified) communities. We are also using the Topcoder Hybrid Crowd Platform to scale and engage ‘in-house’ talent pools in emerging technologies such as Full Stack, DevOps, AI/ML, Cloud, Analytics & other Digital skills with our internal TopGear hybrid community. It also acts as a structured learning path for accounts providing hands-on experience across 200+ skills. We are creating a pool of Challenge Architects, Topcoder Co-pilots & Reviewers to expand the percentage of work delivered through crowdsourcing.

 

   

M&A: Acquisitions are key enablers for us and drive our capability to build industry domain, focus on key strategic areas, strengthen our presence in emerging technology areas, including Digital, and increase market footprint in newer markets. We focus on opportunities where we can further develop our domain expertise, specific skill sets and our global delivery model to maximize service and product enhancements and create higher margins. We also evaluate business units to determine if divestitures would maximize our focus on key priorities.

Operating Segment Overview

Our business comprises of the IT Services, IT Products and ISRE segments. The ISRE segment consists of IT services offerings to ISRE Customers. Effective October 1, 2018, we carved out ISRE as a separate segment from our global IT Services business. We made this decision because we changed our strategy for providing services to ISRE Customers. Historically, projects in our ISRE business have been primarily SI projects that have complex deliverables and, compared to our IT Services segment, longer working capital cycles and different downstream processes, including billing and collections. Most ISRE deals come in the form of a tender process, with little room to negotiate the terms and conditions. We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

Additionally, we provide our IT Services segment revenue and results by industry verticals. Our industry verticals are subject to change and may vary depending on industry trends. Please see Note 30 of the Notes to Consolidated Financial Statements for additional information regarding our segments and IT Services verticals. Comparative information included in this Annual Report has been restated to give effect to the change in our operating segments.

 

-34-


Table of Contents

IT Services Offerings

We are a leading provider of IT services to enterprises across the globe. We provide a range of services, which include digital strategy advisory, customer-centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, global infrastructure services, business process services, cloud, mobility and analytics services, research and development and hardware and software design. We offer these services globally leveraging our products, platforms and solutions through a team of over 170,000 employees using our global delivery model. Our key service offerings are outlined below:

 

   

Digital: At Wipro Digital, the digital unit of Wipro, we continue to focus on the insights, interactions, integrations and innovations that make brands and businesses relevant to their customers. The common characteristic of digitally successful organizations today is their focus on enterprise transformation and agility. Outside-in innovation to “do digital” and create new engagement platforms, new apps and omni-channel experiences is not enough. To gain the full benefits of these digital initiatives, our customers now recognize they must enable inside-out enterprise renovation. Changing legacy systems, processes, tools, mindsets and even traditional ways of working are necessary for our customers to “be digital”, not just do digital.

In the last year, we have grown Wipro Digital to support our customers in their drive to be digital. We opened additional digital pods in the last year, bringing our total number of pods to 19, supporting our “No-Shore” model of delivery with distributed teams around the world.

We have also brought more integrated capability to our customers by integrating parts of our applications service line into Wipro Digital. Secondly, our digital consulting practice is now fully aligned and organized under Wipro Digital. We are now better positioned to bring end-to-end imagination to the execution cycle for our clients, offering an even stronger market-leading partner to our customers across the “think-it, design-it, build-it and run-it” continuum of digital initiatives.

 

   

Modern Application Services (“MAS”): Wipro has been a strategic partner in the transformation of the application landscape of its clients by offering integrated business solutions that span across enterprise applications and digital transformation to security and testing. MAS is comprised of five units: the SAP unit, Oracle unit, the Application Engineering DevOps and Modernization unit, the Process Transformation and Growth Practices unit and the Appirio Cloud Services unit. In addition, MAS includes cloud, consulting and enterprise architecture ecosystems, and leverages themes such as AI/cognitive systems, IoT, blockchain and open source to enable “Smart Applications” and accelerate Digital journeys.

 

   

The SAP and Oracle units each offer end-to-end services for SAP and Oracle stack both on-premise and on cloud platforms, towards application modernization and digital transformation. In SAP services, we are increasing focus on SAP S/4HANA, SAP Leonardo, cloud applications and platform migration; for Oracle services, we are increasing focus on Oracle cloud and industry solutions.

 

   

The Application Engineering, DevOps and Modernization unit brings together our expertise in quality engineering and testing, Microsoft business, enterprise business integration, DevOps and Modernization to re-engineer/re-architect applications. We use these to develop new ways of working and for solution delivery, along with “as a service” models blending methods, models, machinery and mindset across various technology platforms including Dell Boomi, CA, Tricentis, Software AG, Microfocus and TIBCO.

 

   

In the Process Transformation and Growth Practices unit, the Process Transformation group provides advisory services to transform clients’ business processes such as Record-to-Report, Order-to-Cash, Procure-to-Pay and Hire-to-Retire. The Growth Practices group helps customers adopt SaaS based solutions across growing cloud platforms such as Infor, Servicenow, Zoura, Coupa, iCertis and Kinaxis, among others.

 

   

The Appirio Cloud Services unit results from the acquisition we made in 2016 continues to focus on integrating traditional SaaS technology providers such as Salesforce, Google and related providers such as FinancialForce and MuleSoft combining our capabilities in customer experience.

 

   

The cloud, consulting and enterprise architecture teams help organizations simplify, modernize and accelerate their journey to the cloud and digital transformation, including application migration to public clouds such as Amazon Web Services, Microsoft Azure, Google Cloud Computing, IBM and Pivotal. This team covers business design and architecture services across applications, infrastructure, data and process and enables making “Applications Smarter” part of the digital transformation journey.

MAS focuses on driving application transformation with contextual solutions for our customers from front office to back office by combining consulting, design and development, continuous testing and integration, automation and operational excellence across all industries.

 

-35-


Table of Contents
   

Cybersecurity and Risk Services (“CRS”): CRS enables next generation global enterprises to enhance their business resilience through an intelligent and integrated risk approach that has modernizing security at its core. CRS enables the customers to define their cyber strategy and the cybersecurity needs, envisaging best practices across people, process and technology. Leveraging a large pool of experienced security professionals and a global delivery model that leverages our Cyber Defense Centers, we execute implementation projects and deliver managed and hosted services backed by our Cyber Defense Platform. Our unique top-down risk-based approach delivers innovative security platforms for better scalability, improved cost efficiency and greater agility.

 

   

Cloud and Infrastructure Services (“CIS”): CIS is an end-to-end cloud and IT infrastructure services provider that helps global clients accelerate their digital journey. Our offerings include Cloud and Data center, Software Defined, DevOps & Micro-services, digital workplace services, ‘connected intelligence’ services including digital intent-aware networks, IoT and 5G across advisory and consulting, transformation and system integration, testing and managed services. We have a presence in over 50 countries with more than 600 clients and 21 delivery centers. Our investment in IP, a comprehensive partner ecosystem and our skills in emerging technologies like software-defined everything, opensource, DevOps and IoT ensure that we are a one-stop shop for all cloud and IT infrastructure needs.

 

   

Industrial and Engineering Services (“IES”) (formerly, Product Engineering Services): IES is the driver of Wipro’s Engineering Services portfolio and facilitates more than 350 clients across multiple industries and verticals by providing a platform to innovate and engineer products, platforms and technologies at scale. This platform of service offerings, called “Engineering NXT”, combines the maturity of engineering processes, passion for the latest technology and access to a diverse ecosystem to deliver value to customers at various stages of the product or platform life cycle. Over the years, IES has created value with our engineering services offerings for numerous customers by engineering innovative customer experiences, personalizing products and technologies for new markets, integrating next-generation technologies, facilitating faster time to market and ensuring global product compliance. Today, with more than 400 granted and pending patents, IES continues to deliver these services by leveraging its innovative solutions, engineering processes and delivery excellence, and covering connectivity (wireless technologies), cloud and data platforms, systems design, very-large-scale integration (“VLSI”), next generation software development and testing, electronic data systems, product lifecycle management, IoT and Industry 4.0.

 

   

Data, Analytics and AI: Data, Analytics and AI is a preferred partner to our customers in their journey to transform into intelligent enterprises by automating decision making, powered by insights and driven by rich datasets. As a trusted partner for our customers’ data and insights transformations, Wipro leverages AI, ML, advanced analytics, big data and information management platforms and capabilities. We are committed to deliver value across customers’ journeys from data to decisions, focusing on:

 

   

Insights transformation — Transforming legacy decision-making processes into modern, elastic and AI and ML driven, insights-centric capabilities that enable smarter processes. This ensures that our clients get pertinent insights in real-time to the right decision-makers to fuel innovation, productivity and investment, as their organizations become intelligent enterprises.

 

   

Data transformation — Helping clients adopt modern data platforms, processes and methods in on-premises, cloud and hybrid ecosystems to support analytics, AI and ML workloads through a set of themes that brings transformative change to the data landscape.

 

   

Digital Operations and Platforms (“DO&P”) (formerly, Business Process Services): Wipro is a leader in providing next generation technology-led business process services to global enterprises. Our mission is to drive superior customer experience and maximize returns by bringing down operating costs and improving efficiency, quality and productivity. Our process excellence and domain expertise helps us to reimagine, redesign, standardize and transform business processes to maximize returns. This, combined with enterprise operations transformation, has successfully helped clients leverage and deliver benefits from robotics process automation (“RPA”), AI, analytics and other emerging technologies. Some of our leading offerings are:

 

   

Digital Customer Experience: Our analytics powered customer service platform that resolves low complexity interactions via AI chatbots. Complex calls are directed to our subject matter experts with high first call resolution. We also leverage augmented reality and virtual reality in customer care.

 

-36-


Table of Contents
   

Supply Chain Management: RPA and AI automate our end-to-end order management platform for the more than 10 million transactions annually that we currently process.

 

   

Finance and Accounting: We manage end-to-end finance and accounting services for more than 130 global clients, delivering benefits through smart operations.

 

   

Marketing-as-a-Service : We manage marketing operations to cover both above and below the line marketing operations across design, content management, social media marketing, analytics, and more.

 

   

Collections-as-a-Service : We manage collections for several customers across industry verticals and geographies.

 

   

Trust and Safety: We help companies with online presences monitor, police and prevent fraudulent behavior.

 

   

Geospatial Services: We create navigation maps for a large global taxi services aggregator.

Industry offerings

 

   

Banking, Financial Services and Insurance: We manage end-to-end operations in consumer and institutional banking, insurance and mortgage services. We specialize in payment processing, KYC, anti-money laundering, fraud, collections, asset management and reconciliation. We provide Mortgage-as-a-Service to top U.S. mortgage banks.

 

   

Healthcare: We specialize in pharmacovigilance, product complaints management and medical information. We are a partner to several top medical device and pharmaceutical companies.

 

   

Insurance: We are a partner to more than 100 clients including top commercial payer plans and top U.S. health systems. We process more than 200 million claims annually.

IT Services Clients

We service clients from a broad array of industry sectors. Several of our clients engage our services across multiple service offerings. We seek to increase business with our existing clients by expanding the type and range of services we can provide to them. The table below sets forth the number of our client project engagements as measured by revenues.

 

     Number of clients in  

Per client revenue (US$)*

   Year ended
March 31,
2017
     Year ended
March 31,
2018
     Year ended
March 31,
2019
 

1-3 million

     232        238        232  

3-5 million

     81        89        77  

5-50 million

     231        229        221  

50-100 million

     25        31        31  

> 100 million

     9        8        10  
  

 

 

    

 

 

    

 

 

 

Total > 1 million

     578        595        571  

 

*

Note: Effective October 1, 2018, we carved out ISRE as a separate segment from our global IT Services business. The Company is now organized into three operating segments: IT Services, IT Products and ISRE. Comparative information has been restated to give effect to these changes.

The largest client of our IT Services business accounted for 2.7%, 3.2% and 3.7% of revenues from the IT Services business as a whole for the years ended March 31, 2017, 2018 and 2019. The five largest clients of our IT Services business accounted for 10.2%, 11.4% and 12.7% of our total IT Services revenues for the years ended March 31, 2017, 2018 and 2019, respectively.

IT Services Sales and Marketing:

We sell and market our IT services through our direct sales force. Our customer facing functions are predominantly locally staffed in markets such as the U.S., Latin America, continental Europe, India, the Middle East and Africa. Our sales efforts are complemented by our marketing team, which assists in brand building and other corporate and field-level marketing efforts.

 

-37-


Table of Contents

Sales: We believe that the customer always comes first. We believe we can achieve higher levels of client sales and client satisfaction by structuring ourselves based on the following key elements:

 

   

Client Relationship: We have designated global client partners that have primary responsibility for the client relationship, providing single-person accountability and single-person sales responsibility.

 

   

Industry Focus: Our sales teams are dedicated to a specific industry segment and often have significant experience and training in their domain and industry.

 

   

Proactive Solutions: We have a consulting-led approach to sales where our sales teams provide proactive solutions to clients and prospective clients rather than only respond to requests for proposals.

 

   

Geographic Focus: Our sales teams are dedicated to a specific country or region to increase our knowledge of the local business culture, anticipate prospective and existing client needs and increase our market penetration.

In a program we call “OneVoice”, we are enabling our sales teams to sell our Digital services to ensure that we are digital partners for our key customers. We seek to position ourselves as a strategic solutions provider that has the resources and capabilities to provide a comprehensive range of IT services.

Through our program called ADROIT, we train our delivery managers in next generation application delivery and delivery-led sales framework. As of March 31, 2019, we have trained 1,724 delivery managers.

Marketing: In May 2017, in keeping up with contemporary changes in industry, we unveiled our new brand identity. The new brand focuses on how Wipro is transforming its capabilities, offerings, and ways of working to cater to the transforming IT services business.

Our marketing organization complements our sales teams by:

 

   

Building on our brand as a global leader in consulting and IT services;

 

   

Positioning our brand with clients as a thought leader and a solution provider that utilizes innovative techniques to solve difficult as well as day-to-day problems; and

 

   

Participating in industry events which drive sales by showcasing our services, products and strategic alliances.

IT Services Competition

The market for IT services is competitive and rapidly changing. Our competitors in this market include global consulting firms and IT services companies as well as local and niche services providers.

The following factors differentiate us from our competition:

 

  1.

The comprehensive and integrated suite of IT solutions, including digital strategy advisory, customer-centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, global infrastructure services, cloud, mobility and analytics services, business process services, research and development and hardware and software design.

 

  2.

Wipro Digital’s integrated propositions in customer mapping and interaction, seamless integration and data science and insight differentiate its approach with customer journey engineering.

 

  3.

Our organizational culture of innovation and our early start in deploying cutting edge platforms and technologies that drive hyper-automation and achieve industrialization of service delivery, such as Wipro HOLMESTM.

 

  4.

Our investments in developing IP across products, platforms, frameworks, solutions, components, accelerators, tools and apps that enable us to provide standardized solutions to our customers and obtain enormous time-to-market advantage.

 

  5.

Our decades of experience in serving in the IT business, proven track record of delivery excellence and satisfied customers who recommend our services to other corporations.

 

  6.

Our ability to provide an entire range of research and development services from concept to product realization.

 

  7.

Our global delivery model, that leverages our global, regional and local near-shore development centers and collaborative technologies to help us better serve our clients in this modern technology era.

 

-38-


Table of Contents
  8.

Our ability to access, attract and retain highly skilled personnel across key markets.

 

  9.

Our emphasis on engaging the culture of our new age acquisitions and integrating these technologies with our executional experience and service offerings to maximize synergies for our clients.

 

  10.

Our ability to offer opportunities to work with cutting edge technologies and focus on training is a critical differentiator to the quality of our manpower.

 

  11.

The Wipro brand that is recognized globally for its comprehensive portfolio of services, a practitioner’s approach to delivering innovation and an organization-wide commitment to sustainability.

 

  12.

Our commitment to the highest levels of corporate governance.

IT Services Industry Verticals

For the year ended March 31, 2019, our IT Services business is organized into the following seven industry verticals:

 

  1.

Banking, Financial Services and Insurance

 

  2.

Health Business Unit

 

  3.

Consumer Business Unit

 

  4.

Energy, Natural Resources and Utilities

 

  5.

Manufacturing

 

  6.

Technology

 

  7.

