Mba Finance Ratoon Analysis

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SUMMER TRAINING REPORTOn

Conducted at

Submitted to:

Kurukshetra University, Kurukshetra

In the partial fulfilment of the Requirement of the Degree of MBA

(Masters of Business Administration)

(Session 2008-2010)

Submitted By:

Lakhan Anand

ICL INSTITUTE OF MANAGEMENT &

TECHNOLOGY, SOUNTLI

(Affiliated to Kurukshetra University, Kurukshetra)


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DECLARATION

I student of Masters of Business Administration, ICL Institute of

Management & Technology, Sountli, hereby declare that the material

embodied in this dissertation/thesis project entitled RATIO ANALYSISis an organized and original piece of work conducted by me and same has

not been submitted in any other university or Institution for the award of any

degree or diploma in any discipline.

LAKHAN ANAND

Date:

Place:


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PREFACE

Practical Training is an important part of theoretical studies. It is of an immense

importance in the field of management. It offers the student to explore the valuable

treasure of experience and exposure to real work followed by the industries and

thereby helping the students to bridge the gap between the theories explained n the

book and their practical implementations.

Training plays an important role in future building of an individual so that he/she can

better understand the real world in which he has to work in future. The theory greatly

enhances our knowledge and provides opportunities to blend theoretical with the

practical knowledge where trainee gets familiar with certain aspects of Industry. I feel

proud to get trained at Wipro.

I have taken up training in WIPRO and have studied analysis regarding different

Ratios of Wipro.


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ACKNOWLEDGEMENT

Gratitude is the hardest of emotions to express and one often does

not find adequate words to convey what one feels and trying to

express it.

The present project file is an amalgamated of various thoughts and

experiences .the successful completion of this project report would have not been

possible without the help and guidance of number of people. I take thisopportunity to thank all those who have directly and indirectly inspired, directed

and helped me towards successful completion of this project report.

I am also immensely indebted to my project guide, Ms. Vishu

Mehndiratta, Lecturer (ICL) for her illumining observation, encouraging

suggestions and constructive criticisms, which have helped me in completing this

research project successfully.

There are several other people who also deserve much more than a

mere acknowledgement at their exemplary help. I also acknowledge with deep

sense of gratitude and wholehearted help and cooperation intended to me by

them.

LAKHAN ANAND

Date:

Place:


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TABLE OF CONTENTS

THE WIPRO SYMBOL

MISSION

QUALITY POLICY

ABOUT IT INDUSTRY

Introduction

Future of IT Industry

INTRODUCTION TO COMPANY

Background and Business

Financial Performance

Timeline

SWOT Analysis of the Company

OBJECTIVE OF THE STUDY

RESEARCH METHODOLOGY

FINANCIAL STATEMENTS

FINANCIAL ANALYSIS

RATIO ANALYSIS

Liquidity Ratio

Activity Ratio

Profitability Ratio

Profitability Ratio based on Investment

ADVANTAGES & LIMITATIONS OF RATIO ANALYSIS

FINDINGS

RECOMMENDATIONS

CONSTRAINTS OF THE STUDY

BIBLIOGRAPHY

ANNEXURE


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THE WIPRO SYMBOL

The Wipro Flower perceived as the Rainbow Flower to communicate. The Symbol is

called Rainbow Flower, in which expressions are both Rational & Emotional.

RATIONAL

1. Diversified expert2. Innovation3. Precision4. Vastness5. Interaction6. Expression of life7. Versatility8. High rising9. Variety10. Individuality11. Modern

technology12. Aspiration,

brighter side of life13. Ahead of time14. Power and energy15. Focused, yet open

16. Solid, yet flexible

EMOTIONAL

1. Nature's excellence2. Human3. Proximity4. Full of life5. Blooming6. Positive for every

aspect of life7. Fresh8. Striking9. Vivacity10. Youthfulness11. Cheerfulness

12. Colour of life


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Significance of Colours in the Wipro Brand Identity

Red: Blood, Life giving, Dynamic, Auspicious

Green: Fields, Prosperity, Freshness, Growth, Youth

Yellow: Sun, Warmth, Vitality, Aspirations

Violet: Intelligence, Innovation, Shrewdness, Mystery

Blue: Sky, Sea, Transparency, Natural

MISSION

"With utmost respect to Human Values,

We promise to serve our customer with

integrity, through a variety of Innovative,

Value for Money Products and Services,

by Applying Thought, day after day."


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Engineering Changes through core competency for greater synergy reinforcing bonds

with customers & establishing powerful symbiotic relationship with international

allies, preparing global market. The company wants to make a lasting difference to its

shareholders, its customers, business associates, its employee and country as a whole.

Company also gives better quality and better technology to customer and treats every

customer as special to build respect for, and loyalty to, WIPRO.

VISION

Having already achieved the pinnacles of process and quality credentials (through

ISO 9000, SEI CMM, PCMM and Six Sigma), Wipro's Vision is focused on attaining

leadership in the areas of business, customer and people.

Business Leadership: Among the top 10 Information Technology Services companies

globally and the No.1 Information Technology company in India.

Customer Leadership: The No.1 choice of customers through innovative solutions and

Six Sigma processes.

People Leadership: Among the top 10 most preferred employers globally by creatingan environment of empowerment, intellectual challenge and wealth sharing.

Brand Leadership: Wipro to be among the 5 most admired brand in India.

QUALITY POLICY

We shall strive to continuously improve to meet the ever-rising Expectations of

our customers at the lowest cost.


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Each one of us must fulfill the need of our customer, both internal and external

with the highest degree of commitment thereby creating a quality organization

geared to ensure total customer satisfaction and the sustained health and

prosperity of our business.

Customer Orientation: To fulfill the requirement of our internal and external

customer.

Process Orientation: To optimize and harmonize interrelated process rather than

individual functions.

PreventiveBehavior: To prevent the mistakes to happen.


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INTRODUCTION

Information Technology is one of the most important industries in the Indian

economy. The IT industry of India has registered huge growth in recent years. India's

IT industry grew from 150 million US Dollars in 1990-1991 to a whopping 50 billion

UD Dollars in 2006-2007. In the last ten years the Information Technology industry in

India has grown at an average annual rate of 30%.

The liberalization of the Indian economy in the early nineties has played a major role


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in the growth of the IT industry of India. Deregulation policies adopted by the

Government of India have led to substantial domestic investment and inflow of

foreign capital to this industry. In 1970, high import duties had forced IBM to leave

India. However, after the early nineties, many multi national IT companies, including

IBM, have set up their operations in India. During the ten year period 1992-2002, the

Indian software industry grew at double the rate as the US software industry.

Some of the major reasons for the significant growth of the IT

industry of India are -

Abundant availability of skilled manpowerReduced telecommunication and internet costs

Reduced import duties on software and hardware products

Cost advantagesEncouraging government policies

Some of the major companies in the IT industry of India are -

Tata Consultancy Services (TCS)InfosysWiproIBMHP

HCLCognizant Technology Solutions (CTS)PatniSatyamNIIT

India's IT industry caters to both domestic and export markets. Exports contribute

around 75% of the total revenue of the IT industry in India. The IT industry can bebroadly divided into four segments -

IT servicesSoftwares (includes both engineering and Research and Development)ITES-BPOHardware

The robust growth of India Inc. can be attributed to the meteoritic success of ' India

IT Industry '. In fact no other Indian industry has performed so well against the

global market.


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The master control of'Indian IT Industry' is in the hands of Department of

Information Technology (DOT) which aims to make ' India IT Industry ', a Global

IT Super Power by 2008 - a front-runner and bring the benefits of electronics to every

walk of life. Further, it is focused on Creation of Wealth, Employment Generation and

IT led Economic Growth. According to sources, annual revenue projections for '

India IT Industry ' in 2008 are US $ 87 billion and market openings are emerging

across four broad sectors, IT services, software products, IT enabled services, and e-

businesses thus creating a number of opportunities for Indian companies. All of these

segments have opportunities in foreign and as well as in domestic markets

With the formation of a new ministry for IT, Government of India (GOI) has taken

major steps towards promoting ' India IT Industry '. It has taken steps to promote

angel investors, venture creators and incubation to promote

Electronics and hardware manufacturing.

R&D.

Increase PC penetration.

Increase utilization of Internet.

Domestic software market.

Development of local language softwares.

Use of IT to increase productivity. Use of IT as a means of generating employment.

Availability of technical work force.

Number and quality of training facilities.

Future of IT Industries

IT will continue to gain momentum; telecom and wireless will follow the trend. The

immense expansion in networking technologies is expected to continue into the next

decade also. IT will bring about a drastic improvement in the quality of life as it

impacts application domains and global competitiveness. Technologies that are

emerging are Data Warehousing and Data Mining. They involve collecting data to

find patterns and testing hypothesis in normal research. Software services that are

being used in outsourcing will go a long way.


