Wipro Limited (WIT) Q4 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, good day, and welcome to the Wipro Limited Earnings Conference Call for the period ended March 31, 2012. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of today’s presentation. (Operator Instructions) Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Sridhar Ramasubbu. Thank you, and over to you, sir.

Thanks, Marina. Good day to all of you. This is Sridhar, and I’m joined by, Manoj and Aravind from IR team in Bangalore, and on behalf of the entire Wipro team, a very warm welcome to all of you. We are pleased to host Wipro’s 4Q FY’12 earnings call. Regarding the materials for this call, we issued the press release yesterday late night EST, and we will have time for Q&A at the end. Before we start the call an announcement, we are holding our Analysts Day event on May 18 in New York, Midtown and the invites have been sent to all investors in our database. If any of you have not got the invites please reach out to us, we are looking forward to seeing you on May 18 in New York. The format for today’s earnings call is as follows. Azim Premji, Chairman, will give us an overview of our Wipro business, TK Kurien, TK as he is known will share his perspectives on the IT Business side. Suresh Senapaty, CFO, will comment on the IFRS financial results for the quarter ended March 31, 2012. They have joined by BU heads and other senior members of the Wipro management team who will be happy to answer your questions. As always, elements of this call and the management’s view may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995 and are based on management’s current expectations and are associated with uncertainty and risks, which could cause the actual results to differ materially from those expected. These uncertainties and risk factors have been explained in detail in our filings with Securities and Exchange Commission in the U.S. We do not undertake any obligations to update forward-looking statements to reflect events or circumstances after the date of filing thereof. The call is scheduled for an hour. The presentation of the 4Q FY ‘12 results will be followed by Q&A. The operator will walk you through the Q&A process. The entire earnings call proceedings are being archived and transcripts will be made available after the call at our company’s website. The replay of today’s earnings call proceedings will also be available via telephone post the call. During this call, I’m also available on email and through mobile, as well to take any questions and table it to the Wipro team in case you are unable to ask questions for any technical reasons. Ladies and gentlemen, over to Mr. Azim Premji, Chairman of Wipro.

Good afternoon to all of you all. Just let strictly summarize some financial results of Wipro Corporation consolidated results. We recorded revenues in quarter four of financial ‘12 of INR99 billion, a year-on-year growth of 19%. For financial year ‘12, Wipro recorded revenues of 375 billion, a year-on-year growth of 21%. Net income for the quarter at INR14.8 billion, a year-on-year growth of 8% and net income for the year at 55.7 billion, a year-on-year growth of 5%. IT Services Business delivered sequential growth in line with our guidance. A quick summary on our assessment to the macro environment. Overall macroeconomic environment continues to be volatile. While we have seen signs of volatility in the environment in the last three months, customers continue to be cautious. In our discussions with business leaders we are seeing customers focused on globalization and productivity. Since clients want to identify newer growth opportunities, what they seek from us as a service provider is collaborative innovation and solutions which can change the way they do business, bring in more revenue and improve customer insight. This approach is changing the nature of demand we are seeing and it is reflected in our stronger pipeline. However, these programs have a long cycle time approaches. Some highlights on our Wipro Consumer Care & Lighting business. In Consumer Care & Lighting we saw another quarter of 20% plus growth. Santoor revenues have crossed rupees INR10 billion milestone, coinciding with the completion of the 25 year of its existence. Since our business continues to do well, with the Enchanteur brand crossing the milestone of $100 million of revenues. Wipro Infrastructure Engineering. We continue to see a strong growth in the Wipro Infrastructure Engineering business with India doing well and Europe stabilizing. Successful entry in two key growth markets Brazil integration is on track, strong signs of synergy from the global OEMs and sourcing from low cost country. We have set up manufacturing base as a second location in China. We have successfully completed a joint venture agreement with Kawasaki production to start by the second half of financial year ‘13. Some highlights of our initiative on sustainability. We recently released our Fourth Sustainability Report titled The Imperative of Hope. The report provides strategic insights into our vision, goal and progress on our sustainability initiatives. Based on an independent assurance by DNV, the report has been awarded A+ rating in the fourth year in succession, a clear reflection of the quality and strength of our sustainability disclosures. We were recognized by the Ethisphere Institute, a leading business ethics think-tank as one of the 2012 World’s Most Ethical Companies. I would now request Senapaty to give you a brief overview about our IT business – about our financial results, followed by TK Kurien, Our IT Business.

