Assignment on Ratio Analysis of Wipro

Submitted in partial fulfillment towards the degree of

BACHELOR OF TECHNOLOGY
in
ELECTRONICS AND COMMUNICATION ENGINEERING
Prepared By

Name: Nishita Luhana

Roll no: EC-033

DEPARTMENT OF ELECTRONICS AND COMMUNICATION ENGINEERING

FACULTY OF TECHNOLOGY
 DHARMSINH DESAI UNIVERSITY, NADIAD
JULY, 2019

INTRODUCTION
Board of Directors:
M K Sharma – Independent Director
Azim H Premji – Executive Chairman
Narayan Vaghul – Independent Director
Rishad Premji – Chief Strategy Officer & Member of the Board
Ireena Vittal – Independent Director
Dr. Ashok S Ganguly – Independent Director
Abidali Z Neemuchwala – Independent Director
Patrick Dupuis – Independent Director
William Arthur Owens – Independent Director

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) is a leading global information
technology, 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 160,000 dedicated employees serving clients across
six continents. Together, we discover ideas and connect the dots to build a better and a bold
new future.
We began our business as a vegetable oil manufacturer in 1945 at Amalner, a small town in
Western India and thereafter, forayed into soaps and other consumer care products. During the
early 1980s, we entered the Indian IT industry by manufacturing and selling mini computers. In
the 1990s, we leveraged our hardware R&D design and software development expertise and
began offering software services to global clients. In 2013, we demerged the non-IT Diversified
Businesses. With a track record of over 25 years in IT Services, we are, today, focused entirely
on the global Information Technology business. Wipro is listed on National Stock Exchange and
Bombay Stock Exchange in India and New York Stock Exchange in the U.S.A.

Values
The Spirit of Wipro is the core of Wipro. These are our Values. It is about who we are. It is our
character. It is reflected consistently in all our behavior. The Spirit is deeply rooted in the
unchanging essence of Wipro. It also embraces what we must aspire to be. It is the indivisible
synthesis of the four values. The Spirit is a beacon. It is what gives us direction and a clear sense
of purpose. It energizes us and is the touchstone for all that we do.

Transformation leading the way

In today’s world, when rapid change is the order of the day in all spheres of life, technology is
not just an outcome of a strategic planning exercise, it is the new strategy! Or at least, a big
part of it. For the foreseeable future, no other choices will matter to the future of a company,
as much as the new technologies it adopts and the pace at which it accelerates its
transformation using these technologies. For any industry today, the future business models
and value chains are much less predictable than they used to be, but they are certainly
inventible, through constant experimentation, failfast mindsets and being open to innovative
ideas, wherever they come from.
Reinvention is not just about serving your existing customers through digital channels,
experiences and transactions, it is also about serving entirely new customers in entirely new
markets. As incumbents in every market – from publishing to advertising to automobiles to
banking have found out, there are few barriers to entry in any market. If anything, “outsiders”
who move fast, and disrupt convention have a better chance of success, because it’s easier to
run when you are not carrying any baggage. And the baggage doesn’t have to be outdated
infrastructure or processes, it can be cultural baggage too, which comes in the shape of
outmoded ways of thinking and working.
It is hard to imagine any business or brand that can afford to be complacent about customer
loyalty, and the leaders in every industry are taking charge of their own destinies by
experimenting furiously with new business models that leverage data, experience, platforms
and ecosystems. More than anything else, leaders are setting solid foundations by modernizing
their technology landscape and reinventing culture, mindset and talent strategies.
We have made it our obsession to help our clients’ businesses adapt and modernize to be
future ready, because no disruption announces itself ahead of time. We are empowering our
clients to lower the cost of experimentation and failure, so they can pivot like a start-up and
scale like an enterprise. We are helping them not just with the adoption of technologies like
cloud, AI or blockchain, but also working with them to adopt new ways of working, in the IT
organization and beyond.
Our own transformation journey has been a rich and rewarding experience and a deep source
of learning to succeed in the brave new world. We began by transforming ourselves along four
dimensions – reskilling, reorientation or new ways of working, culture, and processes and
systems, with digitization as our central guiding principle. Today, Wipro’s employees are fast
learning to be digital in their mindset, in every aspect of the way we work. Our deep
investments in Wipro HOLMESTM Artificial Intelligence Platform (Wipro HOLMES), our
acquisition of the crowdsourcing platform Topcoder, and our expanding innovation ecosystem
of startup investments are beginning to make a transformative impact on our engagements.
Our Digital revenue continues to grow, and accounts for more than a fourth of our revenue
now.
Our teams are lean and agile, bringing a collaborative and experimentation mindset to their
way of working – heralding the new work culture that is inspiring even our client organizations
to evolve faster. We have reoriented our service with a renewed, sharper focus on client
themes. The new ecosystem transcends traditional silos, and fosters collaboration,
experimentation and innovation.
We continue delivering productivity through automation by deploying Wipro HOLMES in driving
business transformation in our clients and it’s gratifying to see the impact.
While the fundamental economics of industries are changing, customer focus remains the
nucleus of any strategy. There can be no better guarantee of our own success than making our
customers successful in what they do. We are inspired by the vision of our customers and
excited to partner with them, as they undergo their transformational journeys, to create
enduring success in these dynamic times.

