Introduction Of Company
Wipro Limited (Wipro), together with its subsidiaries and associates (collectively, the company or the group) is a
leading India based provider of IT Services and Products, including Business Process Outsourcing (BPO) Services,
globally. Further, Wipro has other business such as India and Asia Pac IT Services and products and Consumer
Care and Lighting. Wipro is headquartered in Bangalore, India. Wipro is the first Indian IT Service Provider to be
awarded Gold-Level Status in the Microsoft Windows Embedded Partner Program. Wipro is the world’s largest
independent R&D Services Provider. Wipro Limited 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 175,000 dedicated employees serving clients across six continents.
Together, we discover ideas and connect the dots to build a better and a bold new future.
Nature Of Business Carried -
The Company is a provider of IT services to enterprises across the globe. The IT Services segment primarily
consists of IT Service offerings to its customers organized by industry verticals, which include Banking, Financial
Services and Insurance (BFSI), Healthcare and Life Sciences (HLS), Retail, Consumer Goods, Transport and
Government (RCTG), Energy, Natural Resources and Utilities (ENU), Manufacturing and High-Tech (MFG), and
Global Media and Telecom (GMT). The Company provides a range of services, which include digital strategy
advisory, customer centric design, technology consulting, IT consulting, custom application design, development,
re-engineering and maintenance, systems integration, package implementation, global infrastructure services,
business process services, cloud, mobility and analytics services, research and development and hardware and
software design. It delivers end-to-end services across the Oracle product spectrum, including E-Business suite,
Oracle Cloud Applications and Engineered Systems. Its Connected Enterprise Services include Digital Customer
Experience Management (DCxM) and Encore (Next Gen Commerce Solution).
Capital Structure Decisions
BALANCE SHEET OF WIPRO (in MAR '15 MAR '16 MAR '17 MAR '18 MAR '19
Rs. Cr.)
12 mths 12 mths 12 mths 12 mths 12 mths
SOURCES OF FUNDS
Total Share Capital 493.7 494.1 486.1 904.8 1,206.80
Equity Share Capital 493.7 494.1 486.1 904.8 1,206.80
Reserves 36,598.30 45,650.70 51,184.10 47,021.50 55,215.80
NETWORTH 37,092.00 46,144.80 51,670.20 47,926.30 56,422.60
Secured Loans 703.4 583.1 465.7 172.2 9,645.30
Unsecured Loans 7011.4 11417.8 13,169.50 12,314.40 0
TOTAL DEBT 7,714.80 12,000.90 13,635.20 12,486.60 9,645.30
Minority Interest 164.6 221.2 239.1 241 263.7
TOTAL LIABILITIES 44,971.40 58,366.90 65,544.50 60,653.90 66,331.60
Total Liabilities –
Total liabiliti es
Polynomial ()
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
MAR '1 5 MAR '1 6 MAR '1 7 MAR '1 8 MAR '1 9
Years
The total liabilities of the company during the five relevant years increased by 47.49 %. This shows the
company is leveraging to grow and diversify its business operations.
In the year 2018 there is a decline in the borrowings of the company as the company paid back a part of its
secured and unsecured loans. In 2017 the company had 13,635.20 crores as its total debt but in the year 2018
it was reduced to 12,486.60 crore. The borrowings saw a fall by 9%.
The company paid back its debt from its reserves surplus of 51670.20 crores. This step is towards making
the company debt-free and that will show a more stable solvency position of the company.
Net Worth / Shareholders Funds –
NET WORTH
Linear ()
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
MAR '1 5 MAR '1 6 MAR '1 7 MAR '1 8 MAR '1 9
Years
The company has increased its shareholders’ funds during the relevant five years by 52%. Among this the
company has increased his share capital by 144% and reserves and surplus by 51%.
This shows that the company is considered a strong and reliable stock in the market. This money has been
raised for business expansion and investment purposes.
The decrease in net worth in the FY 2018 is due to the repayment of secured and unsecured loans. The
reserves and surplus decreased by 3744 crores from the FY 2017-18.
The reserves and surplus has increased by an yearly average of 18% except for the year 2018, where there is
a decline. The increase in reserves and surplus is due increase in profits. This provides us with a strong and
stable outlook of the company.
Total Debt –
Total Debt
Polynomial ()
16,000.00
13,635.20
14,000.00 12,486.60
12,000.90
12,000.00
9,645.30
10,000.00
7,714.80
8,000.00
6,000.00
4,000.00
2,000.00
0.00
MAR '1 5 MAR '1 6 MAR '1 7 MAR '1 8 MAR '1 9
Years
The total debt of the company projects the borrowings from outside. Over the years company is trying to
pay its debt towards its path to become debt-free.