Communications

Our IT Services business is organized into seven industry verticals:

 

   

Banking, Financial Services and Insurance (“BFSI”): The BFSI business unit serves over 100 clients globally across Retail Banking, Investment Banking, Capital Markets, Wealth Management and Insurance. We have been instrumental in delivering success to our clients by aligning with their business priorities; we have done this by leveraging state-of-the-art technology and process transformation solutions, digital capabilities, service design innovation, domain expertise, IP and integrated offerings, end-to-end consulting services, adoption of “new ways of working”, and an ongoing focus on delivery excellence. We also harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics, and emerging technologies, to help our clients adapt to the digital world.

 

   

Health Business Unit (“Health BU”): Our mission is to help organizations solve real world health problems to improve people’s lives. Health BU is dedicated to helping health and life sciences companies rethink, reshape and restructure their business to increase their competitiveness in the industry. We help companies realize value in their core businesses by fueling innovation born in collaboration, and help recalibrate their business toward more accountable, affordable and accessible care.

 

   

Consumer Business Unit (“CBU”): CBU offers a full array of innovative solutions and services to cater to the entire value chain where the consumer is at the core, through a blend of domain knowledge, technology expertise and delivery excellence. We offer an integrated environment that allows organizations to model, optimize, forecast, budget, execute, manage and measure product, and customer performance across the globe. We provide strong consumer-centric insights and project execution skills, across retail, consumer goods, media, travel and public sector. Our domain specialists work with customers to maximize value through technology investments. CBU encompasses retail, consumer packaged goods, new-age companies, media, education, hospitality, travel, transportation and public sector industries.

 

   

Energy, Natural Resources and Utilities (“ENU”): Our ENU industry vertical has been collaborating with and serving businesses across the globe for over 18 years. Our deep domain, digital, consulting and technology expertise has helped the business become a trusted partner to over 75 customers in the oil and gas, mining, water, natural gas, electricity, airports, ports, engineering and construction industries across the globe. Wipro’s ENU industry vertical has been recognized by analysts as a major player in the energy and utilities sector. We provide consulting, engineering, technology and business processes services expertise to the utilities industry across generation and renewables, transmission and distribution, retail, smart grid, energy trading and risk management and health, safety, security and environment. Our deep domain expertise in the energy sector has helped us play a pivotal role in business and digital transformation of major oil and gas companies across their value chain. Our successes in enabling business areas of customer experience, operational efficiency and non-traditional revenue generation through technology for airports have made us a leading partner in the sector.

 

-39-


Table of Contents
   

Manufacturing (“MFG”): Wipro’s MFG business unit caters to manufacturing companies across the industry segments of aerospace and defense, automotive, industrial and process manufacturing. By coupling our digital and extensive domain expertise, we help our customers transform their business processes across product design, supply chain, and aftermarket services to achieve their digital transformation objectives. We have leveraged our network of partners and academia, to develop IP, platforms and industry-focused solutions. Our after-market solutions and services are helping manufacturing customers capture additional market share by adopting new business models. Our ongoing investments in emerging technologies like autonomous systems and robotics, Industry 4.0, aftermarket, industrial IoT, augmented reality and virtual reality are helping customers create new business solutions and create new revenue models.

 

   

Technology (“TECH”): Companies across the high-tech value chain; from the silicon providers to software companies, are serviced by Wipro’s Technology business unit. Our extensive customer portfolio includes marquee companies in Semiconductors, Compute and Storage, Networking & Edge, Peripherals, Consumer Electronics and Platforms and Software products. We help our customers transition to new business models by helping them build digital products and solutions, digitize their back office and front office operations, and enable their servitization strategy. With extensive focus on 5G and AI cloud native based solutions we bring together an ecosystem of expertise to build IP, platforms and domain/industry-focused solutions that help our customers reach their business goals. Our deep domain knowledge, wide range of service offerings, investments and capabilities in complete 5G lifecycle services and solutions has positioned us as a top integrated hardware and software research and development service provider.

 

   

Communications (“COMM”): Wipro has been enabling the digital transformation journey of Communications Service Providers (“CSPs”) across the globe as they transform to become Digital Service Providers. Our digital business solutions are tailored for CSPs customer context, with capabilities in technologies such as 5G, cloud, software-defined networking and network functions virtualization, AI, IoT, blockchain, cybersecurity and a digital workplace in order to focus on new ways of working. We enable the convergence of network, IT and business processes across the entire customer lifecycle. Our investments in new-age start-ups through Wipro Ventures, along with a comprehensive partner ecosystem are enabling CSPs globally to create services that enable new revenue opportunities, build business agility and reduce their time to market in Business-to-Consumer and Business-to-Business environments. Our focus on continuous improvement, alignment to industry standards, investments in the technology solutions of tomorrow, especially as we gear up for the 5G revolution, deliver proven business value to global CSP customers.

IT Products

In order to offer comprehensive IT system integration solutions, we use a combination of hardware products (including servers, computing, storage, networking and security), related software products (including databases and operating systems) and integration services. We maintain a presence in the hardware market by providing suitable third-party brands as a part of our solutions in large integrated deals. Our range of third-party IT Products is comprised of Enterprise Platforms, Networking Solutions, Software Products, Data Storage, Contact Center Infrastructure, Enterprise Security, IT Optimization Technologies, Video Solutions and End-User Computing solutions.

IT Products Customers

We provide our offerings to enterprises in all major industries, primarily in the India market, including government, defense, IT and IT-enabled services, telecommunications, manufacturing, utilities, education and financial services sectors. We have a diverse range of customers, none of whom individually account for more than 10% of our overall IT Products segment revenues.

IT Products Sales and Marketing

We are valued-added resellers of third-party enterprise products through our direct sales force. Our sales teams are organized by industry vertical. Our global client partners receive support from our corporate marketing team to assist in brand building and other corporate level marketing efforts for various market segments.

 

-40-


Table of Contents

IT Products Competition

Our competitors in the IT Products market include global system integrators as well as local and niche services providers operating in specific geographies like India. One of the major challenges we encounter is margin pressure due to competitive pricing. Achieving mindshare and market share in a crowded market place requires differentiated strategies on pricing, branding, delivery and products design. In the system integration market, we believe we are favorably positioned based on our brand, quality leadership, expertise in target markets and our ability to create customer loyalty by delivering value to our customers. The following factors differentiate us from our competition:

 

  1.

Our decades of experience in serving in the IT business, proven track record of delivery excellence and satisfied customers who recommend our services to other corporations.

 

  2.

Our deep understanding of the market especially in the India

 

  3.

Our trusted ability to provide impartial advice on selection of products.

 

  4.

The Wipro brand that is recognized for serving the Indian market of over seventy years.

 

  5.

Our commitment to environmental sustainability as well as deep engagement with communities.

ISRE

The ISRE segment consists of IT Services offerings to departments or ministries of the GoI and/or the Indian State Governments, as well as to corporate entities where more than 51% of the paid-up capital is held by the GoI or any Indian State Government, either individually or jointly (i.e., a “Public Sector Undertaking”). In certain cases, corporate entities which are held by the Central / State Government (more than 51%), in turn hold more than 51% stake of paid-up capital in other entities (i.e., a controlling stake), such other entities are also classified as an ISRE.

We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

We will be leveraging our strong practices in areas such as taxation and e-governance, oil and gas and utilities, along with our strong partner system, to work with Indian government entities, Public Sector Undertakings and other large companies classified as ISREs. For BFSI projects in our ISRE segment, we aim to replicate our successes in areas such as core banking transformation, and consulting.

ISRE Customers

We have customers across the GoI, Indian State Governments and in industry segments such as BFSI and ENU in the form of corporate entities where more than 51% of the paid-up capital is held by the Central and/or State government. We work with multiple ISRE customers and our top two ISRE customers contribute approximately one-third of our total ISRE revenues.

ISRE Sales and Marketing

Our ISRE business unit will focus on the unique customer requirements and will create a “Go To Market” (“GTM”) approach that will address the needs of the present as well as future.

ISRE Competition

In the ISRE sector, our competition comes from both local and global IT services companies, including large global consulting firms. For the GoI segment, several small companies have entered the market as disruptors, with most of these small companies focused on penetration strategy.

The following factors differentiate us from our competition:

 

  1.

Our deep technology knowledge and domain expertise specifically in BFSI and ENU

 

  2.

Our strong partnership with key alliance partners including hardware and software partners

 

  3.

Prior experience in successfully delivering key marquee projects to ISRE customers

Intellectual Property

We believe that IP is increasingly a strong driver of business competitiveness and profits, especially in a knowledge intensive

 

-41-


Table of Contents

economy. Our IP portfolio is key to our strategy to drive non-linearity, and we believe that our IP will differentiate our products and services, introduce new benefits, reduce costs and improve products and services quality. We rely on a combination of patent, copyright, trademark and design laws, trade secrets, confidentiality procedures and contractual provisions to protect our IP.

We have invested in developing IP across products, platforms, frameworks, solutions, components, accelerators, tools and apps. This IP development enables us to provide standardized solutions to our customers and obtain significant time-to-market advantage over the general preference for customized solutions which entail higher cost and longer timelines. Using our IP, we are able to offer innovative commercial models in delivering services.

As of March 31, 2019, we have 558 registered patents in various countries. We filed 305 patents during the year ended March 31, 2019 and currently have approximately 1,678 patent applications pending registration in various jurisdictions across the world.

As of March 31, 2019, we held more than 700 registered trademarks including registered community trademarks in India, Japan, the United States, Malaysia and over 70 other countries. Over 150 trademark applications are pending for registration in various jurisdictions across the world. This includes over 90 trademark applications pending with respect to our new logo.

We require employees, independent contractors and, whenever possible, vendors to enter into confidentiality agreements upon the commencement of their relationships with us. These confidentiality agreements generally provide that any confidential or proprietary information being developed by us or on our behalf be kept confidential. These agreements also provide that any confidential or proprietary information disclosed to third parties in the course of our business be kept confidential by such third parties. However, our clients usually own the IP in the software we develop for them.

India is compliant with all World Trade Organization requirements with respect to IP protection which means that India meets the international mandatory and statutory requirements regarding the protection of IP rights. Our competitors may independently develop similar technology or duplicate our products and/or services. Unauthorized parties may infringe upon or misappropriate our products, services or proprietary information. We are entitled to use all provisions of law to prevent infringement and to seek suitable compensation for any such infringement.

While we invest resources in developing, maintaining and protecting our IP, we deeply respect the IP held by our customers, vendors and other business partners.

Effect of Government Regulation on our Business

Regulation of our business by governments across the world affects our business in several ways. Our registered office is in India and we are subject to the regulations notified by the GoI. We benefit from certain tax incentives promulgated by the GoI, including the export of IT services from Special Economic Zones (“SEZs”). As a result of this incentive, our operations have been subject to relatively lower Indian tax liabilities.

Indian laws also place additional requirements on our business, including that we are generally required to obtain approval under various legislations from the Reserve Bank of India, Securities and Exchange Board of India and/or the Ministry of Finance of the GoI to acquire companies organized outside India, and we are generally required, subject to some exceptions, to obtain approval from relevant authorities in India in order to raise capital outside India or conduct other activities. We may also be required to obtain the approval of the Indian stock exchanges and/or the Securities and Exchange Board of India to take certain actions, such as the acquisition of, or merger with, another company. The conversion of our equity shares into ADSs is governed by guidelines issued by the Reserve Bank of India.

We are also subject to several legislative provisions relating to environmental protection, pollution control, essential commodities and operation of manufacturing facilities.

Please see the section titled “Risk Factors” in Item 3, Key Information, as well as the section titled “Additional Information” in Item 10, for more information on the effects of governmental regulation on our business.

Organizational Structure

Refer Note 28 of the Notes to Consolidated Financial Statements for information on organizational structure of the Company.

 

-42-


Table of Contents

Property, Plant and Equipment

Our registered office is located at Doddakannelli, Sarjapur Road, Bengaluru, India. The offices are approximately 0.30 million square feet. We have approximately 1.34 million square feet of land adjoining our corporate offices for future expansion plans.

In addition, we have approximately 23.33 million square feet of land for future expansion plans. We have 15.18 million square feet of owned software development facilities in India and over 5.95 million square feet of leased software development premises in India.

We have approximately 2.38 million square feet of leased offices, software development and data center facilities in countries outside India, which includes approximately 1.12 million square feet at various locations in the Americas. We have approximately 0.13 million square feet of owned offices, software development and data center facilities in countries outside India.

We incurred total cash outflow of  20,853 million, 21,870 million and  22,781 million on capital expenditure during the fiscal years ended March 31, 2017, 2018 and 2019, respectively. These capital expenditures were primarily incurred on new software development facilities in India and investments in IT assets.

We have 65 sales/marketing offices, data centers, development and training centers in the Americas. In addition, we have 150 similar facilities located in the following regions: Europe, Middle East, Africa and Asia-Pacific region (other than India).

We have two manufacturing sites, which are approximately 0.2 million square feet and approximately 0.1 million square feet of land, respectively. We own one of these facilities, located in Pondicherry, India. We have taken the other facility located in Kotdwar, India on a long-term lease.

Our software development facilities are equipped with a world class technology infrastructure that includes networked workstations, servers, data communication links, captive power generators and other plants and machinery. We believe that our facilities are optimally utilized and that appropriate expansion plans are being developed and undertaken to meet our future growth.

Material Plans to Construct, Expand and Improve Facilities

As of March 31, 2019, we had contractual commitments of  12,443 million primarily related to capital expenditures on construction or expansion of software development facilities. These expenditures are expected to be funded largely through cash generated from operations, existing investible surplus in the form of cash and cash equivalents, short-term investments and other external financing sources.

Legal Proceedings

In the ordinary course of business, we may from time to time become involved in certain legal proceedings. As of the date of this Annual Report on Form 20-F, we are not party to any pending legal proceedings whose resolution could have a material impact on our financial position. We also receive tax assessment orders in ordinary course of business from various tax authorities. Please see the description of our tax proceedings before various tax authorities under the section titled “Income Taxes” under Item 5 of this Annual Report.

 

Item 4A.

Unresolved Staff Comments

None.

 

Item 5.

Operating and Financial Review and Prospects

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in Item 8 of this Annual Report on Form 20-F. This section and other parts of this Annual Report on Form 20-F contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “ambition,” “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to those discussed in the subsection entitled “Risk Factors” above.

 

-43-


Table of Contents

Overview

Wipro Limited is a leading global information technology (“IT”), consulting and business process services company. We harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful.

A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, we have over 170,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

Trend Information

IT Services: Fast-evolving technology landscapes, dynamic economic environments and the emergence of digital business has created a need for enterprises to look for a partner to advise, design and execute their technology transformation and support programs. Over the past two decades, with the emergence of the internet and inexpensive connectivity, the global delivery model of service delivery has risen to become the preferred model in global IT services sourcing, business process services and research and development services. In this period, service providers have acquired technological expertise, domain competency and delivery capability by either developing organically or through acquisitions.

Large multinational enterprises are engaging global IT Services companies to deliver high quality service on a global scale and at competitive costs. Over the years, heightened levels of competition developed among IT service providers, particularly in the IT sourcing environment where there is a shift in favor of vendor consolidation. However, we continuously strive to differentiate ourselves from the competition and sustain prices and profits by demonstrating the unique and differentiated value we bring to our clients. Our comprehensive range of offerings including Digital and cloud computing, and by leveraging our intellectual property, developing innovative service delivery models, providing deep industry insights, adopting competitive pricing strategies and leveraging synergies from strategic acquisition and investments, we demonstrate our value proposition to clients.

We have invested in developing intellectual property (“IP”) across products, platforms, frameworks, solutions, components, accelerators, tools and applications. Our IP has enabled us to provide standardized solutions to our customers and obtain significant time-to-market advantages over the previous customized solutions which incurred higher costs and required a longer time to develop. An example of our IP is Wipro HOLMESTM, an artificial intelligence platform.

 

   

Further, we have invested in acquiring new technology and skills. In the year ended March 31, 2019, we took over the employees and the customer contracts of Syfte, an Australian company specializing in research, user experience, customer experience, service and experience design and content strategy. In the last three fiscal years, we have also acquired Appirio Inc., a global cloud services company that creates next-generation employee and customer experiences, Cooper Software Inc., an award-winning design and business strategy consultancy, which expands our digital reach in North America and adding capabilities in professional design education and InfoSERVER S.A. (“Infoserver”), an IT services provider providing custom application development and software deployment services in the Brazilian market.

