Project wipro

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ACKNOWLEDGMENT

I owe my great amount of gratitude to Dr. Meera Pingle the director of Institute for Excellence in Higher Education (IEHE) for making me the part of this esteemed institution.

I am very much thankful to Dr. S.S.Vijayvargiya (Head of Commerce Department) for giving me permission to use departmental library and Anita Deshbhratar for his valuable guidance and encouragement in academic pursuits.

Finally I sincerely thank my family and friends for their help, moral support and encouragement to undertake and complete this project

Raghvendra singh

M.COM (Final)

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DECLARATION BY THE STUDENT

I hereby declare that the project entitled “A project report on financial Ratio analysis of wipro” submitted to Institute for Excellence in Higher Education is a record of an original work done by me under the guidance of Anita Deshbhratar Mam and this assignment is submitted for the partial fulfillment of the requirement for the award of the degree of Master of Commerce. The research embodied in this assignment has not been submitted to any other University or Institution for the award of any degree or diploma.

Raghvendra Singh

M.Com (Previous)

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CERTIFICATE

This is to certify that Mr. Raghvendra Singh is a regular student of Institute for Excellence in Higher Education [I.E.H.E] Bhopal. He has conducted an authentic research work on the topic “A project report on financial Ratio analysis of wipro” and completed her research project successfully under the guidance of Anita Deshbhratar this project has been prepared for His M.Com [Final] for examination 2014-15 and is being submitted there of.

Date of submission:-

TEACHER GUIDE

Anita Deshbhratar

Assistant Prof.

[Commerce department]

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INDEX

Chapter 1: Introduction

Chapter 2: Objectives & Methodology

Need for the study Scope for the study Objectives of the study Research Methodology Limitations of study

Chapter 3: Company Profile

Chapter 4: Data Analysis & Interpretation

Chapter 5: Findings & Suggestions

Findings

Suggestions

Conclusion

Chapter 6: Bibliography

Chapter 7: Annexure

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CHAPTER 1

INTRODUCTION

FINANCIALANALYSIS

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Financial analysis is the process of identifying the financial strengths and weakness of the firm. It is done by establishing relationships between the items of financial statements viz., balance sheet and profit and loss account. Financial analysis can be undertaken by management of the firm, viz., owners, creditors, investors and others.

Objectives of the financial analysis Analysis of financial statements may be made for a particular purpose in view:

1. To find out the financial stability and soundness of the business enterprise.

2. To assess and evaluate the earning capacity of the business

3. To estimate and evaluate the fixed assets, stock etc., of the concern.

4. To estimate and determine the possibilities of future growth of business.

5. To assess and evaluate the firm’s capacity and ability to repay short and long term loans.

Parties interested in financial analysis: 

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The users of financial analysis can be divided into two broad groups.

Internal users: 1. Financial executives

2. Top management

External users:1. Investors

2. Creditor.

3. Workers

4. Customers

5. Government

6. Public

7. Researchers

Significance of financial analysis Financial analysis serves the following purpose:

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To know the operational efficiency of the business: The financial analysis enables the management to find out the overall efficiency of the firm. This will enable the management to locate the weak Spots of the business and take necessary remedial action.

Helpful in measuring the solvency of  the firm: The financial analysis helps the decision makers in taking appropriate decisions for strengthening the short-term as well as long-term solvency of the firm.

Comparison of past and present results: Financial statements of the previous years can be compared and the trend regarding various expenses, purchases, sales, gross profit and net profit can be ascertained.

Helps in measuring the profitability: Financial statements show the gross profit, & net profit.

Inter‐firm comparison: The financial analysis makes it easy to make inter-firm comparison. This comparison can also be made for various time periods.

Bankruptcy and Failure: Financial statement analysis is significant tool in predicting the bankruptcy and the failure of the business enterprise. Financial statement analysis accomplishes this through the evaluation of the solvency position.

Helps in forecasting: The financial analysis will help in assessing future development by making forecasts and preparing budgets.

METHODS OF ANALYSIS:

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 A financial analyst can adopt the following tools for analysis of the financial statements. These are also termed as methods of financial analysis.

A. Comparative statement analysis

B. Common-size statement analysis

C. Trend analysis

D. Funds flow analysis

E. Ratio analysis

NATURE Of RATIO ANALYSIS Ratio Analysis is a powerful tool of financial analysis. A ratio is defined as "the indicated quotient of mathematical expression" and as "the relationship between two or more things". A ratio is used as benchmark for evaluating the financial position and performance of the firm. The relationship between two accounting figures, expressed mathematically, is known as a financial ratio. Ratio helps to summarizes large quantities of financial data and to make qualitative judgment about the firm's financial performance. The persons interested in the analysis of financial statements can be grouped under three head owners (or) investors who are desired primarily a basis for estimating earning capacity. Creditors who are concerned primarily with Liquidity and ability to pay interest and redeem loan within a specified period. Management is interested in evolving analytical tools that will measure costs, efficiency, liquidity and profitability with a view to make intelligent decisions.

STANDARDS OF COMPARISON

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 The ratio analysis involves comparison for an useful interpretation of the financial statements. A single ratio in itself does not indicate favorable or unfavorable condition. It should be compared with some standard. Standards of comparison are:

1. Past Ratios

2. Competitor's Ratios

3. Industry Ratios.

4. Projected Ratios

Past Ratio: Ratios calculated from the past financial statements of the same firm.

Competitor's Ratio: Ratios of some selected firms, especially the most progressive and successful competitor at the same point in time.

 Industry Ratios: Ratios of the industry to which the firm belongs.

 Projected Ratios: Ratios developed using the projected financial statements of the same firm.

