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Amrut Mody School of Management

Ahmedabad University

Programme: MBA

Course: Financial Accounting

Group No: 10

Submitted to: Vibha Tripathi

Date of submission: 17th September, 2019

Company: Wipro Limited

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Table of Content
1. Acknowledgement…………………………………………………………….3
2. Preface…………………………………………………………………………4
3. List of group members………………………………………………………....5
4. Industry Introduction………………………………………………………….6
5. Company Introduction…………………………………………………………7
6. Comparison with competitors............................................................................11
7. Peer Company Introduction…………………………………………………..12
8. Comparative statement analysis........................................................................14
9. Ratio analysis....................................................................................................24
10. Executive summary..........................................................................................37
11. Conclusion........................................................................................................38
12. References.......................................................................................................39
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Acknowledgement
We are very thankful to Professor Vibha Tripathi for giving us the opportunity to study and
understand the financial reports of real-life company. It was very different from what we study
in our courses. We are also thankful to Ahmedabad University for giving us such an interesting
course which helped students grow and develop. We would like to thank the teaching associate
Simran Agarwal for her constant help and support during our tenure of project.

We would like to express our gratitude not only towards our professor, university and teaching
associate but also to our friends for performing this assignment. Finally, a special thanks to our
group members for their valuable support and suggestions which helped and inspired us to
improve the content. This was only possible due to your help and support.
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Preface
As a part of the course requirement of Financial Statement and Analysis in the First Quarter of
semester I in Masters in Business Administration (MBA), students are required to prepare an
Analysis of Financial Statement majorly through Common Size Statements and Ratios. The
company allotted is Wipro. The aim of this project is the practical application of the managerial
knowledge learned during the course.

This report presents the facts and findings resulting from our understanding of the activities of
Wipro.

The scope of the report is limited to the study of two similar companies of same industry (Wipro
and Infosys) on the basis of data collected from annual reports and other information received.
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List of group members

Name Roll No
Sonali Bhagia AU1914055
Princy Mehta AU1914051
Darshit Gonbare AU1914050
Kaishavi Rachchh AU1914052
Jayesh Tulsiyani AU1914054
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Industry Background
India and world is turning into a techno - friendly society and thus the need for Artificial
Intelligence (AI) and Information Technology (IT) is increasing rapidly. The organizations
serving this need of consumers are glooming. There has been a wide and great visible change
in how the technology is developed, delivered and consumed.

A large number of multi - national companies are working hard to enter and sustain in computer
software and other technological industry. This industry also demands a large amount of
Research and Development which also needs large investments. Thus it becomes difficult for
the company to sustain for a larger period of time.

India is leading in the world in this sector. We have around 75% of global digital talent in our
country. Due to the advancement of the sector, the exports have also risen subsequently. The
overall spending is expected to increase by 9% in 2018 and revenues by 38% by 2025.

Due to significant development, the sector has been able to attract a large amount of Foreign
Direct Investment (FDI). India has secured second rank as per the reports of Department of
Promotion of Industry and Internal Trade (DPIIT). Various companies are trying different
innovative ideas and providing offers to develop themselves and sector.

The sector is looking forward to increase their export revenue by 7% to 9% in the Financial
Year 19. The industry also plans to increase themselves and revenue drastically.
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Company Background

Wipro was incorporated in 1945 as cooking oil manufacturing and refining company. Later in
1982, the company entered into the Information Technology (IT) sector by manufacturing and
selling small computer. By 1990, the company had started offering software services to its
customers. In 2000, the company got listed in New York Stock Exchange (NYSE) and also
started Business Process Outsourcing (BPO) business also. Today, the company majorly
focuses on global Information Technology business and that is the reason it is one of the best
computer software company in the world. The company has nearly one lakh sixty thousand
employees serving all around the world.

Wipro is one of the leading companies in global information technology, consulting and
business process services. The company firmly believes in the concept of sustainability
working currently in sectors like energy and emission, biodiversity, waste and water
consumption. It also works in education and community care sector. The company tries helping
achieve the goals of employees and help them in their overall development.

The logo of the company (as shown in the picture) symbolises a lot of information about the
company. The multi-coloured dots show the energy and hope. The rounded figure also indicates
the world full of connections.

The company operates in several industries like aerospace and defence, communication,
engineering and construction, medical devices, automobile, banking, insurance, healthcare,
consumer electronics, oil and gas, retail, travel and transport, etc. It also provides services like
consulting, block chain, cyber security, cloud service, big data, etc.

General Company Information:

Formally Wipro Limited

Traded As NYSE: WIT, BSE: 507685, NSE: WIPRO
Industry Information technology, Consulting,
Business Process Service
Incorporation 1945
Revenue 480298
Net Income 506924
Total Assets 669981
Website https://www.wipro.com/en-IN/
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Corporate Governance Report

The objective of Wipro Limited’s corporate governance is enhancing long term stakeholder
values with maintaining ethical standards and corporate social responsibilities. The proper
understanding of key roles and commitment of board directors and senior managers are
essential for effective corporate governance. Wipro’s idea of corporate governance runs from
the “spirit of Wipro” concept representing the core values like policies and practices which
guides the organization. The values stated in the “spirit of Wipro” are

Be passionate about Treat each person

client's success with respect

Spirit of
Wipro

Unyielding
Be global and
integrity in
responsible
everything we do

The implementation of Wipro’s corporate governance is done by strong board governance

processes with internal control systems and audit mechanism that follows the governance
guidelines and code of conduct of the company. Wipro’s corporate governance activities are
described in four layers,

1. Governance by share holders

2. Governance by sub committees of board
3. Governance by board
4. Governance through management process
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The company has formulated various committees like:

Nomination and
Compensation

Prevention of
Strategy Sexual
Harassment

Stakeholders
Audit
Relationships

Committees

Corporate
Risk and
Executive
Compliance
Council

Corporate
Social Adminstrative
Responsibility

The following are the important members of the company:

Executive Chairman
Azim Premji
A business entrepreneur and Chairman of
Wipro Ltd are directing the company since
four decades to becoming a world leader in
the software industry to becoming among the
world's most generous billionaires.