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Future Estimates (For 2009):

Annual revenue estimated for the industry is US $ 87 billion.

Software and Services will contribute over 7.5% of the overall GDP growth of

India. IT exports will constitute 35% of the total exports of India.

There will be 2.2 million jobs in IT sector.

IT industry will attract FDI of US$ 4-5 billion.

Market capitalization of IT shares will be approximately US $ 225 billion.

As far as India is concerned we are best in service sector because of cheap and skilled

labour. The India's share in overall world trade is 5%, but in service sector our share

is 1.5%. Though it is less but India is having a bright Chance of increment. The major

export of service by India is in IT (Information Technology) Sector. Last year IT

exports give us $2.5 billion, this is not a small amount. The major players of IT Sector

are Wipro, Infosys etc. Last quarter profit of Infosys is increased by more than 50%

and of Wipro it is increased by more than 40%. This it self shows the growth of IT

sector in India.

Now future of IT sector in India. It is two fold.

On one hand we are having benefit of =>

* Low labour cost* English speaking people

* Good Companies like Wipro, Infosys etc.

* More than 85% consumer of Software Industry Prefer Indian Software.

But on the other hand

* Our government policy, strict rules, Foreign Direct Investment restriction in IT

sector etc. are hurdles in the growth of IT Industry.

Bur apart from all we are having advantage of being the first love of the IT Sector

majors in the World like MICROSOFT, CISCO etc. Last year Software Company

MICROSOFT'S CEO visited India and inaugurates their office in Hyderabad, while at

the same time they are selling their business in other parts of the World. This it self

sows the trust of Foreigner in Shining IT Sector/market in India.

Another good indicator for IT sector is Foreign Institutional Investment Inflow. In

December our Sensex rises to historic height of above 6600 and on 2nd Feb 2005 it is


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around about 6555 and major sector in this growth is IT apart of other like

Automobile, Banking, Pubic sector Units etc. This means foreign investment is

coming to India for the growth and expansion in these sectors.

So, in conclusion we can say that India is having a bright future. This is understood by

our company that's why they are now engaged in producing their own software apart

from doing clerical work for foreign companies. Joint Venture's are also increasing

and Government is also thinking to give more freedom and benefit to the players in

Information Technology.


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INTRODUCTION TO COMPANY

Business & Background

Wipro started as a vegetable oil trading company in 1947 from an old mill founded by

Azim Premji's father Mr. Hasham Premji in Amalner, Maharashtra. When his father

died in 1966, Azim, a graduate in Electrical Engineering fromStanford University,

took on the leadership of the company at the age 21. He repositioned it and

transformed Wipro (Western India Vegetable Products Ltd) into a consumer goodscompany that produced hydrogenated cooking oils/fat company, laundry soap, wax
http://en.wikipedia.org/wiki/Azim_Premjihttp://en.wikipedia.org/wiki/Stanford_Universityhttp://en.wikipedia.org/wiki/Stanford_Universityhttp://en.wikipedia.org/wiki/Stanford_Universityhttp://en.wikipedia.org/wiki/Azim_Premji


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and tin containers and later set up Wipro Fluid Power to manufacture hydraulic and

pneumatic cylinders in 1975. At that time, it was valued at $2 million.

In 1977, when IBM was asked to leave India, Wipro entered the information

technology sector. In 1979, Wipro began developing its own computers and in 1981,

started selling the finished product. This was the first in a string of products that

would make Wipro one of India's first computer makers. The company licensed

technology from Sentinel Computers in the United States and began building India's

first mini-computers. Wipro hired managers who were computer savvy, and strong on

business experience.

In 1980 Wipro moved in software development and started developing customizedsoftware packages for their hardware customers. This expanded their IT business and

subsequently developed the first Indian 8086 chip.

Since 1992 Wipro began to grow its roots off shore in United States and by 2000

Wipro Ltd ADRs were listed on the New York Stock Exchange.

Wipro is a diversified corporation into Services, Consumer Products, Fluid

Power, Bio-Med and Information Technology. Wipro Corporations sales in the year

ended March 31, 2000 were 23.129 million. Over the last 10 years sales have grown

at an average annual growth rate of 23% and profit after tax at 43%. In the same year

2000, the company was also listed on the New York Stock Exchange.

Wipro seeks leadership in all businesses. They are the No. 2 in Information

Technology in Sales and No. 1 in Market Reputation. They are No. 1 in other areas

like Network Integration, Support, and Healthcare Technology in South Asia,Hydraulic Cylinders, Export of Healthcare Systems, Hair Care Soaps, Circular

Florescent Lights and No. 2 in Software Exports, Fluid Power Consumption, Baby

Toiletries and Bakery Fats.

The company's revenue grew by 450% from 2002 to 2007. This success has led to

higher salaries (wages have been growing by more than 14% per year since 2005),

which puts pressure on the company's margins.
http://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/American_Depositary_Receipthttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/American_Depositary_Receipt


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Wipro Technologies deals in following businesses

IT Services: Wipro provides complete range of IT Services to the

organization. The range of services extends from Enterprise Application

Services (CRM, ERP, e-Procurement and SCM) to e-Business solutions.

Wipro's enterprise solutions serve a host of industries such as Energy and

Utilities, Finance, Telecom, and Media and Entertainment.

Product Engineering Solutions: Wipro is the largest independent provider of

R&D services in the world. Using "Extended Engineering" model for

leveraging R&D investment and accessing new knowledge and experience

across the globe, people and technical infrastructure, Wipro enables firms to

introduce new products rapidly.

Technology Infrastructure Service: Wipro's Technology Infrastructure

Services (TIS) is the largest Indian IT infrastructure service provider in terms

of revenue, people and customers with more than 200 customers in US,

Europe, Japan and over 650 customers in India.

Business Process Outsourcing: Wipro provides business process outsourcing

services in areas Finance & Accounting, Procurement, HR Services, Loyalty

Services and Knowledge Services. In 2002, Wipro acquiring Spectramind andbecame one of the largest BPO service players.

Consulting Services: Wipro offers services in Business Consulting, Process

Consulting, Quality Consulting, and Technology Consulting.

Wipro's Sister Concerns (Business Units)

Wipro Infrastructure Engineering: It has emerged as the leader in the hydraulic

cylinders and truck tipping systems market in India.

Wipro Infotech: It is one of the leading manufacturers of computer hardware

and a provider of systems integration and infrastructure services in India.

Wipro Infotech is more focused on the manpower services and is not at the

cutting edge of technology.

Wipro Lighting: It manufactures and markets the Wipro brand of luminaries.

Wipro Lighting offers lighting solutions across various application areas such


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as commercial lighting for modern work spaces, manufacturing and

pharmaceutical companies, designer petrol pumps and outdoor architecture.

Achievements

1993 - Business innovation award for offshore development.

1995 - Wipro gets ISO 9001 quality certification, re-certified twice for mature

processes

1997 - Wipro gets SEI CMM level 3 certification, enterprise wide processes

defined.


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o Start of the Six Sigma initiative, defects prevention practices initiated

at project level.

1998 - Wipro first software services company in the world to get SEI CMM

level 5 1999 - Wipro's market capitalization is the highest in India.

2000 - Start of the Six Sigma initiative, defects prevention practices initiated

at project level. Wipro listed on New York Stock Exchange.

2001 - First Indian company to achieve the "TL9000 certification" for industry

specific quality standards.

o Wipro acquires American Management Systems global energy

practice.

o Becomes world's first PCMM Level 5 company.

o Premji established Azim Premji Foundation, a not-for-profit

organization for elementary education.

o Wipro becomes only Indian company featured in Business Weeks 100

best-performing technology companies.

2002

o Worlds first CMMi ver 1.1 Level 5 company.

o Wipro acquires Spectramind.

o Ranked the 7th software services company in the world byBusiness

Week(Infotech 100, November 2002).

2003

o Wipro acquires Nervewire.

o Wipro Technologies Wins Prestigious IEEE Award for Software

Process Excellence.

o Wipro Technologies awarded prestigious ITSMA award for services

marketing excellence.

o Wipro wins the 2003 Asian Most Admired Knowledge Enterprise

Award.

2004

o Crossed the $1 Billion mark in annualized revenues.

o Wipro launches Indias first RFID enabled apparel store.
http://en.wikipedia.org/wiki/BusinessWeekhttp://en.wikipedia.org/wiki/BusinessWeekhttp://en.wikipedia.org/wiki/BusinessWeekhttp://en.wikipedia.org/wiki/BusinessWeekhttp://en.wikipedia.org/wiki/BusinessWeek


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o Wipro Technologies named Asian Most Admired Knowledge

Enterprise second year in a row.

o IDC rates Wipro as the leader among worldwide offshore service

providers.

