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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 20-F (Mark One) o
    
    Registration statement pursuant to section 12(b) or (g) of the Securities Exchange Act of 1934
 x
    
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended March 31, 2004
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from _________________ to _______________________
 Commission File Number: 001-16139 WIPRO LIMITED  Not Applicable
(Translation of Registrants name into English)  Karnataka, India
(Jurisdiction of incorporation or organization)  Doddakannelli
Sarjapur Road
Bangalore, Karnataka 560035, India
+91-80-2844-0011
(Address of principal executive offices)  Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of Each Class
    
    Name of Each Exchange on Which RegisteredNone
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: American Depositary Shares,
each represented by one Equity Share, par value Rs. 2 per share.   Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: Not Applicable   Indicate the number of each of the issuers classes of capital or common stock as of the class of the period
covered by the annual report. 232,759,152 Equity Shares Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       x   
  No     o Indicate by check mark which financial statement item the registrant has elected to follow. Item 17 
 o     Item 18  
  x




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TABLE OF CONTENTS  PART IItem 1. Identity of Directors, Senior Management and AdvisersItem 2. Offer Statistics and Expected TimetableItem 3. Key InformationItem 4. Information on the CompanyItem 5. Operating and Financial Review and ProspectsItem 6. Directors, Senior Management and EmployeesItem 7. Major Shareholders And Related Party TransactionsItem 8. Financial InformationItem 9. The Offer and ListingItem 10. Additional InformationItem 11. Quantitative and Qualitative Disclosures About Market RiskItem 12. Description of Securities Other Than Equity SecuritiesPART IIItem 13. Defaults, Dividend Arrearages and DelinquenciesItem 14. Material Modifications to the Rights of Security Holders and Use of ProceedsItem 15. Controls and ProceduresItem 16 A. Audit Committee Financial ExpertItem 16 B. Code of EthicsItem 16 C. Fees paid to Independent AccountantsItem 17. Financial StatementsPart IIIItem 18. Financial StatementsREPORT OF AUDIT COMMITTEEREPORT OF MANAGEMENTINDEPENDENT AUDITORS REPORTCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOMECONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSItem 19. ExhibitsSignaturesEXHIBIT INDEXEXHIBIT 10.4EXHIBIT 10.5EXHIBIT 31EXHIBIT 32    Table of Contents  Currency of Presentation and Certain Defined Terms In this Annual Report on Form 20-F, references to U.S., or United States
are to the United States of America, its territories and its possessions.
References to India are to the Republic of India. References to U.K. are to
United Kingdom. Reference to $ or dollars or U.S. dollars are to the
legal currency of the United States, references to £ or Pound Sterling are
to the legal currency of United Kingdom and references to Rs. or Rupees or
Indian rupees are to the legal currency of India. All amounts are in Rs. or
in U.S. dollars unless stated otherwise. Our financial statements are presented
in Indian rupees and translated into U.S. dollars and are prepared in
accordance with United States Generally Accepted Accounting Principles (U.S.
GAAP). References to Indian GAAP are to Indian Generally Accepted Accounting
Principles. References to a particular fiscal year are to our fiscal year
ended March 31 of such year. All references to we, us, our, Wipro or the Company shall mean Wipro
Limited. Wipro is a registered trademark of Wipro Limited in the United
States and India. All other trademarks or tradenames used in this annual report
on Form 20-F are the property of the respective owners. Except as otherwise stated in this annual report on Form 20-F, all translations
from Indian rupees to U.S. dollars are based on the noon buying rate in the
City of New York on March 31, 2004, for cable transfers in Indian rupees as
certified for customs purposes by the Federal Reserve Bank of New York which
was Rs. 43.40 per $1.00. No representation is made that the Indian rupee
amounts have been, could have been or could be converted into United States
dollars at such a rate or any other rate. Any discrepancies in any table
between totals and sums of the amounts listed are due to rounding. Information
contained in our website, www.wipro.com, is not part of this Annual Report. Forward-Looking Statements May Prove Inaccurate IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE SUBJECT
TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED
IN THE SECTION ENTITLED OPERATING AND FINANCIAL REVIEW AND PROSPECTS AND
ELSEWHERE IN THIS REPORT. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENTS ANALYSIS ONLY AS
OF THE DATE HEREOF. IN ADDITION, READERS SHOULD CAREFULLY REVIEW THE OTHER
INFORMATION IN THIS ANNUAL REPORT AND IN THE COMPANYS PERIODIC REPORTS AND
OTHER DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) FROM
TIME TO TIME.




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PART I 
 Item 1. Identity of Directors, Senior Management and Advisers Not applicable. 
 Item 2. Offer Statistics and Expected Timetable Not applicable.




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Item 3. Key Information Summary of Selected Consolidated Financial Data The selected consolidated financial data should be read in conjunction
with the consolidated financial statements, the related notes and operating and
financial review and prospects which are included elsewhere in this Annual
Report. The selected consolidated statements of income data for the five years
ended March 31, 2004 and selected consolidated balance sheet data as of March
31, 2000, 2001, 2002, 2003 and 2004 have been derived from our audited
consolidated financial statements and related notes, which have been prepared
and presented in accordance with U.S. GAAP. (In millions, except share data )Year ended March 31,2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2004Conveniencetranslation intoUS $(Unaudited)Consolidated statements of
Income data:Revenues:Global IT Services and ProductsServices
    
    Rs.
    10,206
    
    
    Rs.
    17,816
    
    
    Rs.
    21,457
    
    
    Rs.
    30,118
    
    
    Rs.
    43,343
    
    
    $
    999Products
    
    
    
    
    
    
    
    
    
    
    955
    
    
    
    149
    
    
    
    122
    
    
    
    3India and AsiaPac IT Services
and ProductsServices
    
    
    1,513
    
    
    
    1,873
    
    
    
    1,914
    
    
    
    2,240
    
    
    
    3,109
    
    
    
    72Products
    
    
    6,577
    
    
    
    6,771
    
    
    
    5,037
    
    
    
    5,801
    
    
    
    6,305
    
    
    
    145Consumer Care and Lighting
    
    
    3,149
    
    
    
    3,144
    
    
    
    2,939
    
    
    
    2,942
    
    
    
    3,567
    
    
    
    82Others
    
    
    1,383
    
    
    
    1,039
    
    
    
    1,171
    
    
    
    1,599
    
    
    
    1,987
    
    
    
    45Total
    
    
    22,828
    
    
    
    30,643
    
    
    
    33,473
    
    
    
    42,849
    
    
    
    58,433
    
    
    
    1,346Cost of revenues:Global IT Services and ProductsServices
    
    
    6,220
    
    
    
    9,205
    
    
    
    11,419
    
    
    
    17,635
    
    
    
    27,853
    
    
    
    642Products
    
    
    
    
    
    
    
    
    
    
    891
    
    
    
    103
    
    
    
    78
    
    
    
    2India and AsiaPac IT Services
and ProductsServices
    
    
    1,052
    
    
    
    1,192
    
    
    
    1,160
    
    
    
    1,187
    
    
    
    1,661
    
    
    
    38Products
    
    
    5,640
    
    
    
    5,459
    
    
    
    4,268
    
    
    
    5,100
    
    
    
    5,643
    
    
    
    130Consumer Care and Lighting
    
    
    2,251
    
    
    
    2,195
    
    
    
    1,999
    
    
    
    2,008
    
    
    
    2,355
    
    
    
    54Others
    
    
    1,070
    
    
    
    866
    
    
    
    924
    
    
    
    1,143
    
    
    
    1,410
    
    
    
    33Total
    
    
    16,233
    
    
    
    18,917
    
    
    
    20,661
    
    
    
    27,176
    
    
    
    39,000
    
    
    
    899Gross Profit
    
    
    6,595
    
    
    
    11,726
    
    
    
    12,812
    
    
    
    15,673
    
    
    
    19,433
    
    
    
    448Operating expenses:Selling, general and
administrative expenses
    
    
    (3,101
    )
    
    
    (4,596
    )
    
    
    (4,359
    )
    
    
    (6,193
    )
    
    
    (8,450
    )
    
    
    (195
    )Amortization of intangible
assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (166
    )
    
    
    (308
    )
    
    
    (7
    )Other operating
income/(expenses)
    
    
    124
    
    
    
    424
    
    
    
    (11
    )
    
    
    172
    
    
    
    226
    
    
    
    5Operating income
    
    
    3,618
    
    
    
    7,554
    
    
    
    8,442
    
    
    
    9,486
    
    
    
    10,901
    
    
    
    251Gain/(loss) on sale of stock by
affiliates, including direct
issue of stock by affiliate
    
    
    412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (206
    )
    
    
    (5
    )Other income/(expense), (net)
    
    
    (284
    )
    
    
    87
    
    
    
    838
    
    
    
    718
    
    
    
    868
    
    
    
    20Equity in earnings of affiliates
    
    
    113
    
    
    
    (53
    )
    
    
    147
    
    
    
    (355
    )
    
    
    96
    
    
    
    2Income before taxes and
minority interest
    
    
    3,859
    
    
    
    7,588
    
    
    
    9,427
    
    
    
    9,849
    
    
    
    11,659
    
    
    
    268Income taxes
    
    
    (525
    )
    
    
    (1,150
    )
    
    
    (1,016
    )
    
    
    (1,342
    )
    
    
    (1,611
    )
    
    
    (37
    )Minority interest (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    (56
    )
    
    
    (1
    )Income from continuing
operations
    
    Rs.
    3,334
    
    
    Rs.
    6,438
    
    
    Rs.
    8,411
    
    
    Rs.
    8,477
    
    
    Rs.
    9,992
    
    
    $
    230Earnings per share from
continuing operations:Basic
    
    
    14.63
    
    
    
    28.07
    
    
    
    36.39
    
    
    
    36.66
    
    
    
    43.20
    
    
    
    1.00Diluted
    
    
    14.58
    
    
    
    27.84
    
    
    
    36.33
    
    
    
    36.60
    
    
    
    43.16
    
    
    
    0.99Cash dividend per equity share
    
    
    0.30
    
    
    
    0.30
    
    
    
    0.50
    
    
    
    1.00
    
    
    
    1.00
    
    
    
    0.02Additional data:Revenue by SegmentGlobal IT Services and
Products (1)
    
    Rs.
    10,295
    
    
    Rs.
    17,942
    
    
    Rs.
    22,668
    
    
    Rs.
    30,593
    
    
    Rs.
    43,775
    
    
    $
    1,009India and AsiaPac IT Services
and Products
    
    
    8,076
    
    
    
    8,598
    
    
    
    6,950
    
    
    
    8,046
    
    
    
    9,445
    
    
    
    217Consumer Care and Lighting
    
    
    3,149
    
    
    
    3,144
    
    
    
    2,939
    
    
    
    2,942
    
    
    
    3,567
    
    
    
    82Others
    
    
    1,308
    
    
    
    959
    
    
    
    916
    
    
    
    1,268
    
    
    
    1,646
    
    
    
    38




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Year ended March 31,2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2004Conveniencetranslation intoUS $(Unaudited)Total
    
    Rs.
    22,828
    
    
    Rs.
    30,643
    
    
    Rs.
    33,473
    
    
    Rs.
    42,849
    
    
    Rs.
    58,433
    
    
    $
    1,346Operating Income by Segment (3)Global IT Services and
Products
    
    Rs.
    2,745
    
    
    Rs.
    6,038
    
    
    Rs.
    7,609
    
    
    Rs.
    8,281
    
    
    Rs.
    9,300
    
    
    $
    214India and AsiaPac IT Services
and Products
    
    
    460
    
    
    
    825
    
    
    
    578
    
    
    
    539
    
    
    
    761
    
    
    
    18Consumer Care and Lighting
    
    
    442
    
    
    
    450
    
    
    
    404
    
    
    
    422
    
    
    
    546
    
    
    
    12Others
    
    
    92
    
    
    
    48
    
    
    
    41
    
    
    
    256
    
    
    
    308
    
    
    
    7Reconciling items
    
    
    (121
    )
    
    
    193
    
    
    
    (190
    )
    
    
    (12
    )
    
    
    (14
    )
    
    
    Total
    
    Rs.
    3,618
    
    
    Rs.
    7,554
    
    
    Rs.
    8,442
    
    
    Rs.
    9,486
    
    
    Rs.
    10,901
    
    
    $
    251Transitional disclosures
pertaining to adoption of SFAS
No. 142, Goodwill and Other
Intangible Assets.Income from continuing
operations, as reported
    
    Rs.
    3,334
    
    
    Rs.
    6,438
    
    
    Rs.
    8,411Add: Amortization of goodwill
    
    
    
    
    
    
    45
    
    
    
    175Income from continuing
operations, adjusted
    
    
    3,334
    
    
    
    6,483
    
    
    
    8,586Earnings per share: Basic
Continuing operations, as
reported
    
    
    14.63
    
    
    
    28.07
    
    
    
    36.39Add: Amortization of goodwill
    
    
    
    
    
    
    0.20
    
    
    
    0.76Continuing operations, adjusted
    
    
    14.63
    
    
    
    28.27
    
    
    
    37.15Earnings per share: Diluted
Continuing operations, as
reported
    
    
    14.58
    
    
    
    27.84
    
    
    
    36.33Add: Amortization of goodwill
    
    
    
    
    
    
    0.20
    
    
    
    0.76Continuing operations, adjusted
    
    
    14.58
    
    
    
    28.04
    
    
    
    37.09Consolidated Balance Sheet Data:Cash and Cash equivalents
    
    Rs.
    784
    
    
    Rs.
    5,623
    
    
    Rs.
    3,251
    
    
    Rs.
    6,283
    
    
    Rs.
    3,297
    
    
    $
    76Investments in liquid and
short-term mutual funds
    
    
    
    
    
    
    
    
    
    
    4,126
    
    
    
    7,813
    
    
    
    18,479
    
    
    
    426Working Capital
    
    
    1,925
    
    
    
    11,216
    
    
    
    18,495
    
    
    
    21,473
    
    
    
    30,649
    
    
    
    706Total assets
    
    
    12,678
    
    
    
    26,187
    
    
    
    33,639
    
    
    
    42,781
    
    
    
    57,738
    
    
    
    1,330Total debt, including preferred
stock (2)
    
    
    1,804
    
    
    
    1,768
    
    
    
    291
    
    
    
    537
    
    
    
    969
    
    
    
    22Total stockholders equity
    
    
    6,687
    
    
    
    19,081
    
    
    
    27,457
    
    
    
    35,431
    
    
    
    46,364
    
    
    
    1,068
 Notes :  1.
    
    Revenues of Global IT Services and Products for the years ended March
31, 2002, 2003 and 2004 include revenue from sales of products of Rs.
955 million, Rs. 149 million and Rs.122 million respectively.2.
    
    Total debt for the year ended March 31, 2000 includes preferred stock
of Rs. 250 million.3.
    
    In the operating income by segment, amortization of goodwill is
included in reconciling items.4.
    
    Minority interest represents the share of minority in the profits of
Wipro Spectramind and Wipro Healthcare IT. The minority interest in
Wipro Healthcare IT was acquired in the year ended March 31, 2003.5.
    
    We have reclassified certain costs for the years ended March 31,
2000, 2001 and 2002 between cost of revenues and operating expenses to
conform to the current presentation. These reclassifications reduced the
previously reported gross profits by Rs 151 million, Rs. 190 million and
Rs. 224 million respectively but did not have any impact on the reported
net income.




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Exchange Rates Fluctuations in the exchange rate between the Indian rupee and the U.S.
dollar will affect the U.S. dollar equivalent of the Indian rupee price of our
equity shares on the Indian stock exchanges and, as a result, will likely
affect the market price of our American Depositary Shares, or ADSs, listed on
the New York Stock Exchange, and vice versa. Such fluctuations will also
affect the U.S. dollar conversion by our depository for the ADSs, Morgan
Guaranty Trust Company of New York, or Depositary, of any cash dividends paid
in Indian rupees on our equity shares represented by the ADSs. The following table sets forth, for the fiscal years indicated,
information concerning the number of Indian rupees for which one U.S. dollar
could be exchanged based on the average of the noon buying rate in the City of
New York on the last business day of each month during the period for cable
transfers in Indian rupees as certified for customs purposes by the Federal
Reserve Bank of New York. The column titled Average in the table below is
the average of the daily noon buying rate on the last business day of each
month during the year. Fiscal Year Ended March 31,
    
    Period End
    
    Average
    
    High
    
    Low2000
    
    Rs.
    43.65
    
    
    Rs.
    43.46
    
    
    Rs.
    43.75
    
    
    Rs.
    42.502001
    
    
    46.85
    
    
    
    45.88
    
    
    
    47.47
    
    
    
    43.632002
    
    
    48.83
    
    
    
    47.81
    
    
    
    48.91
    
    
    
    46.582003
    
    
    47.53
    
    
    
    48.36
    
    
    
    49.07
    
    
    
    47.532004
    
    
    43.40
    
    
    
    45.78
    
    
    
    47.46
    
    
    
    43.40
 On May 5, 2004, the noon buying rate in the city of New York was Rs. 44.55 The following table sets forth the high and low exchange rates for the
previous six months and are based on the noon buying rate in the City of New
York on each business day during the period for cable transfers in Indian
rupees as certified for customs purposes by the Federal Reserve Bank of New
York: Month
    
    High
    
    LowNovember 2003
    
    Rs.
    45.95
    
    
    Rs.
    45.30December 2003
    
    
    45.77
    
    
    
    45.50January 2004
    
    
    45.68
    
    
    
    45.29February 2004
    
    
    45.32
    
    
    
    45.22March 2004
    
    
    45.32
    
    
    
    43.40April 2004
    
    
    44.52
    
    
    
    43.40
 Capitalization and Indebtedness Not applicable. Reasons for the Offer and Use of Proceeds Not applicable.




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RISK FACTORS Risks Related to our Company Our revenue and expenses are difficult to predict because they can
fluctuate significantly given the nature of the markets in which we operate.
This increases the likelihood that our results could fall below the expectation
of market analysts, which could cause the price of our equity shares and ADSs
to decline. Our revenue historically has fluctuated and may fluctuate in the future
depending on a number of factors, including:  
    
    the size,complexity, timing and profitability of significant projects or product orders;
    
    changes in our pricing policies or those of our competitors;
    
    the proportion of services we perform at our clients sites rather than at our offshore facilities;
    
    seasonal changes that affect the mix of services we provide to
our clients or the relative proportion of services and product
revenue;
    
    seasonal changes that affect purchasing patterns among our
consumers of desktops, notebooks, servers, communication devices,
consumer care and other products;
    
    unanticipated cancellations, contract terminations or deferral
of projects;
    
    the duration of tax holidays or exemptions and the availability
of other Government of India incentives;
    
    the effect of seasonal hiring patterns and the time we require
to train and productively utilize our new employees; and
    
    currency exchange fluctuations. Approximately 58% of our total operating expenses in the services
component of our Global IT Services and Products business segment, particularly
personnel and facilities, are fixed in advance of any particular quarter. As a
result, unanticipated variations in the number and timing of our projects or
employee utilization rates may cause significant variations in operating
results in any particular quarter. We believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. Thus, it is
possible that in the future some of our quarterly results of operations may be
below the expectations of public market analysts and investors, and the market
price of our equity shares and ADSs could decline. Our net income increased 23% in year ended March 31, 2004, as compared to
the year ended March 31, 2003. We have not been able to sustain our historical
levels of profitability on account of marginal decline in demand, pricing
pressures for our services and increased wage pressures in India. As compared
to the year ended March 31, 2003, during the year ended March 31, 2004, we
incurred substantially higher selling and marketing expenses to increase brand
awareness among target clients and promote client loyalty and repeat business
among existing clients, and we expect to continue to incur substantially higher
selling and marketing expenses in the future, which could result in declining
profitability. While our global delivery model allows us to manage costs
efficiently, as the proportion of our services delivered at client sites
increases we may not be able to keep our operating costs as low in the future. If we do not continue to improve our administrative, operational and
financial personnel and systems to manage our growth, the value of our
shareholders investment may be harmed. We have experienced significant growth in our Global IT Services and
Products business. We expect our growth to place significant demands on our
management and other resources. This will require us to continue to develop
and improve our operational, financial and other internal controls, both in
India and elsewhere. In particular, our continued growth will increase the
challenges involved in:  
    
    recruiting and retaining sufficiently skilled technical, marketing and management personnel;




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
    
    adhering to our high quality standards;
    
    maintaining high levels of client satisfaction;
    
    developing and improving our internal administrative
infrastructure, particularly our financial, operational,
communications and other internal systems; and
    
    preserving our culture, values and entrepreneurial
environment. If we are unable to manage our growth effectively, the quality of our
services and products may decline, and our ability to attract clients and
skilled personnel may be negatively affected. These factors in turn could
negatively affect the growth of our Global IT Services and Products business
and harm the value of our shareholders investment. Intense competition in the market for IT services could affect our cost
advantages, and, as a result, decrease our revenue. The market for IT services is highly competitive. Our competitors include
software companies, IT companies, systems consulting and integration firms,
other technology companies and client in-house information services
departments. Many of our competitors command significantly greater financial,
technical and marketing resources and generate greater revenue than we do. We
cannot be reasonably certain that we will be able to compete successfully
against such competitors or that we will not lose our key employees or clients
to such competitors. Additionally, we believe that our ability to compete also
depends in part on factors outside our control, such as our ability to attract,
motivate and retain skilled employees, the price at which our competitors offer
comparable services, and the extent of our competitors responsiveness to their
clients needs. Continued appreciation of Indian Rupee against major currencies of the
world could negatively impact our revenue and operating results. Approximately 75% of our revenues are earned in major currencies of the
world while a significant portion of our costs is in Indian rupees. The
exchange rate between the rupee and major currencies of the world has
fluctuated significantly in recent years and may continue to fluctuate in the
future. Appreciation of the rupee against the major currencies of the world can
adversely affect our revenues and competitive positioning, and can adversely
impact our gross margins. We enter into forward exchange contracts to minimize
the impact of currency fluctuations on our revenues. However, volatility in
exchange rate movement and/or sustained rupee appreciation will negatively
impact our revenue and operating results. The economic downturn may negatively impact our revenue and operating
results. Spending on IT products and services in most parts of the world has
significantly decreased due to a challenging global economic environment. Some
of our clients have cancelled, reduced or deferred expenditures for IT
services. Pricing pressures from our clients have also negatively impacted our
operating results. If the current economic downturn continues, our utilization
and billing rates for our IT professionals could be adversely affected, which
may result in lower gross and operating profits. Recently our clients have
started increasing the spending on IT products and services and the pricing
pressures from our clients are showing a marginal decline. The rapid economic slowdown, terrorist attacks in the United States, and
other acts of violence or war could delay or reduce the number of new purchase
orders we receive and disrupt our operations in the United States, thereby
negatively affecting our financial results and prospects. Approximately 71% of our Global IT Services and Products revenue are from
the United States. During an economic slowdown our clients may delay or reduce
their IT spending significantly, which may in turn lower the demand for our
services and affect our financial results. Further, terrorist attacks in the
United States could cause clients in the U.S. to delay their decisions on IT
spending, which could affect our financial results. Although we continue to
believe that we have a strong competitive position in the United States, we
have increased our efforts to geographically diversify our clients and revenue. We may face difficulties in providing end-to-end business solutions for
our clients that could cause clients to discontinue their work with us, which
in turn could harm our business. We have been expanding the nature and scope of our engagements and have
added new service offerings, such as IT consulting, business process
management, systems integration and IT outsourcing. The success of these
service offerings is dependent, in part, upon continued demand for such
services by our existing and new clients and our ability




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to meet this demand in a cost-competitive and effective manner. In
addition, our ability to effectively offer a wider breadth of end-to-end
business solutions depends on our ability to attract existing or new clients to
these service offerings. To obtain engagements for such end-to-end solutions,
we also are more likely to compete with large, well-established international
consulting firms, resulting in increased competition and marketing costs.
Accordingly, we cannot be certain that our new service offerings will
effectively meet client needs or that we will be able to attract existing and
new clients to these service offerings. The increased breadth of our service offerings may result in larger and
more complex projects with our clients. This will require us to establish
closer relationships with our clients and a thorough understanding of their
operations. Our ability to establish such relationships will depend on a number
of factors including the proficiency of our IT professionals and our management
personnel. Larger projects may involve multiple engagements or stages, and there is a
risk that a client may choose not to retain us for additional stages or may
cancel or delay additional planned engagements. These terminations,
cancellations or delays may result from the business or financial condition of
our clients or the economy generally, as opposed to factors related to the
quality of our services. Such cancellations or delays make it difficult to plan
for project resource requirements, and inaccuracies in such resource planning
may have a negative impact on our profitability. Our success depends in large part upon our management team and other
highly skilled professionals. If we fail to retain and attract these
personnel, our business may be unable to grow and our revenue could decline,
which may decrease the value of our shareholders investment. We are highly dependent on the senior members of our management team,
including the continued efforts of our Chairman and Managing Director. Our
ability to execute project engagements and to obtain new clients depends in
large part on our ability to attract, train, motivate and retain highly skilled
professionals, especially project managers, software engineers and other senior
technical personnel. If we cannot hire and retain additional qualified
personnel, our ability to bid on and obtain new projects, and to continue to
expand our business will be impaired and our revenue could decline. We believe
that there is significant competition for professionals with the skills
necessary to perform the services we offer. We may not be able to hire and
retain enough skilled and experienced employees to replace those who leave.
Additionally, we may not be able to re-deploy and retrain our employees to keep
pace with continuing changes in technology, evolving standards and changing
client preferences. We are experiencing high employee attrition rates, in line
with industry, in our BPO services business. Continued employee attrition rates
in this business may adversely affect our revenues and profitability. Our Global IT Services and Products service revenue depend to a large
extent on a small number of clients, and our revenue could decline if we lose a
major client. We currently derive, and believe we will continue to derive, a significant
portion of our Global IT Services and Products service revenue from a limited
number of corporate clients. The loss of a major client or a significant
reduction in the service performed for a major client could result in a
reduction of our revenue. Transco, our largest client for the year ended March
31, 2002, March 31, 2003 and March 31, 2004, accounted for 7%, 8% and 5% of our
Global IT Services and Products revenue, respectively. For the same periods,
our ten largest clients accounted for 41%, 36% and 33% of our Global IT
Services and Products revenue. The volume of work we perform for specific
clients may vary from year to year, particularly since we typically are not the
only outside service provider for our clients. Thus, a major client in one
year may not provide the same level of revenue in a subsequent year. There are a number of factors, other than our performance, that could
cause the loss of a client and that may not be predictable. In certain cases,
clients have reduced their spending on IT services due to challenging economic
environment and consequently have reduced the volume of business with us. If we
were to lose one of our major clients or have significantly lower volume of
business with them, our revenue and profitability could be reduced. We
continually strive to reduce our dependence on revenue from services rendered
to any one client. Restrictions on immigration may affect our ability to compete for and
provide services to clients in the United States, which could hamper our growth
and cause our revenue to decline. If U.S. immigration laws change and make it more difficult for us to
obtain H-1B and L-1 visas for our employees, our ability to compete for and
provide services to clients in the United States could be impaired. In response
to recent terrorist attacks in the United States, the U.S. Citizenship and
Immigration Services has increased the level of scrutiny in granting and
decreased the number of its grants. This restriction and any other changes in
turn could hamper our growth and cause our revenue to decline. Our employees
who work on site at client facilities or at our facilities in the United States
on temporary and extended assignments typically must obtain visas. As of March
31, 2004, the majority of our personnel in the United States held H-1B visas
(1,130 persons) or L-1 visas (1,491 persons). An H-1B visa is a temporary work
visa, which allows the employee to remain in the U.S. while he or she remains
an employee of




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the sponsoring firm, and the L-1 visa is an intra-company transfer visa,
which only allows the employee to remain in the United States temporarily.
Although there is no limit to new L-1 petitions, there is a limit to the
aggregate number of new H-1B petitions that the U.S. Citizenship and
Immigration Services may approve in any government fiscal year. We may not be
able to obtain the H-1B visas necessary to bring critical Indian professionals
to the United States on an extended basis during years in which this limit is
reached. This limit was reached in March 2000 for the U.S. Governments fiscal
year ended December 31, 2000. The U.S. Citizenship and Immigration Service has
recently limited the number of H-1B visas that may be granted in fiscal year
2004 to 65,000 from 195,000 in each of the prior three years. As of March 2003,
according to Indias National Association of Software and Service Industries
(NASSCOM), the number of H-1 visas issued to Indian IT professionals dropped
from 77,000 in 2001 to 33,000 in 2002 while the 2003 level is expected to be
around 30,000. While we anticipated that this limit would be reached before the
end of the U.S. Governments fiscal year, and made efforts to plan accordingly,
we cannot assure you that we will continue to be able to obtain any or a
sufficient number of H-1B visas on the same time schedule as we have previously
obtained, or at all. We focus on high-growth industries, such as networking and communications.
Any decrease in demand for technology in such industries may significantly
decrease the demand for our services, which may impair our growth and cause our
revenue to decline. Approximately 32% of our Global IT Services and Products business is
derived from clients in high growth industries who use our IT services for
networking and communications equipment. The rapid economic slowdown in the
U.S. may adversely affect the growth prospects of these companies. Any
significant decrease in the growth of these industries will decrease the demand
for our services and could reduce our revenue. Our failure to complete fixed-price, fixed-timeframe contracts on budget
and on time may negatively affect our profitability, which could decrease the
value of our shareholders investment. We offer a portion of our services on a fixed-price, fixed-timeframe
basis, rather than on a time-and-materials basis. Although we use specified
software engineering processes and our past project experience to reduce the
risks associated with estimating, planning and performing fixed-price,
fixed-timeframe projects, we bear the risk of cost overruns, completion delays
and wage inflation in connection with these projects. If we fail to accurately
estimate the resources and time required for a project, future rates of wage
inflation and currency exchange rates, or if we fail to complete our
contractual obligations within the contracted timeframe, our profitability may
suffer.




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Disruptions in telecommunications could harm our service model, which
could result in a reduction of our revenue. A significant element of our business strategy is to continue to leverage
and expand our software development centers in Bangalore, Chennai, Hyderabad
and Pune, India, as well as overseas. We believe that the use of a
strategically located network of software development centers will provide us
with cost advantages, the ability to attract highly skilled personnel in
various regions of the country and the world, the ability to service clients on
a regional and global basis and the ability to provide services to our clients
24 hours a day, seven days a week. Part of our service model is to maintain
active voice and data communications between our main offices in Bangalore, our
clients offices, and our other software development and support facilities.
Although we maintain redundancy facilities and satellite communications links,
any significant loss in our ability to transmit voice and data through
satellite and telephone communications could result in a disruption in
business, thereby hindering our performance or our ability to complete client
projects on time. This, in turn, could lead to a reduction of our revenue. Our international operations subject us to risks inherent in doing
business on an international level that could harm our operating results. Currently, we have software development facilities in six countries around
the world. The majority of our software development facilities are located in
India. We intend to establish new development facilities in Southeast Asia and
Europe. We have not yet made substantial contractual commitments to establish
any new facilities and we cannot assure you that we will not significantly
alter or reduce our proposed expansion plans. Because of our limited
experience with facilities outside of India, we are subject to additional risks
related to our international expansion strategy, including risks related to
complying with a wide variety of national and local laws, restrictions on the
import and export of certain technologies and multiple and possibly overlapping
tax structures. In addition, we may face competition in other countries from
companies that may have more experience with operations in such countries or
with international operations generally. We may also face difficulties
integrating new facilities in different countries into our existing operations,
as well as integrating employees that we hire in different countries into our
existing corporate culture. In addition, our international expansion strategy
in Southeast Asia, particularly in China, may face difficulty resulting from
the outbreak of Severe Acute Respiratory Syndrome or SARS or other contagious
diseases. Our international expansion plans may not be successful and we may
not be able to compete effectively in other countries. Our business will suffer if we fail to anticipate and develop new services
and enhance existing services in order to keep pace with rapid changes in
technology and the industries on which we focus. The IT services market is characterized by rapid technological change,
evolving industry standards, changing client preferences and new product and
service introductions. Our future success will depend on our ability to
anticipate these advances and develop new product and service offerings to meet
client needs. We may not be successful in anticipating or responding to these
advances in a timely basis, or, if we do respond, the services or technologies
we develop may not be successful in the marketplace. Further, products,
services or technologies that are developed by our competitors may render our
services non-competitive or obsolete. Most of our client contracts can typically be terminated without cause and
with little or no notice or penalty, which could negatively impact our revenue
and profitability. Our clients typically retain us on a non-exclusive, project-by-project
basis. Most of our client contracts, including those that are on a fixed-price,
fixed-timeframe basis, can be terminated with or without cause, with between
zero and ninety days notice and without termination-related penalties.
Additionally, most of our contracts with clients are typically limited to
discrete projects without any commitment to a specific volume of business or
future work. Our business is dependent on the decisions and actions of our
clients, and there are a number of factors relating to our clients that are
outside our control that might result in the termination of a project or the
loss of a client, including:  
    
    financial difficulties for a client;
    
    a change in strategic priorities, resulting in a reduced level of IT spending;
    
    a demand for price reductions; and
    
    a change in outsourcing strategy by moving more work to client in-house IT departments or to our competitors.




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We may engage in future acquisitions, investments, strategic partnerships
or other ventures that may harm our performance, dilute our shareholders
ownership and cause us to incur debt or assume contingent liabilities. We have acquired and in the future may acquire or make investments in
complementary businesses, technologies, services or products, or enter into
strategic partnerships with parties who can provide access to those assets. We
may not identify suitable acquisition, investment or strategic partnership
candidates, or if we do identify suitable candidates, we may not complete those
transactions on terms commercially acceptable to us or at all. We could have
difficulty in assimilating the personnel, operations, technology and software
of the acquired company. In addition, the key personnel of the acquired
company may decide not to work for us. If we make other types of acquisitions,
we could have difficulty in integrating the acquired products, services or
technologies into our operations. These difficulties could disrupt our ongoing
business, distract our management and employees and increase our expenses. Our revenues could be significantly affected if the governments, in
geographies we operate in, restrict companies from outsourcing work to foreign
corporations In the U.S., there is a nascent economic recovery, however the
unemployment levels have not declined significantly from the pre- economic
recovery levels. There has been concern among the legislators about the impact
of outsourcing on unemployment levels in the U.S. Laws have been proposed to
prohibit federal and state governments from outsourcing IT and IT enabled
services to foreign corporations. Legislators have also proposed to introduce
economic deterrents for U.S. companies outsourcing work to foreign
corporations. Independent research agencies have conducted research and concluded that
outsourcing benefits the U.S. economy. Several U.S. companies have also
supported outsourcing as a competitive advantage. However, if the proposed laws
come into effect it would adversely affect our revenues and profitability. Our BPO services revenue depend to a large extent on a small number of
clients, and our revenue could decline if a major client reduces the volume of
services obtained from us We currently derive, and believe we will continue to derive, a significant
portion of our BPO services revenue from a limited number of corporate clients.
The reduction in volume of work done to a major client could result in a
reduction of our revenue. There are a number of factors that could cause the loss of a client and
such factors are not predictable. We could fail to achieve performance
standards due to a lack of clarity between us and the client on the performance
standards or due to deficiencies in processes. In certain cases, a client could
reduce their spending on such services due to a challenging economic
environment and consequently reduce the volume and profitability of business
with us. In other cases, a client could reduce its spending on such services
with us and form internal competing operations in the U.S., India or other
price competitive geographies. We may be liable to our clients for damages caused by system failures,
which could damage our reputation and cause us to lose customers. Many of our contracts involve projects that are critical to the operations
of our clients businesses and provide benefits that may be difficult to
quantify. Any failure in a clients system could result in a claim for
substantial damages against us, regardless of our responsibility for such
failure. Although we attempt to limit our contractual liability for
consequential damages in rendering our services, we cannot be assured that the
limitations on liability we provide for in our service contracts will be
enforceable in all cases, or that they will otherwise protect us from liability
for damages. Our earnings may be adversely affected if we are required to change our
accounting policies with respect to the expensing of stock options. We do not currently deduct the expense of employee stock option grants
from our income based on the fair value method. The International Accounting
Standards Board requires recording the fair value of stock options issued to
employees as an expense. The Financial Accounting Standards Board is also
proposing an accounting standard on similar lines. Many companies have or are
in the process of voluntarily changing their accounting policies to expense the
fair value of stock options. Stock options are an important component of our
employee compensation package. If we change our accounting policy with respect
to the treatment of employee stock option grants, our earnings could be
adversely affected. Risks Related to Investments in Indian Companies. We are incorporated in India, and substantially all of our assets and our
employees are located in India. Consequently, our financial performance and
the market price of our ADSs will be affected by political, social and




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economic developments affecting India, Government of India policies,
including taxation and foreign investment policies, government currency
exchange control, as well as changes in exchange rates and interest rates. Wages in India have historically been lower than wages in the United
States and Europe, which has been one of our competitive advantages. Wage
increases in India may prevent us from sustaining this competitive advantage
and may reduce our profit margins. Our wage costs in India have historically been significantly lower than
wage costs in the United States and Europe for comparably skilled
professionals, and this has been one of our competitive advantages. However,
wage increases in India may prevent us from sustaining this competitive
advantage and may negatively affect our profit margins. We may need to
increase the levels of our employee compensation more rapidly than in the past
to retain talent. Unless we are able to continue to increase the efficiency
and productivity of our employees, wage increases in the long term may reduce
our profit margins. Our costs could increase if the Government of India reduces or withholds
tax benefits and other incentives it provides to us. Currently, we benefit from certain tax incentives under Indian tax laws.
As a result of these incentives, our operations have been subject to relatively
insignificant Indian tax liabilities. These tax incentives currently include a
10-year tax holiday from payment of Indian corporate income taxes for our
Global IT Services and Products business operated from specially designated
Software Technology Parks in India and an income tax deduction of 100% for
profits derived from exporting information technology services. As a result, a
substantial portion of our pre-tax income has not been subject to significant
tax in recent years. For the years ended March 31, 2002, 2003 and 2004 our tax
benefits were Rs. 2,506 million, Rs. 2,263 million and Rs. 2,925 million
respectively, from such tax incentives. We are currently also eligible for
exemptions from other taxes, including customs duties. The Finance Act, 2000
phases out the tax holiday over a ten year period from the financial year
1999-2000 to financial year 2008-2009. Our current tax holidays expire in
stages by 2009. Additionally, the Finance Act, 2002 subjected ten percent of
all income derived from services located in Software Technology Parks to
income tax for the one-year period ending March 31, 2003. For companies opting
for the 100% tax deduction for profits derived from exporting information
technology services, the Finance Act, 2000 phases out the income tax deduction
over the next five years beginning on April 1, 2000. When our tax holiday and
income tax deduction exemptions expire or terminate, our costs will increase.
Additionally, the government of India could enact similar laws in the future,
which could further impair our other tax incentives. On or about March 25, 2004, we received an assessment order from the
Deputy Commissioner of Income Tax, Bangalore, India in connection with our
regular assessment of our income tax return for the year ended March 31, 2001.
The assessment order disallows a taxable income deduction we made under Section
10A of the Income Tax Act, 1961 of India pertaining to some of our software
development units located in Bangalore. Section 10A of the Income Tax Act,
1961 provides a ten-year tax holiday for setting up software development units
in Software Technology Parks of India (STPI). The assessing officers claim is
based, among other things, upon the premise that in order for such software
development units to qualify for the special tax treatment and corresponding
tax deduction, we should have obtained a license for each such new unit located
in the STPI. We have instead formed such new units with STPI approval under
our original STPI licenses obtained in 1992. The assessment order claims that
the disallowance, along with other disallowances, requires us to make a payment
of Rs. 2,614 million, or approximately US$ 60 million. Based on our assessment
of the merits of the claim, we have made a provision in the amount of Rs. 300
million, or approximately US$ 6.9 million on our balance sheet. In the opinion
of management, the remainder of the amount referred to in the assessment order
is without merit. We filed an appeal before the first appellate authority of
the relevant tax department, known as the Commissioner (Appeals), on April 22,
2004 challenging the assessment order. Although we currently believe we will
ultimately prevail in our appeal, the results of such appeal, and any
subsequent appeals, cannot be predicted with certainty. Should we fail to
prevail in our appeal, or any subsequent appeals, in any reporting period, the
operating results of such reporting period could be materially adversely
affected. Regional conflicts in South Asia could adversely affect the Indian
economy, disrupt our operations and cause our business to suffer. South Asia has from time to time experienced instances of civil unrest and
hostilities among neighboring countries, including between India and Pakistan.
In recent years there have been military confrontations between India and
Pakistan that have occurred in the region of Kashmir and along the
India-Pakistan border. The potential for hostilities between the two countries
is high due to terrorist incidents in India and the aggravated geopolitical
situation in the region. Both countries have initiated active measures to
reduce hostilities. Military activity or terrorist attacks in the future could
influence the Indian economy by disrupting communications and making travel
more difficult and such political tensions could create a greater perception
that investments in Indian companies involve higher degrees of risk. This, in
turn, could have a material adverse effect on the market for securities of
Indian companies, including our equity shares and our ADSs, and on the market
for our services.