CEO
Abidali Z Neemuchwala
An Indian-American business executive
working as CEO and managing director
since 2016. Making efforts in different
sectors like automation, cloud computing
and obtain capability.
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Executive Director & Chief Strategy Officer

Rishad A Premji.
He is the son of Azim Premji. He was also a
chairman of NASSCOM-nationalassociation
of software and services companies.

List of Independent Directors:

a. Patrick Dupuis
b. Ireena Vittal
c. Arundhati Bhattacharya
d. William Arthur Owens
e. M K Sharma
f. Dr. Patrick J Ennis
g. Dr. Ashok S Ganguly
h. Narayanan Vaghul
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Comparison with Competitors

Last Market Capital (Rs. Sales Total

Name Price Cr.) Turnover Net Profit Assets
Infosys 820.35 349338.84 73,107.00 14,702.00 62,711.00
Wipro 250..95 151457.35 48,123.80 7,614.00 54,466.20
HCL
technologies 1062.45 144106.8 26,012.00 8,185.00 30,471.00
Tech Mahindra 704.3 69392.32 27,219.60 4,380.40 21,882.10
L&T InfoTech 1669 28996.65 8,707.02 1,475.10 4,713.50
MphasiS 984.6 18346.93 3,434.02 769.43 3,501.94

COMPARISION CHART
Last Price Market Capital (Rs. Cr.) Sales Turnover Net Profit Total Assets

400000

350000

300000

250000
200000
150000

100000

50000

0
Infosys Wipro HCL Tech Mahindra L&T InfoTech MphasiS
technologies
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Peer Company – Infosys

A New York Stock Exchange listed company named Infosys was established in 1981 as a
private company. Later in 1993, it was converted into a public and started establishing in
different countries of the world. Today, the company is operating in around 46 countries with
the employees’ base of more than 229 thousand people. The company has always kept on
increasing the number and scope of business. Recently, the company is trying to empower
businesses with digitalization. This company also believes firmly on sustainability and thus
works for the betterment of eco-system. Infosys also works for the overall development of their
employees.

There are different industries where it operates like health care, education, mining, retail, oil
and gas, automobile, agriculture and many others. The company also provides different kind
of services like Block chain, Cloud, Data Analysis, Digital Marketing, Digital Commerce,
Digital Interactions, Oracle, Testing, Cyber Security and many more.

General Company Information:

Formally Infosys
Traded As BSE: 500209, NSE:INFY, NYSE: INFY
Industry IT services, IT consulting
Incorporation 7 July 1981
Revenue US$12.1 Billion
Net Income 2.2 Billion
Total Assets 12.2 Billion
Website https://www.infosys.com/
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The following are the major management group:

Chairman
Nandan M. Nilekani
The co-founder and non-executive chairman
of Infosys is an entrepreneur and politician.
He left Infosys in 2009 and re-appointed for
the post of the non-executive of Infosys in
2017. He has served as the chairman of
the Unique Identification Authority of
India (UIDAI). He is the member of the
Indian National Congress but not active from
2019.
CEO
Salil Parekh
He is managing director and chief executive
officer of Infosys since 2018. He is the face
behind the cloud infrastructure services and the
comprising application services. Earlier he was
member of member of the group management
board at Capgemini.
Chief Operating Officer and Whole-time
Director
U. B. Pravin Rao

List of Independent Directors:

a. Kiran Mazumdar-Shaw (Lead Independent Director)

a. Michael Gibbs
b. D. N. Prahlad
c. Dr. Punita Kumar-Sinha
d. Roopa Kudva
e. D. Sundaram
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COMPARATIVE STATEMENT ANALYSIS FOR YEAR 2018-19

Profit & Loss A/C

Particulars Mar-19 Mar-18 Amt. % inc/dec

inc/dec
INCOME
Revenue from operations 20 4,80,298 4,47,100 33,198 7.425184522
Other operating income 21 940 0
Other income 22 25,686 24,796 890 3.589288595
Total Income 5,06,924 4,71,896 35,028 7.422821978
EXPENSES 0
Purchases of stock-in-trade 11,420 14,696 -3,276 -22.29178008
Changes in inventories of finished -553 577 -1,130 -195.8405546
goods and stock-in-trade 23
Employee benefits expense 24 2,38,085 2,17,562 20,523 9.433173073
Finance costs 25 5,249 3,843 1,406 36.58600052
Depreciation and amortisation 9,343 10,148 -805 -7.932597556
expense
Sub-contracting / technical fees / 89,225 78,623 10,602 13.48460374
third party application
Travel 15,005 14,607 398 2.724721024
Facility expenses 14,598 13,397 1,201 8.964693588
Communication 3,698 4,136 -438 -10.58994197
Legal and professional charges 2,525 3,078 -553 -17.96621183
Marketing and brand building 2,304 2,596 -292 -11.24807396
Other expenses 26 17,320 8,290 9,030 108.9264174
Total expenses 4,08,219 3,71,553 36,666 9.868309501
Profit before tax 98,705 1,00,343 -1,638 -1.632400865
Tax expense 0
Current tax 19 22,725 24,345 -1,620 -6.654343808
Deferred tax 19 -160 -1,230 1,070 -86.99186992
Total tax expense 22,565 23,115 -550 -2.379407311
Profit for the year 76,140 77,228 -1,088 -1.408815456
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Analysis:
1. Revenue of company increases by 33198 (7.4%) in year 2018-19. That shows sales is
improved by 7.4%. so, the cost of goods sold increases due to higher quantity of sales.
2. Finance cost has been increased by 36.58% here. Because the company paid the interest
of Rs. 5616 million and the borrowing cost of foreign currency is rs. 1759 (in million)
in the year 2019.
3. Market and brand building expense is decrease by 11%. and yet sales are increases that
indicates that company has already demand in the market. They have good image in the
market and well settled brand. so, they don’t need to pay extra expense in brand building
activity.
4. The company’s other expense increase by Rs. 9030 (108.9%) that is very huge change
in percentage. Because company has incurred expense in rates, tax, insurance, auditor’s
remuneration like audit fee, tax matter and out of pocket expense and spend Rs. 11830
in miscellaneous expense.
5. Profit for the year is decreasing by Rs. 1088 (1.4%) because total income increases by
7.4% whereas total expense increases by 9.8 % that means expense is increases more
than the income. The impact of it we can see on the profit of the year which is
decreasing by 1.4%