TIME SERIES ANALYSIS

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 The easiest way to evaluate the performance of a firm is to compare its present ratios with past ratios. When financial ratios over a period of time are compared, it is known as the time series analysis or trend analysis. It gives an indication of the direction of change and reflects whether the firm's financial performance has improved, deteriorated or remind constant over time.

CROSS SECTIONAL ANALYSIS

 Another way to comparison is to compare ratios of one firm with some selected firms in the industry at the same point in time. This kind of comparison is known as the cross-sectional analysis. It is more useful to compare the firm's ratios with ratios of a few carefully selected competitors, who have similar operations.

INDUSTRY ANALYSIS

 To determine the financial conditions and performance of a firm. Its ratio may be compared with average ratios of the industry of which the firm is a member. This type of analysis is known as industry analysis and also it helps to ascertain the financial standing and capability of the firm & other firms in the industry. Industry ratios are important standards in view of the fact that each industry has its characteristics which influence the financial and operating relationships.

TYPES OF RATIOS

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 Management is interested in evaluating every aspect of firm's performance. In view of the requirement of the various users of ratios, we may classify them into following four important categories:

1. Liquidity Ratio

2. Leverage Ratio

3. Activity Ratio

4. Profitability Ratio

Liquidity Ratio

 It is essential for a firm to be able to meet its obligations as they become due. Liquidity Ratios help in establishing a relationship between cast and other current assets to current obligations to provide a quick measure of liquidity. A firm should ensure that it does not suffer from lack of liquidity and also that it does not have excess liquidity. A very high degree of liquidity is also bad, idle assets earn nothing. The firm's funds will be unnecessarily tied up in current assets. Therefore it is necessary to strike a proper balance between high liquidity. Liquidity ratios can be divided into three types:

Current Ratio Quick Ratio Cash Ratio

Current Ratio

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 Current ratio is an acceptable measure of firm’s short-term solvency Current assets includes cash within a year, such as marketable securities, debtors and inventors. Prepaid expenses are also included in current assets as they represent the payments that will not made by the firm in future. All obligations maturing within a year are included in current liabilities. These include creditors, bills payable, accrued expenses, short-term bank loan, income-tax liability in the current year. The current ratio is a measure of the firm's short term solvency. It indicated the availability of current assets in rupees for every one rupee of current liability. A current ratio of 2:1 is considered satisfactory. The higher the current ratio, the greater the margin of safety; the larger the amount of current assets in relation to current liabilities, the more the firm's ability to meet its obligations. It is a cured -and-quick measure of the firm's liquidity. Current ratio is calculated by dividing current assets and current liabilities.

Quick 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. Cash is the most liquid asset, other assets that are considered to be relatively liquid asset and included in quick assets are debtors and bills receivables and marketable securities (temporary quoted investments).

Inventories are converted to be liquid. Inventories normally require some time for realizing in to cash; their value also has a tendency to fluctuate. The quick ratio is found out by dividing quick assets by current liabilities. Generally, a quick ratio of 1:1 is considered to represent a satisfactory current financial condition. Quick ratio is a more

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penetrating test of liquidity than the current ratio, yet it should be used cautiously. A company with a high value of quick ratio can suffer from the shortage of funds if it has slow- paying, doubtful and long duration outstanding debtors. A low quick ratio may really be prospering and paying its current obligation in time.

Cash Ratio

 Cash is the most liquid asset; a financial analyst may examine Cash Ratio and its equivalent current liabilities. Cash and Bank balances and short-term marketable securities are the most liquid assets of a firm, financial analyst stays look at cash ratio. Trade investment is marketable securities of equivalent of cash. If the company carries a small amount of cash, there is nothing to be worried about the lack of cash if the company has reserves borrowing power. Cash Ratio is perhaps the most stringent Measure of liquidity. Indeed, one can argue that it is overly stringent. Lack of immediate cash may not matter if the firm stretch its payments or borrow money at short notice.

LEVERAGE RATIOS

 Financial leverage refers to the use of debt finance while debt capital is a cheaper source of finance: it is also a riskier source of finance. It helps in assessing the risk arising from the use of debt capital. Two types of ratios are commonly used to analyze financial leverage.

1. Structural Ratios

2. Coverage ratios

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Structural Ratios are based on the proportions of debt and equity in the financial structure of firm. Coverage Ratios shows the relationship between Debt Servicing, Commitments and the sources for meeting these burdens. The short-term creditors like bankers and suppliers of raw material are more concerned with the firm's current debt-paying ability. On the other hand, long-term creditors like debenture holders, financial institutions are more concerned with the firm's long-term financial strength. To judge the long-term financial position of firm, financial leverage ratios are calculated. These ratios indicated mix of funds provided by owners and lenders. There should be an appropriate mix of Debt and owner's equity in financing the firm's assets. The process of magnifying the shareholder's return through the use of Debt is called "financial leverage" or "financial gearing" or "trading on equity". Leverage Ratios are calculated to measure the financial risk and the firm's ability of using Debt to share holder's advantage. Leverage Ratios can be divided into five types.

Debt equity ratio. Debt ratio. Interest coverage ratio Proprietary ratio. Capital gearing ratio

Debt equity ratio

 It indicates the relationship describing the lenders contribution for each rupee of the owner's contribution is called debt-equity ratio. Debt equity ratio is directly computed by dividing total debt by net worth. Lower the debt-equity ratio, higher the degree of protection. A debt-equity ratio of 2:1 is considered ideal. The debt consists of all short term as well as

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long-term and equity consists of net worth plus preference capital plus Deferred Tax Liability.

Debt ratio

 Several debt ratios may used to analyze the long-term solvency of a firm. The firm may be interested in knowing the proportion of the interest-bearing debt in the capital structure. It may, therefore, compute debt ratio by dividing total total-debt by capital employed on net assets. Total debt will include short and long-term borrowings from financial institutions, debentures/bonds, deferred payment arrangements for buying equipments, bank borrowings, public deposits and any other interest-bearing loan. Capital employed will include total debt net worth.