Gross profit as a percentage of revenue in our IT Services segment for the year ended March 31, 2019 is 31.10%. We anticipate challenges in significantly improving our gross profits largely due to the following reasons:

 

   

Limited ability of the market to accept increase in prices;

 

   

Regular increases in salaries, a cost which accounts for a major part of our expense line;

 

   

The impact of exchange rate fluctuations on our Indian Rupee realizations;

 

   

Higher investment in research and development and other emerging technology areas; and

 

   

Investments in acquisitions with potentially lower contribution to margins.

In response to the increased competition in the market place for IT services and pressure on gross margins, we are focusing on:

 

   

Differentiating our offerings by providing premium services across the Digital value-chain, including advisory, strategy, design and engineering;

 

-44-


Table of Contents
   

Investing in non-linearity initiatives that de-link the linear relationship between revenue and efforts expended;

 

   

Investing in customer relationship teams to establish deeper client relationships and provide a wider range of services;

 

   

Driving revenue and cost synergies of acquired businesses;

 

   

Leveraging Wipro HOLMESTM to increase use of automation within our client organizations;

 

   

Developing cost containment initiatives and driving higher employee productivity by using next-generation delivery systems that re-evaluate traditional tools such as operating systems, management systems and mindset behavior;

 

   

Significant cost optimization by deploying cutting edge platforms and technologies that drive hyper-automation and achieve industrialization of service delivery;

 

   

Aligning our resources to expected demand; and

 

   

Increasing the utilization of our IT professionals.

IT Products: In our IT Products segment, we have experienced pricing pressures due to increased competition among IT companies. Our IT Products segment is subject to seasonal fluctuations. Our IT Products revenue is driven by the capital expenditure budgets and spending patterns of our clients, who often delay or accelerate purchases in reaction to tax depreciation benefits on capital equipment and macroeconomic factors. We continue to focus on being a system integrator of choice where we provide IT products as a complement to our IT services offerings rather than sell standalone IT products. Accordingly, our revenue, operating income and profit for the period have varied significantly in the past and we expect that they are likely to vary in the future.

India State Run Enterprise (“ISRE”): The ISRE segment consists of IT services offerings to entities and/or departments owned or controlled by the Government of India (the “GoI”) and/or any Indian State Governments (“ISRE Customers”). Effective October 1, 2018, we carved out ISRE as a separate segment from our global IT Services business. We made this decision because we changed our strategy for providing services to ISRE Customers. Historically, projects in our ISRE business have been primarily system integration (“SI”) projects that have complex deliverables and, compared to our IT Services segment, longer working capital cycles and different downstream processes, including billing and collections. Most ISRE deals come in the form of a tender process, with little room to negotiate the terms and conditions. We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

Comparative information included in this Annual Report has been restated to give effect to this change in our operating segments.

Shareholder Returns

We have always strived to enhance shareholder value for our investors. The Company’s policy has been to provide regular, stable and consistent distribution of return. There is no change in our philosophy on shareholder return.

The cash dividend paid per equity share during the year ended March 31, 2019 was interim dividend of  1. The Board recommended the adoption of the interim dividend of  1 per equity share as the final dividend for the year ended March 31, 2019.

During the fiscal year ended March 31, 2019, we issued a stock dividend, which is commonly known as an issuance of bonus shares in India, in the proportion of one equity share for every three equity shares held (including ADS holders) as of March 7, 2019, the record date fixed for this purpose. This issue of stock dividend was approved by the shareholders of the Company vide a resolution dated February 22, 2019 which was passed through postal ballot and electronic voting. The Company allotted 1,508,469,180 shares for the bonus issuance.

On April 16, 2019, the Board of Directors approved a buyback proposal, subject to approval of shareholders, for purchase by the Company of up to 323,076,923 equity shares of  2 par value each (representing 5.35% of our total paid-up equity capital) from the shareholders of the Company on a proportionate basis by way of a tender offer. The buyback price is  325 (approximately $4.70) per equity share payable in cash for an aggregate amount not exceeding  105 billion (approximately $1.5 billion). The buyback was approved by the shareholders on June 1, 2019 through postal ballot/e-voting.

 

-45-


Table of Contents

Results of Operations

Our revenues and profits for the years ended March 31, 2017, 2018 and 2019 are provided below:

 

     Wipro Limited and subsidiaries  
     Years ended March 31,     Year on Year change  
     2017     2018     2019     2018-17      2019-18  
     ( in millions except earnings per share data)  

Revenue (1)

     554,179       546,359       589,060       (1.41 )%       7.82

Cost of revenue

     (391,544     (385,575     (413,033     (1.52 )%       7.12

Gross profit

     162,635       160,784       176,027       (1.14 )%       9.48

Selling and marketing expenses

     (40,817     (42,349     (44,510     3.75      5.10

General and administrative expenses

     (32,021     (34,141     (35,951     6.62      5.30

Other Operating Income (2)

     4,082       —         4,344       NA        NA  

Operating income

     93,879       84,294       99,910       (10.21 )%       18.53

Profit attributable to equity holders

     84,895       80,081       90,031       (5.67 )%       12.42

As a percentage of revenue:

           

Selling and marketing expenses

     7.37     7.75     7.56     (38 )bps       19 bps 

General and administrative expenses

     5.78     6.25     6.10     (47 )bps       15 bps 

Gross margins (3)

     29.13     29.43     29.66     30 bps       23 bps 

Operating margin (3)

     16.82     15.43     16.84     (139 )bps       141 bps 

Earnings per share (4)

           

Basic

     13.11       12.64       14.99       

Diluted

     13.07       12.62       14.95       

 

(1)

For segment reporting, we have included the impact of exchange rate fluctuations in revenue. Excluding the impact of exchange rate fluctuations, revenue, as reported in our statements of income, is  550,402 million,  544,871 million and  585,845 million for the years ended March 31, 2017, 2018 and 2019, respectively. Further, finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items. Please see Note 30 of the Notes to the Consolidated Financial Statements for additional details.

(2)

Net gain from the sale of our hosted data center services business and Workday and Cornerstone OnDemand business, and reduction in our holdings in Wipro Airport IT Services Limited, in the total amount of  4,344 million, has been recorded as “Other operating income.”

(3)

Gross margin and operating margin as a percentage of revenue have been calculated by including Other Operating Income with Revenue.

(4)

Earnings per share for the years ended March 31, 2017 and 2018 have been proportionately adjusted for the bonus issue in the ratio of 1:3 as approved by the shareholders on February 22, 2019.

Effective October 1, 2018, we decided to carve out ISRE as a separate, standalone segment from our IT Services business. The Company is now organized into three operating segments: IT Services, IT Products and ISRE. Comparative information included in this Annual Report has been restated to give effect to these changes.

Our revenue and segment results are as follows:

 

     Years ended March 31,     Year on Year change  
     2017     2018     2019     2018-17     2019-18  
     ( in millions)              

Revenue:

          

IT Services

     519,196       517,716       568,253       (0.29 )%      9.76

IT Products

     25,922       17,998       12,312       (30.60 )%      (31.59 )% 

ISRE

     9,244       10,694       8,544       15.69     (20.10 )% 

Reconciling items

     (183     (49     (49     73.22     0.00
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     554,179       546,359       589,060       (1.41 )%      7.82
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment results:

          

IT Services

     98,391       83,159       102,503       (15.48 )%      23.26

 

-46-


Table of Contents
     Years ended March 31,     Year on Year change  
     2017     2018      2019     2018-17     2019-18  

IT Products

     (1,680     362        (1,047     121.55     (389.23 )% 

ISRE

     (2,326     454        (1,829     119.52     (502.86 )% 

Reconciling items

     (506     319        283       163.04     (11.29 )% 
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 
     93,879       84,294        99,910       (10.21 )%      18.53
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Analysis of Results

Results of operations for the years ended March 31, 2019 and 2018

Revenue: Our revenue increased by 7.82%.

The IT Services segment revenue increased by 9.76%. This growth was led by two of our largest industry verticals, BFSI and CBU, and was also a result of depreciation of the Indian Rupee against foreign currencies, including the U.S. Dollar, Euro, United Kingdom Sterling Pound and Canadian Dollar. The growth in the BFSI and CBU industry verticals was a result of increasing our differentiated offerings across our geographic and digital capabilities. Growth was partially offset by a decline in revenues due to the sale of our hosted data center business, a reduction in revenues from COMM due to the bankruptcy of one of our clients in the year ending March 31, 2018, completion of large deals and a reduction in revenues from the Health BU due to uncertainties around regulatory changes relating to the Affordable Care Act.

Revenue of the IT Products segment declined by 31.59%, which was primarily due to our focus on being a system integrator of choice where we provide IT products as a complement to our IT services offerings rather than selling standalone IT products.

Revenue of the ISRE segment declined by 20.10%, which was primarily due to scaling down of large engagements and delay in completion of projects. The table below gives our revenue by geographic segments for the year ended March 31, 2018 and 2019:

 

     Percentage of revenues
Year ended March 31,
 

Geographic Segments

   2018     2019  

India

     8     5

Americas (1)

     52     55

Europe

     25     25

Rest of the world

     15     15

 

(1)

The Americas refer to North and South America.

In absolute terms, cost of revenues increased by 7.12% primarily because of increase in employee compensation due to the impact of salary increases, increase in headcount during the year, increase in subcontracting/technical fees and depreciation of the Indian Rupee against foreign currencies, including the U.S. Dollar, Euro, United Kingdom Sterling Pound and Canadian Dollar. This was partially offset by a reduction in the cost of hardware and software and decrease in depreciation, amortization and impairment charges, primarily as a result of the sale of our hosted data center business, during the fiscal year ended March 31, 2019. The following tables present our cost of revenues:

 

     Year ended March 31,      Year on Year     Year on Year  

Cost of revenues

   2018      2019      2019-18     2019-18  
     ( in millions)  

Employee compensation

     228,936        251,818        22,882       9.99

Cost of hardware and software

     18,981        13,567        (5,414     (28.52 )% 

Subcontracting/technical fees

     83,432        93,974        10,542       12.64

Travel

     11,365        13,142        1,777       15.64

Depreciation, amortization and impairment

     16,705        14,658        (2,047     (12.25 )% 

Facility expenses

     16,808        17,390        582       3.46

Communication

     4,648        3,979        (669     (14.39 )% 

Others

     4,700        4,505        (195     (4.14 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

     385,575        413,033        27,458       7.12
  

 

 

    

 

 

    

 

 

   

 

 

 

 

-47-


Table of Contents

As a result of the foregoing factors, our gross profit as a percentage of our total revenue increased by 23 basis points (“bps”). Our selling and marketing expenses as a percentage of total revenue decreased from 7.75% for the year ended March 31, 2018 to 7.56% for the year ended March 31, 2019. In absolute terms, selling and marketing expenses increased by 5.10% primarily because of salary increases and depreciation of the Indian Rupee against foreign currencies including U.S. Dollar, Euro, United Kingdom Sterling Pound and Canadian Dollar. These increases have been partially offset by the decrease in travel and marketing and brand building charges in the year ended March 31, 2019 as compared to the year ended March 31, 2018. The following tables present our selling and marketing expenses:

 

     Year ended March 31,      Year on Year     Year on Year  

Selling and marketing expenses

   2018      2019      2019-18     2019-18  
     ( in millions)  

Employee compensation

     28,070        30,972        2,902       10.34

Travel

     3,054        2,557        (497     (16.27 )% 

Depreciation, amortization and impairment

     4,509        4,712        203       4.50

Facility expenses

     1,510        1,650        140       9.27

Communication

     596        466        (130     (21.81 )% 

Marketing and brand building

     3,140        2,714        (426     (13.57 )% 

Others

     1,470        1,439        (31     (2.11 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

     42,349        44,510        2,161       5.10
  

 

 

    

 

 

    

 

 

   

 

 

 

Our general and administrative expenses as a percentage of revenue decreased from 6.25% for the year ended March 31, 2018 to 6.10% for the year ended March 31, 2019. In absolute terms, general and administrative expenses increased by 5.30%, primarily due to charges paid against a one-time settlement of a legal claim against the company included under “Others.” This was offset by a decrease in the lifetime expected credit loss, deferred contract cost and travel. The following tables present our general and administrative expenses:

 

     Year ended March 31,      Year on Year     Year on Year  

General and administrative expenses

   2018      2019      2019-18     2019-18  
     ( in millions)  

Employee compensation

     15,217        16,984        1,767       11.61

Travel

     2,980        2,069        (911     (30.57 )% 

Facility expenses

     2,726        3,173        447       16.40

Legal and professional fees

     4,082        3,510        (572     (14.01 )% 

Lifetime expected credit loss and deferred contract cost

     6,565        980        (5,585     (85.07 )% 

Others

     2,571        9,235        6,664       259.20
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

     34,141        35,951        1,810       5.30
  

 

 

    

 

 

    

 

 

   

 

 

 

Other operating income: During the year ended March 31, 2019, we concluded the sales of our hosted data center services business and Workday and Cornerstone OnDemand business, and reduced our holding in Wipro Airport IT Services Limited. Net gain from the sale of our hosted data center services business, Workday and Cornerstone OnDemand business, and reduction in our holdings in Wipro Airport IT Services Limited, in the total amount of  4,344 million, has been recorded as “Other operating income.”

As a result of the foregoing factors, our operating income increased by 18.53%, from  84,294 million for the year ended March 31, 2018 to  99,910 million for the year ended March 31, 2019. As a result of the above, our results from operating activities as a percentage of revenue (operating margin) increased by 141 bps from 15.43% to 16.84%.

Finance expenses: Our finance expenses increased from  5,830 million for the year ended March 31, 2018 to  7,375 million for the year ended March 31, 2019. This increase is primarily due to an increase of  2,165 million in interest expense, which was partially offset by a decrease of  620 million in exchange loss on foreign currency borrowings and related derivative instruments.

Finance and other income: Our finance and other income decreased from  23,999 million for the year ended March 31, 2018 to  22,923 million for the year ended March 31, 2019. The decrease is due to a reduction in net gains from investments by  3,283 million during the year ended March 31, 2019 as compared to the year ended March 31, 2018, resulting from a decrease in the average investments held during the year.

Income taxes: Our income taxes increased by  2,852 million from  22,390 million for the year ended March 31, 2018 to  25,242 million for the year ended March 31, 2019. Please refer to Note 17 of the Notes to Consolidated Financial Statements for further information. Our effective tax rate has narrowly increased from 21.85% for the year ended March 31, 2018 to 21.87% for the year ended March 31, 2019.

 

-48-


Table of Contents

Profit attributable to non-controlling interest has increased from  3 million for the year ended March 31, 2018 to  142 million for the year ended March 31, 2019.

As a result of the foregoing factors, our profit attributable to equity holders increased by  9,950 million or 12.42%, from  80,081 million for the year ended March 31, 2018 to  90,031 million for the year ended March 31, 2019.

Results of operations for the years ended March 31, 2018 and 2017

Our revenue decreased by 1.41%.

The IT Services segment revenue decreased by 0.29%. This was primarily due to decreases in revenue in our COMM and Health BU industry verticals. Revenue from the COMM vertical has declined due to the loss of a client who declared bankruptcy, as well as ramp downs in a few large projects. Revenue from the Health BU industry vertical has declined due to uncertainties around regulatory changes relating to the Affordable Care Act and appreciation of the Indian Rupee against currencies other than the U.S. Dollar. Meanwhile, our BFSI vertical registered growth in revenues.

Revenue of IT Products segment declined by 30.60%, which was primarily due to our focus on being a system integrator of choice where we provide IT products as a complement to our IT services offerings rather than selling standalone IT products.

Revenue of ISRE segment increased by 15.69%, which was primarily due to ramp up of existing engagements and new projects.

The table below gives our revenue by geographic segments for year ended March 31, 2017 and 2018:

 

     Percentage of revenues
Year ended March 31,
 

Geographic Segments

   2017     2018  

India

     8     8

Americas (1)

     52     52

Europe

     25     25

Rest of the world

     15     15

 

(1) 

The Americas refer to North and South America.

