20-F 1 d152800d20f.htm 20-F 20-F
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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, 2021

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:

 

Title of each class

 

Trading

Symbol

 

Name of each exchange

    on which registered    

American Depositary Shares, each
represented by one Equity Share, par
value
2 per share
  WIT   New York Stock Exchange

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: 5,479,138,555 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

 

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    Other   ☐
   International Accounting Standards Board  ☒   

 

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  ☒

 

 

 

 


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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, 2021, which was 73.14 per $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;

 

   

our expectations of the potential impact of the ongoing Coronavirus Disease 2019 (“COVID-19”) pandemic and related public health measures on our business, the businesses of our customers, vendors and partners, and the economy;

 

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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;

 

   

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.

 

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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.

 

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TABLE OF CONTENTS

 

   

 

  Page  

PART I

    5  

Item 1.

  Identity of Directors, Senior Management and Advisers     5  

Item 2.

  Offer Statistics and Expected Timetable     5  

Item 3.

  Key Information     6  

Item 4.

  Information on the Company     38  

Item 4A.

  Unresolved Staff Comments     50  

Item 5.

  Operating and Financial Review and Prospects     51  

Item 6.

  Directors, Senior Management and Employees     68  

Item 7.

  Major Shareholders and Related Party Transactions     79  

Item 8.

  Financial Information     80  

Item 9.

  The Offer and Listing     81  

Item 10.

  Additional Information     83  

Item 11.

  Quantitative and Qualitative Disclosures About Market Risk     107  

Item 12.

  Description of Securities Other Than Equity Securities     109  

PART II

    110  

Item 13.

  Defaults, Dividend Arrearages and Delinquencies     110  

Item 14.

  Material Modifications to the Rights of Security Holders and Use of Proceeds     110  

Item 15.

  Controls and Procedures     110  

Item 16A.

  Audit Committee Financial Expert     112  

Item 16B.

  Code of Ethics     113  

Item 16C.

  Principal Accountant Fees and Services     113  

Item 16D.

  Exemptions from the Listing Standards for Audit Committees     113  

Item 16E.

  Purchase of Equity Securities by the Issuer and Affiliated Purchasers     114  

Item 16F.

  Changes in Registrant’s Certifying Accountant     114  

Item 16G.

  Corporate Governance     114  

Item 16H.

  Mine Safety Disclosure     115  

PART III

    115  

Item 17.

  Financial Statements     115  

Item 18.

  Financial Statements     115  

Item 19.

  Exhibits     182  

 

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PART I

 

Item 1.

Identity of Directors, Senior Management and Advisers

Not applicable.

 

Item 2.

Offer Statistics and Expected Timetable

Not applicable.

 

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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 four years ended March 31, 2018, 2019, 2020 and 2021 and selected consolidated statements of financial position data as of March 31, 2018, 2019, 2020 and 2021 have been derived from our Consolidated Financial Statements and related notes audited by Deloitte Haskins & Sells LLP. The selected consolidated statements of income for the year ended March 31, 2017 and selected consolidated statements of financial position data as of March 31, 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)  
                                  2021  
    2017     2018     2019     2020     2021     Convenience
Translation
into US$(1)
 

Consolidated Statements of Income Data:

           

Revenues

   550,402      544,871      585,845      610,232      619,430     US$  8,469  

Cost of revenues

    (391,544     (385,575     (413,033     (436,085     (423,205     (5,786
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

   158,858      159,296      172,812      174,147      196,225     US$  2,683  

Selling and marketing expenses

    (40,817     (42,349     (44,510     (42,907     (41,400     (566

General and administrative expenses

    (32,021     (34,141     (35,951     (29,823     (34,686     (474

Foreign exchange gains/(losses), net

    3,777       1,488       3,215       3,169       2,995       41  

Other operating income/(loss)(2)

    4,082       —         4,344       1,144       (81     (1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Results from operating activities

   93,879      84,294      99,910      105,730      123,053     US$  1,683  

Finance expenses

    (5,942     (5,830     (7,375     (7,328     (5,088     (70

Finance and other income

    22,419       23,999       22,923       24,081       20,912       286  

Share of net profit /(loss) of associates accounted for using the equity method

    —         11       (43     29       130       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before tax

   110,356      102,474      115,415      122,512      139,007     US$  1,901  

Income tax expense

    (25,213     (22,390     (25,242     (24,799     (30,345     (415
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year from continuing operations

   85,143      80,084      90,173      97,713      108,662     US$  1,486  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations

           

Profit after tax for the year from discontinued operations

    —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year

   85,143      80,084      90,173      97,713      108,662     US$  1,486  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit attributable to:

           

Equity holders of the Company

    84,895       80,081       90,031       97,218       107,946       1,476  

Non-controlling interest

    248       3       142       495       716       10  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year

   85,143      80,084      90,173      97,713      108,662     US$  1,486  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit from continuing operations attributable to:

           

Equity holders of the Company

    84,895       80,081       90,031       97,218       107,946       1,476  

Non-controlling interest

    248       3       142       495       716       10  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year from continuing operations    

   85,143      80,084      90,173      97,713      108,662     US$  1,486  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Basic Earnings per equity share (3):

                    

Attributable to equity shareholders of the Company

           

Continuing operations

   13.11      12.64      14.99      16.67      19.11     US$ 0.26  

Discontinuing operations

    —         —         —         —         —         —    

Continuing and discontinuing operations

   13.11      12.64      14.99      16.67      19.11     US$  0.26  

Diluted Earnings per equity share (3):

           

Attributable to equity shareholders of the Company

           

Continuing operations

   13.07      12.62      14.95      16.62      19.07     US$  0.26  

Discontinuing operations

    —         —         —         —         —         —    

Continuing and discontinuing operations

   13.07      12.62      14.95      16.62      19.07     US$  0.26  

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

           

Basic

    6,476,108,013       6,333,391,200       6,007,376,837       5,833,384,018       5,649,265,885       5,649,265,885  

Diluted

    6,495,129,517       6,344,482,633       6,022,304,367       5,847,823,239       5,661,657,822       5,661,657,822  

Cash dividend per equity share paid ()

   3.00      1.00      1.00      1.00      1.00     US$  0.01  

Cash dividend per equity share paid ($)(4)

  US$ 0.05     US$  0.02     US$  0.01     US$  0.01     US$  0.01     US$  0.01  

Additional data:

           

Revenue by segment (5) (6) (7)

           

IT Services

   519,196      515,647      566,657      593,798      605,815     US$  8,283  

IT Products

    25,922       20,467       14,480       11,657       7,685       105  

ISRE

    9,244       10,226       7,932       7,950       8,912       122  

Reconciling items

    (183     19       (9     (4     13       ^  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   554,179      546,359      589,060      613,401      622,425     US$  8,510  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment results (5) (6)

           

IT Services

   98,391      83,186      102,422      107,673      122,850     US$  1,680  

IT Products

    (1,680     335       (1,038     (323     45       1  

ISRE

    (2,326     443       (1,892     (1,849     1,061       15  

Reconciling items

    (506     330       418       229       (903     (13
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   93,879      84,294      99,910      105,730      123,053     US$  1,683  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Statements of Financial Position Data:

           

Cash and cash equivalents

   52,710      44,925      158,529      144,499      169,793     US$  2,321  

Investments

    299,133       257,968       228,867       200,320       187,747       2,567  

Working capital (8)

    309,355       292,649       357,556       303,458       293,146       4,008  

Total assets

    793,516       760,640       833,171       817,062       831,434       11,368  

Total debt

    142,412       138,259       99,467       78,042       83,332       1,139  

Total equity

    522,695       485,346       570,753       559,333       554,593       7,584  

Share capital

    4,861       9,048       12,068       11,427       10,958       150  

Number of shares outstanding

    2,430,900,565       4,523,784,491       6,033,935,388       5,713,357,390       5,479,138,555       5,479,138,555  

 

^

Value is less than 1

Notes:

 

  1.

Solely for the convenience of the readers, the selected consolidated financial data as of and for the year ended March 31, 2021, has been translated into United States dollars at the certified foreign exchange rate of US$1 =  73.14, as published by the Federal Reserve Board of Governors on March 31, 2021.

  2.

Other operating income represents:

 

  (i)

For the year ended March 31, 2017, net gain on sale of the EcoEnergy division,

 

  (ii)

For the year ended March 31, 2019, net gain on sale of, (a) hosted data center services business, and (b) the Workday and Cornerstone OnDemand business,

 

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  (iii)

For the year ended March 31, 2020, (a) change in fair value of the callable units upon partial achievement of business targets pertaining to sale of hosted data center services business, and (b) gain on sale of assets pertaining to the Workday and Cornerstone OnDemand business in Portugal, France and Sweden, and

 

  (iv)

For the year ended March 31, 2021, change in fair value of the callable units upon partial achievement of cumulative business targets pertaining to sale of our hosted data center services business.

Please see Note 26 of the Notes to the Consolidated Financial Statements for additional details.

 

  3.

Earnings per share and weighted average number of equity shares used in computing earnings per equity share for the years ended March 31, 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.

  4.

Translated into United States dollars at the certified foreign exchange rate of 64.85, 65.11, 69.16, 75.39 and 73.14, as published by the Federal Reserve Board of Governors on March 31, 2017, 2018, 2019, 2020 and 2021, respectively.

  5.

During the year ended March 31, 2019, 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 were 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 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 the year ended March 31, 2017 and March 31, 2018 have been restated to reflect the above changes.

  6.

Segment revenue and results for the years ended March 31, 2018, 2019 and 2020 have been restated to reflect the below changes:

 

  (i)

During the year ended March 31, 2021, the Company re-organized its IT Services segment to four Strategic Market Units (“SMUs”) - Americas 1, Americas 2, Europe and Asia Pacific Middle East Africa (“APMEA”). Prior to this change, the IT Services segment was organized by seven industry verticals: Banking, Financial Services and Insurance (“BFSI”), Health Business unit (“Health BU”), Consumer Business unit (“CBU”), Energy, Natural Resources & Utilities (“ENU”), Manufacturing (“MFG”), Technology (“TECH”) and Communications (“COMM”).

 

  (ii)

Effective beginning with the year ended March 31, 2021, revenue from the sale of traded cloud-based licenses is no longer reported in IT Services revenue, and finance income on deferred consideration earned under total outsourcing contracts is not included in segment revenue. Further, for evaluating performance of the individual operating segments, stock compensation expense is allocated on the basis of accelerated amortization as per IFRS 2, “Share-based Payment”.

The segment revenue and results for the year ended March 31, 2017 have not been restated, as restated segment revenues and results for this period could not be prepared without unreasonable effort and expense.

Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

 

  7.

For the purpose of segment reporting, we have included the impact of “foreign exchange gains / (losses), net” in revenue.

  8.

Working capital is defined as current assets less current liabilities.

Capitalization and Indebtedness

Not applicable.

 

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Reasons for the Offer and Use of Proceeds

Not applicable.

 

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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.

Summary

The following summary provides an overview of the material risks we are exposed to in the normal course of our business activities. The summary does not purport to be complete and is qualified in its entirety by reference to the full risk factors discussion immediately following this summary. We encourage you to read the full risk factors carefully.

 

   

Our revenues and expenses are difficult to predict because they can fluctuate significantly given the nature of the markets in which we operate.

 

   

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

 

   

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.

 

   

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

 

   

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.

 

   

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

 

   

We may be subject to litigation and be required to pay damages for deficient services or for violating intellectual property rights, data breach or breach of confidentiality.

 

   

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

 

   

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.

 

   

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

 

   

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.

 

   

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

 

   

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.

 

   

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

 

   

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

 

   

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

 

   

Wage increases in India or our inability to hire in low cost locations may diminish our competitive advantage against companies located in the United States and Europe and may reduce our profit margins.

 

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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 customers of servers, communication devices and other products;

 

   

our expectations regarding the potential impacts on our business of the COVID-19 pandemic;

 

   

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 Pound Sterling, the Euro, the Canadian Dollar and the Australian Dollar, as significant portion of our revenues are in these currencies;

 

   

political uncertainties, changes in regulations, or other economic factors, including the economic conditions, in India, the United States, the United Kingdom, the European Union, Middle East and other geographies in which we operate;

 

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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.

Risks Related to the Markets in which We and Our Clients Operate

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 3.7%, 3.2% and 3.1% of our IT Services revenue for the years ended March 31, 2019, 2020 and 2021, respectively. Our ten largest IT Services clients accounted for approximately 19.5%, 19.7% and 19.5% of our IT Services revenues for the years ended March 31, 2019, 2020 and 2021, respectively. For the year ended March 31, 2021, we had one customer that accounted for 15.4% of our overall IT Products segment revenue, while our largest ISRE customer accounted for 19% of our overall ISRE segment revenue. 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 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.

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. Consolidation activity may also result in new competitors with greater scale, a broader footprint or vertical integration that makes them more attractive to clients as a single provider of integrated products and services. The increased market power of larger companies could also increase pricing and competitive pressures on us.

Concurrent use by many clients of multiple professional service providers means that we are required to be continually competitive with regard to the quality, scope and pricing of our offerings or face a reduction or elimination of our revenue from such clients.

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

 

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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. Additionally, our clients’ business departments are increasingly making or influencing technology-related buying decisions. If we are unable to establish business relationships with these new buying centers, or if we are unable to articulate the value of our technology services to these business functions, our revenues may be adversely impacted.

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. 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 or those arising from COVID-19, 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.

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 59% of our IT Services segment revenue from the Americas (including the United States) and 27% of our IT Services segment 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 is 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.

The effects of Brexit on our business will depend on the implementation of trade agreements that the United Kingdom made with the European Union and other countries to retain access for its goods and services to respective markets. Brexit therefore creates an uncertain economic environment in the United Kingdom and potentially across other European Union member states for the foreseeable future. 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.

 

Our clients are concentrated in certain key industries or sectors. 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 and Utilities industry sector. 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, sanctions 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 (the “ACA”) and the Health Care and Education Reconciliation Act of 2010 . 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.

 

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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, 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.

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, have well-established relationships with clients, or be able to provide services at lower costs or on terms more attractive than we can. 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.

Pandemics and public health crises, such as COVID-19, affecting the geographies where our or our customers operations are located can have an adverse impact on our business.

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 a 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.

If our risk management, business continuity and disaster recovery plans are not effective and our global delivery capabilities are impacted, our business and results of operations may be materially adversely affected, and we may suffer harm to our reputation.

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 the ability 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. Changes in immigration laws to restrict offshore outsourcing, limit the availability of certain work visas or increase visa fees in the key markets in which we operate may impact our ability to staff projects in a timely manner and negatively affect our profitability.

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. Travel restrictions in connection with COVID-19 may also negatively impact our employees’ ability to travel as required to provide services to our clients.

 

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USA

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, 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 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.

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. In addition to calls for changes to U.S. immigration laws regarding the admission of highly skilled temporary and permanent workers, restrictive outsourcing legislation may be 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, misappropriation of sensitive client data and cybersecurity breaches, 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.

Risks Related to Our Contractual Obligations

We may be subject to litigation and be required to pay damages for deficient services or for violating intellectual property rights, data breach or breach of confidentiality.

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, data breach or breach of confidentiality 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.

 

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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, reduced tax revenues and public health crises, such as COVID-19, can affect the number and terms of new government contracts signed.

 

   

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.

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;

 

   

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

 

   

consolidation of IT spending by our clients, whether arising out of mergers and acquisitions, or otherwise.

 

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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.

Risks Related to Our Investments

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, including emerging companies offering specialized services with effective and targeted allocation of technical, marketing and financial resources, 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 (including 5G), artificial intelligence, cloud computing, storage, mobility and applications, analytics, augmented reality, automation, blockchain and quantum computing or as-a-service solutions could have a material adverse effect on our business, results of operations and financial condition.

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 in property, plant and equipment in fiscal year 2021 was  19,577 million ($267.7 million). Additionally, as of March 31, 2021, we had contractual commitments of  7,490 million ($102.4 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.

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 position.

 

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Investments in companies where we do not have majority ownership expose us to decisions made by others, as we have lesser degree of control. This may expose us to additional reputational, financial, legal, compliance or operational risks. This could impact our ability to align the strategic goals of such companies with our goals and 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 other transactions on terms commercially acceptable to us. It may take longer than expected to realize the full benefits from these transactions and arrangements, such as increased revenue or synergies, or the benefits may ultimately be smaller than we expected, which could adversely affect our Consolidated Financial Statements. 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.

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, intellectual property, terminated employees, current or former clients or other third parties, liabilities resulting from an acquisition target’s previous activities, or from an acquisition’s internal controls related to financial reporting, disclosure requirements or cyber and information security environment. We cannot predict or guarantee that our efforts will be effective or will protect us from liability. We may be unable to get indemnification protection or other contractual protections or relief for any material liabilities associated with our acquisitions or investments. If any of these circumstances occur, they could result in unexpected regulatory or legal exposure, including litigation with new or existing clients, unfavorable accounting treatment, unexpected increases in taxes or other adverse effects on our relationships with clients and our business, and 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.

We may be required to integrate any acquired entities into our framework of internal control over financial reporting and disclosure controls and procedures. Integration of acquired entities could be 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.

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, which may lead to impairment charges in the future. Any significant impairment charges could have a material adverse effect on our results of operations.

 

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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 (“RBI”) and relevant government authorities in India, subject to compliance of prescribed conditions. The GoI currently does not mandate prior approvals for IT companies such as ours. However, by notification dated April 22, 2020, the GoI has amended its foreign direct investment (“FDI”) policy to state that investment by a non-resident entity of a country which shares a land border with India, or where the beneficial ownership of an investment into India is situated in or is a citizen of any such countries, shall be under the ‘Government Route’, which requires GoI approval prior to investment. Further, in case of transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the above-mentioned restriction/purview such subsequent change in beneficial ownership, will also require GoI approval. If we are required to seek the approval of the GoI and the GoI 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.

Risks Related to our Cost Structure

If our pricing structures do not accurately anticipate the cost, complexity and duration of 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, complexity 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 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 such 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.

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. For example, the conditions caused by the COVID-19 pandemic may affect the rate of customer spending, including through increased requests by customers for price discounts and adverse impacts on our ability to provide on-site services to our customers or delays to the provisioning of our offerings, including due to travel restrictions imposed by many countries, could adversely affect our future revenues, operating results and overall financial performance.

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

 

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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. Although we continue to improve our services through quality control, innovation and product testing, 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, optimizing utilization of existing facilities, relocating non-client facing employees to lower-cost locations and effectively leveraging our sales and marketing and general and administrative costs. We must also manage additional costs to replace unsatisfactory solutions or services if our clients are not satisfied or if we fail to properly understand their needs and develop solutions accordingly. 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 profitability may suffer.

Wage increases in India or our inability to hire in low cost locations 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 have historically experienced significant competition for employees from large multinational companies that have established and continue to establish offshore operations in India, as well as from companies within India. We may need to increase the levels of our employee compensation more rapidly than in the past to retain talent. Once the effective date is notified by the GoI, we may also experience increased costs in future years for employment and post-employment benefits in India as a result of the issuance of The Code on Social Security, 2020. 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, any inability to increase 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 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 and financial position.

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 97.3% 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 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. 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.