Interest Coverage Ratio

 The interest coverage ratio or the time interest earned is used to test the firms’ debt servicing capacity. The interest coverage ratio is computed by dividing earnings before interest and taxes by interest charges. The interest coverage ratio shows the number of times the interest charges are covered by funds that are ordinarily available for their payment. We can calculate the interest average ratio as earnings before depreciation, interest and taxes divided by interest.

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Proprietary ratio  

The total shareholder's fund is compared with the total tangible assets of the company. This ratio indicates the general financial strength of concern. It is a test of the soundness of financial structure of the concern. The ratio is of great significance to creditors since it enables them to find out the proportion of share holders funds in the total investment of business.

Capital gearing ratio:

 This ratio makes an analysis of capital structure of firm. The ratio shows relationship between equity share capital and the fixed cost bearing i.e., preference share capital and debentures.

ACTIVITY RATIOS

 Turnover ratios also referred to as activity ratios or asset management ratios, measure how efficiently the assets are employed by a firm. These ratios are based on the relationship between the level of activity, represented by sales or cost of goods sold and levels of various assets. The improvement turnover ratios are inventory turnover, average collection period, receivable turn over, fixed assets turnover and total assets turnover. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilize its assets. These ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turned over into sales. Activity ratios thus involve a relationship between sales and assets. A proper balance between sales and assets generally reflects that asset utilization.

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Activity ratios are divided into four types: Total capital turnover ratio Working capital turnover ratio Fixed assets turnover ratio Stock turnover ratio

Total capital turnover ratio :

 This ratio expresses relationship between the amounts invested in this assets and the resulting in terms of sales. This is calculated by dividing the net sales by total sales. The higher ratio means better utilization and vice-versa.

 Some analysts like to compute the total assets turnover in addition to or instead of net assets turnover. This ratio shows the firm's ability in generating sales from all financial resources committed to total assets.

Working capital turnover ratio:

 This ratio measures the relationship between working capital and sales. The ratio shows the number of times the working capital results in sales. Working capital as usual is the excess of current assets over current liabilities. The following formula is used to measure the ratio:

Fixed asset turnover ratio:

 The firm may which to know its efficiency of utilizing fixed assets and current assets separately. The use of depreciated value of fixed assets in computing the fixed assets turnover may render comparison of firm's performance over period or with other firms. 

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The ratio is supposed to measure the efficiency with which fixed assets employed a high ratio indicates a high degree of efficiency in asset utilization and a low ratio reflects inefficient use of assets. However, in interpreting this ratio, one caution should be borne in mind, when the fixed assets of firm are old and substantially depreciated the fixed assets turnover ratio tends to be high because the denominator of ratio is very low.

Stock turnover ratio

 Stock turnover ratio indicates the efficiency of firm in producing and selling its product. It is calculated by dividing the cost of goods sold by the average stock. It measures how fast the inventory is moving through the firm and generating sales. The stock turnover ratio reflects the efficiency of inventory management. The higher the ratio, the more efficient the management of inventories and vice versa .However, this may not always be true. A high inventory turnover may be caused by a low level of inventory which may result if frequent stock outs and loss of sales and customer goodwill.

PROFITABILITY RATIOS

 A company should earn profits to survive and grow over a long period of time. Profits are essential but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits. Profit is the difference between revenues and expenses over a period .Profit is the ultimate 'output' of a company and it will have no future if it fails to make sufficient profits. The financial manager should continuously evaluate the

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efficiency of company in terms of profits. The profitability ratios are calculated to measure the operating efficiency of company. Creditors want to get interest and repayment of principal regularly. Owners want to get a required rate of return on their investment. Generally, two major types of profitability ratios are calculated:

•Profitability in relation to sales

•Profitability in relation to investment

Profitability Ratio can be divided into six types:

Gross profit ratio Operating profit ratio Net profit ratio Return on investment Earns per share Operating expenses ratio

Gross profit ratio

 First profitability ratio in relation to sales is the gross profit margin the gross profit margin reflects. The efficiency with which management produces each unit of product. This ratio indicates the average spread between the cost of goods sold and the sales revenue. A high gross profit margin is a sign of good management. A gross margin ratio may increase due to any of following factors: higher sales prices cost of goods sold remaining constant, lower cost of

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goods sold, sales prices remaining constant. A low gross profit margin may reflect higher cost of goods sold due to firm's inability to purchase raw materials at favorable terms, inefficient utilization of plant and machinery resulting in higher cost of production or due to fall in prices in market. This ratio shows the margin left after meeting manufacturing costs. It measures the efficiency of production as well as pricing. To analyze the factors underlying the variation in gross profit margin,the proportion of various elements of cost (Labor, materials and manufacturing overheads) to sale may studied in detail.

Operating profit ratio

 This ratio expresses the relationship between operating profit and sales. It is worked out by dividing operating profit by net sales. With the help of this ratio, one can judge the managerial efficiency which may not be reflected in the net profit ratio.

Net profit ratio

  Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit. Net profit margin ratio established a relationship between net profit and sales and indicatesmanagement's efficiency in manufacturing, administering and selling products. This ratio also indicates the firm's capacity to withstand adverse economic conditions. A firm with a high net margin ratio would be in an advantageous position to survive in the face of falling selling prices, rising costs of production or declining demand for product

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 This ratio shows the earning left for share holders as a percentage of net sales. It measures overall efficiency of production, administration, selling, financing. Pricing and tax management. Jointly considered, the gross and net profit margin ratios provide a valuable understanding of the cost and profit structure of the firm and enable the analyst to identify the sources of business efficiency / inefficiency.

