Wipro Ltd (WIT) 2008 Q3 法說會逐字稿

Good morning, ladies and gentlemen.

My name is Laurie and I will be your conference operator today.

At this time, I would like to welcome everyone to the Wipro third quarter earnings conference call for the period ending December 31, 2008.

(Operator Instructions).

At this time, it is my pleasure to turn the conference over to Sridhar Ramasubbu.

Please go ahead, sir.

Thanks, Laurie.

Good morning, ladies and gentlemen and good evening to the participants across the globe.

Rajendra, Lalit, Arvind join me from Bangalore in extending a very warm welcome to all the participants to Wipro's third quarter results, our earnings call for the period ended December 31, 2008.

We have with us today Mr.

Azim Premji, Chairman, Suresh Senapaty, CFO, who will comment on the US GAAP results for the period ended December 31, 2008.

They are joined by joint CEOs of IT Business Suresh Vaswani, Girish Paranjpe and other senior members of the Wipro management team who will be happy to answer questions.

During the call we might make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995.

These statements are based on management's current expectations and are associated with uncertainty and risks which could cause the actual results to differ materially from those expected.

These uncertainties and risk factors have been explained in detail in our filings with the Securities Exchange Commission in the USA.

Wipro does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of filing thereof.

This call is scheduled for an hour.

The presentation of the third quarter results will be followed by a question and answer session.

The operator will walk you through the procedure for asking questions.

The entire earnings call proceedings are being archived and transcripts will be made available after the call at our website, www.wipro.com.

I am available on email and through mobile, as well, to take any questions and table it to the Wipro team in case you are unable to ask questions for any technical reasons.

Ladies and gentlemen, over to Mr.

Azim Premji, Chairman, Wipro.

Good evening and good morning to all of you, depending on which part of the world you are working, and I wish all of you a very happy new year.

Thank you for joining our call.

Wipro Limited recorded revenue growth of 25%.

Revenues from our IT Services business crossed INR50b mark for the quarter with strong year-on-year growth of 20%.

2008 saw a fragile global economy, a brittle domestic security environment and a probing investor outlook on corporate governance practices.

2009 will be a tough year.

Consumer confidence is down significantly and leading indicators suggest the bottom is not in sight.

This will impact every economic activity leading to capital conservation and OpEx reduction.

IT budgets for the year are likely to get finalized this quarter, but customers will decide quarter-by-quarter till they get certainty on macro environment.

In such tough times all our stakeholders are impacted, be it customers, employees, investors or partners.

Let me focus on customers first.

Our customers are not looking for vendors but for business partners, partners who know their priorities and collaborate with them.

Challenging times differentiate great companies from good companies.

This is an opportunity that we want to take with both our hands.

I believe customers want a business partner to have four key strengths.

Wipro is well placed in all the four areas.

Customers first look for a one-stop shop to reduce their overheads in managing relationships.

Our wide service portfolio covers Consulting, Application Development and Maintenance, R&D Engineering, Technology Infrastructure Services, Package Implementation, Testing Services and Business Process Outsourcing.

Our ability to provide integrated solutions cutting across multiple service lines positions us well among our peer group.

Second, customers do not want fair-weather friends who care only for their own interests.

In 2001 we stood by our Telecom and Technology customers when some of our competitors looked elsewhere.

We are in this business not just for this quarter or the next, but also for this decade and the next.

Three, customers are looking for partners who can address their current needs of capital conservation and operating expense reduction.

We're addressing this with our suite of offerings under Process Optimization, Application Optimization, Infrastructure Consolidation and Emerging Business Models.

Four, customers expect their partners to be financially strong and sustainable.

While the past is not indicative of the future, we do have the experience in riding economic waves in our last six decades' history, and coming out the stronger.

We are therefore unique as a Company so far as this is concerned.

Finally, a relationship needs to be built on the foundation of the highest standards of integrity.

This holds true not just for our customers, but for all our other stakeholders.