In absolute terms, cost of revenues decreased by 1.52% primarily because of reduction in the cost of hardware, software and travel. This was partially offset by increases in employee compensation due to the impact of salary increases, increases in onsite headcount during the year (including increases resulting from business combinations), increases in subcontracting/technical fees and increases in facility expenses. The following table presents our cost of revenues:

 

     Year ended March 31,      Year on Year     Year on Year  

Cost of revenues

   2017      2018      2018-17     2018-17  
     ( in millions)  

Employee compensation

     226,595        228,936        2,341       1.03

Cost of hardware and software

     27,210        18,981        (8,229     (30.24 )% 

Subcontracting/technical fees

     81,495        83,432        1,937       2.38

Travel

     14,163        11,365        (2,798     (19.76 )% 

Depreciation, amortization and impairment

     16,875        16,705        (170     (1.01 )% 

Facility expenses

     15,084        16,808        1,724       11.43

Communication

     4,599        4,648        49       1.07

Others

     5,523        4,700        (823     (14.90 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

     391,544        385,575        (5,969     (1.52 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 

As a result of the foregoing factors, our gross profit as percentage of our total revenue increased by 30 bps.

 

-49-


Table of Contents

Our selling and marketing expenses as a percentage of total revenue increased from 7.37% for the year ended March 31, 2017 to 7.75% for the year ended March 31, 2018. In absolute terms, selling and marketing expenses increased by 3.75% primarily because of increases in employee compensation, and marketing and brand building charges. These increases have been set-off by the decrease in amortization and impairment charges for intangible assets recognized through business combinations in the year ended March 31, 2018 as compared to the year ended March 31, 2017. The following tables present our selling and marketing expenses:

 

     Year ended March 31,      Year on Year      Year on Year  

Selling and marketing expenses

   2017      2018      2018-17      2018-17  
     ( in millions)  

Employee compensation

     26,051        28,070        2,019        7.75

Travel

     3,132        3,054        (78      (2.49 )% 

Depreciation, amortization and impairment

     5,897        4,509        (1,388      (23.54 )% 

Facility expenses

     1,375        1,510        135        9.82

Communication

     658        596        (62      (9.42 )% 

Marketing and brand building

     2,936        3,140        204        6.95

Others

     768        1,470        702        91.41
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     40,817        42,349        1,532        3.75
  

 

 

    

 

 

    

 

 

    

 

 

 

Our general and administrative expenses as a percentage of revenue increased from 5.78% for the year ended March 31, 2017 to 6.25% for the year ended March 31, 2018. In absolute terms, general and administrative expenses increased by 6.62%, primarily due to impairment of deferred contract cost and receivables arising on account of insolvency of two of our customers. The following tables present our general and administrative expenses:

 

     Year ended March 31,      Year on Year     Year on Year  

General and administrative expenses

   2017      2018      2018-17     2018-17  
     ( in millions)  

Employee compensation

     15,435        15,217        (218     (1.41 )% 

Travel

     2,852        2,980        128       4.49

Facility expenses

     2,838        2,726        (112     (3.95 )% 

Legal and professional fees

     4,122        4,082        (40     (0.97 )% 

Lifetime expected credit loss and deferred contract cost

     2,427        6,565        4,138       170.50

Others

     4,347        2,571        (1,776     (40.86 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

     32,021        34,141        2,120       6.62
  

 

 

    

 

 

    

 

 

   

 

 

 

Other operating income: During the year ended March 31, 2017, we concluded the sale of our EcoEnergy division for a consideration of  4,670 million. The net gain from the sale, amounting to  4,082 million, has been recorded as “other operating income”.

As a result of the foregoing factors, our operating income decreased by 10.21%, from  93,879 million for the year ended March 31, 2017 to  84,294 million for the year ended March 31, 2018. As a result of the above, our results from operating activities as a percentage of revenue (operating margin) decreased by 139 bps from 16.82% to 15.43%. Adjusted for the impact arising out of the insolvency of two of our customers, the operating income for the year ended March 31, 2018 was  88,906 million (16.27%), decreased by 5.30% as compared to year ended March 31, 2017.

Finance expenses: Our finance expenses decreased from  5,942 million for the year ended March 31, 2017 to  5,830 million for the year ended March 31, 2018. This decrease is primarily due to a decrease of  888 million in exchange loss on foreign currency borrowings and related derivative instruments, which was partially offset by an increase in interest expense by  776 million, primarily on account of increase in long term borrowings during the year ended March 31, 2018.

Finance and other income: Our finance and other income increased from  22,419 million for the year ended March 31, 2017 to  23,999 million for the year ended March 31, 2018. The increase is due to an increase in gains from investments by  1,542 million during the year ended March 31, 2018 as compared to the year ended March 31, 2017, resulting from an increase in the average investments held during the year.

 

-50-


Table of Contents

Income taxes: Our income taxes decreased by  2,823 million, from  25,213 million for the year ended March 31, 2017 to  22,390 million for the year ended March 31, 2018. Please refer to Note 17 of the Notes to Consolidated Financial Statements for further information. Our effective tax rate decreased from 22.85% for the year ended March 31, 2017 to 21.85% for the year ended March 31, 2018, primarily because of the re-statement of deferred tax items pursuant to the “Tax Cuts and Jobs Act of 2017” which was signed into law in the U.S. on December 22, 2017. As a result of the operational structure of the Company, it is possible that the application of the recently enacted U.S. tax reform legislation may not have a material and adverse impact on our operating results, cash flows and financial condition. We are still evaluating the impact of this legislation on our business.

Profit attributable to non-controlling interest has decreased from  248 million for the year ended March 31, 2017 to  3 million for the year ended March 31, 2018.

As a result of the foregoing factors, our profit attributable to equity holders decreased by  4,814 million or 5.67%, from  84,895 million for the year ended March 31, 2017 to  80,081 million for the year ended March 31, 2018.

Segment Analysis

Our business comprises of the IT Services, IT Products and ISRE segments.

The ISRE segment consists of IT services offerings to entities and/or departments owned or controlled by the Government of India (the “GoI”) and/or any Indian State Governments (“ISRE Customers”). Effective October 1, 2018, we carved out ISRE as a separate segment from our global IT Services business. We made this decision because we changed our strategy for providing services to ISRE Customers. Historically, projects in our ISRE business have been primarily system integration (“SI”) projects that have complex deliverables and, compared to our IT Services segment, longer working capital cycles and different downstream processes, including billing and collections. Most ISRE deals come in the form of a tender process, with little room to negotiate the terms and conditions. We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

Comparative information included in this Annual Report has been restated to give effect to the above changes.

IT Services: The IT Services segment primarily consists of IT Services offerings to customers organized by industry verticals. During the year ended March 31, 2019, our industry verticals were as follows: Banking, Financial Services and Insurance (“BFSI”), Health Business Unit (“Health BU”), Consumer Business Unit (“CBU”), Energy, Natural Resources and Utilities (“ENU”), Manufacturing (“MFG”), Technology (“TECH”) and Communications (“COMM”).

IT Products: The Company is 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 also delivers hardware, software products and other related deliverables, and revenue relating to these items is reported as IT Products revenue.

ISRE: This segment consists of IT services offerings to entities and/or departments owned or controlled by Government of India and/or any State Governments. Most ISRE deals come in the form of tender process, with little room to negotiate the terms and conditions.

IT Services

Our IT Services businesses provide a range of IT and IT enabled services which include digital strategy advisory, customer centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, global infrastructure services, business process services, cloud, mobility and analytics services, research and development and hardware and software design. Information by industry verticals for the IT Services segment for the years ended March 31, 2017, 2018 and 2019 are as follows:

 

     Year ended March 31,      Year on Year     Year on Year  
     2017      2018      2019      2018-17     2019-18  
     ( in millions)  

Revenue:

  

IT Services industry verticals

             

BFSI

     133,332        144,139        175,262        8.11     21.59

Health BU

     81,980        74,136        75,081        (9.57 )%      1.27

CBU

     78,101        77,914        89,313        (0.24 )%      14.63

ENU

     68,223        67,841        72,830        (0.56 )%      7.35

TECH

     72,069        73,947        76,591        2.61     3.58

 

-51-


Table of Contents
     Year ended March 31,      Year on Year     Year on Year  
     2017     2018      2019      2018-17     2019-18  

MFG

     46,907       46,081        46,496        (1.76 )%      0.90

COMM

     38,584       33,658        32,680        (12.77 )%      (2.91 )% 
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 
     519,196       517,716        568,253        (0.29 )%      9.76
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Segment Result:

            

IT Services industry verticals

            

BFSI

     25,721       24,549        33,831        (4.56 )%      37.81

Health BU

     9,524       9,624        8,638        1.05     (10.25 )% 

CBU

     15,928       12,619        16,828        (20.77 )%      33.35

ENU

     14,485       8,097        7,081        (44.10 )%      (12.55 )% 

TECH

     16,634       14,680        15,916        (11.75 )%      8.42

MFG

     6,843       7,007        8,327        2.40     18.84

COMM

     6,125       3,236        4,396        (47.17 )%      35.85

Unallocated

     (951     3,347        3,142        451.95     (6.12 )% 

Other operating income

     4,082       —          4,344        NA       NA  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 
     98,391       83,159        102,503        (15.48 )%      23.26
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Please see Note 30 of the Notes to the Consolidated Financial Statements for additional details regarding our operating segments.

Our IT Services segment accounted for 93.6%, 94.7% and 96.4% of our total revenue for the years ended March 31, 2017, 2018 and 2019, respectively and 104.8%, 98.7% and 102.6% of our operating income for the years ended March 31, 2017, 2018 and 2019, respectively.

 

-52-


Table of Contents

Operating results of the IT Services segment are as follows:

 

     Year ended March 31,*     Year on Year change  
     2017     2018     2019     2018-17     2019-18  
     ( in millions except percentage data)  

Revenue (1)

     519,196       517,716       568,253       (0.29 )%      9.76

Cost of Revenue

     (355,957     (359,717     (390,197     1.06     8.47

Gross profit

     163,239       157,999       178,056       (3.21 )%      12.69

Selling and marketing expenses

     (39,942     (41,874     (44,207     4.84     5.57

General and administrative expenses

     (28,988     (32,966     (35,690     13.72     8.26

Other Operating Income

     4,082       —         4,344       NA       NA  

Segment results (2)

     98,391       83,159       102,503       (15.48 )%      23.26

As a percentage of revenue:

          

Selling and marketing expenses

     7.69     8.09     7.78     (40 )bps      31 bps 

General and administrative expenses

     5.58     6.37     6.28     (79 )bps      9 bps 

Gross margin (3)

     31.20     30.52     31.10     (68 )bps      58 bps 

Segment results (3)

     18.80     16.06     17.90     (274 )bps      184 bps 

 

(1)

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations amounting to  3,736 million,  1,498 million and  3,208 million for the years ended March 31, 2017, 2018 and 2019, respectively, in revenue. Further, finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items.

(2)

Includes Other Operating Income, which is being included to present the effect from the sale of the EcoEnergy division in the year ended March 31, 2017 and sale of our hosted data center business and Workday and Cornerstone OnDemand business, in the year ended March 31, 2019.

(3)

Gross margin and segment results as a percentage of revenue have been calculated by including Other Operating Income with Segment Revenue.

* Note: Comparative information has been restated to give effect to the change due to carving out of ISRE.

Please see Note 30 of the Notes to the Consolidated Financial Statements for additional details.

Our revenue and segment results by IT Services industry verticals, expressed in terms of percentages, are provided below:

 

     Year ended March 31,  
     2018     2019  

Industry Verticals

   Percentage
of revenues
    Percentage of
Segment
results
    Percentage
of revenues
    Percentage of
Segment
results
 

BFSI

     27.9     29.5     30.8     33.0

Health BU

     14.3     11.6     13.2     8.4

CBU

     15.0     15.2     15.7     16.4

ENU

     13.1     9.7     12.8     6.9

TECH

     14.3     17.7     13.5     15.6

MFG

     8.9     8.4     8.2     8.1

COMM

     6.5     3.9     5.8     4.3

Unallocated

     NA       4.0     NA       3.1

Other operating income

     NA       —         NA       4.2

Results of operations for the years ended March 31, 2019 and 2018

The IT services segment revenue increased by 9.76%. The growth was led by two of our largest industry verticals, BFSI and CBU. The growth in these industry verticals was a result of increasing our differentiated offerings across our geographic and digital capabilities, as well as depreciation of the Indian Rupee against foreign currencies, including the U.S. Dollar, Euro, United Kingdom Sterling Pound and Canadian Dollar. Growth was partially offset by a decline in revenues due to the sale of our hosted data center business, a reduction in revenues from COMM due to the bankruptcy of one of our clients in the year ending March 31, 2018, completion of large deals and a reduction in revenues from the Health BU due to uncertainties around regulatory changes relating to the Affordable Care Act. We added 271 new customers during the year ended March 31, 2019.

 

-53-


Table of Contents

Our gross profit as a percentage of our revenue from our IT Services segment increased by 58 bps, primarily because of depreciation of the Indian Rupee against foreign currencies including U.S. Dollar, Euro, United Kingdom Sterling Pound and Canadian Dollar and a reduction in the depreciation, amortization and impairment charges primarily as a result of the sale of our data center business during the year ended March 31, 2019. This was offset by an increase in employee compensation due to the impact of salary increases, increase in headcount during the year, and increase in subcontracting/technical fees.

Selling and marketing expenses as a percentage of revenue from our IT Services segment decreased from 8.09% for the year ended March 31, 2018 to 7.78% for the year ended March 31, 2019. In absolute terms, selling and marketing expenses increased by  2,333 million primarily on account of salary increases and depreciation of the Indian Rupee against foreign currencies, including the U.S. Dollar, Euro, United Kingdom Sterling Pound and Canadian Dollar. These increases have been offset by the decrease in travel and marketing and brand building charges in the year ended March 31, 2019 as compared to the year ended March 31, 2018.

General and administrative expenses as a percentage of revenue from our IT Services segment decreased from 6.37% for the year ended March 31, 2018 to 6.28% for the year ended March 31, 2019. In absolute terms, general and administrative expenses increased by  2,724 million, primarily due to charges paid against a one-time settlement of a legal claim against the company. This was offset by a decrease in the lifetime expected credit loss, deferred contract cost and travel.

During the year ended March 31, 2019, we concluded the sales of our hosted data center services business and Workday and Cornerstone OnDemand business, and reduced our holding in Wipro Airport IT Services Limited. Net gain from the sale of our hosted data center services business and Workday and Cornerstone OnDemand business, and reduction in our holdings in Wipro Airport IT Services Limited, in the total amount of 4,344 million, has been recorded as “other operating income.”

As a result of the above, segment results as a percentage of our revenue from our IT Services segment increased by 184 bps, from 16.06% to 17.90%. In absolute terms, the segment results of our IT Services segment increased by 23.26%.

Results of operations for the years ended March 31, 2018 and 2017

The IT services segment revenue decreased from  519,196 million for the year ended March 31, 2017 to  517,716 million for the year ended March 31, 2018. This was primarily due to decreased revenue in the COMM and Health BU industry verticals. Revenue from the COMM vertical declined due to the loss of a client who declared bankruptcy and ramp downs in a few large projects. Revenue from the Health BU industry vertical declined due to uncertainties around regulatory changes relating to the Affordable Care Act and appreciation of the Indian Rupee against currencies other than the U.S. Dollar, which offset growth in the BFSI vertical. We added 220 new customers during the year ended March 31, 2018, including customers added because of acquisitions.

Our gross profit as a percentage of our revenue from our IT Services segment decreased by 68 bps primarily because of increase in employee compensation due to the impact of salary increases, increases in onsite headcount during the year (including increases resulting from business combinations), increases in subcontracting/technical fees, and increases in facility expenses, partially offset by reduction in the cost of hardware, software and travel.

Selling and marketing expenses as a percentage of revenue from our IT Services segment increased from 7.69% for the year ended March 31, 2017 to 8.09% for the year ended March 31, 2018. In absolute terms, selling and marketing expenses increased by  1,932 million primarily because of increases in employee compensation, and advertising and brand building charges. These increases were offset by the decrease in amortization and impairment charges for intangible assets recognized through business combinations in the year ended March 31, 2018 as compared to the year ended March 31, 2017.

General and administrative expenses as a percentage of revenue from our IT Services segment increased from 5.58% for the year ended March 31, 2017 to 6.37% for the year ended March 31, 2018. In absolute terms, general and administrative expenses increased by  3,978 million, primarily due to impairment of receivables and deferred contract cost arising on account of insolvency of two of our customers.