Return on investment:

 This is one of the most important profitability ratios. It indicates the relation of net profit with capital employed in business. Net profit for calculating return of investment will mean the net profit before interest, tax, and dividend. Capital employed means long term funds.

Earnings per share

  This ratio is computed by earning available to equity share holders by the total amount of equity share outstanding. It reveals the amount of period earnings after taxes which occur to each equity share. This ratio is an important index because it indicates whether the wealth of each share holder on a per share basis as changed over the period.

Operating expenses ratio

 It explains the changes in the profit margin ratio. A higher operating expenses ratio is unfavorable since it will leave a small amount of operating income to meet interest, dividends. Operating expenses ratio is a yardstick of operating efficiency, but it should be used cautiously. It is affected by a number of factors such as external uncontrollable factors, internal factors. This ratio is computed by dividing operating expenses

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by sales. Operating expenses equal cost of goods sold plus selling expenses and general administrative expenses by sales.

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CHAPTER 2

OBJECTIVES AND METHODOLOGY

NEED OF THE STUDY

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The study enables us to have access to various facts of the organization. It helps in understanding the needs for the importance and advantage of materials in the organization, the study also helps to exposure our minds to the integrated materials management the various procedures, methods and technique adopted by the organization. 

The study provides knowledge about how the theoretical aspects are put in the organization.

OBJECTIVES OF STUDY

To analyze the profitability position of the company.

To assess the return on investment.

To analyze the asset turnover ratio.

To determine the solvency position of company.

To analyze the capital structure of the company through leverage ratio.

LIMITATIONS

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• The study was limited to only FIVE years Financial Data.

•The study is purely based on secondary data which were taken primarily from Published annual reports of WIPRO.

•The ratio is calculated from past financial statements and these are not indicators of future.

•The study is based on only on the past records.

• Non availability of required data to analysis the performance.

•The short span of the time provided also one of limitations.

Research Methodology:

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Research is designed as a systematic, gathering recording and analysis of data about problem relating to any particular field.

It determines strength reliability and accuracy of the project.

 Research Design:

Research design pertains to the great research approach or strategy adopted for a particular project. A research project has to be conducted making sure that the data is collected adequately and economically.

The study used Descriptive research design for the purpose of getting an insight over the issue. It is to provide an accurate picture of some aspects of market environment. Descriptive research is used when the objective is to provide systematic description that is as factual and accurate as possible. 

1. Method of data collection:

Secondary data - Through the internet and published data.

In view of the objects of the study listed above an exploratory research design has been adopted. Exploratory research is one which is largely interprets and already available information and it lays particular emphasis on analysis and interpretation of the existing and available information.

•To know the financial status of the company.

•To know the credit worthiness of the company.

•To offer suggestions based on research finding.

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CHAPTER 3

COMPANY PROFILE

Introduction of company

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Wipro Limited (Wipro), together with its subsidiaries and associates (collectively, the company or the group) is a leading India based provider of IT Services and Products, including Business Process Outsourcing (BPO) Services, globally. Further, Wipro has other business such as India and Asia IT Services and products and Consumer Care and Lighting. Wipro is headquartered in Bangalore, India. Wipro Technologies is a global services provider delivering technology-driven business solutions that meet the strategic objectives clients. Wipro has 40+ ‘Centers of Excellence’ that create solutions around specific needs of industries. Wipro delivers unmatched business value to customers through a combination of process excellence, quality frame works and service delivery innovation. Wipro is the World's first CMM Level 5 certified software Services Company and the first outside USA to receive the IEEE Software Process Award. Wipro is a $3.5 billion Global company in Information Technology Services, R&D Services, Business process outsourcing. Team Wipro is 75,000 Strong from 40national i t ies and growing. Wipro is present across 29 countries, 36 Development centers, Investors across 24 countries.

Largest third party R&D Service provider in the world.

Largest Indian Technology Infrastructure management service provider.

A vendor of choice in the middle east

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Among the top 3 Indian BPO Service provider by Revenue (* Nasscom)

Among the top 2 Domestic IT Services companies in India (*IDC India)

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Group Companies

Wipro Infrastructure Engineering Ltd

Wipro Inc.

Wipro Japan KK

Wipro Shanghai Ltd.

Wipro Trademarks Holding Ltd.

Wipro Travel Services Ltd.

Wipro Cyprus Private Ltd.

Wipro Consumer Care Ltd.

Wipro Health Care Ltd.

Wipro Chandrika Ltd.(a)

Wipro Holdings (Mauritius) Ltd.

Wipro Australia Ltd.

Quantech Global Service Ltd.

Planet PSG Pte Ltd.

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History

  Wipro started in 1945 with the setting up of an oil factory in Amalner a small town in Maharashtra in Jalgaon District. The product Sunflower Vanaspati and 787 laundry soap (largely made from a bi-product of Vanaspati operations) was sold primarily in M a h a r a s h t r a a n d M P . T h e c o m p a n y w a s n a m e d w e s t e r n i n d i a p r o d u c t s L t d .

The Birth of the name Wipro

As the organization grew and diversified into operations of Hydraulic Cylinders and InfoTech, the name of the organization did not adequately reflect its operations. Azim Premji himself in 1979 selected the name “Wipro" largely an acronym of Western India Products. Thus was born the Brand Wipro. The name Wipro was unique and gave the feel of an 'International" company. So much so that some dealers even sent their cheques favoring Wipro (India)Limited. Fortunately, the banks accepted them!!By the early 90s, Wipro had grown into various products and services. The Wipro product basket had soaps called Wipro Shikakai , Baby products under Wipro Baby Soft , Hydraulic Cylinders branded Wipro, PCs under the brand name Wipro, a joint venture company with GE named Wipro GE and software services branded Wipro. The Wipro logo was a 'W", but it was not consistently used in the products. It was clearly felt that the organization was not leveraging its brand name across the various businesses.