BALANCESHEET

Particulars Mar-19 Mar-18 Amt. percentage

inc/dec inc/dec

EQUITY 0
Equity Share capital 12 12,068 9,048 3,020 33.377542
Other equity 4,81,852 4,13,578 68,274 16.50813148
TOTAL EQUITY 4,93,920 4,22,626 71,294 16.86928869
LIABILITIES 0
Non-current liabilities 0
Financial liabilities 0
Borrowings 13 220 724 -504 -69.61325967
Provisions 16 1,196 1,688 -492 -29.14691943
Deferred tax liabilities (net) 104 463 -359 -77.53779698
19
Non-current tax liabilities 9,978 8,557 1,421 16.60628725
(net)
Other non-current liabilities 3,117 2,296 821 35.75783972
17
Total non-current liabilities 14,615 13,728 887 6.461247086
Current liabilities 0
Financial liabilities 0
Borrowings 13 50,522 46,477 4,045 8.703229554
Trade payables 14 47,655 41,762 5,893 14.11091423
Derivative liabilities 18 1,270 2,198 -928 -42.22020018
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Other financial liabilities 15 24,990 25,343 -353 -1.392889555

Contract liabilities 14,862 12,709 2,153 16.94075065
Provisions 16 9,290 7,934 1,356 17.09100076
Current tax liabilities (net) 7,185 8,961 -1,776 -19.81921661
Other current liabilities 17 5,672 4,975 697 14.01005025
Total current liabilities 1,61,446 1,50,359 11,087 7.373685646
TOTAL LIABILITIES 1,76,061 1,64,087 11,974 7.297348358
TOTAL EQUITY AND 6,69,981 5,86,713 83,268 14.19228822
LIABILITIES
ASSETS
Non-current assets
Property, plant and 38,742 38,026 716 1.882922211
equipment
Capital work-in-progress 21,127 12,906 8,221 63.6990547
Goodwill 3,882 3,882 0 0
Other intangible assets 1,386 1,762 -376 -21.33938706
Financial assets 0
Investments 82,503 58,416 24,087 41.23356615
Derivative assets 173 41 132 321.9512195
Trade receivables 4,373 4,446 -73 -1.641925326
Other financial assets 9 3,843 3,078 765 24.85380117
Deferred tax assets (net) 19 3,910 4,520 -610 -13.49557522
Non-current tax assets (net) 20,549 18,349 2,200 11.98975421
Other non-current assets 11 12,189 11,614 575 4.950921302
Total non-current assets 1,92,677 1,57,040 35,637 22.69294447
Current assets 0
Inventories 10 3,403 2,943 460 15.63030921
Financial assets 0
Investments 6 2,19,988 2,48,412 -28,424 -11.44228137
Trade receivables 7 90,463 95,020 -4,557 -4.795832456
Cash and cash equivalents 8 1,03,902 23,220 80,682 347.4677003
Derivative assets 18 4,920 1,232 3,688 299.3506494
Unbilled receivables 16,023 30,256 -14,233 -47.04190904
Other financial assets 9 5,813 5,218 595 11.40283634
Current tax assets (net) 3,307 4,799 -1,492 -31.08981038
Contract assets 10,845 0 10,845
Other current assets 18,640 18,122 518 2.85840415
4,77,304 429222 48,082 11.2021285
Assets held for sale 21 0 451 -451 -100
Total current assets 4,77,304 4,29,673 47,631 11.08540681
TOTAL ASSETS 6,69,981 5,86,713 83,268 14.19228822
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Analysis:
1. The company’s share capital increases by 33.38% in the year 2018-19 over 2017-18.
The main reason behind is the company issued Rs. 4 million equity share capital and
they also give bonus shares to their existing share holder Rs. 3016 million.
2. There is increase in inventory by 15.63% which shows the funds have been locked up.
So, the sales of the company are slow which lead to high carrying cost.
3. The company’s trade payables are increasing by 14% which shows more credit
purchases of company.
4. The company’s trade receivable is decreasing by 4% which shows there is more cash
sales in company. Which means collection from debtors is faster and creditors are being
paid slowly which shows strong collection policy of company.
5. Owner’s equity is increases by 16.9% in the year 2018-19 while the long-term debt of
the company is increases by only 6.46% which shows the dependence of outsider is less
and also there is less financial risk in the company.
6. Company’s current asset is increases by 11% while company’s current liability is
increases by 7.37% which indicate company’s liquidity position is improved gradually
during this year.
7. The total non-current asset of the company is increases by 22.69%.
8. Total fixed asset of the company (which includes property plant and machinery,
goodwill, capital working progress and other intangible asset) is increases by 44.24%
which shows the company maintain long term stability in the market.
9. Cash and cash equivalent of the company have increased by 347.47%. that is very huge
percentage change. That means company have surplus money for further expansion
plans.
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19-Mar 18-Mar
n PARTICULARS (FIGURES IN%) (FIGURES IN
%)
INCOME
Revenue from operations 20 100.00 100.00
Other operating income 4.57
Other income 22 5.35 5.55
Total Income 105.54 105.55
EXPENSES 0.00