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 hardware segment of the IT-Business Process Management exports from
India is estimated to be $15 billion in fiscal year 2018. Emergence of cloud computing
technologies is negatively affecting demand for IT products such as servers.

IT Services
Fast-evolving technology landscapes, dynamic economic environments and the emergence of
digital business has created a need for enterprises to look for a partner to advise, design and
execute their technology transformation and support programs. Large multinational enterprises
are engaging global IT Services companies who can deliver high quality service on a global scale
and at competitive costs. Over the past two decades, with the emergence of the internet and
inexpensive connectivity, the global delivery model of service delivery has risen to become the
preferred model in sourcing of IT services, business process services and research and
development services. In this period, service providers have gained technological expertise,
domain competency and delivery capability by either developing organically or by acquiring
companies with these competencies. Large multinational enterprises are engaging global IT
Services companies to deliver high quality service on a global scale and at competitive costs.
We believe the IT Services industry has significant growth potential.
Business Strategy
Our customers today are undergoing an unprecedented change and transformation in their
businesses led by forces such as Digital, Consumerization of technology, Industry platform
disruptions, and competition from new age companies across industries. We at Wipro believe
that there are a few key industry trends, which over the next 5-10 years, will fundamentally
transform the way technology is bought and consumed by enterprises. These are ‘as-a-service’,
’Intelligent automation’, ‘Digital’ such as Design and user experience, Digital ways of working
and shared economy, ‘Cyber-security and Cyber-defense’.
In today’s market context, our vision and our strategy is about helping our clients navigate to a
Digital future while driving hyper-efficiencies in their ’Run’ operations through a comprehensive
and integrated portfolio of services. We deliver this through industry wrapped process,
and technology solutions and services through an open innovation led approach.

Modernize the core – the “Run Strategy”

Our “Run” strategy is about “Modernizing the clients’ core” operations and technology
landscape. It includes the following strategies:
a. Business Solutions brings together domain and technology solutions across applications,
infrastructure, business process services and analytics to deliver business value to our clients in
an ‘as-a-service’ model.

The Integrated Services and Solutions Group (ISSG) focuses on building integrated offerings
across four key business themes: Customer Experience, Business Acceleration, Simplified and
Sustained IT and Connected Ecosystem. An example is Insightsas-a-Service, which accelerates
Time-to-Insights using the Data Discovery Platform (DDP) powered by advanced visualizations,
models, accelerators and algorithms and is offered as Pay-Per-Use.
b. Process & IT Simplification is about demystifying the complex processes and technology
landscape of our clients. We deliver this through consolidation, elimination, automation and
cloudification to deliver agility and productivity benefits. An example of one of our approaches
is the Framework for Application Services Transformation which covers:
• New age application development; • App rationalization, optimization and modernization; •
Cloud application services; • Newer methodologies such as AgileBase and DevOps; and • Next
generation quality assurance, application support and trust management.