Good day, ladies and gentlemen. Before I delve into our financials, please note that for the convenience of readers, our IFRS financial statements have been translated into dollars at the noon buying rate in New York City on March 30th, 2012 for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New York which was $1 equal to INR50.89. Accordingly, revenue of our IT Services segment that was $1,536 million or in rupee terms INR76 billion appears in our earnings release as $1,491 million based on the convenience translation. Let me start by saying that the Board of Directors have proposed a final dividend of INR4 per share, taking the overall dividend from the year to INR6 per share. Moving into the quarter performance, our IT Services revenue for the quarter ending March 31st, 2012 was $1,536 million on a reported basis, a sequential growth of 2% and a year-on-year growth of 10%. For the full year, we delivered revenue of $5,921 million with year-on-year growth of 13.4%. For the quarter, growth was led by energy and utilities with sequential growth of 6.8% and retail of 5.9%. We saw weakness in telecom vertical, particularly on the OEM side. BFSI was impacted by weakness in investment banking in the current quarter. From a service line perspective we saw strong growth in infrastructure services at 6.4% sequential growth and business analytics at 5.4%. We moved the needle further on our focus area of client engagement in the current quarter on a trailing 12 months, we have seven accounts which are more than $100 million in revenue up from three last year. We are happy with our progress and we continue to make investments in this area. We saw improvement in revenue productivity in the quarter. Offshore realization improved by 1.4% and onsite realization improved by 0.4% sequentially. We continue to characterize the pricing environment as largely stable. Sequential volume growth in the current quarter was 0.8%. Operating profit drop was limited to only 10 basis points despite the strong appreciation of the rupee in the quarter. As of March 31, 2012 our days of sales outstanding showed marked improvement and was at 70 days, down from 71 in the previous quarter. Our IT Products business showed a bit growth of 32% year on year in the current quarter. Consumer Care & Lighting business continued to see good momentum with revenue growth of 25% year on year and operating profit growth of 30%. On the foreign exchange front, our realized rate for the quarter was INR49.43 versus a rate of INR50.53 realized in the last quarter. On a quarter-on-quarter basis, ForEx gave a positive impact of 10 basis points to operating profit. Our OCI reduced from INR5.5 billion to INR1.6 billion as of period end and we had about $2 billion of ForEx hedges outstanding. The effective tax rate for the quarter is 21.2%. We generated a free cash flow of INR16 billion in quarter four of FY’12 as against 8 billion in the quarter three which was 109% of the net income. Operating cash flows was INR18 billion in quarter four as against 11 billion in quarter three. Operating cash flow was 121% of the net income. Our cash balance in the balance sheet was INR69 billion, an increase of about INR16 billion. We – now let me hand over to TK Kurien for giving you an update on the IT business.

Good morning, ladies and gentlemen. In the last few quarters we have made significant investments in making sure that we really kind of approached the market in two ways. Our beliefs that the market is trying to very strictly and – itself to high degree of differentiation in front and a significant levels of standardization in the back. And all our investments in the past couple of quarters can really be focusing on maximizing the advantage that we’d like to get from this quarter. We entered quarter four with challenges and then macroeconomic volatility and slightly challenges we’ve been able to deliver the guidance range in... Our pipeline is robust and given the nature of deals in the proactive engagement – have taken time. The nature of our pipeline has changed and today a healthy part of our pipeline is proactive. As we look ahead we see signs that closure will pick up in quarter one and growth will come back in the next couple of quarters. But let me just give you a sense of the highlights. The focus in account mining and alignment of accountability at the accounts level are beginning to show results. Our top 10 accounts contributed immensely to our revenue growth. We now have several of these relationships crossing the 100 million revenue mark compared to just three years ago. The top 10 accounts moved faster than company average growth for the average size of the top 10 accounts having gone up from 111 million to 123 million year-on-year. Our customer satisfaction accounts continues to improve with a 20% improvement in the top two boxes. In fact, improvement trend is across all outcome measures, loyalty, advocacy and overall satisfaction. Other pillar of our strategy has really been around employee satisfaction. Our quarterly analyzed employment, employee attrition helped, quarter-on-quarter between quarter four of last year and quarter four of this year by 6.5% to 14.4%. A clear reflection that our engagement measures are working. In the last few quarters, we’ve basically focused on four Ps that we’ve seen broadly reshaping our future. One of them is variablization of technology. The second is consumerization of technology of those value. The third is business performance and analytics and the fourth is innovation to bring in the world of goods. We see these four trends driving the next technology disruption, which really would be at the intersection of cloud, analytics and mobility and here is what we’ve achieved in these three areas together. The analytics business continue to show impressive growth, raising a 5.6% quarter-on-quarter growth. We have added 35 new accounts this year. Our customers are investing a significant portion of their IT budgets in analytics and we expect this to increase further. Our cloud business continues to make rapid progress in the current quarter. We have had 40 new wins across various industry segments and tax valuation. We see a completely – the complexity of cloud is increasing rapidly suggesting that cloud is now seeing as part of the enterprise IT strategy by most of our customers. On mobility, we continue to see traction in the mobility space and we’ve added over 50 new customers across different industry verticals during the year. Wipro AppLife, the first enterprise app store for Wipro which is launched last quarter, has the traction with over 50 apps developed by employees which are now commercially viable. All I’d do is I’d like to conclude by saying that the last five quarters have been very exciting. We have seen a lot of changes and wins. I believe we’re on the right track and we expect to continue with it. Thank you. Now I hand this over to Sridhar for questions.

