Wipro Ltd (WIT) 2012 Q4 法說會逐字稿

Ladies and gentlemen, good day and welcome to the Wipro Limited earnings conference call. As a reminder all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions at the end of today's presentation. (Operator Instructions). Please note that this conference is being recorded.

I would now like to hand the conference over to Mr. Manoj Jaiswal. Thank you and over to you, sir.

Thank you, Marina. Good afternoon everyone. Thank you for joining this call. My name is Manoj Jaiswal and I head Investor Relations for Wipro. Along with Arvind in Bangalore and Sridhar in US, we manage the investor interface.

A very warm welcome to all of you to our annual and quarter four results for fiscal 2012. We will begin with a short address by our Chairman, Mr. Azim Premji followed by IT Business highlights by Mr. T.K. Kurien, CEO of IT Business and Mr. Suresh Senapaty, CFO of Wipro Limited who will present financial highlights. The operator will then open the bridge for Q&A with the management team. We have the entire senior management here to take Q&A from the analysts and investors.

Before Mr. Premji starts with his address, let me draw your attention to the fact that during this call we might make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which could cause the actual result to differ materially from those expected. These uncertainties and risk factors have been explained in our detailed filings with the SEC of USA. Wipro does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of filing thereof.

This conference call will be archived and transcripts will be available at our website www.wipro.com.

Ladies and gentlemen, let me now hand over the call to Mr. Premji, our Chairman, Wipro.

Good afternoon to all of you all. Let me just cover some of the financial highlights of the last quarter and of the last year. Wipro recorded revenues in quarter four of financial year '12 of INR99b, a year-on-year growth of 19%. For financial year '12, Wipro recorded revenues of INR375b, a year-on-year growth of 21%.

Net income for the quarter at INR14.8b, a year-on-year growth of 8% and net income for the year at INR55.7b, a year-on-year growth of 5%. IT Services Business delivered sequential growth in line with our guidance.

A little bit about the macro environment. The overall macro environment continues to be volatile. While we have seen signs of volatility in the environment for the last three months, customers continue to be cautious. In my discussions with business leaders we are seeing customers focus on globalization and productivity.

Since clients want to identify newer growth opportunities, what they seek from us as a service provider is collaborative innovation and solutions which can change the way they do business, bring in more innovation and improve revenue and customer insight. This approach is changing the nature of demand we are seeing and is reflected in our stronger pipeline. However, these programs have a long cycle time for closures.

In Consumer Care & Lighting business, we saw another quarter of 20% growth. Santoor revenue has crossed the INR10b milestone, coinciding with the completion of 25 years of existence. Unza business continues to do well, with the Enchanteur brand crossing the milestone of $100m of revenues.

Wipro Infrastructure Engineering. We continue to see a strong growth in Wipro Infrastructure Engineering business, with India doing well and Europe stabilizing. Successful entry into two growth markets, Brazil integration on track, strong signs of synergy from the global OEMs and sourcing from [LPC]. We have set up a manufacturing base in China. We have successfully completed a joint venture with Kawasaki. Production is expected to start by the second half of financial year '13.

Let me cover some points on sustainability. We recently released our Fourth Sustainability Report titled The Imperative of Hope. The report provides strategic insights into our vision, goal and progress on our sustainability initiatives. Based on an independent assurance by DNV, the report has been awarded a A+ rating in the fourth year in succession, a clear reflection of the quality and strength of our sustainability disclosures.

We were recognized by the Ethisphere Institute, a leading business ethics think-tank as one of the 2012 World's Most Ethical Companies.

I would now request Senapaty to give you an overview on the overall financial results.

Good day, ladies and gentlemen. Before I delve into our financials, please note that for the convenience of readers, our IFRS financial statements have been translated into dollars at the noon buying rate in New York City on March 30, 2012 for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New York which was $1 equal to INR50.89.

Accordingly, revenue of our IT Services segment that was $1,536m or in rupee terms INR76b appears in our earnings release as $1,491m based on the convenience translation.

Let me start by saying that the Board of Directors have recommended a final dividend of INR4 per share, taking the overall dividend for the year to INR6 per share.

Moving into the quarter performance, our IT Services revenue for the quarter ending March 31 was $1,536m on a reported basis, a sequential growth of 2% and a year-on-year growth of 10%. For the full year we delivered revenue of $5,921m with year-on-year growth of 13.4%.