 

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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 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 use derivative financial instruments to reduce or mitigate these risks where possible. 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.

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 rating of counterparties and in the credit as well as the debt capital markets in general due to economic turmoil or the COVID-19 pandemic could result in volatility of our investment earnings and impairments to our investment portfolio, which could negatively impact our financial condition and net income. Further, fluctuations in the interest rate environment based on changes in the RBI’s monetary policy could affect the interest income and thereby our profitability.

Risks Related to Our Workforce

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 future performance and customer relationships may be affected by any disruptions in the continued service of our directors and executive officers.

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. Costs associated with recruiting and training employees are significant. 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, which may also impact our ability to attract and retain personnel. If we cannot hire and retain technical 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 may not be able to hire and retain enough skilled and experienced employees to replace those who leave. Additionally, we may not be able to re-skill, reassign or retain our employees to keep pace with continuous changes in technology, evolving standards and changing client preferences. If we are unable to maintain an employee environment that is competitive and appealing, it could have an adverse effect on engagement and retention. 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.

 

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Risks Related to Our Operations

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;

 

   

maintaining our high standards of service and 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, our culture and values, and operations of acquired companies; and

 

   

managing our procurement, supply chain and vendor management processes.

In addition, effective January 1, 2021, we re-organized our IT Services segment from seven industry verticals to four Strategic Market Units (“SMUs”). If we do not successfully implement the changes, our business and results of operation may be negatively impacted.

We are subject to stringent and changing laws, regulations, standards, and contractual obligations related to privacy, data protection, and data security. Our actual or perceived failure to comply with such obligations could harm our business.

We receive, collect, store, process, transfer, and use personal information and other data relating to users of our products, our employees and contractors, and other persons. We have legal and contractual obligations regarding the protection of confidentiality and appropriate use of certain data, including personal information. We are subject to numerous federal, state, local, and international laws, directives, and regulations regarding privacy, data protection, and data security and the collection, storing, sharing, use, processing, transfer, disclosure, and protection of personal information and other data, the scope of which are changing, subject to differing interpretations, and may be inconsistent among jurisdictions or in conflict with other legal and regulatory requirements. We are also subject to certain contractual obligations to third parties related to privacy, data protection and data security. We strive to comply with our applicable policies and applicable laws, regulations, contractual obligations, and other legal obligations relating to privacy, data protection, and data security to the extent possible. However, the regulatory framework for privacy, data protection and data security worldwide is, and is likely to remain for the foreseeable future, uncertain and complex, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that we do not anticipate or that is inconsistent from one jurisdiction to another and may conflict with other legal obligations or our practices. Any perception of privacy, data security, or data protection concerns or an inability to comply with applicable laws, regulations, policies, industry standards, contractual obligations, or other legal obligations, even if unfounded, may result in additional cost and liability to us, harm our reputation and inhibit adoption of our products by current and future customers, and adversely affect our business, financial condition, and results of operations. Further, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, security or disclosure of data, or their interpretation, or any changes regarding the manner in which the consent of users or other data subjects for the collection, use, retention or disclosure of such data must be obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete, and may limit our ability to store and process user data or develop new services and features.

If we were found in violation of any applicable laws or regulations relating to privacy, data protection, or security, in addition to any regulatory fines, penalties, or litigation costs, our business may be materially and adversely affected and we would likely have to change our business practices and potentially the services and features available through our platform. In addition, these laws and regulations could constrain our ability to use and process data in manners that may be commercially desirable. In addition, if a breach of data security were to occur or to be alleged to have occurred, if any violation of laws and regulations relating

 

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to privacy, data protection or data security were to be alleged, or if we had any actual or alleged defect in our safeguards or practices relating to privacy, data protection, or data security, our solutions may be perceived as less desirable and our business, prospects, financial condition, and results of operations could be materially and adversely affected.

Various United States, or U.S., privacy laws are potentially relevant to our business, including the Federal Trade Commission Act, Controlling the Assault of Non-Solicited Pornography and Marketing Act, and the Telephone Consumer Protection Act. We are also subject to the Health Insurance Portability and Accountability Act of 1996, as amended, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information. Any actual or perceived failure to comply with these laws could result in a costly investigation or litigation resulting in potentially significant liability, loss of trust by our users, and a material and adverse impact on our reputation and business.

In June 2018, California passed the California Consumer Privacy Act (“CCPA”), which provides new data privacy rights for California consumers and new operational requirements for covered companies. The CCPA, among other things, provides that covered companies must provide new disclosures to California consumers and afford such consumers new data privacy rights that include the right to request a copy from a covered company of the personal information collected about them, the right to request deletion of such personal information, and the right to request to opt-out of certain sales of such personal information. The CCPA became operative on January 1, 2020. The California Attorney General can enforce the CCPA, including seeking an injunction and civil penalties for violations. The CCPA provides a private right of action for certain data breaches that is expected to increase data breach litigation. The CCPA has required us to modify our data practices and policies and to incur substantial costs and expenses in an effort to comply. Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), was approved by California voters in November 2020. The CPRA creates obligations relating to consumer data beginning on January 1, 2022, with implementing regulations expected on or before July 1, 2022, and enforcement beginning July 1, 2023.The CPRA will significantly modify the CCPA, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply. More generally, some observers have noted the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, as observed with the recent Virginia Consumer Data Protection Act, enacted March 2021. These new state laws could increase our potential liability and adversely affect our business.

Internationally, we also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, and information security proposed and enacted in various jurisdictions. For example, the data protection landscape in the European Union (“EU”) continues to evolve, resulting in possible significant operational costs for internal compliance and risks to our business. The EU adopted the General Data Protection Regulation (“GDPR”), which became effective in May 2018, and contains numerous requirements and changes from previously existing EU laws, including more robust obligations on data processors and heavier documentation requirements for data protection compliance programs by companies. Among other requirements, the GDPR regulates the transfer of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the U.S. Failure to comply with the GDPR could result in penalties for noncompliance (including possible fines of up to the greater of €20 million and 4% of our global annual turnover for the preceding financial year for the most serious violations, as well as the right to compensation for financial or non-financial damages claimed by individuals under Article 82 of the GDPR). Despite our efforts to attempt to comply with the GDPR, a regulator may determine that we have not done so and subject us to fines and public censure, which could harm our company.

Among other requirements, the GDPR regulates transfers of personal data outside of the European Economic Area, (the “EEA”), to third countries that have not been found to provide adequate protection to such personal data, including the U.S. We have undertaken certain efforts to conform transfers of personal data from the EEA to the U.S. and other jurisdictions based on our understanding of current regulatory obligations and the guidance of data protection authorities, including the use of standard contractual clauses approved by the European Commission(the “SCCs”). With regard to transfers to the U.S. of personal data from our employees and European customers and users, we rely upon the SCCs. The “Schrems II” decision issued by the Court of Justice of the European Union (the “CJEU”), on July 16, 2020, invalidated the EU-U.S. Privacy Shield Framework as a mechanism to transfer personal data from the EEA to the U.S. In the same decision, the CJEU confirmed the validity of the SCCs, but advised that the SCCs must be considered on a case-by-case basis, in conjunction with an assessment as to whether national security laws conflict with the guarantees provided by the data importer under the SCCs. Although we believe we continue to satisfy regulatory requirements through our use of SCCs, these latest developments represent a milestone in the regulation of cross-border data transfers, and require major changes to our data transfer policy, including the need to conduct legal, technical, and security assessments for each data transfer from the EEA to a country outside of the EEA. This means that we may be unsuccessful in maintaining legitimate means for our transfer and receipt of personal data from the EEA. We may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we and our customers face the potential for regulators in the EEA to apply different standards to the transfer of personal data from the EEA to the U.S., and to block, or require ad hoc

 

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verification of measures taken with respect to, certain data flows from the EEA to the U.S. We also may be required to engage in new contract negotiations with third parties that aid in processing data on our behalf. We may experience reluctance or refusal by current or prospective European customers to use our platform or products, and we may find it necessary or desirable to make further changes to our handling of personal data of EEA residents.

The regulatory environment applicable to the handling of EEA residents’ personal data, and our actions taken in response, may cause us to assume additional liabilities or incur additional costs and could result in our business, operating results, and financial condition being harmed. We and our customers may face a risk of enforcement actions by data protection authorities in the EEA relating to personal data transfers to us and by us from the EEA. Any such enforcement actions could result in substantial costs and diversion of resources, distract management and technical personnel and negatively affect our business, operating results and financial condition.

In addition to the GDPR, the European Commission has another draft regulation in the approval process that focuses on a person’s right to conduct a private life. The proposed legislation, known as the Regulation of Privacy and Electronic Communications (“ePrivacy Regulation”), would replace the current ePrivacy Directive. Originally planned to be adopted and implemented at the same time as the GDPR, the ePrivacy Regulation is still being negotiated. Most recently, on February 10, 2021, the Council of the EU agreed on its version of the draft ePrivacy Regulation. If adopted, the earliest date for entry into force is in 2023, with broad potential impacts on the use of internet-based services and tracking technologies, such as cookies. Aspects of the ePrivacy Regulation remain for negotiation between the European Commission and the Council. We expect to incur additional costs to comply with the requirements of the ePrivacy Regulation as it is finalized for implementation.

On January 31, 2020, the United Kingdom (“U.K.”) left the EU (commonly referred to as “Brexit”). The U.K. enacted legislation substantially implementing the GDPR, with penalties for noncompliance of up to the greater of £17.5 million or four percent of worldwide revenues. Aspects of U.K. data protection regulation remain unclear in the medium to long term, however, including with regard to regulation of data transfers to and from the U.K. On April 14, 2021, the European Data Protection Board (“EDPB”) announced that it had adopted its opinion on the draft U.K. adequacy decision issued by the European Commission on February 19, 2021. The EDPB’s opinion is non-binding but will be persuasive. The adequacy decision will be formally adopted if it is approved by the EU member states acting through the European Council. If the adequacy decision is adopted, transfers of personal data from the EU to the U.K. may continue following the end of the post-Brexit transition period without the implementation of a data transfer mechanism under the GDPR.

Other countries also are considering or have enacted legislation that could impact our compliance obligations, expose us to liability, and increase the cost and complexity of delivering our services. We are also monitoring recent or pending legislation in India, Brazil, China and Japan, among others, for further impacts on our compliance obligations, including requirements for local storage and processing of data that could increase the cost and complexity of delivering our services. Such current or pending legislation may also result in changes to enforcement measures and sanctions.

In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that may legally or contractually apply to us. One example of such a self-regulatory standard is the Payment Card Industry Data Security Standard, (the “PCI DSS”), which relates to the processing of payment card information. In the event we fail to comply with the PCI DSS, fines and other penalties could result, and we may suffer reputational harm and damage to our business. We may also be bound by and agree to contractual obligations to comply with other obligations relating to privacy, data security, or data protection, such as particular standards for information security measures.

We also expect that there will continue to be changes in interpretations of existing laws and regulations, or new proposed laws and regulations concerning privacy, data security, and data protection. We cannot yet determine the impact these laws and regulations or changed interpretations may have on our business, but we anticipate that they could impair our or our customers’ ability to collect, use or disclose information relating to consumers, which could decrease demand for our platform, increase our costs and impair our ability to maintain and grow our customer base and increase our revenue. Moreover, because the interpretation and application of many laws and regulations relating to privacy, security, and data protection, along with mandatory industry standards, are uncertain, it is possible that these laws, regulations and standards, or contractual obligations to which we are or may become subject, may be interpreted and applied in a manner that is inconsistent with our existing or future data management practices or features of our platform and products. Any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to users or other third parties, or any other legal obligations or regulatory requirements relating to privacy, data protection, or data security, may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and other

 

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burdens imposed by, the laws, regulations, other obligations, and policies that are applicable to the businesses of our users may limit the adoption and use of, and reduce the overall demand for, our platform. Additionally, if third parties we work with violate applicable laws, regulations or contractual obligations, such violations may put our users’ data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.

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 upon Wipro that may directly impact us and our relationships with our customers and partners.

Given the rise of connected devices, transition to cloud and use of other emerging technologies, the impact of threats continue to increase while the threat attack area is evolving and increasing beyond the enterprise. Cybersecurity incidents, both actual and attempted, involving 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. Our internal security controls may not be able to keep pace with these evolving and intensifying threats.

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. As an IT Services provider, we 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. We can provide no 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 campaign, 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. In our investigation into this incident, we found no evidence of data breach or data loss. 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.

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 customers or from their customers for breaching contractual confidentiality provisions or privacy laws. Unauthorized disclosure of sensitive or confidential 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.

 

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In response to COVID-19, most of our employees have been asked to work from home. In order to better support employees working from home, we have enhanced our cybersecurity measures by installing secure agents in our systems. 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, global digital presence, hosted both in the cloud and on premises, and work from home arrangements. Our service delivery and operations are 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 and potentially with other technology service providers and vendors and to have a more thorough understanding of our clients’ operations. 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 clients’ 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. This may further damage our business by affecting our ability to compete for new contracts with current and prospective clients. Additionally, we may experience financial losses in contracts which are linked to our clients’ 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. In projects where we own the end-to-end delivery, we may incur penalties on work performed by our alliance partners, subcontractors or third-party product vendors if they do not meet contractual performance thresholds.

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. 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.

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, representation and warranties insurance in certain acquisitions 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.

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

 

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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 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 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. Further, if open source code that we utilize is no longer maintained, developed or enhanced by the relevant community of independent open source software programmers, most of whom we do not employ, we may be unable to develop new technologies, adequately enhance our existing technologies or meet customer requirements for innovation, quality and price.

In India, the enforcement of intellectual property rights is not as robust as in 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.

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

 

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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.

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 any such natural disaster occurs 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.

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 possible that a court in India may not 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 RBI 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.

 

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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.

Risks Related to Legislation and Regulatory Compliance

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.

Some of our clients may operate in highly regulated sectors and/or geographies. Sanctions may be enforced on them or their key managerial personnel either before they become our clients or during the course of our work with them. While we take reasonable precautions to determine if a potential client is in the sanctioned list, our ability to screen and ensure we do not enter into contract with any such clients depends on the data available in the public domain or third party databases on sanctioned entities or personnel. If a client is subject to sanctions during the course of our work with them, such engagements may expose us to consequential sanctions, administrative action or loss of any government contracts or engagements.

We have more than 41,000 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.

 

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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 corporate governance, 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.

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.

Effective March 31, 2021, companies may no longer set up new units in Special Economic Zones in India and, as a result, our effective tax rate may increase.

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 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. Per the provisions of Income Tax Act,1961 any new SEZ which commences operation on or after April 1, 2020, will not be entitled to any special tax exemption under section 10AA of the Income Tax Act, 1961. In the midst of COVID 19, this timeline was extended to March 31, 2021. Thus, any new SEZ which commences operation after March 31, 2021 will not be entitled to any special tax exemption, which may have the effect of increasing tax outflow in future.

We were subject to a Minimum Alternate Tax (“MAT”) at a fixed rate of approximately 17.47% until March 31, 2020 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. If the MAT rate of taxation is increased, our financial results may be adversely affected.

In 2019, the GoI amended the Income Tax Act, 1961 by enacting The Taxation Laws (Amendment) Ordinance, 2019, and has provided an option for companies to pay tax at a lower rate of 22% (plus surcharge and cess) by forgoing all the deductions available under Chapter VI-A and other profit-linked deductions under the Income Tax Act, 1961. This option, if exercised, is irrevocable and the corresponding MAT credit will be lapsed. We have evaluated the option and have decided to continue under the existing regime and not to avail ourselves of the lower tax rate. In the future, if we opt for the lower tax rate, it may lead to an increase in tax outflow and the MAT credit available will be lapsed.

If the Government of India modifies 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 GoI, through Finance Act 2020, has abolished the dividend distribution tax which reduced our tax burden as the same is shifted to shareholders.

 

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Further, provisions of section 115QA of the Income Tax Act, 1961 for buyback of shares, which were initially applicable only to unlisted companies, have now been extended to buyback of shares by listed companies through the enactment of Finance (No. 2) Act, 2019. In the future, for every buyback of shares, we will be liable to pay additional income tax on the distributed income, which will result in additional cash outflow. Currently the rate of tax on buyback of shares is 20% (plus surcharge and cess).

You may be subject to Indian taxes arising out of capital gains on the sale of the shares.

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. Furthermore, any gain realized on the sale of the Shares held for a period of 12 months or less is subject to capital gains tax in India. 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. However, Finance Act, 2017 has omitted the clause which dealt with any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of subsection (2) of section 40A of the Income Tax Act, 1961.

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.

Taxation laws are susceptible to frequent changes. Increase in tax rates in any of the major countries that we operate in could materially affect our Effective Tax rates. For instance, the corporate tax rates in UK has been increased from 19% to 25% effective 2023. 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. In India, changes in taxation law are announced on an annual basis in February, when the Union Budget is presented. These changes in law 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.

Our ability to invest outside India, including acquiring companies organized outside India, depends on the approval of the Government of India and/or the RBI. 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.

 

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The Ministry of Finance of the GoI and/or the RBI must approve our acquisition of any company organized outside of India or grant general or special permission for such acquisition. The RBI 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 US$1 billion or its equivalent in a financial year would require prior approval of the 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 RBI or the Ministry of Finance or any other Government agency can be obtained. Our failure to obtain such approvals from the GoI for acquisitions of/investments in companies organized outside India may restrict our international growth, which could negatively affect our revenue.

Risks Related to the ADSs

Political, social and economic developments in and affecting India may affect the prices of our equity shares and ADSs.

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, GoI policies such as taxation and foreign investment policies, GoI currency exchange control and changes in exchange rates and interest rates.

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 GoI 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. Regulators like the RBI, Ministry of Corporate Affairs (“MCA”), Ministry of Finance and SEBI have also issued guidelines and regulations to operationalize the framework for issuance of depository receipts by listed entities. Further amendments and requirements may also be notified from time to time. Once the regulations are fully operationalized, our shares can be freely convertible into depository receipts, which would impact the share price and available float in the Indian stock exchanges as well as the price and availability of ADSs on the New York Stock Exchange (the “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 RBI must approve the sale of equity shares underlying ADSs by a non-resident of India to a resident of India. The RBI has given general permission to effect sales of existing shares or certain other capital instruments of an Indian company by a resident to a non-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 RBI for each transaction. Required approval from the RBI 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.

 

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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 certain other 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 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  200 for each day such failure continues, subject to a maximum of  500,000. 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

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.

 

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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 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 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, 2021. 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 United States Federal Tax Consequences—Passive Foreign Investment Company.”

Generic Risks

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.

 

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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 NYSE or other regulatory authorities. Any such action could adversely affect the accuracy and timeliness of our financial reporting.

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, liabilities, income, expenses or cash flows. For a summary of significant accounting policies, refer to Note 3 of the Notes to the Consolidated Financial Statements section.

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”), the Indian Companies Act, 2013 (“Companies Act, 2013”) and the Foreign Exchange Management Act, 1999 are creating uncertainty for companies like ours and adding complexity to our corporate compliance regime. 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.

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, 2021, 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 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

 

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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.

If we fail to comply with new or changed laws or regulations and standards, or unintentionally disclose unpublished price sensitive information, our business and reputation may be harmed.