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Political instability or changes in the Indian government could delay the
liberalization of the Indian economy and adversely affect economic conditions
in India generally, which could impact our financial results and prospects. Since 1991, successive Indian governments have pursued policies of
economic liberalization, including significantly relaxing restrictions on the
private sector. Nevertheless, the role of the Indian central and state
governments in the Indian economy as producers, consumers and regulators has
remained significant. The Government of India has changed five times since
1996. The current Government of India, formed in October 1999, has announced
policies and taken initiatives that support the continued economic
liberalization policies that have been pursued by previous governments.
Although we believe that it is more likely than not that the process of
economic liberalization will continue, we cannot assure you that these
liberalization policies will continue in the future. The rate of economic
liberalization could change, and specific laws and policies affecting
technology companies, foreign investment, currency exchange and other matters
affecting investment in our securities could change as well. A significant
change in Indias economic liberalization and deregulation policies could
adversely affect business and economic conditions in India generally and our
business in particular. The general elections in India are scheduled to be completed in May 2004.
This could result in a new government assuming office. We cannot provide
assurance that the new government will continue to support the economic
liberalization policies that have been pursued by the previous government. The new government could be a coalition of several parties and withdrawal
of one or more of these parties could result in political instability. Such
instability could delay the reform of the Indian economy and could have a
material adverse effect on the market for securities of Indian companies,
including our equity shares and our ADSs, and on the market for our services. Indian law limits our ability to raise capital outside India and may limit
the ability of others to acquire us, which could prevent us from operating our
business or entering into a transaction that is in the best interests of our
shareholders. Indian law constrains our ability to raise capital outside India through
the issuance of equity or convertible debt securities. Generally, any foreign
investment in, or an acquisition of, an Indian company requires approval from
relevant government authorities in India, including the Reserve Bank of India.
However, subject to certain exceptions, the Government of India currently does
not require prior approvals for IT companies like us. If we are required to
seek the approval of the government of India and the Government of India does
not approve the investment or implements a limit on the foreign equity
ownership of IT companies, our ability to seek and obtain additional equity
investment by foreign investors will be limited. In addition, these
restrictions, if applied to us, may prevent us from entering into a
transaction, such as an acquisition by a non-Indian company, that would
otherwise be beneficial for our company and the holders of our equity shares
and ADSs. Our ability to acquire companies organized outside India depends on the
approval of the Government of India. Our failure to obtain approval from the
Government of India for acquisition of companies organized outside India may
restrict our international growth, which could negatively affect our revenue. The Ministry of Finance of the Government of India and/or the Reserve Bank
of India must approve our acquisition of any company organized outside of
India. The Government of India has recently issued a policy statement
permitting the acquisition of companies organized outside India for a
transaction value not exceeding 100% of the networth of the acquiring company
and:  
    
    if in cash, up to 100% of the proceeds from an ADS
offering; and
    
    if in stock, the greater of $100 million or ten times the
acquiring companys previous fiscal years export earnings. We cannot assure you that any required approval from the Reserve Bank of
India and or the Ministry of Finance or any other government agency can be
obtained. Our failure to obtain approval from the Government of India for
acquisitions of companies organized outside India may restrict our
international growth, which could negatively affect our revenue. It may be difficult for you to enforce any judgment obtained in the United
States against us, the selling shareholders or our affiliates. We are incorporated under the laws of India and many of our directors and
executive officers, reside outside the United States. Virtually all of our
assets and the assets of many of these persons are located outside the United




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States. As a result, you may be unable to effect service of process upon
us outside India or upon such persons outside their jurisdiction of residence.
In addition, you may be unable to enforce against us in courts outside of
India, or against these persons outside the jurisdiction of their residence,
judgments obtained in courts of the United States, including judgments
predicated solely upon the federal securities laws of the United States. We have been advised by our Indian counsel that the United States and
India do not currently have a treaty providing for reciprocal recognition and
enforcement of judgments (other than arbitration awards) in civil and
commercial matters. Therefore, a final judgment for the payment of money
rendered by any federal or state court in the United States on civil liability,
whether or not predicated solely upon the federal securities laws of the United
States, would not be enforceable in India. However, the party in whose favor
such final judgment is rendered may bring a new suit in a competent court in
India based on a final judgment that has been obtained in the United States.
The suit must be brought in India within three years from the date of the
judgment in the same manner as any other suit filed to enforce a civil
liability in India. It is unlikely that a court in India would award damages on
the same basis as a foreign court if an action is brought in India.
Furthermore, it is unlikely that an Indian court would enforce foreign
judgments if it viewed the amount of damages awarded as excessive or
inconsistent with Indian practice. A party seeking to enforce a foreign
judgment in India is required to obtain approval from the Reserve Bank of India
under the Foreign Exchange Management Act, 1999, to execute such a judgment or
to repatriate any amount recovered. The laws of India do not protect intellectual property rights to the same
extent as those of the United States, and we may be unsuccessful in protecting
our intellectual property rights. Unauthorized use of our intellectual
property may result in development of technology, products or services which
compete with our products. We may also be subject to third-party claims of
intellectual property infringement. Our intellectual property rights are important to our business. We rely
on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect our
intellectual property. However, the laws of India do not protect proprietary
rights to the same extent as laws in the United States. Therefore, our efforts
to protect our intellectual property may not be adequate. Our competitors may
independently develop similar technology or duplicate our products or services.
Unauthorized parties may infringe upon or misappropriate our products,
services or proprietary information. The misappropriation or duplication of our intellectual property could
disrupt our ongoing business, distract our management and employees, reduce our
revenue and increase our expenses. We may need to litigate to enforce our
intellectual property rights or to determine the validity and scope of the
proprietary rights of others. Any such litigation could be time-consuming and
costly. As the number of patents, copyrights and other intellectual property
rights in our industry increases, and as the coverage of these rights
increases, we believe that companies in our industry will face more frequent
infringement claims. Defending against these claims, even if not meritorious,
could be expensive and divert our attention and resources from operating our
company. Although we believe that our intellectual property rights do not infringe
on the intellectual property rights of any other party, infringement claims may
be asserted against us in the future. If we become liable to third parties for
infringing their intellectual property rights, we could be required to pay a
substantial damage award and be forced to develop non-infringing technology,
obtain a license or cease selling the applications or products that contain the
infringing technology. We may be unable to develop non-infringing technology or
to obtain a license on commercially reasonable terms, or at all. Risks Related to the ADSs Sales of our equity shares may adversely affect the prices of our equity
shares and the ADSs. Sales of substantial amounts of our equity shares, including sales by
insiders, in the public market, or the perception that such sales may occur,
could adversely affect the prevailing market price of our equity shares or the
ADSs or our ability to raise capital through an offering of our securities. In
the future, we may also sponsor the sale of shares currently held by some of
our shareholders, or issue new shares. We can make no prediction as to the
timing of any such sales or the effect, if any, that future sales of our equity
shares, or the availability of our equity shares for future sale, will have on
the market price of our equity shares or ADSs prevailing from time to time. An active or liquid trading market for our ADSs is not assured. An active, liquid trading market for our ADSs may not be maintained in the
long term. Loss of liquidity could increase the price volatility of our ADSs.




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Indian law imposes foreign investment restrictions that limit a holders
ability to convert equity shares into ADSs, which may cause our ADSs to trade
at a premium or discount to the market price of our equity shares. Except under limited circumstances, the Reserve Bank of India must approve
the sale of equity shares underlying ADSs by a non-resident of India to a
resident of India. Since foreign exchange controls are in effect in India, the
Reserve Bank of India will also approve the price at which equity shares are
transferred based on a specified formula, and a higher price per share may not
be permitted. Additionally, except under certain limited circumstances, if an
investor seeks to convert the rupee proceeds from a sale of equity shares in
India into foreign currency and then repatriate that foreign currency from
India, he or she will have to obtain an additional Reserve Bank of India
approval for each transaction. Required approval from the Reserve Bank of India
or any other government agency may not be obtained on terms favorable to a
non-resident investor or at all. Investors who exchange ADSs for the underlying equity shares and are not
holders of record will be required to declare to us details of the holder of
record, and the holder of record will be required to disclose the details of
the beneficial owner. Any investor who fails to comply with this requirement
may be liable for a fine of up to Rs. 1,000 for each day such failure
continues. Such restrictions on foreign ownership of the underlying equity
shares may cause our ADSs to trade at a premium or discount to the equity
shares. An investor in our ADSs may not be able to exercise preemptive rights for
additional shares and may thereby suffer dilution of his or her equity interest
in us. Under the Indian Companies Act, a company incorporated in India must offer
its holders of equity shares preemptive rights to subscribe and pay for a
proportionate number of shares to maintain their existing ownership percentages
prior to the issuance of any new equity shares, unless such preemptive rights
have been waived by three-fourths of the shares voting on the resolution to
waive such rights. Holders of ADSs may be unable to exercise preemptive rights
for equity shares underlying ADSs unless a registration statement under the
Securities Act is effective with respect to such rights or an exemption from
the registration requirements of the Securities Act is available. We are not
obligated to prepare and file such a registration statement and our decision to
do so will depend on the costs and potential liabilities associated with any
such registration statement, as well as the perceived benefits of enabling the
holders of ADSs to exercise their preemptive rights, and any other factors we
consider appropriate at the time. No assurance can be given that we would file
a registration statement under these circumstances. If we issue any such
securities in the future, such securities may be issued to the Depositary,
which may sell such securities for the benefit of the holders of the ADSs.
There can be no assurance as to the value, if any, the Depositary would receive
upon the sale of such securities. To the extent that holders of ADSs are unable
to exercise preemptive rights granted in respect of the equity shares
represented by their ADSs, their proportional interests in us would be reduced. ADS holders may be restricted in their ability to exercise voting rights. At our request, the Depositary will mail to you any notice of
shareholders meeting received from us together with information explaining how
to instruct the Depositary to exercise the voting rights of the securities
represented by ADSs. If the Depositary receives voting instructions from you in
time, relating to matters that have been forwarded to you, it will endeavor to
vote the securities represented by your ADSs in accordance with such voting
instructions. However, the ability of the Depositary to carry out voting
instructions may be limited by practical and legal limitations and the terms of
the securities on deposit. We cannot assure that you will receive voting
materials in time to enable you to return voting instructions to the Depositary
in a timely manner. Securities for which no voting instructions have been
received will not be voted. There may be other communications, notices or
offerings that we only make to holders of our equity shares, which will not be
forwarded to holders of ADSs. Accordingly, you may not be able to participate
in all offerings, transactions or votes that are made available to holders of
our equity shares.




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Item 4. Information on the Company History and Development of the Company Wipro Limited was incorporated in 1945 as Western India Vegetable Products
Limited under the Indian Companies Act, VII of 1913, which is now superceded by
the Companies Act, 1956. We are deemed to be registered under the Companies
Act, 1956, or the Companies Act. We are registered with the Registrar of
Companies, Karnataka, Bangalore, India as Company No. 20800. Our registered
office is located at Doddakannelli, Sarjapur Road, Bangalore 560 035, and the
telephone number of our registered office is +91-80-2844-0011. The name and
address of our registered agent in the United States is CT Corporation, located
at 1350 Treat Blvd., Suite 100, Walnut Creek, California 94596. Wipro Limited was initially engaged in the manufacture of hydrogenated
vegetable oil. Over the years, we have diversified into the areas of
Information Technology or IT services, IT products and Consumer Care and
Lighting Products. We are headquartered in Bangalore, India and have
operations in North America, Europe and Asia. For the fiscal year ended March
31, 2004, 92% of our operating income was generated from our IT business
segments. For the same period, Global IT Services and Products represented 85%
of our operating income, India and AsiaPac IT Services and Products represented
7% of our operating income. In October 2000, we raised gross aggregate proceeds of approximately $131
million in our initial U.S. public offering of our ADSs on the New York Stock
Exchange. We used a portion of these proceeds to consummate the acquisition of
Wipro Spectramind, Global Energy Practice and Wipro Nervewire. We incurred capital expenditure of Rs. 2,439 million, Rs. 2,529 million
and Rs. 4,135 million during the fiscal years ended March 31, 2002, 2003 and
2004, respectively. These capital expenditures were primarily incurred on new
software development facilities in India for our Global IT Services and
Products business segment. As of March 31, 2004 we had contractual commitments
of Rs. 529 million ($12 million) related to capital expenditures on
construction or expansion of software development facilities. We currently
intend to finance our planned construction and expansion entirely from internal
sources of capital. Business Overview We are a leading global IT services company. In the April 2003 report
titled Can Outsourcers Really Transform IT? by Forrester Research, Inc, we
were ranked among the top 10 global IT services players for transformational
capabilities in IT outsourcing. Forrester ranked the transformational
capabilities of IT outsourcers based on a number of factors, including business
value focus, client management practices, operational management, outsourcing
specific research and development activities, financial strength and growth in
client base. We provide a comprehensive range of IT services, software
solutions, IT consulting, business process outsourcing, or BPO, services and
research and development services in the areas of hardware and software design
to leading companies worldwide. We combine the business knowledge and industry
expertise of our domain specialists and the technical knowledge and
implementation skills of our delivery team in our development centers located
in India and around the world, to develop and integrate solutions which enable
our clients to leverage IT for achieving their business objectives. We use our
quality processes and global talent pool for delivering time to development
advantage, cost savings and productivity improvements. In India, we are a leader in providing IT solutions and services. We also
have a profitable presence in the Indian markets for consumer products and
lighting. We have three principal business segments:  
    
    Global IT Services and Products.Our Global IT Services and Products
segment provides IT services to customers in the Americas, Europe and
Japan. The range of services include IT consulting, custom application
design, development, re-engineering and maintenance, systems
integration, package implementation, technology infrastructure
outsourcing, BPO services and research and development services in the
areas of hardware and software design. In April 2003, we reorganized our
business segments. As part of this reorganization, our IT-Enabled
Services business segment, which was our subsidiary Wipro Spectramind
Services Private Limited, or Wipro Spectramind, was consolidated into
our Global IT Services and Products business segment. In addition, we
eliminated our HealthScience segment, consolidating the IT services
component of the HealthScience segment into our Global IT Services and
Products business segment. We reclassified the remainder of our former
HealthScience segment, Wipro Biomed, into Others for purposes of
financial reporting.




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Pursuant to this reorganization, our Global IT Services and Products
business segment now provides BPO services to clients in North America,
Europe, Australia and other markets. Our Global IT Services and Products
segment also provides IT services to the healthcare and life sciences
markets. Our Global IT Services segment accounted for 75% of our revenue and 85% of
our operating income for the year ended March 31, 2004.  
    
    India and AsiaPac IT Services and Products.Our India and AsiaPac IT Services
and Products segment is a leader in the Indian IT market and focuses primarily
on meeting the IT products and services requirements of companies in India,
Asia-Pacific and the Middle East region. This business segment accounted for
16% of our revenue and 7% of our operating income for the year ended March 31,
2004.
    
    Consumer Care and Lighting.We leverage our brand name and distribution
strengths to sustain a profitable presence in niche markets in the areas of
soaps, toiletries, lighting products and hydrogenated cooking oils for the
Indian market. This business segment accounted for 6% of our revenue and 5% of
our operating income for the year ended March 31, 2004. Industry Overview Global IT Services and Products In a challenging global business environment, the role of IT in
transforming businesses and economies has been widely recognized. The shift in
the role of IT from merely supporting business to transforming business, which
is driving productivity gains and creating new business models, has increased
the importance of IT to the success of companies worldwide. In response to a
volatile market-place, companies are integrating IT processes with core
business activities, with their clients and with their suppliers. To serve
these companies, IT service providers require cross functional teams of domain
experts with deep industry knowledge as well as process and implementation
specialists with technical expertise and application development skills, having
the ability to integrate solutions across disparate IT systems. The focus for companies is on objective factors such as:  
    
    Realizing a defined return on investment on their IT spending;
    
    Realizing measurable cost efficiencies;
    
    Reducing the cycle time of introducing new software
applications, commonly known as time-to- application advantage;
    
    Reducing the time it takes to develop new technologies,
commonly known as time-to-market advantage; and
    
    Increasing the focus on core activities by outsourcing IT
infrastructure to integrated IT service providers. According to the Worldwide IT Services Forecast and Analysis, 2002-2007
report published by International Data Corporation, or IDC, in March 2003, the
global IT services market is estimated to grow from approximately $354 billion
in 2002 to approximately $490 billion by 2007, reflecting a compound annual
growth rate, or CAGR, of 6.7%. Companies are increasingly using external professional services as an
effective tool to meet their IT requirements. Outsourcing IT requirements
enable companies to lower operating costs, realize productivity gains and
convert a portion of their fixed costs into variable costs. By deploying
high-speed communications equipment, companies can access skilled IT services
from remote locations to meet their complex IT requirements in a cost-effective
manner. According to an August 2002 Gartner report, 79% of large U.S. corporations
are currently engaged in offshore outsourcing, while the remaining 21% plan to
engage in offshore outsourcing within the subsequent 12 months. According to
the same report, India is a preferred offshore destination accounting for more
than 85% of offshored services. Leading global IT services companies are
facilitating this trend by expanding their offshore operations in India.
According to Confronting the Offshore Wave, a report published by Morgan
Stanley Equity Research on June




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5, 2003, offshore services, which represent 2% of the Global IT services
market in 2002, are expected to grow to 4% of the Global IT services market by
2005. Pure play IT services are increasingly becoming a high-volume commoditized
service offering. To differentiate themselves in the marketplace, IT service
providers are offering the unique value proposition of a comprehensive range
of service offerings, global sourcing models, IT systems integration
capabilities, and a combination of deep business knowledge and implementation
expertise in the service offerings. Indian IT service providers have also
acquired or are developing consulting skills. This is enabling them to
effectively compete against leading global IT services companies as integrated
service providers. The India Advantage. According to a survey of U.S. software service
vendors conducted by the World Bank, India is one of the leading offshore
destinations for companies seeking to outsource software development of IT
projects. According to the August 2002 Gartner report, India ranked as the
primary destination for offshoring IT services by more than 70% of large U.S.
corporations surveyed, while the next highest country was preferred by 10% of
the corporations surveyed. A McKinsey study conducted in 2002 for the Indian National Association of
Software and Service Companies, or NASSCOM, estimates that the Indian IT
services export, as well as the product and technology services, markets are
expected to grow from approximately $6 billion in 2002 to an estimated $36
billion in 2008. There are several key factors contributing to this growth of India-based
IT services:  
    
    India-based IT companies have proven their capability to deliver
IT services that satisfy the requirements of international clients who
expect the highest quality standards. According to Carnegie Mellon
Software Engineering Institutes Survey of High Maturity Organizations
and High Maturity Workshop Research, as of October 2002, 50 of the 74
high maturity organizations choosing to list themselves as
organizations with SEI-CMM Level 5 certification, the highest level of
certification, are based in India. SEI-CMM is the Software
Engineering Institutes Capability Maturity Model, which assesses the
quality of organizations management system processes and
methodologies.
    
    India has a large, highly skilled English-speaking labor pool
that is available at a relatively low labor cost. According to
NASSCOM, the Indian software industry employed 416,000 software
professionals as of March 31, 2002, making it the second largest
employer in the IT services industry after the United States. In
addition, India has more than 2,100 engineering colleges and technical
institutes that train approximately 75,000 graduates annually in IT.
According to the NASSCOM-McKinsey report, U.S. and U.K. companies
could expect total savings of 40% to 60% by using offshore processes
because of the differential in wages paid by U.S. and U.K. companies
in comparison to their India-based counterparts. Although wages in
India are rising faster than in the United States, the labor rate
differential is currently anticipated to remain a competitive
advantage for Indian companies.
    
    With the time differential between India and its largest market,
the United States, Indian companies are able to provide a combination
of onsite and offshore services on a 24-hour basis on specific
projects. The traditional model for most large companies has been to manage most
functions internally. However, current global macroeconomic conditions and
intense competitive pressures have forced companies to pursue new business
models. Companies are focusing on their core activities and outsourcing
critical but non-core activities to companies that specialize in such non-core
functions. Outsourcing enables companies to reduce their operating costs,
realize benefits of scale and flexible cost structures and achieve significant
process improvements. According to the November 2003 report published by IDC, titled The
Growing BPO opportunities for India (the November 2003 IDC Report), the
worldwide BPO market is expected to grow from $773 billion in 2002 to
approximately $1 trillion by 2006, a CAGR of 9%. It is anticipated that this
growth will be primarily led by industries having significant customer
interactions like banking and financial services, insurance,
telecommunications, retail and healthcare. India is a leading destination for BPO services. The proven track record
and client relationships of established Indian IT services companies, favorable
wage differentials, availability of a large, high quality, English speaking
talent pool and a regulatory environment more friendly to investment are
facilitating Indias emergence as a global outsourcing hub. A major portion of revenues is derived from customer care services and
back office processing. According to the November 2003 IDC report, the level of
customer care services exported from India is expected to grow from $ 1.3
billion in 2003 to around $4.8 billion by 2006, and the level of back office
processing exported from India is expected




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to grow from $ 1.6 billion in 2003 to around $6.1 billion by 2006. The
total BPO market in India is expected to grow from $ 3.5 billion in 2003 to $
12.2 billion in 2006, a CAGR of 54%. According to the November 2003 IDC report, the Indian BPO service
providers are primarily engaged in providing rule-based customer care services
and back-office processing services. These services are parts of a functional
process and not the entire process. IDC expects Indian BPO service providers to
transform into functional experts assisting clients in achieving strategic
business transformation. India and Asia Pac IT Services and Products The domestic Indian IT industry is primarily composed of hardware,
packaged software and IT services. According to a report titled Market
Statistics, 2003 published by Gartner Dataquest in December 2003 the domestic
Indian IT market is estimated to grow to US$ 10.2 billion by 2007, reflecting a
compound annual growth rate of approximately 12% from 2002, when US$ 5.7
billion was spent. According to a November 2003 report published by IDC titled
Indian IT Services Forecast and Analysis, 2002-2007, the IT services market
in India is expected to grow to approximately $3.3 billion in 2007 from $1.6
billion in 2003, representing a compounded annual growth rate of 21.2%. In India growth in demand for IT products and services is driven by the
business process transformation initiatives in the banking and financial
services sectors. In the telecommunication sector demand for IT infrastructure
is driven by deregulation and the business imperative to strengthen back end
infrastructure/ processes to manage a significant growth in customer bases.
Further, e-governance initiatives have increased demand for IT strategy
consulting, IT products, network integration services and e-sourcing solutions. Consumer Care and Lighting The consumer care market that we address includes soaps, toiletries and
infant care products. A large portion of our revenues is derived from the sale
of soaps. The market for soaps in India is dominated by established players
like Hindustan Lever (a subsidiary of Unilever). We have a strong brand
presence in a niche segment and have significant market share in select
regional geographies. We expect to increase our market share by acquiring
established brands which complement our brand presence and distribution
strengths. In lighting, we operate in the domestic market for household lamps
as well as institutional market for luminaries and lamps. The market for
lighting is led by Philips India (subsidiary of Philips NV). We have a strong
brand presence in select regional geographies for domestic lighting, as well as
an established institutional presence in select segments like pharma lighting
and software development centre lighting. Competitive Strengths We believe that the following are our principal competitive strengths: Comprehensive range of IT services We provide a comprehensive and integrated suite of IT solutions, ranging
from consulting to application development and maintenance and take end-to-end
responsibility for project execution and delivery. We have over 13 years of
experience in software development, re-engineering and maintenance for our
corporate customers and provide managed IT support services at the clients
site through our 53 offshore development centers in India and several near
shore development centers located in countries closer to our clients offices.
We believe that this integrated approach positions us to take advantage of key
growth areas in enterprise solutions, including IT services data warehousing,
implementation of enterprise package application software such as resource
planning or ERP, supply chain management or SCM and customer relationship
management or CRM. In many large outsourcing deals, BPO services are an
integral part of the total services outsourced. Integrating BPO services into
our portfolio of service offerings has provided us with a strong competitive
advantage over other IT services providers.




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World-class quality as measured by SEI-CMM and Six Sigma initiatives One of the crucial factors in our success has been our commitment to
pursue the highest quality standards in all aspects of our business. We were
assessed at SEI-CMM Level 5, the highest level of quality certification, in
January 1999, making us the first IT services provider in the world to achieve
this standard. SEI-CMM is widely accepted in the software industry as a
standard to measure the maturity and effectiveness of software processes. Our
SEI-CMM Level 5 rating is supported by our Six Sigma initiative, which is an
internationally recognized program focusing on defect reduction and cycle time
reduction. Our Six Sigma program was launched in 1998. Six Sigma represents a
quality standard of less than 3.4 defects per million opportunities in which a
defect may arise. Broad range of research and development services Our strengths in research and development services position us to take
advantage of a recovery in global research and development spending. We are
one of few major IT services companies in the world capable of providing an
entire range of research and development services from concept to product
realization. We provide IT services for designing, enhancing and maintaining
platform technologies including servers and operating systems, communication
subsystems, local area and wide area network protocols, optical networking
systems, Internet protocol based switches, routers and embedded software,
including software used in mobile phones, home or office appliances, industrial
automation and automobiles. We acquired these skill sets through our earlier
research and development efforts in the design of computer hardware products
for the Indian market when the Government of India did not allow these products
to be imported. Global delivery model One of our strengths is our global delivery model, which includes our
offshore development centers, or ODCs, and our nearshore development centers.
We were among the first India-based IT services companies to implement the
offshore development model as a method for delivering high-quality services at
a relatively low cost to international clients. Our global delivery model has
many features that are attractive to our clients, including:  
    
    A time difference between the client site and the ODC which
allows a 24-hour work schedule for specific projects;
    
    The ability to quickly increase the scale of development operations;
    
    Increased access to our large pool of highly skilled IT professionals located in India; and
    
    Physical and operational separation from all other client
projects, providing enhanced security for a clients intellectual
property. Established track record with premier international customer base As of March 31, 2004, our Global IT Services and Products segment had over
347 active clients, which included over 125 Global 500 or Fortune 1000
companies. We had 44 clients that represented at least $5.0 million in revenues
in the fiscal year ended March 31, 2004. We believe that having an established
base of high quality, high technology clients provide us with the following
competitive advantages:  
    
    The type of clients we target are likely to maintain or
increase their IT outsourcing budgets;
    
    Our ODCs support critical IT applications of our large clients.
The clients are therefore likely to provide a high level of repeat
business.
    
    Our IT professionals are consistently exposed to the latest
technologies that we are then able to leverage to procure business
from other clients. Ability to access, attract and retain skilled IT professionals We continue to develop innovative methods of accessing and attracting
skilled IT professionals. We partnered with a leading Indian university to
establish a program for on the job training and a Masters degree in software
engineering. We have also sought to open facilities in various cities in India
to better access local professionals. We believe that our ability to retain
highly skilled personnel is enhanced by our leadership position, opportunities
to work with leading edge technologies and focus on training and compensation.
In fiscal 2002 we were assessed at People Capability Maturity Model or PCMM
level 5, the highest level of certification. PCMM is widely accepted as a
standard to measure the maturity and effectiveness of human resources practices
within a company. As of March 31, 2004, in our




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Global IT Services and Products business segment we had over 19,000 IT
professionals and over 9,300 services professionals in our BPO services
business. We expect to grow these numbers in the foreseeable future. One of
the keys to attracting and retaining qualified personnel is our variable and
performance linked compensation programs. We have had an employee stock
purchase program since 1984 and employee stock option plan and a productivity
bonus plan since October 1999. Broad distribution network and strong sales force in India We have a large and growing distribution network for our domestic
businesses. For our Indian IT Services and Products business segment, our
direct sales force targets large corporate clients and over 235 channel
partners in over 100 locations, and focuses on medium and small enterprises.
For our consumer care and lighting products, we have access to more than 1.2
million retail outlets. This distribution reach provides us with a significant
competitive advantage and allows us to grow our business with minimal increases
in personnel. Strong brand recognition in the Indian market We believe that our brands are some of the most well recognized brands in
the Indian market. We have been operating in the Indian market for over 58
years and believe that customers equate our brand with high quality standards
and a commitment to customer service. We enhance the value of our brands
through aggressive and selective advertising and promotions. Our Strategy Our objective is to be a world leader in providing a comprehensive range
of IT services to our clients. The markets we address are undergoing rapid
change due to the pace of developments in technology, changes in business
models and changes in the sourcing strategies of clients. We believe that
these trends provide us with significant growth opportunities. The key
elements of our strategy include: Significantly expand our Global IT Services and Products business We expect to continue to grow our Global IT Services and Products business
and the percentage of our total revenues and profits contributed by this
business over the next few years. We believe that we can achieve this
objective through the following means:  
    
    Identify and develop service offerings in emerging growth areas
as separate business opportunities. Currently we are focusing on
areas such as business intelligence services, package implementation,
niche consulting, data warehousing, and network storage;
    
    Develop deep business knowledge and industry specific
experience and combine it with technical expertise and implementation
skills to offer integrated solutions;
    
    Offer new pricing models, sharing the risks and rewards of the
impact of IT solutions on business, productivity improvements and
timeliness of delivery;
    
    Use efficient global sourcing models to source IT services from
various geographies and develop methodologies to develop and
integrate solutions from around the globe.
    
    Leverage our experience in providing IT infrastructure
management services in the Indian market and our access to existing
clients outside India to provide technology infrastructure support
services;
    
    Grow our research and development services by focusing on high
growth markets such as telecommunications, mobile communications and
the Internet, and high growth technologies such as embedded software;
and
    
    Expand our market presence by providing enterprise application
integration and system integration services. Increase the number and penetration of Global IT Services and Products
clients We intend to increase the number of our clients through a dedicated sales
team focused on new client acquisitions and increasing our presence in Europe
and Asia. Our goal is to make every new client account earn over $1 million in
annual revenues within twelve months. We intend to increase our share of
business with existing clients by expanding our range of IT solutions and by
increasing our knowledge of industry segments and individual client




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businesses to allow us to better understand client requirements. We intend
to grow our BPO business by leveraging our existing client relationships to
offer BPO services to clients of our Global IT Services and Products segment.
We intend to expand our range of service offerings, migrate from providing
solely rules-based processing activities to offering an entire set of enhanced
processes, provide value- added services and partner with clients in business
transformation initiatives. Focus on services-led growth in the IT market in India We plan to grow in the IT market in India by focusing on IT services. We
believe that by offering clients a full service technology solution, including
IT consulting, systems integration, support services, software and networking
solutions along with branded hardware products, we can enhance our
profitability significantly. Aggressively build awareness of the Wipro brand name We plan to continue aggressively building awareness among clients and
consumers both domestically and internationally of the Wipro brand name. We
believe we can leverage the strength of an international brand name across all
of our businesses by ensuring that our brand name is associated with Wipros
position as a market leader that is committed to high quality standards. To
achieve this objective, we intend to expand our marketing efforts with
advertising campaigns and promotional efforts that are targeted at specific
groups. In fiscal 2004 we were conferred the first IDC Chief Marketing Officer
(CMO) Best Practices award by the IDC CMO advisory panel, recognizing the
quality of our processes for measuring the impact of our marketing programmes. Pursue selective acquisition of IT companies We continue to pursue selective acquisitions of IT service companies that
will allow us to expand our service portfolio and acquire additional skills
that are valued by our clients. We believe this will strengthen our
relationships with clients and allow us to realize higher revenues from them.
In pursuing acquisitions, we focus on companies where we can leverage domain
expertise and specific skill sets, and where a significant portion of the work
can be moved offshore to India to leverage our low cost offshore delivery model
and realize higher margins. In 2002, we acquired Spectramind. This acquisition facilitated our entry
into the BPO business. As a result, we have been able to cross-sell services
into each others client bases. We have positioned ourselves as integrated
service providers with strong capabilities in BPO services, a unique value
proposition which we believe most other competing IT service providers do not
possess. We also acquired the Global Energy Practice of American Management Systems
in 2002. This acquisition augmented our IT consulting expertise in the energy
and utilities sector. In May 2003, we acquired Nervewire, Inc. This
acquisition has enhanced our IT consulting capabilities in the financial
services sector. By integrating consulting services into our service portfolio
we have been able to generate synergies, revenues and realize higher prices for
our regular service offerings. We continue to explore potential strategic
partnerships and other relationships. Sustain growth in operating income and cash flow of our traditional
businesses We have been in the consumer care business since 1945 and the lighting
business since 1992. The consumer care business has historically generated
surplus cash for us to be able to grow our other businesses. Our strategy is
to maintain a steady growth in operating income for these businesses through
efficient capital utilization, strong brand name recognition and expanding our
nationwide distribution network. We have invested in brands which complement
our brand and distribution strengths. Global IT Services and Products Our Global IT Services and Products business segment, which we call Wipro
Technologies, is a leader in providing IT services to international companies.
We provide our clients customized IT solutions to improve their business
competitiveness. Our IT services are focused on the following areas:  
    
    Enterprise IT services;
    
    Technology infrastructure support services;
    
    Research and development services; and
    
    BPO Services.




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In our IT service offerings, we typically assume primary project
management responsibility. We offer these services globally through a team of
over 19,000 IT professionals and 53 offshore development centers. Enterprise Solutions business We provide a comprehensive range of enterprise solutions primarily to
Fortune 1000 / Global 500 companies to meet their business needs. We combine
the business knowledge and industry expertise of our domain specialists and the
technical knowledge and implementation skills of our delivery team to create
customized solutions for delivering time to development advantage, cost savings
and productivity enhancements. Our delivery capabilities are supplemented by a
holistic quality approach that integrates quality processes like Six Sigma, SEI
CMM Level 5 and CMM to eliminate deficiencies in execution. We address the banking and financial services segment, the manufacturing
sector, and the retail, energy and utilities industries through our broad range
of service offerings. Our enterprise solutions division accounted for 50% of
our Global IT Services and Products revenues for the fiscal year ended March
31, 2002, and 58% of our Global IT Services and Products revenues for the
fiscal year ended March 31, 2003 and 2004. Our services include: Custom applications.We enable our clients to leverage IT to achieve
business goals and to align their IT systems with their business strategy by
creating customized solutions, selecting appropriate technologies, implementing
systems on a fast-track basis, and ensuring overall quality.  
    
    Development.We offer our software development services over a
broad spectrum of technology areas that include client or server
applications, object-oriented software, Internet or intranet
applications and mainframe applications. For example, a leading
global insurance Company had IT systems which were aligned to the
requirements of particular distribution channels or specific product
types. This resulted in suboptimal utilization of IT infrastructure.
We designed and developed the One Customer Database (OCDB)  a
central repository for customer data, which provides a common view of
the customer across the clients organization. The OCDB is fully
integrated with the clients back- end systems and contains the
latest version of customer and product details (around 40 million
records). The OCDB has improved turnaround time for responding to
customer requests and has facilitated customer relationship
management by providing a holistic view of the customer holdings
across distribution channel and product categories.
    
    Re-engineering.We study a clients business processes and
existing systems and convert or redevelop them to improve efficiency
and reduce costs. For example, we assisted one of the worlds largest
water companies in a strategic re-engineering initiative to
streamline its IT operations to ensure better service delivery,
improved customer relationship and closer links with business. Over a
two year period, through a series of strategic initiatives, we
enabled the client to realize significant cost savings and
improvements in the quality of the IT applications. We followed a
cycle of define, perform, review and refine for each of the IT
applications assigned to us. We realized savings in the IT
application support budget by consolidating IT applications to derive
economies of scale and redistributing IT applications among third
party vendors for optimum cost savings.
    
    Maintenance.To meet the needs of a changing business
environment with limited internal resource utilization, we address
legacy software applications for our clients that require upgrades.
For example, for a leading reinsurance broker we transitioned legacy
application maintenance to our offshore location in India. Through
this process the client has realized productivity improvements and
more than 50% annual savings in maintenance and support costs. We
studied the existing system, documented and defined the service level
arrangements, simulated the offshore environment at the clients
premises and secured the confidence of the client before
transitioning the process into India. Enterprise application integration services.We implement packaged
enterprise applications that integrate information in an organization with key
business processes to improve the efficiency and effectiveness of our clients.
Through strategic alliances with other vendors, we assist our clients in
implementing services in the areas of enterprise resource planning, supply
chain management and customer relationship management. For example, we
assisted a U.S. based automotive company in designing an interface between the
clients MRP system and a global automotive business to business information
exchange portal. We deployed an Enterprise Application Integration software
tool, supplied by an enterprise software company to facilitate information flow
between the exchange portal and the MRP system. The information was primarily
related to part requirements, supplier schedules, advance shipment notices,




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alarms and inventory status. This secure information flow enables suppliers to
respond effectively to changes in the schedule and minimize inventory shortages
and emergency orders. Business intelligence and data warehousing.We develop strategies and
implement solutions for our clients to manage multiple sources of data for use
in their decision-making processes. For example, one of the leading stock
exchanges in India which is also one of the largest securities trading networks
in the world, needed a data warehouse to analyze trading and payment patterns
of members of the exchange. The client intended to define risk classes to
contain risk and maintain market integrity. We analyzed the diverse data
storage technologies, data semantics, and database management techniques across
multiple applications, and integrated them into a common data warehouse. We
believe this is one of the largest data warehousing projects implemented in
India. With an initial size of more than 500 Gigabytes of data, it offers the
following features:  
    
    A scalable information architecture;
    
    A detailed analysis of member patterns, including trading, delivery and funds payment;
    
    Fraud detection and a sequence of event analysis; and
    
    Data mining to identify correlations between apparently independent entities. Package Implementation.We use our expertise in package software to
architect, implement and maintain client specific solutions. For example, for
the largest vehicle manufacturer in the world, we implemented an ERP
application which enabled the client to make real time decisions in addressing
customer issues, monitoring actual sales versus forecasts and integrating
databases across dealers and fleet sales. Integrating two distinct applications
(for dealer and fleet sales) enabled the customers to optimize the costs of
maintaining the application. Consulting.We leverage our domain expertise and knowledge base in
specific areas to provide consulting services. For example, we worked with one
of the largest foreign exchange and travel companies in designing the
architecture of a global, online commercial foreign exchange system. The system
is intended to facilitate end-to-end automatic foreign exchange transactions
with minimal manual intervention and delays, customer relationship management
and provide value added services to members. We defined a multi-tiered,
multi-layered architecture to meet these requirements. The architecture
comprised disparate software technologies such as J2EE, XML, CORBA, VB and
COM-Java/EJB bridging. Technology Infrastructure Support Services Our service offerings include help desk management, systems management and
migration, network management and messaging services. We are able to provide
our Global IT Services and Products clients with high quality, 24-hour,
seven-day-a-week support services by leveraging our expertise in managing IT
infrastructure for our clients in India. For example, we partnered with one of
the worlds largest voice and data communications companies to reduce the cost
of maintaining legacy network transport applications. We combined the business
knowledge and industry expertise of our domain experts with our global delivery
model to seamlessly migrate mission-critical legacy network transport
applications from an existing service provider and non-critical maintenance
activities to an offshore location. We formed this division at the end of 1998
and it accounted for 6% of Global IT Services and Products revenues for the
year ended March 31, 2004. We anticipate that this division of our Global IT
Services business will continue to grow over the next few years. Research and Development Services We provide product development services for both hardware and software
systems that are implemented in computers and communications equipment. We
acquired these skill sets from earlier research and development efforts in the
design of computer hardware products for the Indian market when the Government
of India did not allow these products to be imported. We have leveraged our
research and development skills to become an outsourcing resource for companies
that seek highly skilled product development services for some of their core
technologies. We are able to assume complete responsibility for all phases of
the development, beginning with the requirements analysis to the transfer of
technology and information to the client. Our research and development services division accounted for 50%, 36% and
32% of the Global IT Services and Products revenue for the fiscal years ended
March 31, 2002, 2003 and 2004. Our services include: Hardware design and development.We design and develop various types of
integrated electronic circuits, or ICs, including application specific
integrated circuits, or ASICs and field programmable gate arrays, or FPGAs. We




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offer our services over a broad spectrum of technology areas, and are able
to provide our clients complete subsystems or entire products. Software system design and development.We develop software applications,
including computer operating system software applications commonly known as
middleware, electronics communication protocols and software that helps
computers manage networks and control peripheral devices such as printers and
monitors. We focus on embedded software technologies that involve the design
and development of software solutions that are embedded in the hardware of a
particular device. We have approximately 7,300 IT professionals trained in a broad array of
computing platforms and communication technologies. By focusing on selected
markets and technologies we are able to leverage our expertise and create
greater efficiencies as well as faster delivery times. Our research and
development services are organized into three areas of focus, which are
described below with illustrative examples of projects we have completed for
our clients: Telecommunications and inter-networking.We provide software and hardware
design, development and implementation services in areas such as fiber optics
communication networks, wireless networks, data networks, voice switching
networks and networking protocols. For example, a leading North-American
telecommunications solution provider had to provide an ISUP  Loop Around based
wireless pre-paid solution to a large cellular service provider in North
America. This wireless pre-paid solution is a suite of services that enable a
mobile subscriber to pay in advance for a class of cellular service. We assumed
complete responsibility of design, development, testing and deployment support
of the application. The solution involved development of an ISUP Call Control,
IS41 Mobility Manager, Rating Engine Interface, IVRU Interface and OAM&P
components. These modules were developed on a high-performance, fault tolerant,
multi-processor intelligent network platform. Embedded systems and Internet access devices.The software solution we
provide is programmed into the hardware IC or ASIC to eliminate the need for
running the software through an external source. The technology is
particularly important to portable computers, hand held devices, consumer
electronics, computer peripherals, automotive electronics and mobile phones, as
well as other machines such as process-controlled equipment. For example, for a
customer which is a large producer of hand held devices utilized at the point
of sale terminal, we developed an embedded device driver for a magnetic stripe
reader. We used our real time operating system development expertise on
embedded systems to develop an embedded device driver with a reusable software
core. The reusable core is independent of the operating system, compiler or
target processor. This reduces the development time of embedded device drivers
on other similar projects. Telecommunications and service providers.We provide software application
integration, network integration and maintenance services to telecommunications
service providers, Internet service providers, application service providers
and Internet data centers. BPO services Wipro Spectramind is one of Indias largest third party offshore BPO
provider. Wipro Spectramind enables clients to improve their quality of
processes, reduce costs and realize benefits of scale. Our service offerings
include:  
    
    Customer interaction services, such as IT-enabled customer services,
marketing services, technical support services and IT helpdesks;
    
    Finance and accounting services, such as accounts payable and
accounts receivable processing; and
    
    Process improvement services that provide benefits of scale for
repetitive processes like claims processing, mortgage processing and
document management. For BPO projects, we have a defined framework to manage the complete BPO
process migration and transition. The process has been developed based on the
experience of our senior management team over the past ten years in migrating
more than 390 remote business processes to India. This defined framework is
designed to ensure process integrity and minimize inherent migration risks. The
framework includes a proprietary transition toolkit, which ensures that there
is a documented methodology with formats, tools, guidelines and a repository of
past experiences to aid the transition team during the transition phase. For
example, for one of the worlds major air carriers, we utilized our proprietary
transition toolkit to transition into India processes such as travel
reservations for loyalty program members      , handling baggage claims,
corresponding with members of frequent flyer programs and processing
reservation requests rejected by IT systems due to incompatibility with other
types of reservation systems . The transition enabled the client to provide
24-hour services to its clients, improve productivity and save costs. We have approximately 9,300 service professionals providing BPO services
operating out of our offshore locations in Delhi, Mumbai, Chennai and Pune,
India.




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Our Global Delivery Model In our IT service offerings, we typically assume primary project
management responsibility for all stages of implementation of the project.
Typically, a project team consists of a small number of IT professionals based
at the clients location who define the scope of the project, track changes to
specifications and requirements during project implementation, assist in
installing the software or system at the clients site and ensure its continued
operation. The large proportion of the development work on the project is
performed at one of our dedicated offshore development centers, or ODCs,
located in India. Our project management techniques, risk management processes
and quality control measures enable us to complete projects on time and
seamlessly across multiple locations with a high level of quality. The Offshore Development Center.We were one of the first Indian IT
services companies to implement the offshore development model as a method for
delivering high-quality services at a relatively low cost to our international
clients. Our ODC is a virtual extension of the clients working environment
with a dedicated facility and dedicated hardware and software infrastructure
that replicates the clients facilities. This is further enhanced by a
dedicated high-speed telecommunication link with the clients onsite facilities
and a secure working environment. We currently operate 53 offshore development
centers. Clients such as Compaq, Nortel, and Seagate Technologies have had
ODCs with us for periods ranging from five to thirteen years. In all our
projects, we endeavor to increase the proportion of work performed at the ODCs
in order to be able to take advantage of the various benefits associated with
this approach, including higher gross margins and increased process control.
Due to the level of investment required by our clients in an ODC and the
quality of services we provide, the ODC model has provided us a high percentage
of repeat business and a stable revenue stream. For the year ended March 31,
2004, 56% of our revenue was generated from client specific ODCs and for work
performed at client premises for clients using our ODCs. Additionally, as of
March 31, 2004, 73% of our IT professionals in the Global IT Services and
Products business were located in India. The Nearshore Development Center.Based on specific client needs, we have
established dedicated development centers in close proximity to our clients
business locations, which we call nearshore development centers. These
nearshore development centers have employees with specialized functional
expertise and provide on-call support to our customers. We currently have
nearshore development centers in Mountain View, California in the U.S.,
Reading, in the U.K., Windsor, Ontario in Canada, Kiel in Germany, Helsinki in
Finland and Yokohama in Japan. In addition to providing software development
services, these centers, with their significant local talent, also provide a
local customer interface.