For the quarter, growth was led by energy and utilities with sequential growth of 6.8% and retail of 5.9%. We saw weakness in telecom vertical, particularly on the OEM side. BFSI was impacted by weakness in investment banking in the current quarter.

From a service line perspective we saw strong growth in infrastructure services at 6.4% sequential growth and business analytics at 5.4% sequential growth.

We moved the needle further on our focus area of client engagement in the quarter -- in the current quarter on a trailing 12 months, we have seven accounts which are more than $100m in revenue up from three a year before. We are happy with our progress and we continue to make investments in this area.

We saw improvement in revenue productivity in the quarter. Offshore realization improved by 1.4 percentage points and onsite realization improved by 0.4% sequentially. We continue to characterize the pricing environment as largely stable.

Sequential volume growth in the current quarter was 0.8%.

Operating margin drop was limited to only 10 basis points despite the strong appreciation of the rupee in the quarter.

As of March 31, 2012 our DSO showed marked improvement and was at 70 days, down from [71] in the previous quarter.

Our IT Services business showed operating profit growth of 32% year on year in the current quarter.

Consumer Care & Lighting business continued to see good momentum with revenue growth of 25% year on year and EBIT growth of 30% year on year.

On the foreign exchange front, our realized rate for the quarter was INR49.43 versus a rate of INR50.53 realized for the last quarter. On a quarter-on-quarter basis, ForEx gave a positive impact of 10 basis points to operating profit.

Our OCI reduced from INR5.5b to INR1.6b as of period end and we had about $2b of ForEx contracts as yet outstanding.

The effective tax rate for the quarter was 21.2%.

We generated a free cash flow of INR16b in quarter four, as against only INR8b in the quarter before, which was 109% of the net income. Operating cash flow was INR18b in quarter four as against [$11b](Sic) in quarter three. Operating cash flow was [121%] of PAT.

Our net cash balance on the balance sheet was [INR69b], an increase of INR16b.

We will now be happy to take questions from here. Sorry, can I request Kurien to give a brief talk please.

Good afternoon, ladies and gentlemen. We appreciate your taking the time off to attend this conference.

Very quickly I'll give you a sense of what's happening, from our perspective what we see in the marketplace. And what we are really doing both in terms of account mining and in terms of service offerings.

In the last few quarters, we have really invested significantly into a -- one, in terms of differentiation in front of the customer and at the back end in terms of making sure that our execution remains seamless. This has really been built around two pillars that we think are critical for any service organization which is customer satisfaction and employee satisfaction.

Having said that, quarter four for us was a quarter of execution. When we entered quarter one there were macroeconomic volatility and other challenges that we saw. But we've been able to deliver in the guidance range that we estimated.

Our pipeline is robust but given the nature of the deals and the proactive engagements that we are going after, closure in the last quarter has taken time. Our pipeline and (inaudible) today is a healthy part of our pipeline (inaudible). As we look ahead we see signs that closure will pick up in Q1 this year and growth will come back in the next few quarters.

The focus on account mining and alignment of accountability at the top levels is beginning to show results. Our top 10 accounts contributed (inaudible) to our revenue growth. We now have seven of these relationships crossing $100m in revenue compared to just three a year ago. In fact, the top 10 accounts grew faster than the Company average growth with the average size of the top 10 accounts having gone up from $111m to $130m.

In terms of customer satisfaction across accounts, it continues to improve. We have had a 20% improvement in the top two boxes. In fact, the improvement trend is all across outcome measures, loyalty, advocacy and overall satisfaction.

Our quarterly annualized employee attrition fell year on year in quarter four by 6.5%. Between last quarter four and this, it's 14.4%, a clear reflection of the fact that our engagement initiatives are working.

On the solutions side, in the past two quarters we have focused on four themes which we see broadly shaping our future. One is what we call variablization technology for business agility. The second is consumerization of technology for value; business performance improvement through analytics and finally, innovation to (inaudible).

We feel that these four trends will drive the next technology disruption which really will be the intersection of cloud analytics and mobility. And here is an update on the three core areas for us.

Analytics. In the analytics business we continue to take market leadership around specific technologies which are absolutely new and specifically related to areas like process and big data. We have shown an impressive growth last quarter, registering a 5.6% quarter-on-quarter growth. We've added 35 new accounts in this year. As we talk to our customers they are investing a significant part of their IT budgets in analytics and we expect to these forward.