Yeah, Marina, we can start the Q&A.

Sure, sir. Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) The first question is from Joseph Foresi from Janney Montgomery Scott. Please go ahead. Joseph Foresi – Janney Montgomery Scott: Hi. I think you talked about in your initial commentary that you had a pretty sharp pricing and you expected to see that. But the guidance for the next quarter actually is from negative to a positive. May be you can help reconcile those two comments and is this something that’s client specific customer effect next quarter in months or happening that in future?

So Joe, I will quickly give you a little bit of color on that one. There are two parts to it. If you look at the India business, our India business in quarter one is showing a negative growth vis-à-vis the last quarter. That’s primarily driven by two segments, one is telecom and the other one is government. Now we had decent growth of 7% last quarter, in quarter four so it’s really coming off that. In quarter two, we expect to see the India business come back, not necessarily driven by these two verticals, but driven by other businesses we expect that we will close and sell in quarter two. If you look at that one part of the problem that we had, which is a factor in the guidance, and the story in India with telecom and government is a fairly well-known story. So won’t go into the details. As far as the regular global business is concerned, we saw some delays in order closure in quarter four of our year, which is quarter one of the calendar. And that has been deferred really to quarter one of our fiscal. And we are right now seeing some of those deals closing. So to that extend, it gives us a little more confidence as we go through the quarter that the closures would be reflected in top line growth in quarter two. That’s fundamentally what’s driving it. Joseph Foresi – Janney Montgomery Scott: Okay. What was causing the delays and why they started to close now?

It’s kind of strange. I think it’s a combination of two things. One is that a lot of the deals that we are now closing were proactive deals. The other one was the whole cycle of contracting which is just kind of drag in a lot of cases. But we see that coming to a closure. In our business both in the BPO business as well as the IT business, typically what happens in the time we contract and the time we close, it’s a three-month – I mean, typically a two-month cycle and then the billing happens three months after that. We’ve seen clear we have the contracts and contract closure, because I think the kind of deals that are out there have a risk element to it and we have to necessarily talk to before we go and sign. Joseph Foresi – Janney Montgomery Scott: Okay. Can you talk about any financial wage increase in this year and just how you are looking at the head count at this point with attrition coming lower.

We have messaged very clearly that our wage increase were going to be on the 1st of June every year. There is nothing that we are doing right now that makes us believe that we need to change that view. So we will continue that you will have a wage increase on 1st of June. The percentage of wage increase, we haven’t closed, but between the range that we would need to competitive in the marketplace. But broadly if you look at the market scenario, we really believe that we can’t head for the hills just because we’ve got a quarter guidance, which is not exactly in line with what we expected. So I think that’s not a reason for doing that. But I think the bigger thing is long-term, we would like to remain invested in this business. We would like to really kind of bring in superior talent into the company and that’s a driver. So for us we are playing this game from most likely longer term perspective rather than a quarter-to-quarter perspective. Joseph Foresi – Janney Montgomery Scott: Last question for me, I wondered if you could just characterize what inning you think you already it changes overall first inning and changing lives as you’ve done in the leading machine, the benefit from that. Maybe you could just characterize that for us? Thanks.

So here is what we are seeing (inaudible) structuring and our mission alignment is pretty much kind of complete. We have, of course, change like everything else is never static, it’s always ongoing. But having said that, the big changes that we had to do with our mission level are all complete. I think fundamentally now, we have to kind of realize the benefits of what we have done. We’ve seen early signs back, but we think it’s going to be – this year it’s going to be a defining year for us to make sure that we are able to provide the impact of what we have done during last year. Joseph Foresi – Janney Montgomery Scott: Thank you.

Thank you. The next question is from Jeff Ulin from Pacific Crest. Please go ahead. Jeff Ulin – Pacific Crest: Hi. Thanks for taking my question. Little bit more on pipeline, looking forward how do you see the mix in your business shifting between longer term annuity out of the contract, and shorter term more discretionary type contract?