The COVID-19 global pandemic has had a significant and continuing adverse impact on our business and results of operations.

The ongoing global COVID-19 pandemic has caused and continues to cause significant loss of life and has resulted in curtailment of economic activities across the world as local administrations and governments seek to limit spread of the disease, including through lockdown policies, restriction on business activities and business shutdowns. Among other things, many of our and our clients’ offices have been closed and employees have been working from home and many customer-facing businesses have closed or are operating at a significantly lower capacity to observe various social distancing requirements and government-mandated COVID-19 protocols. This may adversely impact the demand for our offerings, our service delivery and our business in certain sectors, countries and service offerings.

The majority of our clients are based in the United States, the United Kingdom and other countries in Europe, all regions that have been significantly impacted by the pandemic. The conditions caused by the COVID-19 pandemic have affected and can continue to affect the rate of customer spending, including through cancellations or ramp-downs of existing projects, customers’ decreased ability or willingness to purchase our offerings, delays to prospective customers’ purchasing decisions and requests by customers for price discounts, all of which has affected and can adversely affect our future revenues, operating results and overall financial performance.

Further, macroeconomic conditions caused by COVID-19 may 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 (including contract assets and unbilled receivables) and negatively impact our liquidity and cash generated from operations.

Our operations have been affected and may continue to be affected by a range of external factors related to the COVID-19 pandemic that are not within our control. Due to the closure of many of our and our clients’ facilities, including as a result of various orders from local administrations or governments, we may face challenges in delivering services to our clients and cause significant disruptions to our operations. The pandemic, particularly in India and other countries where we have near-shore or offshore delivery operations for clients and offices of clients where our employees normally work, may impact our ability to deliver services to clients. As many of our employees continue to work from home, we may be exposed to additional cyber or ransomware attacks despite having strong cyber security controls in place. We face increased costs from the pandemic, including as a result of mitigation efforts such as enabling increased work-from-home capabilities and additional health and safety measures. If the COVID-19 pandemic continues to have a substantial impact on our employees’, partners’ or customers’ attendance or productivity or employee morale, our results of operations and overall financial performance may be harmed, and the recoverable value of our assets may be significantly reduced, which may result in impairment loss.

Addressing the significant challenges presented by the pandemic, including various business continuity measures and the need to enable work-from-home arrangements for many of our employees, has demanded significant management time and attention and strained other corporate resources.

 

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The COVID-19 pandemic continues to evolve as countries are facing new waves of outbreaks. The ultimate extent to which the pandemic impacts our business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted at this time, including the delivery and effectiveness of vaccines, future mutations of the COVID-19 virus and any resulting impact on the effectiveness of vaccines, the duration and extent of the pandemic and waves of infection, travel restrictions and social distancing, the duration and extent of business closures and business disruptions and the effectiveness of actions taken to contain, treat and prevent the disease. If we are not able to respond to and manage the impact of such events effectively, our business or the price of our equity shares or ADSs may be adversely impacted.

 

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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 200,000 dedicated employees (including support functions) serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold tomorrow.

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 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, we raised capital in the initial U.S. public offering of ADSs that were listed on the NYSE. We are listed on the NSE and BSE in India and Wipro’s ADSs are listed on the 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, the United Kingdom, Australia, 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 transformed our portfolio of services to focus on areas such as digital, cloud, engineering services and cyber security by investing in new technologies organically as well as through acquisitions. 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 Platform (“Wipro HOLMESTM”).

Our 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 Spirit of Wipro resonates with our 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.

While our company has transformed many times over the years, the Spirit of Wipro and our core values, have remained constant. We have introduced the ‘Five Habits’, which are our values in action:

 

   

Being respectful;

 

   

Being responsive;

 

   

Always communicating;

 

   

Demonstrating stewardship; and

 

   

Building trust.

So far, over 21,000 employees globally have been part of 73 immersive and interactive sessions hosted by our senior leadership team on the Five Habits.

 

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

During the year ended March 31, 2021, Wipro Limited adopted a new organizational structure designed to simplify our go-to-market execution and ensure sector focus and growth in non-US markets. The previous structure of multiple delivery units has been replaced by a simplified model designed to bring the best of Wipro closer to our customers. This model consists of four Strategic Market Units (“SMUs”) and two Global Business Lines (“GBLs”). The four SMUs are Americas 1, Americas 2, Europe, and APMEA.

We organize our customer-facing functions of sales, marketing and business development into teams that focus primarily on the four SMUs and service offerings, enabling us to deliver services to customers based on deep domain insight. Our customer-facing functions in each SMU are predominantly locally staffed.

The ISRE segment consists of IT services offerings to ISRE Customers. During the year ended March 31, 2019, 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.

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. Our website is http://www.wipro.com. The name and address of Wipro’s registered agent in the United States is C T Corporation System, located at 28 Liberty Street, New York, New York 10005. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system.

Capital Expenditures and Divestitures

Acquisitions (“M&A”)

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

 

   

Eximius Design, LLC and Eximius Design India Private Limited, a leading engineering services company with expertise in semiconductor, software and systems design;

 

   

Encore Theme Technologies Private Limited, a Finastra trade finance solutions partner across the Middle East, Africa, India and Asia Pacific;

 

   

4C NV and its subsidiaries, a Salesforce multi-cloud partner in Europe, U.K., and the Middle East;

 

   

IVIA Serviços de Informática Ltda., a specialized IT services provider to financial services, retail and manufacturing sectors in Brazil;

 

   

Rational Interaction, a full-service digital customer experience solutions firm that brings the strategic capabilities of a consultancy together with the creative and digital prowess of an agency;

 

   

International TechneGroup Incorporated, a global digital engineering and manufacturing solutions company and a world leader in computer aided design and product lifecycle management interoperability software services;

We recently signed definitive agreements to acquire the below companies subject to customary closing conditions and regulatory approvals:

 

   

Capco, a global management and technology consultancy providing digital, consulting and technology services to financial institutions in the Americas, Europe and the Asia Pacific, which we completed in April 2021.

 

   

Ampion, an Australia-based provider of cyber security, DevOps and quality engineering services.

Divestitures

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

 

   

Workday and Cornerstone OnDemand business to Alight Solutions LLC (“Alight”). 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; and

 

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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.

Additionally, during the year ended March 31, 2020, we sold our remaining 11% equity holding in Wipro Airport IT Services Limited, which was a joint venture between Wipro Limited and Delhi International Airport Limited, to Antariksh Softtech Private Limited. Consequently, the joint venture agreement was terminated.

Please see Note 7 of the Notes to the Consolidated Financial Statements for additional information regarding our acquisitions and Note 26 of the Notes to the Consolidated Financial Statements for additional information about our divestitures.

Capital Expenditure

We incurred total cash outflow of,  22,781 million,  23,497 million and  19,577 million during the fiscal years ended March 31, 2019, 2020 and 2021, respectively. We incurred these capital expenditures primarily on new software development facilities in India and investments in IT assets. As of March 31, 2021, we had contractual commitments of  7,490 million related to capital expenditures on construction or expansion of software development facilities and investments in IT assets. 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.

Buyback of equity shares

During the year ended March 31, 2021, we completed the buyback of 237,500,000 equity shares at a price of  400 ($5.47) per equity share, as approved by the Board of Directors on October 13, 2020 and by our shareholders by resolution, dated November 16, 2020, through postal ballot by electronic voting. The buyback resulted in a total cash outflow of  116,644 million ($1,594.8 million), including tax on the buyback of  21,445 million ($293.2 million) and transaction cost related to buyback of  199 million ($2.7 million). As a result of the buyback, our share capital has been reduced by  475 million ($6.5 million).

Industry Overview

IT Services

The COVID-19 pandemic has affected every industry, and has disrupted trade, supply chains, work and business models, employment and consumer behaviors. During the COVID-19 pandemic, companies across the world had to accelerate their digital transformation initiatives to address these disruptions and secure their businesses. While some companies have now set up advanced business continuity measures, others have embarked on new innovative services and products. As companies focused on protecting employees from the pandemic, technology enabled a seamless transition to remote working by shifting to digital channels and digital customer engagement models. Various stay at home orders resulted in large scale adoption of models such as buy-online-pickup-in-store in retail, tele-medicine and virtual care in healthcare, touchless experiences in finance and virtual solutions for online learning.

According to the Strategic Review 2021 published by NASSCOM (the “NASSCOM Report”), India’s technology industry is forecasted to grow at 2.3% to reach approximately $194 billion in fiscal year 2021 (excluding e-commerce). According to the NASSCOM Report, exports are estimated to grow at 1.9% to reach approximately $150 billion in fiscal year 2021 and the domestic sector is forecasted to reach approximately $45 billion in fiscal year 2021, growing at 3.4%. According to the NASSCOM Report, the growth is driven by increased demand for digital transformation and infrastructure modernization.

As per the NASSCOM Report, digital revenues account for 28-30% of total industry revenues for fiscal year 2021, growing at five times the overall services growth. The share of digital services in new contracts is up by 90% from fiscal year 2020, driven by cloud, collaboration and cybersecurity. The growth of cloud, artificial intelligence (“AI”), machine learning (“ML”), internet of things (“IoT”), analytics, automation and collaboration software were accelerated during the COVID-19 pandemic, led by remote working and transformation engagements for contactless activities and customer experience. It is expected that the IT services industry will move to hybrid work models, with implications on hiring, team structures, compliance and cybersecurity.

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.

 

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The conditions caused by the COVID-19 pandemic continue to evolve as new variants of the virus are emerging in some of our markets, leaving the recovery outlook varied and uncertain. Despite demand stability being high and ongoing large-scale vaccination drives, economic outlook remains uncertain. However, companies will continue to invest in digital transformation to address new pandemic-driven consumer behaviors with the support of technology.

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Trend Information” in Item 5 for more information on the effects of COVID-19 on our business.

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 is estimated to be $15.7 billion in fiscal year 2021 and overall revenue for the hardware industry is expected to be $16.1 billion in fiscal year 2021. Due to remote work, enterprise demand for notebooks has increased. According to the NASSCOM Report, the personal computer segment is also expected to do well due to the education industry’s shift to online learning.

ISRE

According to the NASSCOM Report, there was significant adoption of digital technologies by governments in reporting COVID-19 updates, medical readiness, citizen services, disaster management centers and contactless services.

The GoI is preparing India to be a hub for AI, cybersecurity, IoT and driving adoption of emerging technologies such as AI, ML, IoT, industrial internet of things (“IIOT”), edge computing and analytics, robotics, automation, augmented reality (“AR”), virtual reality (“VR”), additive manufacturing and blockchain. In collaboration with state governments, GoI is setting up ‘Centres of Excellence’ in AI and cybersecurity. The GoI continues to invest in several projects, through its “Digital India” initiative, and is working with an ecosystem of partners, towards its goal of growing from a $200 billion digital economy in fiscal year 2020 to a $1 trillion digital economy by fiscal year 2025.

The COVID-19 pandemic has shown that the GoI’s IT spending is not only a business enabler but an important lever to deliver citizen-centric communication and services. The government has, in the last year, invested more on applications like Aarogya Setu, CoWIN, Track and Trace, which could be rapidly deployed to meet immediate requirements. The strategy going forward is to mature the current solutions and make them available to the masses through all available digital channels, which shall enable citizen services to be rendered more effectively.

We, therefore, see opportunities in the government sector around digitization, cloud adoption, automation and other initiatives. However, there could be delays in the GoI decision making processes for long-term transformation initiatives.

Business Overview

We are a global technology services firm, with employees in over 55 countries and serving enterprise clients across various industries. Companies are transforming their technology stack, to operate with agility and flexibility. We are trusted partners to clients in their transformation journey and enable them to be leaders in their respective industries.

We are seeing that traditional technology services are rapidly evolving and “shift to the new” is becoming more pronounced. Growth in the technology services sector will be led by next generation technologies and services, such as digital, cloud, data, engineering and cybersecurity. Companies are actively exploring opportunities for digitization, leading to increased demand for consulting services. Digital technologies and next-generation technologies such as 5G, AI/Intelligent Enterprise, robotics and blockchain, are anticipated to grow exponentially in the near future.

We assist our clients to create new possibilities at the intersection of design, domain, consulting and next-generation technologies. Our new operating model ensures adequate sector and domain-focused go-to-market and execution. It also combines global expertise with a local geography-focus in building capabilities, and ensures dedicated sales presence, led by proximity to clients.

Our IT Services segment 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 provide IT products as a complement to our IT services offerings rather than sell standalone IT products, and our focus continues to be on consulting and digital engagements, with a more selective approach in bidding for SI engagements.

 

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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 strategy supports value creation for clients and growth for our organization through five strategic priorities: accelerate growth, strengthen clients and partnerships, lead with business solutions, building talent at scale and a simplified operating model. We are focusing our efforts and our investments on maximum results, going deeper in areas that we believe we have strength and defocusing on others, and scaling up to secure leadership positions. Our new strategy will bring us closer to clients, drive greater agility and responsiveness and help us become the employer of choice.

Our vision is to:

 

   

be a trusted partner to our clients in their transformation journey and enable them in achieving leadership in their respective industries; and

 

   

deliver value to our clients as part of their transformation journey through sector focused ‘Business Solutions’, ‘Digital’ and ‘Technology’ capabilities, cutting edge innovation, leveraging our strategic partnerships and our world class talent.

We aim to realize our vision through five key strategic priorities:

 

  1.

Accelerate growth – focus and scale

Our first priority is growth through focus on identified markets and sectors within markets, bringing the best of Wipro to our clients.

Our choice of sectors in a market is being driven by both market attractiveness and by Wipro’s competitive positioning and strengths. We have therefore prioritized specific sectors in certain markets, and we will build or sustain, as the case may be, our leadership position in those intersections.

Our priority markets include the Americas, certain countries in Europe and APMEA. The Americas continues to be a large market and continues to be our key focus. We are also building a strong growth plan for Europe, Asia and the Middle East.

 

  2.

Strengthen clients and partnerships

Our second strategic priority is to strengthen clients and partnerships through four levers:

 

  a.

Global account executive model: We have global account executives, senior leaders representing Wipro for our key clients, who are enabled by a team of industry and technology specialists and delivery leaders and with strong decision-making capabilities including committing on investments, to grow these client accounts.

 

  b.

Large deals expertise: The second lever where we are significantly boosting our capabilities is in large deal origination and signing. We have invested in a large deal expertise team consisting of deal principals, financial and commercial modelers, experienced consultants and program directors, to bring expertise in large deal creation, solutioning, structuring and supporting our SMUs in signing large deals.

 

  c.

Strategic partnerships: We are committed to scale partnerships with our key alliances such as Amazon Web Services, Microsoft, Google Cloud Platform, ServiceNow, Salesforce, SAP and IBM. We have intensified our efforts to build dedicated ‘Cloud Studios’ and ‘Centers of Excellence’, talent, and our capability to take joint business solutions to our clients.

 

  d.

Market and capability leadership through M&A and Wipro Ventures: We are focused on M&A as a key area to fast-track solutions and capability building in emerging areas and accelerating our access and presence in identified markets. With a strong post-merger integration focus, we are committed to driving synergies and effectively integrating acquisitions. Wipro Ventures, the strategic investment arm of Wipro, invests in early- to mid-stage enterprise software startups. The areas of investment include AI, analytics, business automation, cloud infrastructure, cybersecurity, data management, IoT and testing automation.

 

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As of March 31, 2021, Wipro Ventures manages 16 active investments. In addition to direct equity investments in emerging startups, Wipro Ventures has invested in five enterprise-focused venture funds: B Capital, Boldstart Ventures, Glilot Capital Partners, TLV Partners and Work-Bench.

 

  3.

Lead with business solutions

We are focusing on multiplying our business solutions, and building a catalog of industry-specific solutions, relevant to our clients in their industries by leveraging industry expertise, technology capability and ecosystem partnerships. A few examples of solutions we have built for our clients include digital banking solutions, core modernization for a telecom company for faster 5G deployment, the Open Subsurface Data Universe platform (data and analytics platform in the upstream oil and gas sector) and warehouse management solution for consumer companies.

 

  4.

Building talent at Scale

Clients need partners who will challenge old ways of working, bring forth new ideas and proactively drive change. We are investing in deep domain and technology expertise and market makers. Our priorities include:

 

   

Hiring talent in the front end, domain and technology areas. We are investing in consulting, transformation architects and domain as well as in cutting-edge areas of technology such as AI, data sciences and engineering.

 

   

Reskilling and building onsite and local scale in digital and next-generation capabilities. Our learning and talent transformation programs conform to the new ways of working, and are modelled on ‘Anytime, Anywhere’ learning, social learning, community learning and through mentoring networks and talent champions.

 

   

Building leadership diversity to significantly improve gender and ethnic diversity in our leadership ranks.

 

   

Driving a ‘high-performance’ culture.

 

  5.

Simplified operating model

All of our strategic priorities will be executed through our simplified operating model. It is a two-axis model of SMUs and GBLs, supported by our business functions.

From a client standpoint, our model ensures adequate sector and domain-focus in our go-to-market and execution. This enables focused growth, combines global expertise with local geography-focus in building capabilities, and ensures dedicated sales presence led by proximity to clients.

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. Our revenues for the last three fiscal years by business segment are as follows:

 

     Year ended March 31,  
     2019      2020      2021  
     ( in millions)  

IT Services

     566,657        593,798        605,815  

IT Products

     14,480        11,657        7,685  

ISRE

     7,932        7,950        8,912  

Reconciling items

     (9      (4      13  
  

 

 

    

 

 

    

 

 

 
     589,060      613,401      622,425  
  

 

 

    

 

 

    

 

 

 

For the fiscal year ended March 31, 2021, the IT Services segment generated 97.3% of our revenue and 99.8% of our operating income. For the same period, the IT Products segment generated 1.2% of revenue and 0.0% of operating income and ISRE services segment generated 1.4% of our revenue and 0.9% of our operating income. Reconciling Items constitute (0.7%) of our operating income. (Refer to Item 3 and Note 34 of the Notes to Consolidated Financial Statements).

Our revenues for the last three fiscal years by country are as follows:

 

     Year ended March 31,  
     2019      2020      2021  
     ( in millions)  

India

     30,566        29,374        27,156  

United States of America

     315,301        338,490        336,009  

United Kingdom

     59,568        65,258        67,852  

Rest of the world

     183,625        180,279        191,408  
  

 

 

    

 

 

    

 

 

 
     589,060      613,401      622,425  
  

 

 

    

 

 

    

 

 

 

Additionally, we provide our IT Services segment revenue and results by SMUs. Please refer to Note 34 of the Notes to Consolidated Financial Statements for additional information regarding our segments.