During the year ended March 31, 2017, we had concluded the sale of the EcoEnergy division for a consideration of  4,670 million. Net gain from the sale, amounting to  4,082 million, has been recorded as other operating income in the year ended March 31, 2017.

 

-54-


Table of Contents

As a result of the above, segment results as a percentage of our revenue from our IT Services segment decreased by 274 bps, from 18.80% to 16.06%. Further, in absolute terms, the segment results of our IT Services segment decreased by 15.48%. Adjusted for the impact arising out of insolvency of two of our customers, the segment result from out IT Services segment for the year ended March 31, 2018 was  87,770 million, decreasing by 10.80% as compared to year ended March 31, 2017.

IT Products

While we focus on being a strategic provider of IT services, our goal is to be the system integrator of choice so we provide IT products as a complement to our IT services offerings. In the India and Middle East markets, we are a leading provider of system integration services, where we provide a full suite of IT services as well as complementary hardware solutions and software licenses. Our range of third-party IT Products is comprised of Enterprise Platforms, Networking Solutions, Software Products, Data Storage, Contact Center Infrastructure, Enterprise Security, IT Optimization Technologies, Video Solutions and End-User Computing solutions. Revenue from the hardware products and software licenses sold is recorded under the IT Products segment. We have diverse range of clients across all major industries, primarily in the India and Middle East market.

Our IT Products segment accounted for 4.7%, 3.3% and 2.1% of our revenue for the years ended March 31, 2017, 2018 and 2019, respectively, and (1.8)%, 0.4% and (1.0)% of our operating income for each of the years ended March 31, 2017, 2018 and 2019, respectively.

Operating results of the IT Products segment are as follows:

 

     Year ended March 31,     Year on Year change  
     2017     2018     2019     2018-17     2019-18  
     ( in millions except percentage data)  

Revenue (1)

     25,922       17,998       12,312       (30.60 )%      (31.59 )% 

Cost of Revenue

     (24,965     (16,515     (12,567     (33.85 )%      (23.90 )% 

Gross profit

     957       1,483       (255     54.98     (117.19 )% 

Selling and marketing expenses

     (621     (248     (168     (60.04 )%      (32.26 )% 

General and administrative expenses

     (2,016     (873     (624     (56.70 )%      (28.52 )% 

Segment results

     (1,680     362       (1,047     121.55     (389.23 )% 

As a Percentage of Revenue:

          

Selling and marketing expenses

     2.40     1.38     1.36     102bps       2bps  

General and administrative expenses

     7.78     4.85     5.06     293bps       (21 )bps 

Gross margin

     3.69     8.24     (2.07 )%      455bps       (1031 )bps 

Segment results

     (6.48 %)      2.01     (8.50 )%      849bps       (1051 )bps 

 

(1)

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations amounting to  81 million,  (12) million and  (2) million for the years ended March 31, 2017, 2018 and 2019, respectively, in revenue. Further, finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items. Please see Note 30 of the Notes to the Consolidated Financial Statements for additional details.

Results of operations for the years ended March 31, 2019 and 2018

Our revenue from the IT Products segment decreased by 31.59%. The decline was primarily due to our focus on being a system integrator of choice where we provide IT products as a complement to our IT services offerings rather than sell standalone IT products.

Our gross profit as a percentage of our IT Products segment revenue decreased by 1031 bps, primarily because of cost escalation relating to depreciation of the Indian Rupee against the U.S. Dollar and increase in loss provisions in certain customer contracts.

Selling and marketing expenses as a percentage of revenue from our IT Products segment has remained flat at 1.36%. In absolute terms, selling and marketing expenses decreased by  80 million, in line with reduction in revenues.

General and administrative expenses as a percentage of revenue from our IT Products segment increased from 4.85% for the year ended March 31, 2018 to 5.06% for the year ended March 31, 2019. In absolute terms, general and administrative expenses decreased by  249 million primarily on account of decreases in employee compensation and lifetime expected credit loss in our India business.

 

-55-


Table of Contents

As a result of the above, in absolute terms, segment results of our IT Products segment recorded a loss of  1,047 million for the year ended March 31, 2019 as compared to a profit of  362 million for the year ended March 31, 2018.

Results of operations for the years ended March 31, 2018 and 2017

Our revenue from the IT Products segment decreased by 30.6%. The decline was primarily due to our focus on being a system integrator of choice where we provide IT products as a complement to our IT services offerings rather than sell standalone IT products.

Our gross profit as a percentage of our IT Products segment revenue increased by 455 bps primarily on account of selling high margin products and reduction in loss provisions.

Selling and marketing expenses as a percentage of revenue from our IT Products segment decreased from 2.40% for the year ended March 31, 2017 to 1.38% for the year ended March 31, 2018 due to an optimization of head count. In absolute terms, selling and marketing expenses decreased by  373 million.

General and administrative expenses as a percentage of revenue from our IT Products segment decreased from 7.78% for the year ended March 31, 2017 to 4.85% for the year ended March 31, 2018. In absolute terms, general and administrative expenses decreased by  1,143 million primarily on account of decreases in employee compensation and lifetime expected credit loss in our India business.

As a result of the above, in absolute terms, segment results of our IT Products segment recorded a profit of  362 million for the year ended March 31, 2018 as compared to a loss of  1,680 million for the year ended March 31, 2017.

ISRE

Our ISRE segment accounted for 1.7%, 2.0% and 1.5% of our revenue for the years ended March 31, 2017, 2018 and 2019, respectively, and (2.5)%, 0.5% and (1.8)% of our operating income for each of the years ended March 31, 2017, 2018 and 2019, respectively.

Operating results of the ISRE segment are as follows:

 

     Year ended March 31,     Year on Year change  
     2017     2018     2019     2018-17     2019-18  
     ( in millions except percentage data)  

Revenue (1)

     9,244       10,694       8,544       15.69     (20.10 )% 

Cost of Revenue

     (10,429     (9,135     (9,926     (12.41 )%      8.66

Gross profit

     (1,185     1,559       (1,382     231.56     (188.65 )% 

Selling and marketing expenses

     (403     (379     (294     (5.96 )%      (22.43 )% 

General and administrative expenses

     (738     (726     (153     (1.63 )%      (78.93 )% 

Segment results

     (2,326     454       (1,829     119.52     (502.86 )% 

As a Percentage of Revenue:

          

Selling and marketing expenses

     4.36     3.54     3.44     82 bps      10 bps 

General and administrative expenses

     7.98     6.79     1.79     199 bps      500 bps 

Gross margin

     (12.82 )%      14.58     (16.18 )%      2740 bps      (3076 )bps 

Segment results

     (25.16 %)      4.25     (21.41 )%      2941 bps      (2566 )bps 

 

(1)

Finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items. Please see Note 30 of the Notes to the Consolidated Financial Statements for additional details.

Results of operations for the years ended March 31, 2019 and 2018

Our revenue from the ISRE segment decreased by 20.1%. This was primarily due to scaling down of large engagements and delay in completion of projects.

Our gross profit as a percentage of our ISRE segment revenue decreased by 3076 bps, primarily on account of cost overruns in existing engagements.

 

-56-


Table of Contents

Selling and marketing expenses as a percentage of revenue from our ISRE segment decreased slightly from 3.54% for the year ended March 31, 2018 to 3.44% for the year ended March 31, 2019. In absolute terms, selling and marketing expenses decreased by  85 million, which is in line with reduction in revenues.

General and administrative expenses as a percentage of revenue from our ISRE segment decreased from 6.79% for the year ended March 31, 2018 to 1.79% for the year ended March 31, 2019. In absolute terms, general and administrative expenses decreased by  573 million. This was primarily on account of reduction in lifetime expected credit loss.

As a result of the above, in absolute terms, segment results of our ISRE segment recorded a loss of  1,829 million for the year ended March 31, 2019 as compared to a profit of  454 million for the year ended March 31, 2018.

Results of operations for the years ended March 31, 2018 and 2017

Our revenue from the ISRE segment increased by 15.69%. This was primarily on account of additional orders from existing clients.

Our gross profit as a percentage of our ISRE segment revenue increased by 2740 bps. This was primarily on account of reduction in loss provisions.

Selling and marketing expenses as a percentage of revenue from our ISRE segment decreased from 4.36% for the year ended March 31, 2017 to 3.54% for the year ended March 31, 2018, primarily due to headcount optimization. In absolute terms, selling and marketing expenses decreased by  24 million.

General and administrative expenses as a percentage of revenue from our ISRE segment decreased from 7.98% for the year ended March 31, 2017 to 6.79% for the year ended March 31, 2018. In absolute terms, general and administrative expenses decreased by  12 million. This was primarily due to headcount optimization.

As a result of the above, in absolute terms, segment results of our ISRE segment recorded a profit of  454 million for the year ended March 31, 2018 as compared to a loss of  2,326 million for the year ended March 31, 2017.

Acquisitions

Refer to Item 4 and Note 6 of the Notes to the Consolidated Financial Statements for a description of the acquisitions during the reported period.

Divestitures

Refer to Item 4 and Note 22 of the Notes to the Consolidated Financial Statements for a description of the divestitures during the reported period.

Foreign exchange gains/(losses), net

Our net foreign exchange gains/(losses) for the years ended March 31, 2017, 2018 and 2019 were  3,777 million,  1,488 million and  3,215 million, respectively.

Our foreign exchange gains/(losses), net, comprise of:

 

   

exchange differences arising from the translation or settlement of transactions in foreign currency, except for exchange differences on debt denominated in foreign currency (which are reported within finance expense, net); and

 

   

the changes in fair value for derivatives not designated as hedging derivatives and ineffective portions of the hedging instruments. For forward foreign exchange contracts which are designated and effective as cash flow hedges, the marked to market gains and losses are deferred and reported as a component of other comprehensive income in stockholder’s equity and subsequently recorded in the income statement when the hedged transactions occur, along with the hedged items.

Although our functional currency is the Indian Rupee, we transact a significant portion of our business in foreign currencies, including the U.S. Dollar, the United Kingdom Pound Sterling, the Euro, the Canadian Dollar and the Australian Dollar. The exchange rate between the Indian rupee and these currencies has changed substantially in recent years and may fluctuate substantially in the future.

 

-57-


Table of Contents

Consequently, the results of our operations are affected as the Indian rupee fluctuates against these currencies. Our exchange rate risk primarily arises from our foreign currency revenues, cash balances, payables and debt. We enter into derivative instruments to primarily hedge our forecasted cash flows denominated in certain foreign currencies, foreign currency debt and net investment in overseas operations. Please refer to Notes 12 and 15 of the Notes to the Consolidated Financial Statements for additional details on our foreign currency exposures.

Income taxes

Our profits for the period earned from providing services at client premises outside India may be subject to tax in the country where we perform the work. Most of our taxes paid in countries other than India can be applied as a credit against our Indian tax liability to the extent that the same income is subject to taxation in India.

Currently, we benefit from certain tax incentives under Indian tax laws. These tax incentives include a tax holiday from payment of Indian corporate income taxes for our businesses operating from specially designated Special Economic Zones (“SEZs”). The tax holiday for all our Software Technology and Hardware Technology Parks ended in the fiscal year ended March 31, 2011. We continue to be eligible for exemptions from certain other taxes, including customs duties in these Software Technology and Hardware Technology Parks.

Units in designated SEZs which began providing services on or after April 1, 2005, are eligible for a deduction of 100% of profits or gains derived from the export of services for the first five years from commencement of provision of services and 50% of such profits or gains for a further five years. Certain tax benefits are also available for a further five years subject to the unit meeting certain defined conditions. Profits from certain other undertakings are also eligible for preferential tax treatment.

Due to these tax incentives, a substantial portion of our pre-tax income has not been subject to a significant tax in India in recent years. When our tax holiday and income tax deduction/exemptions expire or terminate, our costs will increase. The expiration period of the tax holiday for each unit within a SEZ is determined based on the number of years since commencement of production by that unit for a maximum of fifteen years. The tax holiday period currently available to the Company expires in various years through fiscal year 2032-33. The expiration period of tax holiday for each unit within a SEZ is determined based on the number of years that have lapsed following year of commencement of production by that unit. The impact of tax holidays has resulted in a decrease of current tax expense of  11,958 million,  11,635 million and  15,390 million for the years ended March 31, 2017, 2018 and 2019, respectively, compared to the effective tax amounts that we estimate we would have been required to pay if these incentives had not been available. The per share effect of these tax incentives for the years ended March 31, 2017, 2018 and 2019 was  1.85,  1.84 and  2.56, respectively.

In March 2004, the Company received a tax demand for year ended March 31, 2001 arising primarily on account of denial of deduction under section 10A of the Income Tax Act, 1961 (the “Act”) in respect of profit earned by the Company’s undertaking in Software Technology Park at Bengaluru. The same issue was repeated in the successive assessments for the years ended March 31, 2002 to March 31, 2011 and the aggregate demand is 47,583 (including interest of 13,832). The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by the second appellate authority for the years up to March 31, 2008. Further appeals have been filed by the Income tax authorities before the Hon’ble High Court. The Hon’ble High Court has heard and disposed-off majority of the issues in favor of the Company up to years ended March 31, 2004. Department has filed a Special Leave Petition before the Supreme Court of India for the year ended March 31, 2001 to March 31, 2004.

On similar issues for years up to March 31, 2000, the Hon’ble High Court of Karnataka has upheld the claim of the Company under section 10A of the Act. For the year ended March 31, 2009, the appeals are pending before Income Tax Appellate Tribunal (“ITAT”). For years ended March 31, 2010 and March 31, 2011, the Dispute Resolution Panel allowed the claim of the Company under section 10A of the Act. The Income tax authorities have filed an appeal before the ITAT.

For the year ended March 31, 2013, the Company received the final assessment order in November 2017 with a demand of  3,286 (including interest of 1,166), arising primarily on account of section 10AA issues with respect to exclusion from Export Turnover. The Company has filed an appeal before Hon’ble ITAT, Bengaluru within the prescribed timelines.

For the year ended March 31, 2014, the Company received the final assessment order in September 2018 with a demand of  1,030 (including Nil interest), arising primarily on account of transfer pricing issues. The Company has filed an appeal before the Hon’ble ITAT, Bengaluru within the prescribed timelines.

For the year ended March 31, 2015, the Company received the draft assessment order in December 2018 with a demand of  6,467 (including interest of  2,007), arising primarily on account of capitalization of wages. The Company has filed objections before the Dispute Resolution Panel (Bengaluru) within the prescribed timelines.

 

-58-


Table of Contents

Income tax demands against the Company amounting to  101,440 and  66,441 are not acknowledged as debt as at March 31, 2018 and March 31, 2019, respectively. The contingent liability has been reworked on the basis of recent judicial pronouncements and updates.

These matters are pending before various Appellate Authorities and the management expects its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company’s financial position and results of operations. Although we currently believe we will ultimately prevail in our appeals, the result of such appeals, and any subsequent appeals, cannot be predicted with certainty. Should we fail to prevail in our appeal, or any subsequent appeals, in any reporting period, the operating results of such reporting period could be adversely affected materially.

Recently enacted U.S. tax reform legislation, known colloquially as the “Tax Cuts and Jobs Act”, makes, among other things, significant changes to the rules applicable to the taxation of corporations, such as changing the corporate tax rate to a flat 21% rate, modifying the rules regarding limitations on certain deductions for executive compensation, introducing a capital investment deduction in certain circumstances, placing certain limitations on the interest deduction, modifying the rules regarding the usability of certain net operating losses and adding certain anti-base erosion rules. As a result of the operational structure of the Company, it is possible that the application of the recently enacted U.S. tax reform legislation may not have a material and adverse impact on our operating results, cash flows and financial condition. We are still evaluating the impact of this legislation on our business.

For the year ended March 2018, the Company took a positive impact of  1,563 million on account of re-statement of deferred tax items pursuant to Tax Cuts and Jobs Act.

Pursuant to the changes in the Indian income tax laws, Minimum Alternate Tax (“MAT”) has been extended to income in respect of which a deduction is claimed under Sections 10A and 10B. Consequently, we have calculated our domestic tax liability after considering MAT and accordingly, a deferred tax asset of 74 million and Nil has been recognized in the statement of financial position for the years ended March 31, 2018 and 2019. The excess tax paid under MAT provisions over and above normal tax liability can be carried forward for a period of fifteen years and set-off against future tax liabilities computed under normal tax provisions.