Purchases of stock-in-trade 2.38 3.29

Changes in inventories of finished goods and stock- -0.12 0.13
in-trade 23
Employee benefits expense 24 49.57 48.66
Finance costs 25 1.09 0.86
Depreciation and amortization expense 1.95 2.27
Sub-contracting / technical fees / third party 18.58 17.59
application
Travel 3.12 3.27
Facility expenses 3.04 3.00
Communication 0.77 0.93
Legal and professional charges 0.53 0.69
Marketing and brand building 0.48 0.58
Other expenses 26 3.61 1.85
Total expenses 84.99 83.10
Profit before tax 20.55 22.44
Tax expense 0.00 0.00
Current tax 19 4.73 5.45
Deferred tax 19 -0.03 -0.28
Total tax expense 4.70 5.17
Profit for the year 15.85 17.27
Other comprehensive income (OCI) 0.00 0.00
Items that will not be reclassified to profit or loss: 0.00 0.00
Defined benefit plan actuarial gains/(losses) 24 0.04 0.17
Net change in fair value of financial instruments -0.31 -0.39
through OCI 18
Income tax relating to items that will not be 0.01 0.04
reclassified to profit or loss 19
Items that will be reclassified to profit or loss: 0.00 0.00
Net change in time value of option contracts 0.12 0.00
designated as cash flow hedges 18
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Net change in intrinsic value of option contracts 0.21 -0.02

designated as cash flow hedges 18
Diluted 1253868.30 1419029.89
Net change in fair value of forward contracts 0.33 -1.65
designated as cash flow hedges 18
Net change in fair value of financial instruments 0.00 -0.15
through OCI
Income tax relating to items that will be reclassified -0.13 0.38
to profit or loss 19
Total other comprehensive (loss)/ income for the 0.26 -1.63
year, net of taxes
Total comprehensive income for the year 16.11 15.64
Earnings per equity share: (Equity shares of par 0.00 0.00
value ` 2 each) 27
Basic 0.00 0.00
Diluted 0.00 0.00
Number of shares 0.00 0.00
Basic 1250760.33 1416549.14

COMMON SIZE INCOME STATEMENT:-

 Common size statement is a very effective way of comparing the financial

performance of two different entities or companies, each item in the income statement
is expressed in percentages of revenue from operation or total sales.
 This helps an analyst to find out the trend of each and every item of the income
statement with respect to revenue from operation.
 This probably provides the easiest way to understand the analysis of any company.

ANALYSIS:-

 Well to start with if we see the Revenue from operation there is a net increase of
33,198 million and 7% increase percentage wise, which shows there is an increase in
net sales but if we analyse there is no significant increase because an increase of 7%
is not that great for a company.
· The most important thing to notice here is the other operating income we can see
that there is no other operating income in the year 2018 but in 2019 we have Rs 940
million. This income is by sale of business in Singapore this helped the company to
spend more as it is visible in total expenses.
· Another important thing to notice is the changes in inventories and there is an very
significant change in two years because in year 2018 we had around 577 million and
in the year 2019 this comes to (553) million the sole reason for this is because in the
year in 2019 there are very less traded goods there is an sudden decline of 577 million
 P a g e | 20

this is surely not a good sign for the company as the company is not able to sell its
goods.
· Another noticeable thing is the employee benefit expense that has the major part
in common size statement, if we see in both years the company is spending around
49% of revenue from operation. This shows that the company is very much concerned
for the employees, it is paying a very great amount to the employees this thing helps
in reducing attrition rate and also motivates the employees to work more and more.
50% of revenue from operation is a very huge number but if we see Infosys it is also
spending around 50%, probably all the IT companies are spending this great amount
on employees.
· Moving onto sub-contracting and technical fees the company is spending a very
huge percentage of revenue from operation on third party, technical fees and sub-
contracting, this shows that the company is very much dependent on third part for its
project which means the company is not getting majority projects from its own rather
it is paying a very good amount to third parties for getting orders.
· Another thing if we notice is the travel expense it continues to around 3% in both
years which is 15,005 million in 2019 and 14,607 million in 2018 this shows that
company is spending a very big amount on travel expenses this thing should be reduced
because at the time of economic crises these cost hurts to the company and slows down
the progress to it is essential that company reduces it.
· If we see other expenses it is also increasing it has increased to around 2% from
the last year, the notes to account shows us that though rates, taxes, insurance and
lifetime expected credit loss are decreasing but all of a sudden provision of diminution
of value of investment expense has increased like anything from negative 268 million
to 7,356 million directly this is an negative sign for the company because diminution
of investment means there is an reduction in the value of investment in the year 2019
and this is surely a very negative sign for the company.
If we look at the total expenses it is around 85% of revenue from operation which is
very high for IT company and we compare this with Infosys. It has around 76% of
revenue from operation which shows that Wipro has to reduce its expenses so as to be
more profitable. Moving on to the profit for the year we can see it has decreased to
15.85% of revenue from operation from 17.27% of revenue from operation which is
the result of increase in the expense in the year 2019. We can say that there is 2%
increase in the total expenses compared to last year, though the increase is not to high
but in the current phase of recession if a company tries to reduce these expenses this
will surely help the company to get more and more profit also if we compare the
profit with Infosys the profit for the year in the year 2019 is around 20% of revenue
from operation and Wipro has 15% only this thing is surely because of the increase in
the total expenses.
 P a g e | 21
2019-MAR 2018-
BALANCE SHEET (FIGURES MAR(FIGURES
IN %) IN %)
ASSETS
Non-current assets