So, Jeff, very quickly let me give you little bit of color on what’s happening on the pipeline. So if you look at the environment around that, one is the thing that we are absolutely looking for a stability of business, because discretionary project as they come and go, it creates significant volatility in terms of cash offline. So we are trying to kind of make sure that we build our sales portfolio in a way, whereby, we have a significant portion of business that’s fundamentally on an annuity, which is really creating our annuity. I think that’s one big focus. Having said that, it’s important for us to make sure that annuities feels that may be bound by contract, ultimately you can make difference remediate from that particular games, if they are selling a monoline. So selling anticipated deals is becoming one big criteria for all of us. The third big thing that we are looking at is to make sure that we have enough of a bench to being onsite and we also have people who are sitting there, who are actually an implacable customer like architect program managers who can pick up this discretionary projects around specific solution areas that we have articulated in every verticals. And start deploying the solutions at quick notice. So we have done all three. Our belief is that with discretionary (inaudible) who came they want to be caught on the wrong boat. So direct whatever investments we have make in front of the customer that’s one area that we will not downsize, we will continue to (inaudible) if remain in rest of the country. Jeff Ulin – Pacific Crest: Right. And what is, how do you describe the deal making environment, do you find majority of your wins are coming from RFP type situations or are you willing more self-source type of deals?

Just, the problem that we have right now is that, a number of deals which people are going out into RFP are kind of getting smaller and smaller. And it’s not the quantum that gets handed number of deals. So, we have our sales force and our positions team and our consulting team have got a lot of work to do to remain proactive. Traditionally that’s an area that we have not done very well often, primarily because if you look at most of us, we have been managing demand rather creating demand. And that’s a big shift that’s happening right now with the sales force. Are we there yet the answer is, no, but that’s right now working for us. Jeff Ulin – Pacific Crest: Great. And one question, financial service is down quarter-on-quarter, was any particular geographies strong or weak or any particular segment weaker than the other?

I’ll ask to run Soumitro Ghosh who runs our Banking and Financial Services segment to talk through that.

Hi, Soumitro here. See, out of the three segments, which we addressed insurance, retail banking and securities capital markets. Insurance and retail banking are doing pretty strong. Securities and capital markets, especially the IB segment is a little bit challenge. So that is where we see, where investment dollars are concerned that is a little bit challenge. Overall, I think retail banking is extremely strong. We are seeing lot of money being spent in top line growth initiatives, lot of money being spent in areas like regulatory, in areas like analytics and the digital channel. Insurance, we see a fair amount of growth in terms of again top line growth. Investment banking, though it is challenge, we believe that that are a lot of opportunities out there specifically around cost take-out, cost variablization as well as a lot of asset monetization, that’s one. And the second is lot of money is being spent though perhaps the pace has slowed down a little bit in the regulatory space.

Excuse me sir, do you have any further question. Thank you. The next question is from Trip Chowdhry from Global Equities Research. Please go ahead. Trip Chowdhry – Global Equities Research: Thank you. Three-part question, you did mention that there is a lot of interest in cloud, mobility and analytics. I was wondering if you can, on each one of those give us a sense like which products in each of those categories. How much is yours that is Wipro’s intellectual capital or intellectual effort on top of those? And the third aspect, how much is the services part on top of those, so just a general flick among these various categories? Thanks.

As we reported and you know a tough question, but I’ll answer the question with one example. And what I’ll do is, I’ll start specifically with analytics and (inaudible) because that may give you a sense of what we are still in the marketplace and how we are building intellectual capability in that area. So one of the big projects that we have executed last month was around – this whole concept of round performance management or equipment, which really all of our machine data, the interpreting machine data and doing auto analysis behind that using exploit systems. So this is a manufacturer which – of computer equipment and fundamentally what we did was that we put in a sensor that took pretty complex equipment, switch off data and make sure that warrantee calls and performance management calls were done on an automated basis rather than having human intervention of any sorts. We found that we were able to cut using just the data that we were getting from the system are above the result was done by almost 80% our time to resolve was almost done by 90%, as an example. So the intellectual property that’s actually built-in top was the business rules that actually impacted with the performance of that particular equipment. And then our ambition would be long-term to kind of link that back into the process knowledge, because each of that particular equipments is in a particular critical process, then we can go back say, hey, listen the profits may get effected with a particular kind of sale. So we can do not only failure management but we can also do proactive compared to sales, stuff like that. Trip Chowdhry – Global Equities Research: Perfect. Thank you.

Thank you. The next question is from Edward Caso from Wells Fargo. Please go ahead. Edward Caso – Wells Fargo: Good evening. Thank you for taking my questions. Just a couple of quick ones. The day sales outstanding, what’s that number?

Day sales outstanding 59 – 60 something...

The return...

That’s probably 70.

So it’s at 71 in the earlier quarter.