 

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IT Services Offerings

Our IT Services service offerings are organized through two GBLs – Integrated Digital, Engineering and Application Services (“iDEAS”) and Cloud Infrastructure, Digital Operations, Risk and Enterprise Cyber Security Services (“iCORE”). iDEAS will include the Domain and Consulting, Applications and Data, Engineering and R&D and Wipro Digital service lines. iCORE will include the Cloud and Infrastructure services (“CIS”), Digital Operations and Platform (“DO&P”) and Cybersecurity and Risk Services (“CRS”) service lines. We believe GBLs will bring in global scale, capabilities and solutions and best practices in delivery.

iDEAS

iDEAS is committed to helping clients across the world to accelerate their transformation and shift how they build and deliver digital products, services, and experiences. iDEAS brings together strategic design, domain, and consulting capabilities along with Wipro Digital and cloud applications, AI, data, engineering, and next-generation technologies. Starting with a design-led approach, iDEAS is uniquely positioned to deliver business solutions required by companies to create what matters to them. iDEAS comprises of the following practices and includes Wipro Digital:

 

   

Applications and Data: This practice includes cloud enterprise platforms (SAP, Oracle, Salesforce, MS Dynamics and Process Transformation and Growth Practices), data and AI.

 

   

Application Engineering and Modernization (“AEM”): This consists of five practices: Microsoft, Legacy Modernization, Tanzu Application Services, Digital Business Integration (“DBI”) and Quality Engineering and Testing (“QET”). Together, these units focus to drive differentiation in the areas of Application Development, Application Modernization, Microsoft Cloud and IBM/Red Hat.

 

   

Cloud Transformation: This practice brings together our dedicated focus on cloud hyperscalers (e.g., Amazon Web Services, Azure and Google Cloud Platform) along with our transformation and consulting capabilities in the operating model, modernization, high end engineering, agile and DevSecOps space.

 

   

Digital Experience (“DX”): DX delivers customer experience transformation from customer acquisition to customer service by leveraging two key pillars, interaction experience and business process agility.

 

   

Digital Interactive: This practice includes our strategic and service design unit, Designit.

 

   

Engineering, Research and Development (“ER&D”): ER&D enables customers across sectors to engineer products, platforms and technologies and adopt operational technologies required for Industry 4.0 and IoT. Wipro Holmes Platform is part of ER&D.

 

   

Domain and Consulting: Domain and Consulting brings our deep industry and consulting expertise to clients across the globe, developing thought leadership and customizing our solutions to address industry needs.

iCORE

iCORE is committed to accelerating the transformation journey of our customers and enabling the enterprise of the future that is agile, intelligent and resilient. iCORE focuses on the core of any enterprise by leveraging next-generation technologies and solutions across cloud, infrastructure, cybersecurity, process, and business operations to enable this transformation. Our iCORE service lines include:

 

   

CIS: CIS helps organizations modernize their IT landscape and transform into future-ready digital enterprises leveraging its offerings in cloud, data center, digital workplace, connected intelligence, IoT, and edge computing.

 

   

CRS: CRS helps our customers achieve a resilient cyber future through advisory-led security and risk management solutions at the leading edge of technology innovation that can help customers accelerate their digital transformation securely.

 

   

DO&P: DO&P service line combines our core business knowledge with leading technologies such as digital, robotics process automation, cognitive technologies and analytics to offer powerful business intelligence that helps improve business visibility and resilience, allowing enterprises to respond quickly to evolving market disruptions.

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 clients as measured by revenues.

 

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     Number of clients in  
Per client revenue (US$)    Year ended
March 31,
2019
     Year ended
March 31,
2020
     Year ended
March 31,
2021
 

1-3 million

     232        233        217  

3-5 million

     77        81        92  

5-50 million

     221        220        217  

50-100 million

     31        25        29  

> 100 million

     10        15        11  
  

 

 

    

 

 

    

 

 

 

Total > 1 million

     571        574        566  
  

 

 

    

 

 

    

 

 

 

The largest client of our IT Services business accounted for 3.7%, 3.2% and 3.1% of revenues from the IT Services business as a whole for the years ended March 31, 2019, 2020 and 2021. The five largest clients of our IT Services business accounted for 12.7%, 12.8% and 12.1% of our total IT Services revenues for the years ended March 31, 2019, 2020 and 2021, 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 each of the SMUs. Our sales efforts are complemented by our marketing team, which assists in brand building and other corporate and field-level marketing efforts.

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 account executives and client executives, that have primary responsibility for the client relationship, providing single-person accountability and single-person sales responsibility.

 

   

Sector and geographic focus: Our sales teams are dedicated to a specific industry sector and often have significant experience and training in their domain and industry. In certain regions, 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.

 

   

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.

 

   

Large deals expertise: Our large deal expertise team consists of deal principals, financial and commercial modelers, experienced consultants and program directors, to bring expertise in large deal creation, solutioning, structuring and supporting in winning large deals.

Marketing: Our 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 that drive sales by displaying 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; 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.

 

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  2.

Wipro Digital has integrated propositions in customer mapping and interaction. Data science and insights 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 intellectual property (“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.

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, DX, Quality as a Service (“QaaS”), workforce transformation, Talent as a Service (“TaaS”) and hybrid (certified) communities.

 

  6.

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.

 

  7.

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

 

  8.

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.

 

  9.

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

 

  10.

Our emphasis on acquiring companies with new age technologies and integrating them with our service offerings, to maximize synergies for our clients.

 

  11.

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.

 

  12.

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.

 

  13.

Our commitment to the highest levels of corporate governance.

IT Services SMUs structure

During the year ended March 31, 2021, the Company re-organized its IT Services segment from seven industry verticals to four SMUs - Americas 1, Americas 2, Europe and APMEA. Americas 1 and Americas 2 are primarily organized by industry sector, while Europe and APMEA are organized by countries.

 

   

Americas 1 includes the entire business of Latin America (“LATAM”) and the following industry sectors in the U.S.: healthcare and medical devices, consumer goods and life sciences, retail, transportation and services, communications, media and information services, technology products and platforms.

 

   

Americas 2 includes the entire business of Canada and the following industry sectors in the U.S.: banking, financial services and insurance, manufacturing, hi-tech, energy and utilities.

 

   

Europe consists of the United Kingdom and Ireland, Switzerland, Germany, Benelux, the Nordics and Southern Europe.

 

   

APMEA consists of Australia and New Zealand, India, the Middle East, South East Asia, Japan and Africa.

The SMUs in Europe and APMEA will be responsible for all industry sectors in these regions. SMUs are our primary go-to-market teams and seek to scale local strategic clients and drive large deal wins.

Revenue from each customer is attributed to the respective SMUs, based on the location of the customer’s primary buying center of such services. With respect to certain strategic global customers, revenue may be generated from multiple countries based on such customer’s buying centers, but the total revenue related to these strategic global customers are attributed to a single SMU based on the geographical location of key decision makers.

Prior to the Company’s re-organization of its IT Services segment, the IT Services segment was organized by seven industry verticals: BFSI, Health BU, CBU, ENU, MFG, TECH and COMM.

IT Products

We provide IT products as a complement to our IT services offerings rather than sell standalone IT products.

 

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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. For the year ended March 31, 2021, we had one customer that accounted for 15.4% of our overall IT Products segment revenue.

IT Products Sales and Marketing

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

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 marketplace 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 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 over seventy-five 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, 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 sectors 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 governments of India. We work with multiple ISRE customers and our top two ISRE customers contributed approximately 26% of our ISRE revenues for the year ended March 31, 2021. Our largest ISRE customer accounted for 19.0% of our overall ISRE segment revenue for the year ended March 31, 2021.

ISRE Sales and Marketing

Our ISRE business unit will focus on the unique customer requirements and will create a “Go to Market” 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.

 

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  2.

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

 

  3.

Significant experience in successfully delivering key marquee programs and strong reference across the ISRE sector.

Intellectual Property

We believe that IP is increasingly a strong driver of business competitiveness and profits, especially in a knowledge intensive industry. 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 that entail higher cost and longer timelines. Using our IP, we are able to offer innovative commercial models in delivering services.

As of March 31, 2021, we have 904 registered patents in various countries. We have filed 93 patents during the year ended March 31, 2021 and currently have approximately 1,181 patent applications pending registration in various jurisdictions across the world.

As of March 31, 2021, we held 380 registered trademarks including registered community trademarks in India, Japan, the United States, Malaysia and over 70 other countries. Over 30 trademark applications are pending for registration in various jurisdictions across the world.

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 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 RBI, SEBI and/or the Ministry of Finance of the GoI to acquire companies incorporated outside India, if prescribed conditions are not satisfied, 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 SEBI 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 RBI.

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

 

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Organizational Structure

Refer to Note 32 of the Notes to Consolidated Financial Statements for information on organizational structure of the Company.

Property, Plant and Equipment

Our registered office is located at Doddakannelli, Sarjapur Road, Bengaluru, India. This office is 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 23.80 million square feet of land for future expansion plans. We have 23.49 million square feet of owned software development facilities in India and over 1.71 million square feet of leased software development premises in India.

We have approximately 2.64 million square feet of leased offices, software development and data center facilities in countries outside India, which includes approximately 1.27 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  22,781 million,  23,497 million and  19,577 million on capital expenditure during the fiscal years ended March 31, 2019, 2020 and 2021, respectively. These capital expenditures were primarily incurred on new software development facilities in India and investments in IT assets.

We have 60 sales/marketing offices, data centers, development and training centers in the Americas. In addition, we have 147 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 0.3 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 and our strategy on agile anywhere and newer ways of working.

We are committed to achieving net-zero greenhouse gas emissions by 2040, which is in line with the Paris Agreement objective of capping temperature rise to 1.5 degree centigrade. We also set an intermediate target of a 55% reduction in our absolute emission levels by 2030 compared to 2016-2017. These targets are based on the globally accepted Science Based Targets initiative (“SBTi”) and reflect deep decarbonization and operational changes we will implement to achieve net-zero by 2040. The primary levers of our decarbonization drive are:

 

  (a)

improving the energy efficiency of our facilities for a sustained reduction in energy consumption;

 

  (b)

increasing the use of renewable energy in our owned facilities in India through private power purchase agreements and captive solar power; and

 

  (c)

combining behavioral, technological and collaborative approaches that help reduce the carbon footprint of air travel, commuting and purchased goods and services.

Over the last few decades, we have steadily reduced our energy, water and waste footprint and bio-diversity impact and we remain steadfast in our commitment to a more sustainable, just and equitable society.

Material Plans to Construct, Expand and Improve Facilities

As of March 31, 2021, we had contractual commitments of  7,490 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.

 

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Item 4A. Unresolved Staff Comments

None.

 

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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.

Overview

Wipro Limited is a leading global 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.

Wipro is recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship. We have over 200,000 dedicated employees (including support functions) serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold tomorrow.

Trend Information

The COVID-19 pandemic has affected every industry, and has disrupted trade, supply chains, work and business models, employment and consumer behaviors.

During the COVID-19 pandemic, companies across the world had to accelerate their digital transformation initiatives to address these disruptions and secure their businesses. While some companies have now set up advanced business continuity measures, others have embarked on new innovative services and products. As companies focused on protecting employees from the pandemic, technology enabled a seamless transition to remote working by shifting to digital channels and digital customer engagement models. Various stay at home orders resulted in large scale adoption of models such as buy-online-pickup-in-store in retail, tele-medicine and virtual care in healthcare, touchless experiences in finance and virtual solutions for online learning.

The conditions caused by the COVID-19 pandemic continue to evolve as new variants of the virus are emerging in some of our markets, leaving the recovery outlook varied and uncertain. The health, safety and wellbeing of our employees is of paramount importance to us. In March 2020, at the onset of the COVID-19 pandemic, we enabled our employees globally to work from home. Since then, fewer than 3% of our employees have been working from Wipro offices. We continue to actively work with our customers to reduce the number of employees required to work out of Wipro offices. Despite demand stability being high and ongoing large-scale vaccination drives, economic outlook remains uncertain. However, companies will continue to invest in digital transformation to address new pandemic-driven consumer behaviors with the support of technology. During the COVID-19 pandemic, we continued to sign large deals and deliver large-scale transformation projects.

IT Services: 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, India’s technology industry is forecasted to grow at 2.3% to reach approximately $194 billion in fiscal year 2021 (excluding e-commerce), exports are estimated to grow at 1.9% to reach to reach approximately $150 billion and the domestic sector is forecasted to reach approximately $45 billion, growing at 3.4%. According to the NASSCOM Report, the growth is driven by increased demand for digital transformation and infrastructure modernization.

Per the NASSCOM Report, digital revenues accounts for 28-30% of total industry revenues for fiscal year 2021, growing at five times the overall services growth. Share of digital services in new contracts is up by 90% compared to fiscal year 2020, driven by cloud, collaboration and cybersecurity. The growth of cloud, AI, ML, IoT, analytics, automation and collaboration software were accelerated during the COVID-19 pandemic, led by remote working and transformation engagements for contactless activities and customer experience. It is expected that the IT services industry will move to hybrid work models, with implications on hiring, team structures, compliance and cybersecurity.

Growth in the technology services sector will be led by next-generation technologies and services, such as digital, cloud, data, engineering and cybersecurity. Companies are actively exploring opportunities for digitization, leading to increased demand for consulting services. The COVID-19 pandemic has resulted in increased technology spending by our customers. 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.

 

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Our strategy supports value creation for clients and growth for our organization through five strategic priorities: accelerate growth, strengthen clients and partnerships, lead with business solutions, building talent at scale, and a simplified operating model. We are focusing our efforts and our investments on maximum results, going deeper in areas that we believe we have strength and defocusing on others, and scaling up to secure leadership positions. Our new strategy will bring us closer to clients, drive greater agility and responsiveness and help us become the employer of choice. Further, we have invested in acquiring new technology and skills. In the last three fiscal years, we have completed several mergers and acquisitions, including the acquisitions of:

 

   

Eximius Design, LLC and Eximius Design India Private Limited, a leading engineering services company with strong expertise in semiconductor, software and systems design;

 

   

Encore Theme Technologies Private Limited, a Finastra trade finance solutions partner across the Middle East, Africa, India and Asia Pacific;

 

   

4C NV and its subsidiaries, a Salesforce multi-cloud partner in Europe, U.K., and the Middle East, helping companies unlock commercial value and achieve business transformation by consistently putting customers first;

 

   

IVIA Serviços de Informática Ltda., is a company specialized in information technology that develops solutions to improve and expand the business of its customers, either by reducing costs, increasing productivity or generating innovation;

 

   

Rational Interaction, a full-service digital CX solutions firm that brings the strategic capabilities of a consultancy together with the creative and digital prowess of an agency;

 

   

International TechneGroup Incorporated, a global digital engineering and manufacturing solutions company and a world leader in computer aided design and product lifecycle management interoperability software services;

We recently signed definitive agreements to acquire the below companies subject to customary closing conditions and regulatory approvals:

 

   

Capco, a global management and technology consultancy providing digital, consulting and technology services to financial institutions in the Americas, Europe and the Asia Pacific, which we completed in April 2021.

 

   

Ampion, an Australia-based provider of cyber security, DevOps and quality engineering services.

Gross profit as a percentage of revenue in our IT Services segment for the year ended March 31, 2021 is 32.59%. We anticipate challenges in significantly improving our gross profits, largely due to the following reasons:

 

   

Annual increases in salaries, progressions and bonuses, and strong demand for digital and other niche skills are expected to result in wage inflation;

 

   

Discretionary spending relating to travel, facilities and marketing spends gradually scaling back;

 

   

Investment in acquisitions, such as our acquisition of Capco, which we completed in April 2021, with potentially lower contribution to margins;

 

   

Increased hiring and training costs due to higher attrition rates;

 

   

Investment in domain architects, deep subject matter experts and diversified local leadership;

 

   

Limited ability of the market to accept increase in prices;

 

   

Loss of revenue due to vendor consolidation or insourcing at the customer end;

 

   

Lower utilization rates for our resources, arising from reduction in demand for our services from customers or contract terminations; and

 

   

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

 

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In response to the increased competition in the marketplace 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 consulting and advisory, strategy, design, cloud and connected offerings;

 

   

Emphasizing a delivery model to retain the utilization of our IT professionals;

 

   

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

 

   

Aligning our resources to expected demand and pivoting ourselves to meet new opportunities;

 

   

Using next-generation technology-led business process services to drive superior customer experience and maximize returns and bring down operating costs;

 

   

Driving revenue and cost synergies of acquired businesses;

 

   

Leveraging Wipro HOLMESTM to increase use of automation within our client organizations to gain cost efficiencies, agility and enhanced user experiences; and

 

   

Investing in non-linearity through our IP portfolio that de-link the linear relationship between revenue and efforts expended.

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 is estimated to be $15.7 billion, and overall revenue for the hardware industry is expected to be $16.1 billion in fiscal year 2021. Due to remote work, enterprise demand for notebooks has increased. According to the NASSCOM Report, the personal computer segment is also expected to do well due to the education industry’s shift to online learning. In our IT Products segment, we continue to experience 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 provide IT products as a complement to our IT services offerings rather than sell standalone IT products, and our focus continues to be on consulting and digital engagements, with a more selective approach in bidding for SI engagements. Accordingly, our revenue, operating income and profit for our IT Products segment have varied significantly in the past and we expect that they are likely to vary in the future.

ISRE: According to the NASSCOM Report, there was significant adoption of digital technologies by governments in reporting COVID-19 updates, medical readiness, citizen services, disaster management centers and contactless services.

The GoI is preparing India to be a hub for AI, cybersecurity, IoT and driving adoption of emerging technologies such as AI, ML, IoT, IIOT, edge computing and analytics, robotics, automation, AR, VR, additive manufacturing, and blockchain. In collaboration with state governments, the GoI is setting up ‘Centres of Excellence’ in AI and cybersecurity. The GoI continues to invest in several projects, through its “Digital India” initiative, and is working with an ecosystem of partners towards its goal of growing from a $200 billion digital economy in fiscal year 2020 to a $1 trillion digital economy by fiscal year 2025.

The COVID-19 pandemic has shown that the GoI’s IT spending is not only a business enabler but an important lever to deliver citizen-centric communication and services. The government has, in the last year, invested more on applications like Aarogya Setu, CoWIN, Track and Trace, which could be rapidly deployed to meet immediate requirements. The strategy going forward is to mature the current solutions and make them available to the masses through all available digital channels, which shall enable citizen services to be rendered more effectively.

We, therefore, see opportunities in the government sector around digitization, cloud adoption, automation and other initiatives. However, there could be delays in the GoI decision making processes for long-term transformation initiatives.

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.

Cash Dividends: The cash dividend paid per equity share during the year ended March 31, 2020 was an interim dividend of  1, and the Board recommended the adoption of the interim dividend of  1 per equity share as the final dividend. The cash dividend paid per equity share during the year ended March 31, 2021 was an interim dividend of  1, and the Board recommended the adoption of the interim dividend of  1 per equity share as the final dividend.

 

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Buyback of equity shares: During the year ended March 31, 2020, we concluded the buyback of 323,076,923 equity shares at a price of  325 ($4.31) per equity share, as approved by the Board of Directors on April 16, 2019 and by shareholders resolution dated June 1, 2019 passed through postal ballot and electronic voting. This resulted in a total cash outflow of  105,000 million ($1,393 million). As a result of the buyback, our share capital was reduced by  646 million ($8.57 million).