Property, plant and equipment 4 5.78 6.48

Capital work-in-progress 3.15 2.20
Goodwill 5 0.58 0.66
Other intangible assets 5 0.21 0.30
Financial assets 0.00 0.00
Investments 6 12.31 9.96
Derivative assets 18 0.03 0.01
Trade receivables 7 0.65 0.76
Other financial assets 9 0.57 0.52
Deferred tax assets (net) 19 0.58 0.77
Non-current tax assets (net) 3.07 3.13
Other non-current assets 11 1.82 1.98
Total non-current assets 28.76 26.77
Current assets 0.00 0.00
Inventories 10 0.51 0.50
Financial assets 0.00 0.00
Investments 6 32.83 42.34
Trade receivables 7 13.50 16.20
Cash and cash equivalents 8 15.51 3.96
Derivative assets 18 0.73 0.21
Unbilled receivables 2.39 5.16
Other financial assets 9 0.87 0.89
Current tax assets (net) 0.49 0.82
Contract assets 0.00 0.00
Other current assets 11 2.78 3.09
71.24 73.16
Assets held for sale 21 0.00 0.08
Total current assets 71.24 73.23
TOTAL ASSETS 100.00 100.00
EQUITY
Equity Share capital 12 1.80 1.54
Other equity 71.92 70.49
TOTAL EQUITY 73.72 72.03
LIABILITIES 0.00 0.00
Non-current liabilities 0.00 0.00
Financial liabilities 0.00 0.00
Borrowings 13 0.03 0.12
Provisions 16 0.18 0.29
Deferred tax liabilities (net) 19 0.02 0.08
Non-current tax liabilities (net) 1.49 1.46
 P a g e | 22

Other non-current liabilities 17 0.47 0.39

Total non-current liabilities 2.18 2.34
Current liabilities 0.00 0.00
Financial liabilities 0.00 0.00
Borrowings 13 7.54 7.92
Trade payables 14 7.11 7.12
Derivative liabilities 18 0.19 0.37
Other financial liabilities 15 3.73 4.32
Contract liabilities 2.22 2.17
Provisions 16 1.39 1.35
Current tax liabilities (net) 1.07 1.53
Other current liabilities 17 0.85 0.85
Total current liabilities 24.10 25.63
TOTAL LIABILITIES 26.28 27.97
TOTAL EQUITY AND LIABILITIES 100.00 100.00

ANALYSIS:

 Well to start with if we see plant, land and equipment the company has invested
only 5.78% of total assets which shows that the company management doesn’t seen
interested in investing in long term assets and this signals that management has less
faith in the long term assets. If we compare it with Infosys it has around 14% land and
equipment share in the total assets and it shows that Infosys has faith in long term
outlook.

 If we see investment, it has non-current investment and we can see that there is an
increase in the investment on about 3% in 2019 from 2018, this shows that the
company is very much interested in investments as these are done with intention to
use them in business and take the benefit accrue for number of years.

 Moving on if we see investment in current asset, it includes short term investments

made by company and we can see that there is a decrease of 10% from 2018 to 2019
and another very important thing to notice here is that current investment make about
42% part of the total assets in the year 2018 that is an very positive sign for the
company this also means that the company is investing for short term period to park
their excess cash at a safe place.

 Another noticeable thing here is that there is an big increase in cash and cash
equivalents, in 2018 company had only 3.96% but in year 2019 it has gone up to 15.51%
and this is a very big jump. This thing will help the company in this hard times that are
going currently also the company will be able to handle its operating expenses very
smoothly, if we go in detail we can see that there is sudden increase of demand
 P a g e | 23

deposits from 12035 million in 2018 to 84818 million in 2019 these demand will surely
help the company to grow.

 After that we have the most important thing that is the proportion of the owner’s
equity to total liabilities of company and what we can analyse here is that both in 2018
as well as 2019 the owner’s equity has been more or less the same, this shows that the
company is not depended on borrowed funds, and is less financial risk, majority of IT
companies have this pattern in the capital because if we compare this with Infosys it
also has 79% of owner’s equity in the total equity and liability.

 Also if we see trade payables in the year 2018 was around 16.25% of the total
assets and in the year 2019, it has reduced to 13.5% of the total assets. This shows that
the company has a very efficient credit policy and is getting payment at the right time.
This 13.5% also shows that majority of sales are done in cash.
 P a g e | 24

Ratio Analysis
Ratio is the mathematical yardstick that measures the relationship between figures or group of
figures which are related to each other and are mutually interdependent. It can be used for
analyzing and comparing the financial position and performance of enterprise over number of
years, same industry, or for performance analysis.

Ratio analysis presents data on a comparative basis and enables the drawing of inferences
regarding the performance of the firm. Ratio analysis helps in concluding liquidity position,
long term solvency, operating efficiency and overall profitability.

1) Liquidity Ratios:
Ratio analysis helps in determining the liquidity position of the firm. A firm is said to
have the ability to meet its current obligations when they become due. It is measured
with the help of liquidity ratios.

(A) CURRENT RATIO:

It measures short term liquidity of the required concern and the ability to meet short
term obligations within time span of year.

It is calculated as:
Current ratio = current assets / current liabilities

CURRENT RATIO
WIPRO LTD.
2016-17 2017-18 2018-19
CURRENT 487271 429673 477304
ASSETS
CURRENT 138399 150359 161446
LIABILITIES

CURRENT RATIO 3.52076966 2.857647364 2.956431

INFOSYS LTD.
CURRENT 47682 44090 46223
ASSETS
CURRENT 11786 11662 15430
LIABITIES

CURRENT RATIO 4.04 3.78066 2.99566

 P a g e | 25

CURRENT RATIO
2017-18 2018-19

4
3.5
3
2.5
2
1.5
1
0.5
0
WIPRO LTD. INFOSYS LTD.

ANALYSIS:

The current ratio ideally should be 2:1. If the current ratio is less than this for a company,
it shows short term financial position is not sound but, if it is more than 2:1, it indicates
idleness of using the working capital. Here, in WIPRO LTD., the company shows the idle
situation as the current ratio is higher than industry idle current ratio.

But, when compared to Infosys ltd., Wipro ltd., has a lesser current ratio which shows better
financial position of Infosys ltd., when compared.

When compared from past data of Wipro Ltd., the current ratio has increased from 2017-
18 to 2018-19, while Infosys ltd., has been showing a decline in current ratio which shoes
lesser growth in financial position when compared to past year.

Overall when compared Wipro Ltd., has sound position in an industry but a little less when
compared to Infosys ltd.