C o m p a n y p r o f i l e

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B u s i n e s s D e s c r i p t i o n

W i p r o L i m i t e d i s t h e f i r s t P C M M L e v e l 5 a n d S E I C M M L e v e l 5 c e r t i f i e d I T Services Company globally. Wipro provides comprehensive IT solut ions and services, including systems integration, Information Systems outsourcing, package implementation, software application development and maintenance, and research and development services to corporations globally. The Group's principal activity is to offer information technology services. The services include integrated business, technology and process solutions including systems integration, package implementation, software application development and maintenance and transaction processing. These services also comprise of information technology consulting, personal computing and enterprise products, information technology infrastructure management and systems integration services. The Group also offers products related to personal care, baby care and wellness products. The operations of the Group are conducted in India, the United States of America and Other countries. During f iscal 2007, the Group acquired Wipro Cyprus Pvt Ltd, Retailbox By, Enabler Informatics SA, Enabler France SAS, Enabler Uk Ltd, Enabler Brazil Ltd, Enabler and Retail Consult GmbH, Cmango Inc, Cmango (India) Pvt Ltd,Saraware Oy, Quantech Global Services and Hydroauto Group.

Global IT Services and Products

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The Company's Global IT Services and Products segment provides IT services to customers in the Americas, Europe and Japan. The range of its services includes IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, technology infrastructure outsourcing, BPO services and research and development services in the areas of hardware and software design. Its service offerings in BPO services include customer interaction services, f inance and accounting services and process improvement services for  repetitive processes!The Global IT Services and Products segment accounted for 74% of the Company’s revenues and 89% of its operating income for the year ended March 31, 2007 (fiscal  2007). Of these percentages, the IT Services and Products segment accounted for 68% of its revenue, and the BPO Services segment accounted for 6% of its revenue during fiscal 2007.

Customized IT solutionsWipro provides i ts cl ients customized IT solut ions in the areas of enterprise IT services, technology infrastructure support services, and research and development services. The Company provides a range of enterprise solutions primarily to Fortune1000 and Global 500 companies. I ts services extend from enterprise applicat ion services to e-Business solutions. Its enterprise solutions have served clients from arrange of industries, including energy and utilities, finance, telecom, and media and entertainment. The enterprise solutions division accounted for 63% of its IT Services and Products revenues for the fiscal 2007.Technology Infrastructure Service

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W i p r o o f f e r s t e c h n o l o g y i n f r a s t r u c t u r e s u p p o r t s e r v i c e s , s u c h a s h e l p d e s k   m a n a g e m e n t , s y s t e m s m a n a g e m e n t a n d m i g r a t i o n , n e t w o r k m a n a g e m e n t a n d messaging services. The Company provides its IT Services and Products clients with around-the-clock support services. The technology infrastructure support services division accounted for 11% of Wipro's IT Services and Products revenues in fiscal2007.

Research and Development ServicesWipro's research and development services are organized into three areas of focus: telecommunications and inter-networking, embedded systems and Internet access devices, and telecommunications and service providers . The Company provides software and hardware design, development and implementation services in areas, such as fiber optics communication networks, wireless networks, data networks, voice switching networks and networking protocols. Wipro's software solution for embedded systems and Internet access devices is programmed into the hardware integrated circuit (IC) or application-specific integrated circuit (ASIC) to eliminate the need for running the software through an external source. The technology is   p a r t i c u l a r l y i m p o r t a n t t o p o r t a b l e c o m p u t e r s , h a n d - h e l d d e v i c e s , c o n s u m e r   electronics, computer peripherals, automotive electronics and mobile phones, as well as other machines, such as process-controlled equipment. The Company providessoftware application integration, network integration and maintenance services to telecommunications service providers, Internet service providers, application service providers and Internet data centers.

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Business Process Outsourcing ServiceWipro BPO's service offerings include customer interaction services, such as IT-enabled customer services, marketing services, technical support services and IT helpdesks; finance and accounting services, such as accounts payable and accounts receivable processing, and process improvement services for repetitive processes, such as claims processing, mortgage processing and document management. For BPO projects, the Company has a defined framework to manage the complete BPO process migration and transition. The Company competes with Accenture, EDS, IBM Global Services, Cognizant , Infosys, Satyam and Tata Consultancy Services. India andAsiaPac IT Services and Products

The Company's India and Asia Pac IT Services and Products business segment, which is referred to as Wipro InfoTech, is focused on the Indian, Asia-Pacific and Middle-East markets, and provides enterprise clients with IT solutions. The India and AsiaPacIT Services and Products segment accounted for 16% of Wipro's revenue in fiscal2007. The Company's suite of services and products consists of technology products; technology integration, IT management and infrastructure outsourcing services; custom application development, application integration, package implementation and maintenance, and consulting.

Wipro's system integration servicesInclude integration of computing platforms, networks, storage, data center andenterprise management software.

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These services are typically bundled with sales of  the Company's technology products. Wipro's infrastructure management and totalo u t s o u r c i n g s e r v i c e s i n c l u d e m a n a g e m e n t a n d o p e r a t i o n s o f c u s t o m e r ' s I T infrastructure on a day-to-day basis. The Company's technology support servicesinclude upgrades, system migrations, messaging, network audits and new system implementation. Wipro designs, develops and implements enterprise applications for c o r p o r a t e c u s t o m e r s . T h e C o m p a n y ' s s o l u t i o n s i n c l u d e c u s t o m a p p l i c a t i o n development, package implementat ion, sustenance of enterprise applications, including industry-specific applications, and enterprise application integration. Wiproa l s o p r o v i d e s c o n s u l t i n g s e r v i c e s i n t h e a r e a s o f b u s i n e s s c o n t i n u i t y a n d r i s k   management, technology, process and strategy.