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Clients We provide IT software solutions to clients from a broad array of industry
sectors. Several of our clients purchase our services across several of our
business segments. We seek to expand the level of business with our existing
clients by increasing the type and range of services we provide to them. The
table below illustrates the size of our client project engagement size as
measured by revenues. Number of clients inYear ended
    
    Year ended
    
    Year endedMarch 31,
    
    March 31,
    
    March 31,Per client revenue($)
    
    2002
    
    2003
    
    20041-3 million
    
    
    49
    
    
    
    51
    
    
    
    743-5 million
    
    
    9
    
    
    
    22
    
    
    
    19>5 million
    
    
    23
    
    
    
    30
    
    
    
    44Total
    
    
    81
    
    
    
    103
    
    
    
    137
 For the fiscal years ended March 31, 2003 and 2004, the largest client of
our Global IT Services and Products segment accounted for 8% and 5% of the
revenues of Global IT Services and Products. For the same periods, the five
largest clients of our Global IT Services and Products segment accounted for
23% and 20% of Global IT Services and Products revenues. Sales and Marketing Our headquarters are located at Bangalore, India. We sell and market our
Global IT Services primarily through our direct sales force, with locations
worldwide, including in the United States, France, Germany, Holland, Japan,
Sweden and the United Kingdom. Our sales teams are organized in three ways:  
    
    By the vertical market segment of the clients business;
    
    By the geographic region in which the client is located; and
    
    By the specific practice specialization or skill set that the client requires. We use an integrated team sales approach that allows our sales teams to
pass a client over to an execution team once the sale is completed. Our sales
personnel work together with the appropriate software professionals and
technical managers in analyzing potential projects and selling our expertise to
potential clients. Our sales efforts are largely decentralized and conducted
within each of our business segments. Global IT Services and Products also
gets support from our corporate marketing team to assist in brand building and
other corporate level marketing efforts. Our sales and marketing team has
increased from 161 to 169 personnel from March 31, 2003 to March 31, 2004. We
intend to expand our global marketing efforts through increased presence in
targeted geographical regions. Competition The market for IT services is highly competitive and rapidly changing.
Our competitors in this market include consulting firms, big four accounting
firms, global IT services companies, such as IBM Global Services, Accenture,
EDS, and India based IT services companies such as Tata Consultancy Services,
Infosys, Satyam and Cognizant. These competitors are located internationally as well as in India. We
expect that further competition will increase and potentially include companies
from other countries that have lower personnel costs than those currently in
India. A significant part of our competitive advantage has historically been a
wage cost advantage relative to companies in the United States and Europe.
Because wage costs in India are presently increasing at a faster rate than
those in the United States our ability to compete effectively will increasingly
become dependent on our ability to provide high quality, on-time, complex
deliverables that depend on increased expertise in certain technical areas. We
also believe that our ability to compete will depend on a number of factors not
within our control, including:  
    
    the ability of our competitors to attract, retain and motivate
highly skilled IT services professionals;




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
    
    the extent to which our international competitors expand their
operations in India and benefit from the favorable wage differential;
    
    the price at which our competitors offer their services; and
    
    the extent to which our competitors can respond to a clients needs. We believe we compete favorably with respect to each of these factors and
believe our success has been driven by quality leadership, our ability to
create client loyalty and our expertise in targeted select markets. In BPO Services, we primarily compete against the in-house business
process outsourcing units of international companies, other Indian IT service
providers, global competitors and competitors from other offshore locations
like the Philippines and Ireland. India and AsiaPac IT Services and Products Our India and AsiaPac IT Services and Products business segment, which we
call Wipro Infotech, is focused on the Indian, Asia-Pacific and Middle-East
markets and provides enterprise clients with comprehensive IT solutions. Our
suite of services and products consists of the following:  
    
    Technology products;
    
    Technology integration, IT management and outsourcing services;
    
    Custom application development, application integration, package implementation and maintenance;
    
    Consulting; and
    
    e-Procurement Additionally, we provide our domestic customers with access to our full
range of global IT services, including enterprise solutions and research and
development services. Services and Products Technology Products.We manufacture our own brand of personal desktop
computers, servers and notebooks, and offer in India a portfolio of
international brands in desktops, servers, notebooks, storage products,
networking solutions and packaged software to meet our clients requirements.
We source components from domestic and international companies for
manufacturing our own brand of computers, servers and notebooks. Technology integration and management services and outsourcing services.
We enable our customers to leverage our IT skill and expertise to maximize
returns on their technology investments. We have over 21 years of experience
and currently support over 338,000 systems with over 11,500 contracts, with
approximately 3,500 IT professionals, including outsourced professionals. Our
offerings include:  
    
    Availability Services. Includes hardware and software
maintenance, and network availability services. We provide these
services through an annual service or maintenance contract with the
client which provides for both preventive and breakdown maintenance
services.
    
    System Integration.We are one of the largest system
integrators in India and our services include integration of
computing platforms, networks, storage, data center and enterprise
management software. These services are typically bundled with sales
of our technology products.
    
    Infrastructure Management and Total Outsourcing.Includes
management and operations of customers IT infrastructure on a
day-to-day basis. Our Total Outsourcing practice encompasses process,
function or activity of the IT department in a clients organization
that can be outsourced to us by the client, through a long term
contractual agreement. The scope of outsourcing typically covers two
or more of the following areas: applications management,
infrastructure management, asset outsourcing and human resources
transition
    
    Technology Support Services.Includes technology support
services for upgrades, system migrations, messaging, network audits
and new system implementation. When combined with our expertise in




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availability and managed IT services, we can provide the client with a
complete solution for enhanced system performance. We supplement our in-house resources with approximately 130 franchisees,
whom we train, and provide support for to allow them to provide both
Availability and Managed IT services. This allows us to grow our business
substantially without proportionate increases in our personnel. Custom application development, application integration, package
implementation and maintenance.We design, develop and implement enterprise
applications for corporate customers. Our solutions include custom application
development, package implementation, sustenance of enterprise applications,
including industry-specific applications, and enterprise application
integration. Consulting.We provide consulting services in the areas of business
continuity and risk management, technology, process and strategy. e-Procurement Services :We provide strategic e-Sourcing and e-Procurement
services to help customers leverage technology to optimize their procurement
costs. Clients We provide products and services to clients in a variety of areas such as
manufacturing, banking, financial services and insurance, government, IT and
IT-enabled services, telecommunications and education. Our clients also include
channel partners, who are value-added resellers of our services and products.
As of March 31, 2004, we had close to 200 channel partners throughout India. We
have a diverse range of clients, none of whom account for more than 5% of our
India and AsiaPac IT Services and Products business segment revenues. Sales and Marketing We sell and market our products and services to major corporate clients
through our direct sales force, and to smaller clients and retail clients
through an extensive network of channel partners. Sales teams are organized
based on vertical segments, geographies, client size or product or service
segment. Compensation to our sales team is comprised of salary and additional
compensation linked to achievement of revenue or profit target and collections
that a particular sales team produces. Sales efforts are supplemented through a
corporate wide web based ordering system and a marketing team that assists in
brand building, and other corporate level marketing efforts. As of March 31,
2004, we had 351 employees in our sales and marketing staff. Competition The market for our services and products is highly competitive and rapidly
changing. Our competitors include global players like IBM, Hewlett Packard,
EDS, Dell and Indian companies such as TCS, HCL Infosystems and Infosys. Global
players like IBM and Hewlett Packard and to some extent Sun Microsystems have
been increasingly focusing on increasing their presence in the Indian markets.
Some of these competitors have recently secured large contracts in India. We
anticipate this competition to continue to grow as the Indian economic demand
for these services increases and additional companies enter the Indian market. Consumer Care and Lighting Our consumer care and lighting business segment focuses on niche
profitable market segments and has historically generated cash to support the
growth of our other business segments. We began with the hydrogenated oil
business in 1946, and have continued to expand our business, currently offering
a mix of consumer products including hydrogenated cooking oil, soaps and
toiletries, light bulbs and fluorescent tubes, and lighting accessories. Products Soaps and toiletries. Our product lines include soaps and toiletries, as
well as baby products, using ethnic ingredients. Our umbrella brands include
the Santoor and Wipro Active line of talcum powders and the Wipro Baby Soft
line of infant and child care products, which includes soap, talcum powder, oil
and feeding bottles. Lighting. Our product line includes incandescent light bulbs, flourescent
tubes and luminaries. We operate both in commercial and retail markets. We
have also developed commercial lighting solutions for pharmaceutical production
centers, software development centers and other industries.




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Hydrogenated cooking oils. Our product line consists of hydrogenated
cooking oils, a cooking medium used in homes, and bulk consumption points like
bakeries and restaurants. We sell this product under our brand name Wipro
Sunflower, which was launched in the 1950s and has been a leading brand in
western and southern India. Sales and Marketing We sell and market our consumer care products primarily through our
distribution network in India, that has access to 1.2 million retail outlets
throughout the country. We sell our lighting products to major industrial and
commercial customers through our direct sales force, from 29 sales offices
located throughout India. We also have access to over 230,000 retail outlets
for our lighting products. We leverage our brand recognition by successfully incorporating the Wipro
identity with our consumer brands. We intend to expand our marketing efforts
with advertising campaigns and promotional efforts targeted to specific regions
of India. Competition Our competitors in consumer care and lighting are located primarily in
India, and include multinational and Indian companies such as Hindustan Lever
for soaps, toiletries and General Electric and Philips for lighting. Certain
competitors have recently focused sales strategies on increasing volumes
through lower prices. We have not. Sustained price pressures by competitors may
require us to respond with similar or different pricing strategies. We cannot
be reasonably certain that we will be able to compete successfully against such
competitors or that continued competition may not adversely affect our gross
and operating profits. Raw Materials and Manufacturing The primary raw materials for many of our soap and hydrogenated oil
products are agricultural commodities, such as vegetable oils. We normally
purchase these raw materials domestically and internationally through various
suppliers contracts. Prices of vegetable oils, agricultural commodities tend
to fluctuate due to seasonal, climatic and economic factors, which generally
also affect our competitors. Our lighting products are manufactured from glass and industrialized
parts. We purchase these parts from various domestic and foreign distributors
and manufacturers, pursuant to a combination of requirement and other supply
contracts. These materials are currently in adequate supply, and we expect
them to continue to be in adequate supply. We have five manufacturing facilities located in southern and western
India. Wipro Fluid Power Limited Our fluid power business started in 1975, as a result of our strategy to
enter new emerging markets with profitable business and high margins. We focus
on the hydraulics market, especially the mobile construction equipment business
and believe the growth of this business is linked to the growth of
infrastructure spending in India. We manufacture and sell cylinders and truck
hydraulics, and we also distribute hydraulic steering equipment and pumps,
motors and valves for international companies. The initiatives by the
Government of India in improving physical infrastructure have increased the
demand for our products. We anticipate that this demand will continue to remain
strong until 2005. Our main competitors include Hitachi Ltd., Hyundai Motor
Company, UT Limited (India) and overseas suppliers such as the Danfoss Group
and Komatsu Ltd. Markets and Sales Revenue Our revenues for the last three fiscal years by geographic areas are as
follows: (in millions)Fiscal year ended March 31,Geographic Area
    
    2002
    
    2003
    
    2004
    
    2004India
    
    Rs.
    11,044
    
    
    Rs.
    12,141
    
    
    Rs.
    14,783
    
    
    $
    341United States
    
    
    12,689
    
    
    
    20,048
    
    
    
    30,869
    
    
    
    711Europe
    
    
    8,255
    
    
    
    8,502
    
    
    
    10,458
    
    
    
    241Rest of the World
    
    
    1,485
    
    
    
    2,158
    
    
    
    2,323
    
    
    
    54Total
    
    Rs.
    33,473
    
    
    Rs.
    42,849
    
    
    Rs.
    58,433
    
    
    $
    1,346




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Wipro GE Medical Systems Private Limited In 1990, we formed a joint venture with General Electric called Wipro GE
Medical Systems Private Limited to learn new technologies and management
processes from world class companies like General Electric and to enter new
markets. General Electric currently holds 51% of the equity in the joint
venture and we hold 49%. The joint venture partners have equal representation
on the board of directors and the chairman of the joint venture is the chairman
of Wipro Limited. The joint venture provides customers in South Asian markets
after sales services for all GE Medical Systems products sold to them.
Products offered in this market consists of GE Medical Systems products
manufactured world wide and portable ultrasound equipment manufactured in India
by this joint venture for the global markets. This venture also leverages our
strength in software development to develop embedded software for medical
equipment designed and developed by General Electric for their global product
portfolio. The main competitors of Wipro GE Medical Systems Private Limited
include Siemens and Philips. Intellectual Property Our intellectual property rights are important to our business. We rely on
a combination of patent, copyright, trademark and design laws, trade secrets,
confidentiality procedures and contractual provisions to protect our
intellectual property. We require employees, independent contractors and,
whenever possible, vendors to enter into confidentiality agreements upon the
commencement of their relationships with us. These agreements generally provide
that any confidential or proprietary information developed by us or on our
behalf be kept confidential. These agreements also provide that any
confidential or proprietary information disclosed to third parties in the
course of our business be kept confidential by such third parties. However, our
clients usually own the intellectual property in the software we develop for
them. Our efforts to protect our intellectual property may not be adequate. Our
competitors may independently develop similar technology or duplicate our
products and/or services. Unauthorized parties may infringe upon or
misappropriate our products, services or proprietary information. In addition,
the laws of India do not protect intellectual property rights to the same
extent as laws in the United States. For example, India does not grant patents
for software applications or products. In the future, litigation may be
necessary to enforce our intellectual property rights or to determine the
validity and scope of the proprietary rights of others. Any such litigation
could be time-consuming and costly. We could be subject to intellectual property infringement claims as the
number of our competitors grows and our product or service offerings overlap
with competitive offerings. In addition, we may become subject to such claims
since we may not always be able to verify the intellectual property rights of
third parties from which we license a variety of technologies. Defending
against these claims, even if not meritorious, could be expensive and divert
our attention from operating our company. If we become liable to third parties
for infringing their intellectual property rights, we could be required to pay
substantial damage awards and be forced to develop non-infringing technology,
obtain a license or cease selling the applications that contain the infringing
technology. The loss of some of our existing licenses could delay the
introduction of software enhancements, interactive tools and other new products
and services until equivalent technology could be licensed or developed. We may
be unable to develop non-infringing technology or obtain a license on
commercially reasonable terms, or at all. As of March 31, 2004, Wipro Limited and its subsidiaries held 89
trademarks in India, including Wipro, Santoor and Wipro Babysoft. Wipro
Trademarks Holding Limited, our wholly owned subsidiary, has 902 trademark
applications pending in India. We have four registered trademarks in Japan,
three registered trademarks in the United States and five community trademarks
registered in the European Union. We have two trademark applications and one
service mark application pending in the United States and one service mark
application pending in Japan. It is uncertain whether we will be successful in
obtaining registration for these pending trademark and service mark
applications. We have three patent applications that are currently pending in India. We
have one registered patent for our hydraulic tipping valve. We have sixteen
registered copyrights and seven pending copyright registrations in India. We
also have ten designs registered in India. We cannot guarantee that we will
obtain patent, design and copyright registration for any of our pending
applications. By letters dated July 10 and October 8, 2003, attorneys for Louis J.
Cutrona, Jr. and Winpro, Inc. (collectively Winpro) alleged that Wipros use
of its WIPRO name and trademark in the United States constitutes infringement
of Winpros rights. On July 10, 2003, Winpro petitioned the U.S. Patent and
Trademark Office (PTO) to cancel Wipros federally registered WIPRO
trademark. By letter to Winpro dated August 12, 2003, Wipro denied Winpros
allegations. On September 12, 2003, Winpro filed with the PTO an amended
petition, alleging trademark infringement and seeking cancellation of the WIPRO
registration. On December 19, 2003, Wipro filed with the PTO an answer denying
the substantive allegations of the amended petition and asserting various
affirmative defenses. Significantly, while the PTO has jurisdiction to cancel
the trademark registration, it may not award money damages or issue an
injunction. Although




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##### Table of Contents



we believe that Winpros allegations are without merit, the results of
this claim cannot be predicted with certainty. Should we fail to prevail in
this matter, our results of operations or financial condition may be adversely
affected. Effect of Government Regulation of our Business Regulation of our business by the Indian government affects our business in
several ways. We benefit from certain tax incentives promulgated by the
Government of India, including a ten-year tax holiday from Indian corporate
income taxes for the operation of most of our Indian facilities and a partial
taxable income deduction for profits derived from exported IT services under
Indian tax laws. As a result of these incentives, our operations have been
subject to relatively insignificant Indian tax liabilities. We have also
benefited from the liberalization and deregulation of the Indian economy by the
successive Indian governments since 1991, including the current Indian
government. Further, there are restrictive parts of Indian law that affect our
business, including the fact that we are generally required to obtain approval
from the Reserve Bank of India and/or the Ministry of Finance of the Government
of India to acquire companies organized outside India, and we are generally
required, subject to some exceptions, to obtain approval from relevant
government authorities in India in order to raise capital outside India. The
conversion of our equity shares into ADSs is governed by guidelines issued by
the Reserve Bank of India. Finally, we are subject to several legislative provisions relating to the
Prevention of Food Adulteration, Weights and Measures, Drugs and Cosmetics,
Storage of Explosives, Environmental Protection, Pollution Control, Essential
Commodities and operation of manufacturing facilities. Non-compliance with
these provisions may lead to civil and criminal liability. We are and have been
in compliance with these provisions. Please see the section entitled Risk Factors in Item 3, as well as the
Section entitled Additional Information in Item 10, for more information on
the effects of governmental regulation of our business. Organization Structure Wipros subsidiaries and affiliates are provided in the table below. Country of
    
    PercentageName
    
    Incorporation
    
    Held by WiproSpectramind Limited
    
    Bermuda
    
    
    100
    %Spectramind Limited
    
    Mauritius
    
    
    100
    %Wipro Spectramind Services Limited (1)
    
    India
    
    
    93
    %Wipro Inc.
    
    United States
    
    
    100
    %Enthink Inc. (2)
    
    United States
    
    
    98
    %Wipro Japan KK
    
    Japan
    
    
    100
    %Wipro Chandrika Limited
    
    India
    
    
    100
    %Wipro Consumer Care Limited
    
    India
    
    
    100
    %Wipro Travel Services Limited
    
    India
    
    
    100
    %Wipro Trademarks Holding Limited
    
    India
    
    
    100
    %Wipro Holdings (Mauritius) Limited
    
    Mauritius
    
    
    100
    %Wipro Holdings (UK) Limited (3)
    
    United Kingdom
    
    
    Wipro Technologies UK Limited (4)
    
    United Kingdom
    
    
    Wipro HealthCare IT Limited
    
    India
    
    
    100
    %Wipro Fluid Power Limited
    
    India
    
    
    98
    %WeP Peripherals Limited
    
    India
    
    
    40.5
    %Wipro GE Medical Systems Private Limited.
    
    India
    
    
    49
    %Spectramind Inc. (5)
    
    United States
    
    
    100
    %Nervewire Inc, SA (6)
    
    Luxembourg
    
    
    100
    %
  (1)
    
    Owned through Spectramind Limited, Bermuda and Spectramind
Limited, Mauritius(2)
    
    Majority owned through Wipro Inc.(3)
    
    Wholly owned through Wipro Holdings (Mauritius) Limited(4)
    
    Wholly owned through Wipro Holdings (UK) Limited(5)
    
    Wholly owned through Wipro Spectramind Services Limited(6)
    
    Wholly owned by Wipro Inc. (prior to merger, it was a
subsidiary of Wipro Nervewire Inc.)During the year, each of Wipro Technologies Inc., a subsidiary of Wipro
Inc. and Wipro Nervewire Inc., a subsidiary of Wipro Limited, merged with
and into Wipro Inc. Property, Plant and Equipment




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##### Table of Contents



Our headquarters and corporate offices are located at Doddakannelli,
Sarjapur Road, Bangalore, India. The offices are approximately 300,000 square
feet. We have purchased approximately 2,062,000 square feet of land adjoining
our corporate offices for future expansion plans. Additionally, our most
significant leased and owned properties are listed in the table below. We have one sales and marketing office located in each of the following
countries: Canada, France, Germany, Japan, Sweden, and the United Kingdom. In
addition, we have eight sales and marketing offices in the United States. We operate nine manufacturing sites, aggregating approximately 4,284,300
square feet of land and approximately 1,254,000 square feet of building space.
We own seven of these facilities, located in Amalner, Tumkur, Bangalore,
Mysore, Hindupur, Chennai and Pondicherry, India. We have leased on a long-term
basis two additional facilities located in Waluj and Baddi, India. We have one
software development facility in London, UK. Our software development and manufacturing facilities are equipped with a
world class technology infrastructure that includes networked workstations,
servers, data communication links, captive power generators and other plants
and machinery. We believe that our facilities are optimally utilized and that appropriate
expansion plans are being planned and undertaken to meet our future growth. Building
    
    Land (1)Location
    
    Approx. Sq.ft.
    
    Approx. Sq.ft.
    
    OwnershipSoftware Development FacilitiesBangalore (M.G.Road), Karnataka
    
    
    56,000
    
    
    
    
    
    
    LeasedBangalore (ITPL), Karnataka
    
    
    45,000
    
    
    
    
    
    
    LeasedBangalore (Koramangala 1), Karnataka
    
    
    48,000
    
    
    
    
    
    
    LeasedBangalore (Koramangala 2), Karnataka
    
    
    52,500
    
    
    
    30,000
    
    
    OwnedBangalore (Koramangala 3), Karnataka
    
    
    13,249
    
    
    
    
    
    
    LeasedBangalore (Madivala - 1), Karnataka
    
    
    48,000
    
    
    
    
    
    
    LeasedBangalore (Madivala - 2), Karnataka
    
    
    74,800
    
    
    
    
    
    
    LeasedBangalore (Madivala - 3), Karnataka
    
    
    70,000
    
    
    
    
    
    
    LeasedBangalore (Electronic City 1), Karnataka
    
    
    225,000
    
    
    
    217,800
    
    
    Long term leaseBangalore (Electronic City 2), Karnataka
    
    
    430,000
    
    
    
    522,000
    
    
    OwnedBangalore (Electronic City 3), Karnataka
    
    
    250,000
    
    
    
    370,000
    
    
    OwnedBangalore (Sigma), Karnataka
    
    
    48,800
    
    
    
    
    
    
    LeasedBangalore (Madivala-4), Karnataka
    
    
    60,324
    
    
    
    
    
    
    LeasedBangalore (Electronics City-SIRI), Karnataka
    
    
    55,000
    
    
    
    
    
    
    LeasedChennai, (Guindy), Tamil Nadu
    
    
    35,000
    
    
    
    16,000
    
    
    OwnedChennai (Sholinganalur), Tamil Nadu
    
    
    450,000
    
    
    
    610,000
    
    
    OwnedMysore (Mettagalli Industrial Area), Karnataka
    
    
    10,000
    
    
    
    
    
    
    OwnedCarlton Towers, Bangalore, Karnataka
    
    
    4,100
    
    
    
    
    
    
    LeasedDelhi
    
    
    139,991
    
    
    
    
    
    
    LeasedGurgaon, Haryana
    
    
    6,000
    
    
    
    
    
    
    Long term leaseGurgaon, Haryana
    
    
    20,000
    
    
    
    
    
    
    LeasedHyderabad (Madhapur), Andhra Pradesh
    
    
    250,000
    
    
    
    196,000
    
    
    Long term leaseLondon, United Kingdom
    
    
    11,000
    
    
    
    
    
    
    LeasedNew Mumbai (Belapur), Maharashtra
    
    
    156,000
    
    
    
    
    
    
    Long term leasePune, (Hinjewadi), Maharashtra
    
    
    270,000
    
    
    
    1,084,000
    
    
    Long term leaseMumbai
    
    
    104,250
    
    
    
    
    
    
    LeasedSecunderabad (Queen Plaza), Andhra Pradesh
    
    
    55.970
    
    
    
    
    
    
    LeasedSecunderabad (Begumpet), Andhra Pradesh
    
    
    40,000
    
    
    
    
    
    
    Long term leaseStockholm, Sweden
    
    
    9,400
    
    
    
    
    
    
    Leased




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##### Table of Contents



Windsor, Canada
    
    
    18,000
    
    
    
    
    
    
    LeasedTotal
    
    
    2,944,470
    
    
    
    3,045,800
 Building
    
    Land (1)Location
    
    Approx. Sq.ft.
    
    Approx. Sq.ft.
    
    OwnershipProposed Software Development FacilitiesBangalore (Electronic City 4), Karnataka (2)
    
    
    1,000,000
    
    
    
    2,015,000
    
    
    OwnedHyderabad, Andhra Pradesh
    
    
    900,000
    
    
    
    1,300,000
    
    
    Long term leaseKolkatta, West
Bengal
    
    
    350,000
    
    
    
    522,000
    
    
    Long term leaseNew Mumbai (Vashi), Maharashtra
    
    
    250,000
    
    
    
    166,000
    
    
    Long term leaseTotal
    
    
    2,500,000
    
    
    
    4,003,000
 Building
    
    Land (1)Factories
    
    Approx. Sq.ft.
    
    Approx. Sq.ft.
    
    OwnershipAmalner, Maharashtra
    
    
    727,000
    
    
    
    1,108,000
    
    
    OwnedBangalore, Karnataka
    
    
    63,000
    
    
    
    397,000
    
    
    OwnedTumkur, Karnataka
    
    
    139,000
    
    
    
    736,000
    
    
    OwnedHindupur, Andhra Pradesh
    
    
    31,000
    
    
    
    114,000
    
    
    OwnedTambaram, Chennai
    
    
    90,000
    
    
    
    80,000
    
    
    OwnedMysore, Karnataka
    
    
    60,000
    
    
    
    327,000
    
    
    OwnedThirubhvanai, Pondicherry
    
    
    20,000
    
    
    
    400,000
    
    
    OwnedWaluj, Aurangabad
    
    
    124,000
    
    
    
    767,000
    
    
    Long term leaseBaddi , Himachal Pradesh
    
    
    
    
    
    
    355,300
    
    
    Long term leaseTotal
    
    
    1,254,000
    
    
    
    4,284,300
  (1)
    
    Includes land owned or held pursuant to a long term lease.(2)
    
    Facility partially completed Material Plans to Construct, Expand and Improve Facilities As
of March 31, 2004, we have capital commitments of Rs. 529 million

($12.18 million) related to the construction or expansion of software
development facilities. Additional expansion plans are currently intended to be
funded by internal sources of capital. Legal Proceedings Wipro Limited, its directors, senior executive officers and affiliates are
not currently a party to any material legal proceedings.




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##### Table of Contents



Item 5. Operating and Financial Review and Prospects Managements Discussion and Analysis of Financial Condition and Results of Operations Investors are cautioned that this discussion contains forward-looking
statements that involve risks and uncertainties. When used in this discussion,
the words anticipate, believe, estimate, intend, will and expect
and other similar expressions as they relate to the company or its business are
intended to identify such forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise. Actual results,
performances or achievements could differ materially from those expressed or
implied in such forward-looking statements. Factors that could cause or
contribute to such differences include those described under the heading Risk
Factors in the prospectus filed with the Securities and Exchange Commission,
as well as the factors discussed in this report. Readers are cautioned not to
place undue reliance on these forward-looking statements that speak only as of
their dates. The following discussion and analysis should be read in
conjunction with our financial statements included herein and the notes
thereto. Overview We are a leading global IT services company. We provide a comprehensive
range of IT services, software solutions and research and development services
in the areas of hardware and software design to the leading companies
worldwide. We use our development centers located in India and around the
world, quality processes and global resource pool to provide cost effective IT
solutions and deliver time-to-market and time-to-development advantages to our
clients. We also provide business process outsourcing, or BPO, services. In India, we are a leader in providing IT solutions and services. We also
have a profitable presence in the Indian markets for consumer products and
lighting. We have three principal business segments:  
    
    Global IT Services and Products. Our Global IT Services and Products
segment provides IT services to customers in the Americas, Europe and
Japan. The range of IT services include IT consulting, custom
application design, development, re-engineering and maintenance, systems
integration, package implementation, technology infrastructure
outsourcing, and research and development services in the areas of
hardware and software design. In April 2003, we reorganized our business
segments. As part of this reorganization, our IT-Enabled Services
business segment, which was our subsidiary Wipro Spectramind Services
Private Limited, or Wipro Spectramind, was consolidated into our Global
IT Services and Products business segment. In addition, we eliminated
our HealthScience segment, consolidating the IT services component of
the HealthScience segment into our Global IT Services and Products
business segment. We reclassified the remainder of our former
HealthScience segment, Wipro Biomed, into Others for purposes of
financial reporting.Pursuant to this reorganization, our Global IT Services and Products
business segment now provides BPO services to clients in North America,
Europe, Australia and other markets. Our Global IT Services and Products
segment also provides IT services to the healthcare and life sciences
markets.Our Global IT Services and Products segment accounted for 75% of our
revenue and 85% of our operating income for the year ended March 31, 2004.
    
    India and AsiaPac IT Services and Products. Our India and AsiaPac IT
Services and Products segment is a leader in the Indian IT market and
focuses primarily on meeting the requirements for IT products and
services of companies in India, AsiaPacific and the Middle East region.
Our India and AsiaPac IT Services and Products segment accounted for 16%
of our revenue and 7% of our operating income for the year ended March
31, 2004.
    
    Consumer Care and Lighting. We leverage our brand name and
distribution strengths to sustain a profitable presence in niche markets
in the areas of soaps, toiletries, lighting products and hydrogenated
cooking oils for the Indian market. Our Consumer Care and Lighting
segment accounted for 6% of our revenue and 5% of our operating income
for the year ended March 31, 2004. Our revenue and net income for the years ended March 31, 2002, 2003 and 2004
are provided below.




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##### Table of Contents



Wipro Limited and its subsidiariesYears ended March 31,2002
    
    2003
    
    2004(in millions except earnings per share data)Revenue
    
    Rs.
    33,473
    
    
    Rs.
    42,849
    
    
    Rs.
    58,433Cost of revenue
    
    
    (20,661
    )
    
    
    (27,176
    )
    
    
    (39,000
    )Gross profit
    
    
    12,812
    
    
    
    15,673
    
    
    
    19,433Gross margins
    
    
    38
    %
    
    
    37
    %
    
    
    33
    %Operating income
    
    
    8,442
    
    
    
    9,486
    
    
    
    10,901Loss on direct issue of stock by subsidiary
    
    
    
    
    
    
    
    
    
    
    (206
    )Income from continuing operations
    
    
    8,411
    
    
    
    8,477
    
    
    
    9,992Loss from discontinued operations, net of tax
    
    
    (82
    )
    
    
    (378
    )
    
    
    Net income
    
    
    8,329
    
    
    
    8,099
    
    
    
    9,992Earnings per share (Continuing operations)Basic
    
    
    36.39
    
    
    
    36.66
    
    
    
    43.20Diluted
    
    
    36.33
    
    
    
    36.60
    
    
    
    43.16Earnings per share (Net income)Basic
    
    
    36.04
    
    
    
    35.03
    
    
    
    43.20Diluted
    
    
    35.98
    
    
    
    34.97
    
    
    
    43.16
 Our Board of Directors has approved a stock dividend, commonly known as an
issue of bonus shares in India, which is subject to the approval of our
shareholders. The proposed stock dividend is expected to be submitted to our
shareholders for approval at our annual general meeting which is scheduled to
be held on June 11, 2004. If approved, the dividend to be declared is two
equity shares for every one equity share outstanding on the record date and two
ADSs for every one ADS outstanding on the record date. The share numbers
reflected in this report reflect pre-stock dividend numbers. The stock
dividend, if approved, will not affect the ratio of ADSs to equity shares, such
that each ADS after the stock dividend will continue to represent one equity
share of par value Rs. 2 per share. We were involved in the corporate Internet services provider, or ISP
business from 1999 until 2002. For strategic reasons, we decided to concentrate
on our core businesses and, as a result, in June 2002, we decided to exit this
business and approved a formal plan of disposal. Under the plan, we have sold
the customer contracts, disposed of the long-lived assets, settled the trade
receivables and outstanding vendor obligations. Our corporate ISP business was an asset group and its operations qualified
as a component of an entity. Because the operations and cash flows of the
component were eliminated from our ongoing operations as a result of the
disposal and we do not have any significant continuing involvement in the
operations of the component after the disposal, the results of operations of
our corporate ISP business were reported in discontinued operations during the
year ended March 31, 2003. Acquisitions Wipro Spectramind In July 2002, we acquired a controlling equity interest in Wipro
Spectramind, a leading IT-enabled service provider in India providing remote
processing services to large global corporations in the U.S., U.K. Australia
and other developed markets. Consequent to this acquisition, we held 89% of the
outstanding equity shares of Wipro Spectramind, acquired at a cost of Rs. 4,177
million. Subsequently, we acquired an additional 11% of the outstanding equity
shares for Rs. 441 million. The results of operations of Wipro Spectramind
have been consolidated in our financial statements with effect from July 1,
2002. As of March 31, 2003, we held 100% of the outstanding equity shares of
Wipro Spectramind. Employees of Wipro Spectramind, however, were previously
granted options to purchase equity shares in Wipro Spectramind, subject to
vesting requirements. As of March 31, 2003, 9,329,762 shares were subject to
outstanding employee stock options under the Wipro Spectramind option plan.
During the year ended March 31, 2004, 3,339,279 options were exercised at a
weighted average exercise price of Rs. 29.41 and 839,015 options were exercised
at a weighted average exercise price of Rs. 57 respectively. As a result of
these option exercises, our ownership interest in Wipro Spectramind has been
reduced to 93%. Upon exercise of the outstanding but unexercised options, our
equity interest in Wipro Spectramind on a fully diluted basis would be
approximately 88%.




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##### Table of Contents



Wipro Healthcare IT Limited (Wipro Healthcare IT) In August 2002, we acquired a 60% equity interest in Wipro Healthcare IT,
an India-based company engaged in the development of health care related
software, and the technology rights in the business of Wipro Healthcare IT for
an aggregate consideration of Rs. 181 million. On December 31, 2002, we
acquired the balance of the 40% equity interest in Wipro Healthcare IT for an
aggregate consideration of Rs. 97 million. Global Energy Practice (GEP) In December 2002, we acquired the Global Energy Practice of American
Management Systems for an aggregate consideration of Rs. 1,165 million. GEP has
a team of domain experts and IT consultants providing specialized IT services
to clients in the energy and utilities sector. This acquisition enhances our
ability to deliver end-to-end IT solutions primarily in the areas of design and
maintenance of complex billing and settlement systems for energy markets and
systems and enterprise application integration services. Wipro Nervewire In May 2003, we acquired Wipro Nervewire, a Massachusetts-based IT
consulting company serving customers in the financial services sector, for
consideration of Rs. 878 million. Through this acquisition, we have broadened
the range of IT consulting services that we offer, to include strategy and
business case development, business requirements definition, IT strategy and
program management and systems development and integration services to
customers in the financial services sector. Our revenue and operating income by business segment are provided below
for the years ended March 31, 2002, 2003 and 2004: Year ended March 31,2002
    
    2003
    
    2004Revenue:Global IT Services and Products
    
    
    68
    %
    
    
    71
    %
    
    
    75
    %India and AsiaPac IT Services and Products
    
    
    21
    
    
    
    19
    
    
    
    16Consumer Care and Lighting
    
    
    9
    
    
    
    7
    
    
    
    6Others
    
    
    3
    
    
    
    4
    
    
    
    3Reconciling items
    
    
    (1
    )
    
    
    (1
    )
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Operating Income:Global IT Services and Products
    
    
    90
    %
    
    
    87
    %
    
    
    85
    %India and AsiaPac IT Services and Products
    
    
    7
    
    
    
    6
    
    
    
    7Consumer Care and Lighting
    
    
    5
    
    
    
    4
    
    
    
    5Others
    
    
    1
    
    
    
    3
    
    
    
    3Reconciling items
    
    
    (3
    )
    
    
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 The Others category in the table above includes our other lines of
business such as Wipro Fluid Power and Wipro Biomed. As discussed previously,
we reorganized our business segments in April 2003. We consolidated our
IT-Enabled Services business segment into our Global IT Services and Products
business segment. We also eliminated our HealthScience business segment,
consolidating the IT services component of the HealthScience segment into our
Global IT Services and Products business segment. As of April 2003, in
connection with our reorganization of business segments, Wipro Biomed, which
was earlier reported as part of the HealthScience business segment for purposes
of our financial reporting, is now being reported as part of Others. Corporate
activities such as treasury, legal, accounting and human resources which do not
qualify as operating segments under SFAS No. 131, have been considered as
reconciling items. Reconciling items are net of common costs allocated to other
business segments. Global IT Services and Products Year ended March 31,2002
    
    2003
    
    2004(in millions)RevenueServices
    
    Rs.
    21,713
    
    
    Rs.
    30,444
    
    
    Rs.
    43,653Products
    
    
    955
    
    
    
    149
    
    
    
    122




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##### Table of Contents



Year ended March 31,2002
    
    2003
    
    2004(in millions)Total
    
    
    22,668
    
    
    
    30,593
    
    
    
    43,775Gross profitServices
    
    
    10,294
    
    
    
    12,809
    
    
    
    15,800Products
    
    
    64
    
    
    
    46
    
    
    
    44Total
    
    
    10,358
    
    
    
    12,855
    
    
    
    15,844Selling, general and administrative expenses
    
    
    (2,533
    )
    
    
    (4,160
    )
    
    
    (6,013
    )Research and Development expenses
    
    
    (213
    )
    
    
    (260
    )
    
    
    (232
    )Amortization of intangibles
    
    
    
    
    
    
    (166
    )
    
    
    (300
    )Others, net
    
    
    (3
    )
    
    
    12
    
    
    
    1Operating income
    
    
    7,609
    
    
    
    8,281
    
    
    
    9,300Revenue growth rate over prior period
    
    
    28
    %
    
    
    35
    %
    
    
    43
    %Gross margin
    
    
    46
    %
    
    
    42
    %
    
    
    36
    %Operating margin
    
    
    34
    %
    
    
    27
    %
    
    
    21
    %
 Revenue from the services component of our Global IT Services and Products
business segment consists of revenue from IT services and BPO services.
Revenue from IT services is derived from technology and software services
provided on a time-and-materials or fixed-price, fixed-timeframe basis. Revenue
from BPO services is derived from both time-based and unit-priced contracts.
Our business segment revenue includes the impact of exchange rate fluctuations.
Revenue from IT services provided on a time-and-materials basis is recognized
in the period that services are provided and costs are incurred. Revenue from
IT services provided through fixed-price, fixed-timeframe projects is
recognized on a percentage of completion basis. Revenue from BPO services is
recognized as services are performed under the specific terms of the contracts
with our customers. Provisions for estimated losses on projects in progress
are recorded in the period in which we determine such losses to be probable.
Maintenance revenue is deferred and recognized ratably over the term of the
agreement. To date, a substantial majority of our services revenue has been
derived from time-and-materials projects. The proportion of revenue from
fixed-price, fixed-timeframe projects may increase. Our operating results
could be adversely affected by factors such as cost overruns due to delays,
unanticipated costs, and wage inflation. Global IT Services and Products revenue from products is derived primarily
from the sale of third-party hardware and software products. The cost of revenue for services in our Global IT Services and Products
segment consists primarily of compensation expenses, data communication
expenses, computer maintenance, travel expenses and occupancy expenses
associated with services rendered. We recognize these costs as incurred.
Selling, general and administrative expenses consist primarily of sales,
marketing and administrative expenses and allocated corporate overhead expenses
associated with management, human resources, corporate marketing, information
management systems, quality assurance and finance. The cost of revenue for products in our Global IT Services and Products
segment primarily consists of the cost for products procured from third-party
manufacturers. The revenue and profits for any period of our IT services is significantly
affected by the proportion of work performed at our facilities in India and at
client sites overseas and by the utilization rates of our IT professionals.
The higher rates we charge for performing work at client sites overseas do not
completely offset the higher costs of performing such overseas work, and
therefore, services performed in India generally yield better profit margins.
For this reason, we seek to move a project as early as possible from overseas
locations to our Indian development centers. As of March 31, 2004, 73% of our
professionals engaged in providing IT services were located in India. For the
year ended March 31, 2004, 42% of the revenue of our IT services were generated
from work performed at our facilities in India. In our segment reporting only, management has included the impact of
exchange rate fluctuations in revenue. Excluding the impact of exchange rate
fluctuations, revenue, as reported in our statements of income, is Rs.
22,412 million, Rs. 30,267 million, and Rs. 43,465 million for the years ended
March 31, 2002, 2003 and 2004. India and AsiaPac IT Services and Products Year ended March 31,2002
    
    2003
    
    2004(in millions)RevenueServices
    
    Rs.
    1,914
    
    
    Rs.
    2,240
    
    
    Rs.
    3,109Products
    
    
    5,036
    
    
    
    5,806
    
    
    
    6,336Total
    
    
    6,950
    
    
    
    8,046
    
    
    
    9,445




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Year ended March 31,2002
    
    2003
    
    2004(in millions)Gross profitServices
    
    
    754
    
    
    
    1,053
    
    
    
    1,448Products
    
    
    768
    
    
    
    706
    
    
    
    693Total
    
    
    1,522
    
    
    
    1,759
    
    
    
    2,141Selling, general and administrative
expenses
    
    
    (946
    )
    
    
    (1,283
    )
    
    
    (1,411
    )Others, net
    
    
    2
    
    
    
    63
    
    
    
    31Operating income
    
    
    578
    
    
    
    539
    
    
    
    761Revenue growth rate over prior period
    
    
    (20
    %)
    
    
    16
    %
    
    
    17
    %Gross
margin
    
    
    22
    %
    
    
    22
    %
    
    
    23
    %Operating margin
    
    
    8
    %
    
    
    7
    %
    
    
    8
    %
 Revenue from the services component of our India and AsiaPac IT Services
and Products business segment is derived principally from hardware and software
support, maintenance, software services, e-procurement services and consulting
services. Revenue from the products component of our India and AsiaPac IT
Services and Products segment is derived primarily from the sale of computers,
networking equipment and related hardware products. Our business segment
revenue includes the impact of exchange rate fluctuations. We recognize revenue
from services, depending on the contract terms, over the contract period.
Revenue on products is recognized, in accordance with the sales contract, on
dispatch of the products to the customer. We have adopted the guidance in EITF
Issue No. 00-21 in respect of all revenue arrangements entered into in the
quarter beginning July 1, 2003. Prior to adoption of EITF Issue No. 00-21, we had elected an accounting
policy to recognize revenue for certain contracts on completion of
installation, where the customer was not obligated to pay a portion of the
contract price allocable to the delivered products until installation was
completed. EITF Issue No. 00-21 does not permit such an election. Consequently,
the amount allocable to the products is recognized as revenue on dispatch from
the factories/warehouses of the Company. The amount allocable to the
installation services is deferred and recognized on completion of the
installation. However, the amount allocable to products is limited to the
amount that is not contingent upon delivery of subsequent services. As a result
of this change, revenues for the year ended March 31, 2004, is higher by Rs.
1,123 million. The cost of revenue for services in our India and AsiaPac IT Services and
Products segment consists primarily of compensation expenses, expenses on
outsourced services and replacement parts for our maintenance services. We
recognize these costs as incurred. The cost of revenue for products in our
India and AsiaPac IT Services and Products segment consists of manufacturing
costs for products, including materials, labor and facilities. In addition, a
portion of the costs reflects products manufactured by third parties and sold
by us. We recognize these costs at the time of sale. In cases where the
application of the contingent revenue provision of EITF Issue No. 00-21 results
in recognizing a loss on delivered item the cost recognized is limited to the
amount of non-contingent revenues recognized. The balance costs are recorded as
an asset and are reviewed for impairment based on the estimated net cash flows
to be received for future deliverables under the contract. These costs are
subsequently recognized on recognition of the revenue allocable to the balance
deliverables. Selling, general and administrative expenses for our India and AsiaPac IT
Services and Products business segment are similar in type to those for our
Global IT Services and Products business segment. Historically, in our India and AsiaPac IT Services and Products business
segment, revenue from products has accounted for a substantial majority of
revenue and a much smaller portion of operating income. Our strategy in the IT
market in India and AsiaPacific region is to improve our profitability by
focusing on IT services, including systems integration, support services,
software and networking solutions, Internet and e-commerce applications. In our segment reporting only, management has included the impact of
exchange rate fluctuations in revenue. Excluding the impact of exchange rate
fluctuations, revenue, as reported in our statements of income, is Rs. 6,950
million, Rs. 8,041 million and Rs.9,413 million for the years ended March 31,
2002, 2003 and 2004 respectively. Consumer Care and Lighting Year ended March 31,2002
    
    2003
    
    2004(in millions)Revenue
    
    Rs.
    2,939
    
    
    Rs.
    2,942
    
    
    Rs.
    3,567Gross profit
    
    
    940
    
    
    
    934
    
    
    
    1,212Selling, general and administrative expenses
    
    
    (539
    )
    
    
    (513
    )
    
    
    (668
    )Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    (8
    )




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Year ended March 31,2002
    
    2003
    
    2004(in millions)Others, net
    
    
    3
    
    
    
    1
    
    
    
    10Operating income
    
    
    404
    
    
    
    422
    
    
    
    546Revenue growth rate over prior period
    
    
    (7
    %)
    
    
    
    
    
    
    21
    %Gross
margin
    
    
    32
    %
    
    
    32
    %
    
    
    34
    %Operating margin
    
    
    14
    %
    
    
    14
    %
    
    
    15
    %
 We have been in the Consumer Care business since 1945 and the lighting
business since 1992. The Consumer Care business has historically generated
surplus cash. Our strategy is to sustain operating margins, continue
generating positive operating cash flows and increase the proportion of
revenues from high margin products. We recognize revenue from product sales, in accordance with the sales
contract, at the time of shipment. Cost of products consists primarily of raw
materials and other manufacturing expenses such as overhead costs for
factories. Selling, general and administrative expenses are similar in type to
those for our other business segments. Amortization of Deferred Stock Compensation We have amortized deferred stock compensation expenses of Rs. 79 million,
Rs. 52 million and Rs. 45 million for the years ended March 31, 2002, 2003 and
2004 in connection with equity shares issued to our employees pursuant to our
Wipro Equity Reward Trust. We currently use the intrinsic value based method of APB Opinion No. 25
and record stock compensation expense for the difference between the exercise
price of options and the fair value as determined by quoted market prices of
our equity shares on the date of grant. FASB is proposing to require companies to change their accounting policies
to record the fair value of stock options issued to employees as an expense.
Under the FASB proposal, all stock options outstanding as of April 1, 2005 and
new stock options granted thereafter should be recorded as expense based on
fair value. Had we recorded compensation cost in a manner consistent with the
fair value approach described in SFAS No. 123, our net income would have been
reduced by Rs. 1,918 million, Rs. 2,989 million and Rs. 2,080 million, for the
years ended March 31, 2002, 2003 and 2004 respectively. Currently, fair value
of stock options is computed using the Black-Scholes model. FASB has proposed
an alternative model for computing the fair value of options and we are
currently evaluating this model. Stock option grants in the future may result
in significant stock compensation expense being recognized in the consolidated
statements of income. Amortization of Intangible Assets Intangible assets are amortized over their estimated useful lives in
proportion to the economic benefits consumed in each period. We have amortized
intangible assets of Rs. 166 million and Rs. 308 million for the years ended
March 31, 2003 and 2004. Foreign Exchange Gains, net Exchange rate fluctuation consists of the difference between the rate of
exchange at which a transaction is recorded and the rate of exchange on the
date the transaction is settled and, the gains and losses on revaluation of
foreign currency assets and liabilities outstanding at the end of a period.
Additionally, gains and losses resulting from valuing foreign currency forward
contracts at fair value at the end of a period is also reported in foreign
exchange gains, net.
For forward foreign exchange contracts which are designated and effective
as accounting hedges, the marked to market gains / losses are deferred and
reported as a component of other comprehensive income in stockholders equity. Others, net Others, net, include net gains on the sale of property, plant, equipment,
and other operating income. Loss on Direct Issue of Stock by Subsidiary As more fully described in note 23 to the Notes to Consolidated Financial
Statements, as of March 31, 2003, Wipro Spectramind had 9,329,762 equity shares
subject to outstanding employee stock options issued under the Wipro
Spectramind option plan. During the year ended March 31, 2004, 3,339,279
options were exercised at a weighted average exercise price of Rs. 29.41 and
839,015 options were exercised at a weighted average exercise price of Rs. 57.