We have always prided ourselves for setting the highest standards of business ethics in our dealings with all our stakeholders.

We have built a strong culture which upholds compliance in letter and spirit.

Over the years we have proactively adopted governance and disclosure standards long before they became mandatory.

We've sacrificed and consolidated results in 1985 for voluntary compliance with SOX-302 certification requirement in [2002].

Additionally, in 1998 we were the first internal audit function in India to get ISO 9002 certified.

Our partnership with customers is not at the cost of investors.

Our focus on operational efficiencies will ensure that our customers are not short-charged, both in the short and the long term.

Employees are the lifeline of any organization.

I am confident that every Wiproite will stretch to the hilt to squeeze every ounce of productivity and provide concrete value to customers to enable us to become partners of choice.

Recessions do not last.

Resilient companies do.

I am confident Wiproites are resilient to withstand the near-term challenges posed by an uncertain environment, and come out stronger than ever.

I will now request Suresh Senapaty, our CFO, to share the financial highlights of the quarter, following which your management team will be happy to take questions.

Good morning to all of you in the United States, and good evening to those of you in Asia.

Prior to taking you through some of our performance highlights for the quarter, let me draw attention to the fact that, for the convenience of readers, our US GAAP financial statement has been translated into dollars at the noon buying rate in New York City on December 31, 2008, for cable transfers in Indian rupees as certified by the Federal Reserve Bank of New York, which was $1.00 equals to INR48.58.

Accordingly, the revenues of our IT Services segment that was $1,100m or, in rupees some, INR50.6b, appears in our earnings release as $1,042m based on the [convenience] translation.

Our IT Services revenue for the quarter was $1,100m; a growth of 3.5% in constant currency and decline of 0.9% sequentially on a reported basis.

Our guidance of $1,121m for quarter three was based on exchange rates as of September 30, 2008.

The quarter revenue restated for exchange rate of September 30, 2008 is $1,126m, resulting in an actual delivery of about $5m more than the guidance.

We had strong growth in the Retail and Transportation verticals, with constant currency sequential growth of 11.4% and year-on-year growth of 38%.

Our Communications and Media Service Providers grew 5.5% sequentially on constant currency terms.

Our Financial Services vertical showed strong constant currency y-o-y growth of 28% in the quarter December '08.

Technology Infrastructure Services and Testing Services have shown strong growth of 20% and 24% on a year-on-year basis.

Our Package Implementation Services' line exhibited sequential growth of 3.7%.

From a geography perspective we saw strong growth in Europe on a constant currency basis of 7.5% sequential and 24% year on year.

India and Middle East business had another strong quarter, with sequential growth rate on constant currency terms of 5.5% and year-on-year growth rate of 52% on constant currency.

We continue to win large deals.

We won four multi-year, multi-million dollar deals in the quarter [end] December.

We added 31 new customers.

Our accounts with revenues greater than $1m increased from [426] in the quarter ending September 30, 2008 to 436 in the quarter ending December 2008.

Our accounts with revenues greater than $20m increased from 50 in quarter ending September to 52.

We have completed our acquisition of Citi Technology Services.

As part of the deal Wipro gets committed business from Citigroup of at least $500m over a five -- over a six-year period, apart from exclusivity for all IT Infrastructure Services for Citigroup out of India and preferred vendor status for Application Development and Maintenance works delivered out of India.

The revenues of Citi Technology Services will be consolidated with Wipro beginning quarter ending March 2009.

We had volume growth of 2.2%.

Our mix of revenue from fixed price increased by 4 - 40 basis points and offshore the mix went up by 90 basis points in the quarter ending December 2008.

Our price realization improved 120 basis points sequentially in constant currency through higher productivity.

However, we are seeing significant price pressure as customers are pushing hard to save costs.

Excluding the one-time provision made in respect of receivables of a large customer, we were able to expand margins by 10 basis points.

The impact of salary increase and drop in reported rate realizations were made up by benefits from the currency and other operating parameters.

Due to changed economic reality since September, there is a considerable uncertainty in decision making by our customers.