70, was 71. Edward Caso – Wells Fargo: And the tax rate, can you give us – just kind of little volatile, can you give us a sense for what kind of tax rate we should assume at the corporate level for next several quarters?

Yeah. So we are expecting tax rate for the coming period years in the range of about 1% to 2% of the normalized rate of tax value for – in FY ‘12. Edward Caso – Wells Fargo: Okay. And can you give us your thoughts on your hiring plans within the context of increasingly difficult L1 visa, the ability to get L1 visa’s perspective?

So I’ll ask Bhanumurthy who is the Global Head of Delivery for us, just talk through that. Bhanu?

Hi. So what we are continuing to do is that, we do cut the visa of (inaudible) for (inaudible) as you are seeing that there are certain kinds of delays that are coming up in terms of visa – issuances of visas, because of multiple checks that continue to be there. What we have done is, over the period of time we have built in processes internally so that we are compliant with the current regulations and we continue to be including those processes. Our focus continues to be on ensuring that we get the right resource for our Chiefs. The new cycle for H1 the window has opened right now. We continue to use that route as well. Edward Caso – Wells Fargo: And can you talk a little bit about your plans to hire locals within both the U.S. and the European markets.

Yeah. Our – again, last year again we did – we continued to focus on hiring the right skill sets that are required within the local markets, and both the U.S., Europe and the Asian job office where we operate in. Our focus has been to ensure that we bring in the right level of skill sets; we bring in the right level of leadership into our teams. Based upon that we have done the hiring, we’ll continue to do those hiring to match the skill sets that are required for our programs.

So again, if I explain very quickly. Our hiring philosophy long-term is that that we believe that ultimately we must build leadership in the local geography and this leadership must be full kind of abide the Wipro culture. So ideally what we are planning to do in the coming year is basically hire those who are fresher, bring them back to India, let them work here for some time, take them back into their own country, be it in Europe or be it in U.S., and then have them go through one more rotation in other country before we get you through full time into their country of the origin. Because that’s the only way we as a company can build leadership in the countries – in countries, because having people flying from India is not really a way by which we could really build a Wipro culture knocking 0.5% decline connected to necessary and is special for us like in a geography walk down. Edward Caso – Wells Fargo: Next question. Can speak to the business process outsourcing marketplace? And how your positioning is for that where you see the market going? Thank you.

I think last year has been a tough year for us in the BPO business. And the good news is that if you look at it I think one of the big shifts that we have taken this year is that we are going after specific industry processes and because we believe that the length in terms of four traditional services, which we were all strong in at one point of time like F&B and HR are slowly getting to monetize and it’s important for us to stay ahead of the commoditization curve. So more work around analytics, more work around industry processes are clearly the way we believe the market is headed. However having said that, I think what we’re now seeing in specific places there would platform place available. We are right now picking and choosing the place that we want to be here in 31 investor platforms because platforms by itself would mean there is going to be a high degree of standardization. And a high degree of standardization fundamentally means huge change management. So we’re just picking and choosing the areas where we don’t have the necessarily course of specific management. Because both areas we believe that we will be successful. In other areas we believe it’s going to be much, much tougher for us to get there. Edward Caso – Wells Fargo: Great. Thank you.

You’re welcome.

Thank you. The next question is from Moshe Katri from Cowen & Co. Please go ahead. Avishai Kantor – Cowen & Company: Hi. It’s Avishai Kantor for Moshe. Thank you very much for taking a question. First, I want to talk a little bit about the BPO again, in the last few quarters as you mentioned strong pipeline and some notable wins in BPO, when do you expect BPO growth to accelerate in the sequential basis?

So looking here what we expect to see, we expect to see some impact in this quarter and then after repeat we expect to see growth during the year two. However, having said that, the real impact of what we have done during in the past couple of quarters and what we will continue to do over the next quarter, next few quarters. We will see the real impact in terms of going back to ore industry’s growth rate only next year. We won’t see that this year. Avishai Kantor – Cowen & Company: And which verticals seem to be driving growth in BPO, it’s really not seem to be stronger than?

So banking and financial services continues to be strong. And the next year we have that we see significant traction is in healthcare. These are the two areas. In fact, on the healthcare side, we’ve done – we’ve had some very nice wins over the past couple of quarters in that particular area. And we see that clearly growing. I can have some either top prospect what you’re planning to do in that particular segment.