DATASHEETS
Balance Sheet
March 2019 March 2018
Total Share Capital 1206.80 904.80
Equity Share Capital 1206.80 904.80
Share Application Money 0.00 0.00
Preference Share Capital 0.00 0.00
Reserves 48185.20 41357.80
Revaluation Reserves 0.00 0.00
Networth 49392.00 42262.60
Secured Loans 5074.20 53.90
Unsecured Loans 0.00 4666.20
Total Debt 5074.20 4720.10
Total Liabilities 54466.20 46982.70
Gross Block 11721.20 11237.80
Less: Accum. Depreciation 7320.20 6870.80
Net Block 4401.00 4367.00
Capital Work in Progress 2112.70 1290.60
Investments 30249.10 30682.80
Inventories 340.30 294.30
Sundry Debtors 10648.60 9502.00
Cash and Bank Balance 10390.20 2322.00
Total Current Assets 21379.10 12118.30
Loans and Advances 8856.20 10212.60
Fixed Deposits 0.00 0.00
Total CA, Loans and Advances 30235.30 22330.90
Deffered Credit 0.00 0.00
Current Liabilities 11483.30 10726.40
Provisions 1048.60 962.20
Total CL and Provisions 12531.90 11688.60
Net Current Assets 17703.40 10642.30
Miscellaneous Expenses 0.00 0.00
Total Assets 54466.20 46962.70
Contingent Liabilities 2618.90 10123.10
Book Value (Rs) 81.86 93.42

Cash Flow Statement

March 2019 March 2018
Net Profit Before Tax 7614.00 7722.82
Net cash from operating 10210.10 6470.90
activities
Net cash (used in)/ from -370.60 5002.30
investing activities
Net cash (used in)/ from -1395.10 -12918.40
financing activities
Net (decrease)/ increase in 8447.40 -1440.00
cash and cash equivalents
Opening cash & cash 1942.50 3362.20
equivalents
Closing cash & cash 10389.90 1922.20
equivalents

Profit and Loss Statement

March 2019 March 2018
Sales Turnover 48123.80 44710.00
Excise Duty 0.00 0.00
Net Sales 48123.80 44710.00
Other Income 2568.60 2479.60
Stock Adjustments 55.30 -57.70
Total Income 50747.70 47131.90
Raw Materials 1142.00 1469.60
Power and Fuel Cost 0.00 0.00
Employee Cost 23808.50 21756.20
Other Manufacturing 12505.10 11076.30
Expenses
Selling and Admin Expenses 230.40 0.00
Miscellaneous Expenses 1732.00 1396.40
Preoperative Exp Capitalised 0.00 0.00
Total Expenses 39418.00 35698.50
Operating Profit 8761.10 8953.80
PBDIT 11329.70 11049.10
Interest 524.90 384.30
PBDT 10804.80 11049.10
Depreciation 934.30 1014.80
Other Written Off 0.00 0.00
Profit Before Tax 9870.50 10034.30
Extra-ordinary items 0.00 0.00
PBT (Post Extra-ord Items) 9870.50 10034.30
Tax 2256.50 2311.50
Reported Net Profit 7614.00 7722.80
Total Value Addition 38276.00 34228.90
Preference Dividend 0.00 0.00
Equity Dividend 545.40 544.60
Corporate Dividend Tax 0.00 0.00
Shares in issue (lakhs) 60339.35 45237.84
Earning Per Share (Rs) 12.62 17.07
Equity Dividend (%) 50.00 50.00
Book Value (Rs) 81.86 93.42

ANALYSIS
Current Ratio: The current ratio is a liquidity ratio that measures a company’s
ability to pay short term obligations or those due within one year. It tells investors
and analysts how a company can maximize the current assets on its balance sheet
to satisfy its current debt and other payables.

Quick Ratio: In finance, the quick ratio, also known as the acid-test ratio is a type
of liquidity ratio which measures the ability of a company to use its near cash or
quick assets to extinguish or retire its current liabilities immediately.

Debt-to-equity Ratio: The debt-to-equity ratio is calculated by dividing a

company’s total liabilities by its shareholder equity. These numbers are available
on the balance sheet of a company’s financial statements. The ratio is used to
evaluate a company’s financial leverage.to

Long term debt to equity Ratio: The ratio is calculated by taking the company’s
long-term debt and dividing it by the book value of common equity. The greater a
company’s leverage, the higher the ratio. A high ratio usually indicates a higher
degree of business risk because the company must meet principal and interest on
its obligations.