Consumer Care and LightingWipro's Consumer Care and Lighting business segment accounted for 5% of i ts revenue in fiscal 2007. The Company's product lines include hydrogenated cookingoil, soaps and toiletries, wellness products, light bulbs and fluorescent tubes, andlighting accessories. Its product lines include soaps and toiletries, as well as baby products, using ethnic ingredients. Brands include Santoor, Chandrika and WiproActive. The Wipro Baby Soft line of infant and child care products includes soap,talcum powder, oil, diapers and feeding bottles and Wipro Sanjeevani line of wellness products.The Company's product line includes incandescent light bulbs, compact fluorescent l a m p s a n d l u m i n a r i e s . I t o p e r a t e s b o t h i n c o m m e r c i a l a n d r e t a i l m a r k e t s . T h e Company has also developed

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commercial l ighting solutions for pharmaceutical  production centers, retail stores, software development centers and other industries.Its product line consists of hydrogenated cooking oils, a cooking medium used inhomes, and bulk consumption points like bakeries and restaurants. It sells this productunder the brand name Wipro Sunflower.

Registered Office AddressWIPRO LIMITEDDoddak annelli, Sarjapur Road,Bangalore – 560 035, India.Tel:+91-80-28440011Fax:+91-80-2844054

Board of Directors

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1. Azim H . Premji Chairman2. Dr Ashok S Ganguly Former Chief Ex.Officer Nortel3. B .C. Prabhakar Practitioner of Law4. Dr. Sheth Proffessor Of Marketing-Emory Uni.Usa.5. N.Vagual Chairman-ICICI Bank Ltd6. Bill Owens Former Chief Ex.Officer,Nortel7. P. M. Sinba Former Chairman Pepsico India

Holdings

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A u d i t o r s

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KPMG

BSR & Co.

Audit committee 

 N Vaghul – ChairmanP M Sinha - Member B C Prabhakar – Member

Board Governance and Compensation CommitteeAshok S Ganguly – ChairmanN Vaghul - Member P M Sinha – MemberShareholders’ Grievance and Administrative CommitteeB C Prabhakar – ChairmanAzim H Premji – Member

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CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

Liquidity Ratio

It measures the ability of the firm to meet its short-term obligations, that is capacity of the firm to pay its current liabilities as and when they fall due. Thus these ratios reflect the short-term

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financial solvency of a firm. A firm should ensure that it does not suffer from lack of liquidity. The failure to meet obligations on due time may result in bad credit image, loss of creditors confidence, and even in legal proceedings against the firm on the other hand very high degree of liquidity is also not desirable since it would imply that funds are idle and earn nothing. So therefore it is necessary to strike a proper balance between liquidity and lack of liquidity.

The various ratios that explains about the liquidity of the firm are

1. Current Ratio2. Acid Test Ratio / quick ratio3. Absolute liquid ration / cash ratio

1. CURRENT RATIOThe current ratio measures the short-term solvency of the firm. It establishes the relationship between current assets and current liabilities. It is calculated by dividing current assets by current liabilities.

Current Ratio = Current Asset

Current Liabilities

Current assets include cash and bank balances, marketable securities, inventory, and debtors, excluding provisions for bad debts and doubtful debtors, bills receivables and prepaid expenses. Current liabilities includes sundry creditors, bills payable, short- term loans, income-tax liability, accrued expenses and dividends payable.

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Interpretation

Current ratio is always 2:1 it means the current assets two time of current liability.

After observing the figure the current ratio is fluctuating.

In the year 2008 ratio is showing good shine.

Here ratio is increase as a increasing rate from 2004 to 2008.

Company is nowhere near the ideal ratio in every year but every company cannot achieve this ratio.

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Current ratio is increased in 2007-08 as compared to 2003-04 because of increase in Inventories 100.96% and 123.77 % increased in Cash and Bank balance.

Current ra t io i s decreased in 2005-06 as compared to the las t year because of   increase in liabilities by 45.39% and 93.19% in increasing in Provision.

2. ACID TEST RATIO / QUICK RATIO

It has been an important indicator of the firm’s liquidity position and is used as a complementary ratio to the current ratio. It establishes the relationship between quick assets and current liabilities. It is calculated by dividing quick assets by the current liabilities.

Acid Test Ratio = Quick Assets

Current liabilities

Quick assets are those current assets, which can be converted into cash immediately or within reasonable short time without a loss of value. These include cash and bank balances, sundry debtors, bill’s receivables and short-term marketable securities.

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Interpretation

Standard Ratio is 1:1

Company’s Quick Assets is more than Quick Liabilities for all these 5 years.

In 2007-08 the ratio is increasing because of increase in bank and cash balance.

So a l l the years has quick ra t io exceeding 1 , the f i rm is in posi t ion to meet i t s immediate obligation in all the years.

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In 2005-06 quick ra t io i s decreased because the increase in quick asse ts i s less  proportionate to the increased quick liabilities.

The Quick ratio was at its peak in 2007-08, while was lowest in the 2004-05.

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Networking Captial

Networking capital = Current Assets – Current Liabilities

Interpretation

This ratio represents that part of the long term funds represented by the net worth and long te rm debt , which are permanent ly b locked in the cur rent assets.

It is in increasing double then year by year because of assets increasing fast then Liabilities

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PROFITABILITY RATIO The profitability ratio of the firm can be measured by calculating various profitability ratios. General two groups of profitability ratios are calculated.

a. Profitability in relation to sales.b. Profitability in relation to investments.