Liquidity and Capital Resources

The Company’s cash flow from its operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows, is summarized in the table below:

 

     Year ended March 31,     Year-on-Year change  
     2017     2018     2019     2018-17     2019-18  
     ( in millions)  

Net cash provided by/(used in) operations:

          

Operating activities

     92,773       84,233       116,316       (8,540     32,083  

Investing activities

     (116,283     35,578       50,126       151,861       14,548  

Financing activities

     (22,752     (129,978     (49,369     (107,226     80,609  

Net change in cash and cash equivalents

     (46,262     (10,167     117,073       36,095       127,240  

Effect of exchange rate changes on cash and cash equivalent

     (1,412     375       526       1,787       151  

As of March 31, 2019, we had cash and cash equivalent and short-term investments of  379,245 million. Cash and cash equivalent and short-term investments, net of debt, was  279,778 million.

In addition, we have unutilized credit lines of  41,955 million. To utilize these lines of credit, we require the consent of the lender and compliance with certain financial covenants. We have historically financed our working capital and capital expenditures through our operating cash flows and through bank debt, as required.

Cash generated by operating activities for the year ended March 31, 2019 increased by  32,083 million while profit for the year increased by  10,089 million during the same period. The increase in cash generated by operating activities is primarily due to optimization of working capital.

 

-59-


Table of Contents

Cash generated by operating activities for the year ended March 31, 2018 decreased by  8,540 million, while profit for the year decreased by  5,059 million during the same period. The decrease in cash generated by operating activities is primarily due to increased working capital requirements.

Cash generated from investing activities for the year ended March 31, 2019 was  50,126 million. We had a net cash inflow of  26,103 million from the sale of our hosted data center business. The cash generated from sale of investments (net of purchases) amounted to  24,340 million. We purchased property, plant and equipment amounting to  22,781 million which was primarily driven by the growth strategy of the Company.

Cash generated from investing activities for the year ended March 31, 2018 was  35,578 million. The cash generated from sale of investments (net of purchases) amounted to  47,973 million. Cash utilized for the payment for business acquisitions amounted to  6,652 million. We purchased property, plant and equipment amounting to  21,870 million which was primarily driven by the growth strategy of the Company.

Cash used in financing activities for the year ended March 31, 2019 was  49,369 million as against  129,978 million for the year ended March 31, 2018. This is primarily on account of outflow for an equity share buyback amounting to  110,312 million in the year ended March, 31 2018 and increased outflow in the year ended March 31, 2019, on account of partial repayment of loans taken for acquisitions. Payment toward the dividend, including dividend distribution tax for the year ended March 31, 2019, amounted to  5,434 million. Dividends paid in the year ended March 31, 2019 represent interim (and final) dividends declared for the year ended March 31, 2019 amounting to  1 per share.

Cash used in financing activities for the year ended March 31, 2018 was  129,978 million as against  22,752 million for the year ended March 31, 2017. This is primarily due to a decrease in net proceeds of loans and borrowings amounting to  24,102 million. Payment toward the dividend including dividend distribution tax and buy back of shares for the year ended March 31, 2018 amounted to  115,732 million. Dividends paid in the year ended March 31, 2018 represents interim (and final) dividend declared for the year ended March 31, 2018 amounting to  1 per share.

We maintain a debt/borrowing level that we have established through consideration of a number of factors including cash flow expectations, cash required for operations and investment plans. We continually monitor our funding requirements, and strategies are executed to maintain sufficient flexibility to access global funding sources, as needed. Please refer to Note 12 of our Notes to the Consolidated Financial Statements for additional details on our borrowings.

As discussed above, cash generated from operations is our primary source of liquidity. We believe that our cash and cash equivalents along with cash generated from operations will be sufficient to meet our working capital requirements as well as repayment obligations with respect to debt and borrowings. Our choices of sources of funding will be driven with the objective of maintaining an optimal capital structure.

As of March 31, 2019, we had contractual commitments of  12,443 million (US$ 179.9 million) related to capital expenditures on construction or expansion of software development facilities,  19,741 million (US$ 285.4 million) related to non-cancelable operating lease obligations and  23,041 million (US$ 333.1 million) related to other purchase obligations. Plans to construct or expand our software development facilities are determined by our business requirements.

We will rely on funds generated from operations and external debt to fund potential acquisitions and shareholder returns. We expect that our cash and cash equivalents, investments in liquid and short-term mutual funds and the cash flows expected to be generated from our operations in the future will generally be sufficient to fund the growth aspirations, as applicable.

In the normal course of business, we transfer certain accounts receivables and net investment in finance lease (financial assets) to banks on a non-recourse basis. The incremental impact of such transactions on our cash flow and liquidity for the years ended March 31, 2017, 2018 and 2019 is not material. Please refer Note 15 of our Notes to Consolidated Financial Statements.

Our liquidity and capital requirements are affected by many factors, some of which are based on the normal ongoing operations of our businesses and some of which arise from uncertainties related to global economies and the markets that we target for our services. We cannot be certain that additional financing, if needed, will be available on favorable terms, if at all.

As of March 31, 2017, 2018 and 2019, our cash and cash equivalents were primarily held in Indian Rupees, U.S. Dollars, United Kingdom Pound Sterling, Euros, and Australian Dollars. Please refer to “Financial risk management” under Note 15 of our Notes to the Consolidated Financial Statements for more details on our treasury activities.

 

-60-


Table of Contents

Off-Balance Sheet Arrangements

The Company enters into operating leases for office space, hardware and certain other equipment. These arrangements are sometimes referred to as a form of off-balance sheet financing and are set forth below under “Contractual Obligations.”

Contractual Obligations

The table of future payments due under known contractual commitments as of March 31, 2019, aggregated by type of contractual obligation, is given below:

 

     Total
contractual
payment
     Payments due in  

Particulars

   2019-20      2020-22      2022-24      2024-25
onwards
 
     ( in millions)  

Short-term borrowings (1)

     68,084        68,084        —          —          —    

Long-term debt (1)

     29,380        1,507        27,833        —          —    

Obligations under capital leases (1)

     2,002        1,507        495        —          —    

Estimated interest payment (2)

     3,289        2,460        829        —          —    

Capital commitments (3)

     12,443        10,385        2,058        —          —    

Non-cancelable operating lease obligation (4)

     19,741        7,006        7,877        3,229        1,629  

Purchase obligations (5)

     23,041        20,552        2,127        362        —    

Other non-current liabilities (6)

     271        —          158        69        44  

 

(1)

For further information on currency and interest rate structures, refer to Note 12 of the Notes to Consolidated Financial Statements.

(2)

Interest payments for long-term fixed rate debts and capital leases have been calculated based on applicable rates and payment dates. Interest payments on floating rate debt have been calculated based on the payment dates and implied forward interest rates as of March 31, 2019 for each relevant debt instrument.

(3)

Represents contractual commitments related to capital expenditures on construction or expansion of software development facilities.

(4)

For further information, refer to Note 29 of the Notes to Consolidated Financial Statements.

(5)

Our purchase obligations include all commitments to purchase goods or services of either a fixed or minimum quantity that meet any of the following criteria: (1) they are non-cancelable, or (2) we would incur a penalty if the agreement was terminated.

(6)

Other non-current liabilities and non-current tax liabilities in the statement of financial position include  4,989 million in respect of employee benefit obligations and certain other liabilities and  11.023 million towards uncertain tax positions, respectively. For these amounts, the timing of repayment/settlement cannot be reliably estimated or determined at present and accordingly have not been disclosed in the table above.

Research and Development

Wipro’s research and development initiatives continue to focus on strengthening and extending our capabilities across multiple new and emerging technology areas as well as in the discovery of innovative potential at the intersection of these technologies. We are investing extensively in developing solutions and services in a host of advanced technology areas (e.g., 5G, ADAS/autonomous vehicles, commercial wearables, machine vision, human machine interfaces, smart assistants, natural language processing and understanding, blockchain technology, quantum computing, smart machines, among others). We continue to invest in working on new ways of software development and deployment for edge-based IoT and always-on architectures.

Our research and development work has contributed to some significant patent applications during the year ended March 31, 2019 in key technology domains. We have been investing in building a focused patent portfolio that protects critical Wipro IP. As of the year ended March 31, 2019, we have a total of 2,236 patents filed in various patent jurisdictions around the world, of which 558 have been granted. Recognition of our work in IP creation has come in the form of the prestigious Enterprise Trophy presented to us by the World Intellectual Property Organization, as well as the National IP Award from the GoI.

 

-61-


Table of Contents

Our Open Innovation programs leverage the innovation ecosystem by working closely with our partner ecosystem, academia and expert networks to jointly provide the latest innovations to our customers. During the year ended March 31, 2019, we identified key innovative startups that usefully differentiate our solutions and have been successful in building traction for joint engagements. We continue to be part of various industry and startup forums including the NASSCOM Industry Partner Program, which connect us with promising startups. We also work with and maintain our relationships with accelerators and other investors and influencers in the startup ecosystem. We continue to work with a variety of open innovation intermediaries to leverage expert networks across the world to complement our in-house expertise.

This year we signed an agreement with Swinburne University, Melbourne, Australia to create a Wipro Chair in the University, to lead critical joint AI technology research. We continue to actively scout for academia research programs from institutions across the world, where we can establish mutually beneficial research collaborations. Our existing academia programs are progressing satisfactorily; our joint research collaboration with Tel Aviv University (“TAU”), where Wipro and TAU are working on core and applied research in image and text analytics using deep learning and sparse representation models and techniques, transfer domain and incremental learning problems, has resulted in some key advances and our research collaborations with the Indian Institute of Science on technologies for autonomous vehicles is also on track.

Our innovation incubation centers, the Technovation Center at Bengaluru and the Silicon Valley Innovation Center in Mountain View, California, continues to drive technology-led innovation to visualize the “art of the possible” in emerging business environments for our customers globally. These Centers bring together an innovation ecosystem, a set of best practices, IP and research and development resources to help our clients develop successful initiatives.

We have invested in crowdsourcing through Topcoder, a community and crowdsourcing platform with of over one million developers, designers, data scientist, and testers, provides us focused enterprise offerings around AI/ML and analytics, digital experience (“DX”), quality as a service (“QaaS”), workforce transformation, talent as a service (“TaaS”) and hybrid (certified) communities. We are also investing in TopGear, our social learning and crowdsourcing platform. TopGear is a powerful learning platform, focusing on workforce transformation in ‘Digital’ and “in-demand” skills. It consists of over 2,000 learning assignments and case studies across 200 skills in addition to live projects. It provides hands-on experience to employees on emerging digital skills that enables them to become customer deployable on those skills. Employees can self-select projects that interest them and prepare themselves for future projects. TopGear also enables workforce transformation through structured learning paths aligned to business specific needs.

We have invested in advanced technologies to strengthen existing capabilities and enhance our platforms for rich customer experience. For example, we have developed a solution which has near-human ability of having intuitive multi-modal interactions, thereby providing personalized experiences accurately and efficiently across different senses: voice, vision, haptics, smell and taste. It has the potential to transform customer experience through nascent channels of interaction such as augmented reality, virtual reality and mixed reality experiences provided on head-mounted devices. There have been customer engagements on this, such as investments in a digital advisor solution for field and service personas, an immersive visualization solution for product exploration and facility / plant walk-throughs and a digital trainer solution for technician. These investments have resulted in above solution enhancements and new capabilities, which are unique and differentiated in the market.

For over a decade, Wipro has been investing in building IP capabilities across the entire spectrum of AI and automation, spanning RPA to cognitive systems and deep learning, leveraging our technology, domain expertise and experience in outcome-based services. The core AI research group of Wipro HOLMESTM focuses on enhancing the capabilities of HOLMESTM platform services in the areas of Ethics and Bias in AI services, explain-ability in AI decision making, benchmarking AI topologies for performance enhancement and enhance knowledge packs across the industries in collaboration with universities across India and abroad. Our investments in Wipro HOLMESTM and its ecosystem have resulted in a wide portfolio of automation use cases across industry verticals and technology processes which have impacted both our bottom and top level revenue. Wipro also leverages the analyst and customer community through the Wipro HOLMESTM Advisory Board, a collaboration forum, that brings together some of the top minds of AI from around the world. It aims to help drive adoption of AI, social impact and business outcomes through the exchange of ideas, experiences and best practices. One of our IPs in the field of data, analytics and AI is our Data Discovery Platform (“DDP”). A full-stack analytics and AI offering, DDP combines software, services, infrastructure and operationalization to an Insights-as-a-Service model to extract deep insights from data and accelerate analytics consumption. The services are enabled by a data discovery platform with more than 100 pre-built analytical apps to address use-cases across verticals along with data science automation components.

We are also actively building solutions in collaborative robotics for industrial and warehouse applications. Our objective is to build AI based software platforms that consist of cognition and decision systems so that we could deploy the solutions at scale with the customers. We are currently building software platforms for automation of machine tending, intelligent material handling and transport. These use a computer vision platform that provides actionable insights to improve compliance, quality and productivity by using image and video analytics. We have built partnerships with robot and accessory vendors to become single point solution provider for our customers. Some of the use cases we have built that are showcased in our

 

-62-


Table of Contents

innovation centers are a shopper robot, vision-assisted machine tending operations, inventory and inspection, segregation of hazardous materials and a game playing robot. We are also collaborating with an agricultural university, start-ups and research institutions to develop early detection of pest infestation in crops with the use of hyper spectral imaging technology.

Our research and development expenses for the years ended March 31, 2017, 2018 and 2019 were  3,338,  3,041, and  3,942, respectively.

Significant accounting policies, estimates and judgments

Please refer Notes 2(iv) and 3 of our Notes to Consolidated Financial Statements for a description of significant accounting policies, estimates and judgments.

 

Item 6.

Directors, Senior Management and Employees

Directors and Senior Management

Our directors and executive officers, along with their ages and positions as of March 31, 2019 are detailed below:

 

Name

  

Age

    

Position

Azim H. Premji

     73      Chairman of the Board and Managing Director (designated as “Executive Chairman”)

Dr. Ashok S. Ganguly

     83      Director

Narayanan Vaghul

     82      Director

William Arthur Owens

     78      Director

M. K. Sharma

     71      Director

Ireena Vittal

     50      Director

Dr Patrick J. Ennis

     55      Director

Patrick Dupuis

     56      Director

Arundhati Bhattacharya (1)

     63      Director

Abidali Z. Neemuchwala

     51      Chief Executive Officer and Executive Director

Rishad Azim Premji

     42      Executive Director and Chief Strategy Officer

Jatin Pravinchandra Dalal

     44      Chief Financial Officer

 

(1)

Mrs. Arundhati Bhattacharya was appointed as an Additional Director designated as Independent Director, with effect from January 1, 2019, for a period of 5 years. The said appointment was approved by shareholders vide resolution dated June 1, 2019, passed through postal ballot/e-voting.

As of March 31, 2019, we had eight non-executive directors and three executive directors, of whom one executive director is Chairman of our Board. All of the eight non-executive directors are independent directors or independent of management and free from any business or other relationship that could materially influence their judgement. All the independent directors satisfy the criteria of independence as defined under the SEBI Listing Regulations and the Companies Act, 2013 in India and the New York Stock Exchange Corporate Governance standards.

The Board of Directors of the Company have, at their meeting held on June 6, 2019, approved the following, subject to approval of the shareholders:

 

   

Re-appointment of Mr. Rishad A. Premji as Whole-Time Director for a period of 5 years with effect from July 31, 2019 to July 30, 2024 (designated as Executive Chairman by the Board of Directors of the Company).

 

   

Appointment of Mr. Azim H. Premji as Non-Executive Director for a period of 5 years with effect from July 31, 2019 to July 30, 2024 and conferred him with the title of Founder Chairman of the Company. Mr. Azim H Premji will retire from his current position as Executive Chairman and Managing Director effective July 30, 2019.

 

   

Re-designated and appointed Mr. Abidali Z. Neemuchwala as Managing Director of the Company with effect from July 31, 2019 till the end of his current term, in addition to his existing position as Chief Executive Officer of the Company.

The profiles of our directors and executive officers are set forth below.