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As a result of these option exercises, our ownership interest in Wipro
Spectramind was reduced from 100% to 93%. The exercise price for these options
was less than our carrying value per share. Accordingly, the exercise resulted
in a decline in the carrying value of our ownership interest by Rs. 206
million. In accordance with our accounting policy, we have included this
decline in carrying value in the statement of income as a loss on the direct
issue of stock by subsidiary. Of the 4,178,294 shares issued upon these option exercises, 3,996,387
shares are subject to repurchase rights that allow us to repurchase these
shares at fair value. The rights also give the employees the right to sell the
shares back to us at fair value. Employees can exercise this right to sell
shares to us after six months from the date of their option exercise.
Similarly, we can also exercise this repurchase right after six months from the
date of an employees option exercise. Other Income, net Our other income includes interest income on short-term investments, net
of interest expense on short-term and long-term debt, dividend income and
realized gains/losses on the sale of investment securities. Equity in Earnings/Losses of Affiliates Wipro GE Medical Systems Private Limited. (Wipro GE).We hold a 49% equity
interest in Wipro GE Medical Systems Private Limited, a venture where General
Electric, USA holds the balance of 51%. WeP Peripherals Ltd. (WeP).We hold a 40.5% equity interest in WeP
Peripherals Ltd. NetKracker.In December 2000, we established NetKracker by transferring
our retail Internet business into a newly formed Company in which a strategic
investor invested Rs. 300 million to acquire a 51% equity share interest. We
retained a 49% equity share interest and also acquired additional convertible
preference shares in NetKracker for an aggregate amount of Rs. 54 million. In
March 2002, we converted such preference shares to equity shares and increased
our equity interest in NetKracker to 79%. In March 2002, we agreed to acquire a
19% equity share interest in NetKracker from the strategic investor for Rs. 30
million in cash and a contingent cash consideration that is payable on the
occurrence of certain specified events. We believe that the occurrence of such
specified events are within our control and as a result have determined that
the contingent consideration is not payable. Accordingly, the transaction was
accounted for as a purchase business combination. The amounts assigned to the
net assets of NetKracker exceed the cost of acquisition and this excess was
initially used to reduce the amounts allocated to certain eligible assets.
Since the remaining excess of Rs. 96 million is not material we have reported
it as a component of other income and not as an extraordinary gain. Income Taxes Our net income earned from providing services at client premises outside
India is subject to tax in the country where we perform the work. Most of our
tax paid in countries other than India can be applied as a credit against our
Indian tax liability to the extent that the same income is chargeable to tax in
India. Currently, we benefit from tax holidays the Government of India gives to
the export of information technology services from units in designated
Software Technology Parks in India. As a result of these incentives, our
operations have been subject to relatively insignificant Indian tax
liabilities. These tax incentives currently include a 10-year tax holiday from payment
of Indian corporate income taxes for the operation of our Indian facilities,
all of which are Export Oriented Undertakings or located in Software
Technology Parks or Export Processing Zones and an income tax deduction of
100% for profits derived from exporting information technology services. We
can use either of these two tax incentives. As a result of these two tax
incentives, a substantial portion of our pre-tax income has not been subject to
significant tax in recent years. For the years ended March 31, 2002, 2003 and
2004 our tax benefits were Rs 2,506 million, Rs 2,263 million and Rs 2,925
million respectively, from such tax incentives. The Finance Act, 2000 phases out the 10-year tax holiday over a ten year
period from fiscal 2000 through fiscal 2009. Accordingly, facilities set up on
or before March 31, 2000 have a 10-year tax holiday, new facilities set up on
or before March 31, 2001, have a 9-year tax holiday and so forth until March
31, 2009, after which the tax holiday will no longer be available to new
facilities. Our current tax holidays expire in stages by 2009. The Finance Act, 2000 also restricts the scope of the tax exemption to
export income earned by software development centers that are Export Oriented
Undertakings or located in Software Technology Parks or Export Processing
Zones as compared to the earlier exemption which was available to business
profits earned by them. For




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companies opting for the 100% tax deduction for profits derived from
exporting information technology services, the Finance Act, 2000 phases out the
income tax deduction over a period of five years beginning on April 1, 2000.
Additionally, the Finance Act, 2002 had subjected 10% of all income derived
from services located in  Software Technology Parks to income tax for a
one-year period ending March 31, 2003. For the year ended March 31, 2004, our effective tax rate was 13.8% and
our Indian statutory tax rate for the same period was 35.9%. When our tax
holiday and taxable income deduction expire or terminate, our tax expense will
materially increase, reducing our profitability. On or about March 25, 2004, we received an assessment order from the
Deputy Commissioner of Income Tax, Bangalore, India in connection with our
regular assessment of our income tax return for the year ended March 31, 2001.
The assessment order disallows a taxable income deduction we made under Section
10A of the Income Tax Act, 1961 of India pertaining to some of our software
development units located in Bangalore. Section 10A of the Income Tax Act,
1961 provides a ten-year tax holiday for setting up software development units
in STPI. The assessing officers claim is based, among other things, upon the
premise that in order for such software development units to qualify for the
special tax treatment and corresponding tax deduction, we should have obtained
a license for each such new unit located in the STPI. We have instead formed
such new units with STPI approval under our original STPI licenses obtained in
1992. The assessment order claims that the disallowance, along with other
disallowances, requires us to make a payment of Rs. 2,614 million, or
approximately US$ 60 million. Based on our assessment of the merits of the
claim, we have made a provision in the amount of Rs. 300 million, or
approximately US$ 6.9 million on our balance sheet. In the opinion of
management, the remainder of the amount referred to in the assessment order is
without merit. We filed an appeal before the first appellate authority of the
relevant tax department, known as the Commissioner (Appeals), on April 22, 2004
challenging the assessment order. Although we currently believe we will
ultimately prevail in our appeal, the results of such appeal, and any
subsequent appeals, cannot be predicted with certainty. Should we fail to
prevail in our appeal, or any subsequent appeals, in any reporting period, the
operating results of such reporting period could be materially adversely
affected. Results of Operations Years ended March 31, 2004 and 2003 Revenue.Our total revenues increased by 36% from Rs. 42,849 million for
the year ended March 31, 2003 to Rs.58,433 million for the year ended March 31,
2004. This was driven primarily by a 44%, 17%, 21% and 24% increase in revenue
from Global IT Services and Products, India and AsiaPac IT Services and
Products, Consumer Care and Lighting and Others, respectively. Global IT Services and Products revenue increased by 44% from Rs. 30,267
million for the year ended March 31, 2003 to Rs.43,465 million for the year
ended March 31, 2004. This increase is attributable primarily to two factors.
First, we acquired Wipro Spectramind in July 2002, Global Energy Practice in
December 2002 and Wipro Nervewire in May 2003. Second, the increase in revenue
of our Global IT Services and Products business segment was also attributable
to a 49% increase in revenue from enterprise services, a 36% increase in
revenue from technology services and a 122% increase, on a comparable basis,
from BPO services. The increase in revenue from enterprise services was
primarily driven by increased revenue from services provided in the area of
enterprise applications. The increase in revenue from technology services was
primarily driven by increased revenue from services provided in the areas of
design and development of embedded software solutions to consumer electronics,
automotive and computer hardware manufacturing companies and an increase in
revenue from our Telecom and Internetworking division. Revenue from BPO
services increased primarily due to an increase in the number of clients and an
increase in the scope and volume of services provided to clients. In our Global IT Services and Products business segment we added 123 new
clients during the year ended March 31, 2004. The total number of clients that
individually accounted for over $1 million run rate in revenue increased from
103 as of the year ended March 31, 2003 to 137 as of the year ended March 31,
2004. India and AsiaPac IT Services and Products revenue increased by 17% from
Rs. 8,041 million for the year ended March 31, 2003 to Rs. 9,414 million for
the year ended March 31, 2004. Revenue from the products component of our India
and AsiaPac IT Services and Products business segment increased by 9% from Rs.
5,801 million for the year ended March 31, 2003 to Rs. 6,305 million for the
year ended March 31, 2004. The increase in revenue was primarily due to two
factors. First, the increase is attributable to an increase in revenue from
traded and manufactured products. Second, the revenues for the year ended March
31, 2004, are higher by Rs 1,123 million due to adoption of guidance in EITF
Issue No. 00-21, in respect of all revenue arrangements entered into in the
quarter beginning July 1, 2003.




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Revenue from the services component of our India and AsiaPac IT Services
and Products business segment grew by 39% from Rs. 2,240 million in the year
ended March 31, 2003 to Rs.3,109 million in the year ended March 31, 2004. The
increase was primarily due to an increase in revenue from new service lines
like consulting services and system integration services and growth in our core
service business of hardware and software support and maintenance services. Consumer Care and Lighting revenue increased by 21% from Rs. 2,942 million
for the year ended March 31, 2003 to Rs 3,567 million for the year ended March
31, 2004. This was primarily due to increased efforts on expanding market
presence in select geographies which resulted in higher sales of soap products. Revenue from Others increased by 24% from Rs.1,599 million for the year
ended March 31, 2003 to Rs. 1,988 million for the year ended March 31, 2004.
This was primarily due to a 34% increase in the revenues from the sale of
hydraulic cylinders and tipping gear systems in our Fluid Power business. The
initiatives by the Government of India in improving physical infrastructure
have increased the demand for hydraulic cylinders and tipping gear systems. Gross Profit:As a percentage of total revenue, gross profit declined by
4% from 37% for the year ended March 31, 2003 to 33% for the year ended March
31, 2004. This decline is primarily as a result of decline in gross profit from
the services component of our Global IT Services and Products segment from 41%
for the year ended March 31, 2003 to 36% for the year ended March 31, 2004.
Gross profit in the India and AsiaPac IT Services and Products segment remained
unchanged at 22% for the years ended March 31, 2003 and March 31, 2004. Gross
profit in Consumer Care and Lighting increased from 32% for the year ended
March 31, 2003 to 34% of revenue for the year ended March 31, 2004. The gross profit as a percentage of revenues of Global IT Services and
Products has declined by 5% from 41% of revenue for the year ended March 31,
2003 to 36% of revenue in the year ended March 31, 2004. This decrease is
primarily due to a 5% increase in the proportion of services rendered onsite,
1.5% decline in our offshore billing rates, an increase in compensation for
offshore employees as a part of our compensation review in October 2003 and an
increase in the number of independent consultants hired for specific
assignments. This is partially offset by a 1.8% increase in the onsite billing
rates and a 3% increase in IT professional utilization rates from 66% in the
year ended March 31, 2003 to 69% in the year ended March 31, 2004. As a percentage of India and AsiaPac IT Services and Products revenue,
gross profit remained unchanged at 22% for the years ended March 31, 2003 and
March 31, 2004. The increase in proportion of revenues from Services, from 28%
of revenues in the year ended March 31, 2003 to 33% of total revenues in the
year ended March 31, 2004, was offset by a decline in gross profit from
Products, by 1% from 12% of revenues in the year ended March 31, 2003 to 11% of
revenues in the year ended March 31, 2004. As a percentage of Consumer Care and Lighting revenue, gross profit
increased by 2% from 32% for the year ended March 31, 2003 to 34% for the year
ended March 31, 2004. This increase was primarily due to an increase in the
gross margins from soap products and an increase in the proportion of revenue
from soap products, which typically have a higher gross margin compared to
other products. As a percentage of revenue, gross profit from Others increased marginally
by 1% from 28% for the year ended March 31, 2003 to 29% for the year ended
March 31, 2004. Selling, general and administrative expenses.Selling, general and
administrative expenses increased by 36% from Rs. 6,193 million for the year
ended March 31, 2003 to Rs. 8,450 million for the year ended March 31, 2004.
The total increase in selling, general and administrative expenses of Rs. 2,257
million was attributable to an increase of Rs.1,853 million in Global IT
Services and Products, Rs. 128 million in India and AsiaPac IT Services and
Products, Rs. 155 million in Consumer Care and Lighting and Rs 121 million in
Others. Selling, general and administrative expenses for our Global IT Services
and Products business segment increased by 45% from Rs. 4,160 million for the
year ended March 31, 2003 to Rs. 6,013 million for the year ended March 31,
2004. Selling general and administrative expenses include selling general and
administrative expenses for Wipro Spectramind, the business we acquired in July
2002, Global Energy Practice, the business we acquired in December 2002, and
Wipro Nervewire, the business we acquired in May 2003. The increase of Rs 1,853
million in selling, general and administrative expenses is primarily due to an
increase in the average number of sales and marketing personnel from 139 in the
year ended March 31, 2003 to 170 in the year ended March 31, 2004, an increase
in the proportion of local hires in our sales and marketing team, who typically
have a higher remuneration package, an increase in compensation costs as part
of compensation review in October 2003 and an increased focus on promoting the
IT Services brand,




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Selling, general and administrative expenses for our India and AsiaPac IT
Services and Products business segment increased by 10% from Rs. 1,283 million
for the year ended March 31, 2003 to Rs. 1,411 million for the year ended March
31, 2004. This was primarily due to an increase in the number of sales and
marketing personnel for this business segment and an increase in compensation
costs as part of compensation review in October 2003. Selling, general and administrative expenses for Consumer Care and
Lighting increased by 30% from Rs. 513 million for the year ended March 31,
2003 to Rs. 668 million for the year ended March 31, 2004. This was primarily
due to the increase in sales promotion expenses for this business segment. Selling, general and administrative expenses for Others, including
reconciling items, has increased by 51% from Rs 237 million for the year ended
March 31, 2003 to Rs 358 million for the year ended March 31, 2004. The
increase was primarily due to compensation review in October 2003 and increased
expenditure on brand promotion. Operating income.As a result of the foregoing factors, operating income
increased by 15% from Rs. 9,486 million for the year ended March 31, 2003 to
Rs. 10,901 million for the year ended March 31, 2004. Operating income of
Global IT Services and Products increased by 12% from Rs 8,281 million for the
year ended March 31, 2003 to Rs 9,300 million for the year ended March 31,
2004. Operating income of India and AsiaPac IT Services and Products increased
by 41% from Rs. 539 million for the year ended March 31, 2003 to Rs. 761
million for the year ended March 31, 2004. Operating income of Consumer Care
and Lighting increased by 29% from Rs. 422 million for the year ended March 31,
2003 to Rs. 546 million for the year ended March 31, 2004. Operating income of
Others, including reconciling items, increased by 20% from Rs. 256 million for
the year ended March 31, 2003 to Rs. 308 million for the year ended March 31,
2004. Effective March 2004, upon completion of the formal documentation and
testing for effectiveness, we have designated forward contracts in respect of
forecasted transactions, which meet the hedging criteria, as cash flow hedges.
Consequently, as of March 31, 2004, we have recorded an amount of Rs. 1,059
million as a component of accumulated other comprehensive income within
stockholders equity. These amounts will be recognized in the consolidated
statements of income in the periods in which the hedged transactions occur. Other income, net.Other income, net, increased from Rs. 718 million in
the year ended March 31, 2003 to Rs. 868 million for the year ended March 31,
2004. Other income for the year ended March 31, 2003 includes interest payable
by tax authorities on tax refunds due upon completion of tax assessments of Rs
54 million. Other income for the year ended March 31, 2004 includes gain on
sale of property of Rs 107 million. Other income has increased primarily due to
an increase in the average quantum of investment, partially offset by a decline
in average return on investments. Income taxes.Income taxes increased by 20% from Rs. 1,342 million for the
year ended March 31, 2003 to Rs. 1,611 million for the year ended March 31,
2004. Our effective tax rate increased from 13.6% in the year ended March 31,
2003 to 13.82% for the year ended March 31, 2004. The increase in effective tax
rate is primarily on account of a higher proportion of income being subject to
foreign taxes and the provision of Rs 274 million in respect of earlier years.
The Finance Act, 2002 had subjected 10% of all income derived from units
located in Software Technology Parks to income tax for a one year period
ending March 31, 2003 and consequently in the year ended March 31, 2003 10% of
all income derived from units located in Software Technology Parks was
subject to income tax. For the year ended March 31, 2004 income derived from
units located in Software Technology Parks is not subject to income tax. Equity in earnings / losses of affiliates.Equity in earnings of
affiliates for the year ended March 31, 2004 was Rs. 96 million against loss of
Rs. 355 million for the year ended March 31, 2003. Equity in earnings of
affiliates of Rs. 96 million in the year ended March 31, 2004 comprises equity
in earnings of Wipro GE of Rs. 56 million and equity in earnings of WeP
Peripherals of Rs.40 million. Equity in losses of affiliates of Rs. 355 million
for the year ended March 31, 2003 is attributable to the share in losses of Rs
371 million in Wipro GE partially offset by equity in earnings of WeP
Peripherals of Rs 16 million. Income from continuing operations.As a result of the foregoing factors,
income from continuing operations increased by 18% from Rs. 8,477 million for
the year ended March 31, 2003 to Rs. 9,992 million for the year ended March 31,
2004. Years ended March 31, 2003 and 2002 Revenue.Our total revenue increased by 28% from Rs. 33,473 million for
the year ended March 31, 2002 to Rs. 42,849 million for the year ended March
31, 2003. Revenue growth of 28% was driven primarily by a 35%, 16%, and 37%
increase in revenue from Global IT Services and Products, India and AsiaPac IT
Services and Products and Others, respectively. Revenues of Consumer Care and
Lighting remained flat as compared to the year ended March 31, 2002.




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Global IT Services and Products revenue increased by 35% from Rs. 22,412
million for the year ended March 31, 2002 to Rs. 30,267 million for the year
ended March 31, 2003. This increase is attributable primarily to two factors.
First, we acquired Spectramind eServices Limited in July 2002, Wipro Healthcare
IT in August 2002 and Global Energy Practice in December 2002. Second, the
increase in revenue of our Global IT Services and Products business segment was
also attributable to a 43% increase in revenues from enterprise services
partially offset by a 5% decline in revenues from technology services. The
increase in revenue from enterprise services was primarily driven by increased
revenues we received from services provided to financial services, retail and
utility companies. The decline in revenues from technology services was
primarily due to a 24% decline in revenues from our Telecommunications and
Inter-networking division, reflecting the softness in demand from
telecommunications equipment manufacturers. This was partially offset by a 17%
increase in revenue from services provided in the areas of design and
development of embedded software solutions to consumer electronics, automotive
and computer hardware manufacturing companies. We added 120 new clients during the year ended March 31, 2003. The total
number of clients that individually accounted for over $1 million run rate in
revenues increased from 81 in the year ended March 31, 2002 to 103 in the year
ended March 31, 2003. India and AsiaPac IT Services and Products revenue increased by 16% from
Rs. 6,950 million for the year ended March 31, 2002 to Rs. 8,041 million for
the year ended March 31, 2003. Revenue from products increased 15% which was
primarily due to a 7% increase in revenue from manufactured products and a 20%
increase in revenue from traded products. Revenue from services grew by 17%
from Rs.1,914 million for the year ended March 31, 2002 to Rs. 2,240 million
for the year ended March 31, 2003. Consumer Care and Lighting revenues remained flat from Rs. 2,939 million
for the year ended March 31, 2002 to Rs. 2,942 million for the year ended March
31, 2003. Revenue from Others increased by 37%, from Rs. 1,172 million for the year
ended March 31, 2002 to
Rs. 1,599 million for the year ended March 31, 2003. This was primarily
due to a 51% increase in the revenues from sale of hydraulic cylinders and
tipping gear systems in our Fluid Power business. The initiatives by the
Government of India in improving physical infrastructure have increased the
demand for hydraulic cylinders and tipping gear systems. Gross Profit.As a percentage of total revenue, gross profit declined from
38% for the year ended March 31, 2002 to 37% for the year ended March 31, 2003.
The decline is primarily due to a decline in gross profit of Global IT
Services and Products from 47% of revenues for the year ended March 31, 2002 to
41% of revenues for the year ended March 31, 2003. As a percentage of Global IT Services and Products revenue, gross profit
for the services component declined by 6% from 47% in the year ended March 31,
2002 to 41% in the year ended March 31, 2003. This decline is primarily due to
a 7% decrease in our offshore billing rates, a 6% decrease in our onsite
billing rates and an increase in compensation for offshore employees as part of
our compensation review in June 2002. This is partially offset by a 6%
increase in IT professional utilization rates from 60% in the year ended March
31, 2002 to 66% in the year ended March 31, 2003. As a percentage of India and AsiaPac IT Services and Products revenue,
gross profit for the products component declined by 3% from 15% for the year
ended March 31, 2002 to 12% for the year ended March 31, 2003. This was
primarily due to a 7% decline in gross margins of traded products partially
offset by a 3% increase in gross margins of manufactured products. As a percentage of India and AsiaPac IT Services and Products revenue,
gross profit for the services component increased by 8% from 39% for the year
ended March 31, 2002 to 47% for the year ended March 31, 2003. This increase
was primarily due to an increase in the proportion of revenues from higher
margin services. As a percentage of Consumer Care and Lighting revenue, gross profit as a
percentage of revenue remained at 32% for the year ended March 31, 2003. As a percentage of revenues, gross profit from Others increased by 7% from
21% for the year ended March 31, 2002 to 28% for the year ended March 31, 2003.
A portion of costs in our Fluid Power business, which is included as part of
Others, is fixed in nature, and does not increase in proportion to the increase
in revenues. Selling, general and administrative expenses.Selling, general and
administrative expenses increased by 42% from Rs.4,359 million for the year
ended March 31, 2002, to Rs. 6,193 million for the year ended March 31, 2003.
The total increase in selling, general and administrative expenses of Rs. 1,834
million was attributable to an increase of Rs. 1,627 million in Global IT
Services and Products, Rs. 337 million in India and AsiaPac IT Services and
Products, a decrease of Rs. 26 million in Consumer Care and Lighting and a
decline of Rs. 104 million in Others.




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Selling, general and administrative expenses for Global IT Services and
Products increased by 64% from Rs. 2,533 million for the year ended March 31, 2002 to Rs. 4,160 million
for the year ended March 31, 2003. The increase was primarily due to an
increase in the number of sales and marketing personnel, which increased from
an average of 91 in the year ended March 31, 2002 to 139 in the year ended
March 31, 2003, an increase in compensation costs as part of our compensation
review in June 2002 and an increase in the proportion of local hires, who
typically have a higher remuneration package, in our sales and marketing team.
Additionally, selling, general and administrative expenses of Wipro
Spectramind, Wipro Healthcare IT and Global Energy Practice are included in our
selling, general and administrative expenses from July 2002, August 2002 and
December 2002 respectively. Selling, general and administrative expenses for India and AsiaPac IT
Services and Products increased by 36% from Rs. 946 million for the year ended
March 31, 2002 to Rs. 1,283 million for the year ended March 31, 2003. This was
primarily due to expenditure incurred on establishing sales and marketing
offices in the Asia Pacific region, an increase in the number of sales and
marketing personnel and an increase in compensation costs as part of our
compensation review. Selling, general and administrative expenses for Consumer Care and
Lighting decreased marginally by 5% from Rs.539 million for the year ended
March 31, 2002 to Rs. 513 million for the year ended March 31, 2003. Selling, general and administrative expenses for Others, including
reconciling items, decreased by 30% from Rs. 340 million for the year ended
March 31, 2002 to Rs. 237 million for the year ended March 31, 2003. The
decline was primarily due to increase in amount of common costs allocated to
other business segments. Operating income.As a result of foregoing factors, operating income
increased by 12% from Rs. 8,442 million for the year ended March 31, 2002 to
Rs. 9,486 million for the year ended March 31, 2003. Operating income of
Global IT Services and Products and Consumer Care and Lighting increased by 9%
and 4% respectively to Rs. 8,281 million and Rs. 422 million, respectively.
Operating income of India and AsiaPac IT Services and Products declined by 7%
to Rs. 539 million. Operating income of Others increased to Rs.244 million for
the year ended March 31, 2003, from an operating loss of Rs. 149 million for
the year ended March 31, 2002. Operating income of Others, including
reconciling items, for the year ended March 31, 2002 includes goodwill
amortization charge of Rs. 175 million. Other income, net.Other income, net, decreased from Rs. 839 million in
the year ended March 31, 2002 to Rs. 718 million for the year ended March 31,
2003. The decrease was mainly due to the impact of exchange rate fluctuations
on our investments denominated in dollars. Lower yield on our total
investments was partially offset by an increase in the amount of our average
investments. Income taxes.Income taxes increased by 32% from Rs. 1,016 million for the
year ended March 31, 2002 to Rs. 1,342 million for the year ended March 31, 2003. Our effective tax
rate increased from 10.8% in the year ended March 31, 2002 to 13.6% in the year
ended March 31, 2003. The increase in effective tax rate was primarily due to a
tax of 10% of the profits generated by our operations located in software
technology parks in the year ended March 31, 2003, a decrease in the proportion
of income from domestic investments being realized in a tax-free manner and an
increase in the proportion of our income that is subject to foreign taxes. The
profits generated by our operations located in software technology parks were
subject to a 100% tax holiday in the year ended March 31, 2002. Equity in earnings/losses of affiliates.Equity in losses of affiliates
for the year ended March 31, 2003 was Rs. 355 million against equity in earnings of affiliates of Rs. 147
million for the year ended March 31, 2002. Equity in the earnings of Wipro GE
was Rs. 234 million for the year ended March 31, 2002 which was partially
offset by the equity in losses of Netkracker of Rs. 111 million. In the year
ended March 31, 2003 equity in the losses of Wipro GE was Rs. 371 million which
was partially offset by the equity in earnings of WeP Peripherals of Rs 16
million. The losses in Wipro GE were primarily due to an increase in input
costs and a decline in average selling prices of products. Income from continuing operations.As a result of the foregoing factors,
income from continuing operations increased by 1% from Rs. 8,411 million for
the year ended March 31, 2002 to Rs. 8,477 million for the year ended March 31,
2003. Discontinued operations.The results of operations of the Corporate ISP
division are reported in discontinued operations for the current and prior
periods in our consolidated financial statements. Liquidity and Capital Resources As of March 31, 2004, we had cash and cash equivalents of Rs. 3,297
million, investments in liquid and short-term mutual funds of Rs. 18,479
million and an unused line of credit of approximately Rs 1,000 million. To
utilize the




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line of credit we need to comply with certain financial covenants.
We have historically financed our working capital and capital expenditure
through our operating cash flows, and, to a limited extent, through bank loans. We believe that cash generated from operations along with the net proceeds
of Rs. 5,803 million ($125 million) from our initial U.S. public offering (IPO) in October 2000
will be sufficient to satisfy our currently foreseeable working capital and
capital expenditure requirements. The proceeds were invested in money market
instruments. Currently we have utilized Rs. 4,810 million ($102 million) from
the proceeds of our IPO for acquisitions. In the year ended March 31, 2004, the
remaining portion of the net proceeds from our initial U.S. public offering in
October 2000 was repatriated to India for meeting current working capital and
capital expenditure requirements. Cash provided by operating activities for the year ended March 31, 2004
was Rs. 10,815 million against Rs. 7,663 million in the year ended March 31, 2003. The increase was
primarily due to increase in operating profits and greater focus on working
capital management. Cash used in investing activities for the year ended March 31, 2004 was
Rs. 14,348 million. The cash was used primarily on purchases of liquid and
short-term mutual funds, capital expenditures and acquisitions. Cash provided
by operating activities was used to meet the capital expenditure of Rs. 4,135
million. Cash provided by financing activities for the year ended March 31, 2004
was Rs. 556 million. During the year ended March 31, 2004 dividends of Rs 262
million have been paid to shareholders. As of March 31, 2004 the short term
borrowings from Banks was Rs 969 million. The short term borrowings are against
the line of credit by banks and used to bridge the temporary mismatches in cash
flows. We have proposed to pay an annual cash dividend of Rs. 4 per share on
equity shares and ADRs and a one-time cash dividend of Rs. 25 per share on
equity shares and ADRs in fiscal 2005. This proposal is subject to approval by
the shareholders of the Company. We expect a dividend payout of approximately
Rs. 7,600 million. As of March 31, 2004 we had contractual commitments of Rs. 2,140 million
($49 million) related to capital expenditures on construction or expansion of
software development facilities, non-cancelable operating lease obligations and
other purchase obligations. Plans to construct or expand our software
development facilities are dictated by business requirements. We currently intend to finance our operations and planned construction and
expansion entirely from internal sources of capital. In Wipro Spectramind 4,178,294 shares were issued to employees pursuant to
exercise of employee stock options. Out of these 3,996,387 shares are covered
by a share purchase feature that entitles us to repurchase these shares at fair
value after six months from the date of exercise. We expect that these rights
to repurchase will be exercised in the year ended March 31, 2005. Our liquidity and capital requirements are affected by many factors, some
of which are based on the normal ongoing operations of our businesses and some
of which arise from uncertainties related to global economies and the markets
that we target for our services. In addition, we routinely review potential
acquisitions. In the future, we may require or choose to obtain additional debt
or equity financing. We cannot be certain that additional financing, if
needed, will be available on favorable terms. Off-Balance Sheet Arrangements The company has not entered into any off-balance sheet arrangements as
defined by SEC Final Rule 67 (FR-67), Disclosure in Managements Discussion
and Analysis about Off-Balance Sheet Arrangements and Aggregate Contractual
Obligations.




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Contractual obligations The table of future payments due under contractual commitments, aggregated
by type of contractual obligation, is given below: In Rs. millionTotalcontractual
    
    Payments due inpayment
    
    2004-05
    
    2005-07
    
    2007-09
    
    2009 onwardsCapital Commitments
    
    
    529
    
    
    
    529
    
    
    
    
    
    
    
    
    
    
    
    Non-cancelable
operating lease
obligation
    
    
    1,154
    
    
    
    176
    
    
    
    304
    
    
    
    315
    
    
    
    360Purchase obligations
    
    
    457
    
    
    
    435
    
    
    
    22
    
    
    
    
    
    
    
    
 Purchase obligations include all commitments to purchase goods or services
of either a fixed or minimum quantity that meet any of the following criteria:
(1) they are non-cancelable or (2) we would incur a penalty if the agreement
was terminated. If the obligation to purchase goods or services is
non-cancelable, the entire value of the contract was included in the above
table. If the obligation is cancelable, but we would incur a penalty if
cancelled, the amount of the penalty was included as a purchase obligation. Trend Information Global IT Services and Products.We believe that the increasing acceptance
of outsourcing and offshoring as an economic necessity has contributed to
continued growth in our revenue. However, the increased competition among IT
companies, commoditization of services and high volume transactions in IT
services limits our ability to increase our prices and improve our profits. We
continually strive to differentiate ourselves from the competition, innovate
service delivery models, adopt new pricing strategies and demonstrate our value
proposition to the client to sustain prices and profits. We have also acquired
businesses to augment our existing services and capabilities. The acquisitions
have also allowed us to sustain and in certain circumstances improve our prices
and profits. Gross profit as a percentage of revenues in Global IT Services and
Products declined from 41% in the year ended March 31, 2003 to 36% in the year
ended March 31, 2004. The decline is attributable to:  
    
    Declines in price realizations;
    
    Increases in proportion of services performed at client
location  some of our newer service offerings, such as consulting
and package implementation, require a higher proportion of services
to be performed at the clients premises;
    
    Increases in wages for our IT professionals; and
    
    The impact of the appreciation of the Rupee exchange rate with major world currencies. We expect these trends to continue for the foreseeable future. In
response to the pressure on gross margins and the increased competition from
other IT services companies, we are focusing on offering services with higher
margins, strengthening our delivery model, increasing employee productivity,
investing in emerging technology areas, managing our cost structure, aligning
our resources to expected demand and increasing the utilization of our IT
professionals. To remain competitive, we believe that we need to innovate, identify and
position ourselves in emerging technology areas and increase our understanding
of industry, business and impact of IT on the business. Our Global IT Services and Products business segment is also subject to
fluctuations primarily resulting from factors such as:  
    
    The effect of seasonal hiring which occurs in the quarter ended September 30;
    
    The time required to train and productively use new employees;
    
    The proportion of services we perform at client sites for a particular project;




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
    
    Exchange rate fluctuations; and
    
    The size, timing and profitability of new projects. India and AsiaPac IT Services and Products.In our India and AsiaPac IT
Services and Products business segment we have experienced pricing pressures
due to increased competition among IT companies. As a result, gross margins in
the products component of this business segment declined from 12% in the year
ended March 31, 2003 to 11% in the year ended March 31, 2004. Our India and AsiaPac IT Services and Products business segment is also
subject to seasonal fluctuations. Our product revenue is driven by capital
expenditure budgets and the spending patterns of our clients, who often delay
or accelerate purchases in reaction to tax depreciation benefits on capital
equipment. As a result, our India and AsiaPac IT Services and products revenue
for the quarters ended March 31 and September 30 are typically higher than
other quarters of the year. We believe the impact of this fluctuation on our
revenue will decrease as the proportion of services revenue increases. Consumer Care and Lighting.Our Consumer Care and Lighting business
segment is also subject to seasonal fluctuations. Demand for hydrogenated
cooking oil is greater during the Indian festival season and has increased
revenue from our Consumer Care business for the quarters ended September 30 and
December 31. Our revenues in this segment are also subject to commodity price
fluctuations. However, revenue from hydrogenated oil products as a proportion
of total revenue of our Consumer Care business has continued to decline
significantly. This decline has been offset by continued increases in revenue
from soaps and lighting products. Our quarterly revenue, operating income and net income have varied
significantly in the past and we expect that they are likely to vary in the
future. You should not rely on our quarterly operating results as an
indication of future performance. Such quarterly fluctuations may have an
impact on the price of our equity shares and ADSs. Recent accounting pronouncements. In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires entities to record the fair value
of a liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. SFAS No. 143 is
effective for fiscal years beginning after June 15, 2002. Adoption of SFAS No.
143, did not have a material impact on our consolidated financial statements. In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. Adoption of SFAS No. 146 did not have a
material impact on our consolidated financial statements. In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123.
SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The disclosure provisions of
SFAS No. 148 are applicable for fiscal periods beginning after December 15,
2002. We continue to use the intrinsic value based method of APB Opinion No. 25
to account for our employee stock based compensation plans. We have adopted the
disclosure provisions of SFAS No. 148. In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entities- an interpretation of Accounting Research Bulletin No. 51.
FIN No. 46 is applicable to all variable interest entities created after
January 31, 2003. In respect of variable interest entities created before
February 1, 2003, FIN No. 46 will be applicable from fiscal periods ending
after December 15, 2003. Further, in December 2003, the FASB issued a revision
to FIN No. 46 to clarify some of the provisions of FIN No. 46 and to exempt
certain entities from its requirements. Adoption of FIN No. 46 did not have a
material impact on our consolidated financial statements. In April 2003, the FASB issued SFAS No. 149, Amendment of Statement No.
133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative




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instruments, including certain derivative instruments embedded in other
contracts and for hedging activities under SFAS No. 133. SFAS No. 149 is
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. Adoption of SFAS No.149
did not have a material impact on our consolidated financial statements. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS
No. 150 requires issuers to classify as liabilities (or assets in some
circumstance) three classes of freestanding financial instruments that embody
obligations for the issuer. Generally, SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003 and is otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. Adoption of SFAS No. 150 did not have a material impact on our
consolidated financial statements. In December 2003, the FASB issued SFAS No. 132 (revised 2003), Employers
Disclosures about Pensions and Other Postretirement Benefits. SFAS No. 132
revises financial statement disclosures for pension plans and other post
retirement benefit plans. SFAS No. 132 is applicable for fiscal periods
beginning after December 15, 2003. We have adopted the disclosure provisions
of SFAS No. 132. Critical accounting policies Critical accounting policies are defined as those that in our view are
most important to the portrayal of the Companys financial condition and
results and that place the most significant demands on managements judgment.
For a detailed discussion on the application of these and other accounting
policies, please refer to Note 2 to the Notes to Consolidated Financial
Statements. Revenue Recognition We derive our revenues primarily from two sources: (i) product revenue and (ii)
service revenue. Product Revenue Product revenue is recognized when there is persuasive evidence of a
contract, the product has been delivered, the sales price is fixed or
determinable, and collectibility is reasonably assured. The product is
considered delivered to the customer once it has been shipped, and title and
risk of loss has been transferred. We generally consider a binding purchase order or a signed contract as
persuasive evidence of an arrangement. Persuasive evidence of an arrangement
may take different forms depending upon the customary practices of a specific
class of customers. Service Revenue Service revenue is recognized when there is persuasive evidence of a
contract, the sales price is fixed or determinable, and collectibility is
reasonably assured. Time-and-materials service contract revenue is recognized
as the services are rendered. Revenue from fixed-price, fixed-timeframe
contracts is recognized in accordance with percentage of completion method. We
have relied on the Accounting Standards Executive Committees conclusion in
paragraph 95 of Statement of Position (SOP) 97-2, Software Revenue Recognition,
to account for revenue from fixed price arrangements for software development
and related services in conformity with SOP 81-1, Accounting for Performance of
Construction-Type and Certain Production-Type Contracts. We use the input (cost
expended) method to measure progress towards completion. Percentage of
completion method accounting relies on estimates of total expected contract
revenue and costs. We follow this method when reasonably dependable estimates
of the revenues and costs applicable to various elements of the contract can be
made. Key factors we review to estimate the future costs to complete include
estimates of future labor costs and productivity efficiencies. Because the
financial reporting of these contracts depends on estimates that are assessed
continually during the term of these contracts, recognized revenue and profit
are subject to revisions as the contract progresses to completion. When
estimates indicate that a loss will be incurred, the loss is provided for in
the period in which the loss becomes evident. Maintenance revenue is recognized
ratably over the term of the agreement. Revenue from customer training, support
and other services is recognized as the related services are performed. Revenues from BPO Services are derived from both time-based and
unit-priced contracts. Revenue is recognized as services are performed under
the specific terms of the contracts with the customers. Revenue Arrangements with Multiple Deliverables




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Effective July 1, 2003, we have adopted EITF Issue No. 00-21. We have
elected to adopt EITF Issue No. 00-21 for all revenue arrangements entered into
on or after July 1, 2003. Based on this guidance, we recognize revenues on the
delivered products or services only if:  
    
    The revenue recognition criteria applicable to the unit of accounting is met;
    
    The delivered element has value to the customer on a standalone basis. The delivered unit will have value on a standalone
basis if it is being sold separately by other vendors or the customer could resell the deliverable on a standalone basis;
    
    There is objective and reliable evidence of the fair value of the undelivered item(s); and
    
    If the arrangement includes a general right of return relative to the delivered item, delivery or performance of the
undelivered item(s) is considered probable and substantially in our control. The arrangement consideration is allocated to the units of accounting
based on their fair values. The revenue recognized for the delivered items is
limited to the amount that is not contingent upon the delivery or performance
of the undelivered items. In certain cases, the application of the contingent
revenue provisions of EITF Issue No. 00-21 could result in recognizing a loss
on the delivered element. In such cases, the cost recognized is limited to the
amount of non-contingent revenues recognized and the balance of costs are
recorded as an asset and are reviewed for impairment based on the estimated net
cash flows to be received for future deliverables under the contract. These
costs are subsequently recognized on recognition of the revenue allocable to
the balance of deliverables. Assessments about whether the delivered units have a value to the customer
on a standalone basis, impact of forfeiture and similar contractual provisions,
and determination of fair value of each unit would affect the timing of revenue
recognition and would impact our results of operations. Accounting Estimates While preparing financial statements we make estimates and assumptions
that affect the reported amount of assets, liabilities, disclosure of
contingent liabilities at the date of financial statements and the reported
amount of revenues and expenses for the reporting period. Specifically, we make
estimates of the uncollectability of our accounts receivable by analyzing
historical payment patterns, customer concentrations, customer
credit-worthiness and current economic trends. If the financial condition of
the customers deteriorates, additional allowances may be required. Our estimate of liability relating to pending litigation is based on
currently available facts and our assessment of the probability of an
unfavorable outcome. Considering the uncertainties about the ultimate outcome
and the amount of losses, we re-assess our estimates as additional information
becomes available. Such revisions in our estimates could materially impact our
results of operations and our financial position. We provide for inventory obsolescence, excess inventory and inventories
with carrying values in excess of realizable values based on our assessment of
the future demands, market conditions and our specific inventory management
initiatives. If the market conditions and actual demands are less favorable
than our estimates, additional inventory write-downs may be required. In all
cases inventory is carried at the lower of historical costs or realizable
value. Accounting for Income taxes As part of the process of preparing our consolidated financial statements
we are required to estimate our income taxes in each of the jurisdictions in
which we operate. We are subject to tax assessments in each of these
jurisdictions. A tax assessment can involve complex issues, which can only be
resolved over extended time periods. Though we have considered all these issues
in estimating our income taxes, there could be an unfavorable resolution of
such issues that may affect results of our operations. We also assess the temporary differences resulting from differential
treatment of certain items for tax and accounting purposes. These differences
result in deferred tax assets and liabilities, which are recognized in our
consolidated financial statements. We assess our deferred tax assets on an
ongoing basis by assessing our valuation allowance and adjusting the valuation
allowance appropriately. In calculating our valuation allowance we consider
the future taxable incomes and the feasibility of tax planning initiatives. If
we estimate that the deferred tax asset cannot be realized at the recorded
value, a valuation allowance is created with a charge to the statement of
income in the period in which such assessment is made. We have not created a
deferred tax liability in respect of the basis difference in the




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carrying value of investments in domestic subsidiaries since we expect to
realize this in a tax-free manner and the current tax laws in India provide
means by which we can realize our investment in a tax-free manner. We are subject to a 15% branch profit tax in the United States to the
extent the net profit attributable to our U.S. branch for the fiscal year is
greater than the increase in the net assets of the U.S. branch for the fiscal
year, as computed in accordance with the Internal Revenue Code. As of March 31,
2004, the U.S. branchs net assets amounted to $83 million. We have not
triggered the branch profit tax and, consistent with our business plan, we
intend to maintain the current level of our net assets in the United States.
Accordingly we did not record a provision for branch profit tax. Business Combinations, Goodwill and Intangible Assets In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we
have assigned all the assets and liabilities, including goodwill, to the
reporting units. We review goodwill for impairment annually and whenever events
or changes in circumstances indicate the carrying value of goodwill may not be
recoverable. The provisions of SFAS No. 142 require that a two-step impairment
test be performed on goodwill. In the first step, we compare the fair value of
the reporting unit to its carrying value. We determine the fair value of our
reporting units using the income approach. If market information relating to
comparable companies is available, the results of income approach are compared
with the fair value under the market approach to determine the reasonableness
of the valuation resulting from the income approach. Under the income approach,
we calculate the fair value of a reporting unit based on the present value of
estimated future cash flows. Under the market approach, we estimate the fair
value based on market multiples of revenues or earnings for comparable
companies. If the fair value of the reporting unit exceeds the carrying value
of the net assets assigned to that unit, goodwill is not impaired and we are
not required to perform further testing. If the carrying value of the net
assets assigned to the reporting unit exceeds the fair value of the reporting
unit, then we must perform the second step in order to determine the implied
fair value of the reporting units goodwill and compare it to the carrying
value of the reporting units goodwill. The implied fair value of goodwill is
determined in the same manner as the amount of goodwill recognized in a
business combination. That is, the fair value of the reporting unit is
allocated to all of the assets and liabilities of that unit (including any
unrecognized intangible assets) as if the reporting unit had been acquired in a
business combination and the fair value of the reporting unit was the purchase
price paid to acquire the reporting unit. If the carrying value of a reporting
units goodwill exceeds its implied fair value, then we must record an
impairment loss equal to the difference. To assist in the process of determining goodwill impairment, we obtain
appraisals from independent valuation firms. In addition we perform internal
valuation analyses and consider other market information that is publicly
available. The discounted cash flow approach and the income approach, which we
use to estimate the fair value of our reporting units are dependent on a number
of factors including estimates of future market growth and trends, forecasted
revenue and costs, appropriate discount rates and other variables. We base our
fair value estimates on assumptions we believe to be reasonable, but which are
unpredictable and inherently uncertain. Actual future results may differ from
those estimates. Derivatives and hedge accounting We enter into forward foreign exchange contracts to mitigate the risk of
changes in foreign exchange rates on accounts receivables and forecasted cash
flows denominated in certain foreign currencies. We designate the forward
contracts in respect of forecasted transactions, which meet the hedging
criteria, as cash flow hedges. Changes in the derivative fair values that are
designated, effective and qualify as cash flow hedges, under SFAS 133
Accounting for Derivative Instruments and Hedging Activities, are deferred and
recorded as a component of accumulated other comprehensive income until the
hedged transactions occur and are then recognized in the consolidated
statements of income. We assess the hedge effectiveness at the end of each
reporting period and recognize the ineffective portion in the consolidated
statements of income. Hedge ineffectiveness could result from forecasted transactions not
happening in the same amounts or in the same periods as forecasted or changes
in the counterparty credit rating. Further, change in the basis of designating
forward contracts as hedges of forecasted transactions could alter the
proportion of forward contracts which are ineffective as hedges. Hedge
ineffectiveness increases volatility of the consolidated statements of income
since the changes in fair value of an ineffective portion of forward contracts
is immediately recognized in the consolidated statements of income.