On cloud, we continued to make rapid progress, especially in the last quarter. We had 40 new wins across various segments and client engagements in the last quarter alone. The speed and complexity of cloud is increasing rapidly suggesting that cloud after many years is now seen as a part of enterprise IT and it's a part of a strategy by our customers to increase variablization.

On mobility we continue to see traction in the mobility space and we've added over 50 customers over the year. More importantly, an initiative that we launched called Wipro AppLife has over 50 applications developed by employees which are now monetize. We also have over 1,000 employees who have signed up and who are creating applications for Wipro.

I want to conclude by saying that the last five quarters have been very exciting. We have seen a lot of changes. We've seen some wins. We believe we are on the right track. And the core of what we do is execution. Bottom line we expect to continue to keep winning in the marketplace.

Thank you.

Marina.

Yes, sir.

We can take questions and answers from here.

Sure thank you very much. Ladies and gentlemen, we will now begin the question and answer session. (Operator Instructions).

The first question is from Mitali Ghosh from Bank of America. Please go ahead.

Yes, thanks. Firstly, just could you help us understand the challenges that you're facing in the India market and why you expect it to resolve in the second quarter?

So what I'll do is I'll take a stab at it, Mitali, and then I'll pass it on to Anand Sankaran to continue. So here's what we have seen. You know last quarter, we're coming out of a fairly robust growth in the previous quarter. Quarter four, our growth in the India market rose 7%. There are two segments that we see clearly challenged as far as India is concerned which is telecom and government. And because of that we see some level of negative growth coming in, in quarter one.

Now based upon whatever wins we've had over the past year, we expect to see growth coming back, not necessarily in the industries that we spoke about but in other industries in quarter two.

Anand, you want to add to it.

I think, Mitali, T.K. has spoken about the reasons why we're seeing a slowdown in quarter one as compared to quarter four. Broadly we are noticing a slowdown in the verticals that T.K. spoke about. Telecom, all of us know that it has been slow for the last 12 months and I believe will continue to be slow for the next 12 months as far as the Indian market is concerned.

Government, though we're seeing opportunities coming up, it is taking time for us to convert those opportunities into real deals. So it's taking time for those opportunities to convert to orders.

So while we will see a slowdown in quarter one I believe that we will have a strong recovery in quarter two and quarter three, going ahead. So we've got a reasonably robust pipeline in the other verticals. And we would see that coming up in quarter one and resulting in revenues in quarter two and ahead.

And what would some of these verticals be?

The BSFI vertical is showing promise in India. So that's clearly one vertical which is showing promise, both in terms of banks looking at a lot of [surround] solutions around core banking. So that's one vertical that's showing promise.

There's also manufacturing that's seeing momentum in the country. So, some of these verticals should give us upsides in quarter two.

Sure, thanks. Then on Infrastructure management -- which actually saw a good growth this year, if you can just help us understand what the main drivers were for this and what the pipeline looks like?

So Mitali, (inaudible), but Anand now runs both our India business and our Global Infrastructure business. So I'll ask Anand to respond to that.

So Mitali, the growth on the Infrastructure Services side I would say has happened globally. So we've seen a reasonably strong momentum in our global business. And the good news is that the global business as we look ahead we're seeing a fairly robust funnel for Infrastructure Services. So I think it's been a good run in the last quarter for Infrastructure Services globally.

And so is the case of India. We've seen a robust momentum in Infrastructure Services in the Indian market. And therefore we also believe that looking ahead the Indian market and the Middle East market would also show a lot of promise and a lot of momentum as we go ahead in the next few quarters.

So it's been a combination of a few large deals and run rate business in Infrastructure Services both in India and globally.

Okay, thanks. This is one final question from me on the net headcount addition which was slightly down this quarter. I mean your total headcount was slightly down and I understand it's because of the decline in the BPO business headcount. If you could give us some color in terms of the hiring, the gross hiring done and how that pans out versus IT and BPO.

So on the gross hiring I'll give it to Saurabh to respond to it, Mitali. Saurabh is Head of HR for the Technology business -- the Global IT Business, sorry.

Hi, Mitali. So on the backdrop of two quarters of 5,000 plus net adds and a gross hiring of more than 6,000 people in this quarter it was a issue only in BPO where we were doing a large transformation program and there was some transition which was happening that had people both onsite and offshore. And that got concluded.