Wipro Client List


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Embedded and

Product

Engineering

Manufacturing Retail Telecommunicat

ion and

Internetworking

Travel and

Transportati

on

Education

NCR

Toshiba

Symantec

Corporation

Energy and

Utilities

National Grid

CaseStudies

PacifiCorp

Thames Water

NewsStory

NPower

Vectren Source

Microsoft

Cisco

Akzo Nobel News

Story

Honeywell

Sanyo

Schneider Electric

Nike

TNT

Media &

Entertainment

Easy Cinema.com

Exel

Weyerhaeuser

Scotts

Telecom

ServiceProvider

NTL

TeliaSonera

Avaya Inc.

Nokia Siemens

Networks

Cisco Systems

Nortel Networks

Alcatel Lucent

Ciena

Broadcom

Cable &

Wireless

Aircel

Unitech

Thomas

Cook

TUI AG

University of

Canberra

Tulasi Vivek

Hr. Sec.School(EnglishMedium)

FINANCIAL PERFORMANCE

Services:
http://en.wikipedia.org/wiki/Toshibahttp://en.wikipedia.org/wiki/Symantec_Corporationhttp://en.wikipedia.org/wiki/Symantec_Corporationhttp://en.wikipedia.org/wiki/Symantec_Corporationhttp://en.wikipedia.org/wiki/Symantec_Corporationhttp://en.wikipedia.org/w/index.php?title=Energy_and_Utilities&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Energy_and_Utilities&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Energy_and_Utilities&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=National_Grid_Case_Studies&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=National_Grid_Case_Studies&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=National_Grid_Case_Studies&action=edit&redlink=1http://en.wikipedia.org/wiki/PacifiCorphttp://en.wikipedia.org/w/index.php?title=Thames_Water_News_Story&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Thames_Water_News_Story&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Thames_Water_News_Story&action=edit&redlink=1http://en.wikipedia.org/wiki/NPowerhttp://en.wikipedia.org/w/index.php?title=Vectren_Source&action=edit&redlink=1http://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/Ciscohttp://en.wikipedia.org/w/index.php?title=Akzo_Nobel_News_Story&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Akzo_Nobel_News_Story&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Akzo_Nobel_News_Story&action=edit&redlink=1http://en.wikipedia.org/wiki/Honeywellhttp://en.wikipedia.org/wiki/Sanyohttp://en.wikipedia.org/wiki/Schneider_Electrichttp://en.wikipedia.org/wiki/Nikehttp://en.wikipedia.org/wiki/TNThttp://en.wikipedia.org/wiki/Exelhttp://en.wikipedia.org/wiki/Weyerhaeuserhttp://en.wikipedia.org/wiki/Scotts_Miracle-Gro_Companyhttp://en.wikipedia.org/wiki/NTLhttp://en.wikipedia.org/wiki/TeliaSonerahttp://en.wikipedia.org/wiki/Avaya_Inc.http://en.wikipedia.org/wiki/Avaya_Inc.http://en.wikipedia.org/wiki/Nokia_Siemens_Networkshttp://en.wikipedia.org/wiki/Nokia_Siemens_Networkshttp://en.wikipedia.org/wiki/Nokia_Siemens_Networkshttp://en.wikipedia.org/wiki/Cisco_Systemshttp://en.wikipedia.org/wiki/Nortel_Networkshttp://en.wikipedia.org/wiki/Alcatel_Lucenthttp://en.wikipedia.org/w/index.php?title=Ciena&action=edit&redlink=1http://en.wikipedia.org/wiki/Broadcomhttp://en.wikipedia.org/w/index.php?title=Cable%26Wireless&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Cable%26Wireless&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Cable%26Wireless&action=edit&redlink=1http://en.wikipedia.org/wiki/Aircelhttp://en.wikipedia.org/wiki/Unitechhttp://en.wikipedia.org/wiki/Thomas_Cookhttp://en.wikipedia.org/wiki/Thomas_Cookhttp://en.wikipedia.org/wiki/TUI_AGhttp://en.wikipedia.org/wiki/University_of_Canberrahttp://en.wikipedia.org/wiki/University_of_Canberrahttp://en.wikipedia.org/w/index.php?title=Tulasi_Vivek_Hr._Sec._School(English_Medium)&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tulasi_Vivek_Hr._Sec._School(English_Medium)&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tulasi_Vivek_Hr._Sec._School(English_Medium)&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tulasi_Vivek_Hr._Sec._School(English_Medium)&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tulasi_Vivek_Hr._Sec._School(English_Medium)&action=edit&redlink=1http://en.wikipedia.org/wiki/Toshibahttp://en.wikipedia.org/wiki/Symantec_Corporationhttp://en.wikipedia.org/wiki/Symantec_Corporationhttp://en.wikipedia.org/wiki/Symantec_Corporationhttp://en.wikipedia.org/w/index.php?title=Energy_and_Utilities&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Energy_and_Utilities&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=National_Grid_Case_Studies&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=National_Grid_Case_Studies&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=National_Grid_Case_Studies&action=edit&redlink=1http://en.wikipedia.org/wiki/PacifiCorphttp://en.wikipedia.org/w/index.php?title=Thames_Water_News_Story&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Thames_Water_News_Story&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Thames_Water_News_Story&action=edit&redlink=1http://en.wikipedia.org/wiki/NPowerhttp://en.wikipedia.org/w/index.php?title=Vectren_Source&action=edit&redlink=1http://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/Ciscohttp://en.wikipedia.org/w/index.php?title=Akzo_Nobel_News_Story&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Akzo_Nobel_News_Story&action=edit&redlink=1http://en.wikipedia.org/wiki/Honeywellhttp://en.wikipedia.org/wiki/Sanyohttp://en.wikipedia.org/wiki/Schneider_Electrichttp://en.wikipedia.org/wiki/Nikehttp://en.wikipedia.org/wiki/TNThttp://en.wikipedia.org/wiki/Exelhttp://en.wikipedia.org/wiki/Weyerhaeuserhttp://en.wikipedia.org/wiki/Scotts_Miracle-Gro_Companyhttp://en.wikipedia.org/wiki/NTLhttp://en.wikipedia.org/wiki/TeliaSonerahttp://en.wikipedia.org/wiki/Avaya_Inc.http://en.wikipedia.org/wiki/Nokia_Siemens_Networkshttp://en.wikipedia.org/wiki/Nokia_Siemens_Networkshttp://en.wikipedia.org/wiki/Cisco_Systemshttp://en.wikipedia.org/wiki/Nortel_Networkshttp://en.wikipedia.org/wiki/Alcatel_Lucenthttp://en.wikipedia.org/w/index.php?title=Ciena&action=edit&redlink=1http://en.wikipedia.org/wiki/Broadcomhttp://en.wikipedia.org/w/index.php?title=Cable%26Wireless&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Cable%26Wireless&action=edit&redlink=1http://en.wikipedia.org/wiki/Aircelhttp://en.wikipedia.org/wiki/Unitechhttp://en.wikipedia.org/wiki/Thomas_Cookhttp://en.wikipedia.org/wiki/Thomas_Cookhttp://en.wikipedia.org/wiki/TUI_AGhttp://en.wikipedia.org/wiki/University_of_Canberrahttp://en.wikipedia.org/wiki/University_of_Canberrahttp://en.wikipedia.org/w/index.php?title=Tulasi_Vivek_Hr._Sec._School(English_Medium)&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tulasi_Vivek_Hr._Sec._School(English_Medium)&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tulasi_Vivek_Hr._Sec._School(English_Medium)&action=edit&redlink=1


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Wipro provides the following services:

Development and Maintenance: The company develops information

technology products and offers maintenance support in case of a breakdown.

Consulting: Companies hire Wipro for consulting services pertaining to

information technology.

Testing: Wipro tests IT systems for efficiency and effectiveness.

Package Implementation: Wipro gives information on making decisions

about choosing the right package to run applications.

Business Process Outsourcing (BPO): Companies contract Wipro to

complete specific business tasks.

R&D services: Wipro designs software and hardware (including chips).

Infrastructure outsourcing: Wipro sets up IT infrastructures for companies.

R&D services is the largest segment for Wipro generating 35% of total sales in 2006.

This is followed by development and maintenance which accounted for 23%.

PRICING STRATEGIES ADOPTED BY WIPRO
http://www.wikinvest.com/image/Wit3.pnghttp://www.wikinvest.com/image/Wit2.png


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Though the sector seems to be growing at a reasonable rate, margins of players are

coming under tremendous pressure. Low international prices, intense competition

from the local assemblers and falling customs duties have led to wafer thin margins

for the players. The pricing strategy followed is mark-up pricing. The mark up varies

from tender to tender depending on the special price quoted.