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##### Table of Contents



As of March 31, 2004, there were no significant gains or losses on
derivative transactions or portions thereof that were either ineffective as
hedges, excluded from the assessment of hedge effectiveness, or associated with
an underlying exposure that did not occur. 
 Item 6. Directors, Senior Management and Employees Directors and Senior Management Our directors and executive officers, their respective ages and positions
as of March 31, 2004 are as follows: Name
    
    Age
    
    PositionAzim H. Premji
    
    
    58
    
    
    Chairman of the Board and Managing DirectorDr. Ashok Ganguly
    
    
    68
    
    
    DirectorB. C. Prabhakar
    
    
    60
    
    
    DirectorDr. Jagdish N. Sheth
    
    
    65
    
    
    DirectorVivek Paul
    
    
    45
    
    
    Vice Chairman of the Board and Executive OfficerNarayanan Vaghul
    
    
    67
    
    
    DirectorProf. Eisuke Sakakibara
    
    
    62
    
    
    DirectorP.M.Sinha
    
    
    63
    
    
    DirectorSuresh C. Senapaty
    
    
    47
    
    
    Executive Vice President, FinancePratik Kumar
    
    
    38
    
    
    Vice President, Human ResourcesSuresh Vaswani
    
    
    44
    
    
    President, Wipro InfotechVineet Agrawal
    
    
    42
    
    
    President, Wipro Consumer Care and LightingRanjan Acharya
    
    
    46
    
    
    Vice President, Human Resources DevelopmentTamal Dasgupta
    
    
    53
    
    
    Chief Information OfficerGirish S Paranjpe
    
    
    46
    
    
    President-Finance & Insurance, Wipro TechnologiesSudip Banerjee
    
    
    44
    
    
    President-Enterprise Solutions, Wipro TechnologiesDr A. L. Rao
    
    
    55
    
    
    President-Telecom & Internetworking Solutions,
Wipro TechnologiesAnurag Behar (1)
    
    
    35
    
    
    Vice President- Mission Quality, Innovation,
Brand and Corporate CommunicationRamesh Emani (1)
    
    
    47
    
    
    Chief Executive-Embedded & Product Engineering
Solutions, Wipro Technologies
 (1) Appointed as a member of Corporate Executive Council during the
year Azim H. Premji has been our Chairman of the Board and Managing Director
since September 1968. Mr. Premji holds a Bachelor of Science in Electrical
Engineering from Stanford University. Dr. Ashok Ganguly has served as our director since January 1999.
From August 1996 to April 2003, he served as Chairman of ICI India Limited.
From May 1980 to April 1990, he served as Chairman of Hindustan Lever
Limited. From May 1990 to May 1997 he served as Director of Unilever NV and
Plc. Currently, besides being Chairman of ICICI OneSource Limited, he is also
on the boards of British Airways Plc, Technology Network (India) Pvt Ltd, ICICI
Knowledge Park Ltd, Hemogenomics Pvt. Ltd., Mahindra & Mahindra Ltd, New
Skies Satellite NV as well as on the Central Board of Directors of Reserve
Bank of India, ABP Pvt. Limited and Tata AIG Life Insurance Co Ltd. Dr
Ganguly is also a member of the Audit Committee of British Airways and Tata AIG
Life Insurance Company Ltd. Dr Ganguly is also a Chairman of the Compensation
Committee of Tata AIG Life Insurance Co. Ltd., ICICI OneSource Ltd, New Skies
Satellites NV and member of the Board Governance Committee and Corporate
Governance Committee of ICICI OneSource Limited and New Skies Satellites NV
respectively. Dr. Ganguly holds a B.Sc in Chemistry from Bombay University
and an MS and Ph.D from the University of Illinois. B.C. Prabhakar has served as our director since February 1997. He has
practiced law in his own firm since April 1970. Mr. Prabhakar holds a B.A. in
Political Science and Sociology and an LL.B. from Mysore University. Dr. Jagdish N. Sheth has served as our director since January 1999. He has
been a professor at Emory University since July 1991. Dr Sheth has also been a
director of Norstan, Inc. since September 1995, and of Pac West Telecomm since
July 1999. Dr Sheth is also on the Boards of Pacwest Telecomm, Norstan Inc,
Cryo-Cell International Inc and Shasun Chemicals & Drugs Limited. Dr Sheth is
also a member of the Audit Committee of Norstan Inc. and PacWest Telecom and a
member of the Governance Committee of Cyro Cell International. Dr. Sheth holds
a B. Commerce from Madras University, an M.B.A. and a Ph.D in Behavioral
Sciences from the University of Pittsburgh.




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##### Table of Contents



Vivek Paul has served as our director, Vice Chairman of the Board and
Executive Officer of Wipro Technologies since July 1999. From January 1996 to
July 1999, Mr. Paul was General Manager of Global CT Business at General
Electric, Medical Systems Division. From March 1993 to December 1995, he served
as President and Chief Executive Officer of Wipro GE Medical Systems Private
Limited. Mr. Paul holds a B.Engineering from the Birla Institute of Technology
and Science, and an M.B.A. from the University of Massachusetts, Amherst. Narayanan Vaghul has served as our director since June 1997. He has been
Chairman of the Board of ICICI Bank Limited since September 1985 (formerly
known as ICICI Limited prior to its merger with ICICI Bank Limited). Mr.
Vaghul also serves on the Boards of Mahindra and Mahindra Ltd., Mahindra
Industrial Park Limited, Nicholas Piramal India, Ltd., Apollo Hospitals
Enterprise Limited, Hemogenomics Pvt. Ltd., Technology Network (India) Pvt.
Ltd, Himatsingka Seide Limited, Asset Reconstruction Company (India) Limited
and Air India Limited. Mr. Vaghul is also the Chairman of the Compensation
Committee of ICICI Bank Limited, Mahindra and Mahindra Limited, Nicholas
Piramal India Ltd and a member of the Compensation Committee of Mahindra
Industrial Park Limited. Mr Vaghul is also a member of the Audit Committee of
Mahindra Industrial Park Limited and Air India Limited. Mr. Vaghul holds a B.
Commerce in Banking from Madras University. Prof. Eisuke Sakakibara became a director of our company on January 1,
2002. He has been a Professor of Economics at Keio University of Japan since
1999. After working with the Ministry of Finance, Government of Japan since
1965, he was posted as an economist with the International Monetary Fund in
1971 and was the visiting Associate Professor of Economics at Harvard
University. He has also served as Director-General, International Finance
Bureau, Japan between 1995 and 1997. In 1997 he became the Vice Minister of
Finance for International Affairs, Japan. Prof. Sakakibara holds a B.A. in
Economics from the University of Tokyo and a Ph.D. in Economics from the
University of Michigan. Priya Mohan Sinha has served as our director since January 1, 2002. He
has served as the Chairman of PepsiCo India Holdings Limited and President of
Pepsi Foods Limited since July 1992. From October 1981 to November 1992, he was
on the Executive Board of Directors of Hindustan Lever Limited. From 1981 to
1985 he also served as Sales Director of Hindustan Lever Limited. Currently,
he is also on the Boards of ICICI Bank Limited, Quadra Advisory Limited, Indian
Oil Corporation Limited, Lafarge India and Azim Premji Foundation. Mr. Sinha
was also Chairman of Stepan Chemicals Limited between 1990 and 1993 and on the
Boards of Brooke Bond India Limited, Lipton India Limited, Indexport Limited
and Lever Nepal Limited. Mr Sinha is a member of the Board Governance Committee
and Compensation Committee of ICICI Bank Limited. Mr. Sinha holds a Bachelor
of Arts from Patna University and he has also attended the Advanced Management
Program at the Sloan School of Management, Massachusetts Institute of
Technology. Pratik Kumar has served as our Corporate Vice President, Human Resources,
since April 2002, and has served with us in other positions since November
1991. Mr. Kumar holds a Bachelor of Arts from Delhi University and a MBA from
Xavier Labour Relations Institute (XLRI), Jamshedpur, India. Suresh C. Senapaty has served as our Corporate Executive Vice President,
Finance, since January 1995 and served with us in other positions since April
1980. Mr. Senapaty holds a B. Commerce from Utkal University, and is a Fellow
Member of the Institute of Chartered Accountants of India. Suresh Vaswani has served as our President of Wipro Infotech since
December 2000, and has served with us in other positions since June 1987. Mr.
Vaswani holds a B.Tech from IIT, Karagpur and a Post Graduate Diploma in
Management from the Indian Institute of Management, Ahmedabad. Vineet Agrawal has served as our President of Wipro Consumer Care and
Lighting since July 2002 and has served with us in other positions since
December 1985. Mr. Agrawal holds a B.Tech from IIT, New Delhi and an M.B.A from
Bajaj Institute of Management Studies, Mumbai. Girish S Paranjpe has served as our President  Finance & Insurance of
Wipro Technologies since October 2000 and has served with us in other positions
since July 1990. Mr Paranjpe holds B.Commerce from Bombay University and is a
Fellow Member of Institute of Chartered Accountants of India and Institute of
Cost and Works Accountants of India. Dr A. L. Rao has served as our President-Telecom & Internetworking
Solutions of Wipro Technologies since October 2000 and has served with us in
other positions since August 1980. Dr. Rao holds a B.Sc , M.Sc and Ph.D in
Nuclear Physics from Andhra University. Tamal Dasgupta has served as our Chief Information Officer since March
2000. Mr. Tamal Dasgupta holds a B.Commerce from Calcutta University and is a
Fellow Member of the Institute of Chartered Accountants of India and has
obtained a CPA at Maryland, U.S.




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##### Table of Contents



Ranjan Acharya has served as our Vice President-Human Resources
Development since April 2002 and has served with us in other positions since
July 1994. Mr Ranjan Acharya holds a B.Sc from Pune University and an M.B.A.
from Symbosis Institute of Business Management, Pune, India. Sudip Banerjee has served as President-Enterprise Solutions of Wipro
Technologies since February 2002 and has served with us in other positions
since November 1983. Mr Banerjee holds a Bachelor of Arts from Delhi
University and Diploma in Management from All India Institute of Management
Association. Anurag Behar has served as Corporate Vice President- Mission Quality,
Innovation, Brand and Corporate Communication since May 2002. Mr Behar holds a
B.Engineering from Regional Engineering College, Trichy and Post Graduate
Diploma in Business Management from Xavier Labour Relations Institute (XLRI),
Jamshedpur, India. Ramesh Emani has served as President-Embedded & Product Engineering
Solutions of Wipro Technologies since October 2003 and has served with us in
other positions since November 1983. Mr Ramesh Emani holds a B.Tech from
Jawaharlal Nehru Technology University, Hyderabad and M.Tech from IIT,
Kanpur. Compensation Director Compensation Each of our non-employee directors receive an attendance fee of $46.08(Rs.
2,000) for every Board and Committee meeting they attend. Our directors are
reimbursed for travel and out-of-pocket expenses in connection with their
attendance at Board and Committee meetings. Additionally, we also compensate
non-employee directors by way of commission as follows, which is limited to a
fixed sum payable as approved by the Board subject to a maximum of 1% of the
net profits of the Company as approved by the shareholders.  1.
    
    Dr. Ashok Ganguly receives approximately $18,433 (Rs. 800,000) per year.2.
    
    Narayanan Vaghul receives approximately $18,433 (Rs. 800,000) per year.3.
    
    Prof. Eisuke Sakakibara receives approximately $40,000 (Rs. 1,736,000)
per year.4.
    
    Dr. Jagdish N. Sheth receives approximately $25,000 (Rs. 1,085,000) per
year.5.
    
    Priya Mohan Sinha receives approximately $23,042 (Rs. 1,000,000) per
year.6.
    
    B. C. Prabhakar receives approximately $9,216 (Rs. 400,000) per year. In the fiscal year ended March 31, 2004, we paid an aggregate of $134,124
(Rs.5,821,000) as commission to our non-employee directors. Executive Compensation The following two tables present the annual and long term compensation
earned, awarded or paid for services rendered to us for the fiscal year ended
March 31, 2004 by our Executive Directors and members of our administrative,
supervisory or management bodies. Annual CompensationSalary and
    
    Commission/InName
    
    allowances
    
    centives (1)
    
    Housing (2)
    
    Others (3)Azim H. Premji
    
    $
    48,387
    
    
    $
    257,741
    
    
    $
    32,834
    
    
    $
    31,943Vivek Paul
    
    
    460,000
    
    
    
    773,223
    
    
    
    
    
    
    
    11,561




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##### Table of Contents



Annual CompensationSalary and
    
    Commission/InName
    
    allowances
    
    centives (1)
    
    Housing (2)
    
    Others (3)Pratik Kumar
    
    
    56,624
    
    
    
    26,668
    
    
    
    
    
    
    
    464Suresh C. Senapaty
    
    
    80,034
    
    
    
    51,339
    
    
    
    12,589
    
    
    
    2,242Vineet Agrawal
    
    
    107,027
    
    
    
    
    
    
    
    10,764
    
    
    
    3,025Sudip Banerjee
    
    
    68,085
    
    
    
    34,248
    
    
    
    1,347
    
    
    
    2,551Girish S Paranjpe
    
    
    66,349
    
    
    
    34,403
    
    
    
    6,995
    
    
    
    8,000Tamal Dasgupta
    
    
    48,079
    
    
    
    27,148
    
    
    
    5,529
    
    
    
    2,095A L Rao
    
    
    77,698
    
    
    
    36,492
    
    
    
    
    
    
    
    1,206Ranjan Acharya
    
    
    56,148
    
    
    
    29,515
    
    
    
    
    
    
    
    919Suresh Vaswani
    
    
    82,538
    
    
    
    35,519
    
    
    
    4,289
    
    
    
    1,629Anurag Behar
    
    
    31,300
    
    
    
    18,008
    
    
    
    4,604
    
    
    
    735Ramesh Emani
    
    
    78,825
    
    
    
    46,315
    
    
    
    737
    
    
    
    1,214
  1.
    
    Azim H. Premji and Vivek Paul were paid commissions at the rate of 0.1%
and 0.3% respectively, on our net profits computed in accordance with the
provisions of the Indian Companies Act, 1956. All other executives,
excepting Vineet Agrawal, were paid incentives under a Quarterly
Performance Linked Scheme based on their achievement of pre-defined profit
targets.2.
    
    The value of this perquisite accounts for more than 25% of the total
value of all perquisites and personal benefits received in fiscal 2004.3.
    
    The figure includes a subsidy of $19,565 to Azim H. Premji, for interest
payments on his independent housing loan. Long term compensationNo. ofEquity
    
    
    
    
    
    No. ofShare
    
    
    
    
    
    ADSDeferred
    
    Options
    
    Grant
    
    options
    
    Grant
    
    ExpirationName
    
    benefits(1)(2)
    
    Granted
    
    Price
    
    granted
    
    Price
    
    DateAzim H. Premji
    
    $
    46,894
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vivek Paul
    
    
    69,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pratik Kumar
    
    
    5,535
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Suresh C Senapaty
    
    
    10,582
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vineet Agrawal
    
    
    7,564
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sudip Banerjee
    
    
    6,737
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Girish S Paranjpe
    
    
    6,737
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tamal Das Gupta
    
    
    4,949
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    A L Rao
    
    
    8,409
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    




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##### Table of Contents



Long term compensationNo. ofEquity
    
    
    
    
    
    No. ofShare
    
    
    
    
    
    ADSDeferred
    
    Options
    
    Grant
    
    options
    
    Grant
    
    ExpirationName
    
    benefits(1)(2)
    
    Granted
    
    Price
    
    granted
    
    Price
    
    DateRanjan Acharya
    
    
    5,628
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Suresh Vaswani
    
    
    8,025
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Anurag Behar
    
    
    4,012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ramesh Emani
    
    
    7,819
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  1.
    
    Deferred benefits payable to other employees are by way of our
contribution to the Provident Fund and Pension Fund. The Provident Fund
is a statutory fund to which Wipro and the employee contribute every
month. A lump sum payment on separation and a Pension payment on
attaining the age of superannuation are payable from the balance standing
to the credit of the Fund, as per the Employee Provident Fund and
Miscellaneous Provisions Act, 1952.Deferred benefits, in the case of Mr Vivek Paul, are comprised of the
Companys contribution to a Deferred Compensation Plan. The Company has a
Deferred Compensation Plan in place, and a Participation Agreement with Mr
Vivek Paul. Contributions made by the Company under this Deferred
Compensation Plan are managed by an irrevocable Trust whose trustees are
appointed by the Company under a Trust Agreement. Wells Fargo NA. has been
appointed as a Trustee of the Trust. The Company makes a contribution of
15% of the base salary of Mr. Paul to the Trust and Mr Paul is also
eligible to contribute up to 15% of his base salary and up to 100% of his
commission under the Deferred Compensation Plan to the Trust. The Trust
will make payouts upon compliance with specific conditions prescribed in
the Plan and related agreements.Under our pension plans, any pension that is payable to an employee is not
computed on the basis of final compensation, but on the accumulated
pension fund to the credit of the employee as of the date of separation,
death, disability or retirement. We annually contribute 15% of Mr.
Premjis base salary and commission earned for that year to our pension
fund for the benefit of Mr. Premji. For all other employees, we
contribute 15% of their respective base salaries to our pension fund for
their benefit. These contributions are included in this column.2.
    
    In addition to the deferred benefits indicated above, we are also
required by Indian law to pay a one time lump sum amount of $8,064 (Rs.
350,000) as a gratuity payment to each of the above listed persons, other
than Vivek Paul, at the time of separation, death, disability or
retirement. Board Composition Our Articles of Association provide that the minimum number of directors
shall be four and the maximum number of directors shall be twelve. As of March
31, 2004, we had eight directors on our Board. Our Articles of Association
provide that at least two-thirds of our directors shall be subject to
retirement by rotation. One third of these directors must retire from office at
each annual general meeting of the shareholders. A retiring director is
eligible for re-election. Up to one-third of our directors can be appointed as
permanent directors. Currently, Azim H. Premji and Vivek Paul are non-retiring
directors. The terms of each of our directors and their expiration dates are: Name
    
    Expiration of current term of office
    
    Term of officeAzim H. Premji
    
    December 30, 2004
    
    2 yearsVivek Paul
    
    July 25, 2004
    
    5 yearsDr. Jagdish N Sheth
    
    Annual General Meeting 2006
    
    Retirement by rotationDr. Ashok Ganguly
    
    Annual General Meeting 2005
    
    Retirement by rotationB. C. Prabhakar
    
    June 11, 2004
    
    Retirement by rotationN. Vaghul
    
    June 11, 2004
    
    Retirement by rotationProf. Eisuke Sakakibara
    
    Annual General Meeting 2005
    
    Retirement by rotation




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##### Table of Contents



Name
    
    Expiration of current term of office
    
    Term of officePriya Mohan Sinha
    
    Annual General Meeting 2006
    
    Retirement by rotation
 Option Grants There were no option grants to our Chairman and Managing Director in the
fiscal years ended March 31, 2003 and 2004. Details of options granted to other
senior management executives are reported elsewhere in this Item 6 in the
section titled Executive Compensation. Option Exercises and Holdings Our Chairman and Managing Director did not exercise or hold any options
during the fiscal year ended March 31, 2004. The details of stock options held
and exercised with respect to other senior management executives are reported
elsewhere in this Item 6 in the section titled Share Ownership. Employment and Indemnification Contracts Under the Companies Act, our shareholders must approve the salary, bonus
and benefits of all employee directors at an Annual General Meeting of
Shareholders. Each of our employee directors has signed an agreement containing
the terms and conditions of employment, including a monthly salary, performance
bonus and benefits including vacation, medical reimbursement and pension fund
contributions. These agreements are made for a two year period, three year
period and five year period, but either we or the employee director may
terminate the agreement upon six months notice to the other party. We have entered into employment agreements with Azim H. Premji, Vivek
Paul, Pratik Kumar, Suresh C. Senapaty, Vineet Agrawal, Suresh Vaswani, Tamal
Das Gupta, A L Rao, Sudip Banerjee, Ranjan Acharya, Girish S Paranjpe, Ramesh
Emani and Anurag Behar. These employment agreements provide for up to a 180-day
notice period, up to 21 days of leave per year in addition to statutory
holidays, and an annual compensation review. Additionally, employees are
required to relocate as we may determine, and to comply with confidentiality
provisions. Our employment agreement with Vivek Paul also provides that if his
employment with us is terminated for reasons other than legal, ethical or
company policy violations, we will pay a severance payment equal to twenty-four
months base salary plus benefits payable for that period. The severance payment
is payable in monthly installments consistent with our established payroll
policies over a twenty-four month period following the date notice of
termination is served. These payments will cease if Vivek Paul obtains new
employment within the twenty-four months. Further, upon termination of service
for reasons other than legal, ethical or company policy violations, Vivek Paul
shall be entitled to continued vesting for a specified number of shares awarded
to him under the Wipro Equity Reward Trust. Vivek Paul must exercise his right
to receive these shares within three months from the date of his termination. We also have entered into agreements to indemnify our directors and
officers for claims brought under U.S. laws to the fullest extent permitted by
Indian law. These agreements, among other things, indemnify our directors and
officers for certain expenses, judgments, fines and settlement amounts incurred
by any such person in any action or proceeding, including any action by or in
the right of Wipro Limited, arising out of such persons services as our
director or officer, including claims which are covered by the Insurance Policy
on Directors and Officers Liability Insurance taken by the company. Board Committee Information Audit Committee Our Audit Committee reviews, acts on and reports to the Board of Directors
with respect to various auditing and accounting matters. These matters include
the recommendation of our independent auditors, the scope of our annual audits,
fees to be paid to the independent auditors, the performance of our independent
auditors and our accounting practices. The Audit Committee comprises of the
following three non-executive directors; Mr. N. Vaghul
    
    -
    
    Chairman of the Audit CommitteeMessrs. Priya Mohan Sinha and B. C. Prabhakar
    
    -
    
    Members of the Audit Committee.
 Compensation and Benefits Committee




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##### Table of Contents



The Compensation and Benefits Committee of the Board of Directors, which
was formed in 1987, determines the salaries, benefits and stock option grants
for our employees, directors and other individuals compensated by the Company.
The Compensation and Benefits Committee also administers our compensation
plans. The Compensation and Benefits Committee comprises of the following three
non-executive directors; Mr. N. Vaghul
    
    -
    
    Chairman of the Compensation and Benefits CommitteeMessrs. Priya Mohan Sinha and B. C. Prabhakar
    
    -
    
    Members of the Compensation and Benefits Committee.
 Nomination and Corporate Governance Committee The Nomination and Corporate Governance Committee of the Board of
Directors, which was formed in 2002, develops and recommends to the Board a set
of corporate governance guidelines applicable to the Company, implements the
policies and processes relating to corporate governance principles, self
evaluation process for the Board and Committees, ensures that appropriate
procedures are in place to assess Board membership needs and recommends
potential director candidates to the Board of Directors. The Nomination and
Corporate Governance Committee comprises of the following three non-executive
directors: Mr. Ashok Ganguly
    
    -
    
    Chairman of the Nomination and Corporate Governance CommitteeMessrs. N Vaghul and Priya Mohan Sinha
    
    -
    
    Members of the Nomination and Corporate Governance Committee.
 During the year ended March 31, 2004, Mr Priya Mohan Sinha was appointed as a
member of the Committee consequent upon resignation of Mr B C Prabhakar as a
member. Employees As of March 31, 2004, we had over 32,000 employees, including over 19,000
IT professionals. Highly trained and motivated people are critical to the
success of our business. To achieve this, we focus on attracting and retaining
the best people possible. A combination of strong brand name, congenial
working environment and competitive compensation programs enables us to attract
and retain these talented people. Our human resources department is centralized at our corporate
headquarters in Bangalore and functions across all of the business segments.
We have implemented corporate-wide recruiting, training, performance evaluation
and compensation programs that are tailored to address the needs of each of our
business segments. Recruiting We hire entry level graduates from both the top engineering and management
universities in India as well as more experienced lateral hires from employee
referral programs, advertisements, placement consultants, our website postings
and walk-ins. To facilitate employee growth within Wipro Limited, all new
openings are first offered to our current employees. The nature of work, skill
sets requirements and experience levels are highlighted to the employees.
Applicants undergo the regular recruitment process and get assigned to their
new roles. Training Each of our new recruits must attend a two week intensive training program
when they begin working with us. New or recent graduates must also attend
additional training programs that are tailored to their area of technology. We
also have a mandatory continuing education program that requires each IT
professional to attend at least 40 hours of continuing education classes to
improve their understanding and competency of new technologies, as well as to
develop leadership and personal self-development skills. We currently have 61
full-time faculty members to provide these training courses. We supplement our
continuing education program for existing employees by sponsoring special
programs at leading educational institutions such as IIM Bangalore to provide
special skill set training in areas such as project management to any of our IT
professionals who choose to enroll. We also reserve a small percentage of
these classes for our software programmer clients who meet the eligibility
criteria.




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##### Table of Contents



Performance Evaluations Employees receive written performance objectives that they develop in
cooperation with their respective managers. They are measured against these
criteria annually in a formal review process which includes self-reviews and
reviews from peers, managers and subordinates. Compensation We continually strive to provide our employees with competitive and
innovative compensation packages. Our compensation packages include a
combination of salary, stock options, pension, and health and disability
insurance. We measure our compensation packages against industry standards and
seek to match or exceed them. We adopted an employee stock purchase plan in
1984. We have devised both business segment performance and individual
performance linked incentive programs that we believe more accurately link
performance to compensation for each employee. For example, we link cash
compensation to a business segments quarterly operating margin objectives. Share Ownership The following table sets forth as of March 31, 2004, for each director and
executive officer, the total number of equity shares, ADSs and options to
purchase equity shares and ADSs exercisable within 60 days from March 31, 2004.
Beneficial ownership is determined in accordance with rules of the Securities
and Exchange Commission. All information with respect to the beneficial
ownership of any principal shareholder has been furnished by such shareholder
and, unless otherwise indicated below, we believe that persons named in the
table have sole voting and sole investment power with respect to all the shares
shown as beneficially owned, subject to community property laws, where
applicable. The shares beneficially owned by the directors include the equity shares
owned by their family members to which such directors disclaim beneficial
ownership. The number of shares beneficially owned includes equity shares,
equity shares underlying ADSs and the number of equity shares underlying
options and equity shares underlying ADSs options exercisable within 60 days
from March 31, 2004. For the convenience of the readers, the stock option grant
price has been translated into U.S. dollars based on the noon buying rate in
the City of New York on March 31, 2004, for cable transfers in Indian rupees as
certified for customs purposes by the Federal Reserve Bank of New York which
was Rs.43.40 per $1.00. The share numbers and percentages listed below are
based on 232,759,152 equity shares outstanding as of March 31, 2004. Our Board of Directors has approved a stock dividend, commonly known as an
issue of bonus shares in India, which is subject to the approval of our
shareholders. The proposed stock dividend is expected to be submitted to our
shareholders for approval at our annual general meeting which is scheduled to
be held on June 11, 2004. If approved, the stock dividend to be declared is
two equity shares for every one equity share outstanding on the record date and
two ADSs for every one ADS outstanding on the record date. The share numbers
reflected in this report reflect pre-stock dividend numbers. The stock
dividend, if approved, will not affect the ratio of ADSs to equity shares, such
that each ADS after the stock dividend will continue to represent one equity
share of par value Rs. 2 per share. Percentage
    
    Equityof Equity
    
    SharesEquity Shares
    
    Shares
    
    Underlyingbeneficially
    
    Beneficially
    
    Options
    
    GrantName
    
    owned
    
    Owned
    
    Granted
    
    Price ($)
    
    Date of expirationAzim H. Premji (1)
    
    
    195,011,210
    
    
    
    83.78
    
    
    
    
    
    
    
    
    
    
    
    Vivek Paul (2)
    
    
    291,600
    
    
    
    *
    
    
    
    7,500
    
    
    
    23.59
    
    
    September 200516,500
    
    
    
    55.75
    
    
    August 200633,000
    
    
    
    41.375
    
    
    October 200650,000
    
    
    
    36.4
    
    
    February 2008B. C. Prabhakar (3)
    
    
    500
    
    
    
    *
    
    
    
    
    
    
    
    




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##### Table of Contents



Percentage
    
    Equityof Equity
    
    SharesEquity Shares
    
    Shares
    
    Underlyingbeneficially
    
    Beneficially
    
    Options
    
    GrantName
    
    owned
    
    Owned
    
    Granted
    
    Price ($)
    
    Date of expirationDr. Jagdish Sheth
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dr. Ashok Ganguly
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    N. Vaghul
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Prof. Eisuke Sakakibara
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Priya Mohan Sinha
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Suresh C. Senapaty
    
    
    27,800
    
    
    
    *
    
    
    
    2,400
    
    
    
    25.02
    
    
    September 20054,400
    
    
    
    42.69
    
    
    June 20061,650
    
    
    
    41.375
    
    
    October 20067,500
    
    
    
    36.54
    
    
    February 2008Pratik Kumar
    
    
    11,725
    
    
    
    *
    
    
    
    900
    
    
    
    25.02
    
    
    September 20052,750
    
    
    
    42.69
    
    
    June 20061,375
    
    
    
    41.375
    
    
    October 20066,000
    
    
    
    36.54
    
    
    February 2008Vineet Agrawal (4)
    
    
    18,820
    
    
    
    *
    
    
    
    1,200
    
    
    
    25.02
    
    
    September 20052,750
    
    
    
    42.69
    
    
    June 20067,500
    
    
    
    36.54
    
    
    February 2008Suresh Vaswani (5)
    
    
    14,625
    
    
    
    *
    
    
    
    2,100
    
    
    
    25.02
    
    
    September 20053,575
    
    
    
    42.69
    
    
    June 20067,500
    
    
    
    36.54
    
    
    February 2008Sudip Banerjee
    
    
    19,625
    
    
    
    *
    
    
    
    1,350
    
    
    
    25.02
    
    
    September 20053,575
    
    
    
    42.69
    
    
    June 20061,100
    
    
    
    41.375
    
    
    October 20065,400
    
    
    
    36.54
    
    
    February 2008Girish S. Paranjpe
    
    
    12,900
    
    
    
    *
    
    
    
    1,200
    
    
    
    25.02
    
    
    September 20053,575
    
    
    
    42.69
    
    
    June 20061,375
    
    
    
    41.375
    
    
    October 20067,500
    
    
    
    36.54
    
    
    February 2008A L Rao
    
    
    30,335
    
    
    
    *
    
    
    
    1,500
    
    
    
    25.02
    
    
    September 20054,125
    
    
    
    42.69
    
    
    June 2006




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Percentage
    
    Equityof Equity
    
    SharesEquity Shares
    
    Shares
    
    Underlyingbeneficially
    
    Beneficially
    
    Options
    
    GrantName
    
    owned
    
    Owned
    
    Granted
    
    Price ($)
    
    Date of expiration1,650
    
    
    
    41.375
    
    
    October 20064,500
    
    
    
    36.54
    
    
    February 2008Tamal Das Gupta
    
    
    4,600
    
    
    
    *
    
    
    
    1,650
    
    
    
    42.69
    
    
    June 2006550
    
    
    
    41.375
    
    
    October 20064,200
    
    
    
    36.54
    
    
    February 2009Ranjan Acharya
    
    
    9,250
    
    
    
    *
    
    
    
    1,350
    
    
    
    25.02
    
    
    September 20052,200
    
    
    
    42.69
    
    
    June 20064,500
    
    
    
    36.54
    
    
    February 2008Anurag Behar
    
    
    910
    
    
    
    *
    
    
    
    3600
    
    
    
    35.16
    
    
    May 2009Ramesh Emani
    
    
    12,225
    
    
    
    *
    
    
    
    1,500
    
    
    
    25.02
    
    
    September 20054,125
    
    
    
    42.69
    
    
    June 20061,650
    
    
    
    41.375
    
    
    October 20066,000
    
    
    
    36.54
    
    
    February 2008
  Represents less than 1% of the shares. (1) Includes 54,376,500 shares held by Hasham Traders (a partnership), of
which Mr. Premji is a partner, 54,169,500 shares held by Prazim Traders (a
partnership), of which Mr. Premji is a partner, 54,040,800 shares held by Zash
Traders (a partnership), of which Mr. Premji is a partner, 6,840,500 shares
held by Napean Trading Investment Co. Pvt. Ltd., of which Mr. Premji is a
director, 8,965,700 shares held by Regal Investments Trading Co. Pvt. Ltd., of
which Mr. Premji is a director, 6,940,100 shares held by Vidya Investment
Trading Co. Pvt. Ltd., of which Mr. Premji is a director, 239,100 shares held
jointly by Mr. Premji and members of his immediate family and 98,500 shares
held by the Azim Premji Foundation (I) Pvt. Ltd. Mr. Premji disclaims
beneficial ownership of the 98,500 shares held by the Azim Premji Foundation
(I) Pvt. Ltd. (2) Includes shares held jointly by Mr. Paul and the Wipro Equity Reward
Trust (the WERT), which may be transferred to the sole ownership of the WERT
if Mr. Pauls employment is terminated. However, if Mr Pauls employment is
terminated for reasons other than legal, ethical or company policy violations,
Mr Paul shall be entitled to continued vesting for a specified number of shares
awarded to him under the WERT. Mr Paul must exercise his right to receive
these shares within three months from the date of his termination. (3) Includes 110 shares held by an immediate family member of Mr.
Prabhakar. (4) Includes shares held jointly by Mr. Vineet Agrawal and the WERT, which
may be transferred to the sole ownership of the WERT if Mr. Vineet Agrawals
employment is terminated prior to October 2004. (5) Includes shares held jointly by Mr. Suresh Vaswani and the WERT, which
may be transferred to the sole ownership of the WERT if Mr. Suresh Vaswanis
employment is terminated prior to October 2004. 2000 ADS Option Plan Our 2000 ADS option plan provides for the grant of two types of options to
our employees and directors: incentive stock options, which may provide our
employees with beneficial U.S. tax treatment, and non-statutory stock options.
The 2000 ADS option plan was approved by our Board of Directors in September
2000 and by our shareholders on April 26, 2000. Unless terminated sooner by the
Board, the 2000 ADS option plan will terminate
automatically in September 2010. A total of 1,500,000 ADSs, representing
1,500,000 equity shares, are currently reserved for issuance under the 2000 ADS
option plan. All options under the 2000 ADS option plan will be exercisable for
ADSs. Either our Board of Directors or a committee of our Board of Directors
administers the 2000 ADS option plan. The committee has the power to determine
the terms of the options granted, including the exercise prices, the




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number of
ADSs subject to each option, the exercisability thereof, and the form of
consideration payable upon such exercise. In addition, the committee has the
authority to amend, suspend, or terminate the 2000 ADS option plan, provided
that no such action may affect any ADS previously issued and sold or any option
previously granted under the 2000 ADS option plan. The 2000 ADS option plan generally does not allow for the transfer of
options, and only the optionee may exercise an option during his or her
lifetime. An optionee generally must exercise an option within three months of
termination of service. If an optionees termination is due to death or
disability, his or her option will fully vest and become exercisable and the
option must be exercised within twelve months after such termination. The
exercise price of incentive stock options granted under the 2000 ADS option
plan must at least equal the fair market value of the ADSs on the date of
grant. The exercise price of non-statutory stock options granted under the 2000
ADS option plan must at least equal 90% of the fair market value of the ADSs on
the date of grant. The term of options granted under the 2000 ADS option plan
may not exceed ten years. The 2000 ADS option plan provides that in the event
of certain corporate actions as provided for in the Plan or our merger with or
into another corporation or a sale of substantially all of our assets, the
successor corporation shall either assume the outstanding options or grant
equivalent options to the holders. If the successor corporation neither assumes
the outstanding options nor grants equivalent options, such outstanding options
shall vest immediately, and become exercisable in full. 2000 Employee Stock Option Plan Our 2000 stock plan provides for the grant of stock options to eligible
employees and directors. The creation of our 2000 stock plan was approved by
our Board of Directors on April 26, 2000, and by our shareholders on July 27,
2000. The 2000 stock plan became effective on September 15, 2000, and unless
terminated sooner, the 2000 stock plan will terminate automatically on
September 15, 2010. A total of 25,000,000 equity shares are currently reserved
for issuance pursuant to the 2000 stock plan. All options under the 2000 stock
plan will be exercisable for our equity shares. Our Compensation and Benefits Committee appointed by our Board of
Directors administers the 2000 stock plan. The committee has the power to
determine the terms of the options granted, including the exercise price, the
number of shares subject to each option, the exercisability thereof, and the
form of consideration payable upon such exercise. In addition, the committee
has the authority to amend, suspend or terminate the 2000 stock plan, provided
that no such action may adversely affect the rights of any optionee under the
2000 stock plan. The 2000 stock plan generally does not allow for the transfer of options
and only the optionee may exercise an option during his or her lifetime. An
optionee generally must exercise any vested options, within seven days of
termination of service with us. If an optionees termination is due to death,
disability or retirement, his or her option will fully vest and become
exercisable. Generally such options must be exercised within six months after
termination. The exercise price of stock options granted under the 2000 stock
plan will be determined by the committee. The term of options granted under the
2000 stock plan may not exceed six years. The 2000 stock plan provides that in the event of certain corporate
actions as provided for in the Plan or our merger with or into another
corporation or a sale of substantially all of our assets, each option shall be
proportionately adjusted to give effect to the merger or asset sale. 1999 Employee Stock Option Plan Our 1999 stock plan provides for the grant of stock options to eligible
employees and directors. The 1999 stock plan was approved by our Board of
Directors on April 30, 1999 and by our shareholders on July 29, 1999. Unless
terminated sooner, the 1999 stock plan will terminate automatically on July 28,
2009. A total of 5,000,000 equity shares are currently reserved for issuance
pursuant to the 1999 stock plan. All options under the 1999 stock plan will be
exercisable for our equity shares. Our Compensation and Benefits Committee appointed by our Board of
Directors administers the 1999 stock plan. The committee has the power to
determine the terms of the options granted, including the exercise price, the
number of shares subject to each option, the exercisability thereof, and the
form of consideration payable upon such exercise. In addition, the committee
has the authority to amend, suspend or terminate the 1999 stock plan, provided
that no such action may adversely affect the rights of any optionee under the
1999 stock plan. The 1999 stock plan generally does not allow for the transfer of options
and only the optionee may exercise an option during his or her lifetime. An
optionee generally must exercise any vested options, within seven days of
termination of service with us. If an optionees termination is due to death,
disability or retirement, his or her option




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will fully vest and become
exercisable. Generally such options must be exercised within six months after
termination. The exercise price of stock options granted under the 1999 stock
plan will be determined by the committee. The term of options granted under the
1999 stock plan may not exceed six years. The 1999 stock plan provides that in the event of certain corporate
actions as provided for in the Plan or our merger with or into another
corporation or a sale of substantially all of our assets, each option shall be
proportionately adjusted to give effect to the merger or asset sale. Wipro Equity Reward Trust We established the Wipro Equity Reward Trust, or WERT, in 1984 to allow
our employees to acquire a greater proprietary stake in our success and growth,
and to encourage our employees to continue their association with us. The WERT
is designed to give eligible employees the right to receive restricted shares
and other compensation benefits at the times and on the conditions that we
specify. Such compensation benefits include voluntary contributions, loans,
interest and dividends on investments in the WERT, and other similar benefits. The WERT is administered by a board of trustees that generally consists of
between two and six members as appointed by us. We select eligible employees to
receive grants of shares and other compensation from the WERT and communicate
this information to the WERT. We select employees based upon various factors
including, without limitation, an employees performance, period of service and
status. The WERT awards the number of shares that each employee is entitled to
receive out of the shares we issued to the WERT at its formation. We also
determine the time intervals that an employee may elect to receive them. The
shares issued under the WERT are generally not transferable for a period of
four years after the date of issuance to the employee. Shares from the WERT are
issued in the joint names of the WERT and the employee until such restrictions
and obligations are fulfilled by the employee. After the four year period,
complete ownership of the shares is transferred to the employee. If employment is terminated by death, disability or retirement, his or her
restricted shares are transferred to the employees legal heirs or continue to
be held by the employee, as the case may be, and such individuals may exercise
any rights to those shares for up to ninety days after employment has ceased. The Trustees of the WERT have the authority to amend or terminate the WERT
at any time and for any reason. The WERT is subject to all applicable laws,
rules, regulations and approvals by any governmental agencies as may be
required. As of March 31, 2004, the WERT holds 1,339,835 of our outstanding
equity shares in its own name and holds 218,855 of our outstanding equity
shares jointly in the names of the WERT and participating employees, including
25,325 shares not yet jointly registered in the names of the WERT and
participating employees. 
 Item 7. Major Shareholders And Related Party Transactions Major Shareholders The following table sets forth certain information regarding the beneficial
ownership of our equity shares as of March 31, 2004, of each person or group
known by us to own beneficially 5% or more of the outstanding equity shares. Beneficial ownership is determined in accordance with rules of the SEC and
includes voting and investment power with respect to such shares. Shares
subject to options that are currently exercisable or exercisable within 60 days
of March 31, 2004 are deemed to be outstanding and to be beneficially owned by
the person holding such options for the purpose of computing the percentage
ownership of such person, but are not deemed to be outstanding and to be
beneficially owned for the purpose of computing the percentage ownership of any
other person. All information with respect to the beneficial ownership of any
principal shareholder has been furnished by such shareholder and, unless
otherwise indicated below, we believe that persons named in the table have sole
voting and sole investment power with respect to all the shares shown as
beneficially owned, subject to community property laws, where applicable. The
number of shares and percentage ownership are based on 232,759,152 equity
shares outstanding as of March 31, 2004. Number of SharesClass of
    
    beneficially held as ofName of Beneficial Owner
    
    Security
    
    March 31, 2004
    
    % of ClassAzim H. Premji (1)
    