Azim H. Premji is the Chairman of the Board and Managing Director (designated as “Executive Chairman”) of Wipro Limited and has been at its helm since the late 1960s, turning what was then a small cooking fat company into a $8.5 billion revenue group with businesses in IT, Consulting and Business Process Services with a presence in over 50 countries. Mr. Premji is a member of our Board’s Strategy Committee. Mr. Premji also serves as Non-Executive Chairman of Wipro Enterprises (P) Limited and as a director of Wipro GE Healthcare Private Limited and in other entities of the promoter group. Mr. Premji has established the Azim Premji Foundation and its related entities, which do extensive philanthropic work in India. The work spans from deep-on-the-ground efforts focused on improving public school education, working directly in seven states of India which have over 350,000 schools, to running the not-for-profit Azim Premji University which is focused on programs in education and related fields of human development and providing support through multi-year financial grants to other not-for-profit organizations working in specific areas such as reduction of child stunting, improvement of local governance and alleviation of the conditions of the most vulnerable groups. Over the years, Mr. Premji has received numerous honors and accolades, which he considers as recognitions for the Wipro team. Mr. Premji is the first Indian recipient of the Faraday Medal. The Republic of France bestowed upon him the highest French civilian distinction, the Chevalier de la Legion d’Honneur (Knight of the Legion of Honor) in November 2018. In January 2011, he was conferred with Padma Vibhushan, the second highest civilian award in India. The Carnegie Medal of Philanthropy was bestowed on him in 2017. Business Today and Ernst & Young conferred Mr. Premji with a Lifetime Achievement Award in 2018. Mr. Premji has been listed as one of the most influential people in the world by several global publications including Time, Financial Times, Forbes and Fortune. BusinessWeek listed him among the top 30 entrepreneurs in world history. Mr. Premji has a graduate degree in Electrical Engineering from Stanford University. Mr. Premji is the father of Mr. Rishad A. Premji, the Executive Director and Chief Strategy Officer of the Company.

 

-63-


Table of Contents

Dr. Ashok S. Ganguly has served as a director on our Board since January 1999. He is the Chairman of our Board Governance, Nomination and Compensation Committee. He was the Chairman of ABP Private Limited (Ananda Bazar Patrika Group) until February 2019. Dr. Ganguly was a former director of Dr. Reddy’s Laboratories Ltd. from 2009 to 2017. He was also a former member of Rajya Sabha, the upper house of Parliament of India (2009-2015). He was a former member of the Board of British Airways Plc from 1996 to 2005 and Unilever Plc/NV from 1990 to 1997. Dr. Ganguly was formerly the Chairman of Hindustan Lever Limited (now Hindustan Unilever Limited) from 1980 to 1990. Dr. Ganguly was on the Central Board of Directors of the Reserve Bank of India from 2000 to 2009. Dr. Ganguly was the Chairman and Director of ICI India Limited from 1996 to 2002 and was the Director of ICICI Firstsource Solutions Ltd. from 2002 to 2010. He was the Chairman of Mahindra & Mahindra from 1997 to 2013. He was on the board of TATA AIG Life Insurance Co. from 2002 to 2010. In 2006, Dr. Ganguly was awarded the CBE (Hon) by the United Kingdom. In 2008, Dr. Ganguly received the Economic Times Lifetime Achievement Award. Dr. Ganguly received the Padma Bhushan award by the Government of India in January 1987 and the Padma Vibhushan award in January 2009. Dr. Ganguly holds B.Sc (Hons) from University of Bombay and an MS and PhD from the University of Illinois.

Narayanan Vaghul has served as a director on our Board since June 1997. He is the Chairman of our Audit, Risk and Compliance Committee, and a member of the Board Governance, Nomination and Compensation Committee. Mr. Vaghul is also the lead independent director of the Company. He was the Chairman of the Board of ICICI from September 1985 to April 2009. He was on the boards of Piramal Finance Limited and Apollo Hospitals Enterprise Limited until May 2018 and March 2019 respectively. Mr. Vaghul was on the board of Mahindra World City Developers Limited until April 2019. He is currently on the boards of the following companies in India 1) Piramal Enterprises Limited and 2) Apollo Proton Therapy Cancer Centre Private Limited. Mr. Vaghul was a board member of Arcelor Mittal, Luxembourg from July 1997 to May 2017. He was on the board of Universal Trustees Private Limited until March 2019. He is currently on the board of IKP Trusteeship Services Private Limited. Mr. Vaghul is the Chairman of the Compensation Committee and Audit Committee of Piramal Enterprises Limited. Mr. Vaghul holds a Bachelor (Honors) degree in Commerce from Madras University. Mr. Vaghul was the recipient of the Padma Bhushan award by the Government of India in 2010. Mr. Vaghul also received the Lifetime Achievement Awards from Economic Times, Ernst & Young Entrepreneur of the Year Award Program and Mumbai Management Association. He was given an award for the contribution to the Corporate Governance by the Institute of Company Secretaries of India in 2007.

William Arthur Owens has served as a director on our Board since July 2006. He is also a member of our Board Governance and of our Nomination and Compensation Committee, and serves as the Chairman of our Strategy Committee. He has held a number of senior leadership positions at large multinational corporations. Mr. Owens served as the Chairman of the Board of CenturyLink from July 2009 to May 2017. He is also the Executive Chairman of Red Bison Advisory Group (“RBAG”). RBAG is a company in the natural resources (oil, gas and fertilizer plants) and information and communication technology sectors. Mr. Owens previously served as the Chairman of AEA Investors (Asia) from April 2006 to December 2015 and has served as Managing Director, Chairman and Chief Executive Officer of AEA Holdings Asia, a New York private equity company at various times during that period. Mr. Owens also served as Vice Chairman of the New York Stock Exchange, Asia from June 2012 to June 2014, as well as Vice Chairman, Chief Executive Officer and Vice Chairman of the Board of Directors of Nortel Networks Corporation, a global supplier of communications equipment from April 2004 to November 2005. Prior to that, Mr. Owens served as Chairman and Chief Executive Officer of Teledesic LLC, a satellite communications company from August 1998 to April 2004. During that same period, Mr. Owens also served as Chairman and Chief Executive Officer of Teledesic LLC’s affiliated company, Teledesic Holdings Ltd. Mr. Owens was President, Chief Operating Officer and Vice Chairman of Science Applications International Corporation from June 1996 to August 1998. Mr. Owens was a career officer in the U.S. Navy where he served as commander of the U.S. Sixth Fleet in 1990 and 1991, and as senior military assistant to Secretaries of Defense Frank Carlucci and Dick Cheney. Mr. Owens’ military career culminated in his position as Vice Chairman of the Joint Chiefs of Staff where he had responsibility for the reorganization and restructuring of the armed forces in the post-Cold War era. Mr. Owens is widely recognized for bringing commercial high technology into the U.S. Department of Defense for military applications and as the architect of the Revolution in Military Affairs, an advanced systems technology approach to military operations. Mr. Owens is also a member of several philanthropic and private company boards. Mr. Owens was a member of the Board of Directors of Daimler Chrysler AG from November 2003 to April 2009, Embarq Corporation from May 2006 to July 2009 and Nortel Networks Corporation from February 2002 to November 2005.

Mr. Owens is a director of the following private companies: Tethr and Versium. Mr. Owens is on the advisory board of the following private companies: Carillon Technologies, Healthmine, Platform Science, Sarcos, Sierra Nevada Corporation and Vodi. Mr. Owens is on the board of trustees at East West Institute, Seattle University, and an advisor to the Center for State-led National Debt Solutions which aims to establish a balanced budget amendment to the U.S. Constitution. He is also a member of the Council of Foreign Relations. Mr. Owens holds an M.B.A. (Honors) degree from George Washington University, a B.S. in Mathematics from the U.S. Naval Academy and a B.A. and M.A. in Politics, Philosophy and Economics from Oxford University.

 

-64-


Table of Contents

M. K. Sharma became a director of the Company in July 2011. Mr. Sharma is the Chairman of our Administrative and Shareholders/Investors Grievance Committee. Mr. Sharma is also a member of our Audit, Risk and Compliance Committee. Mr. Sharma served as Vice Chairman of Hindustan Lever Limited (now Hindustan Unilever Limited) from 2000 to 2007. Mr. Sharma served as a full-time director of Hindustan Unilever Limited from 1995 to 2000. Mr. Sharma is on the board of the Indian School of Business, Hyderabad and serves as a Governor of Anglo Scottish Education Society Limited, Mumbai. Mr. Sharma is Chairman and member of the National Management Committee and a Trustee of Indian Cancer Society. Mr. Sharma is currently the non-executive Chairman of United Spirits Limited and Atria Convergence Technologies Limited and was formerly the non-executive Chairman of ICICI Bank Limited from 2015 to 2018. Mr. Sharma is the Chairman of the Audit Committee of Asian Paints Limited and Atria Convergence Technologies Limited and a member of the Audit Committee of United Spirits Ltd. Mr. Sharma is also a member of the Nomination and Remuneration Committee of Asian Paints Limited. He is on the board of Ambuja Cements Limited since April 2019. Mr. Sharma is also on the board of BIC-Cello India Private Limited, East India Investment Co. Pvt. Limited and Gwalior Webbing Co. Pvt. Limited.

Mr. Sharma holds a Bachelor’s Degree in Arts and Bachelors of Law Degree from Canning College University of Lucknow. He completed a post-graduate diploma in Personnel Management from the Department of Business Management, University of Delhi and Diploma in Labour Laws from Indian Law Institute, Delhi. In 1999, he was nominated to attend the Advance Management Program at Harvard Business School.

Ireena Vittal became a director of the Company in October 2013 and she also serves as a member of our Audit, Risk and Compliance Committee, Strategy Committee and Administrative and Shareholders/Investors Grievance Committee. Ms. Ireena Vittal is among India’s most respected consultant and advisor. She was a partner with McKinsey & Co. for 16 years, where she served global companies on issues of growth and sustainable scale-up. Earlier, she worked with Nestle and MaxTouch. She has also co-authored several studies relating to agriculture and urbanization and served government and public institutions to design and implement solutions core to India’s development in the areas of inclusive urban development and sustainable rural growth. Ms. Vittal serves as a board member of Titan Company Limited, The Indian Hotels Company Limited, Godrej Consumer Products Limited, HDFC Limited (since January 2019), Compass Plc and non-profit organizations such as Vidhi Legal, Wateraid and Educate Girls, among others. She is a member of the Audit Committee of all the aforementioned companies and a member of Nomination and Remuneration Committee of Titan Company Limited and Godrej Consumer Products Limited. Ms. Vittal was on the board of Cipla Limited until March 2019.

Ms. Vittal has a graduate degree in Electronics from Osmania University and has completed her Master’s in Business Administration from the Indian Institute of Management, Calcutta.

Dr. Patrick J. Ennis became a director of the Company in April 2016. Dr. Ennis has more than 25 years of experience as a scientist, engineer, businessman and venture capitalist. Dr. Ennis serves as a member of our Strategy Committee. He is currently a Venture Partner at Madrona Venture Group and the CTO of Xinova. He was Global Head of Technology for Intellectual Ventures where he led start-up incubation and technology commercialization around the world. Previously he was at ARCH Venture Partners where he built startups from universities and national labs. He also held positions with Lucent, AT&T and Bell Labs, and conducted research in Nuclear Physics at labs in North America and Europe. He is an inventor of several patents, has written articles and book chapters and is a frequent invited speaker. Dr. Ennis has served on numerous corporate, educational, and non-profit boards. He earned a PhD and M.S. in Physics from Yale, an M.B.A. from Wharton and a B.S. in Math and Physics from the College of William & Mary where he was elected to Phi Beta Kappa.

Patrick Dupuis became a director of the Company in April 2016. He also serves as a member of our Strategy Committee. Currently, Mr. Dupuis is a Sr Operating Advisor for Hellman & Friedman, a leading Private Equity firm based in San Francisco. He is a former officer of global technology platform and payments leader, PayPal Holdings, Inc., where he facilitated the company’s listing on Nasdaq in 2015 and its double-digit global expansion, serving as Chief Financial Officer, then SVP for Quality and Productivity. Prior to joining PayPal, Mr. Dupuis was Chief Financial Officer of SITEL Worldwide Corporation, a leader in customer service and Chief Financial Officer of BJC HealthCare, one of the largest non-profit health care organizations in the United States. He started his career in 1984 at General Electric, where he held multiple executive positions over 20 years, including head of GE’s famed Audit Staff and Chief Financial Officer of GE Healthcare and General Manager of GE Capital International Services (now, Genpact). Throughout his career, Mr. Dupuis has been an enabler of growth, transformation at scale and organization effectiveness. He is a committed coach and mentor for middle and senior executives. He serves with a number of social and charitable organizations. Mr. Dupuis graduated from the École de Management de Lyon in France.

Arundhati Bhattacharya became a director of the Company in January 2019 and also serves as a member of our Audit, Risk and Compliance Committee. Mrs. Bhattacharya has 40 years of rich experience in India’s financial sector working across varied roles and multiple national and international locations. Mrs. Bhattacharya has a graduate degree in English Literature from Lady Brabourne College, Kolkata and has completed her Master’s in English Literature from Jadhavpur University, Kolkata. She is also an Associate of the Indian Institute of Bankers. During her four years tenure as the first-ever woman Chair of State Bank of India, a Fortune 500 company, she has stamped her imprint on the financial world not just in India but globally as well. Mrs. Bhattacharya has expertise and deep understanding of all aspects of banking spanning the domains of credit, forex, treasury, retail operations, mergers and acquisitions, in addition to the capital markets. Forbes ranked her 25th in their list of “Most Powerful Women in the World” and 5th in “The Most Powerful Women in Finance” category in 2016. She has also been featured in the Fortune List of Top 50 globally most powerful women in business and ranked among the top 5 in the Asia-Pacific region. She was included in the top 100 Global Thinkers in 2014 by Foreign Policy Magazine and was one of two Indians on the list. She has been ranked 26th in the fourth edition of Fortune’s World 50 Greatest Leaders list, making her the only Indian corporate leader to be featured in the list.

 

-65-


Table of Contents

Abidali Z. Neemuchwala is our Chief Executive Officer and Member of the Company’s Board of Directors. He has served in this role since February 1, 2016. He also serves as a member on our Strategy Committee. Previously, he served as Group President and Chief Operating Officer of the Company with effect from April 1, 2015. Mr. Neemuchwala drives Wipro’s vision through a strong belief that technology can drive consumer aspirations into instant reality. This drive, he believes, establishes a consumer-first world where business and technology converge into an era of mass personalization, data fluency, real time intelligence and seamlessly integrated experiences. He is an advocate of change and believes simplification of processes, belief in people and customer centricity are the keys to success.

To realize this vision within the Company, Mr. Neemuchwala has spearheaded a transformative strategy across Wipro to make it a services company of the future enabling clients modernize their core and drive their future by creating an innovative, agile and client execution focused organization that is eager and ready to meet the challenges of tomorrow.

Mr. Neemuchwala has spent 27 years in the industry and Mr. Neemuchwala’s career includes a 23-year tenure in Tata Consultancy Services. Mr. Neemuchwala has played roles in the industry through its multiple evolutions, now leading the digital transformation, where he handled multiple executive roles across business, technology, sales, operations and consulting. Mr. Neemuchwala has been recognized with multiple industry awards and sits on boards of industry and community forums such as the World Affairs Council of Dallas Fort Worth. He has been recently appointed on the Board of Texas Economic Development Corporation and is also a member of its CEO Council. He is very passionate about community service and champions diversity and inclusion in the workplace. Mr. Neemuchwala has a master’s Degree in Industrial Management from the Indian Institute of Technology, Mumbai, and a bachelor’s Degree in Electronics and Communication from the National Institute of Technology, Raipur.

Rishad Azim Premji is the Chief Strategy Officer and has been a member of our Board since May 2015. He also serves as a member on our Strategy Committee and Administrative and Shareholders/Investors Grievance Committee. As the Chief Strategy Officer, he is responsible for shaping the Company’s strategy to drive sustained and profitable growth. In his role, Mr. Premji is also responsible for Investor Relations and all Government relations activities of the Company. As the Chief Strategy Officer, he leads Wipro’s M&A Strategy and conceptualized Wipro Ventures, a $100 million fund to invest in start-ups developing technologies and solutions that will complement Wipro’s businesses with next-generation services and products.