During the year ended March 31, 2021, we concluded the buyback of 237,500,000 equity shares at a price of  400 ($5.47) per equity share, as approved by the Board of Directors on October 13, 2020 and by our shareholders by resolution dated November 16, 2020 passed through postal ballot by electronic voting. This resulted in a total cash outflow of  116,644 million ($1,594.8 million) including tax on buyback of  21,445 million ($293.2 million) and transaction cost related to buyback of  199 million ($2.7 million). As a result of the buyback, our share capital has reduced by  475 million ($6.5 million).

Results of Operations

The below discussion of our results of operations omits a comparison of our results for the years ended March 31, 2019 and March 31, 2020. Such omitted discussions can be found in Item 5 of our annual report on Form 20-F for the year ended March 31, 2020, filed with the SEC on June 1, 2020.

Our revenues and profits for the years ended March 31, 2020 and 2021 are provided below:

 

     Wipro Limited and subsidiaries  
     Year ended March 31,     Year on
Year
change
 
     2020     2021     2021-20  
     ( in millions, except earnings
per share data)
       

Revenue (1)

     613,401       622,425       1.47

Cost of revenue

     (436,085     (423,205     (2.95 )% 

Gross Profit

     177,316       199,220       12.35

Selling and Marketing expenses

     (42,907     (41,400     (3.51 )% 

General and administrative expenses

     (29,823     (34,686     16.31

Other Operating income (2)

     1,144       (81     (107.08 )% 

Operating income

     105,730       123,053       16.38

Profit attributable to equity holders

     97,218       107,946       11.03

As a percentage of revenue:

      

Selling and marketing expenses

     6.99     6.65     (34 )bps 

General and administrative expenses

     4.86     5.57     71bps  

Gross Margins (3)

     28.85     32.01     316bps  

Operating margin (3)

     17.20     19.77     257bps  

Earnings per share

      

Basic

     16.67       19.11    

Diluted

     16.62       19.07    

 

 

(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  610,232 million and  619,430 million for the years ended March 31, 2020 and 2021, respectively. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

(2)

Other operating income represents:

 

  (i)

For the year ended March 31, 2020, (a) change in fair value of the callable units upon partial achievement of business targets pertaining to sale of data center business, and (b) gain on sale of assets pertaining to Workday business and Cornerstone OnDemand business in Portugal, France and Sweden.

 

  (ii)

For the year ended March 31, 2021, change in fair value of the callable units upon partial achievement of cumulative business targets pertaining to sale of our hosted data center services business.

Please see Note 26 of the Notes to the Consolidated Financial Statements for additional details.

 

(3)

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

 

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Segment Information

We are organized into following operating segments: IT Services, IT Products and ISRE.

IT Services: During the year ended March 31, 2021, the Company re-organized its IT Services segment from seven industry verticals to four SMUs—Americas 1, Americas 2, Europe and APMEA.

Americas 1 and Americas 2 are primarily organized by industry sector, while Europe and APMEA are organized by countries. Americas 1 includes the entire business of LATAM and the following industry sectors in the U.S.: healthcare and medical devices, consumer goods and life sciences, retail, transportation and services, communications, media and information services, technology products and platforms. Americas 2 includes the entire business in Canada and the following industry sectors in the U.S.: banking, financial services and insurance, manufacturing, hi-tech, energy and utilities. Europe consists of the United Kingdom and Ireland, Switzerland, Germany, Benelux, the Nordics and Southern Europe. APMEA consists of Australia and New Zealand, India, the Middle East, South East Asia, Japan and Africa.

Revenue from each customer is attributed to the respective SMUs, based on the location of the customer’s primary buying center of such services. With respect to certain strategic global customers, revenue may be generated from multiple countries based on such customer’s buying centers, but the total revenue related to these strategic global customers are attributed to a single SMU based on the geographical location of key decision makers.

Prior to the Company’s re-organization of its IT Services segment, the IT Services segment was organized by seven industry verticals: BFSI, Health BU, CBU, ENU, MFG, TECH and COMM.

Effective January 1, 2021, revenue from sale of traded cloud-based licenses is no longer reported in IT Services revenue, and finance income on deferred consideration earned under total outsourcing contracts is not included in segment revenue. Further, for evaluating performance of the individual operating segments, stock compensation expense is allocated on the basis of accelerated amortization as per IFRS 2 – “Share-based Payment”.

The corresponding information for the year ended March 31, 2020 has been re-stated to give effect to the above changes.

IT Products: The Company is a value-added reseller of security and packaged and SaaS software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables, and revenue relating to these items is reported as IT Products revenue.

ISRE: The ISRE segment consists of IT services offerings to entities and/or departments owned or controlled by the GoI and/or 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. Our ISRE strategy is to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

Our revenue and segment results are as follows:

 

     Year ended March 31,      Year on Year change  
     2020      2021      2021-20  
     ( in millions)         

Revenue:

        

IT Services

     593,798        605,815        2.02

IT Products

     11,657        7,685        (34.07 )% 

ISRE

     7,950        8,912        12.10

Reconciling items

     (4      13        425.00
     613,401        622,425        1.47

Segments results:

        

IT Services

     107,673        122,850        14.10

IT Products

     (323      45        113.93

ISRE

     (1,849      1,061        157.38

Reconciling items

     229        (903      (494.32 )% 
     105,730        123,053        16.38

 

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Analysis of Results

Results of operations for the years ended March 31, 2021 and 2020

Revenue: Our revenue increased by 1.47%.

Our IT Services segment revenue increased by 2.02%. The revenue of all SMUs, except for Americas 2, grew during the year, with growth led by Europe and APMEA. The growth in these SMUs was led by a surge in demand for IT services by our customers, a ramp up of our new deal wins and depreciation of the Indian Rupee against foreign currencies, including the Euro, Pound Sterling and Australian Dollar. The decline in revenues from Americas 2 was primarily due to reduction in revenue from the banking, financial services and insurance sector and manufacturing sector.

Revenue of the IT Products segment declined by 34.07%, which was primarily due to our focus on providing IT products as a complement to our IT services offerings, rather than selling standalone IT products, as well as our change in strategy to focus on consulting and digital engagements with ISRE clients rather than SI engagements.

Revenue of the ISRE segment increased by 12.10%, which was primarily due to improved execution of SI deals during the year ended March 31, 2021.

The table below gives our revenue by country for the year ended March 31, 2020 and 2021:

 

     Percentage of revenues  
     Year ended March 31,  
     2020     2021  

United States of America

     55     54

United Kingdom

     11     11

India

     5     4

Rest of the world

     29     31

In absolute terms, cost of revenues decreased by 2.95%, primarily because of decrease in travel costs due to the COVID-19 pandemic, and lower subcontracting costs due to our cost efficiency efforts. Improvement in key operational parameters and higher offshoring also contributed to this increase. This was partially offset by an increase in employee compensation due to the impact of salary increases and increase in headcount, and depreciation of the Indian Rupee against foreign currencies, including the Euro, Pound Sterling and Australian Dollar. The following table presents our cost of revenues:

 

     Year ended March 31,      Year on Year change  

Cost of revenues

   2020      2021      2021-20      2021-20  
     ( in millions)      ( in millions)         

Employee Compensation

     279,356        282,983        3,627        1.30

Cost of hardware and software

     11,490        7,684        (3,806      (33.12 )% 

Sub-contracting / technical fees

     89,890        82,470        (7,420      (8.25 )% 

Travel

     12,775        4,731        (8,044      (62.97 )% 

Depreciation, amortization and impairment

     15,590        18,900        3,310        21.23

Facility expenses

     17,648        18,386        738        4.18

Communication

     4,208        4,546        338        8.03

Others

     5,128        3,505        (1,623      (31.65 )% 
     436,085        423,205        (12,880      (2.95 )% 

As a result of the foregoing factors, our gross profit as a percentage of our total revenue increased by 316 basis points (“bps”).

Our selling and marketing expenses as a percentage of total revenue decreased from 6.99% for the year ended March 31, 2020 to 6.65% for the year ended March 31, 2021. In absolute terms, selling and marketing expenses decreased by 3.51% primarily because of decrease in travel costs and marketing and brand building costs due to the COVID-19 pandemic. This was partially offset by an increase in depreciation, amortization and impairment, due to an impairment charge of  2,418 million on certain intangibles assets recognized on acquisitions. The following tables present our selling and marketing expenses:

 

 

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     Year ended March 31,      Year on Year change  

Selling and marketing expenses

   2020      2021      2021-20      2021-20  
     ( in millions)      ( in millions)         

Employee Compensation

     30,763        31,236        473        1.54

Travel

     3,029        209        (2,820      (93.10 )% 

Depreciation, amortization and impairment

     3,539        6,798        3,259        92.09

Facility expenses

     737        593        (144      (19.54 )% 

Communication

     536        382        (154      (28.73 )% 

Marketing and brand building

     2,532        1,011        (1,521      (60.07 )% 

Others

     1,771        1,171        (600      (33.88 )% 
     42,907        41,400        (1,507      (3.51 )% 

Our general and administrative expenses as a percentage of revenue increased from 4.86% for the year ended March 31, 2020 to 5.57% for the year ended March 31, 2021. In absolute terms, general and administrative expenses increased by 16.31%, primarily due to increase in communication cost, rates, taxes and insurance costs and contributions towards COVID-19, included under “Others” in the year ended March 31, 2021. These increases have been partially offset by the decrease in travel costs due to the COVID-19 pandemic in the year ended March 31, 2021 as compared to the year ended March 31, 2020. The following tables present our general and administrative expenses:

 

     Year ended March 31,      Year on Year change  

General and administrative expenses

   2020      2021      2021-20      2021-20  
     ( in millions)      ( in millions)         

Employee Compensation

     16,452        18,152        1,700        10.33

Travel

     2,365        318        (2,047      (86.55 )% 

Facility expenses

     1,348        1,276        (72      (5.34 )% 

Legal and professional fees

     4,156        4,817        661        15.90

Lifetime expected credit loss

     1,043        1,506        463        44.39

Others

     4,459        8,617        4,158        93.25
     29,823        34,686        4,863        16.31

Other operating income:

During the year ended March 31, 2021, we recorded  (81) million towards change in fair value of the callable units upon partial achievement of cumulative business targets pertaining to the sale of our hosted data center services business.

During the year ended March 31, 2020, we recorded (a)  992 million toward change in fair value of the callable units upon partial achievement of first and second year’s business targets pertaining to the sale of our hosted data center business, and (b)  152 million toward gain on sale of assets pertaining to the divestment of the Workday and Cornerstone OnDemand business in Portugal, France and Sweden.

As a result of the foregoing factors, our operating income increased by 16.38%, from  105,730 million for the year ended March 31, 2020 to  123,053 million for the year ended March 31, 2021. As a result of the above, our results from operating activities as a percentage of revenue (operating margin) increased by 257 bps from 17.20% to 19.77%.

Finance expenses: Our finance expenses decreased from  7,328 million for the year ended March 31, 2020 to  5,088 million for the year ended March 31, 2021. Reduction in exchange fluctuation expense due to repayment of foreign currency loans and reduction in interest rates during the year ended March 31, 2021, primarily, resulted in lower finance expense.

Finance and other income: Our finance and other income decreased from  24,081 million for the year ended March 31, 2020 to  20,912 million for the year ended March 31, 2021. The decrease is primarily due to decrease in interest income by  3,322 million during the year ended March 31, 2021 compared to the year ended March 31, 2020.

Income taxes: Our income taxes increased by  5,546 million from  24,799 million for the year ended March 31, 2020 to  30,345 million for the year ended March 31, 2021. Please refer to Note 21 of the Notes to the Consolidated Financial Statements for further information. Our effective tax rate has increased from 20.24% for the year ended March 31, 2020 to 21.83% for the year ended March 31, 2021. This increase is primarily due to reduction in special economic zone tax benefits in India.

 

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Profit attributable to non-controlling interest: Our profit attributable to non-controlling interest has increased from  495 million for the year ended March 31, 2020 to  716 million for the year ended March 31, 2021.

As a result of the foregoing factors, our profit attributable to equity holders increased by  10,728 million or 11.03%, from  97,218 million for the year ended March 31, 2020 to  107,946 million for the year ended March 31, 2021.

Analysis of Revenue and Results by Segment

IT Services

Our IT Services segment 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, cloud and infrastructure services, business process services, cloud, mobility and analytics services, research and development and hardware and software design. Information by SMUs for the IT Services segment for the years ended March 31, 2020 and 2021 are as follows:

 

     Year ended March 31,      Year on Year change  
     2020      2021      2021-20  
     ( in millions)         

Revenue:

        

IT Services Strategic Market Units

        

Americas 1

     176,115        178,091        1.12

Americas 2

     181,481        179,821        (0.91 )% 

Europe

     157,526        165,441        5.02

APMEA

     78,676        82,462        4.81
     593,798        605,815        2.02

Segments Result:

        

IT Services Strategic Market Units

        

Americas 1

     27,289        33,040        21.07

Americas 2

     34,341        41,589        21.11

Europe

     27,617        31,673        14.69

APMEA

     9,550        11,476        20.17

Unallocated

     7,732        5,153        (33.35 )% 

Other Operating Income

     1,144        (81      (107.08 )% 
     107,673        122,850        14.10

Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details regarding our operating segments.

Our IT Services segment accounted for 96.8% and 97.3% of our total revenue for the years ended March 31, 2020 and 2021, respectively and 101.8% and 99.8% of our operating income for the years ended March 31, 2020 and 2021, respectively.

Operating results of the IT Services segment are as follows:

 

     Year ended March 31,     Year on Year change  
     2020     2021     2021-20  
     ( in millions)        

Revenue (1)

     593,798       605,815       2.02

Cost of revenue

     (415,004     (408,411     (1.59 )% 

Gross Profit

     178,794       197,404       10.41

Selling and Marketing expenses

     (42,418     (40,985     (3.38 )% 

General and administrative expenses

     (29,847     (33,488     12.20

Other Operating income

     1,144       (81     (107.08 )% 

Segment Results (2)

     107,673       122,850       14.10

As a percentage of revenue:

      

Selling and marketing expenses

     7.14     6.77     (37 )bps 

General and administrative expenses

     5.03     5.53     50bps  

Gross Margins (3)

     30.05     32.59     254bps  

Segment Results (3)

     18.10     20.28     218bps  

 

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(1)

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations amounting to  3,232 million and  2,955 million for the years ended March 31, 2020 and 2021, respectively, in revenue. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

(2)

Includes other operating income, to present the effect from the sale of assets pertaining to the Workday business and Cornerstone OnDemand business in Portugal, France and Sweden and the recognized change in fair value of the callable units upon partial achievement of business targets pertaining to the sale of our hosted data center business, in the year ended March 31, 2020 and, in the year ended March 31, 2021, the recognized change in fair value of the callable units upon partial achievement of cumulative business targets pertaining to the sale of our hosted data center services business.

(3)

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

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

 

     Year ended March 31,  
     2020     2021  
     Percentage
of revenues
    Percentage
of Segment
results
    Percentage
of revenues
    Percentage
of Segment
results
 

Strategic Market Units

        

Americas 1

     29.7     25.3     29.4     26.9

Americas 2

     30.6     31.9     29.7     33.9

Europe

     26.5     25.6     27.3     25.8

APMEA

     13.2     8.9     13.6     9.3

Unallocated

     NA       7.2     NA       4.2

Other Operating Income

     NA       1.1     NA       (0.1 )% 

Our IT Services segment revenue by sectors, expressed in terms of percentages, is provided below:

 

     Year ended
March 31,
 
     2020     2021  

Sector

    

Banking, Financial Services and Insurance

     31.0     30.7

Consumer

     16.3     16.4

Health

     13.2     13.5

Energy, Natural Resources and Utilities

     12.9     13.1

Technology

     12.8     13.0

Manufacturing

     8.1     8.1

Communications

     5.7     5.2

IT Services results of operations for the years ended March 31, 2021 and 2020

The IT Services segment revenue increased by 2.02% in the year ended March 31, 2021 compared to our revenue in the year ended March 31, 2020. The revenue of all SMUs, except for Americas 2, grew during the year, led by Europe and APMEA. The growth in these SMUs was led by a surge in demand for IT services by our customers, a ramp up of our new deal wins and depreciation of the Indian Rupee against foreign currencies, including Euro, Pound Sterling and Australian Dollar. The decline in revenues from Americas 2 was primarily due to reduction in revenue in the banking, financial services and insurance sector and manufacturing sector.

Our gross profit as a percentage of our revenue from our IT Services segment increased by 254bps, primarily because of decrease in travel costs by  7,968 million due to the COVID-19 pandemic, and lower subcontracting costs by  5,955 million due to the Company’s cost efficiency efforts. Improvement in key operational parameters and higher offshoring also contributed to this increase. This was partially offset by an increase in employee compensation due to the impact of salary increases and increase in headcount, and an increase in depreciation and amortization cost.

 

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Selling and marketing expenses as a percentage of revenue from our IT Services segment decreased from 7.14% for the year ended March 31, 2020 to 6.77% for the year ended March 31, 2021. In absolute terms, selling and marketing expenses decreased by  1,433 million primarily because of decrease in travel costs by  2,802 million and marketing and brand building costs by  1,461 million. This was partially offset by an increase in depreciation, amortization and impairment, due to an impairment charge of  2,418 million on certain intangibles assets recognized on acquisitions.

General and administrative expenses as a percentage of revenue from our IT Services segment increased from 5.03% for the year ended March 31, 2020 to 5.53% for the year ended March 31, 2021. In absolute terms, general and administrative expenses increased by  3,641 million, primarily due to an increase in employee compensation by  1,518 million due to the impact of salary increases and increase in headcount, communication cost by of  1,062 million and rates, taxes and insurance costs by of  771 million.

During the year ended March 31, 2021, we recorded  (81) million towards change in fair value of the callable units upon partial achievement of cumulative business targets pertaining to the sale of our hosted data center services business.

As a result of the above, segment results as a percentage of our revenue from our IT Services segment increased by 218bps, from 18.10% to 20.28%. In absolute terms, the segment results of our IT Services segment increased by 14.10%.

IT Products

While we focus on being a strategic provider of IT services, we provide IT products as a complement to our IT services offerings. 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 1.9% and 1.2% of our revenue for the years ended March 31, 2020 and 2021, respectively, and (0.3)% and 0.0% of our operating income for each of the years ended March 31, 2020 and 2021, respectively.

Operating results of the IT Products segment are as follows:

 

     Year ended March 31,     Year on Year change  
     2020     2021     2021-20  
     ( in millions)        

Revenue (1)

     11,657       7,685       (34.07 )% 

Cost of revenue

     (11,578     (7,465     (35.52 )% 

Gross Profit

     79       220       178.48

Selling and Marketing expenses

     (274     (109     (60.22 )% 

General and administrative expenses

     (128     (66     (48.44 )% 

Segment Results

     (323     45       113.93

As a percentage of revenue:

      

Selling and marketing expenses

     2.35     1.42     (93 )bps 

General and administrative expenses

     1.10     0.86     (24 )bps 

Gross Margins

     0.68     2.86     218bps  

Segment Results

     (2.77 )%      0.59     336bps  

 

 

(1)

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations amounting to  (26) million and  20 million for the years ended March 31, 2020 and 2021, respectively, in revenue. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

IT Products results of operations for the years ended March 31, 2021 and 2020

Our revenue from the IT Products segment decreased by 34.07% in the year ended March 31, 2021 compared to our revenue in the year ended March 31, 2020. The decline was primarily due to our focus on providing IT products as a complement to our IT services offerings rather than sell standalone IT products, and our adoption of a more selective approach in bidding for SI engagements.