    Equity
    
    
    195,011,210
    
    
    
    83.78Hasham Traders
    
    Equity
    
    
    54,376,500
    
    
    
    23.36Prazim Traders
    
    Equity
    
    
    54,169,500
    
    
    
    23.27




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Number of SharesClass of
    
    beneficially held as ofName of Beneficial Owner
    
    Security
    
    March 31, 2004
    
    % of ClassZash Traders
    
    Equity
    
    
    54,040,800
    
    
    
    23.21
    Our American Depositary Shares are listed on the New York Stock Exchange.
Each ADS represents one equity share of par value Rs. 2 per share. Our ADSs are
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934
and, as of March 31, 2004, are held by approximately 4,952 holders of record in
the United States. Our equity shares can be held by Foreign Institutional Investors, or FIIs,
Overseas Corporate Bodies, or OCBs, and Non-resident Indians, or NRIs, who are
registered with the Securities and Exchange Board of India, or SEBI, and the
Reserve Bank of India, or RBI. Currently 5.11% of the Companys equity shares
are held by these FIIs, OCBs and NRIs of which some of them may be residents or
bodies corporate registered in the United States of America and elsewhere. We
are not aware of which FIIs, OCBs and NRIs hold our equity shares as residents
or as corporate entities registered in the United States. Our major shareholders do not have differential voting rights with respect
to their equity shares. To the best of our knowledge, we are not owned or
controlled directly or indirectly by any government or by any other
corporation. We are not aware of any arrangement, the operation of which may at
a subsequent date result in a change in control. Related Party Transactions We engaged in no material related party transactions in the fiscal year ended March 31, 2004. 
 Item 8. Financial Information Consolidated Statements and Other Financial Information The following financial statements and the Auditors Report appearing
under item 18 in this Annual Report for the fiscal year ended March 31, 2003
are incorporated herein by reference:  
    
    Independent Auditors Report;
    
    Consolidated Balance Sheet as of March 31, 2002, 2003 and 2004;
    
    Consolidated Statements of Income for the years ended March 31, 2002, 2003 and 2004;
    
    Consolidated Statements of Stockholders Equity and
comprehensive income for the years ended March 31, 2002, 2003 and
2004; and
    
    Notes to the Consolidated Financial Statements. Dividends Although the amount varies, public companies in India typically pay cash
dividends. Under Indian law, a corporation pays dividends upon a
recommendation by the Board of Directors and approval by a majority of the
shareholders, who have the right to decrease but not increase the amount of the
dividend recommended by the Board of
Directors. Under the Companies Act, dividends may be paid out of profits
of a company in the year in which the dividend is declared or out of the
undistributed profits of previous fiscal years. For the years ended March 31, 2001, 2002 and 2003 we paid cash dividends
of Rs. 0.50, Rs. 1.00 and Rs. 1.00($0.02) per equity share,
respectively. Although we have no current intention to discontinue dividend
payments, we cannot assure you that any future dividends will be declared or
paid or that the amount thereof will not be decreased. Holders of ADSs will be
entitled to receive dividends payable on equity shares represented by such
ADSs. Cash




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dividends on equity shares represented by ADSs are paid to the
Depositary in rupees and are generally converted by the Depositary into U.S.
dollars and distributed, net of depository fees, taxes, if any, and expenses,
to the holders of such ADSs. Our Board of Directors has approved a stock dividend, commonly known as an
issue of bonus shares in India, which is subject to the approval of our
shareholders. The proposed stock dividend is expected to be submitted to our
shareholders for approval at our annual general meeting which is scheduled to
be held on June 11, 2004. If approved, the stock dividend to be declared is
two equity shares for every one equity share outstanding on the record date and
two ADSs for every one ADS outstanding on the record date. The share numbers
reflected in this report reflect pre-stock dividend numbers. The stock
dividend, if approved, will not affect the ratio of ADSs to equity shares, such
that each ADS after the stock dividend will continue to represent one equity
share of par value Rs. 2 per share. The Board of Directors have, subject to the approval of the shareholders
at the forthcoming Annual General Meeting in June 2004, recommended a final
dividend of Rs.4 ($0.09) per equity share and a one time dividend of Rs.25
($0.58) per equity share for the year ended March 31, 2004. This dividend will
be payable to the shareholders who are on the records of the Company as of the
opening hours of May 11, 2004. Export Revenue For the fiscal year ended March 31, 2004, we generated Rs.42,166 million,
or 72% of our total revenues, from the export of our products and services out
of India. Significant Changes None. 
 Item 9. The Offer and Listing Price History Our equity shares are traded on The Stock Exchange, Mumbai or BSE, the
Bangalore Stock Exchange, or BGSE, The National Stock Exchange of India
Limited, or NSE, The Cochin Stock Exchange Ltd., The Calcutta Stock Exchange
Association Ltd., The Stock Exchange-Ahmedabad, The Delhi Stock Exchange
Association Ltd., in India, or collectively, the Indian Stock Exchanges. A
significant portion of our equity shares are traded on the BSE and the NSE. In
April 2004, the Companys Board of Directors approved the de-listing of our
equity shares from the BGSE, Cochin Stock Exchange Ltd., Calcutta Stock
Exchange Association Ltd., Stock Exchange-Ahmedabad and the Delhi Stock
Exchange Association Ltd. The de-listing of our equity shares from these stock
exchanges is subject to the approval of our shareholders at the forthcoming
Annual General Meeting to be held in June 2004. Our American Depositary Shares
as evidenced by American Depositary Receipts, or ADRs are traded in the U.S. on
the New York Stock Exchange, or NYSE, under the ticker symbol WIT. Each ADS
represents one equity share. Our ADSs began trading on the NYSE on October 19,
2000. As of March 31, 2004, we had 232,759,152 issued and outstanding equity
shares. As of March 31, 2004, there were approximately 4,952 record holders of
ADRs evidencing 3,208,113 ADSs (equivalent to 3,208,113 equity shares). As of
March 31, 2004, there were approximately 49,025 record holders of our equity
shares listed and traded on the Indian Stock Exchanges. The following tables set forth for the periods indicated the price history
of our equity shares and ADSs on the BSE, NSE and the NYSE. BSE
    
    NSE
    
    NYSEPrice per equity share
    
    Price per equity share
    
    Price per ADSHigh
    
    Low
    
    High
    
    Low
    
    High
    
    Low
    
    High
    
    Low
    
    High
    
    Low(Rs.)
    
    (Rs.)
    
    ($)
    
    ($)
    
    (Rs.)
    
    (Rs.)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Fiscal Year
ended March 31,2004
    
    
    1861.00
    
    
    
    791.25
    
    
    
    42.88
    
    
    
    18.23
    
    
    
    1870.00
    
    
    
    797.40
    
    
    
    43.08
    
    
    
    18.37
    
    
    
    59.40
    
    
    
    18.282003
    
    
    1875.00
    
    
    
    1063
    
    
    
    39.45
    
    
    
    22.36
    
    
    
    1875.00
    
    
    
    1063.00
    
    
    
    39.45
    
    
    
    22.36
    
    
    
    40.28
    
    
    
    22.222002
    
    
    1965.00
    
    
    
    765
    
    
    
    41.34
    
    
    
    16.10
    
    
    
    1974.00
    
    
    
    759.00
    
    
    
    41.53
    
    
    
    15.97
    
    
    
    44.00
    
    
    
    16.992001
    
    
    5920.00
    
    
    
    1295
    
    
    
    124.55
    
    
    
    27.25
    
    
    
    5924.00
    
    
    
    1327.00
    
    
    
    124.64
    
    
    
    27.92
    
    
    
    68.43
    
    
    
    31.052000
    
    
    9800.00
    
    
    
    930
    
    
    
    206.19
    
    
    
    19.57
    
    
    
    10350.00
    
    
    
    937.00
    
    
    
    217.76
    
    
    
    19.71
    
    
    NA
    
    NA




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##### Table of Contents



BSE
    
    NSE
    
    NYSEPrice per equity share
    
    Price per equity share
    
    Price per ADSHigh
    
    Low
    
    High
    
    Low
    
    High
    
    Low
    
    High
    
    Low
    
    High
    
    Low(Rs.)
    
    (Rs.)
    
    ($)
    
    ($)
    
    (Rs.)
    
    (Rs.)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Quarter EndedMarch 31, 2004
    
    
    1861.00
    
    
    
    1350.00
    
    
    
    42.88
    
    
    
    31.10
    
    
    
    1870.00
    
    
    
    1351.00
    
    
    
    43.08
    
    
    
    31.12
    
    
    
    59.40
    
    
    
    37.81December 31, 2003
    
    
    1800.00
    
    
    
    1175.00
    
    
    
    41.47
    
    
    
    27.07
    
    
    
    1802.00
    
    
    
    1180.00
    
    
    
    41.52
    
    
    
    27.18
    
    
    
    49.00
    
    
    
    28.00September 30, 2003
    
    
    1355.00
    
    
    
    838.00
    
    
    
    31.22
    
    
    
    19.31
    
    
    
    1333.00
    
    
    
    841.35
    
    
    
    30.71
    
    
    
    19.38
    

    
    
    31.14
    
    
    
    20.70June 30, 2003
    
    
    1309.00
    
    
    
    791.25
    
    
    
    30.16
    
    
    
    18.23
    
    
    
    1307.00
    
    
    
    797.40
    
    
    
    30.11
    
    
    
    18.37
    
    
    
    30.00
    
    
    
    18.28March 31, 2003
    
    
    1685.00
    
    
    
    1209.00
    
    
    
    35.45
    
    
    
    25.44
    
    
    
    1688.00
    
    
    
    1210.00
    
    
    
    35.51
    
    
    
    25.46
    
    
    
    35.99
    
    
    
    27.40Quarter endedDecember 31, 2002
    
    
    1762.00
    
    
    
    1285.00
    
    
    
    37.07
    
    
    
    27.04
    
    
    
    1761.00
    
    
    
    1285.00
    
    
    
    37.05
    
    
    
    27.04
    
    
    
    37.00
    
    
    
    26.70September 30, 2002
    
    
    1520.00
    
    
    
    1063.00
    
    
    
    31.98
    
    
    
    22.36
    
    
    
    1520.00
    
    
    
    1063.00
    
    
    
    31.98
    
    
    
    22.36
    
    
    
    29.94
    
    
    
    22.22June 30, 2002
    
    
    1875.00
    
    
    
    1452.00
    
    
    
    39.45
    
    
    
    30.55
    
    
    
    1875.00
    
    
    
    1453.00
    
    
    
    39.45
    
    
    
    30.57
    
    
    
    40.28
    
    
    
    29.10Six Months Ended
(monthly for lastsix months)
October 31, 2003
    
    
    1452.00
    
    
    
    1175.00
    
    
    
    33.45
    
    
    
    27.07
    
    
    
    1517.00
    
    
    
    1180.00
    
    
    
    34.95
    
    
    
    27.18
    
    
    
    37.40
    
    
    
    28.00November 30, 2003
    
    
    1547.00
    
    
    
    1336.00
    
    
    
    35.65
    
    
    
    30.78
    
    
    
    1548.00
    
    
    
    1335.60
    
    
    
    35.66
    
    
    
    30.77
    
    
    
    39.63
    
    
    
    36.00December 31, 2003
    
    
    1800.00
    
    
    
    1483.00
    
    
    
    41.47
    
    
    
    34.17
    
    
    
    1802.00
    
    
    
    1407.00
    
    
    
    41.52
    
    
    
    32.41
    
    
    
    49.00
    
    
    
    39.05January 31, 2004
    
    
    1861.00
    
    
    
    1540.00
    
    
    
    42.88
    
    
    
    35.48
    
    
    
    1870.00
    
    
    
    1540.20
    
    
    
    43.08
    
    
    
    35.48
    
    
    
    59.40
    
    
    
    48.20February 29, 2004
    
    
    1681.00
    
    
    
    1395.00
    
    
    
    38.73
    
    
    
    32.14
    
    
    
    1649.00
    
    
    
    1397.30
    
    
    
    37.99
    
    
    
    32.19
    
    
    
    51.79
    
    
    
    39.25March 31, 2004
    
    
    1537.00
    
    
    
    1350.00
    
    
    
    35.41
    
    
    
    31.10
    
    
    
    1535.00
    
    
    
    1351.10
    
    
    
    35.36
    
    
    
    31.10
    
    
    
    43.50
    
    
    
    37.81
   (1)
    
    Source: BSE data obtained from www.bseindia.com and NSE data
obtained from www.nse-india.com. NYSE data obtained from
www.adrwise.com. Plan of Distribution Not applicable. Markets Trading Practices and Procedures on the Indian Stock Exchanges The BSE and NSE together account for most of the total trading volume on
the Indian Stock Exchanges. Trading on both of these exchanges is accomplished
through on-line execution. Trading is done on a two-day fixed settlement basis
on most of the exchanges, including the BSE and NSE. Any outstanding amount at
the end of the settlement period is settled by delivery and payment. However,
institutional investors are not permitted to net out their transactions and
must trade on a delivery basis. The BSE permits carry forwards of trades in certain securities by
non-institutional investors with an associated charge. In addition, orders can
be entered with a specified term of validity that may last until the end of the
session, day or settlement period. Dealers must specify whether orders are for
a proprietary account or for a client. The BSE specifies certain margin
requirements for trades executed on the exchange, including margins based on
the volume or quantity of exposure that the broker has on the market, as well
as mark-to-market margins payable on a daily basis for all outstanding trades.
Trading on the BSE normally takes place from 10:00 a.m. to 3:30 p.m. on all
weekdays, except holidays. The NSE does not permit carry forwards of trades. It
has separate margin requirements based on the net exposure of the broker on the
exchange. The NSE normally trades from 9:30 a.m. until 4:00 p.m. on weekdays,
except holidays. The NSE and BSE also have separate online trading systems and
separate clearing houses. The BSE was closed from January 11 through January 13, 1993 due to a riot
in Mumbai. It was also closed on March 12, 1993 due to a bomb explosion within
its premises. From December 14 through December 23, 1993 the BSE was closed due
to a brokers strike, and from March 20 through March 22, 1995, the governing
board of the BSE closed
the market due to a default of one of the broker members. There have been
no closures of the Indian Stock Exchanges in response to panic trading or
large fluctuations. The stock exchanges in India now operate on a trading day plus two, or T+2
rolling settlement system. At the end of the T+2 period, obligations are
settled with buyers of securities paying for and receiving securities, while
sellers transfer and receive payment for securities. The Securities and
Exchange Board of India, or SEBI, has moved to a T+2 settlement system
beginning April 1, 2003 and is subsequently planning to move to a T+1
settlement system in the future.




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##### Table of Contents



In order to contain the risk arising out of the transactions entered into
by the members in various securities either on their own account or on behalf
of their clients, the largest exchanges have designed risk management
procedures, which include compulsory prescribed margins on the individual
broker members, based on their outstanding exposure in the market, as well as
stock specific margins from the members. There are generally no restrictions
on price movements of any security on any given day. In order to restrict
abnormal price volatility, the SEBI has instructed the stock exchanges to apply
the following price bands, calculated at the previous days closing price. Market Wide Circuit Breakers: Market wide circuit breakers are applied to
the market for movement by 10%, 15% and 20% for two prescribed market indices;
the Sensex for the BSE and the Nifty for the NSE. If any of these circuit
breaker thresholds are reached, trading on all equity and equity derivates
markets nationwide is halted. Price Bands: Price Bands are circuit filters of 20% movements either up or
down and are applied to most securities traded in the markets, excluding
securities included in the BSE Sensex and the NSE Nifty indices and derivatives
products. Depositories The National Securities Depositary Limited and Central Depositary Services
(India) Limited are the two depositories that provide electronic depository
facilities for trading in equity and debt securities in India. The SEBI has
also provided that the issue and allotment of shares in initial public
offerings shall only be in electronic form. 
 Item 10. Additional Information Share Capital Not applicable. Memorandum and Articles Of Association Set forth below is a brief summary of the material provisions of our
Articles of Association and the Companies Act, all as currently in effect.
Wipro Limited is registered under the Companies Act, with the Registrar of
Companies, Karnataka, Bangalore, India with Company No. 20800. The following
description of our Articles of Association does not purport to be complete and
is qualified in its entirety by the Articles of Association, and Memorandum of
Association, of Wipro Limited that are included as exhibits to our registration
statement on Form F-1 filed with the Securities and Exchange Commission on
September 26, 2000. Our Articles of Association provide that the minimum number of directors
shall be four and the maximum number of directors shall be twelve. Currently,
we have eight directors. Our Articles of Association provide that at least
two-thirds of our directors shall be subject to retirement by rotation. One
third of these directors must retire from office at each annual general meeting
of the shareholders. A retiring director is eligible for re-election. Up to
one-third of our directors can be appointed as permanent directors. Currently,
Azim H. Premji and Vivek Paul are non-retiring directors. Our Articles of
Association do not mandate the retirement of our directors under an age limit
requirement. Our Articles of Association do not require our Board members to be
shareholders in our company. Our Articles of Association provide that any director who has a personal
interest in a transaction must disclose such interest, must abstain from voting
on such transaction and may not be counted for purposes of determining whether
a quorum is present at the meeting. Such directors interest in any such
transaction shall be reported at the next meeting of shareholders. The remuneration payable to our directors may be fixed by the Board of
Directors in accordance with provisions prescribed by the Government of India. Objects and Purposes of Our Memorandum of Association The following is a summary of our Objects as set forth in Section 3 of our Memorandum of Association:  
    
    To purchase or otherwise acquire and take over any lands.
    
    To carry on the business of extracting vegetable oil.
    
    To manufacture and deal in hydrogenated vegetable oil.




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##### Table of Contents




    
    To carry on business as manufacturers, sellers, buyers,
exporters, importers, and dealers of fluid power products.
    
    To carry on business as mechanical engineers, tool makers,
brass and metal founders, mill-makers, mill-wrighters,
machinists, metallurgists.
    
    To carry on the trade or business of manufacturing and
distributing chemical, synthetic and organic products.
    
    To carry on business as manufacturers, exporters, sellers,
dealers and buyers in all types and kinds of goods, articles and
things.
    
    To carry on business in India and elsewhere as
manufacturer, assembler, designer, builder, seller, buyer,
exporter, importer, factors, agents, hirers and dealers of computer
hardware and software and any related aspects thereof.
    
    To carry on research and development activities on all
aspects related to products business and objects of our company.
    
    To construct, equip and maintain mills, factories,
warehouses, godowns, jetties and wharves any other conveniences or
erection suitable for any of the purpose of our company.
    
    To carry on all or any of the business of soap and candle
makers, tallow merchants, chemists, druggists, dry salters,
oil-merchants, manufacturers of dyes, paints, chemicals and
explosives and manufacturers of and dealers in pharmaceutical,
chemical, medicinal and other preparations or compounds, perfumery
and proprietary articles and photographic materials and derivatives
and other similar articles of every description.
    
    To carry on any other trade or business whatsoever as can
in the opinion of us be advantageously or conveniently carried on
by us.
    
    To carry on the business of metal working and
manufacturing.
    
    To acquire and take over the whole or any part of the
business, property and liabilities of any person or persons, firm
or corporation carrying on any business which we are authorized to
carry on or possessed of any property or rights suitable for our
purposes.
    
    To manufacture or otherwise acquire and deal in containers
and packing materials of any kind.
    
    To apply for, purchase or otherwise acquire any patents,
brevets dinvention, licenses, concessions and the like conferring
an exclusive or non-exclusive or limited right to use, any secret
or other information as to any invention.
    
    To purchase or otherwise acquire, manufacture, and deal in
all raw materials, stores, stock-in-trade, goods, chattels and
effects.
    
    To enter into any partnership or any arrangement for
sharing profits, union of interests, joint ventures, reciprocal
concession or otherwise.
    
    To purchase or otherwise acquire all or any part of the
business, property and liabilities of any person, company, society,
or all or any of the purposes within the objects of our company.
    
    To enter into any arrangement with any government or
authorities.
    
    To provide for the welfare of person in the employment of
our company, or formerly engaged in any business acquired by our
company and the wives, widows, families or dependants of such
persons.
    
    To undertake, carry out, promote and sponsor rural
development including any program for promoting the social and
economic welfare or uplift of the public in any rural area.




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##### Table of Contents




    
    To undertake, carry out, promote and sponsor or assist any
activity for the promotion and growth of the national economy and
for discharging what the directors may consider to be the social
and moral responsibilities of our company to the public or any
section of the public.
    
    From time to time to subscribe or contribute to any
charitable, benevolent or useful object of a public nature. Description of Equity Shares Dividends Under the Companies Act, unless our Board of Directors recommends the
payment of a dividend, we may not declare a dividend. Similarly, under our
Articles of Association, although the shareholders may, at the annual general
meeting, approve a dividend of an amount less than that recommended by the
Board of Directors, they cannot increase the amount of the dividend. In India,
dividends generally are declared as a percentage of the par value of a
companys equity shares. The dividend recommended by the Board, if any, and
subject to the limitations described above, is distributed and paid to
shareholders in proportion to the paid up value of their shares within 30 days
of the approval by the shareholders at the annual general meeting. Pursuant to
our Articles of Association, our Board of Directors has discretion to declare
and pay interim dividends without shareholder approval. With respect to equity
shares issued during a particular fiscal year, including any equity shares
underlying ADSs issued to the Depositary or in the future, unless otherwise
determined by shareholders, cash dividends declared and paid for such fiscal
year generally will be prorated from the date of issuance to the end of such
fiscal year. Under the Companies Act, dividends can only be paid in cash to the
registered shareholder at a record date fixed on or prior to the annual general
meeting or to his order or his bankers order. The Companies Act provides that any dividends that remain unpaid or
unclaimed after the 30-day period are to be transferred to a special bank
account. We transfer any dividends that remain unclaimed for seven years from
the date of the transfer to a fund created by the Indian Government. After the
transfer to this fund, such unclaimed dividends may be claimed only from the
fund. Under the Companies Act, dividends may be paid out of profits of a company
in the year in which the dividend is declared or out of the undistributed
profits of previous fiscal years. Before declaring a dividend greater than 10%
of the par value of its equity shares, a company is required under the
Companies Act to transfer to its reserves a minimum percentage of its profits
for that year, ranging from 2.5% to 10% depending upon the dividend percentage
to be declared in such year. The Companies Act further provides that, in the event of an inadequacy or
absence of profits in any year, a dividend may be declared for such year out of
the companys accumulated profits, subject to the following conditions:  
    
    the rate of dividend to be declared may not exceed 10% of its paid up
capital or the average of the rate at which dividends were declared by
the company in the prior five years, whichever is less;
    
    the total amount to be drawn from the accumulated profits earned in
the previous years and transferred to the reserves may not exceed an
amount equivalent to 10% of its paid up capital and free reserves, and
the amount so drawn is to be used first to set off the losses incurred
in the fiscal year before any dividends in respect of preference or
equity shares are declared; and
    
    the balance of reserves after withdrawals shall not fall below 15% of
its paid up capital.We are subject to taxation for each dividend declared, distributed or paid
for a relevant period by our company. Bonus Shares In addition to permitting dividends to be paid out of current or retained
earnings as described above, the Companies Act permits a company to distribute
an amount transferred from the general reserve or surplus in the companys
profit and loss account to its shareholders in the form of bonus shares
(similar to a stock dividend). The Companies Act also permits the issuance of
bonus shares from a share premium account. Bonus shares are distributed to
shareholders in the proportion recommended by the Board of Directors.
Shareholders of record on a fixed record date are entitled to receive such
bonus shares.




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##### Table of Contents



Audit and Annual Report At least 21 days before the Annual General Meeting of shareholders, a
company must distribute a detailed version of the companys audited balance
sheet and profit and loss account and the reports of the Board of Directors and
the auditors thereon. Under the Companies Act, a company must file the balance
sheet and annual profit and loss account presented to the shareholders within
30 days of the conclusion of the Annual General Meeting with the Registrar of
Companies. A company must also file an annual return containing a list of the
companys shareholders and other company information, within 60 days of the
conclusion of the meeting. Preemptive Rights and Issue of Additional Shares The Companies Act gives shareholders the right to subscribe for new shares
in proportion to their respective existing shareholdings unless otherwise
determined by a special resolution passed by a General Meeting of the
shareholders. Under the Companies Act, in the event of an issuance of
securities, subject to the limitations set forth above, a company must first
offer the new shares to the shareholders on a fixed record date. The offer must
include: (i) the right, exercisable by the shareholders of record, to renounce
the shares offered in favor of any other person; and (ii) the number of shares
offered and the period of the offer, which may not be less than 15 days from
the date of offer. If the offer is not accepted it is deemed to have been
declined. The Board of Directors is authorized under the Companies Act to
distribute any new shares not purchased by the preemptive rights holders in the
manner that it deems most beneficial to the company. Voting Rights At any General Meeting, voting is by show of hands unless a poll is
demanded by a shareholder or shareholders present in person or by proxy holding
at least 10% of the total shares entitled to vote on the resolution or by those
holding shares with an aggregate paid up capital of at least Rs.50,000. Upon a
show of hands, every shareholder entitled to vote and present in person has one
vote and, on a poll, every shareholder entitled to vote and present in person
or by proxy has voting rights in proportion to the paid up capital held by such
shareholders. The Chairman of the Board has a deciding vote in the case of any
tie. Any shareholder of the company may appoint a proxy. The instrument
appointing a proxy must be delivered to the company at least 48 hours prior to
the meeting. A proxy may not vote except on a poll. A corporate shareholder may
appoint an authorized representative who can vote on behalf of the shareholder,
both upon a show of hands and upon a poll. Ordinary resolutions may be passed by simple majority of those present and
voting at any General Meeting for which the required period of notice has been
given. However, certain resolutions such as amendments of the Articles and the
Memorandum of Association, commencement of a new line of business, the waiver
of preemptive rights for the issuance of any new shares and a reduction of
share capital, require that votes cast in favor of the resolution (whether by
show of hands or poll) are not less than three times the number of votes, if
any, cast against the resolution. As per the Companies Act, not less than
two-third of the directors of a public company shall retire by rotation and be
appointed by the shareholders in the general meeting. Liquidation Rights Subject to the rights of creditors, employees and the holders of any
shares entitled by their terms to preferential repayment over the equity
shares, if any, in the event of our winding-up the holders of the equity shares
are entitled to be repaid the amounts of paid up capital or credited as paid up
on those equity shares. All surplus assets after payments to the holders of any
preference shares at the commencement of the winding-up shall be paid to
holders of equity shares in proportion to their shareholdings. Preference Shares Preference shares have preferential dividend and liquidation rights.
Preference shares may be redeemed if they are fully paid, and only out of our
profits, or out of the proceeds of the sale of shares issued for purposes of
such redemption. Holders of preference shares do not have the right to vote at
shareholder meetings, except on resolutions which directly affect the rights of
their preference shares. However, holders of cumulative preference shares have
the right to vote on every resolution at any meeting of the shareholders if the
dividends due on the preference shares have not been paid, in whole or in part,
for a period of at least two years prior to the date of the meeting.
Currently, there are no preference shares issued and outstanding.




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##### Table of Contents



Redemption of Equity Shares Under the Companies Act, unlike preference shares, equity shares are not
redeemable. Liability on Calls Not applicable. Discriminatory Provisions in Articles There are no provisions in the Articles of Association discriminating
against any existing or prospective holder of such securities as a result of
such shareholder owning a substantial number of shares. Alteration of Shareholder Rights Under the Companies Act, the rights of any class of shareholders can be
altered or varied with the consent in writing of the holder of not less than
three-fourths of the issued shares of that class or with the sanction of a
special resolution passed at a separate meeting of the holders of the issued
shares of that class if the provisions with respect to such variation is
contained in the memorandum or articles of the company, or in the absence of
any such provision in the memorandum or articles, if such variation is not
prohibited by the terms of issue of the shares of that class. Under the Companies Act, the Articles may be altered only by way of a
special resolution. Meetings of Shareholders We must convene an annual general meeting of shareholders within six
months after the end of each fiscal year and may convene an extraordinary
general meeting of shareholders when necessary or at the request of a
shareholder or shareholders holding at least 10% of our paid up capital
carrying voting rights. The annual general meeting of the shareholders is
generally convened by our Secretary pursuant to a resolution of the Board of
Directors. Written notice setting out the agenda of the meeting must be given
at least 21 days, excluding the days of mailing and date of the meeting, prior
to the date of the general meeting to the shareholders of record. Shareholders
who are registered as shareholders on the date of the general meeting are
entitled to attend or vote at such meeting. The annual general meeting of
shareholders must be held at our registered office or at such other place
within the city in which the registered office is located; meetings other than
the annual general meeting may be held at any other place if so determined by
the Board of Directors. Our Articles of Association provide that a quorum for a
general meeting is the presence of at least five shareholders in person. Additionally, shareholder consent for certain items or special business is
required to be obtained by a postal ballot. In order to obtain the
shareholders consent, our Board of Directors appoint a scrutinizer, who is not
in our employment, who, in the opinion of the Board, can conduct the postal
ballot voting process in a fair and transparent manner in accordance with the
provisions of Companies (Passing of the Resolution by Postal Ballot) Rules,
2001. Limitations on the Rights to Own Securities The limitations on the rights to own securities, including the rights of
non-resident or foreign shareholders to hold the securities imposed by Indian
law are discussed in Item 10 of this Annual Report, under the section titled
Currency Exchange Controls and is incorporated herein by reference. Voting Rights of Deposited Equity Shares Represented by ADSs Under Indian law, voting of the equity shares is by show of hands unless a
poll is demanded by a member or members present in person or by proxy holding
at least one-tenth of the total shares entitled to vote on the resolution or by
those holding an aggregate paid up capital of at least Rs. 50,000. A proxy may
not vote except on a poll. As soon as practicable after receipt of notice of any meetings or
solicitation of consents or proxies of holders of shares or other deposited
securities, our Depositary shall fix a record date for determining the holders
entitled to give instructions for the exercise of voting rights. The Depositary
shall then mail to the holders of ADSs a notice stating (a) such information as
is contained in such notice of meeting and any solicitation materials, (b) that
each holder on the record date set by the Depositary therefore will be entitled
to instruct the Depositary as to the exercise of the voting rights, if any
pertaining to the deposited securities represented by the ADSs evidenced by
such holders ADRs and (c) the manner in which such instruction may be given,
including instructions to give discretionary proxy to a person designated by
us.




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##### Table of Contents



On receipt of the aforesaid notice from the Depositary, our ADS holders
may instruct the Depositary on how to exercise the voting rights for the shares
that underlie their ADSs. For such instructions to be valid, the Depositary
must receive them on or before a specified date. The Depositary will try, as far as is practical, and subject to the
provisions of Indian law and our Memorandum of Association and our Articles of
Association, to vote or to have its agents vote the shares or other deposited
securities as per our ADS holders instructions. The Depositary will only vote
or attempt to vote as per an ADS holders instructions. The Depositary will not
itself exercise any voting discretion. Neither the Depositary nor its agents are responsible for any failure to
carry out any voting instructions, for the manner in which any vote is cast, or
for the effect of any vote. There is no guarantee that our shareholders will
receive voting materials in time to instruct the Depositary to vote and it is
possible that ADS holders, or persons who hold their ADSs through brokers,
dealers or other third parties, will not have the opportunity to exercise a
right to vote. Register of Shareholders; Record Dates; Transfer of Shares We maintain a register of shareholders. For the purpose of determining the
shares entitled to annual dividends, the register is closed for a specified
period prior to the annual general meeting. The date on which this period
begins is the record date. To determine which shareholders are entitled to
specified shareholder rights, we may close the register of shareholders. The
Companies Act requires us to give at least seven days prior notice to the
public before such closure. We may not close the register of shareholders for
more than thirty consecutive days, and in no event for more than forty-five
days in a year. Trading of our equity shares, however, may continue while the
register of shareholders is closed. Following the introduction of the Depositories Act, 1996, and the repeal
of Section 22A of the Securities Contracts (Regulation) Act, 1956, which
enabled companies to refuse to register transfers of shares in some
circumstances, the equity shares of a public company are freely transferable,
subject only to the provisions of Section 111A of the Companies Act. Since we
are a public company, the provisions of Section 111A will apply to us. Our
Articles of Association currently contain provisions which give our directors
discretion to refuse to register a transfer of shares in some circumstances.
Furthermore, in accordance with the provisions of Section 111A(2) of the
Companies Act, our directors may refuse to register a transfer of shares if
they have sufficient cause to do so. If our directors refuse to register a
transfer of shares, the shareholder wishing to transfer his, her or its shares
may file a civil suit or an appeal with the National Company Law Tribunal. Pursuant to Section 111A(3), if a transfer of shares contravenes any of
the provisions of the Securities and Exchange Board of India Act, 1992 or the
regulations issued thereunder or the Indian Sick Industrial Companies (Special
Provisions) Act, 1985 or any other Indian laws, the National Company Law
Tribunal may, on application made by the company, a depository incorporated in
India, an investor, the Securities and Exchange Board of India or other
parties, direct the rectification of the register of records. The National
Company Law Tribunal may, in its discretion, issue an interim order suspending
the voting rights attached to the relevant shares before making or completing
its investigation into the alleged contravention. Notwithstanding such
investigation, the rights of a shareholder to transfer the shares will not be
restricted. Under the Companies Act, unless the shares of a company are held in a
dematerialized form, a transfer of shares is effected by an instrument of
transfer in the form prescribed by the Companies Act and the rules thereunder
together with delivery of the share certificates. Our transfer agent for our
equity shares is Karvy Computer Share Private Limited located in Bangalore,
Karnataka, India. Company Acquisition of Equity Shares Under the Companies Act, approval of at least 75% of a companys
shareholders voting on the matter and approval of the National Company Law
Tribunal of the state in which the registered office of the company is situated
is required to reduce a companys share capital. A company may, under some
circumstances, acquire its own equity shares without seeking the approval of
the National Company Law Tribunal. However, a company would have to extinguish
the shares it has so acquired within the prescribed time period. A company
is not permitted to acquire its own shares for treasury operations. An acquisition by a company of its own shares that does not rely on an
approval of the National Company Law Tribunal must comply with prescribed
rules, regulations and conditions of the Companies Act. In addition, public
companies which are listed on a recognized stock exchange in India must comply
with the provisions of the Securities and Exchange Board of India (Buy-back of
Securities) Regulations, 1998, or Buy-back Regulations. Since we are a public
company listed on several recognized stock exchanges in India, we would have to
comply with the relevant provisions of the Companies Act and the provisions of
the Buy-back Regulations.




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Disclosure of Ownership Interest Section 187C of the Indian Companies Act requires beneficial owners of
shares of Indian companies who are not holders of record to declare to the
company details of the beneficial owner. Any person who fails to make the
required declaration within 30 days may be liable for a fine of up to Rs. 1,000
for each day the declaration is not made. Any lien, promissory note or other
collateral agreement created, executed or entered into with respect to any
share by the registered owner thereof, or any hypothecation by the registered
owner of any share, pursuant to which a declaration is required to be made
under Section 187C, shall not be enforceable by the beneficial owner or any
person claiming through the beneficial owner if such declaration is not made.
Failure to comply with Section 187C will not affect the obligation of the
company to register a transfer of shares or to pay any dividends to the
registered holder of any shares pursuant to which such declaration has not been
made. While it is unclear under Indian law whether Section 187C applies to
holders of ADSs of the company, investors who exchange ADSs for the underlying
Equity Shares of the Company will be subject to the restrictions of Section
187C. Additionally, holders of ADSs may be required to comply with such
notification and disclosure obligations pursuant to the provisions of the
Deposit Agreement to be entered into by such holders, the company and a
depository. Provisions on Changes in Capital Our authorized capital can be altered by an ordinary resolution of the
shareholders in a General Meeting. The additional issue of shares is subject to
the preemptive rights of the shareholders and provisions governing the issue of
additional shares are discussed in item 10 of this Annual Report. In addition a
company may increase its share capital, consolidate its share capital into
shares of larger face value than its existing shares or sub-divide its shares
by reducing their par value, subject to an ordinary resolution of the
shareholders in a General Meeting. Takeover Code and Listing Agreements Under the Securities and Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 1997, or Takeover Code, upon the
acquisition of more than 5% of the outstanding shares or voting rights of a
publicly-listed Indian company a purchaser is required to notify the company
and the company and the purchaser are required to notify all the stock
exchanges on which the shares of such company are listed. An ADS holder would
be subject to these notification requirements. Upon the acquisition of 15% or more of such shares or voting rights, or a
change in control of the company, the purchaser is required to make an open
offer to the other shareholders, offering to purchase at least 20% of all the
outstanding shares of the company at a minimum offer price as determined
pursuant to the Takeover Code. Since we are a listed company in India, the
provisions of the Takeover Code will apply to us. However, the Takeover Code
provides for a specific exemption from this provision to an ADS holder and
states that this provision will apply to an ADS holder only once he or she
converts the ADSs into the underlying equity shares. An acquirer is required to disclose the aggregate of the pre and post
acquisition of shareholding and voting rights of the acquirer to the target
company when such acquisition aggregates to 5% and 10% of the voting rights.
The creeping acquisition limits provided under SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 have been changed to 5% with effect
from October 1, 2002 in any fiscal year. We have entered into listing agreements with each of the Indian Stock
Exchanges on which our equity shares are listed. Each of the listing agreements
provides that if a purchase of a listed companys shares results in the
purchaser and its affiliates holding more than 5% of the companys outstanding
equity shares or voting rights, the purchaser and the company must report its
holding to the company and the relevant stock exchange(s). The agreements also
provide that if an acquisition results in the purchaser and its affiliates
holding equity shares representing more than 15% of the voting rights in the
company, then the purchaser must, before acquiring such equity shares, make an
offer on a uniform basis to all remaining shareholders of the company to
acquire equity shares that have at least an additional 20% of the voting rights
of the total equity shares of the company at a prescribed price. Although the provisions of the listing agreements entered into between us
and the Indian Stock Exchanges on which our equity shares are listed will not
apply to equity shares represented by ADSs, holders of ADSs may be required to
comply with such notification and disclosure obligations pursuant to the
provisions of the Deposit Agreement to be entered into by such holders, our
company and a depository. Material Contracts Not applicable.




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Currency Exchange Controls Foreign Investments in India are governed by the provisions of Section 6
of the Foreign Exchange Management Act (FEMA) 1999 and are subject to the
Regulations issued by the Reserve Bank of India under FEMA 1999. The Foreign
Direct Investment Scheme under the Reserve Banks Automatic Route enables
Indian Companies (other than those specifically excluded in the scheme) to
issue shares to persons resident outside India without prior permission from
the RBI, subject to certain conditions. General permission has been granted for
the transfer of shares and convertible debentures by a person resident outside
India as follows: (i) for transfers of shares or convertible debentures held by
a person resident outside India other than NRI or overseas corporate bodies, or
OCBs, to any person resident outside India, provided that the transferee has
obtained permission of the Central Government if that person had any previous
venture or tie up in India through investment in any manner or a technical
collaboration or trademark agreement in the same field or allied field in which
the Indian company whose shares are being transferred is engaged, and (ii) NRI
or OCB are permitted to transfer shares or convertible debentures of Indian
company to other NRI or OCB. A person resident outside India may transfer securities of an Indian
company to a person resident in India by way of gift. However where such
transfer is not by way of gift, prior approval of the RBI is necessary. For
transfer of existing shares or convertible debentures of an Indian company by a
resident to a non resident by way of sale the transferor should obtain an
approval of Central Government and thereafter make an application to RBI for
permission. In such cases the RBI may permit the transfer subject to such terms
and conditions including the price at which the sale may be made. General Shares of Indian companies represented by ADSs may be approved for
issuance to foreign investors by the Government of India under the Issue of
Foreign Currency Convertible Bonds and Equity Shares (through Depositary
Receipt Mechanism) Scheme, 1993, or the 1993 Regulation, as modified from time
to time, promulgated by the Government of India. The 1993 Regulation is
distinct from other policies or facilities, as described below, relating to
investments in Indian companies by foreign investors. The issuance of ADSs
pursuant to the 1993 Regulation also affords to holders of the ADSs the
benefits of Section 115AC of the Indian Income Tax Act, 1961 for purposes of
the application of Indian tax law. The Reserve Bank of India or RBI, has issued a notification directing that
Indian companies may utilize up-to 100 percent of proceeds realized from the
sale of ADSs for overseas investments. In February 2002, the RBI issued a circular stating that the terms of
Regulation 4A of the Reserve Bank of India Notification FEMA 20/2000-RB dated
May 3, 2000, as amended by Notification No.FEMA 41/2001-RB dated March 2, 2001,
allow a registered broker to purchase shares of an Indian company on behalf of
a person resident outside of India for the purpose of converting those shares
into ADSs/GDSs. However, such conversion is subject to compliance with the
provisions of the Issue of Foreign Currency Convertible Bonds and Ordinary
Shares (Through Depositary Receipt Mechanism) Scheme 1993 and the periodic
guidelines issued by the Central Government. This would mean that ADSs
converted into Indian shares may be converted back into ADSs, subject to the
limits of sectoral caps. The Operative Guidelines for the limited two-way fungibility under the
Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depositary Receipt Mechanism) Scheme 1993 has also been approved by the
Government of India. These guidelines provide that a re-issuance of ADSs/GDSs are permitted to
the extent of ADSs/GDSs, have been redeemed for underlying shares and sold in
the domestic market. The re-issuance must be within the specified limits. The
conditions to be satisfied in this regard are: (i) the shares are purchased on
a recognized stock exchange; (ii) the Indian company has issued ADS/GDS, (iii)
the shares are purchased with the permission of the custodian of the ADSs/GDSs
of the Indian company and are deposited with the custodian; and (iv) the number
of shares so purchased shall not exceed the number of ADSs/GDSs converted into
underlying shares. Procedure for conversion of shares into ADSs/GDSs is as follows: (i) on
request by the overseas investor for the acquisition of shares for re-issuance
of ADSs/GDSs, the SEBI registered broker will purchase shares from a stock
exchange after verifying with the custodian as to the availability of Head
Room (i.e. the number of ADSs/GDSs originally issued minus number of ADSs/GDSs
outstanding further adjusted for ADSs/GDSs redeemed into underlying shares and
registered in the name of the non- resident investor(s)); (ii) an Indian broker
purchases the shares in the name of the overseas depository; (iii) After the
purchase, the Indian broker places the domestic shares with the Custodian; (iv)
Custodian advises the overseas depository on the custody of domestic shares
and to issue corresponding ADSs/GDSs to the Investor; and (v) the overseas
depository issues ADSs/GDSs to the Investor.