The Financial Services and the Technology, Media and Telecom SBUs are most impacted by the change in the environment.

Our IT Product business showed strong year-on-year growth of 26% in the quarter of December 2008 and the margins improved the business by about 100 basis points and EBIT growth, therefore, on a year-on-year basis was 70%.

Wipro Consumer Care and Lighting business continued to see good momentum with industry-leading growth rate.

Overall, business grew 20% on a year-on-year basis.

On the ForEx front our realized rate for the quarter was INR46.03 versus a rate of INR42.65 realized for the quarter ended September 2008.

On a quarter-on-quarter basis ForEx gave us positive impact to margin net of cross currency of 0.3%.

As at period end, after assigning to the assets on the balance sheet, we had about $1.8b of contracts, $2.35b on a gross basis, total contracts, at the rates between INR39.50 and INR49.91.

As of December 31, 2008 our net cash balance in the balance sheet was INR11,044m.

We generated a free cash flow of INR6,532m during the quarter under US GAAP.

In the light of issues on financial reporting, we have decided to enhance the disclosure level.

We are starting to give break-up of investment and cash bank balances by banks' funds in the balance sheet.

I will also take a minute to highlight that our internal control processes are very robust and we have sufficient checks and balances in the system.

Our cash bank confirmations are done by external auditors directly with the bank and this process has been going on for many years.

For the quarter ended March 2009 we expect the margin to be within a narrow range.

We will be glad to take questions from here.

Laurie, you can start up Q&A.

Thank you.

(Operator Instructions).

Our first question today comes from Ed Caso with Wachovia.

Good evening, Ed Caso of Wachovia.

I was wondering if you could give us an update on your BPO business, pricing turnover, tone of business (inaudible).

This is Suresh Vaswani here.

Let me just give you a broad perspective in terms of some new initiatives that we've taken on our BPO business.

We've really got the BPO business and the IT business working much closer together and, therefore, creating quite a few BPO/IT type of opportunities, or integrated BPO/IT type of opportunities.

Our focus really has been to drive a transaction processing business as against voice business, and there has been a substantial movement insofar as that is concerned.

While the BPO business in terms of revenue may not look exciting in context of the growth that we have had across some of the service lines, but in terms of order booking it has been fairly healthy.

We finalized quite a few, specifically four fairly substantial BPO deals which are transaction processing deals this quarter, and the order booking has been significantly ahead of what we achieved last year, despite this year being much more economically challenged.

I notice that your number of active clients has trended down similar to the other two firms that have reported already.

Is there a movement to thin your customer base to just the better customers?

So, again, this is Suresh Vaswani here.

I think we've added as many as 31 new customers this quarter.

There has also been customer attrition but that is not attrition in context of -- and it's more attrition in context of our finishing projects with customers or completing our projects with customers and, really, that is it.

So most of the customer attritions has been in the context of projects that we were executing having been completed.

So [that] question of yours was relating to BPO?

No, it's more general than that.

Okay, okay.

Last two quick questions.

The impact of Nortel in the quarter and the impact of the Gallagher acquisition on revenue?

Sorry, could you repeat the question again?

I'm looking for the impact that Nortel, the bankruptcy, may have had in the F Q3 or F Q4, and the impact that the Gallagher acquisition had to revenues in F Q3.

Right, so far as the first item is concerned, we have made -- based on the discussions that we had with the customer, bulk of the revenue (inaudible) that we have with them continues to hold good going forward.

However, so far as the receivables as on the date of filing is concerned, there is some amount of uncertainty in terms of how that is to be dealt with because they have filed Chapter 11 so far as the US is concerned and a restructuring plan so far as Canada is concerned, and many other entities not (inaudible) nothing has been filed.

So from that perspective there is a little bit of uncertainty and, given the context, we have reserved about 50% of the outstanding we had on the date of filing.

And that has reduced the margin so far as December 2008 quarter is concerned by about 60 basis points.