It's a one quarter issue. I would say that pipeline is robust and we'll see continued hiring in the coming quarters.

Right. So what was the gross hiring? Did you say it's 6,000 this quarter? And what was it in the previous two quarters?

7,400 in this quarter and net hiring -- net adds in the last, previous two quarters were 5,000 each, for Q3 and Q2.

Okay, thank you.

Thank you. The next question is from Sandeep Shah from RBS Equities. Please go ahead.

Sir, if we look at the first quarter guidance and if we believe that India is a major cause in terms of giving a weak guidance versus earlier guidance, then it seems the extent of the impact on India on the guidance looks higher because it's 9.6%, India and Middle East to the total revenues of IT Service. Does that mean that India will decline by high teens Q-on-Q in the first quarter?

Sandeep, we don't break up guidance by geography, number one. But I'll give you a little bit of color on that. I mentioned that during my opening remarks the combination that you're seeing in quarter one of a weak guidance is really two things. One is that slower closures in quarter four in our global business as well as a lower growth than we expected sequentially in our IT Business, in the India IT business. It's a combination of both.

And just you also commented that for a FY'13 we are still looking to achieve the industry growth. And if you look at 11% to 14% NASSCOM guidance for the export revenues that means from the second quarter onwards our growth should be really high single digit to actually achieve near to the NASSCOM guidance growth rate.

Sandeep, you know we don't give annual guidance. You know that right? And fundamentally what we do is that when we look at our pipeline, as where we are sitting today, and we look at how the pipeline is going to [liquidate] itself over the next couple of quarters, we do believe that ultimately as far as we are concerned our endeavor is to make sure that we remain within the NASSCOM guideline or above if possible. That's really our endeavor. But it's not a guidance. I just want to clarify that.

And can you give some color in terms of the deal wins in this quarter versus last quarter?

So typically what we have done is that we have seen certain areas which I think I've clearly standing out in terms of large deals. So if I could very quickly break it up, it's broadly two, three areas where we are seeing wins coming in, which are typically (inaudible).

The first -- I'll just talk from, really from some service line perspective first and then I'll come down to industry. So the first big thing that we have been seeing is that application management and application support, there are some large deals out there. And we've had a fair share of wins in that area.

The second big area that we're seeing opportunity in is around technology infrastructure. With GIS now integrated between the India business and the global business I just see -- we just see big opportunities coming there.

The third is we're seeing a pickup in BPO, not as fast as we would have probably liked it to be, but we see BPO growth coming back in the next couple of quarters.

Overall, in terms of, if I look at the business, BSFI continues to win deals both in our existing customer base as well as new customers. Healthcare continues to win deals. As far as (technical difficulty).

That's broadly what we see in terms of demand coverage. Oil and gas again, [I hate to miss] that business. The oil and gas business continues to be robust as you can see from the results. And that, we think, is an area of true differentiator for us.

Fine. And you used to give some color in terms of number of deals and TCV? Is it possible to give this and how it compares to the last quarter?

I'll ask Jatin Dalal to answer that.

So Sandeep, can you repeat your question?

What I said is in the earlier quarters you used to give the number of deal wins and TCV of new deals wins on a Q-on-Q basis. So is it possible to give the same for the fourth quarter?

Yes, Sandeep, we can share that number with you. But from a trend standpoint we have had heavy deal closures except for the fact that some of the deals that we would have liked to close have not closed in Q4 and have got pushed out to Q1. But overall it is not a significant deceleration vis-a-vis earlier quarters.

In fact, just to add on, I think it's a marginal improvement in terms of deal closures in quarter one, in terms of (technical difficulty).

So Q4 versus Q3.

That's right. Q4 versus Q3.

And just last question in terms of margins. Given the currency as well as our hedges and the wage inflation, which may begin from June, what is the outlook on a full-year basis?

Sandeep, I'm sorry can you repeat that question again. I lost you for a second.

Hello.

Sandeep, I lost you for a second. Can you just repeat that question?

What I'm saying is given the currency and the hedges as well as the wage hikes which may kick in effective June, can you give some color in terms of margin movements going forward?

Jatin will answer.

Yes, so, Sandeep, our view on margin is no different than what it has been in recent times. We want to remain invested vis-a-vis the front end investment that we want to make in the domain and positioning. And we will also have an impact of the wage hike in the current quarter. So we will, we in the short term, will remain in the range. And towards the end of the year we will look at (background noise) in the markets.