(B) QUICK RATIO:

This ratio shows short term solvency in a true manner. The name suggests that it
measures how quickly or immediately the current liabilities can be paid with the help
of current assets. The word quick assets means that can be converted into cash.

Quick ratio = current assets – inventories – prepaid expenses / current liabilities

 P a g e | 26

QUICK RATIO
WIPRO LTD.
2016-17 2017-18 2018-19
CURRENT ASSETS 487271 429673 477304
LESS:INVENTORIES 3559 2943 3403
NET CURRENT 483712 426730 473901
ASSETS

CURRENT 138399 150359 161446

LIABILITIES
QUICK RATIO 3.4:1 2.83:1 2.93:1
INFOSYS LTD.
CURRENT ASSETS 47682 44090 46223
LESS:PREPAID 387 449 580
EXPENSES
NET CURRENT 47295 43641 45643
ASSETS
CURRENT 11786 11662 15430
LIABILITIES

QUICK RATIO 4.01 3.74:1 2.95:1

QUICK RATIO
2017-18 2018-19

4
3.5
3
2.5
2
1.5
1
0.5
0
WIPRO LTD. INFOSYS LTD.

ANALYSIS:

Quick ratio measures the concept of knowing liquidity of the company. The ideal quick
ratio is 1:1 which shows that the company’s current assets after deducting the inventory
and prepaid expenses are equal to current liabilities.

Wipro ltd. has better liquidity position to pay off the current liabilities out of current assets
as it has higher quick ratio than the ideal one. It is observed that it has a ratio of 2.83:1 in
2017-18 and 2.93:1 in 2018-19, which shows that it has approximately 2.83 times and 2.93
 P a g e | 27

times of current assets to pay 1 time of current liabilities which shows the efficiency of
company to repay its current liabilities.

The ratio has increased in 2018-19 which is due to increase in current assets by 1.11 times
(473901/426730) in Wipro ltd., besides in Infosys it has decreased from 3.74 to 2.95 due
to increase in prepaid expenses but not equivalent increase in current assets.

Thus, Wipro shows a sound liquidity position.

2) PROFITABILITY RATIOS:
(BASED ON SALES)
It includes analysis done for knowing the relationship between profits and revenue from
operations or funds or assets employed in business.

(A) Net Profit Ratio:

NP Ratio indicates the percentage of profit out of sales. This profit is pure profit
after meeting the expenses of cost of production, cost of borrowed funds and
operating charges.
NP ratio= NP/ sales * 100

NP RATIO:
WIPRO LTD.
2016-17 2017-18 2018-19
(a)Profit for year 81617 77228 76140
(b)Sales 456396 447100 480298

NP RATIO 17.88 17.27 15.85

=(a)/(b)*100
INFOSYS LTD.
(a)Profit for year 13818 16155 14702
(b)Sales 59289 61941 73107

NP RATIO 23.30618 26.08127 20.11025

=(a)/(b)*100
 P a g e | 28

NP RATIO
WIPRO LTD INFOSYS LTD.

30

25

20

15

10

0
2016-17 2017-18 2018-19

ANALYSIS:

Wipro shows a decreasing trend in NP ratio, which could be due to decreasing profit. Also,
2018-19 the sales have increased which is the reason of decreased NP ratio by more than 2%
when compared to 2016-17.so, increasing sales and decreasing NP are the reason of decreasing
NP ratio.

When compared to peer company, the NP ratio is decreasing but there the reason of decrease
is due to increase in sales. Though, we see there is increase in profit but the increase in profit
is not as sufficient to make the NP ratio higher than the last year.

We can say that, Wipro ltd. has still maintained the NP ratio but Infosys ltd., shows more
variation in NP ratio which could be due to lack of uniformity in the company or other reasons
such as change in accounting policies, or methods.

(BASED ON INVESTMENTS)

(B) RETURN ON CAPITAL EMPLOYED

This ratio helps to find how much profit is earned out of the capital invested by the
company.
ROCE = PBIT-dividend/ capital employed * 100

RETURN ON CAPITAL EMPLOYED

WIPRO LTD.
2016- 2017- 2018-
17 18 19
PBIT 106871 100343 98705

NON-CURRENT ASSETS 144298 157040 192677

ADD:CURRENT ASSETS 487271 429673 477304
LESS:CURRENT 138399 150359 161446
LIABILITIES
CAPITAL EMPLOYED 493170 436354 508535
 P a g e | 29

RETURN ON CAPITAL 21.67 22.99 19.41

EMPLOYED=PBIT/CAPITAL
EMPLOYED * 100(IN %)

INFOSYS LTD.
PBIT 19927 19908 18938

NON-CURRENT ASSETS 32707 31787 32203

ADD: CURRENT ASSETS 46223 44090 47682
LESS: CURRENT 15430 11662 11786
LIABILITIES
CAPITAL EMPLYED 63500 64215 68099

RETURN ON CAPITAL 31.3811 31.0021 27.8095

EMPLOYED =
PBIT/CAPITAL EMPLOYED
* 100

RETURN ON CAPITAL EMPLOYED

WIPRO LTD INFOSYS LTD.

35

30

25

20

15

10

0
2016-17 2017-18 2018-19

ANALYSIS:
Return on capital employed signifies that how much profit is earned out of
invested capital, by the owners. And hence, this ratio is highly important to
investors to know the profit earned out of their money if they invest into it.
It serves the purpose of efficient management being carried out by the
company.

Here, when the investors or potential customers will compare Infosys ltd.
and Wipro ltd., they’ll rather invest in Infosys ltd. due to less fluctuation
seen in three years and also the ratio of Wipro ltd. a change of around 1% or
2% which is high and rather Infosys ltd. has a stable or less fluctuation when
compared to Wipro ltd.
 P a g e | 30

As an investor or shareholder, a person will always think of higher usage of

its capital and higher return on investment made. Also, person will look for
safety in investment and less fluctuations in the company invested. So,
Infosys will be preferred over Wipro ltd.