Hi. This is Sangita and I manage the Healthcare and Life Sciences business. So we’ve seen an energized growth engine in the last two quarters, quarter three and quarter four largely around Life Sciences, where customers seem to be investing around three areas. One, which is around increasing productivity where we leverage our bread and butter business in the form of infrastructure and BPO. We also see our customers investing around accelerating growth and there everything around digital marketing CRM is what we’ve making ourselves available for our customers. Finally, in the innovation business, the new Greenfield projects around big data, analytics and mobility is what’s driving some of the growth in the Life Sciences business. Come to the payer and provide, in which we are a relative upstart we are leaning largely around the new Greenfield areas, once again mobility and analytics, also the acquisition that we have made with the Infocrossing and the healthcare business of Infocrossing, we are available to leverage the platform that we have for Medicare and make it available for some of the large payer lines of ours. Largely, on the success of some of the CSAT that we’ve had with our top customers. We hope to mind them much better and apply a dual strategy of mining and hunting to see robustness in our growth. Avishai Kantor – Cowen & Company: Thank you. And should we expect any new offerings in the BPO in the near-term?

Yes. We have – we are seeing ourselves being able to offer very specialized services to Life Sciences, medical devices in the BPO space. Today we work with a large payer, which we believe is really the model ship as far as the payer business is concern. And the work that we do in the BPO space over the last eight years is very unique to Wipro and we should be able to leverage that to other customers as well. So it would be more around appetizing it and more around productizing what we’ve already done with our customers. Avishai Kantor – Cowen & Company: Great. My next question I want to just clear, your offshore pricing any notable trends in offshore pricing going into fiscal year ‘13?

So I will ask Jatin Dalal, our CFO to talk through it.

Yeah. So if you see this quarter our offshore pricing has improved 1.4% sequentially. And if you see last four quarters we are – and if you see the range, we are trending at the higher end of that range. Going forward, we believe that the pricing and realization, third person realization should remain in a stable environment. We don’t see a significant aspect given the uncertainty in the market as well as we don’t see a significant negative balance. Avishai Kantor – Cowen & Company: Thank you. And the last question is on China, any changes on your China strategy, your initiatives or how you consider China?

I’ll ask Bhanumurthy who is our Chief Delivery Officer to kind of talk to that.

Our center in China continues to serve our global customer’s that has been our strategy. Our strategy has been to serve our global customers through the center, depending upon the skill sets required and the nature of support that is required. And we continue to grow that part of the center. Our investment in that center has increased in terms of getting the local talent into that place and also ensuring that there is adequate training that is there in place both the technical and the soft skills and communication. So we continue to stay invested in China and we’re seeing certain categories of customers moving – they are moving certain categories work to that center right now. Avishai Kantor – Cowen & Company: Thank you very much, looking forward to your Analyst Day.

Thank you.

Thank you.

Thank you. The next question is from Shashi Bhushan from Prabhudas Lilladher. Please go ahead. Shashi Bhushan – Prabhudas Lilladher: Yeah, good evening, sir. Thanks for taking my question. This is a good investment uptick in our sales and marketing effort, in fact highest as a percentage of sales in the region? So I have two parts of question related to that. Now do we further see acceleration in S&M effort in FY ‘13. Or second is there a different approach to our sales effort that we are taking a possible hunting and farming in the morning conference call, so are we spending that extra dollar for hunting or also farming?

Good question, Shashi. Let me answer that in two parts. First, is that our S&M expenses would go up during FY ‘13 because our belief is that again in time – it’s important for us to make sure that we are able to kind of we have to say investment in current capacity. It’s absolutely predictable. So our S&M expenses would go up. Second is where would the S&M expense would go up. I mean, would they be allocated more the mining or the hunting. And I think that’s the question that I cannot answer with any degree of certainty. Because fundamentally what we are doing is we’re going to create a hunting team, we already have the farming team to create it, we are aligned all our 138 accounts across in terms of making sure that everybody is aligned from a service line perspective and as far as the management perspective and part of the customer. And there really our gain would be as far as the accounts that we are already in, our biggest focus would be to make sure that our best of calling changes and calling on different stakeholder changes. While on the other hand as far as hunting is concerned we continue to go all out to make sure that more mono-lines and more integrated services continue to be sold. Where we actually act as the structure to grab market share and that’s really the ambition. Shashi Bhushan – Prabhudas Lilladher: That’s really helpful, all the best for FY ‘13.

Thank you.

Thank you. The next question is from Swami Shanmugasundaram from Morningstar. Please go ahead. Swami Shanmugasundaram – Morningstar: Hi, thanks for taking my question. I mean, I have couple of questions. My first one is about the R&D business. I mean it’s kind of being on the secularly with 95, looking at the number over the last eight quarter’s coming down close to 16% of revenue to 12.5%. Kind of seeing that it’s a drag on the overall growth. So, would you mind talking about your plans for these factors I mean like how do you plan to reverse the trend and what kind of impact does this decelerating growth have on your margins?