And so far as Gallagher is concerned can I ask [Ram] to (inaudible).

Hi, should I say I'm on the call?

Ram, why don't you answer that.

Yes, thanks.

So I'm just trying to understand if the question was broader, saying that how are we going about in client selection given the challenge that we have with Nortel bankruptcy and some maybe potential clients of Gallagher?

Yes, I was trying to get a sense for whether the leading offshore providers were maybe targeting down on a narrower higher quality group of clients?

That's right.

So, clearly, in the current [downturn] things that we are using as a test for qualifying clients is their survivability during the downturn.

And -- but not all the choices are painless and, clearly, none of them are faultless, but that's certainly a theme that we use [well-qualified] clients.

Thank you.

We'll take our next question from Joseph Foresi with Janney Montgomery Scott.

Hello.

My first question here is just on the Citigroup.

I know the deal closed.

Given what Citigroup's going through in the news, I wonder if there are any break-up provisions included in the deal.

I know there's a minimum volume commitment.

And were there any changes in the deal based on just what we saw as far as that company is concerned?

[Hugh], do you want to answer that?

I'm sorry, the line is not so good.

Can you just summarize for me (inaudible)?

Yes, just real quickly.

Citigroup's been in the news lately and I just was wondering if there was any changes or amendments to the deal based on what's been going on with that particular company?

No, I think we had a chance to look at that before we finally closed and, fortunately, the deal only closed after the restructuring was announced.

So we reassessed and looked at what was there and we felt comfortable that what was there was sufficient for us to build a long-term relationship [grid], so that the promise that was held out on the acquisition actually has a chance of [getting] delivered.

Right, so there was no changes, post Citigroup news?

No, that's right, because.

That's what I said.

Because we actually closed yesterday and by that time the restructuring had been announced, so actually we did a call with the Group management and did our own assessment about what was still left and what was put into the bad bank.

And we felt sufficiently comfortable that what we had was still valuable.

Okay.

And also, Joseph, the (inaudible) that that entity has with Citi, almost more than 90% of that comes from the Citicorp.

And a very small component is to Citi Holdings.

And it is our belief that, even if it is a very small component, that creates an opportunity going forward.

And just on the budget side, are you starting to get more visibility on what budgets are going to look like next year?

Maybe the timing of the visibility and any comparison compared to where last year how budgets looked?

Okay, this is Suresh Vaswani here.

Now, clearly, the budgets are going to be challenged next year and our feedback is [CEOs] are wanting to do more for less.

So there is budget pressure.

It will probably be less than what we had planned for last year, but I don't think there's going to be any substantial reduction in terms of the quantum of jobs, the quantum of transformation initiatives that the CEOs would expect.

The other perspective I would like to give is, while budgets are frozen for the year, people will re-look at the budgets quarter on quarter.

So, typically, how much, how well you've done in the quarter will determine how much you spend in the subsequent quarter.

So it's going to be budgets which are lower, budgets which are challenged and budgets which will be reviewed quarter on quarter.

It looked like in the press release you guys talked about taking a charge that affected margins.

Is that charge associated with Nortel?

That is correct.

Okay.

And just one last question here on the Satyam front.

Obviously, we see the overlap in the clients.

I think the most recent one was [Signa], also a client of you guys.

I wonder if you could just talk about any discussions you're having on that front and maybe put some numbers around anything that you think you might be able to benefit from.

Okay.

This is Suresh Vaswani here again.

Yes, you're right, there are customers that are common to Satyam and us.

There are customers who have large programs who would be looking at business continuity, and it's pretty much natural to expect that, and those customers are also in touch with us in terms of their own business continuity plans.

From our perspective we're really not sort of soliciting for the Satyam customer base, but where there are common customers, where there are crucial programs and where they are looking for alternatives, and where they're looking for business continuity, we certainly are in talks with them.

Maybe you could just give us some color on that.

Is there a certain number of top-10 customers that you guys share or a certain total number of customers?

So, we find it difficult to do that, so we won't be able to talk too much about it.