(C) RETURN ON EQUITY SHAREHOLDERS’ FUNDS.

This ratio indicates the percentage of profit earned out of

shareholders’ funds and thus it is of great help to shareholders’.

RETURN ON EQUITY SHAREHOLDER’S FUNDS

WIPRO LTD.
2016- 2017- 2018-
17 18 19
PAT 81617 77228 76140
LESS:DIVIDEND - - -

SHAREHOLDERS FUNDS 467056 422626 493920

RETURN ON EQUITY =PAT- 17.47 18.27 15.42
DIVIDEND/SHAREHOLDERS
FUND *100

INFOSYS LTD.
PAT 14702 16155 13818
LESS:DIVIDEND

SHAREHOLDERS FUNDS 62711 63502 68017

RETURN ON EQUITY =PAT- 23.4440 25.4401 20.3155
DIVIDEND/SHAREHOLDERS
FUND *100
 P a g e | 31

RETURN ON EQUITY
SHAREHOLDERS FUND
WIPRO LTD INFOSYS LTD.

30
25
20
15
10
5
0
2016-17 2017-18 2018-19

ANALYSIS:

It is evident in the graph that Wipro ltd. has less ROE when compared to
Infosys ltd. so, shareholders will take more interest in Infosys ltd.

Also, as a shareholder one must see that there is decrease in the rate of return
of Wipro ltd. but that is around 2% and when seen on other side i.e. Infosys
ltd., the rate has decreased by around 4% from 2016-17 to 2018-19.

So, rather than investing in Infosys ltd. one may invest in Wipro ltd.

Thus, the decision lies in the hands of investor or the shareholder to invest
according to the risks faced or according to the return received. When seen
according to the risk factor, i.e. fluctuations one should invest into Wipro
ltd. but while comparing on basis of return one should invest in Infosys ltd.

3) SOLVENCY RATIOS:
Ratios calculated to know the solvency ability of the company to
meet the obligations towards stakeholders, especially external
stakeholders. They consider long-term aspects.
 P a g e | 32

(A) DEBT EQUITY RATIOS:

The ratio shows the ability of company to pay the external debts
i.e. long term debts out of internal funds i.e. shareholders’ funds.
And hence, also called ‘External-Internal’ equity-ratio.

Debt-equity ratio= long term debts/ shareholders’ funds.

DEBT EQUITY RATIO:

WIPRO LTD.
2017- 2018-19
18
LONG TERM DEBTS 724 220
SHAREHOLDERS 422626 493920
FUND
DEBT-EQUITY 0.001:1 0.0004:1
RATIO=LONG TERM
DEBT/SHAREHOLDERS
FUND
INFOSYS LTD.
LONG TERM DEBTS - -
SHAREHOLDERS 63502 68017
FUND
DEBT-EQUITY - -
RATIO=LONG TERM
DEBT/SHAREHOLDERS
FUND

ANALYSIS:
It is significant that Infosys ltd. does not have any sort of long term
borrowings and hence the concept of debt equity ratio is undefined. The
company has no legal long term obligations towards external stakeholders.
Besides this, Wipro ltd. has have long term debts but they are very less when
compared with its shareholders funds.
Even if Infosys ltd. and Wipro ltd. had have taken a long term debt, than the
Wipro would have been in a better position to repay it due to more
shareholders’ funds as compared to Infosys ltd.
The shareholders’ funds of Wipro ltd. is 6.6 times and 7.3 times more in
2017-18 and 2018-19 respectively than that of Infosys ltd.
Thus, company has a better amount of resources to repay long term debt and
shows a sound ability to pay the external debts.

(B) PROPRIETORY RATIO:

The ratio shows the financial position generally related to
business concern. It mainly serves the purpose to creditors who
can know the particulars about shareholders’ funds’ proportion
in total assets of business.
 P a g e | 33

PROPRIETARY RATIO:
WIPRO LTD.
2017-18 2018-19
(A)PROPRIETORS 422626 493920
FUNDS
(B)TOTAL 586713 669981
ASSETS

PROPRIETORY 0.72 0.74

RATIO=(A)/(B)
(IN TIMES)
INFOSYS LTD.
(A)PROPRIETORS 63502 62711
FUNDS
(B)TOTAL 75877 78930
ASSETS

PROPRIETORY 0.84 0.79

RATIO=(A)/(B)
(IN TIMES)

PROPRIETORY RATIO
2017-18 2018-19

0.86
0.84
0.82
0.8
0.78
0.76
0.74
0.72
0.7
0.68
0.66
WIPRO LTD INFOSYS LTD.

ANALYSIS:
The graph clearly shows that the Wipro ltd. Shows increase in proprietary
ratio which stands good for the creditors of the business.
Due to this creditors will get engaged in business and show trust in business.
This may also create a positive impact on goodwill of the business.
On other hand, the Infosys ltd., shows the reverse effect of Wipro ltd.
This will create a good credit worthiness of the business in the industry and
company will get easy accessible long term borrowings and loans.
 P a g e | 34

(C) INTEREST COVERAGE RATIO:

It shows how much profit the business earns before making the
expenses related to tax and interest, to repay the interest.

INTEREST COVERAGE RATIO:

WIPRO LTD.
2016-17 2017- 2018-19
18
(A)EBIT 106871 100343 98705
(B)INTEREST 769 1559 3320

INTEREST 138.97 64.36 29.73

COVERAGE
RATIO=(A)/(B)
INFOSYS LTD
(A)EBIT 18938 19908 19927
(B)INTEREST - - -

INTEREST - - -
COVERAGE
RATIO=(A)/(B)

ANALYSIS:

Interest makes a huge portion of finance costs which arise due to long term debts, now in the
case of Infosys ltd., there were no long term debts and hence the interest coverage stays
undefined for Infosys ltd.

On the other hand, Wipro ltd., has ₨.138.97 for paying Rs.1 as an interest. This shows sound
position of the business.

This will help the creditors to know the ability of the business of paying of interest along with
debts.