There is a couple of things and I will take the first part of the question and then kind of drift that question across Ayan Mukerji, who runs the telecom business and who can show a little bit color on this. But, broadly as far as the R&D business is concerned, we are really changing our focus from simple sale of competency back to integrated facilities. That’s one big change that we have made over the last year. The second big change that we’re making is that traditionally if you look at our verticals, they are in the strong end, these are basically manufacturing at telecom. Telecom had its own presence in terms of equipment vendors and the R&D business in general, that it’s been in the house what we see here in terms of top line growth is manufacturing to which is another big area for us. Again, on the consumable electronic side we’ve seen – we’ve not seen great growth. So, those are two areas that have been effected. Clearly, we have four other verticals and FBU. Our objective would be to make sure that the R&D business kind of cause and get more breadth across and be restricted by these two verticals.

Aravind and Balla for our manufacturing perspective.

Hi. My name is Aravind, and I can give a perspective from a Telecom side. What we are seeing is with the change in market requirements of products, Telecom products that are moving from voice to data, the investment on the Telecom side is more on the radio access network side and on the optical side. The legacy product than the telecom industry had previously, right, the investments are moving from sustaining and maintaining the legacy products into cutting edge technology. And these technology areas are extremely on the cutting edge and the investments that have been made by the industry would take at least 12 to 18 months product to realize. As a result, of which as expenses that they have on legacy products is being reduced. So it’s not necessarily that the outsourcing strategy for the telecom industry is undergoing a change, but it is the fact that the products that they’ve been has to undergo to cases with the new requirements of data with the given voice. So we continue to have strong presence within the R&D in the telecom industry, but the nature of work that we are doing is changing considerably.

And just to act on Aravind’s comments, this is Balla, I run he manufacturing and the Hi-tech business unit. So within large segment, obviously, product engineering is pretty significant proportion of what we do. To your point, I think there is definitely the fact that product lifecycle introduction has become much shorter now, there are many new models being introduced at a far higher pace. And therefore the lifecycle of product development has been shortened quite a bit in the last couple of years. Having said that the nature of work has definitely moved upstreams specifically in terms of what we do. We have currently engaged with few customers in terms of driving entire products for emerging markets. And these products are not scared of motions of global product. But product that will be designed for an emerging market and should be taken back to developed countries. So the base design itself will be completed and it would relate to a completely used segment of the market. So those kinds of upstream projects which are really more end to end and which have a significant design component in them, are the focused areas that we’re trying to do. So as you would imagine a lot of them has to do with an integrated hardware and software design. And that’s what we’re focusing on right now.

You know there is – just to make an another addition here. The other thing we’re seeing in the R&D in the terms of industry is the business model change. So as our customers redeploy their cash in dollars they are wanting their partners to invest. So the business model which you’ve – previously more time and material – time and material and fixed price based is changing to less reward and revenue linked. So give about three or four fairly large deals that are following this business model where the product revenues get realized two to three years down the line.

Okay. I think we should go to the next question. I think Swami’s line got disconnected. Go to the next question and also announce for any further questions.

Sure, sir. (Operator Instructions) The next question is from Keith Bachman from Bank of Montreal. Please go ahead. Keith Bachman – Bank of Montreal: Hi, thank you. You talked about the financial vertical in terms of the March quarter. But I’d like to hear some comments as you look out over the next couple of quarters. Isn’t the growth market, will it grow faster than or slower than the company average. Any kind of color there. And then the second question is, relative to some of your comments as you look forward, how do you compare it with – let say what TCS announced in yesterday and why do you anticipate growing slower than TCS? And that’s it from me. Thank you.

So, I’ll answer the second question first and then I’ll hand over to Soumitro Ghosh to throw some color on the banking practices that he mentioned. Against what we believe, you know at the end of the day, our – we don’t guide for a full year, we guide only for the quarter. Keith Bachman – Bank of Montreal: Yes.

To that extent what you see is a quarter one guidance for us. We haven’t given any guidance for the full year. So it’s difficult for us to comment as to you know, TCS how it’s going to do and how we are going to do with VPN because fundamentally we don’t guide. The second part – for the first part of the question, I’ll give it to Soumitro Ghosh, to throw some color on the bank in multiple areas.