The components of the quoted price in a tender includes:

Base price

+ Excise duty (currently @16%) = ex works price

+ Freight and handling charges+ Transit insurance

+ Entry tax (2% for Orissa)

+ Sales tax (OST @4%)= final delivered price

This is a price structure followed by the company for direct sales to the major

account. In case of supplies by the dealer, dealer margin is added after the entry tax.

The price at which the dealer receives the goods is known as dealer transfer price.

TheFOR price in case of supplies through dealer the price is calculated as

below:

DTP (special discount adjusted) + dealer margin + OST + freight to the site

However dealers can further reduce their margins to bag the order.

MILESTONES


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2008: Launch of Wipro Egypt Development Center

2008: Launch of Wipro GSMC in Kuala Laumpur

2007: Wipro Arabia Joint Venture found

2006: Acquisition of 3D networks

2006: Launch of GSMC- Global Service Management Centre for remote service

delivery

2004: Start of Total Outsourcing business

2002: Start of Consulting business unit

2001: Launch of Wipro Infotech Middle East & Asia-Pacific operations

2000: Wipro Listed on NYSE

1998: Mission Quality journey started with focus on Six Sigma

1998: Re-launch of Wipro branded PC

1995: Wipro-BT joint venture started

1995: Joint Venture with Acer started

1995: Partnership with Cisco announced

1995: Offshoring services started

1992: Launch of global R&D services1990: Launch of global software services business

1988: Partnership with Sun Microsystems announced

1986: Manufacturing tie-up with Epson for printers

1986: Start of Wipro PC manufacturing (with India's first surface mounted

technology)

1984: Start of Wipro Systems - focus on software products (Wipro branded as well as

distribution business)

1981: Manufacture of mini computers started at the Mysore factory

1980: Birth of IT business under banner of Wipro Information Technology Ltd.

focused on hardware manufacturing and R&D

1945: Manufacturing of edible oils

BOARD OF DIRECTORS OF WIPRO Ltd.

Azim H. Premji(Chairman & Managing Director)


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Dr. Ashok Ganguly(Director)(Chairman ICI India Ltd., former Director of Unilever Plc.)

Dr. Nachiket Mor(Director)(Head of Treasury at ICICI Ltd.)

P S Pai(Vice Chairman & Executive Officer)

Vivek Paul(Vice Chairman & Executive Officer)

B C Prabhakar(Director)(Senior Counsel)

Dr. Jagdish N. Sheth(Director)(Professor in Marketing at Emory University, USA)

Arun K Thiagarajan(Vice Chairman & Executive Officer)

N Vaghul(Director)

(Chairman of ICICI Ltd.)

Hamir K Vissanji(Director)(Industrialist)

COMMITTEES OF THE BOARD

COMPENSATION &

BENEFITS COMMITTEEN Vaghul (Chairman)

Hamir K VissanjiB C Prabhakar

AUDIT COMMITTEEHamir K Vissanji (Chairman)

N VaghulDr. Nachiket Mor

ADMINISTRATIVE COMMITTEEAzim H Premji (Chairman)B C Prabhakar

SWOT ANALYSIS OF WIPRO

STRENGTHS


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Global R&D facility.

Retention of the man-power is the best in the industry.

Impressive list of clientele.

Relatively lower receivable compared to the industry average.

WEAKNESSES

Low operating margin of the other group companies.

Free floating stock is very less.

OPPORTUNITIES

In the branded product category.

In the consultancy area.

In the emerging technology areas like Blue Tooth, WAP etc.

THREATS

Increasing cost of human capital.

Slowdown in the US economy.

Will face fierce competition in the areas of e-business and ASP

services.


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OBJECTIVE OF STUDY

For a fresher like me, in a big organization like Wipro Ltd. gave me a feel of the real

working atmosphere. It enhanced my horizons about how the members of the

organization work as a team, co-ordinating with each other, their interdependence on

each other. I became aware of the synergy effect i.e., how different members in

different profiles produce greater results with co-ordination.

The usefulness of Study:

In-depth knowledge of Companys workings.

Awareness of difference between the bookish knowledge and the practical

workings of the company.

Knowledge of Companys policies.

Motivates to work as a team member.

To get aware of Current Position of the Company.

The various designations in an organization, the respective work profiles and the

interdependence among them.

It helps to understand how to tackle work pressure and meet dead lines.

Time utilization.

Data analysis and interpretation helps to increase capability of mind.

Knowledge of Companys decisions to solve the problems.


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RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. In

it step by step methods are followed to solve a particular problem. It refers to asearch for knowledge. It can also be defined as a scientific search for pertinent

information on a specific topic. In fact, research is an art of scientific investment.

Redman & Mory defines research systematized effort to gain new

knowledge.

RESEARCH DESIGNResearch Designs the way in which the research is carried out. It works as a blue

print. Research Design is the arrangement of the conditions for the collections

and analysis of data in a manner that to combine relevance to the research

purpose with economy in procedure.

TYPES OF RESEARCH DESIGN

Exploratory Research Design

Descriptive & Diagnostic Research Design

Experimental Research Design

Exploratory Research Design

In it, a problem is formulated for precise investigation and working and

hypothesis are developed.

Descriptive & Diagnostic Research Design

In descriptive research design: those studies are taken which are concerned with

describing the characteristics of a particular individual or a group.


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Experimental Research Design

In it casual relationships between the variables are tested. It is also known as

Hypothesis Testing Research Design

The present project is descriptive in nature. The major purpose of

descriptive research is the description of the state of affairs, as it exists in

present. The main characteristic of this method is that the researcher has no

control over the variables. He can only report what has happened or what is

happening.

SAMPLE DESIGN

It is not possible for any researcher to include each and every member of the

universe in his research process. So, he selects small portion of the universe,

which is its true representative. This group is known as sample and this

process is called sampling.

Sampling Techniques can be categorized into two broad categories namely:

Non-probability Sample

Probability Sampling

Non-probability Sampling

In it, researcher selects sample deliberately, by using his own judgment, in it

every item of the universe does not have equal chances of inclusion in the

sample.

It can be of following type:

Convenience Sampling

Judgment Sampling

Quota Sampling


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Probability Sampling

It is known as Random Sampling or Chance Sampling. In it, each

population element has equal chance of selection.

It can be of following types:

Simple Random Sampling

Stratified Sampling

Cluster Sampling

In the present project, non-probability sampling has been used becausesample is selected by researchers own view and every item of the universe has

not equal chances of being selected. Under non-probability sampling, convenient

sampling has been used because sample has been selected according to own

convenience

DATA COLLECTION

The data can be of two types: Primary Data

Secondary Data

Primary Data

Primary data are those data, which is originally collected afresh.

Secondary Data

Secondary data are those data which are already collected and stored and

which has been passed through statistical research.

In this project, Secondary data has been collected from following sources:-

Annual report

Books

M.I.S


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Other material and report published by company


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FINANCIAL STATEMENTS

INTRODUCTION

Accounting is the process of identifying, measuring, and communicating economic

information to permit informed judgments and decisions by users of the information

.it involves recording classifying and summarizing various business transactions. The

end products of business transactions are the financial statements comprising

primarily the position statement or the balance sheet and the income statement or the

profit and loss account. Financial Statements are the basis for decision making by the

management as well as all other outsiders who are interested in the affairs of the firm

such as investors, creditors, customers, suppliers, financial institutions, and

employees, potential investors, Government and the general public.

MEANING OF FINANCIAL STATEMENTS

A Financial statement is a collection of data organized according to logical and

consistent accounting procedures. The term Financial Statement generally refers to

the two statements:

(i) The position statement or the balance sheet; and

(ii) The Income statement or the profit and loss account.

In the words of John N. Myer , The Financial Statements provide a summary of the

accounts of the business enterprise, the balance sheet reflecting the assets, liabilities

and capital as on a certain date and the income statement showing the results of

operations during a certain period

In the words of Anthony, Financial Statements essentially, are interim reports,

presented annually and reflect a division of the life of an enterprise into more or less

arbitrary accounting period more frequently a year.


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FINANCIAL ANALYSIS

The term Financial Analysis, also known as analysis and interpretation of financial

statements, refers to the process of determining financial strengths and weaknesses of

the firm by establishing strategic relationship between the items of the balance

sheet .profit and loss and other operative data. Analyzing financial statements,

according to Metcalfand Titard , is a process of evaluating the relationship

between component parts of a financial statement to obtain a better understanding of afirms position and performance. The analysis of financial statements is to bring out

the mystery behind the figures in financial statements.