But, like I say --

(Inaudible).

Yes.

Okay, fair enough.

Thank you, guys.

Thank you.

Our next question comes from Julio Quinteros with Goldman Sachs.

Hi, guys.

For the subsequent quarter that you guys are guiding to on the IT services side, I believe the target is $1.045b in revenues.

What is the contribution from Citi expected next quarter?

Julio, they had a revenue run rate of a little under $80m so far as calendar 2008 is concerned.

And that is more or less in line with the guaranteed revenue, fronted revenue that is part of the transaction, and we would expect similar numbers going forward.

Okay.

So, when we look at the revenue growth (multiple speakers).

-- for the year.

For a quarter it will probably be one fourth of that.

Right, sure.

When we look at the guidance and I compare it to the -- I'm comparing it to the revenue relative to the revenue item that you guys report in your Company data spreadsheet.

So if I look at IT services revenue in that line item, which we've always looked, at $1.1b going to $1.045b, less the contribution from Citi, it looks like, on a reported basis, revenue growth will be down about 7%.

What is the currency impact that you guys are factoring in there?

That is on a constant currency [level].

Correct.

So the constant currency number is negative 7%?

Yes.

Yes.

Okay.

So your guidance is actually changing to constant currency now?

Yes, because your have seen how the volatility has been and, therefore, there are enough confusions in the marketplace.

So, if some time we get some more stability on this currency, we thought that it would be most appropriate way to communicate and articulate in the environment of high volatility.

Okay.

So, this is actually the first quarter that you guys are now providing guidance on a constant currency basis?

Just the first quarter.

That is correct.

So [even] the last quarter also we [not] constant currency weight off [the board] based on the closing currency on September 30, (inaudible) will be given on the constant currency basis.

Okay, yes.

I did notice the change in the language this press release.

I guess, on the margin front, I understand that there's a 60 basis point drag from the AR provision that you guys ended up having to take for this contract.

Was there any other additional reserves taken for doubtful accounts at this point of time?

No, there is nothing exceptional.

They'll be like a normal (inaudible).

Okay.

So, can you just walk us through the components impacting the margins relative to (inaudible) cases?

They came in a little bit lower.

So, just trying to understand what are the puts and takes in margins, given that I think you would have had some currency benefits in the quarter.

At least we've seen two other companies report significant currency benefits.

So can you walk us through what the offsets were to, say, currency, and maybe just give us each one on a basis point perspective?

Yes, on the exchange fund there is a benefit of over 30 basis points, Julio.

And so far as [EBD] is concerned, which exclude that one time, it's about 30 basis points [overhead].

So, overall, it was -- but for that component, you will see there are pluses and minuses which even out.

I'm sorry, what on a basis point perspective?

Can you give us those pluses and minuses?

What I'm saying is that we have an exchange benefit of over 30 basis points, with EBD is about minus 30 basis points and, but for the Nortel, the results that you talk about, the margins are flattish.

And, overall, there is a negative utilization, negative with respect to that compensation increase in terms of the BPO (inaudible) that we effected as far as quarter three is concerned.

And also the IT services offshore salary increase that was done in August, there is an additional one month [there].

So those have been negative.

The pluses were offshore mix and the pluses were on the foreign exchange gain, and that's it.

So that almost neutralizes the other impact.

Okay.

And then, just going back to the old Infocrossing acquisition, any color that you guys can provide on how that business is trending relative to your expectations?

Obviously, last night we saw IBM had some pretty decent numbers on the IT outsourcing side.

Can you comment on how the Infocrossing business is tracking today?

Okay, let me take that.

This is Suresh Vaswani here.

From a strategic perspective we had acquired Infocrossing to really enhance our total Outsourcing proposition and our Infrastructure Services contribution globally and, particularly in the US.

And I think it is pretty much on course insofar as achieving that objective is concerned.