A company should earn profits to survive and grow over a long period of time. Itwould be wrong to assume that every action initiated by management of companyshould be aimed at maximizing profits, irrespective of social as well as economicalconsequences. It is a fact that sufficient must be earned to sustain the operation of the business to be able to obtain funds from investors for expansion and growth and tocontribute towards the responsibi l i ty for the wel fare of the society in businessenvironment and globalization.The profitabil i ty rat ios are calculated to measure the operating efficiency of thecompany.The following Profitability Ratios are calculated for the company.

Gross Profit Ratio

Operating Profit Ratio

Net Profit Ratio

Rate Of Return On Investment

Rate Of Return On Equity

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GROSS PROFIT MARGIN OR RATIOIt measures the relationship between gross profit and sales. It is calculated by dividing gross profit by sales. It is a useful indication of the profitability of business. This ratio is usually expressed as percentage. The ratio shows whether the mark-up obtained on cost of production is sufficient however it must cover its operating expenses.

Gross profit margin or ratio = Gross profit X 100

Net sales

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Interpretation GP Ratio shows how much efficient company is in Production.

GP is decreasing 2007-08 due to higher production cost.

Gross sales and services are increasing year by year so in effect Gross profit ratio is increasing year by year up to 2007.

OPERATING RATIOThis ratio shows the relation between Cost of Goods Sold + Operating Expenses and Net Sales. It shows the efficiency of the company in managing the operating costs base with respect to Sales. The higher the ratio, the less will be the margin available to proprietors.

Operating profit margin or ratio = Operating expenses X 100

Net sales

Operating expenses includes cost of goods produced/sold, general and administrative expenses, selling and distributive expenses.

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Interpretation

Operating ratio is lowest during current 2007.

This shows that the expenses incurred to earn profi t were less compared to the  previous two years.

Operating ratio is decreses feom 2004 to anward decreasing rate.

From the graph conclusion is made that company is not on the right track byefficiently cutting down manufacturing, administrative and selling distributionexpenses.

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NET PROFIT MARGIN OR RATIO

It measures the relationship between net profit and sales of a firm. It indicates management’s efficiency in manufacturing, administrating, and selling the products. It is calculated by dividing net profit after tax by sales.

Net profit margin or ratio = Earning after tax X 100Net Sales

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Interpretation

After observing the figure the ratio is fluctuating.

Company has rise in its net profit in 2006-07 as compared to the previous year   because the company has increased its sales 41.45% .

Though the company’s sale is continuously rising but the net profit is not so much increased so management should take some steps to decrease its expenses.

Sales is decrease in 2008 compare to 2007

The overall ratio is showing good position of the company.

Return on Investment

Rate of Return on Investment indicates the profitability of business and is very much in use among financial analysis.

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Interpretation

From the above observation it can be seen that ratio is fluctuating.

In the year 2005-06 Rate of Return on Investment is slightly increase as compared to previous year 

Rat io i s decreas ing af ter 2005 a t a decreas ing ra te because of asse ts increase compare to sales.

The company’s Tota l Asse ts i s increased to 86.51%, so ROI i s decreased so conclusion made that company is not utilizing its assets and investment efficiently.

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Rate of Return on Equity

Rate of Re turn on Equi ty shows what percentage of prof i t i s earned on the capi ta l invested by ordinary share holders.

Interpretation

ROE is remaining almost same Between 2005 to 2007, but it is decrease in2008 because the the company has increase share capital but profit not getting that much increase.

Company is getting same return on equity.

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As a result the share holders are getting higher return every year and investment portfolio scheme selection was a judicious decision taken by the company.

This happens because Profit and Share Capital both increasing same way.

ASSETS TURNOVER RATIOThe relationship between assets and sales is known as assets turnover ratio. Several assets turnover ratios can be calculated depending upon the groups of assets, which are related to sales.

Total asset turnover. Net asset turnover Fixed asset turnover Current asset turnover Net working capital turnover ratio

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TOTAL ASSETS TURNOVER

This ratio shows the firm’s ability to generate sales from all financial resources committed to total assets. It is calculated by dividing sales by total assets.

Interpretation

The total assets turnover ratio is almost same in all years.

The Assets turnover Rat io i s near by 1 .5 in a l l 5 years which shows ef fec t ive utilization of assets from the company’s view point.

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In the year 2005-06 ra t io is increased because of company’s to ta l asse ts i s increased by 24.52%, but sales is increased by 29.92%.So the ratio is increased but in cur rent year i t i s decreased becaus e sa le inc reas ing by 41.45% and Assets increasing by 49.28%.

Net Fixed Assets TurnoverTo ascertain the efficiency & profitability of business the total fixed assets are comparedto sales. The more the sales in relation to the amount invested in fixed assets, the moreefficient is the use of fixed assets. It indicates higher efficiency. If the sales are less ascompared to investment in f ixed asse ts i t means tha t f ixed asse ts are not adequa te lyut i l ized in business . Of course excess ive sa le i s an indica t ion of over

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t rading and isdangerous.

Interpretaton

Here the ratio of Net Fixed Asset Turnover is continuously increasing up to 2006and after that it has strated decline.Because sales as well as assets boths are equally increase.

Net Fixed Assets Turnover Rat io i s increas ing year by year because of Sa le i s increasing continuously.

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It indicates that the company maximizes the use of its fixed assets to earn profit inthe business so that whatever amount is invested by company in fixed asset, gives maximum productivity which helps to increase sales as well as profit.

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Inventory Turnover RatioInventory Turnover Ratio: The no. of times the average stock is turned over during the year is known as stock turnover ratio.

Interpretation

F r o m t h e a b o v e c a l c u l a t i o n w e c a n s a y t h a t t h e r a t i o i s d e c r e a s i n g . I t m e n s inventory is not spdly convert in to sales. So that it is bad for the company.

In 2003-04 ra t io is increased as compared to af ter tha t a l l year so management should take care about good efficiency of stock management.