MARKET RATIO:

1. Earning per share = Net profit after interest tax and preference divined / no. of equity
shares
Earning per share is the ratio which indicates the per share earning of the shareholder. It
calculated by dividing company’s net income with the no of equity shares. It is also called
return on equty shares. It helps in deciding the market price of the company. Higher the EPS
shows the higher capacity of company to pay dividend to the share holder.
 P a g e | 35

WIPRO LTD

2016-17 2017-18 2018-19

Net profit after tax 81617 77228 76140

and interest (in
millions)
No. of equity
shares:
Basic 2428.5 4750 6007.4

Basic EPS 33.61 16.26 12.67

INFOSYS LTD

2016-17 2017-18 2018-19

Basic EPS 60.16 71.28 33.66

EPS RATIO
Basic EPS infosys Basic EPS wipro

80
70
60
50
40
30
20
10
0
2016-17 2017-18 2018-19

ANALYSIS:

In Wipro ltd., there is seen decrease in net profit after tax in subsequent years and increase in
basic equity shares over a period of years, which leads the EPS ratio fall down in 2017-18 and
2018-19.

In Infosys ltd. also, the basic eps tends to decrease but it is decreasing at a faster rate than Wipro
ltd.
 P a g e | 36

2. Price to earnings (P/E) ratio = market price per share / EPS

This ratio can be found by dividing the market price per share with the EPS. It shows the market
valuation of the stock and the performance of the company in the market. It defines how much
investors are willing to pay.

WIPRO LTD

2016-17 2017-18 2018-19

Market price per 193.39 211 254.8

share
Basic EPS 33.61 16.26 12.67
Diluted EPS 33.5 16.23 12.64

(P/E) RATIO 5.75 12.97 20.11

INFOSYS LTD

2016-17 2017-18 2018-19

(P/E) ratio 8.50 15.869 22.05

P/E RATIO
(P/E) ratio infosys (P/E) ratio Basic wipro

25

20

15

10

0
2016-17 2017-18 2018-19
 P a g e | 37

ANALYSIS:

Both the companies shows an increasing trend in P/E ratio.

This also means that the companies will be able to attract more investors and performance of
company in terms of valuation of stock and financial performance is good.

As this ratio takes into account diluted EPS, it also includes the effect of convertible preference
shares

EXECUTIVE SUMMARY
The report follows the financial and legal provision under Indian government act 2013
including the accounting standards, securities and exchange board of India regulations. Wipro
is global IT, consulting and business process services’ company incorporated and domiciled in
India. Wipro is providing competitive advantages by applying new technologies with assurance
of cyber security. Not only enabling the digital future but also increasing the efficiencies in
their technology infrastructure with leading IT consultants and business companies.

The directors report:

Wipro is contributing $33 million in the overall IT industry in India according to NASSCOM
strategic review 2019. The company has adopted enterprise risk management (ERM) policy
following the global standards recognition which includes topic related to risk and the solutions
for risk management. As a part of management, Wipro has accepted a salient feature related to
integrating report which is introduced by international integrated report council in accordance
of the regulations 34 of listing regulations and SEBI report.

Dividend:

The board directors have recommended issues of equity shares in the proportion of 1:3.
According to the government regulations board has approved and accepted a dividend
distribution policy in which the interim dividend of Rs 1 per equity share has to be paid the
face value of Rs 2 each.

Acquisition and Investments:

Acquisition works to enable driving capability to build industry domain and increase the
strength of emerging the technical areas including digital sector. Wipro is working with the
same pattern and spending the investments and being in the partnership with 13 startups in AI
(artificial Intelligence), cyber security, data management, industrial IOT, testing automation
and cloud infrastructure.

Financial Performance:

Wipro has recorded financial statements for financial year 2019 forming the part of annual
report according to the Indian accounting standards. As directed by the ministry of corporate
 P a g e | 38

affairs, Wipro’s sales have increased to Rs 4,80,298 million this year comparing with Rs
4,47,100 million in last year with the increasing rate of 7.43%. The net profit has decreased to
Rs 76,140 million comparing with Rs 77,228 million for the last year with the rate of 1.41%.

CONCLUSION
1 Liquidity Position:

The company is in the position of liquidity due to increasing payables and the second impact
is due to sales of investment which in fact created positive cashflow.

2 Management of fixed assets:

Over the period company’s fixed assets turnover ratio is increasing with the increase in the
revenues. Company has added more assets as well as increase in capex which in line with the
future plans of the company.

3 Inventory Turnover Ratio

The company has increased inventory which is inline with the increase in the payables. As the
stock is the most important for the working capital and in this case the ratio is increasing that
means that the company is moving stocks through the company and increasing the sales.

4 Payment of current liabilities

Company should pay its current liabilities to improve the current ratio. Also, the quick
payment to the creditors will impact the profit of the company due to the early payment
discount and the saving the interest costs.

5 Additional stock issues

Company has regularized its inventory pattern thereby impact is seen on increase in revenues.
Still, there is increase in closing stock which impacted the quick ratio.

6 Interest expenses

The interest expenses are increased to the extent company has repaid its loan and the following
impact is due to knocking off of derivative liabilities by setting the transaction. Impact is seen
on the net profit ratio.

7 Sales

Increase in sales are in line with GP ratio. The corresponding effect is lesser receivables and
more inventory levels to set of the company budgeted targets.
 P a g e | 39

8 Non-operating expenses

Decreasing in the non-operating expenses as compared to revenue generating streams seems

company has focused more on expense planning and has expensed only on core activities.

References

https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2018-2019/annual-
report-for-fy-2018-19.pdf

https://economictimes.indiatimes.com/tech/ites/such-a-long-journey-azim-premji-and-
wipro/articleshow/69684117.cms

https://en.wikipedia.org/wiki/Wipro

https://www.ibef.org/industry/information-technology-india.aspx

https://www.infosys.com/investors/reports-filings/annual-report/annual/Documents/infosys-
ar-19.pdf