METHODS OR DEVICES OF FINANCIAL ANALYSIS

A number of methods or devices are used to study the relationship between different

statements. An effort is made to use those devices which clearly analyse the position

of the enterprise. The following methods of analysis are generally used:

(1) Comparative Statements;

(2) Trend Analysis;

(3) Common size statements;

(4) Funds Flow Analysis;

(5) Cash Flow Analysis;

(6) Ratio Analysis;(7) Cost Volume-Profit Analysis.


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RATIO ANALYSIS

INTRODUCTION

The ratio analysis is one of the most powerful tools of financial analysis. It is the

process of establishing and interpreting various ratios. It is with the help of ratios that

the financial statements can be analyzed more clearly and decision made from such

analysis.

MEANING OF RATIO

A ratio is simply an arithmetical expression of the relationship of one number to

other. It may be defined as the indicated quotient of two mathematical expressions.

According to Accountants Handbook by Wixon,Kell and Bedford ,a ratio is an

expression of the quantitative relationship between two numbers According to

Kohler , a ratio is the relation ,of the amount, a , to another ,b, expressed as the ratio

of a to b ; a:b or as a simple fraction ,integer ,decimal, fraction or percentage.

HOW RATIOS CAN BE EXPRESSED?

Ratios can be expressed in 3 ways:

1. PURE RATIO:

For example if the current assets of the firm on a given date are 5,00,000 and

the current liabilities are Rs 2,50,000 ,then the ratio of current assets to current

liabilities will work out to be 5,00,000/2,50,000 or 2 .Such type of ratios are called

simple or pure ratios. A financial ratio is the relationship between two accounting

figures expressed mathematically.


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2. PERCENTAGE (%):

A ratio can also be expressed as percentage by simply multiplying the ratio by

100. As in the above example the ratios is 2 * 100 or 200% or say current

assets are 200% of current liabilities.

3. QUOTIENT RATIO / TIME RATIO:

It is also expressed as a proportion for example ,ratio of current assets to

current liabilities is,say,5,00,000 : 2,50,000 or 2:1.Some analysts also express

ratio as a rate or time. For example, the ratio of stock turnover is, say

50,000/10,000 or 5 times which simply conveys that stock has been turned

over 5 times. In the example given above we can say that the ratio is two

times.


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USE AND SIGNIFICANCE OF RATIO ANALYSIS

The ratio analysis is one of the most powerful tools of financial analysis. It is used as

a device to analyse and interpret the financial health of the enterprise. The use ofratios is not confined to financial managers only .With the use of ratio analysis one

can measure the financial condition of a firm and can point out whether the condition

is strong ,good ,questionable or poor. The conclusions can also be drawn as to

whether the performance of the firm is improving or deteriorating. Thus, the ratios

have wide applications and are of immense use today.

Managerial Uses of Ratio Analysis

Helps in Decision-making

Helps in financial forecasting

Helps in communicating

Helps in Cost of Goods Sold-ordination

Helps in control

Other uses

Utility to Shareholders/Investors

Utility to Creditors

Utility to Employees

Utility to Government

Tax Audit Requirements


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LIMITATIONS OF RATIO ANALYSIS

Limited use of a single ratio

Lack of adequate standards

Inherent limitations of accounting

Change of Accounting Procedure

Window Dressing

Personal Bias

Incomparable

Absolute Figures Distortive

Price Level Changes

Ratios no Substitutes


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LIQUIDITY RATIOS

Liquidity refers to the ability of the concern to meet its current obligations as and

when these become due. The short-term obligations are met by releasing amounts

from current, floating or circulating assets. The current assets should be liquid or near

liquidity. The sufficiency of current assets should be assessed by comparing them

with short-term (current) liabilities. if the current assets can pay off the current

liabilities, then liquidity position will be satisfactory. On the other hand, if current

liabilities may not be easily met out of current assets then liquidity position will be

bad. The Bankers, suppliers of goods and other short-term creditors are interested in

the liquidity of the concern. They will extend credit only if they are sure that current

assets are enough to payout the obligations. To measure the liquidity of a firm, the

following ratios can be calculated:

Current Ratio

Quick or Acid Test or Liquid Ratio


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1. CURRENT RATIO

Current ratio may be defined as the relationship between current assets and current

liabilities. This ratio is also known as working capital ratio, is a measure of general

liquidity and is most widely used to make the analysis of a short term financial

position or liquidity of a firm. It is calculated by dividing the total assets by total of

the current liabilities.

Current ratio = Current Assets

Current Liabilities

2004-05 2005-06 2006-07 2007-08 2008-09

Current Ratio 1.47 1.42 1.68 2.54 1.83

0

0.5

1

1.5

2

2.5

3

2005 2006 2007 2008 2009

CURRENT RATIO

SIGNIFICANCE


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From the above table it can be interpreted that Wipro liquidity position is constant.

As a conventional rule a current ratio of 2:1 or more is considered satisfactory

because in a worse situation, even if the value of current assets becomes half, the firm

will be able to meet its obligations. Current ratio refers to a margin of safety for

creditors therefore higher the current ratio, the greater the margin of safety.

2. QUICK or ACID TEST OR LIQUID RATIO

Quick ratio establishes a relationship between quick or liquid assets and

current liabilities. An asset is liquid if it can be converted into cash

immediately or reasonably soon without a loss of value. Inventories are

considered to be less liquid therefore calculating quick ratio they are

deducted from current assets.

Quick Ratio = Current Assets inventory

Current liabilities

2004-05 2005-06 2006-07 2007-08 2008-09

Quick Ratio 1.45 1.40 1.61 2.44 1.76

0

0.5

1

1.5

2

2.5

2005 2006 2007 2008 2009

SIGNIFICANCE


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Wipro quick ratio in the current year has decreased in comparison to previous

year, yet it can be considered to be satisfactory, as it is 1:1 times of current

liabilities. Although quick ratio is more penetrating test of liquidity than

current ratio. Yet it should be used cautiously, as all debtors may not be

liquid and cash may be immediately needed to pay operating expenses.

TURNOVER RATIOS

These ratios indicate how efficiently the working capital and stock is being

used to obtain sales. Higher turnover ratios indicate the better use of capital or

resources and in turn lead to higher profitability. They are also called performance

ratios.

Turnover / Activity Ratios

Stock Turnover Ratio

Debtors Turnover Ratio

Fixed assets Turnover Ratio

Creditors Turnover Ratio


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1. STOCK TURNOVER RATIO

This ratio is also called inventory turnover ratio. It shows the speed

or velocity with which inventory moves through business.

Inventory Turnover Ratio = Cost of Goods Sold

Average Inventory

COMPONENTS

COGS = Net Sales - G/P.

Sales = Gross Sales - Sales Return

Average Inventory = Opening Stock + Closing Stock / 2

2004-05 2005-06 2006-07 2007-08 2008-09

ITR 57.38 69.56 58.12 39.41 47.02

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009

SIGNIFICANCE


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The higher this ratio, the better it is. Lower stock turnover ratio indicates that

stock is blocked, poor performance, over investment in stock.

2. DEBTORS TURNOVER RATIO

It is also called receivable turnover ratio, it indicates the rate at which cash is

generated by turnover by debtors. It establishes the relationship between credit sales

and debtors sales during the year.

Debtors Turnover Ratio = Net Credit Sales

Average Debtors

COMPONENTS

Net Credit Sales = Gross Sales - Cash Sale

Average Debtors = Opening Debtors + Closing Debtors / 2

2004-05 2005-06 2006-07 2007-08 2008-09

DTR 5.86 6.06 6.01 5.62 5.34

4.8

5

5.2

5.4

5.6

5.8

6

6.2

2005 2006 2007 2008 2009

SIGNIFICANCE


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This ratio is an indicator of the speed the debts are being realized. The higher this

ratio, the better it is. As it will show, that debts are collected quickly.

DEBT COLLECTION PERIOD

This indicates the time within which the amount is collected from debtors and bills

receivable. It is calculated by dividing the months in a year by debtors turnover ratio.

Debt Collection Period = 12 Months

DTR

2006-07 2007-08 2008-09

Debt Collection Period 2.17 2.10 2.70

0

0.5

1

1.5

2

2.5

3

2007 2008 2009


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3. FIXED ASSETS TURNOVER RATIO

This ratio indicates how efficiently the fixed assets have been utilized to

increase the sales of the firm.

Fixed asset turnover Ratio = Net Sales

Net Fixed Assets

COMPONENTS

Net Sales = Total Sales - Sale Return

Net Fixed Assets = Assets after Dep.