Okay. Thanks, and all the best.

Thank you. The next question is from Vihang Naik from MF Global. Please go ahead.

Yes, hello. Yes, most of the questions are answered. Can you just provide us with some clarity about the way BFSI panned out in fourth quarter? Have you seen any kind of ramp downs or difficulty in startups and things like that?

I'll ask Mr. Soumitro Ghosh who runs our BFSI segment to answer.

So hi. This is Soumitro here. So you know the last three quarters we had fairly robust growth. Last quarter you see is really an impact of a couple of things. One is on the investment banking part, as T.K. has also mentioned in earlier quarters. That has been relatively challenged compared to retail banking and insurance. So some of our IB customers, we are seeing a slow down on their discretionary spend. That is one.

Second is on the insurance. There have been a couple of projects which have come to a closure which needs to be refreshed with new projects. And that is really fundamentally causing the growth or the lack of growth in this particular quarter.

But going forward we feel pretty positive about it, because even though, on the IB side there are challenges we are also seeing new opportunities which are really coming about. And the opportunities are really in terms of cost [recall] cost utilization as well as on the regulatory side.

Okay. And you are speaking about regulatory and compliance have you see any kind of changes in regulation that has perhaps adversely affected you in the last quarter?

Well, not really. Actually it can open up a whole lot of opportunities. Though I must admit that we had expected that the pace of that demand will be pretty quick, but it is really not so much because of the delay in some of [deals] stop getting implemented.

For example, Dodd-Frank, that is definitely -- it is not growing at the same pace as what one had thought about say two quarters back. But otherwise if I look at the overall regulation, especially in Europe whether you pick up Basel III or you pick up Solvency II or you pick up RDF as well as in Australia FOFA I see a fair bit of spend which is happening out there.

In US on the Dodd-Frank my guess is in two to three quarters time even that will pick up. One of the leading investment banks incidentally has chosen us -- this is in Europe -- as their Basel III implementation partner, which is pretty prestigious a project to be awarded.

Okay, excellent. And lastly on your top client actually, this time that has de-grown quite sharply. So what is the nature of this de-growth really? And would it be probably continue at this level with this -- from this client.

Again, Vihang, customers go up, customers go down. As far as we are concerned (inaudible) because we can't afford to ramp things up and down based on how their business is, at least to my investment perspective.

If you look at the current month, quarter -- between last quarter and this quarter, this year last quarter we have grown [54%] in terms of top line. So while we have de-grown last quarter, overall the growth for the last year has been very robust. To that extent we are not, how do I say, we are not worried about the fact that we are going to have a significant -- continue to have significant ramp down with that particular customer.

And, Vihang, jump in here. If you also look at the top 10 in the market, and if you see despite this sequential de-growth in the top customer we have grown (inaudible) 2.6% in top 10. So we are seeing significant benefits of the investments that we are making with our top customers in the market.

Definitely, thanks that was really helpful.

Thank you. The next question is from Nitin Mohta from Macquarie. Please go ahead.

Thanks for taking my question. Kurien, you earlier mentioned about deal closures. I just wanted to understand what has changed between fourth quarter and first quarter that is giving your clients confidence to close budgets and start spending? Is it more confidence in macro or something that's changing in the business of the client itself?

[Every time] the state of the macro environment has changed between 30% margins the first -- and (inaudible) the first three weeks of April. Nothing much has happened. I think what's happened is that we have seen some of the deals that we expected to close actually closing, primarily because some of the them had got delayed and pushed out into quarter two, and it's just a matter of (inaudible) delay. And, sorry quarter two calendar, quarter one of our year.

So I think that's what we are seeing. So in the first three weeks we clearly see closure, quite a few closures. Of course, like every closure cycle we will not win everything that we compete for, we will lose some, we will win some. But right now we feel pretty positive about the fact that the closures will happen. And [as we told you] we think that the other two months of the quarter will really determine where it will end. But today we feel pretty confidence that we will win our fair share.

Just so I understand this correctly most of it is just a timing issue of deals getting pushed out. Is that a fair understanding?

Most of it is timing issues; some of it is also driven by changes in business model, all kinds of small stuff. But it's not something that I am unduly worried about.