Our gross profit as a percentage of our IT Products segment revenue increased by 218bps, primarily because of decrease in cost of hardware and software.

 

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Selling and marketing expenses as a percentage of revenue from our IT Products segment decreased from 2.35% for the year ended March 31, 2020 to 1.42% for the year ended March 31, 2021. In absolute terms, selling and marketing expenses decreased by  165 million.

General and administrative expenses as a percentage of revenue from our IT Products segment decreased from 1.10% for the year ended March 31, 2020 to 0.86% for the year ended March 31, 2021. In absolute terms, general and administrative expenses decreased by  62 million.

As a result of the above, in absolute terms, segment results of our IT Products segment recorded a profit of  45 million for the year ended March 31, 2021 as compared to segment loss of  323 million for the year ended March 31, 2020.

ISRE

Our ISRE segment accounted for 1.3% and 1.4% of our revenue for the years ended March 31, 2020 and 2021, respectively, and (1.7)% and 0.9% of our operating income for each of the years ended March 31, 2020 and 2021, respectively.

Operating results of the ISRE segment are as follows:

 

     Year ended March 31,     Year on Year change  
     2020     2021     2021-20  
     ( in millions)        

Revenue (1)

     7,950       8,912       12.10

Cost of revenue

     (9,037     (7,282     (19.42 )% 

Gross Profit

     (1,087     1,630       249.95

Selling and Marketing expenses

     (368     (294     (20.11 )% 

General and administrative expenses

     (394     (275     (30.20 )% 

Segment Results

     (1,849     1,061       157.38

As a percentage of revenue:

      

Selling and marketing expenses

     4.63     3.30     (133 )bps 

General and administrative expenses

     4.96     3.09     (187 )bps 

Gross Margins

     (13.67 )%      18.29     3,196bps  

Segment Results

     (23.26 )%      11.91     3,516bps  

 

 

(1)

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations amounting to  (32) million and  5 million for the years ended March 31, 2020 and 2021, respectively, in revenue. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

ISRE results of operations for the years ended March 31, 2021 and 2020

Our revenue from the ISRE segment increased by 12.10% in the year ended March 31, 2021 compared to our revenue in the year ended March 31, 2020, primarily due to improved execution of SI deals during the year ended March 31, 2021.

Our gross profit as a percentage of our ISRE segment revenue increased from (13.67)% for the year ended March 31, 2020 to 18.29% for the year ended March 31, 2021, primarily due to decrease in subcontracting costs by  1,569 million and led by Company’s cost efficiency efforts.

Selling and marketing expenses as a percentage of revenue from our ISRE segment decreased from 4.63% for the year ended March 31, 2020 to 3.30% for the year ended March 31, 2021. In absolute terms, selling and marketing expenses decreased by  74 million, primarily due to decrease in employee compensation.

General and administrative expenses as a percentage of revenue from our ISRE segment increased from 4.96% for the year ended March 31, 2020 to 3.09% for the year ended March 31, 2021. In absolute terms, general and administrative expenses decreased by  119 million. This was primarily a result of the Company’s cost efficiency efforts.

As a result of the above, in absolute terms, segment results of our ISRE segment recorded a profit of  1,061 million for the year ended March 31, 2021 as compared to a loss of  1,849 million for the year ended March 31, 2020.

 

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Acquisitions

Refer to Item 4 and Note 7 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 26 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, 2020 and 2021 were  3,169 million and  2,995 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 expenses, 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 shareholder’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 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. 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, lease liabilities 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 14 and 19 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 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 tax expense 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 2034-35. The impact of tax holidays has resulted in a decrease of current tax expense of  11,963 million and  11,458 million for the years ended March 31, 2020 and 2021, 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, 2020 and 2021 was  2.05 and  2.03, respectively.

 

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We have calculated our domestic tax liability after considering MAT and accordingly, a deferred tax asset of  3,425 million and  Nil has been recognized in the statement of financial position for the years ended March 31, 2020 and 2021, respectively. 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.

In September 2019, the GoI amended the Income Tax Act, 1961 by enacting The Taxation Laws (Amendment) Act, 2019, and has provided an option for companies to pay tax at a lower rate of 22% (plus surcharge and cess) by foregoing all the deductions available under chapter VI-A and other profit linked deductions under the Income Tax Act, 1961. This option, if exercised, is irrevocable and the corresponding MAT credit available will be lapsed. We have evaluated the option and have decided to continue under the existing regime and not to avail ourselves of the lower tax rate. In the future, if we opt for the lower tax rate, it may lead to increase in tax outflow and the MAT credit available to us will be lapsed. Further there has been a reduction in the tax rate under MAT provisions from 21.54% to 17.47%.

The Company’s assessments are completed for the years up to March 31, 2016 in India. The Company has received demands on multiple tax issues in India. These claims are primarily arising out of denial of deduction under section 10A of the Income Tax Act, 1961 in respect of profits earned by the Company’s undertaking in Software Technology Park at Bengaluru, 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, which either has been or may be contested by the Income tax authorities before the Hon’ble Supreme Court of India. Other claims relate to disallowance of tax benefits on profits earned from Software Technology Park and Special Economic Zone units, capitalization of research & development expenses, transfer pricing adjustments on intercompany / inter unit transactions and other issues.

Income tax claims against the Company amounting to  77,873 million and  80,032 million are not acknowledged as debt as at March 31, 2020 and 2021, respectively. 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.

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  
     2020      2021      2021-20  
     ( in millions)  

Net cash generated by/(used in):

        

Operating activities

     100,643        147,550        46,907  

Investing activities

     34,012        7,739        (26,273

Financing activities

     (150,998      (128,840      22,158  

Net change in cash and cash equivalents

     (16,343      26,449        42,792  

Effect of exchange rate changes on cash and cash equivalents

     1,922        (890      (2,812

As of March 31, 2021, we had cash and cash equivalent and short-term investments of  345,500 million. Cash and cash equivalent and short-term investments, net of total debt, was  262,168 million.

In addition, we have unutilized credit lines of  66,488 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, 2021 increased by  46,907 million while profit for the year increased by  10,949 million during the same period. The increase in cash generated by operating activities is primarily due to decreased working capital requirements. This was partially offset by an increase in income tax payments during the year ended March 31, 2021.

 

 

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Cash generated by operating activities for the year ended March 31, 2020 decreased by  15,673 million while profit for the year increased by  7,540 million during the same period. The decrease in cash generated by operating activities is primarily due to increased working capital requirements. This was partially offset by income tax refunds for the previous year received during the year ended March 31, 2020.

Cash generated from investing activities for the year ended March 31, 2021 was  7,739 million. The cash generated from sale of investments (net of purchases) amounted to  16,808 million. Cash utilized for the payment for business acquisitions amounted to  9,873 million. We purchased property, plant and equipment amounting to  19,577 million which was primarily driven by the growth strategy of the Company.

Cash generated from investing activities for the year ended March 31, 2020 was  34,012 million. The cash generated from sale of investments (net of purchases) amounted to  34,579 million. Cash utilized for the payment for business acquisitions amounted to  10,003 million. We purchased property, plant and equipment amounting to  23,497 million which was primarily driven by the growth strategy of the Company.

Cash used in financing activities for the year ended March 31, 2021 was  128,840 million. This is primarily on account of outflow for an equity share buyback (including tax on buyback and transaction cost related to buyback) amounting to  116,644 million. Payment toward the dividend for the year ended March 31, 2021 amounted to  5,459 million. This was partially offset by net inflow from loans and borrowings amounting to  6,212 million. Dividends paid in the year ended March 31, 2021 represents interim (and final) dividend declared for the year ended March 31, 2021 amounting to  1 per share.

Cash used in financing activities for the year ended March 31, 2020 was  150,998 million. This is primarily on account of outflow for an equity share buyback (including transaction cost related to buyback) amounting to  105,311 million and outflow on account of partial repayment of loans taken for acquisitions. Payment toward the dividend including dividend distribution tax for the year ended March 31, 2020 amounted to  6,863 million. Dividends paid in the year ended March 31, 2020 represents interim (and final) dividend declared for the year ended March 31, 2020 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 14 of our Notes to the Consolidated Financial Statements for additional details on our borrowings.

As of March 31, 2021, we have deferred certain indirect tax liabilities and payroll related tax liabilities in certain countries pursuant to COVID-19 relief measures enacted by the governments of the respective countries. We do not anticipate any liquidity challenges in paying these liabilities in the future, even if such COVID-19 relief measures are withdrawn.

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, 2021, we had contractual commitments of  7,490 million ($102.4 million) related to capital expenditures on construction or expansion of software development facilities and  15,411 million ($210.71 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.

We completed our acquisition of Capco on April 29, 2021, and the payment of upfront cash consideration of  108,760 million was funded through borrowings and cash and cash equivalents.

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, 2020 and 2021 is not material. Please refer to Note 19 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, as well as uncertainties around COVID-19. We cannot be certain that additional financing, if needed, will be available on favorable terms, if at all.

As of March 31, 2020 and 2021, our cash and cash equivalents were primarily held in Indian Rupees, U.S. Dollars, Pound Sterling, Euros, Saudi Riyal, Canadian Dollar, Omani Rial, Japanese Yen and Australian Dollars. Please refer to “Financial risk management” under Note 19 of our Notes to the Consolidated Financial Statements for more details on our treasury activities.

 

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Off-Balance Sheet Arrangements

Performance and financial guarantees are provided by banks on behalf of the Company to the Indian government, customers and certain other agencies, as part of the banks’ line of credit arrangements. These arrangements are sometimes referred to as a form of off-balance sheet financing. Please refer to Notes 14 and 33 of the Notes to the Consolidated Financial Statements for more details.

Contractual Obligations

The table of future payments due under known contractual commitments as of March 31, 2021, aggregated by type of contractual obligation, is given below:

 

     Total
contractual
payment
     Payments due in  

Particulars

   2021-22      2022-24      2024-26      2026-27
onwards
 
     ( in millions)  

Short-term borrowings (1)

     60,363        60,363        —          —          —    

Long-term borrowings (1)

     22,969        15,511        7,458        —          —    

Estimated interest payment on borrowings(2)

     1,884        1,735        149        —          —    

Lease liabilities(3)

     25,291        8,675        11,353        3,935        1,328  

Contingent consideration(4)

     2,413        139        2,274        —          —    

Capital commitments (5)

     7,490        7,213        55        222        —    

Purchase obligations (6)

     15,411        11,954        2,861        595        1  

Other non-current liabilities (7)

     135        —          135        —          —    

 

(1)

For further information on currency and interest rate structures, refer to Note 14 of the Notes to Consolidated Financial Statements.

(2)

Interest payments for long-term fixed rate debts have been calculated based on applicable rates and payment dates. Interest payments on floating rate debt have been calculated based on the payment dates and implied forward interest rates as of March 31, 2021 for each relevant debt instrument.

(3)

Includes future cash outflow toward deferred interest on lease liabilities and certain committed leases which have not yet commenced. For further information on lease liabilities, refer to Note 5 and Note 14 in the Notes to Consolidated Financial Statements.

(4)

The fair value of the contingent consideration is estimated by applying the discounted cash-flow approach considering probability adjusted revenues and earnings estimates. The amount in the table above is the undiscounted fair value.

(5)

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

(6)

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.

(7)

Other non-current liabilities and non-current tax liabilities in the statement of financial position include  7,835 million in respect of employee benefit obligations and certain other liabilities and  11,069 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

Our research and development initiatives are accelerating to focus on intensifying and extending our capabilities across multiple new and emerging technology areas, as well as in the discovery of innovative potential at the intersection of multiple technologies. We believe in enabling our customers to continuously innovate and reinvent their core business to become future ready. This is accomplished by building deep expertise, IP and solutions in emerging technologies. Our investment is focused around emerging technologies areas like blockchain technology, interactive experiences (AR, VR), 5G, quantum computing, cognitive computing, autonomous vehicles, computer vision, robotics and drones, Computer Augmented Virtual Environment (“CAVE”) and room scale industrial holographic systems.

Our focus on innovation has contributed, as in past years, to some significant patent applications during the year ended March 31, 2021. We have been continuously investing in building a patent portfolio that protects critical Wipro IP, and during the year ended March 31, 2021, in spite of the unique challenges of the COVID-19 pandemic, our investment has continued apace. As of March 31, 2021, we have 2,085 patents filed in various patent jurisdictions around the world, of which 904 have been granted.

 

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Our Open Innovation programs further enrich our innovation capabilities by co-opting an extended innovation ecosystem of start-up partners, academia and expert networks. During the year ended March 31, 2021, we signed a memorandum of understanding with Tel Aviv University (“TAU”) for jointly working on identifying possible quantum computing approaches to complicated business problems. Wipro’s research teams work with the University of Texas at Austin, TAU, IIT Kharagpur, IIT Madras, IISc Bangalore, and the Institute of Wood Sciences, Bangalore, among others, on various topics in AI, natural language processing (“NLP”), encryption, 5G, blockchain, autonomous vehicles, computer vision (“CV”) and other critical new technologies. We also continued to incubate new innovative start-up partnerships and in scaling existing relationships through joint engagements.

Our innovation centers, the Technovation Centre at Bengaluru, India and the Silicon Valley Innovation Center in Mountain View, California are state of the art innovation incubation centers that build technology-led innovations to realize the “art of the possible” in emerging business environments for our enterprises around the world. 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. To overcome the constraints created by the COVID-19 pandemic, we created digital “twins” of our innovation centers and became truly virtual, through which we hosted a number of our customers and other visitors over the last year and showcased our best technologies and solutions. Additionally, the Technovation Centre has developed human-free and autonomous industry solution concepts at the convergence of information technology, operations technologies, engineering technologies and industrial game technologies. These are rendered into the CAVE and holographic systems, which are both room scale AR environments. Business technology needs, such as hybrid augmented intelligence, AR, intelligent mechatronics and an integrated approach to simulation and modelling are driving research activities.

Our robotics practice is focusing on industrial robotics and developing smart solutions using industrial robots, cobots, automated guided vehicles (“AGVs”), autonomous mobile robots (“AMRs”), drones and other technologies that aim to make industrial operations hyper-efficient. We have partnered with Precision Automation & Robotics India Limited (“Wipro-PARI”) to provide integrated IT-OT solutions to our customers. For all of our robotics projects, we are digitizing, orchestrating the process using AI and generating rich analytics that will help reimagine production. We believe that these initiatives will enable the factory of the future. We have helped our customers with physical automation solution integrated with enterprise resource planning, drone based automated stock-check, intelligent machine tending, optimize logistic package handling operations and remote management of production line. We have signed a partnership agreement with Yaskawa India Private Ltd. to develop and deploy production-ready solutions to our customers. We have signed a research partnership with the Fraunhofer Institute of Manufacturing Engineering and Automation to jointly develop AI solutions for the factory of the future.

We are working on building capability in application of 5G technologies. We are engaging with IIT Kharagpur on radio frequency (“RF”), new waveform and precision localization technology research for 5G and beyond. As an engineering solutions organization, we are investing in building our IP portfolios, in contributing to standards build, in creating use cases to demonstrate new possibilities and enabling customers to embark on new technology journeys. We have invested in academic collaboration in strategic areas like RF, baseband and remote connectivity with the aim of building deep technology competency and demonstrate thought leadership through valuable patents, standards contribution. We are a member of Telecommunications Standards Development Society, India (“TSDSI”), an organizational partner of 3GPP that defines 5G specification. We are also a member in leading open source initiatives like the Open Network Automation Platform, Akraino, O-RAN, Telecom Infra Project (“TIP”) and have set up a 5G ‘centre of excellence’ with development tool chains. Our 5G lab enables our clients to realize use cases leveraging edge computing, network programmability and dynamic orchestration.

The blockchain capability at Wipro has been consistently highly ranked by global industry analysts such as Everest Group, IDC and Avasant. We have helped organizations realize value from blockchain initiatives by offering services in the areas of creating new markets, re-distributing markets and streamlining existing processes. Our strategy is to create a Minimum Viable Ecosystem to help our customers to jump start their blockchain innovation journey. In the blockchain advisory and consulting space we help customers create their roadmap for their blockchain journey, and identify expected ROI from blockchain initiatives. We offer smart contract and distributed application development services amongst others in our application services offering. We have created three platforms – the Supply Chain, Digital Assets and Decentralized Identity platforms – to help customers accelerate founder-led networks. To accelerate our progress, we have partnered with leading technology and business consortia such as Hyperledger, Enterprise Ethereum Alliance, Hedera Hashgraph, Energy Web Foundation, Blockchain in Transportation Alliance, among others. Over the years, we have helped organizations create new revenue streams through a peer to peer energy trading consortium, have enabled redistribution of existing market operations and have built traceability platforms for our customers.

Wipro has full-fledged solutions on AR and VR which are transforming the information sharing process, field force training, upskilling, modernizing, on-job support and on time support processes for enterprises and consumers. Our four industrial transformation platforms, Connect, Connect+, Coalesce and Cicerone, are improving worker performance, efficiency and compliance for a new generation of workers by enabling field service teams and subject matter experts to collaborate in real time, providing augmented information on physical products, providing novel ways of training and also provide directions to people in places without GPS connectivity. We have also developed multiple proof of concepts in the field of AR/VR/mixed reality out of our innovation labs focusing on field assistance, worker training, and spatial experiences for high value purchases. Our CAVE Industrial VR setup enables us to collaborate with multiple stakeholders at the same time and operate remote command centers demonstrating the future of work in complex industrial ecosystems.

 

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Our Advanced AI Research Center works at the cusp of ongoing research in the field of AI and its applications. The team focuses on diverse areas such as computer vision, natural language processing (“NLP”), reasoning, algorithms, AI ethics and speech collaborating with academic institutions, such as UT-Austin, IIT-Patna, and IIT-Delhi. Some of the accelerators the team is working on are a segmentation and image pre-processing algorithm to extract domain specific information, curb fake news and hate speech in social media using machine translation and CodeMix language modelling, explainable AI models for COVID-19 detection using cough samples and understanding speech without transcription. We have also ventured towards the goal of making AI transparent by focusing on model explainability and data privacy using homomorphic encryption. We recently collaborated with HCG Hospital in Bangalore and Bhakti Vedanta Hospital in Mumbai to develop a web application for COVID-19 detection. Other client engagements include developing document classification algorithms for accurate key value entity extraction, utility infrastructure drawing extraction and technical manual translation from German to English using machine translation.

Quantum computing has disruptive possibilities in areas like encryption, optimization problems, and simulations for the pharmaceutical, oil and gas and health industries. Quantum computing is a hotbed for research and experimentation is currently led by big technology vendors, academia and start-ups. At Wipro, we have formed a ‘centre of excellence’ to research applications of quantum computing in the areas of ML and optimization. We have also built collaborations with leading academic institutions and have an active quantum computing community. We have launched a dedicated quantum computing practice in our Engineering Research and Development (“ER&D”) department to accelerate go-to-market and have had proactive conversations with banks and oil and gas customers. Our existing practices, including Cloud Infrastructure Services, Wipro Digital and ER&D have been built capabilities on various market platforms and pursuing industry use cases that can be best solved by quantum computing.