From the FY 2015 to FY 2019 the company’s debt has increased by only 24%. From the FY 2017 the
company has begun to repay its debt. The company’s borrowing is showing a decline of 30%. This means
company is carrying out its expansion plans through its retained earnings.
This shows that WIPRO is able to deploy its borrowings efficiently in order to earn ample cash flow.
Solvency Ratio Analysis –
a) Interest Coverage Ratio –
Column1 MAR '15 MAR '16 MAR '17 MAR '18 MAR '19
ICG 30.09 20.27 23.84 27.11 19.8
ICG
ICG
35
30.09
30
27.11
25 23.84
20 20.27 19.8
15
10
5
0
MAR '15 MAR '16 MAR '17 MAR '18 MAR '19
YEARS
The interest coverage ratio shows the number of times the interest charges are covered by funds that are
ordinarily available for their payment. Interest coverage ratio is calculated by dividing the earnings before
interest and taxes with interest charges.
The higher the coverage, the better will be the position of debenture holders or loan creditors regarding their
fixed payment of interest, the greater will be the profitability.
There has been a fluctuation in the interest coverage ratio over the years. The interest coverage ratio has
reduced by _ due to increased borrowings to fund the acquisitions made over the years. The decline in ICG
is also due to changes in the interest rates.
For the FY 2019 company’s interest coverage ratio is 19.8 times which is higher than its industry average of
16 times. It shows that company’s EBIT is approximately 20 times its debt expenses during the year. It
shows the sound solvency of the company.
b) Debt to Equity
MAR '15 MAR '16 MAR '17 MAR '18 MAR '19
Debt/Equit 0.17 0.1 0.15 0.14 0.12
y 7
Debt/Equity
Debt/Equity
0.18
0.17 0.17
0.16
0.15
0.14 0.14
0.12 0.12
0.1
0.08
0.06
0.04
0.02
0
MAR '15 MAR '16 MAR '17 MAR '18 MAR '19
YEARS
The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt
used to finance a company's assets. The debt-to-equity (D/E) ratio is calculated by dividing a company’s
total liabilities by its shareholder equity. The ratio is used to evaluate a company's financial leverage. It is a
measure of the degree to which a company is financing its operations through debt versus wholly-owned
funds.
There is a declining trend over the years because the company is repaying its debt over the years. In the year
2019 the company had 9645 crore against 56422 crore of shareholders funds. It shows that the company is
not aggressively financing it growth with debt.
It shows that the interest of the creditors of the company is protected. It may be concluded that Wipro could
still mobilize the debt funds in order to reap the benefits of financial leverage. It increases the earning per
share of company.
Comment on the Capital Structure Decisions –
Wipro has shrunken its total debt levels in the last twelve months, from ₹145b to ₹115b , which comprises of
short- and long-term debt. With this debt repayment, Wipro’s cash and short-term investments stands at ₹331b ,
ready to deploy into the business.
Moreover, Wipro has generated cash from operations of ₹85b during the same period of time, leading to an
operating cash to total debt ratio of 74%, signalling that WIPRO’s operating cash is sufficient to cover its debt.
This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets.
In Wipro’s case, it is able to generate 0.74x cash from its debt capital. With current liabilities at ₹210b, the
company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing
at 2.51x. Generally, for IT companies, this is a reasonable ratio since there’s a sufficient cash cushion without
leaving too much capital idle or in low-earning investments.
Wipro’s level of debt is appropriate relative to its total equity, at 22%. This range is considered safe as Wipro is
not taking on too much debt obligation, which can be restrictive and risky for equity-holders.
Capital Budgeting Decisions
Application Of Funds MAR '15 MAR '16 MAR '17 MAR '18 MAR '19
12 mths 12 mths 12 mths 12 mths 12 mths
Less: Accum.
7,397.60 8,513.90 9,550.20 8,343.40 9,296.80
Depreciation
Net Block 10,837.10 17,279.10 19,886.50 18,126.70 17,464.70
Capital Work In Progress 395.1 380.6 737.7 1,377.70 2,141.80
Investments 5,532.10 20,915.10 29,913.30 25,796.80 22,886.70
Inventories 484.9 539 391.5 337 395.1
Sundry Debtors 9,154.80 9,961.40 9,484.60 10,099.00 10,048.90
Cash And Bank Balance 16,619.00 9,904.90 5,271.00 4,492.50 15,852.90
Total Current Assets 26,258.70 20,405.30 15,147.10 14,928.50 26,296.90
Loans And Advances 15,353.80 13,039.10 13,297.40 15,463.60 14,134.70
Total Ca, Loans &
41,612.50 33,444.40 28,444.50 30,392.10 40,431.60
Advances
Current Liabilities 8,892.80 12,478.00 12,259.10 13,889.70 15,279.10
Provisions 4,512.60 1,174.30 1,178.40 1,149.70 1,314.10
Total Cl & Provisions 13,405.40 13,652.30 13,437.50 15,039.40 16,593.20
Net Current Assets 28,207.10 19,792.10 15,007.00 15,352.70 23,838.40
Total Assets 44,971.40 58,366.90 65,544.50 60,653.90 66,331.60
Investments –
Chart Title
35,000.00
30,000.00
25,000.00
20,000.00
15,000.00
10,000.00
5,000.00
0.00
MAR '1 5 MAR '1 6 MAR '1 7 MAR '1 8 MAR '1 9
The investments of the company has increased for approximately 200% over the FY years. In the
year 2015 it had investments of Rs. 5532.10 which increased to Rs. 22886.70.