Inventory Turnover Ratio: In accounting, the inventory turnover is a measure of

the number of times inventory is sold or used in a time period such as a year. It is
calculated to see if a business has an excessive inventory in comparison to its
sales level.

Receivable Turnover Ratio: The ratio, also known as Debtor’s Turnover Ratio is an
accounting measure used to measure how effective a company is in extending
credit as well as collecting debts. The receivables turnover ratio is an activity ratio,
measuring how efficiently a firm uses its assets.
Investment Turnover Ratio: The asset turnover ratio measures the value of a
company’s sales or revenues relative to the value of its assets. The asset turnover
ratio can be used as an indicator of the efficiency with which a company is using
its assets to generate revenue.

Fixed Asset Turnover Ratio: It is the ratio of sales (on the profit and loss account)
to the value of fixed assets (on the balance sheet). It indicates how well the
business is using its fixed assets to generate sales. A declining ratio may indicate
that the business is over-invested in plant, equipment, or other fixed assets.

Total Asset Turnover Ratio: The asset turnover ratio is an efficiency ratio that
measures a company’s ability to generate sales from its assets by comparing net
sales with average total assets. In other words, this ratio shows how efficiently a
company can use its assets to generate sales.

Dividend Payout Ratio: The dividend payout ratio is the fraction of net income a
firm pays to its stockholders in dividends: The part of earnings not paid to
investors is left for investment to provide for future earnings growth.

Earnings Retention Ratio: It indicates the percentage of a company’s earnings

that are not paid out in dividends but credited to retained earnings. It is the
opposite of the dividend payout ratio, so that also called the retention rate.

Financial Ratios
 March 2019 March 2018
Face value 2.00 2.00
Dividend per share 1.00 1.00
Operating profit per share 14.52 19.79
(Rs)
Net operating profit per 79.76 98.83
share (Rs)
Free reserves per share - -
Bonus in equity capital 99.86 99.85
Operating profit margin (%) 18.20 20.02
Profit before interest and tax 15.43 16.82
margin (%)
Gross profit margin (%) 16.26 17.75
Cash profit margin (%) 16.86 18.51
Adjusted cash margin (%) 16.86 18.51
Net profit margin (%) 15.82 17.27
Adjusted net profit margin 15.02 16.36
(%)
Return on capital employed 19.08 22.17
(%)
Return on net worth (%) 15.41 18.27
Adjusted return on net worth 15.41 18.27
(%)
Return on assets excluding 81.86 93.42
revaluations
Return on assets including 81.86 93.42
revaluations
Return on long term funds 21.03 24.60
(%)
Current ratio 1.34 1.37
Quick ratio 2.35 1.85
Debt equity ratio 0.10 0.11
Interest cover 19.80 27.11
Total debt to owners fund 0.10 0.11
Financial charges coverage 17.29 23.74
ratio post tax
Inventory turnover ratio 141.42 151.92
Debtors turnover ratio 4.78 5.07
Investments turnover ratio 141.42 151.92
Fixed assets turnover ratio 4.30 4.19
Total assets turnover ratio 0.89 0.96
Asset turnover ratio 0.95 0.90
 Number of days in working 67.16 3.87
capital
Material cost composition 2.37 3.28
Selling distribution cost 0.47 -
composition
Expenses as composition of 92.38 87.63
total sales
Dividend payout ratio net 7.16 7.05
profit
Dividend payout ratio cash 6.38 6.23
profit
Earning retention ratio 92.84 92.95
Cash earning retention ratio 93.62 93.77
Adjusted cash flow times 0.59 0.54
Earnings per share 12.62 17.07
Book value 81.86 93.42

CONCLUSION

Excellent Consistent Profit Margins, excellent ROE, lots of free cash flow, low
debt.
Good revenue growth and EPS growth in the last 10 years
Wipro is an IT services provider with two segments Services and Products.
Revenue growth was slow in 2018 because a two major clients declared
bankruptcy. Wipro did a buyback in 2017 at a price of 343 Rs per share.
With the rise of cloud solutions like AWS, Azure and increased automation, more
work can be done at cheaper costs with fewer people. IT companies need to
adapt to this changing world quickly.
 REFERNCES

https://www.wipro.com
https://m.moneycontrol.com
https://www.wikipedia.org
https://craytheon.com