The good news this quarter about Infocrossing -- or the good news last quarter about Infocrossing, is the fairly large opportunity that we won in the US for a business services provider, which is in excess of $100m in terms of total contract value and really covers our taking over and managing 10,000 megs of mainstream capacity, 600 servers, which the customer was [really] managing on its own.

That has now been transitioned to us and we will be doing managerial center services for all the server capacity and mainstream capacity that I spoke about.

So it's a breakthrough win.

We have a fairly healthy pipeline on the intersection of our Infrastructure Services practice and the Infocrossing managed data center services front.

Great.

Thanks, guys.

Our next question will come from Mark [Marascia] with Piper Jaffray.

Hi, it's actually Mark Zqutowicz for Marascia.

I just was looking for a utilization clarification.

I just noticed that despite the declines in headcount and utilization, which utilization, as far as I can tell, have remained relatively flat, that you increased the total person months and billed person months.

And I'm just curious what that implies.

Is that a -- are you increasing existing working hours or did attrition come in towards the end of the quarter?

If you could provide some clarification there it would be helpful.

Thanks.

Mark, hi, this is Manish here.

I'm the CFO for the IT business.

And just to ensure I understand your question correctly, your question is, with the movement in utilization, how is the -- what is the (inaudible) reason for the utilization increase in spite of a decrease in headcount.

Is that the correct understanding of the question?

Yes.

And I notice that person months and billed person months are increasing, so I was just curious how that works.

So, typically, what happens is that the billed person months is a reflection of what is the number of people that have got billed on a monthly basis.

And it also gets impacted by how much is generated from fixed price projects and how much is from [TNN].

And a like-to-like correlation of headcount is not going to be easy because what you see in the utilization number is basically the number of people billed against the total headcount.

What you see as a headcount number may not necessarily be all that gets billed.

So we have a training component, and if you see our reported numbers the utilization net of training has increased which reflects the increase in volume.

While the utilization net -- including training, actually, you will see a drop which will be the explanation for how we are saying the volume has increased, while utilization is not necessarily reflecting the same.

Okay.

So, --

As far as changing of working hours are concerned, there hasn't been any change that we have done in quarter three.

Okay.

And, attrition in the quarter, did that somehow fall more towards the end of the quarter or was that linear to the quarter?

Mark, hi, this is Pratik here.

No, we didn't see any specific or distinct pattern to the attrition.

Going through the three months which is October, November, December, it was fairly evenly spread.

Okay.

And then, in terms of the fixed price contract job, is that -- can you give some trajectory going forward, where you see fixed price ending over the next six to 12 months?

And if you can quantify what contribution that you're seeing to margins with that?

You know the current [approach] to us -- approach to be both the market has been what we call about [this pace], which is process optimization, application optimization, consolidation and emerging business models.

And when you go to the customers on these particular programs more and more this (technical difficulty) have gone with the solution which is supposed to help them conserve cash, help them manage costs better, help them get better productivity.

And therefore it is this particular environment which allows both of us to get into a business model and an engagement model which -- where the driving of the productivity can be much better and much more optimized.

And, consequently, we are seeing some increase in the fixed price projects and, going forward, you would see even more, maybe another five to 10 basis -- 10 percentage points in terms of whether you call it a fixed price or an out (inaudible) based pricing, etc., etc.

The combination of that another 5% to 10% could go up in terms of the next four quarters.

Did you say 5% to 10% over the next four quarters?

That's correct.

Okay, thanks.

And then just one final question.

Could you give some direction in terms of headcount -- that headcount, over the next couple of quarters?

Are we going to see that similar to what we saw this quarter?

I'm speaking of net headcount.

(Inaudible) it will clearly a function of the business that we are going to have.

And you've seen the guidance for quarter four so, consequently, that clearly reflects what the headcount we had in the current quarter or we will have in the next quarter.

So, let me just -- as you have seen the demand for supply [installation] has changed so, consequently, it is possible to operate on a model where you can get the resources on requirement and, therefore, we will definitely be trying and using that model more and more as we go forward.

Sure, I understand that.