AutoInsights, a connected vehicle and mobility platform, is a strategic investment by Wipro. Today, this platform is used across the globe by various automotive original equipment manufacturers (“OEMs”) and related ecosystem players to help them maximize a vehicle’s lifetime value. Recently, we have also signed a co-innovation agreement with a motorcycle OEM to customize AutoInsights patented solutions to build a unique and industry-first dealership digitalization experience using connected motorcycle data and voice enabled smart helmets. We also have a number of patents associated with AutoInsights.

We have invested in crowdsourcing through Topcoder, a Wipro Company, the world’s largest technology network and on-demand digital talent platform with more than 1.5 million developers, designers, data scientists, and testers across the globe. Topcoder empowers organizations to leverage the flexibility of its key enterprise offerings around Enterprise Crowdsourcing (Design, QA, Dev, Data Science), TaaS and Workforce Transformation (Strategic Consulting). Our community and our customers come together on the Topcoder platform to collaborate and build enterprise grade digital assets. Enterprises distribute work through the platform where community members develop innovative solutions, win money, gain experience, and earn recognition. Topcoder became a part of Wipro Limited in November 2016.

We are continuing to invest in TopGear, our social learning and crowdsourcing platform. TopGear is a powerful learning platform, helping us with workforce transformation in Digital and “in-demand” skills, and accelerating our development of “Future of Work” delivery models. This platform consists of over 2,200 learning assignments and case studies across 240 skills in addition to live projects. TopGear enables hands-on experience to employees on emerging digital skills through case studies and live assignments from customer projects. Employees can self-select projects that interest them and prepare themselves for future projects. TopGear also has structured learning paths aligned to business-specific needs.

Our research and development expenses for the years ended March 31, 2020 and 2021 were  4,619 million and  3,703 million, respectively.

Significant accounting policies, estimates and judgments

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

 

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Item 6.

Directors, Senior Management and Employees

Our directors and executive officers, along with their ages and positions as of March 31, 2021 are detailed below:

 

Name

   Age     

Position

Rishad A. Premji

     44     

Chairman of the Board (designated as “Executive Chairman”)

Azim H. Premji

     75     

Non-Executive, Non-Independent Director (designated as “Founder Chairman”)

Thierry Delaporte

     53     

Chief Executive Officer and Managing Director

William Arthur Owens

     80     

Director

M. K. Sharma

     73     

Director

Ireena Vittal

     52     

Director

Dr. Patrick J. Ennis

     57     

Director

Patrick Dupuis

     58     

Director

Deepak M. Satwalekar

     72     

Director

Jatin Pravinchandra Dalal

     46     

President and Chief Financial Officer

On May 13, 2021, the Board of Directors approved the appointment of Ms. Tulsi Naidu as an Independent Director for a term of five years, with effect from July 1, 2021, subject to approval of the shareholders of the Company.

As of March 31, 2021, we had six non-executive independent directors, one non-executive non-independent director and two executive directors, of whom one executive director is Chairman of our Board. The non-executive and non-independent director and the Chairman of our Board belong to the promoter group. The remaining six 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 of 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 profiles of our directors and executive officers are set forth below.

Rishad A. Premji is the Chairman of the Company and the Board, since July 31, 2019. Mr. Rishad A. Premji has been a member of the Board since May 2015. He also serves as a member on our Strategy Committee and Administrative and Shareholders/Investors Grievance Committee. Prior to being appointed the Chairman of the Company, he was the Chief Strategy Officer, responsible for shaping Wipro’s strategy to drive sustained and profitable growth. Mr. Rishad A. Premji was also responsible for Investor Relations and government relations for the company. As the Chief Strategy Officer, he led Wipro’s M&A strategy and conceptualized Wipro Ventures – a $250 million fund to invest in start-ups developing technologies and solutions that will complement Wipro’s businesses with next-generation services and products.

Mr. Rishad A. Premji is on the boards of Wipro Enterprises (P) Limited, a leading player in FMCG and Infrastructure Engineering and Wipro-GE, a joint venture between Wipro Enterprises (P) Limited and General Electric in the healthcare domain. Separately, he is also on the Board of Azim Premji Foundation, one of the largest not-for-profit initiatives in India, which is focused on improving public school education, and works with over 350,000 government schools across seven states in India. Mr. Rishad A. Premji is also on the Board of Azim Premji Philanthropic Initiatives, which provides grants to organizations that contribute to social change.

Mr. Rishad A. Premji was the Chairman of the National Association of Software and Services Companies (NASSCOM), the trade body of India’s $190 billion software industry, for financial year 2018-19.

Prior to joining Wipro Limited in 2007, Mr. Rishad A. Premji was with Bain & Company in London, working on assignments across the consumer products, automobile, telecom and insurance industries. He also worked with GE Capital in the US in the insurance and consumer lending space and is a graduate of GE’s Financial Management Program.

Mr. Rishad A. Premji has an MBA from Harvard Business School and a BA in Economics from Wesleyan University in the US. 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. Rishad A. Premji is the son of Mr. Azim H. Premji, the Founder Chairman of the Company.

Azim H. Premji is the Non-Executive, Non-Independent Director of the Company (designated as “Founder Chairman”), since July 31, 2019. Mr. Premji was the Chairman of the Board of Wipro Limited until July 30, 2019 and has been at its helm since the late 1960s, turning what was then a small cooking fat company into over $8 billion revenue group with businesses in IT, Consulting and Business Process Services with a presence in over 55 countries. Mr. Premji serves as a member on our Strategy Committee. Mr. Premji also serves as 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

 

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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 and the Foundation teams. 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 Chairman of the Board and the Company.

Thierry Delaporte is the Chief Executive Officer and Managing Director of the Company, since July 6, 2020. He also serves as a member on our Strategy Committee. With 26 years of experience in the IT services industry, Mr. Delaporte brings strategic insights to Wipro’s leadership team, and deep operational knowledge of driving business growth, furthering partnerships, and leading cross-cultural teams.

Prior to joining Wipro, Mr. Delaporte held various leadership positions in Capgemini since 1995, including Chief Operating Officer from September 2017 to May 2020, and was a member of the Group Executive Board. He drove Capgemini’s strategic planning and operations for several key businesses and led the group’s transformation agenda. Mr. Delaporte is President and co-founder of “Life Project 4 Youth”, a not-for-profit organization dedicated to the professional and social integration of young adults living in extreme poverty.

Always passionate about meaningful change, Mr. Delaporte believes prioritizing people and customers, and streamlining processes, are the keys to success in today’s digital world. Mr. Delaporte holds a bachelor’s degree in economy and finance from Sciences Po Paris, and a Master of Laws from the Sorbonne University.

William Arthur Owens has served as a director on our Board since July 2006. He currently serves as the Chairman of our Board Governance, 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 is also the executive chairman of Red Bison Technology group which provides high-speed telecom networks for major office buildings and residential buildings. Mr. Owens previously served as the Chairman and Managing Director 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. Mr. Owens also served as Vice Chairman of the New York Stock Exchange, Asia from June 2012 to June 2014, as well as 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: Knowlabs, Tethr Prism, TruU, Kyrrex, the Compass SPAC, 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 Seattle University, and board member of 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.

 

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M. K. Sharma became a director of the Company in July 2011. Mr. Sharma is the Chairman of our Audit, Risk and Compliance Committee and Administrative and Shareholders/Investors Grievance Committee. Mr. Sharma is also a member of our Board Governance, Nomination and Compensation 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 the Anglo Scottish Education Society, Mumbai. Mr. Sharma is Trustee and member of the National Management Committee 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 and is a member of their Audit Committee and Corporate Social Responsibility Committee. Since June 2019, Mr. Sharma is on the board of Vedanta Ltd and is the Chairman of their Audit Committee and CSR Committee. He also serves on the board of East India Investment Co. Pvt. Limited and Gwalior Webbing Co. Pvt. Limited. Mr. Sharma was on the board of BIC-Cello India Private Limited until October 31, 2020.

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 Board Governance, Nomination and Compensation Committee. Ms. 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. She has also co-authored books on 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. Ireena Vittal serves as a board member of Godrej Consumer Products Limited, HDFC Limited, Compass Plc, Diageo Plc. Ms. Ireena Vittal is a member of the Audit Committee and Nomination and Remuneration Committee of all the 4 boards. Ms. Ireena Vittal was on the board of Titan Company Limited until October 1, 2020.

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 30 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. Previously he was Global Head of Technology for Intellectual Ventures where he led start-up incubation and technology commercialization around the world. He was also the founding CTO of Xinova. Previously, he was at ARCH Venture Partners where he built start-ups 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 provides executive coaching for c-suite and mid-career executives, and is deeply engaged in a number of social and philanthropic ventures, with a special emphasis on housing equity in the Silicon Valley. He previously served as advisor and interim executive for Hellman & Friedman, based in San Francisco, during the preparation for the execution of the merger between Kronos and Ultimate Software. 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, 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. Mr. Dupuis graduated from the École de Management de Lyon in France.

Deepak M. Satwalekar became a director of the Company in July 2020. Mr. Satwalekar is a member of our Audit, Risk and Compliance Committee and Administrative and Shareholders/Investors Grievance Committee. Mr. Deepak M. Satwalekar was the Managing Director of HDFC Ltd., India’s first and largest specialized provider of housing finance. He then became Managing Director and CEO of HDFC Standard Life Insurance Co. Ltd. (2000-2008), the first private-sector life insurance company registered in India after 1956.

 

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Mr. Satwalekar has also been a consultant to the World Bank, the Asian Development Bank, the United States Agency for International Development (USAID), and the United Nations Human Settlements Programme (HABITAT). He serves on the India Advisory Board of a large European bank, and is active on advisory boards of several non-profit organizations supporting primary education for the low-income and underprivileged communities in rural and urban India. He is on the board of SINE, a technology incubator at Indian Institute of Technology (“IIT”), Bombay. He also advises a venture capital fund.

Mr. Satwalekar has chaired the RBI Committee on corporate governance in public sector banks, and was a member of several industry and government/regulatory authority committees, including the Insurance Regulatory and Development Authority of India (“IRDAI”) and Pension Fund Regulatory & Development Authority (“PFRDA”). He received the Distinguished Alumnus Award from the Indian Institute of Technology, Bombay. He is currently the Chairman on the Board of Governors of the Indian Institute of Management, Indore.

Mr. Satwalekar is on the boards of Asian Paints Limited, Piramal Enterprises Limited, Piramal Capital and Housing Finance Limited, Home First Finance Company India Limited and Germinait Solutions Private Limited. Mr. Satwalekar is the Chairman of Corporate Social Responsibility Committee and Stakeholders Relationship Committee of Piramal Enterprises Limited, member of Audit Committee, Corporate Social Responsibility Committee and Investment Committee of Asian Paints Limited and member of Nomination and Remuneration Committee of Piramal Capital and Housing Finance Limited.

Mr. Satwalekar holds a Bachelor’s Degree of Technology in Mechanical Engineering from Indian Institute of Technology, Bombay and Masters in Business Administration from The American University, Washington D.C., USA.

Tulsi Naidu has been appointed as an Additional Director in the capacity of Independent Director for a term of five years, with effect from July 1, 2021 to June 30, 2026, subject to approval of the shareholders of the Company. She has 25 years of financial services experience in Europe and Asia. She is CEO Asia Pacific of Zurich Insurance Group (Zurich), a member of Zurich’s Executive Committee and a trustee of the Z Zurich Foundation. Ms. Naidu was appointed CEO of Zurich’s UK business in November 2016 and implemented an extensive transformation program – reshaping the business, simplifying structure, improving technical and digital capabilities, and positioning it for growth in its core markets.

Prior to joining Zurich, Ms. Naidu spent 14 years at Prudential in a variety of executive positions across their UK and Europe business. Her last position with Prudential was Executive Director, UK & Offshore. She was previously Chief Operating Officer for Prudential UK and Europe and prior to that held several general management roles at Prudential focused on driving strategic transformational change.

Ms. Naidu holds a Post Graduate Diploma in Management from Indian Institute of Management, Ahmedabad and bachelor’s degree in Mathematics, Economics and Statistics from Nizam College, Hyderabad.

Jatin Pravinchandra Dalal is the President and Chief Financial Officer of the Company. Mr. 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 (“NMIMS”), Mumbai. Mr. Dalal is a qualified Chartered Accountant (CA), India, Cost and Management Accountant (CMA), India, Chartered Global Management Accountant (CGMA), UK and a Chartered Financial Analyst (CFA), U.S.A. Mr. Dalal has completed The Strategic Decision-Making Mindset course from The Wharton School, University of Pennsylvania and Stanford Advanced Computer Security course from Stanford University. 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. The Board of Directors, in turn, approves and recommends such compensation to the shareholders for their approval. 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 ($1,367.24) 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, for all non-executive directors put together, as approved by the shareholders. Further, the non-executive non-independent director is entitled to maintenance of Founder Chairman’s office, including an executive assistant at Company’s expense and reimbursement of travel, stay and entertainment expenses actually and properly incurred in the course of business as per the Company’s policy.

 

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The Board Governance, Nomination and Compensation Committee has created a policy for selection and appointment of Directors, including determining qualifications and independence of directors, key managerial personnel and senior management personnel, and their respective remuneration, as part of its charter and other matters provided under Section 178(3) of the Companies Act, 2013.

The aggregate commission to our non-executive directors for the year ended March 31, 2021 is  108.5 million ($1.48 million). There were no stock options granted to non-executive directors as of March 31, 2021 and the shares held by non-executive directors as of March 31, 2021 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 the Board Governance, Nomination and Compensation Committee, within the parameters set by the shareholders at the general meeting. 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 Variable Pay Scheme. This is a variable pay program for all employees, including executive officers, which is deemed to be part of each employee’s salary. The variable pay of our executive officers, including the Chief Executive Officer and Managing Director, is based on clearly laid out criteria and measures, which are linked to the desired performance and business objectives of the organization. The criteria for variable pay, which is paid out quarterly / annually, includes financial parameters like revenue, profit achievement, operating margin achievement and other strategic goals as decided by the Board from time to time. Apart from the variable pay component, long term (typically greater than one year) incentives granted to executive officers, including the Chief Executive Officer and Managing Director, include both time-based Restricted Stock Units (“RSUs”) and performance-based stock units (“PSUs”).

The following table presents the annual and long-term compensation earned, awarded or paid for services rendered for the fiscal year 2021 by our executive officers. For the convenience of the readers, the amounts paid / payable in India rupees 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, 2021 which was  73.14 per $1.

 

Name

   Salary and
allowances

US$
     Commission/
variable

Pay
US$
     Others
US$
     Long-term
compensation
(Deferred
Benefit) (4) (5)

US$
     Total
US$
 

Rishad A. Premji(1)(2)

     796,178        761,311        2,334        52,791        1,612,614  

Thierry Delaporte (3)(6)

     1,312,938        1,542,132        5,184,417        758,719        8,798,206  

Jatin Pravinchandra Dalal(6)

     288,089        162,702        531,083        36,916        1,018,790  

Abidali Z. Neemuchwala(7)

     190,413        32,611        82,788        33        305,845  

 

(1)

Mr. Rishad A. Premji is entitled to a commission at the rate of 0.35% on incremental consolidated net profits of Wipro Limited for fiscal year 2021 over the previous year, computed in accordance with the provisions of the Companies Act, 2013.

(2)

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

(3)

The compensation disclosed for Mr. Thierry Delaporte is for the period from July 6, 2020 to March 31, 2021. It includes components such as a one-time cash award, annual stock grant and one-time grant of RSUs, among other things, as per the terms approved by the shareholders at the Annual General Meeting of the Shareholders in July 2020.

(4)

Deferred benefits are payable to employees by way of our contribution to the Provident Fund, Pension Fund and Social Insurance (health and retirement funds) 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.

 

 

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(6)

The remuneration of executive officers is computed on an accrual basis. It also includes the amortization of 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.

(7)

The compensation disclosed for Mr. Abidali Z. Neemuchwala is for the period April 1, 2020 to June 1, 2020. Mr. Neemuchwala resigned as the Chief Executive Officer and Managing Director with effect from the end of the day on June 1, 2020. For further details on the terms of employment arrangements with Mr. Neemuchwala, please see the section entitled “Terms of Employment Agreements” in Item 6 of our Annual Report on Form 20-F for the fiscal year ended March 31, 2020.

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 stock options granted to Mr. Rishad A. Premji in fiscal year 2021. Details of stock options granted to executive directors as of March 31, 2021 and stock options held and exercised by executive officers through March 31, 2021 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, 2021, we had nine 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 the Chairman of our Board is not subject to retirement by rotation. Accordingly, our Chief Executive Officer and Managing Director, and non-executive non-independent director, are currently subject to retirement by rotation. The position of the terms of all directors are as given below.

 

Name    Expiration of current term of office    Term of office

Rishad A. Premji

   July 30, 2024    5 years

Azim H. Premji

   July 30, 2024    5 years

Thierry Delaporte

   July 5, 2025    5 years

William Arthur Owens

   July 31, 2022    5 years

M. K. Sharma

   June 30, 2021    5 years

Ireena Vittal

   September 30, 2023    5 years

Dr. Patrick J. Ennis(1)

   March 31, 2026    5 years

Patrick Dupuis(1)

   March 31, 2026    5 years

Deepak M. Satwalekar

   June 30, 2025    5 years

 

(1)

The Board of Directors of the Company, at their meeting held on January 13, 2021, approved the re-appointment of Dr. Patrick J. Ennis and Mr. Patrick Dupuis as Independent Directors for a second term of 5 years with effect from April 1, 2021 to March 31, 2026. The said re-appointment was approved by shareholders of the Company vide special resolutions dated June 4, 2021, passed through postal ballot by e-voting.

The Board of Directors, at their meeting held on May 29, 2020, noted the resignation of Mr. Abidali Z. Neemuchwala as the Chief Executive Officer and Managing Director and resignation of Ms. Arundhati Bhattacharya as an Independent Director, with effect from the end of the day on June 1, 2020 and close of business hours on June 30, 2020, respectively.

Terms of Employment Arrangements

Under the Companies Act, 2013, our shareholders must approve the salary, bonus and benefits of all executive directors at a general meeting of the Shareholders. 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, 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. Rishad A. Premji, Mr. Thierry Delaporte and Mr. Jatin Pravinchandra Dalal provide for up to a 180-day notice period, and country-specific leave allowances 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.

 

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Pursuant to the terms of the employment arrangement with Mr. Delaporte, if his employment is terminated by the Company without Cause, the Company is required to pay Mr. Delaporte, severance pay of 12 months’ base salary as last applicable when in service, payable over a 12 month period following the date of termination. These payments will cease if Mr. Delaporte obtains a new employment within the 12 months period or becomes a consultant to any company.

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;

 

   

Review of utilization of loans and advances from, and investment by, the Company in its subsidiaries exceeding  1,000,000,000 or 10% of the asset size of the subsidiary, whichever is lower, including existing loans, advances and investments.

 

   

Evaluation of internal financial controls, monitoring and reviewing of the risk management plan and such other functions including cyber security as the Board of Directors may deem fit.