Yeah, hi. So I’ll give you a slant in terms of you know, the respective verticals, as well as the geography, right. So as I said earlier, insurance and retail banking is showing robust growth. Investment banking is a little bit challenged and that is directly related to how the trading volumes are among all the investment bank and its direct relation to the market, right. So we are seeing in retail banking, as well as the insurance segment, customers spending a lot in terms of growth initiatives right, how to launch new products, new geographies, new channels etcetera. While in investment banking perhaps the focus is more in terms of taking cost out, valuing the cost, asset monetization and the other place where they are spending money is regulatory. So that’s at a segment level. In terms of the geography spread, we are seeing specifically lot more traction in U.K. and Europe as far as retail banking is concerned. At least three of the top U.K. banks we are working with right and that have big initiatives in all of them in terms of both revenue generation as well as cost take out. Overall from a portfolio perspective of the emerging markets, we believe that there is a lot of money being spent in the emerging markets and the high focus area really there is in baking and within banking, the core banking space. So what we have done as a part of the New Year strategy is to form a dedicated unit focusing on the emerging markets with a primary proposition around core banking. So we are building a team which focuses on core banking as a fundamental offering and in addition also transformational initiatives outside of core banking in the insurance – in the banking space. In insurance, a lot of the – global insurance companies are expanding the footprint into these markets, so we are also focusing on building solutions where there can be an insurance in a box proposition, which we are taking to these – insurance companies.

Keith, this is Jatin here, just adding to previous comment on guidance. So if you see last two years of Wipro’s performance you will see that there is an element of seasonality in Q1 with closing, so I think that has also contributed to our guidance for Q1. Keith Bachman – Bank of Montreal: Okay. Fair enough. But just coming back to the question, would you expect the financial services vertical in aggregate to grow at below, at or below the company average growth in CY ‘12 and that can either be from your perspective or and/or the industry perspective? In other words you talked about the pipeline being good. There’s the pipeline and you see some recover in the pipeline that turns into growth as we look at the back half of the calendar year for the financial services vertical? Thank you.

Keith (inaudible) are therefore company or for specifically vertical take you from the last year performance you will see that FX, the banking and financial services had been in line with the company and we continue to see a robust pipeline for financial services as we enter the systems. Keith Bachman – Bank of Montreal: Okay. Thank you.

I think Malina Swamy has logged in that will be the last question. I think you got some follow-up. After this question they will close the call or again give me the control. Okay?

Sure sir. Ladies and gentlemen, we will take one last question from Swami Shanmugasundaram from Morning Star. Please go ahead. Swami Shanmugasundaram – Morningstar: Sorry, for the trouble. Thanks for accommodating. My next question is a (inaudible) your oil and business. I mean, just like you guys have been showing a very good momentum on this and have you more profit from the acquisition. So my question is, can you talk about how integration is going and how does the client base look like, rough estimate on multi-million dollar account?

So, on integration on the SATI side, I’ll ask Rishabh talk to that.

So, the integration is complete and the integration has actually gone very well. It has become an integral part of our oil and gas business and if you see the chart that we received relative to our overall plan at the time of closing the deal, we’re very much in line. So, it’s going well. Swami Shanmugasundaram – Morningstar: And any–

Are there other– go ahead. Swami Shanmugasundaram – Morningstar: So, I mean any interest on your – I mean the cash (inaudible) $40 million account. How does the pipeline look like?

The pipeline is strong. We’ve – the duty of that deal once we got a high number of (inaudible) highly complementary to our client base and we’re seeing good traction in terms of taking our services into that client base and taking the competency on the upstream side of oil and gas into our client base. Swami Shanmugasundaram – Morningstar: Sure. I think my last one is about the on-site option. I just wanted to know how do – as going forward, I mean on-site contribution, I mean if I look at their 200 basis points, I mean is this is a temporary phenomenon, strengthening your clientele and price? The reason I’m asking is it does look like it does have an impact on the margins, I mean the margins have come down from 22% to 20%, so want to get your base on that?

Mr. Swami , this is really reflection of two things. The kind of demand that we see and also the new project start, both trying to be on-site centric to begin with. So, I think the trend that you’re seeing over last four quarters are where the world that is more onsite centric is really the deflection of the needs that have sort of come through and is available in the marketplace. And going forward, we continue to see a little bit more onsite-centric deal, and to that extent I would say that there would be a little bit more buyers towards onsite than it has been before. Swami Shanmugasundaram – Morningstar: Yes.

And we must say that Swami, what I must add, is this business or this industry has evolved over the years to move – continue to move what is offshore. And as we mature into this account, I’m reasonably confident that we will have a lot more offshore in future conference. Swami Shanmugasundaram – Morningstar: Sure.

Swami, are you done with your questions? Swami Shanmugasundaram – Morningstar: Yeah, yeah. That’s it for me. Thanks again for taking my questions.

Okay. Thank you so much. So Marina, we will conclude the call. Thank you very much for your active participation. We – the IR team is available for any offline questions. Remember May 18 Analyst Day in New York. Thank you so much.

Thank you gentlemen of the management. Ladies and gentlemen, on behalf of Wipro, that concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.