This shows that the company is expanding its operations and the source of this investment being
retained earnings and share capital. This shows a stable outlook for Wipro Ltd.
Some of the major investments are as follows :
In February 2020, Wipro acquired Rational Interaction, a Seattle-based digital customer
experience consultancy.
In 2019, Wipro Consumer Care and the Ang-Hortaleza Corporation signed a share purchase
agreement for the sale of 100% of the latter's stake in the personal care business of Splash
Corporation.
On 3 May 2018, Wipro was opened manufacturing locations in Andhra
Pradesh and Guangzhou.
In March 2018, Wipro bought a third of Denim Group.
In 2017, Wipro Limited won a five-year IT infrastructure and applications managed services
engagement with Grameenphone (GP), and set up a new delivery centre there.
In 2017, the company expanded its operations in London.
In October 2016, bought Appirio, an Indianapolis-based cloud services company for $500
million.
Total Assets –
Total assets
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
MAR '1 5 MAR '1 6 MAR '1 7 MAR '1 8 MAR '1 9
YEARS
The total assets of the company has increased for approximately 50% over the five year tenure from FY
2015-2019. The company had total assets of Rs. 44971, which increased to Rs. 66331 in 2019.
The majority of increase in the total assets in contributed from the company’s increasing investments.
The current assets has been same along the years. This shows that the company maintains its inventory
and has a periodic inventory turnover days.
The increase in total assets only due to investments shows that the company has a stable cash balance
over the years.
Investment Decision Analysis –
a) Return on Investment
Years Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
EBITDA 11,007 9,870 10,034 10,687 10,594
Total Assets 65,306 66,998 58,671 63,156 58,924
ROI % 16.9% 15% 17.1% 17% 17.9%
ROI %
18.50%
18.00%
18%
17.50%
17.00% 17% 17%
17%
16.50%
16.00%
15.50%
15.00% 15%
14.50%
14.00%
13.50%
Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
YEARS
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or
compare the efficiency of a number of different investments. To calculate ROI, the benefit (or return) of an
investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio. A high
ROI means the investment's gains compare favourably to its cost.
The companies ROI has shown declining trend over the years but this is due to the various external
challenges faced by the investments.
Though the ROI is declining over the years but is above the industry average of 15% over the years. This
shows positive outlook towards the company.
The company’s ROI in 2019 has improves by 3% in 2019 in compare to 2018, which represents the sound
decisions made by the company.
Return On Equity -
YEARS Mar-19 Mar-18 Mar-17 Mar-16 Mar-15
Return on Equity (%) 18.68 15.41 18.27 17.47 19.89
R etur n on Equity (%)
25
20 19.89
18.68 18.27
17.47
15 15.41
10
0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
Return on equity (ROE) is a measure of financial performance calculated by dividing net
income by shareholders' equity. Because shareholders' equity is equal to a company’s assets minus its debt,
ROE is considered the return on net assets. ROE is considered a measure of how effectively management is
using a company’s assets to create profits. .Rate of Return on Equity =Profit for the Equity/Net worth.
The company’s ROE has been stable for the years except for 2018, where the companies ROE fall to 15.4%.
The investments decisions made in 2015 is considered to be the most fruitful for shareholders.
As a result the shareholders are getting higher return every year and investment portfolio scheme selection
was a judicious decision taken by the company.
Strategy and Suggestion
Wipro can use to improve its Financial position especially during Unfavourable macroeconomic condition
of COVID-19. It should plan to increase strategic partnerships, use more variable talent pools and
invest in automation.
A strategy of cost-cutting, rationalizing, doing more with less will not be effective, with a workforce that is
incessantly anxious about job security, demoralized about career and business prospects, and depressed
about life in general. Going forward, the employer-employee relationship has to be far more close-knit,
symbiotic. More than ever, therefore, alongside technology and process innovations, an investment in
employee well-being needs to underscore business turnaround strategies.
The company should has a greater focus on cost management as they deal with an evolving and uncertain
economic climate. The company should adapt strategies such as maintaining appropriate alignment between
the demand for services and resource capacity, optimising the costs of service delivery through automation
and deployment of tools, and effectively leveraging its sales, marketing and general and administrative
costs.