 

   

To formulate a detailed risk management policy which shall include:

 

  a)

A framework for identification of internal and external risks specifically faced by the Company, in particular including financial, operational, sectoral, sustainability (specifically, environmental, social and governance related risks and impact), information and cyber security risks

 

  b)

Measures for risk mitigation

 

  c)

Systems for internal controls

 

  d)

Business contingency plan

 

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To monitor and oversee implementation of the risk management policy, including evaluating the adequacy of risk management and internal control systems;

 

   

Evaluate risks related to cyber security and significant risk exposures of the Company and assess steps taken by the management to mitigate the exposures in a timely manner (including business continuity and disaster recovery planning).

All members of our Audit, Risk and Compliance Committee are independent non-executive 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 three non-executive directors:

Mr. M. K. Sharma – Chairman

Ms. Ireena Vittal and Mr. Deepak M. Satwalekar – Members

During the year ended March 31, 2021, our Audit, Risk and Compliance Committee held five meetings. The charter of the Audit, Risk and Compliance Committee is available under the investor relations section on our website at www.wipro.com.

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 Chief Human Resources Officer 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 independent non-executive directors. The Board Governance, Nomination and Compensation Committee is the apex body that oversees our CSR policy and programs. The Board Governance, Nomination and Compensation Committee is comprised of the following three non-executive directors:

Mr. William Arthur Owens – Chairman

Mr. M. K. Sharma and Ms. Ireena Vittal – Members

 

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During the year ended March 31, 2021, our Board Governance, Nomination and Compensation Committee held five meetings. The charter of the Board Governance, Nomination and Compensation Committee 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).

The Strategy Committee is comprised of the following seven directors:

Mr. William Arthur Owens – Chairman

Mr. Azim H. Premji, Mr. Thierry Delaporte, Mr. Rishad A. Premji, Dr. Patrick J. Ennis, Mr. Patrick Dupuis and Ms. Ireena Vittal – Members

During the year ended March 31, 2021, our Strategy Committee held two meetings.

At the Board meeting held on April 15, 2021, it was decided to discontinue the Strategy Committee, as the entire Board will be deliberating on matters pertaining to the strategy of the Company going forward.

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:

 

   

Redressal of grievances of the shareholders of the Company pertaining to transfer or transmission of shares, non-receipt of annual report and declared dividends, issue of new or duplicate share certificates, and grievances pertaining to corporate actions;

 

   

Approving consolidation, split or sub-division of share certificates, transmission of shares, issue of duplicate share certificates, re-materialization of shares;

 

   

Reviewing the grievance redressal mechanism implemented by the Company in coordination with Company’s Registrar and Transfer Agent (“RTA”) from time to time;

 

   

Reviewing the measures taken by the Company for effective exercise of voting rights by shareholders;

 

   

Implementing and overseeing the procedures and processes in handling and maintenance of records, transfer of securities and payment of dividend by the Company, RTA and dividend processing bank;

 

   

Reviewing the various measures and initiatives taken by the Company for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants, annual reports and statutory notices by the shareholders of the Company;

 

   

Overseeing administrative matters like opening and closure of Company’s bank accounts, grant and revocation of general, specific and banking powers of attorney; and

 

   

Considering and approving allotment of equity shares pursuant to exercise of stock options, setting up branch offices and other administrative matters as delegated by Board from time to time.

 

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The Committee is comprised of the following three Directors:

Mr. M. K. Sharma – Chairman

Mr. Rishad A. Premji and Mr. Deepak M. Satwalekar – Members

During the year ended March 31, 2021, our Administrative and Shareholders/Investors Grievance Committee held four meetings. The charter of the Administrative and Shareholders/Investors Grievance Committee is available under the investor relations section on our website at www.wipro.com.

Employees

As of March 31, 2019, 2020 and 2021, we and our subsidiaries had more than 170,000, 175,000 and 200,000 employees, respectively. As of March 31, 2019, 2020 and 2021, more than 38,000, 41,000 and 41,000 of these employees were located outside India. We have increasingly focused on hiring local resources in the countries where we operate. Highly trained and motivated people are critical to the success of our business. To achieve this, we focus on attracting and retaining the best people possible. A combination of strong brand name, a congenial working environment and competitive compensation programs enables us to attract and retain these talented people.

Our relationship with employees and employee groups are based on mutual trust and respect and we continue to maintain the same spirit at all times.

Recruiting

We hire entry level graduates from both the top engineering and management universities, as well as experienced lateral hires through employee referral programs, advertisements, job boards, placement consultants, our website postings and walk-ins. To facilitate employee growth within the Company, all new openings are first offered to our existing employees. The nature of work, skill sets requirements and experience levels are highlighted to the employees. Applicants undergo the evaluation and, if selected, get assigned to new roles.

Training

Each of our new entry level recruits must attend an intensive training program that is tailored to their area of technology and domain as well as attend behavioral skills programs. We also have a continuing education program that encourages each IT professional to attend continuing education classes to improve their understanding and competency with new technologies, domain, process, as well as to develop leadership and personal self-development skills. We supplement our continuing education program for existing employees by sponsoring special programs at leading educational institutions, such as the Birla Institute of Technology and Science, Pilani and Symbiosis International University, Pune and others to provide special skill set training in areas such as advanced technology, management, business and project management skills to any of our IT professionals who meet the eligibility criteria of these Institutes, as part of our flagship work integrated learning programs.

Performance Evaluations

Our employees receive written performance objectives that they develop in conjunction with their respective managers. They are measured against these criteria quarterly as well as annually in a formal review process which includes self-reviews and manager feed-forward discussions. Appropriate development plans and interventions are then charted out based on discussion between manager and employee. Differentiation of high performers is ensured in relevant talent management processes.

Compensation

We continually strive to provide our employees with competitive and innovative compensation packages. Our employee compensation is based on total rewards. Our pay mix comprises of fixed pay, benefits, variable pay, retirals, health insurance and long-term incentives (equity pay). We measure our compensation packages against industry standards and seek to match or exceed them. We have adopted stock incentive plans over the years, like our employee stock purchase plan in 1984, employee stock option plans, adopted in 1999 and 2000, and restricted stock unit option plans in 2004, 2005 and 2007, and the Wipro Equity Reward Trust employee stock purchase plan in 2013, as part of the Company’s compensation program. We have devised both business unit performance and individual performance linked incentive programs that we believe more accurately links performance and compensation for each employee. For example, we link variable compensation for senior managers with their corresponding business unit’s quarterly performance of financial and customer objectives. In addition to fixed and variable compensation, we have also introduced performance-based long-term incentive plans. For example, we have PSUs plans that will vest based on the performance parameters of the Company.

 

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Share Ownership

The following table sets forth, as of March 31, 2021, for each director and executive officer, the total number of equity shares, ADSs and vested and unexercised options to purchase equity shares and ADSs exercisable within 60 days of March 31, 2021. Beneficial ownership is determined in accordance with the rules of the SEC. All information with respect to the beneficial ownership of any principal shareholder has been furnished by such shareholder and, unless otherwise indicated below, we believe that persons named in the table have sole voting and sole investment power with respect to all the shares shown as beneficially owned. The number of shares beneficially owned includes equity shares, equity shares underlying ADSs and the shares subject to vested options that are currently exercisable or exercisable within 60 days of March 31, 2021. Our directors and executive officers do not have a differential voting right with respect to their equity shares, ADSs, or options to purchase equity shares or ADSs. For the convenience of the readers, the stock option grant price has been translated into U.S. dollars based on the certified foreign exchange rates published by Federal Reserve Board of Governors on March 31, 2021, which was  73.14 per $1. The share numbers and percentages listed below are based on 5,479,138,555 equity shares outstanding as of March 31, 2021.

 

Name

   Equity Shares
beneficially
owned
    Percentage
of Total
Equity
Shares
Outstanding
     Equity
Shares
Underlying
Options
Granted
    Exercise
Price
(US$)
     Date of expiration

Azim H. Premji(1)

     4,001,040,248       73.02        —         —        —  

Thierry Delaporte(3)

     —         —          300,000 **      0.03      July 2022
          900,000 **      0.03      June 2023
          300,000 **      0.03      July 2024

Rishad A. Premji

     1,738,057 ***      *        —         —        —  

M. K. Sharma

     —         —          —         —        —  

William Arthur Owens

     —         —          —         —        —  

Ireena Vittal

     —         —          —         —        —  

Patrick Dupuis

     —         —          —         —        —  

Patrick J. Ennis

     —         —          —         —        —  

Deepak M. Satwalekar

     —         —          —         —        —  

Jatin Pravinchandra Dalal(2)(3)

     172,821 ****      *        48,000       0.03      August 2022
          49,000       0.03      January 2023
          140,000       0.03      July 2023
          48,000       0.03      August 2023
          52,500       0.03      August 2024
          60,000       0.03      November 2024

 

(1)

Includes 928,946,043 shares held by Hasham Traders (a partnership firm), of which Mr. Azim H. Premji is a partner, 1,119,892,315 shares held by Prazim Traders (a partnership firm), of which Mr. Azim H. Premji is a partner, 1,135,618,360 shares held by Zash Traders (a partnership firm), of which Mr. Azim H. Premji is a partner, 1,425,034 shares held by Hasham Investment and Trading Company Pvt. Ltd., of which Mr. Azim H. Premji is a director, 558,676,017 shares held by Azim Premji Trust, of which Azim Premji Trustee Company Private Limited is the trustee company, of which Mr. Azim H. Premji is a director and sole shareholder, and 241,913,816 shares held jointly by Mr. Azim H. Premji and members of his immediate family. In addition, 14,568,663 shares are held by Azim Premji Philanthropic Initiatives Private Limited. Mr. Azim H. Premji disclaims beneficial ownership of 14,568,663 shares held by Azim Premji Philanthropic Initiatives Private Limited and 558,676,017 shares held by Azim Premji Trust.

(2)

The equity shares beneficially owned include vested and unexercised options to purchase equity shares exercisable within 60 days of March 31, 2021.

(3)

The equity shares underlying options granted include options that will vest based on performance parameters of the Company.

*

Represents less than 1% of the total equity shares outstanding as of March 31, 2021.

**

Represents ADS Stock Options having equivalent underlying equity shares.

***

Equity shares held by Mr. Rishad A. Premji are jointly with his relative and included in shareholding of Mr. Azim H. Premji.

****

Includes equity shares held jointly by Mr. Jatin Pravinchandra Dalal and a member of his immediate family.

Employee Stock Option Plans

We have various employee stock option and restricted stock unit option plans (collectively referred to as “stock option plans”). Our stock option plans provide for grants of options to eligible employees and directors. Our stock option plans are administered by our Board Governance, Nomination and Compensation Committee (the “Committee”) appointed by our Board of Directors. The Committee has the sole power to determine the terms of the units granted, including the exercise price, selection of eligible employees and directors, the number of equity shares to be covered by each option, the vesting and exercise periods, and the form of consideration payable upon such exercise. In addition, the Committee has the authority to amend, suspend or terminate the stock option plan with the approval of the shareholders, provided that no such action may adversely affect the rights of any participant under the plan.

 

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Our stock option plan generally does not allow for the transfer of options and only the optionee may exercise an option during his or her lifetime. The vesting period for the options under the stock option plans range from 12 months to a maximum of 60 months. An optionee generally must exercise any vested options within a prescribed period as per the respective stock option plans generally before the termination date of the stock option plan. A participant must exercise any vested options prior to termination of services with us or within a specified post-separation period ranging from seven days to six months from the date of the separation, depending on the reason for separation. If an optionee’s termination is due to death, disability or retirement, his or her option will fully vest and become exercisable.

The salient features of our stock plans are as follows:

 

Name of plan

   Number of
options(1)
     Range of
exercise
prices(1)
     Effective date    Termination
date
    

Other remarks

Wipro ADS Restricted Stock Unit Plan (WARSUP 2004 plan)

     59,797,979      US$ 0.03      June 11, 2004      —       

Perpetual until the

options are available

for grant under the

plan

Wipro employee Restricted Stock Unit Plan 2005 (WSRUP 2005 plan)

     59,797,979      2      July 21, 2005      —       

Perpetual until the

options are available

for grant under the

plan

Wipro employee Restricted Stock Unit Plan 2007 (WSRUP 2007 plan)

     49,831,651      2      July 18, 2007      —       

Perpetual until the

options are available

for grant under the

plan

Wipro Equity Reward Trust Employee Stock Purchase Plan, 2013

     39,546,197      2      May 30, 2013      May 29, 2023      —  

 

(1)

Subject to adjustment for corporate action from time to time.

Please also refer to Note 30 of our Notes to Consolidated Financial Statements.

Wipro Equity Reward Trust (“WERT”)

We established the WERT, in 1984 to allow our employees to acquire a greater proprietary stake in our success and growth, and to encourage our employees to continue their association with us. The WERT, which is administered by a Board of Trustees, is designed to give eligible employees the right to receive restricted shares and other compensation benefits at the times and on the conditions that we specify. Such compensation benefits include voluntary contributions, loans, interest and dividends on investments in the WERT and other similar benefits.

Shareholders have, through a postal ballot dated April 19, 2013, approved the issuance of additional shares, in one or more tranches, to the WERT. The Board has the discretion to determine the timing and allotment of such shares, and as of March 31, 2021 has not approved the issuance of additional shares pursuant to the enabling resolution approved by the shareholders. Pursuant to approval by the shareholders at their meeting held in July 2014, the Company is authorized to transfer shares from the WERT to employees on exercise of vested Indian RSUs.

During the year ended March 31, 2021, 3,344,866 shares have been transferred by WERT to eligible employees on exercise of stock options.

 

Item 7.

Major Shareholders and Related Party Transactions

Major Shareholders

The following table sets forth certain information regarding the beneficial ownership of our equity shares as of March 31, 2021, of each person or group known by us to own beneficially 5% or more of our outstanding equity shares.

 

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Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to such shares. Shares subject to vested options that are currently exercisable or exercisable within 60 days of March 31, 2021, are deemed to be outstanding or to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person, but are not deemed to be outstanding or to be beneficially owned for the purpose of computing the percentage ownership of any other person. All information with respect to the beneficial ownership of any principal shareholder has been furnished by such shareholder and, unless otherwise indicated below, we believe that persons named in the table have sole voting and sole investment power with respect to all the shares shown as beneficially owned, subject to community property laws, where applicable. The number of shares and percentage ownership are based on 5,479,138,555 equity shares outstanding as of March 31, 2021.

 

Name of Beneficial Owner    Class of
Security
     Number of
Shares
Beneficially
Held as of
March 31, 2021
     % of
Class of
Total
Shares
Outstanding
 

Azim H. Premji(1)

     Equity        4,001,040,248        73.02  

Hasham Traders

     Equity        928,946,043        16.95  

Prazim Traders

     Equity        1,119,892,315        20.44  

Zash Traders

     Equity        1,135,618,360        20.73  

Azim Premji Trust

     Equity        558,676,017        10.20  

 

(1)

Includes 928,946,043 shares held by Hasham Traders (a partnership firm), of which Mr. Azim H. Premji is a partner, 1,119,892,315 shares held by Prazim Traders (a partnership firm), of which Mr. Premji is a partner, 1,135,618,360 shares held by Zash Traders (a partnership firm), of which Mr. Azim H. Premji is a partner, 1,425,034 shares held by Hasham Investment and Trading Company Pvt. Ltd., of which Mr. Azim H. Premji is a director, 558,676,017 shares held by Azim Premji Trust, of which Azim Premji Trustee Company Private Limited is the trustee company, of which Mr. Azim H. Premji is a director and sole shareholder, and 241,913,816 shares held jointly by Mr. Azim H. Premji and members of his immediate family. In addition, 14,568,663 shares are held by Azim Premji Philanthropic Initiatives Private Limited. Mr. Premji disclaims beneficial ownership of 14,568,663 shares held by Azim Premji Philanthropic Initiatives Private Limited and 558,676,017 shares held by Azim Premji Trust.

Our ADSs are listed on the New York Stock Exchange. Each ADS represents one equity share of par value  2 per share. Our ADSs are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 and, as of March 31, 2021, 2.61% of the Company’s equity shares are held through ADSs by approximately 36,500 holders of record. As of March 31, 2021, approximately 97.39% of the Company’s equity shares are held by 818,538 holders.

Our equity shares can be held by Foreign Institutional Investors (“FIIs”) and Non-Resident Indians (“NRIs”) who are registered with SEBI, and the RBI. As of March 31, 2021, about 9.27% of the Company’s equity shares were held by these FIIs, NRIs, Foreign Nationals and FPIs some of which may be residents or corporate entities registered in the United States and elsewhere. We are unaware of whether FIIs and/or NRIs hold our equity shares as residents or as corporate entities registered in the United States.

Our major shareholders do not have differential voting rights with respect to their equity shares. To the best of our knowledge, we are not owned or controlled directly or indirectly by any government or by any other corporation. We are not aware of any arrangement, the operation of which may at a subsequent date result in a change in control, of our Company.

Related Party Transactions

Terms of Employment Arrangements and Indemnification Agreements: We are a party to various employment and indemnification agreements with our directors and executive officers. See “Terms of Employment Arrangements” under Item 6 of this Annual Report for a description of the agreements that we have entered into with our directors and executive officers.

Related parties: For details and summary of transactions with related parties, please refer to Note 32 to the Consolidated Financial Statements.

 

Item 8.

Financial Information

Consolidated Statements and Other Financial Information

Please refer to the following Consolidated Financial Statements and the Auditor’s Report under Item 18 in this Annual Report for the fiscal year ended March 31, 2021:

 

   

Report of the independent registered public accounting firm;

 

   

Consolidated Statements of Financial Position as of March 31, 2020 and 2021;

 

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Consolidated Statements of Income for the years ended March 31, 2019, 2020 and 2021;

 

   

Consolidated Statements of Comprehensive Income for the years ended March 31, 2019, 2020 and 2021;

 

   

Consolidated Statements of Changes in Equity for the years ended March 31, 2019, 2020 and 2021;

 

   

Consolidated Statements of Cash Flows for the years ended March 31, 2019, 2020 and 2021; and

 

   

Notes to the Consolidated Financial Statements.

The financial statements of the Company included in this Annual Report on Form 20-F have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Export Revenue

For the years ended March 31, 2019, 2020 and 2021, we generated  558,494 million,  584,027 million and  595,269 million, or 95%, 95% and 96% of our total segment revenues of  589,060 million,  613,401 million and  622,425 million, respectively, from the export of our products and rendering of services to customers outside of India.

Legal Proceedings

Please see the section titled “Legal Proceedings” under Item 4 of this Annual Report for this information.

Dividends

Public companies in India typically pay cash dividends even though the amount of such dividends varies from company to company. Under Indian laws, a corporation can pay dividends upon a recommendation by its board of directors and approval by a majority of the shareholders, who have the right to decrease but not increase the amount of the dividend recommended by the board of directors. Under the Companies Act, 2013, dividends may be paid out of profits of a company in the year in which the dividend is declared or out of the undistributed profits of previous fiscal years. The Companies Act, 2013 contains specific conditions for the declaration of dividend out of reserves. The Companies (Declaration and Payment of Div