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But in 2006 onward ratio is decreasing because of increase in COGS. So companyshould devise a systematic operational plan for inventory control.

Debtor Turnover RatioDebtor turnover ratio: The debtor turnovers suggest the no. of times the amount of credit sale is collected during the year.

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Interpretation

Debtor tu rnover ind i ca te s how qu ick ly the company can co l l ec t i t s c red i t s a le s revenue.

Here the ratio is continuously decreasing, so that the company’s collection of credit sales is efficient management is improved its collection period every year so its hows that the management have an ability to collect its money from his debtors. So they can invest that money on Assets, HRD and other investments.

SOLVENCY RATIOThe solvency or leverage ratios throws light on the long term solvency of a firm reflecting it’s ability to assure the long term creditors with regard to periodic payment of interest during the period and loan repayment of principal on maturity or in predetermined instalments at due dates. There are thus two aspects of the long-term solvency of a firm.

The ratio is based on the relationship between borrowed funds and owner’s capital it is computed from the balance sheet, the second type are calculated from the profit and loss a/c. The various solvency ratios areThe following Finance Ratios are calculated for the company.

Debt Ratio

Debt-Equity Ratio

Interest Coverage Ratio

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Debt RatioDebt ratio indicates the long term debt out of the total capital employed

Interpretation

From the above calculation it seems that the ratio is fluctuating.

In 2007-08 the ratio is increased as compared to the previous year because the total loan funds are increased by 661.56%.

In 2005-06 Company has issued equity Share and also loan is decreased.

Its means that now company trying to increasing Trading on equity.

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Debt-Equity RatioThis ratio is only another form proprietary ratio and establishes relation between theoutside long term l iabi l i t ies and owner funds. I t shows the proportion of long term external equity & internal Equities.

Interpretation

It shows companies accumulated more equity than required company has to refocus to its strategic policies and plans and try to accumulate more debt funds in future so as to make the balance between debt and equity.

There is only current year ratio is some what sufficient.

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Interest Coverage Ratio

Interest Coverage Ratio: The ratio indicates as to how many times the profit covers the payment of interes t on debentures and other long term loans hence i t i s a lso known as times interest earned ratio. It measures the debt service capacity of the firm in respect of fixed interest on long term debts

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Interpretation

After observing the figure it shows that the ratio has mix trend up to 2006.

In the year 2007-08 company has not much debt compare to EBIT so in teres t coverage rat io is h igh but in 2007-08 company increas ing i ts external debt so company have pay more interest among its earnings so interest coverage ratio falling down compare to previous year.

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CHAPTER 5

FINDINGS AND SUGGESTIONS

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FINDINGS

Though the sa les has been cont inuously increased f rom past 3 years but the  proportionate expenditure is also rising so overall not making any huge effect on net profit of this company.

Here the in 2005 company has reinvest profit for business expansion it is good shine for the company.

The total expenditure is near by 80% of total income in every year.

Every year PBT is near by 20% of total income.

Fixed assets are efficiently utilized by the company due to which the profit of the company is increasing every year.

Liabi l i t ies are increas ing ra te i t mean company has to developed business . And  purchase raw material on credit basis.

Company has enough cash in hand so that in any condition company can take Any Financial decision easily.

A l l t h e y e a r s h a s q u i c k r a t i o e x c e e d i n g 1 , t h e f i r m i s i n p o s i t i o n t o m e e t i t s immediate obligation in all the years.

GP Ratio shows how much efficient company is in Production.

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SUGGESTION

T h e c o m p a n y ’ s f u t u r e p l a n s f o r e x p a n s i o n s e e m c l e a r d u e t o i n c r e a s e d investment in Fixed Assets .Eff ic ient use of these Assets has enabled the company to observe an increased profit.

Though the company’s sale is continuously rising but the net profit is not so m u c h i n c r e a s e d s o m a n a g e m e n t s h o u l d t a k e s o m e s t e p s t o d e c r e a s e i t s expenses.

Company should try its best to increase sales and profit.

The profit margin ratio shows decline in current year so that company should try to increase profit after tax

Current ra t io is very good i t i s 2 .13:1 so company has ful ly ut i l ize cash liquidity for business development.

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CONCLUSION

According to this Research we find that The company's overall position is at a good position. The company achieves sufficient profits in past four years. Fixed assets are efficiently utilized by the company due to which the profit of the company is increasing every year.The long term solvency of the company is good. The company maintains low liquidity to achieve high profitability .The company distributes dividend every year to its shareholders. Inventory turnover rat io is increased as compared to after that al l year so management should take care about good efficiency of stock management.Net Fixed Assets Turnover Ratio is increasing year by year because of Sale is increasing continuously and Though the company’s sale is continuously rising but the net profit is not so m u c h i n c r e a s e d s o m a n a g e m e n t s h o u l d t a k e s o m e s t e p s t o d e c r e a s e i t s expenses.

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CHAPTER6

BIBLIOGRAPHY

Books:

Annual Report of Wipro Limited for Financial Year 2004-05, 2006-07,2007-08.

Narayanaswamy R., (1998): “Financial Accounting”: A Managerial Perspective,Prentice-Hall of India Private Ltd, New Delhi., Third Edition, Reprint 2003

Khan M.Y. and Jain P.K., (1992):”Financial Management”, Tata McGraw-HillPublishing Co Ltd., New Delhi., Third Edition..

Websites

http://www .wipro.com 

http://www.bseindia.com//shareholding/shareholding_new.asp

http://www.cmie.com//indutries//gdp.asp

http://www.wipro.com/investors/annual_reports.htm

http://www.wipro.com/investors/pdf_files/AR07_08_first_book_final.pdf  

http://www.wipro.com/investors/pdf_files/AR07_08_second_book_final.pdf  

http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_1.pdf  

http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_2.pdf