2004-05 2005-06 2006-07 2007-08 2008-09

FATR 7.52 7.16 6.29 7.81 6.86

0

1

2

3

4

5

6

7

8

2005 2006 2007 2008 2009

SIGNIFICANCE


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This ratio indicates the efficiency with which the firm is utilising its

investment in fixed assets. The higher this ratio, the better it is. A high ratio indicates

efficient utilization of fixed assets in generating sales.

4. CREDITOR TURNOVER RATIO

This ratio establishes relationship between net credit purchases and average

creditors.

Creditors Turnover Ratio = Net Credit Purchases

Average Creditors

COMPONENTSNet Credit Purchases = Gross Credit Purchases Purchase Return

Average Debtors = Opening Debtors + Closing Debtors / 2

2004-05 2005-06 2006-07 2007-08 2008-09

CTR 5.70 3.67 3.55 3.45 3.32

0

1

2

3

4

5

6

2005 2006 2007 2008 2009

SIGNIFICANCE

Lower creditor turnover means that creditors have followed liberal credit policy.

High ratio means that the firm has to pay the creditors in a short period. Lower ratio is

beneficial to the firm as it poses fewer problems to manage working capital.


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PROFITABILITY RATIO

The primary objective of a business undertaking is to earn profits. Profit earning is

considered essential for the survival of the business. In the words of Lord Keynes,

Profit is the engine that drives the business enterprise. A business needs profits not

only for its existence but also for expansion and diversification. A business enterprise

can discharge its obligations to the various segments of the society only through

earning profits. Profits are, thus, a useful measure of overall efficiency of a business.

Profits to the management are the test of efficiency and measurement of control; to

owners, a measure of worth of their investment; to the creditors ,the margin of safety;

to employees, a source of fringe benefits; to government, a measure of tax paying

capacity and the basis of legislative action; to customers, a hint to demand better for

quality and price cuts; to an enterprise, less cumbersome source of finance for growthand existence and finally to the country, profits are an index of economic progress.

The various profitability ratios are discussed as under:

PROFITABILITY RATIOS

(i) Gross Profit Ratio

(ii) Operating Profit Ratio

(iii) Expenses Ratio

(iv) Net Profit Ratio


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1. GROSS PROFIT RATIO

Gross Profit Ratio measures the relationship of gross profit to net sales and is usually

represented as a percentage .Thus; it is calculated by dividing the gross profit b y

sales:

Gross Profit Ratio = Gross Profit X 100

Net Sales

COMPONENTS

Net Sales = Gross Sales Sales Return

Gross Profit = Net Sales Cost of Goods Sold

2004-05 2005-06 2006-07 2007-08 2008-09

GP Ratio 26.34 25.08 25.30 18.63 19.64

0

5

10

15

20

25

30

2005 2006 2007 2008 2009

SIGNIFICANCE

High gross profit ratio is the sign of efficient management. Increase in prices or

reduction in cost can also result in high gross profit ratio. Sometimes, lower valuation

of opening stock or higher valuation of closing stock can also increase gross profit

ratio.


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2. OPERATING PROFIT RATIO

Operating ratio establishes the relationship between cost of goods sold and other

operating expenses on the one hand and the sales on the other. In the other words, it

measures the cost of operations per rupee of sales. The ratio is calculated by dividing

operating costs with the net sales and its generally represented as a percentage.

Operating Ratio = Operating Profit X 100

Net Sales

COMPONENTS

Operating Profit = Net Sales Operating Cost

= Net Sales (Cost of Goods Sold + administrative and Office

expenses + Selling and Distributive Expenses)

OR

Operating Profit = Net Profit + NonOperating Expenses Non-Operating Income

2004-05 2005-06 2006-07 2007-08 2008-09

Operating Ratio 25.64 24.28 23.78 21.24 22.12

0

5

10

15

20

25

30

2005 2006 2007 2008 2009


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SIGNIFICANCE

The lower the operating ratio, more efficient the firm will be. This ratio can be used to

compare the firm with other firms or the performance of the firm in previous years

with the current years.

3. NET PROFIT RATIO

Net profit ratio establishes a relationship between net profit (after taxes) and sales,

and indicates the efficiency of the management in manufacturing, selling,

administrative and other activities of the firm. This ratio is also called Net Profit

Margin.

(i) Net Profit Ratio = Net Profit After Tax X 100

Net Sales

2004-05 2005-06 2006-07 2007-08 2008-09

NP Ratio 20.45 19.53 20.34 17.19 14.14

0

5

10

15

20

25

2005 2006 2007 2008 2009

SIGNIFICANCE

The ratio is very useful as if the profit is not sufficient, the firm shall not be able to

achieve a satisfactory return on its investment. This ratio also indicates the firms


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capacity to face adverse economic conditions such as price competition, low demand,

etc. Obviously, higher the ratio, the better is the profitability.

4. EXPENSES RATIO

Expenses ratio indicates the relationship of various expenses to net sales. The

operating ratio reveals the average total variations in expenses. But some of the

expenses may be increasing while some may be falling. Hence, expense ratios are

calculated by dividing each item of expenses with the net sales to analyze the causes

of variation of the operating ratio .The ratio can be calculated for each individual item

of expenses or a group of items of a particular type of expense like cost of sales ratio,

administrative expense ratio, selling expense ratio, material consumed ratio, etc.

Particulars Expense Ratio = Particular Expense X 100

Net Sales

Individual or specific expense ratio may be calculated as:

(i) Cost Of Goods Sold Ratio = Cost of Goods Sold X 100

Net Sales

(ii) Administrative & Office Expenses Ratio

= Administrative & Office Expenses X 100Sales

(iii) Selling & Distributive Expenses Ratio

= Selling & Distributive Expenses X 100

Sales

(iv) Non-Operating Expenses Ratio

= Non-Operating Expenses X 100


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Sales

2004-05 2005-06 2006-07 2007-08 2008-09

Material Consumed Ratio 16.51 13.60 14.43 17.94 15.63

0

2

4

6

8

10

12

1416

18

2005 2006 2007 2008 2009

SIGNIFICANCE

The lower the ratio, the greater is the profitability and higher the ratio, lower is the

profitability.


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PROFITABILITY RATIOS based on INVESTMENT

The main objective of these ratios is to know whether the business is earning adequate

return on capital invested or not. On the basis of these ratios, the performance of the

business can be measured. Business collects funds from various sources to earn

profits. Therefore, it becomes essential to make proper use of these resoures. These

ratios are also known as Return on Investment or ROI.

Return on Investment

(i) Return on Total Assets

(ii) Return on Net Capital Employed

(iii) Return on Shareholders Fund


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1. RETURN ON TOTAL ASSETS

With the help of this ratio, overall profitability of all resources can be evaluated. Total

assets can also be called Gross Capital Employed. Total assets are equal to the sum

of fixed assts and current assets.

Return on Total Assets = Profit before Interest and Tax X 100

Total Assets

2004-05 2005-06 2006-07 2007-08 2008-09

Return on Total Assets 69.54 45.03 63.86 79.05 85.42

0

10

20

30

40

50

60

70

80

90

2005 2006 2007 2008 2009

SIGNIFICANCE

By comparing this ratio to the ratio of similar types of firms, it can be ascertained how

effectively the Assets of business are utilized. Higher ratio indicates that assets are

being utilized efficiently.


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2. RETURN ON CAPITAL EMPLOYED

For the purpose of this ratio, capital employed is concerned with long term funds.

Long term funds are provided by creditors and owner of business.

Return on Capital Employed = Profit before Interest and Tax X 100

Capital Employed

COMPONENTS

Capital Employed = Fixed Assets + Net Working Capital

Or

Capital Employed = Long term Liabilities + Issued Share Capital + Reserve &

Surplus

2004-05 2005-06 2006-07 2007-08 2008-09

Return on Capital Employed 35.20 35.58 33.30 23.23 21.36

0

5

10

15

20

25

30

35

40

2005 2006 2007 2008 2009

SIGNIFICANCE


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Return on Capital Employed is a measure of the profitability of Long term funds. By

comparing this ratio to the ratio of similar types of firms, it can be ascertained how

effectively the Long term Funds of business are utilized. Higher ratio indicates that

Capital Employed is being utilized efficiently.

3. RETURN ON SHAREHOLDERS FUND

Return on capital employed highlights overall profitability of the funds invested by

creditors and shareholders. Return on shareholders fund evaluates the profitability of

the fund invested by owner. Dividend to preference shareholders is paid out of the

earning after tax and the balance of profit is available for equity shareholders. There

are various measures for return on shareholders fund:

Return on Shareholders Fund

(i) Dividend per Share

(ii) Earning per Share

(iii) Dividend payout ratio

(iv) Debt Equity Ratio


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1. Dividend per Share

All the profits after tax and preference dividend available for equity

shareholders are not distributed among them as dividend. Rather, a part of it is

retained in business. The balance of profit is distributed among equity shareholders.