Mr. Premji was the Chairman of the National Association of Software and Services Companies (NASSCOM) for financial year 2018-19. Mr. Premji is on the Board of Wipro Enterprises (P) Limited, a leading player in FMCG & Infrastructure Engineering and Wipro-GE, a joint venture between Wipro Enterprises (P) Limited and General Electric in the healthcare domain. Separately, he is on the Boards of the Azim Premji Foundation, one of the largest not-for-profit initiatives in India, and Azim Premji Philanthropic Initiatives, which provides grants to organizations that contribute to social change. Prior to joining Wipro in 2007, Mr. Premji was with Bain & Company in London, working on assignments across Consumer Products, Automobiles, Telecom and Insurance. He also worked with GE Capital in the United States across businesses in the Insurance and Consumer Lending space and is a graduate of GE’s Financial Management Program. Mr. Premji has an MBA from Harvard Business School and a BA in Economics from Wesleyan University. In 2014, he was recognized as a Young Global Leader by the World Economic Forum for his outstanding leadership, professional accomplishments, and commitment to society. Mr. Premji is the son of Mr. Azim Premji, the Chairman of the Board and Managing Director.

Jatin Pravinchandra Dalal was appointed as Chief Financial Officer of the Company with effect from April 1, 2015 and has served with us in other positions since July 2002. Mr. Dalal holds a Bachelor of Mechanical Engineering degree from National Institute of Technology, Surat and PGDBA (Full time MBA) in Finance with International Business from Narsee Monjee Institute of Management Studies, Mumbai. Mr. Dalal is a qualified Chartered Accountant (CA), India, Cost and Management Account (CMA), India, Chartered Global Management Accountant (CGMA), UK and a Chartered Financial Analyst (CFA), U.S.A. Mr. Dalal is on the NYSE Listed Company Advisory Board at New York Stock Exchange. Mr. Dalal previously worked with General Electric and Lazard between 1999 and 2002.

Compensation

Director Compensation

Our Board Governance, Nomination and Compensation Committee determines and recommends to our Board of Directors the compensation payable to our directors. All board-level compensation is subject to approval by our shareholders. Each of our non-executive directors receives an attendance fee per meeting of  100,000 (US$ 1,445.9) for every Board meeting they attend. Our directors are reimbursed for travel and out-of-pocket expenses in connection with their attendance at Board and Committee meetings. Additionally, we also compensate non-executive directors by way of commission, which is limited to a fixed sum payable as approved by the Board subject to a maximum of 1% of the net profits of the Company, in the aggregate, as approved by the shareholders.

 

-66-


Table of Contents

The aggregate commission to our non-executive directors for the year ended March 31, 2019 is  90.33 million (US$1.31 million).

There were no stock options granted to non-executive directors as of March 31, 2019 and the shares held by non-executive directors as on March 31, 2019 are reported elsewhere in this Item 6 under the section titled “Share Ownership”.

Executive Compensation

The annual compensation of our executive directors is approved by our Board Governance, Nomination and Compensation Committee, within the parameters set by the shareholders. Remuneration of our executive officers, including our executive directors, consists of a fixed component and a variable performance linked incentive. The variable performance linked incentive portion is earned under our Quarterly Performance Linked Scheme. This is a variable pay program for all employees, including executive officers, which is deemed to be part of each employee’s salary. Variable payments are made to employees, including senior management, on a quarterly basis; for senior management, amounts are adjusted at the end of the year based on performance for the full year. Our Executive Directors - Chief Executive Officer and Chief Strategy Officer receive variable payments on an annual basis and our Chairman is entitled to commission on an annual basis.

The following table presents the annual and long-term compensation earned, awarded or paid for services rendered for the fiscal year 2019 by our executive officers. For the convenience of the readers, the amounts in the below table have been converted into U.S. dollars based on the certified foreign exchange rates published by the Federal Reserve Board of Governors on March 31, 2019 which was  69.16 per US$ 1.

 

Name    Salary and
allowances
US$
     Commission/
variable

Pay (1)(2)(3)
US$
     Others US$      Long-term
compensation
(Deferred

Benefit)
US$ (4)(5)
     Total US$  

Azim H. Premji

     62,322        131,231        55,705        12,796        262,054  

Abidali Z. Neemuchwala (6)

     1,041,539        891,760        2,012,433        4,800        3,950,532  

Rishad A. Premji

     241,990        697,531        2,633        45,498        987,652  

Jatin Pravinchandra Dalal (6)

     269,831        173,821        402,897        34,657        881,206  

 

(1)

Mr. Azim H. Premji is entitled to a commission at the rate of 0.5% on incremental net profits of Wipro Limited for fiscal year 2019 over the previous year, computed based on the method approved by the Board Governance, Nomination and Compensation Committee and in accordance with the provisions of the Companies Act, 2013.

(2)

All executives receive variable pay under a Quarterly Performance Linked Scheme based on key parameters of individual or combined performance of the business unit, division or segment or the Company as a whole. Our Chief Executive Officer and Executive Director, and our Executive Director and Chief Strategy Officer, each receive variable payments on an annual basis.

(3)

Mr. Rishad A. Premji’s compensation also included cash bonus (part of his variable pay) on an accrual basis, which is payable over a period of time.

(4)

Deferred benefits are payable to employees by way of our contribution to the Provident Fund, Pension Fund and 401K Plan as applicable. The Provident Fund is a statutory fund to which the Company and our employees contribute every month. A lump sum payment on separation and a pension payment on attaining the age of superannuation are payable from the balance standing to the credit of the Fund, as per the Employee Provident Fund and Miscellaneous Provisions Act, 1952.

(5)

Under our pension plans, any pension that is payable to an employee is not computed on the basis of final compensation, but on the accumulated pension fund to the credit of the employee as at the date of separation, death, disability or retirement. We annually contribute 15% of Mr. Azim H. Premji’s basic salary and commission earned for that year to our pension fund for the benefit of Mr. Azim H. Premji. For all other executive officers domiciled in India, we contribute 15% of their respective basic salaries to our pension fund for their benefit. These contributions are included in this column.

 

-67-


Table of Contents
(6)

The remuneration of executive officers is computed on an accrual basis. It also includes the amortization of Restricted Stock Units (“RSUs”) granted to them, which vest over a period of time. This also includes RSUs that will vest based on performance parameters of the Company.

We operate in numerous countries and compensation for our officers and employees may vary significantly from country to country. As a general matter, we seek to pay competitive salaries in all the countries in which we operate.

There were no options granted to our Chairman and Managing Director, and Executive Director and Chief Strategy Officer in fiscal years 2017, 2018 or 2019. Details of stock options granted to executive directors as of March 31, 2019 and stock options held and exercised by executive officers through March 31, 2019 are reported elsewhere in this Item 6 under the section titled “Share Ownership.”

Board Composition

Our Articles of Association provide that the minimum number of directors on our Board of Directors shall be four and the maximum number of directors shall be fifteen which may be increased by passing a special resolution of the shareholders. As of March 31, 2019, we had eleven directors on our Board. Our Articles of Association provide that at least two-thirds of our directors shall be subject to retirement by rotation. One third of these directors must retire from office at each Annual General Meeting of the Shareholders, but each retiring director is eligible for re-election at such meeting. Independent directors are not subject to retirement by rotation and two-thirds of the executive directors are subject to retirement by rotation. Currently, Mr. Azim H. Premji, Mr. Rishad A. Premji and Mr. Abidali Z. Neemuchwala are executive directors and Mr. Azim H. Premji is not liable to retire by rotation. The position of the terms of all directors are as given below.

 

Name   

Expiration of current term of office

  

Term of office

Azim H. Premji

   July 30, 2019    2 years

Dr. Ashok S Ganguly

   July 31, 2019    3 years

Narayanan Vaghul

   July 31, 2019    3 years

Ireena Vittal

   September 30, 2023    5 years

William Arthur Owens

   July 31, 2022    5 years

M. K. Sharma

   June 30, 2021    5 years

Patrick Dupuis

   March 31, 2021    5 years

Dr. Patrick J. Ennis

   March 31, 2021    5 years

Arundhati Bhattacharya (1)

   December 31, 2023    5 years

Abidali Z. Neemuchwala

   January 31, 2021    5 years

Rishad Azim Premji

   April 30, 2020    5 years

 

(1) 

Mrs. Arundhati Bhattacharya was appointed as an Additional Director designated as Independent Director, with effect from January 1, 2019, for a period of five years. The said appointment was approved by shareholders of the Company vide resolution dated June 1, 2019, passed through postal ballot/e-voting.

The Board of Directors of the Company have, at their meeting held on June 6, 2019, approved the following, subject to approval of the shareholders:

 

   

Re-appointment of Mr. Rishad A. Premji as Whole-Time Director for a period of 5 years with effect from July 31, 2019 to July 30, 2024 (designated as Executive Chairman by the Board of Directors of the Company).

 

   

Appointment of Mr. Azim H. Premji as Non-Executive Director for a period of 5 years with effect from July 31, 2019 to July 30, 2024 and conferred him with the title of Founder Chairman of the Company. Mr. Azim H Premji will retire from his current position as Executive Chairman and Managing Director effective July 30, 2019.

 

   

Re-designated and appointed Mr. Abidali Z. Neemuchwala as Managing Director of the Company with effect from July 31, 2019 till the end of his current term, in addition to his existing position as Chief Executive Officer of the Company.

Terms of Employment Arrangements

Under the Companies Act, 2013, our shareholders must approve the salary, bonus and benefits of all executive directors. Each of our executive directors has signed an agreement containing the terms and conditions of employment, including a monthly salary, performance bonus and benefits including vacation, medical reimbursement and pension fund contributions. These agreements have varying terms ranging from two to five year periods, but either we or the executive director may generally terminate the agreement upon six months’ notice to the other party.

The terms of our employment arrangements with Mr. Azim H. Premji, Mr. Abidali Z. Neemuchwala, Mr. Rishad A. Premji, and Mr. Jatin Pravinchandra Dalal provide for up to a 180-day notice period, up to 21 days of leave per year in addition to statutory holidays, and an annual compensation review. Additionally, these officers are required to relocate as we may determine, and to comply with confidentiality provisions. Service contracts with our executive directors and officers provide for our standard retirement benefits that consist of a pension and gratuity which are offered to all of our employees, but no other benefits upon termination of employment except as mentioned below.

 

-68-


Table of Contents

Pursuant to the terms of Mr. Abidali Z. Neemuchwala’s employment, if the Agreement is terminated by the Company, the Company is required to pay Mr. Neemuchwala severance pay equivalent of 12 months’ base pay.

We also indemnify our directors and officers for claims brought under any rule of law to the fullest extent permitted by applicable law. Among other things, we agree to indemnify our directors and officers for certain expenses, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Company, arising out of such person’s services as our director or officer, including claims which are covered by the director’s and officer’s liability insurance policy taken by the Company.

Board Committee Information

Audit, Risk and Compliance Committee

The Audit, Risk and Compliance Committee of our Board reviews, acts on and reports to our Board of Directors with respect to various auditing and accounting matters. The primary responsibilities include overseeing:

 

   

Auditing and accounting matters, including recommending the appointment of our independent auditors to the shareholders;

 

   

Compliance with legal and statutory requirements;

 

   

Integrity of the Company’s financial statements, discussions with the independent auditors regarding the scope of the annual audits, and fees to be paid to the independent auditors;

 

   

Performance of the Company’s internal audit function, independent auditors and accounting practices;

 

   

Review of related party transactions and functioning of whistle blower mechanism;

 

   

Implementation of the applicable provisions of the Sarbanes Oxley Act of 2002 (the “Sarbanes Oxley Act”), including review of the progress of internal control mechanisms to prepare for certification under Section 404 of the Sarbanes Oxley Act;

 

   

Evaluation of internal financial controls, risk management systems and policies including review of cyber-security; and

 

   

Review of utilization of loans and advances from, and investment by, the Company in its subsidiaries exceeding Rs.100 crore or 10% of the asset size of the subsidiary, whichever is lower, including existing loans, advances and investments.

All members of our Audit, Risk and Compliance Committee are non-executive independent directors who are financially literate. The Chairman of our Audit, Risk and Compliance Committee has accounting and related financial management expertise.

Independent auditors as well as internal auditors have independent meetings with the Audit, Risk and Compliance Committee and also participate in the Audit, Risk and Compliance Committee meetings.

Our Chief Financial Officer and other corporate officers make periodic presentations to the Audit, Risk and Compliance Committee on various issues.

The Audit, Risk and Compliance Committee is comprised of the following four non-executive directors:

Mr. N. Vaghul – Chairman

Mr. M. K. Sharma, Mrs. Ireena Vittal and Mrs. Arundhati Bhattacharya – Members

During fiscal year 2019, our Audit, Risk and Compliance Committee held five meetings. The charter of the Audit, Risk and Compliance Committee was amended in January 2019 to align with amendments to the SEBI Listing Regulations and is available under the investor relations section on our website at www.wipro.com.

 

-69-


Table of Contents

Board Governance, Nomination and Compensation Committee

The Board Governance, Nomination and Compensation Committee reviews, acts on and reports to our Board of Directors with respect to various governance, nomination and compensation matters. The primary responsibilities include:

 

   

Developing and recommending to the Board, corporate governance guidelines applicable to the Company;

 

   

Evaluating the Board on a continuing basis, including an assessment of the effectiveness of the full Board, operations of the Board Committees and contributions of individual directors;

 

   

Establishing policies and procedures to assess the requirements for induction of new members to the Board;

 

   

Implementing policies and processes relating to corporate governance principles;

 

   

Ensuring that appropriate procedures are in place to assess Board membership needs and Board effectiveness;

 

   

Reviewing the Company’s policies that relate to matters of corporate social responsibility (CSR), including public issues of significance to the Company and its shareholders;

 

   

Formulating the Disclosure Policy, its review and approval of disclosures;

 

   

Approving and evaluating the compensation plans, policies and programs for full-time directors and senior management;

 

   

Acting as Administrator of the Company’s Employee Stock Option Plans and Employee Stock Purchase Plans drawn up from time to time; and

 

   

Reviewing and recommending of all remuneration, in whatever form, payable to senior management.

Our Head of Human Resources makes periodic presentations to the Board Governance, Nomination and Compensation Committee on compensation reviews and performance linked compensation recommendations. All members of the Board Governance, Nomination and Compensation Committee are non-executive independent directors. The Board Governance, Nomination and Compensation Committee is the apex body that oversees our Corporate Social Responsibility policy and programs. The Board Governance, Nomination and Compensation Committee is comprised of the following three non-executive directors:

Dr. Ashok S. Ganguly — Chairman

Mr. N. Vaghul and Mr. William Arthur Owens — Members

During fiscal year 2019, our Board Governance, Nomination and Compensation Committee held four meetings. The charter of the Board Governance, Nomination and Compensation Committee was amended in January 2019 to align with the amendments to SEBI Listing Regulations and is available under the investor relations section on our website at www.wipro.com.

Strategy Committee

The Strategy Committee reviews, acts on and reports to our Board of Directors with respect to various strategic matters. The primary responsibilities of the Strategy Committee are:

 

   

Making recommendations to the Board relating to the Company’s mission, vision, strategic initiatives, major programs and services;

 

   

Ensuring management has established an effective strategic planning process, including development of a three to five year strategic plan with measurable goals and time targets;

 

   

Annually reviewing the strategic plan for the Company and/or for each division and entity as well and recommending updates to the Board;

 

   

Establishing criteria for management to evaluate potential strategic investments, reviewing proposals for acquisition or divestment opportunities for the Company and making appropriate recommendations to the Board, and reviewing post-transaction integration matters; and

 

   

Monitoring the Company performance against measurable targets (e.g. market share, increase in revenue, or Operating Margin) or progress points (such as emerging technologies).

 

-70-


Table of Contents

The Strategy Committee is comprised of the following seven directors:

Mr. William Arthur Owens — Chairman

Mr. Azim H. Premji, Mr. Abidali Z. Neemuchwala, Mr. Rishad A. Premji, Dr. Patrick J Ennis, Mr. Patrick Dupuis and Mrs. Ireena Vittal — Members

During fiscal year 2019, our Strategy Committee held three meetings.

Administrative and Shareholders/Investors Grievance Committee (also known as Stakeholders Relationship Committee)

The Administrative and Shareholders/Investors Grievance Committee reviews, acts on and reports to our Board of Directors with respect to various matters relating to stakeholders. The primary responsibilities include:

 

   

Considering and resolving the grievances of the shareholders of the Company including complaints related to the transfer or transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new or duplicate share certificates, non-receipt of notice of General Meetings, and corporate actions;