That's helpful. And if I can squeeze a second one in on verticals-wise performance, obviously we have seen very good growth from retail and transportation if I look at the last seven to eight quarters trend. Just your thoughts what's exactly is driving that growth in that vertical.

Very simple, if you look at our past performance it hasn't been very great. We've -- so for the last quarter we are just catching up. That's the good -- that -- I wish I could say there was some strategy behind that, but nothing today that we have done to make us grow. That's not necessarily true, but we have just kind of managed to catch up and grow in that segment.

Overall, I think if you look at it energy and utilities used to be a big area of focus for us, and we certainly can grow there. Retail US, decision making is a little slow and that's what we are seeing today, especially among the big box retailers. As far as online players are concerned we don't see too much of an issue.

But besides that, Srini, do you want to add any more color to it. Srini runs our CPG business, so he can talk to it.

I think certainly from a macro trend perspective retail Europe has been slower than US. Having said that it is particularly in the US what I think is customers are now investing in two specific areas, one is I would say multi-channels where they want to kind of give a consistent experience to their customers across brick and mortar and online channel.

And the second one I think picking up the growth is about business performance, which has actually been helped through analytics, where clients do a lot of (inaudible) analytics, merchandising and trying to look at what store layout one needs to look at for each of the products and so on and so forth.

I think these are the two areas that we have seen in the last couple of quarters where the customers are investing. And we seem to be there at the right place at the right time.

Thanks, great. And best of luck for 2013.

Thank you, Nitin.

Thank you. The next question is from Viju George from JP Morgan. Please go ahead.

Yes, hi, thanks for taking my question. T.K. when you refer to pushing out the deal closures is there any concentration of the deal closures by way of verticals to kind of work, or is this generally seen across spread out?

I think what we have seen is that it's been generally seen across. I think (background noise) driven by to some extent by ourselves, because what we did was that we went after a lot of proactive deals, and to some extent those got delayed.

Apart from that, if I look at vertical segments I would say banking was one where a lot of the deals did not kind of -- quite a few deals did not come through in quarter one, which we are now seeing opening up in quarter two.

And (multiple speakers).

Similarly -- sorry quarter four in quarter one, not quarter one in quarter two, I'm very sorry about that. And the other thing that we are seeing, the other area where we are really seeing opportunity is where -- there was some push out within manufacturing, again, with deal closures.

Okay, all right. The other thing I wanted to ask you is that when you talked about deal pipelines looking better, order pipeline -- I mean the fact that your order pipeline today is much better than one year back. Is that because your sales pattern is much better today, or is it because your conversion of the sales pattern to orders that is your win rates have improved. I mean where have you seen really the improvement if you will over the past year, 12 to 18 months or so?

I think we have seen it in four verticals. We have seen the pipeline going up very significantly, primarily because we are calling on a whole host of interesting customers as well as new customers. I don't know if you are aware of that. We have really broken up our sales team now into two. We have got a farming team which runs after -- which goes after all the core accounts that we believe are important for us for the future, as well as we have a separate hunting team that chases deal (inaudible).

So we are seeing traction, obviously more near-term traction with existing accounts, and more medium term in terms of hunting accounts. The key what we are seeing is that the overall pipeline has kind of [gone].

I think the other important thing that we are seeing is that the win ratios have changed. And also what we have seen is that the kind of deals that we're chasing, the quality of deals have also changed. A year ago if our pipeline was primarily around project-based business that has swung significantly now towards more managed services.

So I wish I could tell you -- normally what happens is all of us tend to get a little overawed by all the new technology like cloud, mobility and analytics. But the reality is that our pipeline today consists of bread and butter stuff. And we believe the bread and butter will still continue to be a large part of our business.

Sure, okay. And finally, when I look at your client metrics no doubt the $1m clients accounts moved from three to seven etc, but it seems to me that the count of the other revenue bucket is fairly static from a one year basis. What I am trying to say is that say $50m to $75m, $75m to $100m, clearly hasn't really moved up. I don't know whether you guys have seen that traction, I mean observed that metric. Above $50m, yes, you are getting an increase that's largely because of the push into the $100m plus category.

So it seems to me that you've put in a lot of energies to get your clients to the $100 million plus category, but you really haven't -- we haven't seen much action in terms of increasing number of clients or accounts from $50m to -- between $50m and $75m, $75m and $100m that's pretty stagnant Y-o-Y terms.

Let me get Jatin to better answer that question, and then I'll chip in immediately after Jatin.

