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Wipro Ltd. (

WIT

)

F2Q11 (Qtr End 09/30/10) Earnings Call

October 22, 2010 09:15 am ET

Executives

Sridhar Ramasubbu - VP, IR

Azim Premji - Chairman

Suresh Senapaty - Chief Financial Officer

Girish Paranjpe - Joint CEO

Suresh Vaswani - Joint CEO

Martha Bejar - President, Global Sales and Operations

Rajendra Kumar Shreemal - VP, IR

Sambuddha Deb- Chief Global Delivery Officer

Manish Dugar - CFO

Saurabh Govil - Senior VP, Human Resources

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Analysts

Trip Chowdhry - Global Equities

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Moshe Katri - Cowen and Company

Nabil Elsheshai - Pacific Crest

Ashish Thadani - Gilford Securities

Swami Shanmugasundaram - Morningstar

Mark Zgutowicz - Piper Jaffray

Presentation

Operator

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Good morning. My name is Steve and I will your conference operator today. At this time, I would like to welcome everyone to the Wipro Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions).

Mr. Sridhar Ramasubbu, you may begin your conference.

Sridhar Ramasubbu

Thanks, Steve. Good day to all of you. This is Sridhar Ramasubbu and I'm joined by Rajendra, Arvind and other team members from my team in Bangalore. We are pleased to extend a very warm welcome to all the participants and host the Wipro's Quarter Two FY'11 results and earnings call. Regarding the material for this call, we issued the press release yesterday late night EST and we will have time for Q&A at the end.

We have with us today Mr. Azim Premji, Chairman; Mr. Suresh Senapaty, CFO, who will comment on the IFRS results and on key takeaways for the quarter and year-ended September 30, 2010. They are joined by Joint CEOs of IT business, Suresh Vaswani, Girish Paranjpe and other senior members of the Wipro management team will be happy to answer questions.

As always, elements of this call and the management's view maybe characterized as forward-looking under the Private Securities Litigation Reform Act, 1995, and are based on management's current expectations and are associated with uncertainty and risk which could cause the actual results to differ materially from those expected. These uncertainties and risk factors have been explained in our filings.

We do not undertake any obligation 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 Q2 FY level 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. A replay our today's earnings call proceedings will also be available via telephone post the call.

During this call, I am 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, Wipro.

Azim Premji

Good day and good evening to all of you. Let me just first cover the key points of our IT business. We had a quarter in which we had a 6.6% sequential growth in volume and a 5.7% sequential growth in revenues. Despite the macro uncertainty in the major environments, the micro level customers are spending their budgets and demand environment is very strong. Discretionary spend is picking up. Pricing environment is stable with potential for price increases next year.

As was anticipated, our margins have dropped to 22.2% driven by RSUs and progressions to over 20,000 people, the impact of ForEx as well as increased spend on sales and marketing. We remain completely committed to driving operational excellence and margin improvements.

I want to highlight some of the specifics of our results. The retail and transportation, healthcare and services, telecom and energy and utilities led the growth among the verticals. Technology infrastructure services, product engineering services, consulting and package implementation contributed to our service line growth.

We had a strong growth in Europe and in the emerging markets. The industry has seen much stronger volume and revenue growth this quarter, and we recognize this and acknowledge this.

We want to assure you that we will rise to the challenge and ensure that we return to be among industry-leading profitable growth. We are putting the entire muscle of our organization behind this. In the past six months, Wipro EcoEnergy has moved from concept to reality. We have quite sharply narrowed our focus into areas where intellectual property can be leveraged to create a scalable business. We are leveraging Wipro's customer base to offer these services.

I now hand over to Suresh Senapaty, our CFO, to give you the financial highlights.

Suresh Senapaty

Good day to all of you in the United States, and good evening to all of you here in India. Before I delve into our financials, please also note that for the convenience of readers, our IFRS financial statement have been translated into dollars at the noon buying rates in New York City on September 30, 2010 for cable transfers in Indian rupee, as certified by the Federal Reserve Board of New York, which was $1 equal to 44.56 rupees.

Accordingly, revenues of our IT Services segment that was $1,273 million or in rupee terms INR57.47 billion appears in our earnings release as $1,290 million based on the convenient translation. Our IT Services revenue for the quarter ending 30th September was $1,273 million on a reported basis, a sequential growth of 5.7% and a year-on-year growth of 19.5 %. On a constant currency basis, our IT Services revenue was $1,251 million.

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