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Companies are also permitted to sponsor the issue of ADSs through an
overseas depository against the underlying equity shares accepted from holders
of its equity shares in India at a price to be determined by the managing
underwriters for the offering. However, the sponsored issue of ADSs is possible
only if the following conditions are satisfied:  a.
    
    the ADS offering is approved by the FIPB and the shareholders
of the issuer in a general meeting;b.
    
    the facility is available to all the shareholders of the
issuer;c.
    
    the proceeds of the offering are repatriated into India within
one month;d.
    
    the sale of the existing shares by the Indian shareholders are
made in compliance with the Foreign Direct Investment Policy in
India;e.
    
    the number of shares offered by the Indian shareholders are
subject to limits in proportion to the existing holdings of the
Indian shareholders when the sale is oversubscribed; andf.
    
    the offering expenses do not exceed 7% of the offering proceeds
and are paid by the shareholders on a pro-rata basis. The issuer company is also required to furnish a report to Reserve Bank of
India specifying the details of the offering, including the amount raised
through the offering, the number of ADSs issued, the underlying shares offered
and the percentage of equity held by the issuer. Foreign Direct Investment In July 1991, the Government of India raised the limit on foreign equity
holdings in Indian companies from 40% to 51% in certain high priority
industries. The RBI gives automatic approval for such foreign equity holdings.
The Foreign Investment Promotion Board, or FIPB, currently under the Ministry
of Industry, was thereafter formed to negotiate with large foreign companies
wishing to make long-term investments in India. Foreign equity participation in
excess of 51% in such high priority industries or in any other industries up to
Rs. six billion is currently allowed only with the approval of the FIPB.
Proposals in excess of Rs. six billion require the approval of the Cabinet
Committee on Foreign Investment. Proposals involving the public sector and
other sensitive areas require the approval of Cabinet Committee on Economic
Affairs.These facilities are designed for direct foreign investments by
non-residents of India who are not NRIs, OCBs or FIIs (as each term is defined
below), or foreign direct investors. The Department of Industrial Policy and
Promotion, a part of the Ministry of Industry, issued detailed guidelines in
January 1998 for consideration of foreign direct investment proposals by the
FIPB, or the Guidelines. Under the Guidelines, sector specific guidelines for
foreign direct investment and the levels of permitted equity participation have
been established. In March 2000, the RBI issued a notification that foreign
ownership of up to 50%, 51%, 74% or 100%, depending on the category of
industry, would be allowed without prior permission of the RBI. The issues to
be considered by the FIPB, and the FIPBs areas of priority in granting
approvals are also set out in the Guidelines. The basic objective of the
Guidelines is to improve the transparency and objectivity of the FIPBs
consideration of proposals. However, because the Guidelines are administrative
guidelines and have not been codified as either law or regulations, they are
not legally binding with respect to any recommendation made by the FIPB or with
respect to any decision taken by the Government of India in cases involving
foreign direct investment. In May 1994, the Government of India announced that purchases by foreign
investors of ADSs as evidenced by ADRs and foreign currency convertible bonds
of Indian companies will be treated as direct foreign investment in the equity
issued by Indian companies for such offerings. Therefore, offerings that
involve the issuance of equity that results in Foreign Direct Investors holding
more than the stipulated percentage of direct foreign investments (which
depends on the category of industry) would require approval from the FIPB. In
addition, in connection with offerings of any such securities to foreign
investors, approval of the FIPB is required for Indian companies whether or not
the stipulated percentage limit would be reached, if the proceeds therefrom are
to be used for investment in non-high priority industries. In July 1998, the Government of India issued guidelines to the effect that
foreign investment in preferred shares will be considered as part of the share
capital of a company and will be processed through the automatic RBI route or
will require the approval of the FIPB, as the case may be. Investments in
preferred shares are included as foreign direct investment for the purposes of
sectoral caps on foreign equity, if such preferred shares carry a conversion
option. If the preferred shares are structured without a conversion option,
they would fall outside the foreign direct investment limit but would be
treated as debt and would be subject to special Government of India guidelines
and approvals.




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Investment by Non-Resident Indians and Overseas Corporate Bodies A variety of special facilities for making investments in shares of Indian
companies is available to individuals of Indian nationality or origin residing
outside India, or Non-Resident Indian (NRI) and to overseas corporate bodies,
or OCBs. These facilities permit NRIs and OCBs to make portfolio investments
in shares and other securities of Indian companies on a basis that is not
generally available to other foreign investors. An NRI or a Person of Indian
Origin (PIO) resident outside India may invest by way of contribution to the
capital of a firm or a proprietary concern in India on a non-repatriable
basis. These facilities are different and distinct from investments by Foreign
Direct Investors described above. Indian companies are now allowed, without
prior Government of India approval, to invest in joint ventures or wholly-owned
subsidiaries outside India. The amount invested may not exceed 100% of the net
worth of the Company. Investment By Foreign Institutional Investors In September 1992, the Government of India issued guidelines which enable
foreign institutional investors or FIIs, including institutions such as pension
funds, investment trusts, asset management companies, nominee companies and
incorporated/institutional portfolio managers, to invest in all the securities
traded on the primary and secondary markets in India. Under the guidelines,
FIIs are required to obtain an initial registration from the SEBI and a general
permission from the RBI to engage in transactions regulated under FERA. FIIs
must also comply with the provisions of the SEBI Foreign Institutional
Investors Regulations, 1995. When it receives the initial registration, the FII
also obtains general permission from the RBI to engage in transactions
regulated under FERA. Together, the initial registration and the RBIs general
permission enable the registered FII to: buy (subject to the ownership
restrictions discussed below) and sell freely tradable securities issued by
Indian companies; realize capital gains on investments made through the initial
amount invested in India; subscribe or renounce rights offerings for shares;
appoint a domestic custodian for custody of investments held; and repatriate
the capital, capital gains, dividends, income received by way of interest and
any other compensation received towards the sale or renunciation of rights

offerings of shares. Ownership Restrictions SEBI and RBI regulations restrict investments in Indian companies by FIIs,
NRIs and OCBs or collectively, Foreign Direct Investors. Under current SEBI
regulations applicable to Wipro Limited, subject to the requisite approvals of
the shareholders in a General Meeting, Foreign Direct Investors in aggregate
may hold no more than 49% of a companys equity shares, excluding the equity
shares underlying the ADSs. However, under Notification No. FEMA.45/2001-RB
dated September 20, 2001 under Foreign Exchange Management (Transfer or Issue
of Security by a person resident outside India Regulations, 2001, the limit of
FII investment in a company has been linked to sectoral caps/statutory ceiling
as applicable to the concerned industry subject to obtaining the approval of
the shareholders by a special resolution. NRIs and OCBs in aggregate may hold
no more than 24% of a companys equity shares, (subject to obtaining the
approval of the shareholders by a special resolution) excluding the equity
shares underlying the ADSs. Furthermore, SEBI regulations provide that no
single FII may hold more than 10% of a companys total equity shares and no
single NRI or OCB may hold more than 5% of a companys total equity shares.
There is uncertainty under Indian law about the tax regime applicable to FIIs
which hold and trade ADSs. FIIs are urged to consult with their Indian legal
and tax advisers about the relationship between the FII guidelines and the ADSs
and any equity shares withdrawn upon surrender of ADSs. More detailed provisions relating to FII investment have been introduced
by the SEBI and RBI with the introduction of the SEBI Foreign Institutional
Investors Regulations, 1995 and the RBI circulars in this regard. These
provisions relate to the registration of FIIs, their general obligations and
responsibilities, and certain investment conditions and restrictions. A SEBI
registered FII must restrict the allocation of its total investment in India
between equity and debt securities in the ratio of 70:30. Such FII can form a
100% debt fund and register it with SEBI to invest in India. An FII may not purchase and hold more than 10% of the paid-up equity
capital of a company. An NRI or OCB may not purchase and hold more than 5% of
the paid-up equity capital of the company. Registered FIIs may also trade in all exchange traded derivative contracts
in India subject to position limits prescribed by the SEBI . The SEBI has also
permitted private placements of shares by listed companies with FIIs, subject
to the prior approval of the RBI under FERA. Such private placement must be
made at the average of the weekly highs and lows of the closing price over the
preceding six months or the preceding two weeks, whichever is higher. Under the
Securities and Exchange Board of India (Substantial Acquisition of shares and
Takeovers) Regulations, 1998 approved by the SEBI in January 1998 and
promulgated by the Government of India in February 1998, or the Takeover Code,
which replaced the 1994 Takeover Code (as defined herein), upon the acquisition
of more than 5% or 10% or 14% of the outstanding shares of a public Indian
company, a purchaser is required to notify the




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company and all the stock
exchanges on which the shares of the company are listed. Upon the acquisition
of 15% or more of such shares or a change in control of the company, the
purchaser is required to make an open offer to the other shareholders offering
to purchase at least 20% of all the outstanding shares of the company at a
minimum offer price as determined pursuant to the rules of the Takeover Code.
Upon conversion of ADSs into equity shares, an ADS holder will be subject to
the Takeover Code. Open market purchases of securities of Indian companies in India by
Foreign Direct Investors or investments by NRIs, OCBs and FIIs above the
ownership levels set forth above require Government of India approval on a
case-by-case basis. The Reserve Bank of India in circular No.44 dated December 8, 2003, has
imposed certain restrictions on OCBs in making any new investments as well as
on the sale or transfer of shares held by them. Government of India Approvals Approval of the Foreign Investment Promotion Board for foreign direct
investment by ADS holders is required. Specific approval of the Reserve Bank
of India will have to be obtained for:  
    
    any renunciation of rights in the underlying equity shares in favor of a person resident in India; and
    
    the sale of the underlying equity shares by a person resident outside India to a person resident in India. In such cases, the foreign investor would have to apply to the Reserve
Bank of India by submitting Form TS1, that requires information as to the
transferor, the transferee, the shareholding structure of the company whose
shares are to be sold, the proposed price and other information. The Reserve
Bank of India is not required to respond to a Form TS1 application within any
specific time period and may grant or deny the application at its discretion.
Exceptions to this requirement of Reserve Bank of India approval include sales
made in the stock market through a registered Indian broker, through a
recognized stock exchange in India at the prevailing market rates, or if the
shares are offered in accordance with the terms of an offer under the
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997. The proceeds from any sale of the underlying
equity shares by a person resident outside India to a person resident in India
may be transferred outside India after receipt of Reserve Bank of India
approval (if required), and the payment of applicable taxes and stamp duties. No approval is required for transfers of ADSs outside India between two
non-residents. Any person resident outside India who desires to sell equity
shares received upon surrender of ADSs or otherwise transfer such equity shares
within India should seek the advice of Indian counsel as to the requirements
applicable at that time. Taxation Indian Taxation The following summary is based on the law and practice of the Indian
Income-tax Act, 1961, or Income-Tax Act, including the special tax regime
contained in Sections 115AC and 115ACA of the Income-tax Act read with the
Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through
Depositary Receipt Mechanism) Scheme, 1993, as amended on, January 19, 2000, or
the Issue of Foreign Currency Convertible bonds and Ordinary Shares Scheme.
The Income-tax Act is amended every year by the Finance Act of the relevant
year. Some or all of the tax consequences of Sections 115AC and 115ACA may be
amended or changed by future amendments to the Income-tax Act. We believe this information is materially complete as of the date hereof,
however, this summary is not intended to constitute a complete analysis of the
individual tax consequences to non-resident holders or employees under Indian
law for the acquisition, ownership and sale of ADSs and equity shares. Residence. For purposes of the Income-tax Act, an individual is
considered to be a resident of India during any fiscal year if he or she is in
India in that year for:  
    
    a period or periods amounting to 182 days or more; or
    
    60 days or more and, within the four preceding years has been in India
for a period or periods amounting to 365 days or more; or
    
    182 days or more, in case of a citizen of India or a person of Indian
origin living abroad who visits India and within the four preceding years
has been in India for a period or periods amounting to 365 days or more.




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A company is a resident of India if it is incorporated in India or the
control and the management of its affairs is situated wholly in India.
Companies that are not residents of India would be treated as non-residents for
purposes of the Income-tax Act. Taxation of Distributions.As per Section 10(34) of the Income Tax Act,
dividends paid by Indian Companies on or after April 1, 2003 to its
shareholders (whether resident in India or not) are not subject to tax.
However, the Company paying the dividend is subject to a dividend distribution
tax of 12.81% including the applicable surcharge, on the total amount it
distributes, declares or pays as a dividend, in addition to the normal
corporate tax. Any distributions of additional ADSs or equity shares to resident or non-
resident holders will not be subject to Indian tax. Taxation of Capital Gains. The following is a brief summary of capital
gains taxation of non-resident holders and resident employees in respect of the
sale of ADSs and equity shares received upon redemption of ADSs. The relevant
provisions are contained mainly in sections 45, 47(vii)(a), 115AC and 115ACA,
of the Income Tax Act, in conjunction with the Issue of Foreign Currency
Convertible Bonds and Ordinary Shares Scheme. Gains realized upon the sale of ADSs or shares that have been held for a
period of more than thirty-six months and twelve months, respectively, are
considered long term capital gains. Gains realized upon the sale of ADSs or
shares that have been held for a period of thirty six months or less and twelve
months or less, respectively, are considered short term capital gains. Capital
gains are taxed as follows:  
    
    Gains from a sale of ADSs outside India, by a non-resident to another
non-resident are not taxable in India.
    
    Long term capital gains realized by a resident employee from the
transfer of the ADSs will be subject to tax at the rate of 10%.
Short-term capital gains on such a transfer will be taxed at graduated
rates with a maximum of 30%. An additional surcharge of 10% will be
charged in case the aggregate taxable income of the resident employee
exceed Rs. 850,000 during the relevant financial year.
    
    Long-term capital gains realized by an individual holder upon the sale
of equity shares obtained through the redemption of ADSs are subject to
tax at a rate of 10%. An additional surcharge of 10% will be charged in
case the aggregate taxable income of the individual holder exceeds Rs.
850,000 during the relevant financial year.
    
    Long-term capital gains realized by non-resident corporate holders upon
the sale of equity shares obtained through the redemption of ADSs are
subject to tax at a rate of 10.25% including the applicable surcharge.
    
    Short-term capital gains realized upon the sale of equity shares
obtained from the redemption of ADSs will be taxed at variable rates with
a maximum of 41% (including the applicable surcharge) in case of foreign
companies, and 30% in the case of resident employees and non-resident
individuals with taxable income exceeding Rs. 150,000. In the case of
resident employees or the non-resident individuals, an additional
surcharge of 10% will be charged in case their aggregate taxable income
exceed Rs. 850,000 during the relevant financial year. The above rates may be reduced by the applicable tax treaty in case of
non-residents. The capital gains tax is computed by applying the appropriate
tax rates to the difference between the sale price and the purchase price of
the equity shares or ADSs. Under the Issue of Foreign Currency Convertible
Bonds and Ordinary Shares Scheme, the purchase price of equity shares in an
Indian listed company received in exchange for ADSs will be the market price of
the underlying shares on the date that the depository gives notice to the
custodian of the delivery of the equity shares in exchange for the
corresponding ADSs or the stepped up basis purchase price. The market price
will be the price of the equity shares prevailing on The Stock Exchange, Mumbai
or the National Stock Exchange. There is no corresponding provision under the
Income Tax Act in relation to the stepped up basis for the purchase price of
equity shares. However the tax department in India has not denied this
benefit. In the event that the tax department denies this benefit, the
original purchase price of ADSs would be considered the purchase price for
computing the capital gains tax. According to the Issue of Foreign Currency Convertible Bonds and Ordinary
Shares Scheme, a non-resident holders holding period for the purposes of
determining the applicable Indian capital gains tax rate in respect of equity
shares received in exchange for ADSs commences on the date of the notice
of the redemption by the depository to the custodian. However, the Issue of
Foreign Currency Convertible Bonds and Ordinary Shares Scheme does not address
this issue in the case of resident employees, and it is therefore unclear as to
when the holding period for the purposes of determining capital gains tax
commences for such a resident employee. The Issue of Foreign Currency Convertible Bonds and Ordinary Shares Scheme
provides that if the equity shares are sold on a recognized stock exchange in
India against payment in Indian rupees, they will no longer be eligible for the
preferential tax treatment.




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It is unclear as to whether section 115AC and the Issue of Foreign
Currency Convertible Bonds and Ordinary Shares Scheme are applicable to a
non-resident who acquires equity shares outside India from a non-resident
holder of equity shares after receipt of the equity shares upon redemption of
the ADSs. If section 115AC and the Issue of Foreign Currency Convertible Bonds and
Ordinary Shares Scheme are not applicable to a non-resident holder, long term
capital gains realized on the sale of such equity shares will still be subject
to tax at a rate of 10%. In addition to this, there will be a surcharge of 2.5%
in the case of corporate holders and 10% in the case of non-corporate holders
with a aggregate taxable income exceeding Rs. 850,000. The non-resident holders
will also be able to avail of the benefits of exchange rate fluctuations for
the computation of capital gains tax, which are not available to a non-resident
holder under section 115AC and the Issue of Foreign Currency Convertible Bonds
and Ordinary Shares Scheme. It is unclear as to whether capital gains derived from the sale of
subscription rights or other rights by a non-resident holder not entitled to an
exemption under a tax treaty will be subject to Indian capital gains tax. If
such subscription rights or other rights are deemed by the Indian tax
authorities to be situated within India, the gains realized on the sale of such
subscription rights or other rights will be subject to Indian taxation. The
capital gains realized on the sale of such subscription rights or other rights,
which will generally be in the nature of short term capital gains, will be
subject to tax at variable rates with a maximum rate of 41% including the
applicable surcharge in case of a foreign company and 30%, in case of resident
employees and non-resident individuals with taxable income over Rs. 150,000. An
additional surcharge of 10% will be charged in case the aggregate taxable
income of resident employees and non-resident individuals exceed Rs. 850,000
during the relevant financial year. Section 10(36) of the Income tax Act exempts long-term capital gains
arising from the transfer of a share, being an eligible equity share in a
company purchased on or after March 1, 2003 but before March 1, 2004 and held
for a period of twelve months or more. An eligible equity share means,  
    
    Any equity share in a company being a constituent of BSE-500 Index of
the Stock Exchange, Mumbai as on March 1, 2003 and the transactions of
purchase and sale of such equity shares are entered into on a recognized
stock exchange in India.
    
    Any equity share in a company allotted through a public issue on or
after March 1, 2003 and listed in a recognized stock exchange in India
before March 1, 2004 and the transaction of sale of such share is entered
into on a recognized stock exchange in India. As per Section 55(2) of the Income Tax Act, the cost of any share
(commonly called a bonus share) allotted to any shareholder without any
payment and on the basis of such shareholders share holdings, shall be nil.
The holding period of bonus shares for the purpose of determining the nature of
capital gains shall commence on the date of allotment of such shares by the
company. Withholding Tax on Capital Gains. Any gain realized by a non-resident or
resident employee on the sale of equity shares is subject to Indian capital
gains tax, which, in the case of a non-resident is to be withheld at the source
by the buyer. Buy-back of Securities. Indian companies are not subject to any tax on
the buy-back of their shares. However, the shareholders will be taxed on any
resulting gains. Our company would be required to deduct tax at source
according to the capital gains tax liability of a non-resident shareholder. Stamp Duty and Transfer Tax. Upon issuance of the equity shares
underlying our ADSs, companies will be required to pay a stamp duty of 0.1% per
share of the issue price of the underlying equity shares. A transfer of ADSs
is not subject to Indian stamp duty. However, upon the acquisition of equity
shares from the depository in exchange for ADSs, the non-resident holder will
be liable for Indian stamp duty at the rate of 0.25% of the market value of the
ADSs or equity shares exchanged. A sale of equity shares by a non-resident
holder will also be subject to Indian stamp duty at the rate of 0.25% of the
market value of the equity shares on the trade date, although customarily such
tax is borne by
the transferee. Shares must be traded in dematerialized form. The
transfer of shares in dematerialized form is currently not subject to stamp
duty. Wealth Tax. The holding of the ADSs and the holding of underlying equity
shares by resident and non-resident holders will be exempt from Indian wealth
tax. Non-resident holders are advised to consult their own tax advisors
regarding this issue. Gift Tax and Estate Duty. Indian gift tax was abolished as of October
1998. Indian Estate Duty was abolished as of March 1985. We cannot assure
that these taxes and duties will not be restored in future. Non-resident
holders are advised to consult their own tax advisors regarding this issue.




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Service Tax. Brokerage or commission paid to stock brokers in connection
with the sale or purchase of shares is subject to a service tax of 8%. The
stock broker is responsible for collecting the service tax from the shareholder
and paying it to the relevant authority. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE INDIAN AND THEIR LOCAL TAX CONSEQUENCES OF ACQUIRING, OWNING OR
DISPOSING OF EQUITY SHARES OR ADSs. United States Federal Taxation The following is a summary of the material U.S. federal income and estate
tax consequences that may be relevant with respect to the acquisition,
ownership and disposition of equity shares or ADSs. This summary addresses the
U.S. federal income and estate tax considerations of holders that are U.S.
persons. U.S. persons are citizens or residents of the United States, or
corporations created in or under the laws of the United States or any political
subdivision thereof or therein, estates, the income of which is subject to U.S.
federal income taxation regardless of its source and trusts for which a U.S.
court exercises primary supervision and a U.S. person has the authority to
control all substantial decisions and who will hold equity shares or ADSs as
capital assets or U.S. Holder. This summary does not address tax considerations applicable to holders
that may be subject to special tax rules, such as banks, insurance companies,
dealers in securities or currencies, tax-exempt entities, persons that will
hold equity shares or ADSs as a position in a straddle or as part of a
hedging or conversion transaction for tax purposes, persons that have a
functional currency other than the U.S. dollar or holders of 10% or more, by
voting power or value, of the stock of our company. This summary is based on
the tax laws of the United States as in effect on the date of this document and
on United States Treasury Regulations in effect or, in some cases, proposed, as
of the date of this document , as well as judicial and administrative
interpretations thereof available on or before such date and is based in part
on the assumption that each obligation in the deposit agreement and any related
agreement will be performed in accordance with its terms. All of the foregoing
are subject to change, which change could apply retroactively and could affect
the tax consequences described below. Each prospective investor should consult his, her or its own tax advisor
with respect to the U.S. federal, state, local and foreign tax consequences of
acquiring, owning or disposing of equity shares or ADSs. Ownership of ADSs. For U.S. federal income tax purposes, holders of ADSs
will be treated as the owners of equity shares represented by such ADSs. Dividends. Except for equity shares, if any, distributed pro rata to all
shareholders of our company, including holders of ADSs, distributions of cash
or property with respect to equity shares will be included in income by a U.S.
holder as foreign source dividend income at the time of receipt, which in the
case of a U.S. holder of ADSs generally will be the date of receipt by the
depository, to the extent such distributions are made from the current or
accumulated earnings and profits (as determined under U.S. federal income tax
principles) of our company. Such dividends will not be eligible for the
dividends received deduction generally allowed to corporate U.S. holders. To
the extent, if any, that the amount of any distribution by our company exceeds
our companys current and accumulated earnings and profits as determined under
U.S. federal income tax principles, it will be treated first as a tax-free
return of the U.S. holders tax basis in the equity shares or ADSs and
thereafter as capital gain. Subject to certain conditions and limitations, any Indian dividend
distribution taxes imposed upon distributions paid to a U.S. Holder will be
eligible for credit against the U.S. holders federal income tax liability.
Alternatively, a U.S. holder may claim a deduction for such amount, but only
for a year in which a U.S. holder elects to do so with respect to all foreign
income taxes. The overall limitation on foreign taxes eligible for credit is
calculated separately with respect to specific classes of income. For this
purpose, dividends distributed by us with respect to equity shares or ADSs will
generally constitute foreign source passive income. If dividends are paid in Indian rupees, the amount of the dividend
distribution included in the income of a U.S. holder will be in the U.S. dollar
value of the payments made in Indian rupees, determined at a spot exchange rate
between Indian rupees and U.S. dollars applicable to the date such dividend is
included in the income of the U.S. holder, regardless of whether the payment is
in fact converted into U.S. dollars. Generally, gain or loss, if any,
resulting from currency exchange fluctuations during the period from the date
the dividend is paid to the date such payment is converted into U.S. dollars
will be treated as U.S. source ordinary income or loss. A non-U.S. holder of equity shares or ADSs generally will not be subject
to U.S. federal income tax or withholding tax on dividends received on equity
shares or ADSs unless such income is effectively connected with the conduct by
such non-U.S. holder of a trade or business in the United States.




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Sale or Exchange of Equity Shares or ADSs. A U.S. holder generally will
recognize gain or loss on the sale or exchange of equity shares or ADSs equal
to the difference between the amount realized on such sale or exchange and the
U.S. holders tax basis in the equity shares or ADSs, as the case may be. Such
gain or loss will be capital gain or loss, and will be long-term capital gain
or loss if the equity shares or ADSs, as the case may be, were held for more
than one year. Gain or loss, if any, recognized by a U.S. holder generally
will be treated as U.S. source passive income or loss for U.S. foreign tax
credit purposes. A non-U.S. holder of equity shares or ADSs generally will not be subject
to U.S. federal income or withholding tax on any gain realized on the sale or
exchange of such equity shares or ADSs unless:  
    
    such gain is effectively connected with the conduct by such non-U.S.
holder of a trade or business in the U.S.; or
    
    in the case of any gain realized by an individual non-U.S. holder, such
holder is present in the United States for 183 days or more in the
taxable year of such sale and other conditions are met. Estate Taxes. An individual shareholder who is a citizen or resident of
the United States for U.S. federal estate tax purposes will have the value of
the equity shares or ADSs owned by such holder included in his or her gross
estate for U.S. federal estate tax purposes. An individual holder who actually
pays Indian estate tax with respect to the equity shares will, however, be
entitled to credit the amount of such tax against his or her U.S. federal
estate tax liability, subject to a number of conditions and limitations. Any dividends paid, or proceeds on a sale of, equity shares or ADSs to or
by a U.S. holder may be subject to U.S. information reporting, and a 31% backup
withholding tax may apply unless the holder is an exempt recipient or provides
a U.S. taxpayer identification number, certifies that such holder is not
subject to backup withholding and otherwise complies with any applicable backup
withholding requirements. Any amount withheld under the backup withholding
rules will be allowed as a refund or credit against the holders U.S. federal
income tax, provided that the required information is furnished to the Internal
Revenue Service. Passive Foreign Investment Company. A non-U.S. corporation will be
classified as a passive foreign investment company for U.S. Federal income tax
purposes if either:  
    
    75% or more of its gross income for the taxable year is passive income;or
    
    on average for the taxable year by value, or, if it is not a publicly
traded corporation and so elects, by adjusted basis, if 50% or more of
its assets produce or are held for the production of passive income. We do not believe that we satisfy either of the tests for passive foreign
investment company status. If we were to be a passive foreign investment
company for any taxable year, U.S. holders would be required to either:  
    
    pay an interest charge together with tax calculated at maximum ordinary
income rates on excess distributions, which is defined to include gain
on a sale or other disposition of equity shares;
    
    if a qualified electing fund election is made, include in their taxable
income their pro rata share of undistributed amounts of our income; or
    
    if the equity shares are marketable and a mark-to-market election is
made, mark-to-market the equity shares each taxable year and recognize
ordinary gain and, to the extent of prior ordinary gain, ordinary loss
for the increase or decrease in market value for such taxable year.  The above summary is not intended to constitute a complete analysis of all
tax consequences relating to ownership of equity shares or ADSs. You should
consult your own tax advisor concerning the tax consequences of your particular
situation.




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Documents on Display This report and other information filed or to be filed by Wipro Limited
can be inspected and copied at the public reference facilities maintained by
the SEC at:  
    
    Judiciary Plaza
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20529, and
    
    Northwestern Atrium Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661-2511 Copies of these materials can also be obtained from the Public Reference
Section of the SEC, 450, 5th Street, N.W., Washington, DC 20549, at prescribed
rates. The SEC maintains a website at www.sec.gov that contains reports, proxy
and information statements, and other information regarding registrants that
make electronic filings with the SEC using its EDGAR system. Additionally, documents referred to in this Form 20-F may be inspected at
our corporate offices which are located at Doddakannelli, Sarjapur Road,
Bangalore, Karnataka, 560035, India.




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Item 11. Quantitative and Qualitative Disclosures About Market Risk General Market risk is the risk of loss of future earnings, to fair values or to
future cash flows that may result from a change in the price of a financial
instrument. The value of a financial instrument may change as a result of
changes in the interest rates, foreign currency exchange rates, commodity
prices, equity prices and other market changes that affect market risk
sensitive instruments. Market risk is attributable to all market risk
sensitive financial instruments including foreign currency receivables and
payables and long-term debt. Our exposure to market risk is a function of our investment and borrowing
activities and our revenue generating activities in foreign currency. The
objective of market risk management is to avoid excessive exposure of our
earnings and equity to loss. Most of our exposure to market risk arises out of
our foreign currency account receivables and our investments in foreign
currency denominated securities. Risk Management Procedures We manage market risk through a corporate treasury department, which
evaluates and exercises independent control over the entire process of market
risk management. Our corporate treasury department recommends risk management
objectives and policies which are approved by senior management and our audit
committee. The activities of this department include management of cash
resources, implementing hedging strategies for foreign currency exposures,
borrowing strategies, and ensuring compliance with market risk limits and
policies on a daily basis. Components of Market Risk Our exposure to market risk arises principally from exchange rate risk.
Interest rate risk is the other component of our market risk. Exchange rate risk.Our exchange rate risk primarily arises from our
foreign exchange revenue, receivables, forecasted cash flows, payables and
foreign currency debt. A significant portion of our revenue are in U.S. dollars
while a significant portion of our costs are in Indian rupees. The exchange
rate between the rupee and dollar has fluctuated significantly in recent years
and may continue to fluctuate in the future. Appreciation of the rupee against
the dollar can adversely affect our results of operations. We evaluate our exchange rate exposure arising from these transactions and
enter into foreign currency forward contracts to mitigate such exposure. We
have approved risk management policies that require us to hedge a significant
portion of our exposure. Until fiscal 2003 we used to hedge only the
underlying foreign currency assets and liabilities. In fiscal 2004, we
reevaluated our risk management strategy and decided to hedge a significant
portion of the anticipated U.S. dollar revenues for fiscal 2005. As of March
31, 2004, we had forward contracts to sell $ 867 million. In the year ended
March 31, 2003 we had forward contracts to sell $ 113 million. Effective March 2004, upon completion of the formal documentation and
testing for effectiveness, we have designated the forward contracts in respect
of forecasted transactions, which meet the hedging criteria, as cash flow
hedges. Changes in the derivative fair values that are designated effective and
qualify as cash flow hedges are deferred and recorded as a component of
accumulated other comprehensive income until the hedged transactions occur and
are then recognized in the consolidated statements of income. The ineffective
portion of a hedging derivative is immediately recognized in the consolidated
statements of income. Consequently, as of March 31, 2004, we have recorded an
amount of Rs. 1,059 million as a component of accumulated other comprehensive
income within the stockholders equity. In addition, during the year ended March 31, 2004, we purchased put
options to sell U.S. dollars. Contemporaneously, we also wrote put options to
sell U.S. dollars. These options qualify as net written options, ineligible for
hedge accounting under SFAS No. 133. Consequently, the increase in fair value
of the net written options of Rs. 153 million is recognized in the consolidated
statement of income. As of March 31, 2004, we had net written options to sell
US$ 113 million. Sensitivity analysis of exchange rate risk As at March 31, 2004, a Rs.1 increase /decrease in the spot rate for
exchange of Indian Rupee with U.S. dollar would result in approximately Rs. 900
million decrease/increase in the fair value of the companys forward contracts
and net written options.




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Interest rate risk.Our interest rate risk primarily arises from our
investment securities. Our investments are primarily in short-term
investments, which do not expose us to significant interest rate risk. Fair value. The fair value of our market rate risk sensitive instruments,
other than forward contracts and option contracts, closely approximates their
carrying value. 
 Item 12. Description of Securities Other Than Equity Securities Not applicable. 
 PART II 
 Item 13. Defaults, Dividend Arrearages and Delinquencies Not applicable. 
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds Use of Proceeds On October 19, 2000, We completed our initial public offering in the
United States, or U.S. IPO, of 3,162,500 American Depositary Shares
representing 3,162,500 equity shares, par value Rs. 2 per share (including the
exercise of the underwriters overallotment option consisting of 412,500
American Depositary Shares representing 412,500 equity shares), at a public
offering price of $41.375 per American Depositary Share, pursuant to a
registration statement filed on Form F-1 (File No. 333-46278) with the
Securities Exchange Commission (the Registration Statement). All of the
shares registered were sold. The managing underwriters were Morgan Stanley
Dean Witter, Credit Suisse First Boston, and Banc of America Securities.
Aggregate gross proceeds to Wipro (prior to deduction of underwriting discounts
and commissions and expenses of the offering) were $130,848,438. There were no
selling stockholders in the U.S. IPO. We paid underwriting discounts and commissions of $5,888,180. The net
proceeds from the offering after underwriting discounts and commissions are
estimated to be $124,960,258. Net proceeds from the offering have been invested in highly liquid money
market instruments. In July 2002 we acquired 62% equity interest in
Spectramind e-Services Private Limited for a consideration of Rs
3,691 million ($75.82 million) in cash. A portion of the consideration amounting to
$60.49 million was paid out of net proceeds from the offering. In December
2002, we acquired the global energy practice of American Management Systems for
an aggregate consideration of Rs. 1,180 million ($24.58 million). A portion of
the consideration, amounting to $21.46 million, was paid out of the net
proceeds form the offering. None of the net proceeds from the initial public
offering were paid, directly or indirectly, to any of our directors, officers
or general partners or any of their associates, or to any persons owning ten
percent or more of any class of our equity securities, or any affiliates. 
 Item 15. Controls and Procedures Evaluation of disclosure controls and procedures. Based on their evaluation as of the end of the period covered by this
Annual Report on Form 20-F, the Companys principal executive officer and
principal financial officer have concluded that the Companys disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d  14(c) under
the Securities Exchange Act of 1934 (the Exchange Act)) are effective to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange
Commission rules and forms. Change in internal controls. There were no significant changes in the Companys internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation. There were no significant deficiencies or material
weaknesses, and therefore there were no corrective actions taken. 
 Item 16 A. Audit Committee Financial Expert The Audit Committee is responsible for reviewing reports of our financial
results, audits, internal controls, and compliance with federal procurement
laws and regulations. The committee selects the independent accountants and




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approves all related fees and compensation and reviews their selection
with the Board of Directors. The committee also reviews the procedures of the
independent accountants to ensure their independence with respect to the
services performed for the Company. Members of the committee are non-management directors who, in the opinion
of the Board, are independent as defined under the applicable rules of the New
York Stock Exchange. The Board has determined that Mr. Vaghul qualifies as an
Audit Committee Financial Expert as defined by the applicable rules of the SEC. 
 Item 16 B. Code of Ethics Pursuant to the requirements of Item 406 of the Regulation S-K, on October
16, 2002, our Audit Committee adopted a written code of ethics is applicable to
our Chairman and Chief Executive Officer, Principal Financial Officer and
others members of our finance department. Our code of ethics is filed as an
exhibit to this annual report and is available on our website www.wipro.com On April 17, 2003, our Audit Committee also adopted a whistleblowing
policy that we call our ombudsprocess. We have nominated ombudsmen to address
concerns relating to malpractice, impropriety, abuse or wrongdoing, including
questionable accounting practices, violations of law and any breaches of any
policy, manual or code adopted by us. Our ombudsprocess encourages the
employees and business associates to report any instances of malpractice,
impropriety, abuse or wrongdoing, and prohibits harassment or victimization
including informal pressures of any kind against any employee or business
associate who reports any such conduct. Our Ombudsprocess is filed as an
exhibit to this annual report and is available on our website www.wipro.com. 
 Item 16 C. Fees paid to Independent Accountants Our audit committee charter requires us to obtain the prior approval of
our audit committee on every occasion that we engage our principal accountants
or their associated entities and on every occasion that they provide us with
any non-audit services. At the beginning of each year, the Audit Committee
approves the proposed services, including the nature, type and scope of
services contemplated and the related fees, to be rendered by these firms
during the year. In addition, Audit Committee pre-approval is also required for
those engagements that may arise during the course of the year that are outside
the scope of the initial services and fees pre-approved by the Audit Committee. Set forth below are the fees paid by us to our independent accounting firm
for the years ended March 31, 2003 and 2004. In millionsYear ended March 31,2003
    
    
    
    
    
    2004Audit fees
    
    Rs.
    
    
    9.15
    
    
    Rs.
    
    
    9.75Audit-related fees
    
    
    
    
    
    
    1.30
    
    
    
    
    
    
    
    Tax fees
    
    
    
    
    
    
    10.75
    
    
    
    
    
    
    
    15.60Other fees
    
    
    
    
    
    
    14.85
    
    
    
    
    
    
    
    3.95Total
    
    Rs.
    
    
    36.05
    
    
    Rs.
    
    
    29.30
 We were notified by KPMG, India, our independent auditor, that for the
fiscal year ended March 31, 2004, KPMG LLP, a UK limited liability partnership
(KPMG LLP) would serve as our Independent auditor. The change was made at
the request of KPMG, India. The change is likely to be transitory, and we
expect to re-appoint KPMG, India, once it has successfully completed its
registration with the U.S. Public Company Accounting Oversight Board (the
PCAOB). Description of Non-Audit Services Audit related fees primarily comprise fees for financial due diligence
carried out in connection with business acquisition activities of the Company. Tax Feescomprise fees for tax compliance and tax planning services
rendered by the independent accountants. These services include tax services
for employees on assignment and other corporate tax services like assistance
with foreign income tax, value added tax, transfer pricing study, government
sales tax and equivalent tax matters in local jurisdictions and assistance with
local tax authority reporting requirements for tax compliance purposes. All Other Feesprimarily fees for assistance in conducting training
programs for employees, processing documents for obtaining work permits / visas
for employees deputed abroad and other matters.




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Item 17. Financial Statements Not applicable. 
 Part III 
 Item 18. Financial Statements




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REPORT OF AUDIT COMMITTEE  The Board of Directors and Stockholders
Wipro Limited The Consolidated financial statements for the year ended March 31, 2004
have been reviewed by the committee with the auditors as well as the management
and recommended to the board at the companys board meeting held on April 16,
2004 for approval and adoption of the consolidated audited financial statements
read with the report of the Auditors thereon. These financial statements be
further hereby recommended for inclusion in the companys Annual Report and
other statutory regulatory filings. Bangalore
    
    N.Vaghul
    
    P. M. Sinha
    
    B. C. PrabhakarApril 16, 2004
    
    Chairman
    
    Member
    
    Member




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REPORT OF MANAGEMENT Management of Wipro is responsible for the integrity and objectivity of
the consolidated financial statements and related notes. The consolidated
financial statements have been prepared in accordance with United States
generally accepted accounting principles (U.S. GAAP) and include amounts based
on judgments and estimates by management. Management is also responsible for
the accuracy of the related data in the annual report and its consistency with
the financial statements. Management maintains internal control systems designed to provide
reasonable assurance that assets are safeguarded, transactions are executed in
accordance with managements authorization and properly recorded, and
accounting records are adequate for preparation of financial statements and
other financial information. These are reviewed at regular intervals to
ascertain their adequacy and effectiveness. In addition to the system of internal controls, the Company has
articulated its vision and core values which permeate all its activities. It
also has corporate policies to ensure highest standards of integrity in all
business transactions, eliminate possible conflicts of interest, ensure
compliance with laws, and protect confidentiality of proprietary information.
These are reviewed at periodic intervals. The consolidated financial statements have been audited by the Companys
independent auditors, KPMG LLP. Their responsibility is to audit these
statements in accordance with generally accepted auditing standards in the
United States and express their opinion on the fairness of presentation of the
statements. The Audit Committee of the board comprising entirely of independent
directors conducts an ongoing appraisal of the independence and performance of
the Companys internal and external auditors and monitors the integrity of
Companys financial statements. The Audit Committee meets several times during
the year with management, internal auditors and the independent auditors to
discuss audit activities, internal controls and financial reporting matters. Azim H. PremjiChairman and Chief Executive OfficerBangalore, April 16, 2004
    
    S.C. SenapatyCorporate Executive Vice President  Finance
and Chief Financial Officer




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INDEPENDENT AUDITORS REPORT The Board of Directors and Stockholders
Wipro Limited We have audited the accompanying consolidated balance sheets of Wipro
Limited and subsidiaries as of March 31, 2004 and 2003, and the related
consolidated statements of income, stockholders equity and comprehensive
income, and cash flows for each of the years in the three-year period
ended March 31, 2004. These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion. In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Wipro
Limited and subsidiaries as of March 31, 2004 and 2003, and the results of
their operations and their cash flows for each of the years in the
three-year period ended March 31, 2004, in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 2 to the consolidated financial statements, effective
April 1, 2002, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets and SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. KPMG LLP
London, United Kingdom
April 16, 2004




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WIPRO LIMITED AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS
PREPARED IN ACCORDANCE WITH U.S. GAAP
AS OF AND FOR THE
YEAR ENDED MARCH 31, 2004




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WIPRO LIMITED AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 As of March 31,2003
    
    2004
    
    2004Conveniencetranslation intoUS$(Unaudited)ASSETSCurrent assets:Cash and cash equivalents (Note 6)
    
    Rs.
    6,283,014
    
    
    Rs
    3,297,164
    
    
    $
    75,972Accounts receivable, net of allowances (Note 7)
    
    
    7,930,847
    
    
    
    10,972,936
    
    
    
    252,833Costs and earnings in excess of billings on contracts in progress
    
    
    1,379,273
    
    
    
    2,099,835
    
    
    
    48,383Inventories (Note 8)
    
    
    1,449,498
    
    
    
    1,438,193
    
    
    
    33,138Investments in liquid and short-term mutual funds (Note 10)
    
    
    7,813,400
    
    
    
    18,479,045
    
    
    
    425,784Other investment securities (Note 10)
    
    
    526,969
    
    
    
    
    
    
    
    Deferred income taxes (Note 22)
    
    
    215,299
    
    
    
    279,370
    
    
    
    6,437Property, plant and equipment held for sale (Note 5)
    
    
    12,667
    
    
    
    
    
    
    
    Other current assets (Note 9)
    
    
    3,015,817
    
    
    
    4,772,086
    
    
    
    109,956Total current assets
    
    
    28,626,784
    
    
    
    41,338,629
    
    
    
    952,503Property, plant and equipment, net (Note 11)
    
    
    7,309,784
    
    
    
    9,257,202
    
    
    
    213,300Investments in affiliates (Note 15)
    
    
    534,069
    
    
    
    619,559
    
    
    
    14,276Deferred income taxes (Note 22)
    
    
    65,488
    
    
    
    161,771
    
    
    
    3,727Intangible assets, net (Note 3, 12)
    
    
    450,362
    
    
    
    222,864
    
    
    
    5,135Goodwill (Note 3, 12)
    
    
    5,186,617
    
    
    
    5,368,697
    
    
    
    123,703Other assets (Note 9)
    
    
    607,787
    
    
    
    769,588
    
    
    
    17,732Total assets
    
    Rs.
    42,780,891
    
    
    Rs.
    57,738,310
    
    
    $
    1,330,376LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Borrowings from banks (Note 17)
    
    Rs.
    508,519
    
    
    Rs.
    969,050
    
    
    $
    22,328Current portion of long-term debt
    
    
    28,200
    
    
    
    
    
    
    
    Accounts payable
    
    
    2,236,060
    
    
    
    2,732,583
    
    
    
    62,963Accrued expenses
    
    
    1,427,447
    
    
    
    2,665,171
    
    
    
    61,409Accrued employee costs
    
    
    1,261,015
    
    
    
    2,012,465
    
    
    
    46,370Advances from customers
    
    
    896,989
    
    
    
    962,751
    
    
    
    22,183Other current liabilities (Note 13)
    
    
    795,273
    
    
    
    1,348,413
    
    
    
    31,069Total current liabilities
    
    
    7,153,503
    
    
    
    10,690,433
    
    
    
    246,323Other liabilities
    
    
    195,827
    
    
    
    276,206
    
    
    
    6,364Total liabilities
    
    
    7,349,330
    
    
    
    10,966,639
    
    
    
    252,688Minority interest
    
    
    
    
    
    
    407,919
    
    
    
    9,399Stockholders equity:Equity shares at Rs.2 par value:375,000,000 shares authorized;
Issued and outstanding: 232,563,992 and 232,759,152
shares as of March 31, 2003 and 2004 (Note
18)
    
    
    465,129
    
    
    
    465,520
    
    
    
    10,726Additional paid-in capital (Note 23)
    
    
    6,946,629
    
    
    
    7,176,679
    
    
    
    165,361Deferred stock compensation (Note 23)
    
    
    (64,008
    )
    
    
    (9,884
    )
    
    
    (228
    )Accumulated other comprehensive income / (loss)
    
    
    690
    
    
    
    918,640
    
    
    
    21,167Retained earnings (Note 19)
    
    
    28,083,196
    
    
    
    37,812,872
    
    
    
    871,264Equity shares held by a controlled Trust: 1,303,610 and 1,314,510
shares as of March 31, 2003 and 2004 (Note 23)
    
    
    (75
    )
    
    
    (75
    )
    
    
    (2
    )Total stockholders equity
    
    
    35,431,561
    
    
    
    46,363,752
    
    
    
    1,068,289Total liabilities and stockholders equity
    
    Rs.
    42,780,891
    
    
    Rs.
    57,738,310
    
    
    $
    1,330,376
 See accompanying notes to the consolidated financial statements.