Yes. So, if you see it from an overall full year to full year basis, although one can look at also equally on Q3 to Q4. But across the brackets you will see a movement. So it is -- like one particular bracket of a particular quarter, may have been -- not move at all from 18 to 19 or a similar number.

But if you see greater than $10m customers which we had 117 for 2011 is 121 now. And if you see also brackets upwards, which is more than $20m, more than $50m, more than $75m, more than $100m, all have shown a good progress. And none of the categories have remained stagnant.

So while in one bracket we might have moved by five number in other brackets we might have moved by three. And therefore between categories you might have some stagnancy. But if you see overall there you will see that more than $10m or even more than $5m there is an increase also.

And just to add to that, we also recognize that the change in that segment is not fast enough compared to market. So what we have done this year, is that earlier if you remember we had talked about [mega] account being there as part of our structure. And we had really focused on what we've -- a certain number of accounts that we believed we are core.

What we have done this time effective in March is that we have also expanded the number of customers under which we are going to put dedicated account teams, and dedicated solution teams (background noise). That number has gone up by roughly about 2.38. So we recognize the fact that we have a -- that we are not growing as much in that segment compared to the rest, but clearly it is our objective to go and -- make sure that we catch up in that area.

Sure, thank you and all the best.

Thank you.

Thank you. The next question is from Sandip Agarwal from Edelweiss. Please go ahead.

Yes, hi. One question to T.K. and then one question to Suresh Senapaty. So, T.K. if you can throw some more light on the BFSI vertical, how you are seeing the traction. I know you have answered a part of it, but I still want to know a little bit more. Is there a risk this year of the global spend in BFSI going down? And what is your take on the global spend?

And second question, if I can ask, where do you see the telecom equipment impacting the overall vertical this year? So, I know there is some softness in telecom and tele equipment makers. But do you think that it can be offset by the service providers?

So, I do want this to be right, and I hand over that question to Soumitro Ghosh, who runs our BSFI business and he can talk about that particular segment. But speaking a little bit of color, Soumitro talked about, I talked about in the beginning. If you look at retail banking today we see no decline as far as retail banking is concerned. We don't see any cause of concern there. I may be kind of being a little more (inaudible) than I probably should be, but sitting where we are we don't see it.

As far as investment banking is concerned, clearly (inaudible), our challenge both in terms of price as well as in terms of the kind of business that we get and the volume of it.

As far as insurance is concerned, our present relations is still starting to grow. To that extent we have underpenetrated that space, and we see enough headspace ahead of us to make sure that we can kind of grow in this segment.

As far as security is concerned that's been an area of growth last year for us, continues to be an area of growth this year even though the number clients (background noise). But Soumitro can add, and give a little more color on that one.

Yes, hi, thanks, T.K. So you know broadly if you look at the market, let's say if we look at it in two broad buckets one is insurance and the second is the banking and capital markets space. And within banking and capital markets we can further sub-divide it into retail banking and financial services, and the other in securities and capital markets.

So broadly retail banking is actually showing very strong trends. And we are seeing customers besides doing cost takeout initiatives they are spending a lot in terms of growth. So a lot of initiatives in terms of the platform replacement to launch new products, new services in new geographies new channels, etc., lot of stuff even on the regulatory side in -- on the retail banking side.

In insurance again a fair bit of spending is being done on the growth side. IB and [TKXN] because of the current market conditions and the trading volumes being fairly low, it is directly sensitive to their revenue growth and their profit.

So on the -- so as far as the (inaudible) budget is concerned we are seeing on the retail bank side the (inaudible) budgets to be in the positive area. On the insurance side again depending on which insurance company you are talking about, but by and large it is flat to positive. On the IB side, depending whether the IB customer is more from Europe versus US, it varies a little bit, but broadly it will be flat or negative.

So the opportunities which we are really coming about both in banking and insurance is from growth as well as cost takeout, while on the IB side the opportunity is really in terms of taking cost takeout, cost utilization, asset monetization and regulatory. There is not much being spent in terms of growth out there.

So what we have done is really come up with a strategy to address in each of these segments with very specific offerings to address the opportunities either on top-line growth or in terms of cost takeout for the customers.

Regulatory and analytics are two other pieces where irrespective which segment it is, people are spending in money because that is either going to help in taking cost takeout or improve performance, or help in better cost sales to increase top line. So broadly speaking these are the four buckets where we have come out with very pointed service offerings.