To calculate dividend per share, we divide the profit distributed as dividend among

equity shareholders by number of equity shares.

Dividend per Share = Profit Distributed to Equity Shareholders

Number of Equity Shares

2004-05 2005-06 2006-07 2007-08 2008-09Dividend per Share 5.00 5.00 6.00 6.00 4.00

0

1

2

3

4

5

6

2005 2006 2007 2008 2009


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2. Earning per ShareThis ratio measures the earning per share available to ordinary shareholders. Equity

shareholders have the right to profits left after payment of taxes and preference

dividend. This ratio is calculated by dividing the profit available for equity

shareholders by the number of equity shares issued.

Earning per Share = Net Profit after Tax and Preference Dividend

Number of Equity Shares

2004-05 2005-06 2006-07 2007-08 2008-09

Earning per Share 21.25 14.17 19.48 20.96 20.30

0

5

10

15

20

25

2005 2006 2007 2008 2009


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3. Dividend Payout Ratio or D/P Ratio

This ratio is called payout ratio. This ratio establishes relationship between the

earning for ordinary shareholders and the dividend paid to them. In other words, it

explains what percentage of profit after tax and preference dividend has been paid to

equity shareholders as dividend.

D/P Ratio = Total Dividend paid to Equity Shareholders X 100

Total Net Profit belonging to Equity Shareholders

Or

D/P Ratio = DPS X 100

EPS

2004-05 2005-06 2006-07 2007-08 2008-09

D/P Ratio 26.83 40.23 35.20 33.47 23.05

0

5

1015

20

25

30

35

40

45

2005 2006 2007 2008 2009


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4. Debt-Equity Ratio

The necessary funds for the assets of business are provided by ordinary shareholders,

preferential shareholders and creditors. In any business, there should be equitable

balance between owned capital and debt capital because it affects the long term

solvency of the business. If a business procures more funds from the owners business,

it will secure the interest of the creditors. On the other hand, if more funds are

borrowed instead of employing owned capital, it will increase risk for creditors as

well as shareholders and management may face difficulty in future to pay the debts.

Debt Equity Ratio = External Equities

Internal Equities

COMPONENTS

External Equities = Debentures + Long term Loans + short term creditors

Internal Equities = Equity Share Capital + Preference share capital + Capital Reserve

+ Revenue Reserves.

2004-05 2005-06 2006-07 2007-08 2008-09

Debt Equity Ratio 0.01 0.01 0.03 0.33 0.40

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

2005 2006 2007 2008 2009

SIGNIFICANCE


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If the debt equity ratio is 1:2, it means that for every one rupee of external liability,there are two rupees of shareholders fund.

ADVANTAGES / MERITS OF RATIO ANALYSIS

1) SIMPLIFICATION OF ACCOUNTING DATA

Ratio Analysis summarizes and simplifies a long array of accounting figuresto make them more clear and understandable.

2) USEFUL IN FINANCIAL STATEMENT ANALYSIS

Ratio Analysis is extremely useful device for analyzing the financialstatements.

3) USEFUL IN DETERMFINATION OF TRENDS

Ratio analysis helps in determination of trends in profit, cost etc.

4) MEASUREMENT OF OVERALL PROFITABILITY

Ratio analysis helps in measuring the overall profitability of enterprise.

5) HELPFUL IN CONTROLLING

Ratio analysis compares the ratio regarding efficiency and financial positionwith standard ratio. It discloses solvency, liquidity and profitability of aenterprises and any unfavourable result can be controlled.

6) RATIOS ANALYSIS HELPS THE MANAGEMENT TO DIAGNOSE THE

VARIOUS SITUATIONS

LIMITATION OF RATIO ANALYSIS

1) WRONG DATA GIVES FALSE RATIO

Ratio are based on data given in the Profit and Loss Account, Balance Sheet.Therefore, they will be only as correct as accounting data on which they are

based.

2) LIMITED USE OF SINGLE RATIO

There is limited use of single ratio, because single ratio is not very significantto explain the situation.

3) RESULTS MAY BE MISLEADING IN THE ABSENCE OF ABSOLUTE

DATA

Some time ratio gives misleading result in the absence of absolute data fromwhich such ratio are derived.

4) CHANGES IN MANY RATIO ARE CLOSELY ASSOCIATED AND

CONNECTS WITH ONE ANOTHER.


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FINDINGS

The business is running 10% on domestic basis

90% of export basis

There are no creditors

Weekly requirement are given through cash flow statements

The sources of fund are from the corporate office.

Head office allots funds to the Wipro InfoTech.

Apart from it the financial department of Wipro InfoTech keeps accounts

for expenses as per the accounting practices.

It deals in insurance, sales tax, excise matters, costing, budgeting and MIS.

The advertising pattern is updated n regular

Discipline is very good


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RECOMMENDATIONS

Debtors Turnover Ratio is decreasing because increase in debtors is more

than increase in Revenue. In 2008 debtors represent 40% of total Current

Assets that is quiet high. So Firstly Company should make changes in its

credit policy and secondly company should try to make more efforts to

collect the funds from its debtors.

Operating Expenses are high which 95% of total expenses are in 2008. In

Operating Expenses employee costs are high which 42% of total operating

expenses are. So the company must have to make some efforts to reduce

its expenses, and profit can increase.

Cash and Bank Balance is 42% in 2008 of total current Assets which is

high. Therefore company must think it to invest in any profitable project.

Return on Shareholders funds are decreased because increase is net profit

is less than increase in shareholders funds.


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CONSTRAINTS OF THE STUDY

Although every effort has been in to collect the relevant information through the

sources available, still some relevant information could not be gathered, due to:

Busy Schedule of Concerned Executives: The concerned executives were

having very busy schedule because of which they were reluctant to give

appointment.

Time: The time duration could not provide ample opportunity to study every

detail of working capital management of the company.

Unawareness: Executives were unaware of many terms related to working capital

study while asking to them.

Confidential Information: As the company on account of confidential report has

not disclosed some figures. Moreover, in some cases separate accounts of division

are not separately maintained thereby, leading to restrictions in study.


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BIBLIOGRAPHY

Books

Financial Management - S.K Gupta

Management Accountancy - D k Goel

Cost and Management Accountancy - S.N.Maheshwari

Financial Management and Policy - James C.Van Horne

World Wide Web

Search Engines: Google, Yahoo, etc.

www.wipro.co.in

www.moneycontrol.com

Wikipedia

Other than Web

M.I.S of the company

Annual Reports
http://www.wipro.co.in/http://www.moneycontrol.com/http://www.wipro.co.in/http://www.moneycontrol.com/


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ANNEXURE & GLOSSARY

ANNEXURE-1

1. General Information

Name of the Company: Wipro Ltd.Registered Office: Doddakannelli, Sarjapur Road,

Bangalore -560 035. Tel: 91-80-8440011 Fax: 91-80-8440056 Website: www.wipro.co.in Chairman: Mr.Azim H. Premji

2. History & Current Profile

Promoter: Mr.Azim H. Premji

Total No. of Employees: Approx. 41500Competitors: Tata Consultancy Service, Infosys, IBM,HP, etc.

3. Financial Data Provider

Financial Concern: Mr. Pyuesh SharmaJob Profile: Finance Department
http://www.wipro.co.in/http://www.wipro.co.in/


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ANNEXURE-2

Table 1

PROFIT & LOSS ACCOUNT in Rs. Cr.