But maybe can you draw some correlation between fixed price contract, the concentration there increasing, and what that implies for headcount, or your needs for headcount?

Can you give some correlation there?

Let me address this maybe a little differently.

Certainly, fixed price contracts do give us flexibility in terms of optimizing manpower, and we certainly will do that.

Now, Senapaty covered some aspects of forecasting and basically recruiting based on what your need is.

The other perspective is we are -- a lot of our businesses are truly non-linear in nature.

So the Infocrossing win that I spoke about is a managed data center services contract which is fairly substantial in terms of annuity business, but it does not add too much of headcount.

Likewise, we are driving non-linearity across our businesses.

So, if I look at the package implementation and support business, we've got a flex delivery model which enables us to do a lot more tool-based managed services and application support for customers.

So the revenue growth is not proportion -- is not in proportion to the headcount growth.

And, likewise, we have several other initiatives across the Company.

A large part of our -- a significant part of our Services business also comes from the domestic market.

And I just give an example of managed services, in context of India, when maybe really driven a non-linear model.

So, this year -- or, actually, speaking about a broad base [here], we have been able to increase revenue to the extent of 30% plus without a single addition in terms of headcount.

And that's because we've consolidated service delivery, we've centralized it, we've used a lot of tools and lots of automation in terms of service delivery to customers.

So, really, the correlation between revenue growth and headcount growth, as it used to appear in the past, is changing significantly as we go forward based on some of the delivery models and the business models that we now have.

Okay, great.

Thanks very much.

Our next question will go to Ashish Thadani with Gilford Securities.

Yes, I have a couple of questions.

Just to pick up on the HR discussion, attrition seems to be at about 20%, and is there any reason why this is proving to be difficult to manage?

And the second one is on SG&A.

It seems to be climbing at a time when growth is slowing and the rupee is depreciating as a percentage of total revenue.

It would be helpful if you could shed some light on that as well.

Okay.

Let me just take the first one on attrition.

As we would have shared in the fact sheet which got circulated through the quarters, starting from quarter one, voluntary attrition has been moving downwards.

So, in Q1 when we reported 14.7%, in Q2 it was 11%, this quarter it has marginally gone up to about 11.9%.

I think what you're also looking simultaneously is the involuntary portion, an involuntary portion which was 2% for the quarter which, effectively, is 8% for the year so that makes it 20%.

So the simple reason is that, yes, we have looked at some of our performance parameters more closely over the last two quarters and, as a result of that, we have had people exiting due to that.

In addition, we also have had some more exits which fall in the bucket of involuntary.

What is it which we see going forward?

We think that at least over the next two quarters will continue to see us remaining focused on exits related to performance parameters.

And we think that will play out pretty much till first quarter of the next fiscal.

And as far as voluntary attrition is concerned, I think our own assessment is that, going forward, we would see the downward trend on voluntary attrition and, at least our guess is that it should be in high single digits very soon.

And, Ashish, on the last question in terms of SG&A, if you look at the IT services under the US GAAP the SG&A, which was 12.2% in September '08, has gone up to 12.7% in December '08, which is an increase of about 50 basis points.

But, as we just talked about one particular [preserving] that we did in one last customer (inaudible) filing for bankruptcy, that was about 60 basis points.

Okay.

So if you correct for that, it is actually a 10 basis points improvement.

Okay.

And then, finally, this has to do with currency.

In the notes to your US GAAP financial statements you have broken out a hedging component.

Could you clarify how this is likely to impact reported results in future periods?

So that's the normal hedging action.

There is no change in that and like we have so far been dealing with, so I will not think that there is any kind of change from now on.

Okay.

Thank you.

Thank you, Ashish.

(Operator Instructions).

Okay, if there are no additional questions, let's close the call.

Thank you very much for your participation.

And the IR team in India and the US are available offline for any questions.

And the (inaudible) replay is available, post the call.

Thank you.

Thank you very much, ladies and gentlemen for joining today's Wipro conference call.

This concludes your conference.

You may now disconnect.