On the telecom equipment question I'll ask Ayan Mukerji, who runs our telecom business to kind of give you a little bit on it.

So, Sandip, simple answer to your question, based on our deal flow and the pipeline that we see I think we should be able to offset the uncertain nature of the equipment vendors, definitely.

Okay. One question to Kurien on the tax, if you can throw some light on the tax rate going forward, I know you don't give guidance, but some kind of sense on that. And also one question on the total number of fresher offers made for next year.

So the first part of the question I give it to Senapaty because he is the guy who manages taxes, at least for the (inaudible) so he can talk to it. And on the fresher hiring I can get Saurabh to give you some color but we don't generally break out fresher hiring.

Yes, as far as the tax rate is concerned as we go forward there would be some amount of [handling] of the tax rate, our expectation would be about 1% to 2% gain variation as we go forward.

On fresher hiring, maybe, Saurabh, you can answer.

So our fresher hiring the strategy continues to be plain that we want to inject a lot of talent into the organization, and groom the talent up. And we have visited the campuses that we consider important for us and we've made offers for those people already. And for the coming year, already the process is in place for us in terms of looking for the campuses selections for us.

So that's from my side.

Thank you. The next question is from Pankaj Kapoor from Standard Chartered. Please go ahead.

Yes, hi. So just want to get some sense in terms of what's happening in our BPO business where I think for the past few quarters we have seen a sequential de-growth. And given what you mentioned earlier about the ramp ups and ramp downs is it some kind of a re-setting which has been going on over there, and how do we see this panning out over the next two to three quarters?

So I will ask Manish Dugar who runs our BPO business (background noise).

Hi Pankaj, Manish. We spoke about this last quarter as well, and we have had some softness in our pipeline and order book since about three quarters back. We have seen both pipelines improving significantly, because of, one, a greater [recall] to the clients, better customer satisfaction of course. And higher recall with the 100 something odd advisor communities. And we have also seen significant increase in win ratios which has led to decent order books in the last three quarters.

Our belief is with that kind of an order book behind us it gives us a lot more confidence of what revenues we are expecting in the coming quarters. And to some extent the revenues in the last two, three quarters have been impacted by movement of our business in transition from onsite to offshore. And as you would have seen that has also resulted in a decrease in our headcount, because we have just about completed those transitions. And those having been already concluded with the order book that we have, I think we will be expecting a much better revenue growth in the coming quarters, at least from now onwards.

Okay. And so this headcount reduction that you explained was largely in BPO but if I look at our global IT Services available percent also, the delivery percent seems to have already moved quarter on quarter. So is there some kind of a headcount reduction on a [period end period] basis in IT Services as well.

Pankaj, Jatin here. There is no deduction on period to period end basis, it might be just that the speed at which the recruitment happened during the quarter and the attrition that happened during the quarter. We have maintained our utilization at the level that we are comfortable with. And we are confident of the hiring that we will do for next year as well -- in the next year.

And the (inaudible).

Okay. Thank you, and all the best, sir.

Thank you.

Thank you. Ladies and gentlemen due to time constraints we'll take one last question from Amar Mourya from Indianivesh Securities. Please go ahead.

Thanks for the opportunity. All my questions are answered. Only thing is Japan has shown a significant decline this quarter. I just wanted to have a comment on that.

So maybe what I'll do is that I'll ask -- maybe I'll answer the question myself because the person who handles Japan is not here in the room. Anyhow, yes, the total size of the Japan market for us is pretty much insignificant.

Yes, sir.

So while we have had a de-growth there, I wouldn't kind of -- I mean I personally won't lose too much sleep on that one.

Because, Amar, what happens is that we think the critical market is small, on large project execution up the growth. And when it gets completed it doesn't get replenished fully, so there is a little bit of lumpiness there.

Okay, thank you so much.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand over the floor back to the management for closing comments.

Yes, thank you, Marina. We thank all of you for participating in this call. Should you have any other questions that we could not answer due to time constraints, please feel free to get in touch with Arvind or me. We shall be happy to answer them for you. A transcript of this call will be archived on our website as soon as possible. Thanks a lot, and have a wonderful day ahead. Thank you.

Thank you, gentlemen of the management. Ladies and gentlemen, on behalf of Wipro that does conclude this conference call. Thank you for joining us, and you may now disconnect your lines.