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ANNEXURE-3

TABLE 1

CASH FLOW STATEMENT

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Income

Sales Turnover 7,276.18 10,264.09 13,758.50 17,658.10 21,612.80

Excise Duty 43.02 36.97 74.60 165.50 105.50

Net Sales 7,233.16 10,227.12 13,683.90 17,492.60 21,507.30

Other Income 93.32 151.92 288.70 326.90 -480.40Stock Adjustments 9.29 24.21 86.30 187.00 -13.90

Total Income 7,335.77 10,403.25 14,058.90 18,006.50 21,013.00

Expenditure

Raw Materials 1,194.77 1,391.88 1,975.30 3,139.30 3,362.80

Power & Fuel Cost 46.54 86.46 0.00 0.00 0.00

Employee Cost 2,878.53 4,279.03 5,768.20 7,409.10 9,242.20

Other Manufacturing Expenses 511.53 934.24 120.50 299.80 0.00

Selling and Admin Expenses 657.32 801.07 27.60 557.80 0.00

Miscellaneous Expenses 135.64 274.76 2,624.10 2,558.00 4,129.60

Preoperative Exp Capitalised -37.12 0.00 0.00 0.00 0.00Total Expenses 5,387.21 7,767.44 10,515.70 13,964.00 16,734.60


Operating Profit 1,855.24 2,483.89 3,254.50 3,715.60 4,758.80

PBDIT 1,948.56 2,635.81 3,543.20 4,042.50 4,278.40

Interest 5.57 3.13 7.20 116.80 196.80

PBDT 1,942.99 2,632.68 3,536.00 3,925.70 4,081.60

Depreciation 185.97 292.26 359.80 456.00 533.70

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 1,757.02 2,340.42 3,176.20 3,469.70 3,547.90

Extra-ordinary items -7.06 -33.85 0.00 0.00 0.00

PBT (Post Extra-ord Items) 1,749.96 2,306.57 3,176.20 3,469.70 3,547.90

Tax 255.15 286.10 334.10 406.40 574.10

Reported Net Profit 1,494.82 2,020.48 2,842.10 3,063.30 2,973.80

Total Value Addition 4,192.44 6,375.55 8,540.40 10,824.70 13,371.80

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 351.79 712.88 873.70 876.50 586.00

Corporate Dividend Tax 49.34 99.98 126.80 148.90 99.60

Per share data (annualised)

Shares in issue (lakhs) 7,035.71 14,257.54 14,590.00 14,615.00 14,650.00Earning Per Share (Rs) 21.25 14.17 19.48 20.96 20.30

Equity Dividend (%) 250.00 250.00 300.00 300.00 200.00

Book Value (Rs) 69.54 45.03 63.86 79.05 85.42


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In Rs. Cr.


Net Profit Before Tax 1757.02 2340.43 3176.20 3469.70 3547.90

Net Cash From OperatingActivities

1666.42 1912.25 2674.60 715.90 4344.50

Net Cash (used in)/from

Investing Activities -874.58 -1694.42 -1881.90 -1127.50 -3662.70Net Cash (used in)/from FinancingActivities

-550.61 59.80 238.50 2290.90 -70.70

Net (decrease)/increase In Cashand Cash Equivalents

246.80 277.63 1031.20 1879.30 611.10

Opening Cash & Cash Equivalents 290.09 545.38 818.00 1852.80 3798.10

Closing Cash & Cash Equivalents 536.90 823.00 1849.20 3732.10 4409.20

ANNEXURE-4

TABLE 1

BALANCE SHEET


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In Rs. Cr.


Sources Of Funds

Total Share Capital 140.71 285.15 291.80 292.30 293.00

Equity Share Capital 140.71 285.15 291.80 292.30 293.00

Share Application Money 1.21 7.49 3.50 58.00 1.50Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 4,751.73 6,135.30 9,025.10 11,260.40 12,220.50

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Net worth 4,893.65 6,427.94 9,320.40 11,610.70 12,515.00

Secured Loans 21.59 45.06 23.20 4.00 0.00

Unsecured Loans 40.50 5.10 214.80 3,818.40 5,013.90

Total Debt 62.09 50.16 238.00 3,822.40 5,013.90

Total Liabilities 4,955.74 6,478.10 9,558.40 15,433.10 17,528.90

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09Application Of Funds

Gross Block 1,763.49 2,364.53 1,645.90 2,282.20 3,179.60

Less: Accum.Depreciation

855.53 1,246.27 0.00 0.00 0.00

Net Block 907.96 1,118.26 1,645.90 2,282.20 3,179.60

Capital Work in Progress 250.24 612.36 989.50 1,335.00 1,311.80

Investments 2,859.51 3,459.20 4,348.70 4,500.10 6,884.50

Inventories 127.37 148.65 240.40 448.10 459.70

Sundry Debtors 1,406.51 1,968.07 2,582.30 3,646.60 4,409.20

Cash and Bank Balance 536.89 822.42 1,849.20 3,732.10 4,299.20

Total Current Assets 2,070.77 2,939.14 4,671.90 7,826.80 9,168.10Loans and Advances 602.08 1,136.96 1,666.50 4,231.30 4,408.00

Fixed Deposits 0.01 0.58 0.00 0.00 0.00

Total CA, Loans &Advances

2,672.86 4,076.68 6,338.40 12,058.10 13,576.10

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 1,211.14 1,776.83 2,998.90 3,361.60 5,716.40

Provisions 523.70 1,011.56 765.20 1,380.70 1,706.70

Total CL & Provisions 1,734.84 2,788.39 3,764.10 4,742.30 7,423.10

Net Current Assets 938.02 1,288.29 2,574.30 7,315.80 6,153.00

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00Total Assets 4,955.73 6,478.11 9,558.40 15,433.10 17,528.90

Contingent Liabilities 676.65 509.18 661.60 749.90 596.10

Book Value (Rs) 69.54 45.03 63.86 79.05 85.42

ANNEXURE-5

TABLE 1

Financial Ratios


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Investment Valuation

Ratios

Face Value 2.00 2.00 2.00 2.00 2.00

Dividend Per Share 5.00 5.00 6.00 6.00 4.00

Operating Profit Per Share(Rs)

26.37 17.42 22.31 25.42 32.48

Net Operating Profit PerShare (Rs)

102.81 71.73 93.79 119.69 146.81

Free Reserves Per Share(Rs)

66.69 42.65 -- -- --

Bonus in Equity Capital 98.43 98.08 95.84 95.68 95.45

Profitability Ratios

Operating ProfitMargin(%)

25.64 24.28 23.78 21.24 22.12

Profit Before Interest AndTax Margin(%) 22.83 21.19 20.71 18.29 20.09

Gross Profit Margin(%) 26.34 25.08 25.30 18.63 19.64

Cash Profit Margin(%) 22.99 22.36 22.91 19.74 16.68

Adjusted Cash Margin(%) 22.84 22.32 22.91 19.74 16.68

Net Profit Margin(%) 20.45 19.53 20.34 17.19 14.14

Adjusted Net ProfitMargin(%)

20.30 19.49 20.34 17.19 14.14

Return On CapitalEmployed(%)

35.20 35.58 33.30 23.23 21.36

Return On Net Worth(%) 30.55 31.43 30.49 26.51 23.76

Adjusted Return on NetWorth(%)

30.33 31.39 30.50 26.51 23.76

Return on AssetsExcluding Revaluations

69.54 45.03 63.86 79.05 85.42

Return on AssetsIncluding Revaluations

69.54 45.03 63.86 79.05 85.42

Return on Long TermFunds(%)

35.61 35.87 33.31 23.32 21.36

Liquidity And Solvency

Ratios

Current Ratio 1.47 1.42 1.68 2.54 1.83Quick Ratio 1.45 1.40 1.61 2.44 1.76

Debt Equity Ratio 0.01 0.01 0.03 0.33 0.40

Long Term Debt EquityRatio

-- -- 0.03 0.33 0.40

Debt Coverage Ratios

Interest Cover 313.35 735.79 442.14 30.71 19.03

Total Debt to OwnersFund

0.01 0.01 0.03 0.33 0.40

Financial ChargesCoverage Ratio

346.75 829.08 492.11 34.61 21.74

Financial ChargesCoverage Ratio Post Tax

302.87 739.19 445.71 31.13 18.82


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Management Efficiency

Ratios

Inventory Turnover Ratio 57.38 69.56 58.12 39.41 47.02

Debtors Turnover Ratio 5.86 6.06 6.01 5.62 5.34

Investments Turnover

Ratio 58.05 78.23 57.23 39.41 47.02Fixed Assets TurnoverRatio

7.52 7.16 6.29 7.81 6.86

Total Assets TurnoverRatio

1.46 1.58 1.43 1.14 1.23

Asset Turnover Ratio 4.14 4.35 8.31 7.81 6.86

Average Raw MaterialHolding

37.32 28.45 -- -- --

Average Finished Goods

Held

3.99 3.78 -- -- --

Number of Days InWorking Capital

46.69 45.35 67.73 150.56 102.99

Profit & Loss Account

Ratios

Material CostComposition

16.51 13.60 14.43 17.94 15.63

Imported Composition ofRaw Materials Consumed

51.39 62.12 -- -- --

Selling Distribution CostComposition

1.48 1.67 -- 3.04 --

Expenses as Compositionof Total Sales

74.29 69.25 -- -- --

Cash Flow Indicator

Ratios

Dividend Payout RatioNet Profit

26.83 40.23 35.20 33.47 23.05

Dividend Payout RatioCash Profit

23.86 35.14 31.24 29.13 19.54

Earning Retention Ratio 72.98 59.68 64.80 66.53 76.95

Cash Earning RetentionRatio

75.99 64.79 68.76 70.87 80.46

AdjustedCash Flow Times 0.04 0.02 0.07 1.09 1.43


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