---



##### Table of Contents



WIPRO LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share data)
 Year ended March 31,2002
    
    2003
    
    2004
    
    2004Conveniencetranslation intoUS$(Unaudited)Revenues:Global IT Services and ProductsServices
    
    Rs.
    21,456,945
    
    
    Rs.
    30,117,972
    
    
    Rs.
    43,343,440
    
    
    $
    998,697Products
    
    
    955,281
    
    
    
    149,493
    
    
    
    121,900
    
    
    
    2,809India and AsiaPac IT Services and ProductsServices
    
    
    1,913,547
    
    
    
    2,239,756
    
    
    
    3,108,507
    
    
    
    71,265Products
    
    
    5,036,948
    
    
    
    5,800,811
    
    
    
    6,304,745
    
    
    
    145,271Consumer Care and Lighting
    
    
    2,938,630
    
    
    
    2,942,071
    
    
    
    3,567,444
    
    
    
    82,199Others
    
    
    1,172,119
    
    
    
    1,599,797
    
    
    
    1,987,323
    
    
    
    45,791Total
    
    
    33,473,470
    
    
    
    42,849,900
    
    
    
    58,433,359
    
    
    
    1,346,391Cost of revenues:Global IT Services and ProductsServices
    
    
    11,419,299
    
    
    
    17,634,529
    
    
    
    27,853,457
    
    
    
    641,785Products
    
    
    890,730
    
    
    
    103,294
    
    
    
    77,634
    
    
    
    1,789India and AsiaPac IT Services and ProductsServices
    
    
    1,160,497
    
    
    
    1,186,907
    
    
    
    1,660,999
    
    
    
    38,272Products
    
    
    4,268,441
    
    
    
    5,099,599
    
    
    
    5,642,528
    
    
    
    130,012Consumer Care and Lighting
    
    
    1,999,434
    
    
    
    2,008,178
    
    
    
    2,354,821
    
    
    
    54,259Others
    
    
    923,006
    
    
    
    1,143,932
    
    
    
    1,410,500
    
    
    
    32,500Total
    
    
    20,661,407
    
    
    
    27,176,439
    
    
    
    38,999,939
    
    
    
    898,616Gross profit
    
    
    12,812,063
    
    
    
    15,673,461
    
    
    
    19,433,420
    
    
    
    447,775Operating expenses:Selling, general and administrative expenses
    
    
    (4,358,902
    )
    
    
    (6,192,653
    )
    
    
    (8,450,070
    )
    
    
    (194,702
    )Research and development expenses
    
    
    (213,457
    )
    
    
    (260,481
    )
    
    
    (232,048
    )
    
    
    (5,347
    )Amortization of goodwill (Note 12)
    
    
    (175,317
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of intangible assets (Note 12)
    
    
    (250
    )
    
    
    (166,321
    )
    
    
    (308,230
    )
    
    
    (7,102
    )Foreign exchange gains, net
    
    
    218,968
    
    
    
    306,639
    
    
    
    377,559
    
    
    
    8,700Others, net
    
    
    158,474
    
    
    
    125,623
    
    
    
    80,648
    
    
    
    1,858Operating income
    
    
    8,441,579
    
    
    
    9,486,268
    
    
    
    10,901,279
    
    
    
    251,182Loss on direct issue of stock by subsidiary (Note 4)
    
    
    
    
    
    
    
    
    
    
    (206,000
    )
    
    
    (4,747
    )Other income, net (Note 20)
    
    
    838,838
    
    
    
    717,951
    
    
    
    868,206
    
    
    
    20,005Equity in earnings/(losses) of affiliates (Note 15)
    
    
    147,078
    
    
    
    (355,250
    )
    
    
    95,990
    
    
    
    2,212Income before income taxes and minority interest
    
    
    9,427,495
    
    
    
    9,848,969
    
    
    
    11,659,475
    
    
    
    268,651Income taxes (Note 22)
    
    
    (1,016,003
    )
    
    
    (1,342,248
    )
    
    
    (1,611,389
    )
    
    
    (37,129
    )Minority interest
    
    
    
    
    
    
    (30,101
    )
    
    
    (56,049
    )
    
    
    (1,291
    )Income from continuing operations
    
    
    8,411,492
    
    
    
    8,476,620
    
    
    
    9,992,037
    
    
    
    230,231Discontinued operationsLoss from operations of the discontinued
corporate Internet services division (including loss on disposal of Rs.
246,120 for the year ended March 31, 2003 (Note 5))
    
    
    (126,771
    )
    
    
    (536,523
    )
    
    
    
    
    
    
    Income tax benefit (Note 5, 22)
    
    
    45,257
    
    
    
    158,978
    
    
    
    
    
    
    
    Net income
    
    Rs.
    8,329,978
    
    
    Rs.
    8,099,075
    
    
    Rs.
    9,992,037
    
    
    $
    230,231Earnings per equity share: BasicEarnings per equity share: Basic
    
    
    36.39
    
    
    
    36.66
    
    
    
    43.20
    
    
    
    1.00Discontinued operations
    
    
    (0.35
    )
    
    
    (1.63
    )
    
    
    
    
    
    
    Net income
    
    
    36.04
    
    
    
    35.03
    
    
    
    43.20
    
    
    
    1.00Earnings per equity share: DilutedContinuing operations
    
    
    36.33
    
    
    
    36.60
    
    
    
    43.16
    
    
    
    0.99Discontinued operations
    
    
    (0.35
    )
    
    
    (1.63
    )
    
    
    
    
    
    
    Net income
    
    
    35.98
    
    
    
    34.97
    
    
    
    43.16
    
    
    
    0.99Weighted average number of equity shares used in computing earnings per
equity share:Basic
    
    
    231,132,500
    
    
    
    231,204,326
    
    
    
    231,290,130
    
    
    
    231,290,130Diluted
    
    
    231,534,876
    
    
    
    231,572,448
    
    
    
    231,515,107
    
    
    
    231,515,107
 See accompanying notes to the consolidated financial statements.




---



##### Table of Contents



WIPRO LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (in thousands, except share data)
 Equity Shares
    
    AdditionalPaid in
    
    Deferred Stock
    
    ComprehensiveNo. of Shares
    
    Amount
    
    Capital
    
    Compensation
    
    IncomeBalance as of March 31, 2001
    
    
    232,433,019
    
    
    Rs.
    464,866
    
    
    Rs.
    6,785,652
    
    Rs.
    (186,404
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of equity shares on exercise
of options
    
    
    32,670
    
    
    
    66
    
    
    
    35,414
    
    
    
    
    
    
    
    Equity shares forfeited, net of issuances by
Trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation related to employee stock
incentive plan, net of reversals
    
    
    
    
    
    
    
    
    
    
    (14,480
    )
    
    
    2,362
    
    
    
    Amortization of compensation related to
employee stock incentive plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,841
    
    
    
    Income tax benefit arising on exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    10,577
    
    
    
    
    
    
    
    Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rs.
    8,329,978Other comprehensive incomeUnrealized
gain/(loss) on investment securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,430Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rs.
    8,380,408Balance as of March 31, 2002
    
    
    232,465,689
    
    
    
    464,932
    
    
    
    6,817,163
    
    
    
    (93,201
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of equity shares on exercise
of options
    
    
    98,303
    
    
    
    197
    
    
    
    106,612
    
    
    
    
    
    
    
    Equity shares issued by Trust, net of
forfeitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation related to employee stock
incentive plan, net of reversals
    
    
    
    
    
    
    
    
    
    
    22,854
    
    
    
    (23,049
    )
    
    
    Amortization of compensation related to
employee stock incentive plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,242
    
    
    
    Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rs.
    8,099,075Other comprehensive incomeTranslation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (568
    )Unrealized gain/(loss) on investment
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,603
    )Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,171
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rs.
    8,047,904Balance as of March 31, 2003
    
    
    232,563,992
    
    
    
    465,129
    
    
    
    6,946,629
    
    
    
    (64,008
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of equity shares on exercise of
options
    
    
    195,160
    
    
    
    391
    
    
    
    239,308
    
    
    
    
    
    
    
    Equity shares forfeited, net of issuance by
Trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   [Continued from above table, first column(s) repeated] Accumulated
    
    
    
    
    
    Equity Shares held by aOtherComprehensive
    
    Retained
    
    Controlled Trust
    

TotalStockholdersIncome/(loss)
    
    Earnings
    
    No. of Shares
    
    Amount
    
    EquityBalance as of March 31, 2001
    
    Rs.
    1,431
    
    
    Rs.
    12,015,143
    
    
    
    (1,280,885
    )
    
    Rs.
    (75
    )
    
    Rs.
    19,080,613Cash dividends paid
    
    
    
    
    
    
    (128,534
    )
    
    
    
    
    
    
    
    
    
    
    (128,534
    )Issuance of equity shares on exercise
of options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,480Equity shares forfeited, net of issuances by
Trust
    
    
    
    
    
    
    
    
    
    
    (40,450
    )
    
    
    
    
    
    
    Compensation related to employee stock
incentive plan, net of reversals
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,118
    )Amortization of compensation related to
employee stock incentive plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,841Income tax benefit arising on exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,577Comprehensive incomeNet income
    
    
    
    
    
    
    8,329,978
    
    
    
    
    
    
    
    
    
    
    
    8,329,978Other comprehensive incomeUnrealized gain/(loss) on investment
securities, net
    
    
    50,430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,430Comprehensive incomeBalance as of March 31, 2002
    
    
    51,861
    
    
    
    20,216,587
    
    
    
    (1,321,335
    )
    
    
    (75
    )
    
    
    27,457,267Cash dividends paid
    
    
    
    
    
    
    (232,466
    )
    
    
    
    
    
    
    
    
    
    
    (232,466
    )Issuance of equity shares on exercise
of options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,809Equity shares issued by Trust, net of
forfeitures
    
    
    
    
    
    
    
    
    
    
    17,725
    
    
    
    
    
    
    
    Compensation related to employee stock
incentive plan, net of reversals
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (195
    )Amortization of compensation related to
employee stock incentive plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,242Comprehensive incomeNet income
    
    
    
    
    
    
    8,099,075
    
    
    
    
    
    
    
    
    
    
    
    8,099,075Other comprehensive incomeTranslation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gain/(loss) on investment
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total other comprehensive income
    
    
    (51,171
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,171
    )Comprehensive incomeBalance as of March 31, 2003
    
    
    690
    
    
    
    28,083,196
    
    
    
    (1,303,610
    )
    
    
    (75
    )
    
    
    35,431,561Cash dividends paid
    
    
    
    
    
    
    (262,361
    )
    
    
    
    
    
    
    
    
    
    
    (262,361
    )Issuance of equity shares on exercise of
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    239,699Equity shares forfeited, net of issuance by
Trust
    
    
    
    
    
    
    
    
    
    
    (10,900
    )
    
    
    
    
    
    
    




---



##### Table of Contents



Equity Shares
    
    AdditionalPaid in
    
    Deferred Stock
    
    ComprehensiveNo. of Shares
    
    Amount
    
    Capital
    
    Compensation
    
    IncomeCompensation related to employee stock
incentive plan, net of reversals
    
    
    
    
    
    
    
    
    
    
    (9,258
    )
    
    
    1,105
    
    
    
    Amortization of compensation related to
employee stock incentive plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,019
    
    
    
    Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rs. 9,992,037Other comprehensive incomeTranslation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (150,426
    )Unrealized gain/(loss) on investment
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,409Unrealized gain on cash flow hedging
derivatives, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,058,967Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    917,950Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rs. 10,909,987Balance as of March 31, 2004
    
    
    232,759,152
    
    
    Rs. 465,520
    
    
    Rs. 7,176,679
    
    
    Rs. (9,884)Balance as of March 31, 2004($)
(unaudited)
    
    
    
    
    
    $
    10,726
    
    
    $
    165,361
    
    
    $
    (228
    )
   [Continued from above table, first column(s) repeated] Accumulated
    
    
    
    
    
    Equity Shares held by aOtherComprehensive
    
    Retained
    
    Controlled Trust
    

TotalStockholdersIncome/(loss)
    
    Earnings
    
    No. of Shares
    
    Amount
    
    EquityCompensation related to employee stock
incentive plan, net of reversals
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,153
    )Amortization of compensation related to
employee stock incentive plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,019Comprehensive incomeNet income
    
    
    
    
    
    
    9,992,037
    
    
    
    
    
    
    
    
    
    
    
    9,992,037Other comprehensive incomeTranslation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gain/(loss) on investment
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gain on cash flow hedging
derivatives, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total other comprehensive income
    
    
    917,950
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    917,950Comprehensive incomeBalance as of March 31, 2004
    
    Rs. 918,640
    
    
    Rs. 37,812,872
    
    
    
    (1,314,510
    )
    
    Rs. (75)
    
    
    Rs. 46,363,752Balance as of March 31, 2004($)
(unaudited)
    
    $
    21,167
    
    
    $
    871,264
    
    
    
    
    
    
    $
    (2
    )
    
    $
    1,068,289
 See accompanying notes to the consolidated financial statements.




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##### Table of Contents



WIPRO LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except share data)
 Year ended March 31,2002
    
    2003
    
    2004
    
    2004Conveniencetranslation intoUS$(Unaudited)Cash flows from operating activities:Net income
    
    Rs.
    8,329,978
    
    
    Rs.
    8,099,075
    
    
    Rs.
    9,992,037
    
    
    $
    230,231Adjustments to reconcile net income to net cash provided by operating activities:Loss from discontinued operations
    
    
    81,514
    
    
    
    377,545
    
    
    
    
    
    
    
    (Gain)/loss on sale of property, plant and equipment
    
    
    (26,003
    )
    
    
    6,470
    
    
    
    (107,000
    )
    
    
    (2,465
    )Depreciation and amortization
    
    
    1,465,555
    
    
    
    1,698,028
    
    
    
    2,280,077
    
    
    
    52,536Deferred tax charge / (benefit)
    
    
    80,046
    
    
    
    44,457
    
    
    
    (76,217
    )
    
    
    (1,756
    )(Gain)/loss on sale of investment securities
    
    
    (201,536
    )
    
    
    (410,360
    )
    
    
    2,070
    
    
    
    48Loss on direct issue of stock by subsidiary
    
    
    
    
    
    
    
    
    
    
    206,000
    
    
    
    4,747Amortization of deferred stock compensation
    
    
    78,723
    
    
    
    52,047
    
    
    
    44,866
    
    
    
    1,034Equity in losses/(gains) of affiliates,
    
    
    (147,078
    )
    
    
    355,250
    
    
    
    (95,990
    )
    
    
    (2,212
    )Other non-cash items
    
    
    (96,000
    )
    
    
    
    
    
    
    
    
    
    
    Income tax benefits arising from exercise of stock options
    
    
    10,577
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    30,101
    
    
    
    56,049
    
    
    
    1,291Changes in operating assets and liabilities:Accounts receivable
    
    
    (87,295
    )
    
    
    (1,640,603
    )
    
    
    (2,935,536
    )
    
    
    (67,639
    )Costs and earnings in excess of billings on contracts in progress
    
    
    (944,461
    )
    
    
    (369,478
    )
    
    
    (640,873
    )
    
    
    (14,767
    )Inventories
    
    
    64,951
    
    
    
    (47,352
    )
    
    
    11,305
    
    
    
    260Other assets
    
    
    (209,253
    )
    
    
    (1,120,511
    )
    
    
    (877,756
    )
    
    
    (20,225
    )Accounts payable
    
    
    432,112
    
    
    
    (202,298
    )
    
    
    267,704
    
    
    
    6,168Accrued expenses and employee costs
    
    
    (383,989
    )
    
    
    881,421
    
    
    
    1,989,174
    
    
    
    45,834Advances from customers
    
    
    127,230
    
    
    
    (178,674
    )
    
    
    65,762
    
    
    
    1,515Other liabilities
    
    
    483,984
    
    
    
    60,359
    
    
    
    633,520
    
    
    
    14,597Net cash provided by continuing operations
    
    
    9,059,055
    
    
    
    7,635,477
    
    
    
    10,815,192
    
    
    
    249,198Net cash provided by discontinued operations
    
    
    11,286
    
    
    
    27,861
    
    
    
    
    
    
    
    Net cash provided by operating activities
    
    
    9,070,341
    
    
    
    7,663,338
    
    
    
    10,815,192
    
    
    
    249,198Cash flows from investing activities:Expenditure on property, plant and equipment
    
    
    (2,439,238
    )
    
    
    (2,529,312
    )
    
    
    (4,134,667
    )
    
    
    (95,269
    )Proceeds from sale of property, plant and equipment
    
    
    307,501
    
    
    
    112,845
    
    
    
    122,828
    
    
    
    2,830Dividends received from affiliates
    
    
    5,096
    
    
    
    49,000
    
    
    
    10,500
    
    
    
    242Purchase of investments in liquid and short-term mutual funds
    
    
    (6,308,119
    )
    
    
    (41,592,182
    )
    
    
    (18,546,149
    )
    
    
    (427,331
    )Proceeds from sale of investments in liquid and short-term mutual funds
    
    
    2,182,077
    
    
    
    37,904,824
    
    
    
    7,894,991
    
    
    
    181,912Purchase of other investment securities
    
    
    (9,759,309
    )
    
    
    (5,494,070
    )
    
    
    
    
    
    
    Proceeds from sale and maturities of other investment securities
    
    
    7,198,754
    
    
    
    10,392,034
    
    
    
    526,969
    
    
    
    12,142(Investments in)/ redemption of inter-corporate deposits
    
    
    (1,013,091
    )
    
    
    1,779,288
    
    
    
    285,803
    
    
    
    6,585Purchase of intangible assets
    
    
    
    
    
    
    
    
    
    
    (50,000
    )
    
    
    (1,152
    )Payment for acquisitions, net of cash acquired
    
    
    
    
    
    
    (5,441,072
    )
    
    
    (458,250
    )
    
    
    (10,559
    )Net cash used in continuing operations
    
    
    (9,826,329
    )
    
    
    (4,818,645
    )
    
    
    (14,347,975
    )
    
    
    (330,599
    )Net cash provided by discontinued operations
    
    
    (45,625
    )
    
    
    
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (9,871,954
    )
    
    
    (4,818,645
    )
    
    
    (14,347,975
    )
    
    
    (330,599
    )Cash flows from financing activities:Proceeds from issuance of equity shares
    
    
    35,480
    
    
    
    106,809
    
    
    
    239,699
    
    
    
    5,523Proceeds from issuance of equity shares by a subsidiary
    
    
    
    
    
    
    
    
    
    
    145,869
    
    
    
    3,361Proceeds from / (repayments of) short-term borrowing from banks, net
    
    
    (164,390
    )
    
    
    326,259
    
    
    
    460,531
    
    
    
    10,611Repayment of long-term debt
    
    
    (1,312,465
    )
    
    
    (13,439
    )
    
    
    (28,200
    )
    
    
    (650
    )Payment of cash dividends
    
    
    (128,534
    )
    
    
    (232,466
    )
    
    
    (262,361
    )
    
    
    (6,045
    )Net cash provided by/(used in) financing activities
    
    
    (1,569,909
    )
    
    
    187,163
    
    
    
    555,538
    
    
    
    12,800Net increase/ (decrease) in cash and cash equivalents during the period
    
    
    (2,371,522
    )
    
    
    3,031,856
    
    
    
    (2,977,245
    )
    
    
    (68,600
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    (8,605
    )
    
    
    (198
    )Cash and cash equivalents at the beginning of the period
    
    
    5,622,680
    
    
    
    3,251,158
    
    
    
    6,283,014
    
    
    
    144,770Cash and cash equivalents at the end of the period
    
    Rs.
    3,251,158
    
    
    Rs.
    6,283,014
    
    
    Rs.
    3,297,164
    
    
    $
    75,972Supplementary information:Cash paid for interest
    
    Rs.
    69,826
    
    
    Rs.
    30,245
    
    
    Rs.
    35,067
    
    
    $
    808Cash paid for taxes
    
    
    1,251,346
    
    
    
    1,859,707
    
    
    
    1,499,457
    
    
    
    34,550
 See accompanying notes to the consolidated financial statements.




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##### Table of Contents



WIPRO LIMITED AND SUBSIDIARIES 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share data and where otherwise stated) 1. Overview Wipro Limited (Wipro), together with its subsidiaries Wipro Inc., Wipro
Holdings (Mauritius) Limited, Wipro Chandrika Limited, Wipro Travel Services
Limited, Wipro Trademarks Holdings Limited, Wipro Japan KK, Wipro Fluid Power
Limited, Spectramind Limited, Wipro Healthcare IT Limited, Wipro Consumer Care
Limited and affiliates WeP Peripherals Limited and Wipro GE Medical Systems
Limited (collectively, the Company) is a leading India based provider of IT
Services and Products, including Business Process Outsourcing (BPO) services,
globally. Further, Wipro has other businesses such as India and AsiaPac IT
Services and Products and Consumer Care and Lighting. Wipro is headquartered
in Bangalore, India. 2. Significant Accounting Policies The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, revenues and expenses and disclosure of contingent
assets and liabilities. Actual results could differ from these estimates. Basis of preparation of financial statements. The accompanying
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. Functional currency and exchange rate translation. The functional
currency of the Company, including its consolidated foreign subsidiaries,
except Wipro Inc. and Wipro Holdings (Mauritius) Limited is the Indian rupee.
The functional currency of Wipro Inc. and Wipro Holdings (Mauritius) Limited is
the US dollar. The translation of the functional currency of these foreign
subsidiaries into Indian rupee is performed for balance sheet accounts using
the exchange rate in effect at the balance sheet date and for revenue and
expense accounts using an appropriate monthly weighted average exchange rate
for the respective periods. The gains or losses resulting from such translation
are reported as a separate component of stockholders equity. Foreign currency transactions are translated into the functional currency
at the rates of exchange prevailing on the date of respective transactions.
Monetary assets and liabilities in foreign currency are translated into
functional currency at the exchange rates prevailing on the balance sheet date.
The resulting exchange gains / losses are included in the statement of income. Convenience translation. The accompanying consolidated financial
statements have been reported in Indian rupees, the national currency of India.
Solely for the convenience of the readers, the financial statements as of and
for the year ended March 31, 2004, have been translated into US dollars at the
noon buying rate in New York City on March 31, 2004, for cable transfers in
Indian rupees, as certified for customs purposes by the Federal Reserve Bank of
New York of $1 = Rs. 43.40. No representation is made that the Indian rupee
amounts have been, could have been or could be converted into United States
dollars at such a rate or any other rate. Principles of consolidation. The consolidated financial statements
include the financial statements of Wipro and all of its subsidiaries, which
are more than 50% owned and controlled. All material inter-company accounts
and transactions are eliminated on consolidation. The Company accounts for
investments by the equity method where its investment in the voting stock gives
it the ability to exercise significant influence over the investee. Cash equivalents. The Company considers investments in highly liquid
investments with remaining maturities, at the date of purchase / investment, of
three months or less to be cash equivalents.




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##### Table of Contents



Revenue recognition. Revenues from software development services comprise
revenues from time-and-material and fixed-price contracts. Revenue on
time-and-material contracts is recognized as the related services are
performed. Revenue from fixed-price, fixed-time frame contracts is recognized
in accordance with percentage of completion method. Guidance has been drawn
from the Accounting Standards Executive Committees conclusion in paragraph 95
of Statement of Position (SOP) 97-2, Software Revenue Recognition, to account
for revenue from fixed price arrangements for software development and related
services in conformity with SOP 81-1, Accounting for Performance of
Construction-Type and Certain Production-Type Contracts. The input (cost
expended) method has been used to measure progress towards completion as there
is a direct relationship between input and productivity. Provisions for
estimated losses on contracts-in-progress are recorded in the period in which
such losses become probable based on the current contract estimates.
Maintenance revenue is deferred and recognized ratably over the term of the
agreement. Revenue from customer training, support and other services is
recognized as the related service is performed. Revenue from sale of goods is
recognized, in accordance with the sales contract, on dispatch from the
factories / warehouses of the Company. In November 2002, the Emerging Issues Task Force (EITF) issued EITF Issue
No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. This
issue addresses determination of whether an arrangement involving more than one
deliverable contains more than one unit of accounting and how arrangement
consideration should be measured and allocated to the separate units of
accounting. EITF Issue No. 00-21 is effective for revenue arrangements entered
into in fiscal periods beginning after June 15, 2003. Alternatively, the
Company may elect to report the change in accounting as a cumulative-effect
adjustment. The Company has elected to adopt the guidance in EITF Issue No.
00-21 for all revenue arrangements entered into from the quarter beginning July
1, 2003. Prior to adoption of EITF Issue No. 00-21, the Company had elected an
accounting policy to recognize revenue for certain contracts on completion of
installation, where the customer was not obligated to pay a portion of the
contract price allocable to the delivered products until installation was
completed. EITF Issue No. 00-21 does not permit such an election.
Consequently, for all revenue arrangements entered into on or after July 1,
2003, the amount allocable to the products is recognized as revenue on dispatch
from the factories/warehouses of the Company. The amount allocable to the
installation services is deferred and recognized on completion of the
installation. In certain cases, the application of the contingent revenue provisions of
EITF Issue No. 00-21 could result in recognizing a loss on the delivered
element. In such cases, the cost recognized is limited to the amount of
non-contingent revenues recognized and the balance costs are recorded as an
asset and are reviewed for impairment based on the estimated net cash flows to
be received for future deliverables under the contract. These costs are
subsequently recognized on recognition of the revenue allocable to the balance
deliverables. As a result of the adoption of EITF Issue No. 00-21, the income from
continuing operations and net income for the year ended March 31, 2004 has
increased by Rs 96,376. The pro forma effect of this new policy on the income
from continuing operations and net income for all prior periods presented is
not material. Revenues from BPO Services are derived from both time-based and
unit-priced contracts. Revenue is recognized as the related services are
performed, in accordance with the specific terms of the contract with the
customers. When the Company receives advance payments from customers for sale of
products or provision of services, such payments are reported as advances from
customers until all conditions for revenue recognition are met. Revenues from
product sales are shown net of excise duty, sales tax and applicable discounts
and allowances. Warranty costs.The Company accrues the estimated cost of warranties at
the time when the revenue is recognized. The accruals are based on the
Companys historical experience of material usage and service delivery costs. Shipping and handling costs.Shipping and handling costs are included in
selling, general and administrative expenses. Inventories. Inventories are stated at the lower of cost and market
value. Cost is determined using the weighted average method for all categories
of inventories.




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##### Table of Contents



Investment securities. The Company classifies its debt and equity
securities in one of the three categories: trading, held-to-maturity or
available-for-sale, at the time of purchase and re-evaluates such
classifications as of each balance sheet date. Trading and available-for-sale
securities are recorded at fair value. Held-to-maturity securities are
recorded at amortized cost, adjusted for the amortization or accretion of
premiums or discounts. Unrealized holding gains and losses on trading
securities are included in income. Temporary unrealized holding gains and
losses, net of the related tax effect, on available-for-sale securities are
excluded from income and are reported as a part of other comprehensive income
in stockholders equity until realized. Realized gains and losses from the
sale of trading and available-for-sale securities are determined on a
first-in-first out basis and are included in income. A decline in the fair
value of any available-for-sale or held-to-maturity security below cost that is
deemed to be other than temporary results in a reduction in carrying amount to
fair value with a charge to the income statement. Fair value is based on
quoted market prices. Non-readily marketable equity securities for which there
is no readily determinable fair value are recorded at cost, subject to an
impairment charge to the income statement for any other than temporary decline
in value. Investments in affiliates. The Companys equity in the earnings/(losses)
of affiliates is included in the statement of income and the Companys share of
net assets of affiliates is included in the balance sheet. Shares issued by subsidiary / affiliate. The issuance of stock by a
subsidiary/affiliate to third parties reduces the proportionate ownership
interest in the investee. Unless the issuance of such stock is part of a
broader corporate reorganization or unless realization is not assured, the
Company recognizes a gain or loss, equal to the difference between the issuance
price per share and the Companys carrying amount per share. Such gain or loss
is recognized in the statement of income when the transaction occurs. Property, plant and equipment.Property, plant and equipment are stated
at cost. The Company depreciates property, plant and equipment over the
estimated useful life using the straight-line method. Assets under capital
lease are amortized over their estimated useful life or the lease term, as
appropriate. The estimated useful lives of assets are as follows: Buildings
    
    30 to 60 yearsPlant and machinery
    
    2 to 21 yearsFurniture, fixtures and equipment
    
    5 yearsVehicles
    
    4 yearsComputer software
    
    2 years
 Software for internal use is primarily acquired from third-party vendors
and is in ready to use condition. Costs for acquiring this software are
capitalized and subsequent costs are charged to the statement of income. The
capitalized costs are amortized on a straight-line basis over the estimated
useful life of the software. Deposits paid towards the acquisition of property, plant and equipment
outstanding as of each balance sheet date and the cost of property, plant and
equipment not ready for use before such date are disclosed under capital
work-in-progress. The interest cost incurred for funding an asset during its
construction period is capitalized based on the actual investment in the asset
and the average cost of funds. The capitalized interest is included in the
cost of the relevant asset and is depreciated over the estimated useful life of
the asset. Business combinations, goodwill and intangible assets. In June 2001, the
Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 141, Business Combinations, which requires that
the purchase method of accounting be used for all business combinations after
June 30, 2001. SFAS No. 141 also specifies the criteria that intangible assets
acquired in a purchase method business combination need to meet to be
recognized and reported apart from goodwill, noting that any purchase price
allocated to an assembled workforce may not be accounted separately. On April 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets. Adoption of SFAS No. 142 did not result in reclassification
of existing goodwill and intangible assets. As required by
SFAS No. 142, the Company identified its reporting units and assigned
assets and liabilities, including goodwill to the reporting units on the date
of adoption. Subsequent to the adoption of SFAS No. 142, the Company does not
amortize goodwill but instead tests goodwill for impairment at least annually.




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##### Table of Contents



The provisions of SFAS No. 142 require that a two-step impairment test be
performed on goodwill. In the first step, the fair value of the reporting unit
is compared to its carrying value. The fair value of reporting units is
determined using the income approach. If the fair value of the reporting unit
exceeds the carrying value of the net assets assigned to that unit, goodwill is
not impaired. If the carrying value of the net assets assigned to the reporting
unit exceeds the fair value of the reporting unit, then the implied fair value
of the reporting units goodwill is compared with the carrying value of the
reporting units goodwill. The implied fair value of goodwill is determined in
the same manner as the amount of goodwill recognized in a business combination.
If the carrying value of a reporting units goodwill exceeds its implied fair
value, then an impairment loss equal to the difference is recorded. Upon adoption, the Company performed a transitional impairment evaluation,
which did not indicate an impairment loss. The carrying value of the goodwill
on the date of adoption was Rs 656,240. Reported income from continuing operations, net income and basic and
diluted earnings per share excluding the impact of amortization of goodwill,
for all periods presented would have been as follows: Year ended March 31,2002
    
    2003
    
    2004Income from continuing operations, as reported
    
    Rs.
    8,411,492
    
    
    Rs.
    8,476,620
    
    
    Rs.
    9,992,037Add: Amortization of goodwill
    
    
    175,317
    
    
    
    
    
    
    
    Income from continuing operations, adjusted
    
    Rs.
    8,586,809
    
    
    Rs.
    8,476,620
    
    
    Rs.
    9,992,037Earnings per share : BasicContinuing operations, as reported
    
    Rs.
    36.39
    
    
    Rs.
    36.66
    
    
    Rs.
    43.20Add: Amortization of goodwill
    
    
    0.76
    
    
    
    
    
    
    
    Continuing operations, adjusted
    
    Rs.
    37.15
    
    
    Rs.
    36.66
    
    
    Rs.
    43.20Earnings per share : DilutedContinuing operations, as reported
    
    Rs.
    36.33
    
    
    Rs.
    36.60
    
    
    Rs.
    43.16Add: Amortization of goodwill
    
    
    0.76
    
    
    
    
    
    
    
    Continuing operations, adjusted
    
    Rs.
    37.09
    
    
    Rs.
    36.60
    
    
    Rs.
    43.16
 Year ended March 31,2002
    
    2003
    
    2004Net income, as reported
    
    Rs.
    8,329,978
    
    
    Rs.
    8,099,075
    
    
    Rs.
    9,992,037Add: Amortization of goodwill
    
    
    175,317
    
    
    
    
    
    
    
    Net income, adjusted
    
    Rs.
    8,505,295
    
    
    Rs.
    8,099,075
    
    
    Rs.
    9,992,037Earnings per share : BasicNet income, as reported
    
    Rs.
    36.04
    
    
    Rs.
    35.03
    
    
    Rs.
    43.20Add: Amortization of goodwill
    
    
    0.76
    
    
    
    
    
    
    
    Net income, adjusted
    
    Rs.
    36.80
    
    
    Rs.
    35.03
    
    
    Rs.
    43.20Earnings per share : DilutedNet income, as reported
    
    Rs.
    35.98
    
    
    Rs.
    34.97
    
    
    Rs.
    43.16Add: Amortization of goodwill
    
    
    0.76
    
    
    
    
    
    
    
    Net income, adjusted
    
    Rs.
    36.74
    
    
    Rs.
    34.97
    
    
    Rs.
    43.16
 Intangible assets acquired individually, with a group of other assets or
in a business combination are carried at cost less accumulated amortization.
The intangible assets are amortized over their estimated useful lives in
proportion to the economic benefits consumed in each period. The estimated
useful lives of the intangible assets are as follows: Customer-related intangibles.
    
    2-5 yearsMarketing-related intangibles.
    
    2-20 years




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##### Table of Contents



Technology-based intangibles
    
    5 years
 Start-up costs. Cost of start-up activities including organization costs
are expensed as incurred. Research and development. Revenue expenditure on research and development
is expensed as incurred. Capital expenditure incurred on equipment and
facilities that are acquired or constructed for research and development
activities and having alternative future uses, is capitalized as tangible
assets when acquired or constructed. Software product development costs are
expensed as incurred until technological feasibility is achieved. Impairment or disposal of long-lived assets. Effective April 1, 2002, the
Company adopted SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. While SFAS No. 144 supersedes SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, it retains the fundamental provisions of SFAS No.
121. SFAS No. 144 also supersedes the accounting and reporting provisions of
Accounting Principles Board (APB) Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business. However, SFAS No. 144 retains the
requirement of APB Opinion No. 30 to separately report discontinued operations
and extends that reporting to a component of an entity that an entity has
disposed of, or classified as held-for-sale. SFAS No. 144 requires that the
Company measures long-lived assets held-for-sale, at the lower of carrying
amount or fair value, less costs to sell. Similarly, under SFAS No. 144,
discontinued operations are no longer measured at net realizable value or
include amounts for operating losses that have not yet been incurred. Earnings per share. In accordance with SFAS No. 128, Earnings Per Share,
basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed using the weighted average number of common and dilutive common
equivalent shares outstanding during the period, using the treasury stock
method for options and warrants, except where the results would be
antidilutive. Income taxes. Income taxes are accounted for using the asset and
liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss carry-forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date. The measurement of deferred tax assets is reduced, if
necessary, by a valuation allowance for any tax benefits of which future
realization is not more likely than not. Stock-based compensation.The Company uses the intrinsic value based
method of APB Opinion No. 25, Accounting for Stock Issued to Employees, to
account for its employee stock based compensation plans. The Company has
therefore adopted the pro forma disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation as amended by SFAS No. 148, Accounting
for Stock-Based Compensation  Transition and Disclosure, an amendment of FASB
Statement No. 123. Had compensation cost been determined in a manner consistent with the fair
value approach described in SFAS No. 123, the Companys net income and earnings
per share as reported would have been reduced to the pro forma amounts
indicated below:




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##### Table of Contents



Year ended March 31,2002
    
    2003
    
    2004Net income, as reported
    
    Rs.
    8,329,978
    
    
    Rs.
    8,099,075
    
    
    Rs.
    9,992,037Add: Stockbased employee
compensation expense
included in reported net
income, net of tax
effects
    
    
    67,185
    
    
    
    45,366
    
    
    
    44,866Less: Stock-based employee
compensation expense
determined under fair
value based method, net of
tax effects
    
    
    (1,985,297
    )
    
    
    (3,033,273
    )
    
    
    (2,124,466
    )Pro forma net income
    
    Rs.
    6,411,866
    
    
    Rs.
    5,111,168
    
    
    Rs.
    7,912,437Earnings per share: BasicAs reported
    
    
    36.04
    
    
    
    35.03
    
    
    
    43.20Pro forma
    
    
    27.74
    
    
    
    22.10
    
    
    
    34.22Earnings per share: DilutedAs reported
    
    
    35.98
    
    
    
    34.97
    
    
    
    43.16Pro forma
    
    
    27.73
    
    
    
    22.09
    
    
    
    34.18
 Assumptions considered for determining fair value of options granted are
given below: Year ended March 31,2002
    
    2003Dividend yield
    
    
    0.03
    %
    
    
    0.10
    %Expected life
    
    1260 months
    
    2472 monthsRisk free interest rates
    
    
    6.5% - 8.5
    %
    
    
    6.0% - 7.5
    %Volatility
    
    
    65
    %
    
    
    65
    %
 There were no option grants during the year ended March 31, 2004. Derivatives and hedge accounting.The Company purchases forward foreign
exchange contracts and options (derivatives) to mitigate the risk of changes in
foreign exchange rates on accounts receivable and forecasted cash flows
denominated in certain foreign currencies. In accordance with SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended by SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of SFAS No.
133, the Company recognizes all derivatives as assets or liabilities measured
at their fair value, regardless of the purpose or intent of holding them. In
respect of derivatives designated as cash flow hedges, gains or losses
resulting from changes in the fair value are deferred and recorded as a
component of accumulated other comprehensive income within stockholders equity
until the hedge transaction occur and are then recognized in the consolidated
statements of income. Changes in fair value for derivatives not designated as
hedging instruments are recognized in consolidated statements of income in the
current period. In respect of derivatives designated as hedges, the Company formally
documents all relationships between hedging instruments and hedged items, as
well as its risk management objective and strategy for undertaking various
hedge transactions. The Company also formally assesses, both at the inception
of the hedge and on an ongoing basis, whether each derivative is highly
effective in offsetting changes in fair values or cash flows of the hedged
item. If it is determined that a derivative is not highly effective as a hedge,
or if a derivative ceases to be a highly effective hedge, the Company will,
prospectively, discontinue hedge accounting with respect to that derivative.




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Recent accounting pronouncements.In August 2001, the FASB issued SFAS No.
143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires
entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred. When the liability is
initially recorded, the entity capitalizes a cost by increasing the carrying
amount of the related long-lived asset. Over time, the liability is accreted to
its present value each period, and the capitalized cost is depreciated over the
useful life of the related asset. Upon settlement of the liability, an entity
either settles the obligation for its recorded amount or incurs a gain or loss
upon settlement. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. Adoption of SFAS No. 143 did not have a material impact on the
consolidated financial statements of the Company. In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. Adoption of SFAS No. 146 did not have a
material impact on the consolidated financial statements of the Company. In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123.
SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The disclosure provisions of
SFAS No. 148 are applicable for fiscal periods beginning after December 15,
2002. The Company continues to use the intrinsic value based method of APB
Opinion No. 25 to account for its employee stock based compensation plans. The
disclosure provisions of SFAS No. 148 have been adopted by the Company. In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entities- an interpretation of Accounting Research Bulletin No. 51.
FIN No. 46 is applicable to all variable interest entities created after
January 31, 2003. In respect of variable interest entities created before
February 1, 2003, FIN No. 46 will be applicable from fiscal periods ending
after December 15, 2003. Further, in December 2003, the FASB issued a revision
to FIN No. 46 to clarify some of the provisions of FIN No. 46 and to exempt
certain entities from its requirements. Adoption of FIN No. 46 did not have a
material impact on the consolidated financial statements of the Company. In April 2003, the FASB issued SFAS No. 149, Amendment of Statement No.
133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts
entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. Adoption of SFAS No. 149 did not have a
material impact on the consolidated financial statements of the Company. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS
No. 150 requires issuers to classify as liabilities (or assets in some
circumstance) three classes of freestanding financial instruments that embody
obligations for the issuer. Generally, SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003 and is otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. Adoption of SFAS No. 150 did not have a material impact on the
consolidated financial statements of the Company. In December 2003, the FASB issued SFAS No. 132 (revised 2003), Employers
Disclosures about Pensions and Other Postretirement Benefits. SFAS No. 132
revises financial statement disclosures for pension plans and other post
retirement benefit plans. SFAS No. 132 is applicable for fiscal years ending
after December 15, 2003. The Company has adopted the disclosure provisions of
SFAS No. 132.




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##### Table of Contents



Reclassifications.As of March 31, 2002 and 2003, the Company held
investments in liquid and short-term mutual funds aggregating Rs. 4,126,042 and
Rs. 7,813,400 respectively, which were previously reported as cash equivalents.
During the current year, the Company has reclassified these investments as a
component of investments in liquid and short-term mutual funds. The
reclassification decreased the previously reported net cash provided by
investing activities for the year ended March 31, 2002 and 2003 by Rs.
4,126,042 and Rs. 3,687,358 respectively. Certain other reclassifications have
been made to conform prior period data to current presentation. 3. Acquisitions Wipro Spectramind Services Limited(Wipro Spectramind) As of June 30, 2002, the Company held a 15% equity interest in Wipro
Spectramind, acquired for a consideration of Rs. 192,000. Additionally, the
Company held non-voting convertible preference shares acquired for a
consideration of Rs. 288,000, which were convertible into equity shares, on
occurrence of events specified in the shareholders agreement. As this voting
equity interest did not give Wipro the ability to exercise significant
influence over the operating and financial policies of Wipro Spectramind, the
investment was recorded at cost. In July 2002, the Company acquired a controlling equity interest in Wipro
Spectramind at an additional cost of Rs. 3,696,552. Consequent to this
acquisition, the Company held 89% of the outstanding equity shares of
Wipro Spectramind. Subsequently, the Company acquired the balance 11% of
the outstanding equity shares for
Rs. 440,591. Consequently the Company held 100% of the outstanding
equity shares of Wipro Spectramind as of March 31, 2003. The results of
operations of Wipro Spectramind are consolidated in the Companys financial
statements with effect from July 1, 2002. Wipro Spectramind is a leading IT-Enabled Service provider in India
providing remote processing services to large global corporations in the US,
UK, Australia and other developed markets. The acquisition is intended to
provide a time to market advantage to the Company in addressing the BPO
services market, strengthen the value proposition of being an end-to-end
outsourcing solution provider to large corporations and provide synergistic
benefits of being able to address the remote processing services requirements
of the existing customer base of the Company. The total purchase price has been allocated, based on managements
estimates and independent appraisals, to the acquired assets and liabilities as
follows: Description
    
    Fair valueNet tangible assets
    
    Rs.
    705,904Customer-related intangibles
    
    
    387,000Marketing-related intangibles
    
    
    34,300Goodwill
    
    
    3,489,939Total
    
    Rs.
    4,617,143
 Wipro Healthcare IT Limited (Wipro Healthcare IT) In August 2002, Wipro acquired a 60% equity interest in Wipro Healthcare
IT, an India-based company engaged in the development of health care related
software, and the technology rights in the business of Wipro Healthcare IT for
an aggregate consideration of Rs. 180,776. On December 31, 2002, the Company
acquired the balance 40% equity interest in Wipro Healthcare IT for an
aggregate consideration of Rs. 96,980. The Company intends to address the market for healthcare information
systems in India and South Asia through Wipro Healthcare IT. Further, the
Company intends to leverage the domain expertise of Wipro Healthcare IT in
addressing the outsourcing requirements of large corporations engaged in the
design, development and integration of healthcare information systems.




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##### Table of Contents



The total purchase price has been allocated, based on managements
estimates, to the acquired assets and liabilities as follows: Description
    
    Fair valueNet tangible assets
    
    Rs.
    80,406Technology-based intangibles
    
    
    34,300Customer-related intangibles
    
    
    62,833Goodwill
    
    
    100,217Total
    
    Rs.
    277,756
 Global energy practice (GEP) On December 31, 2002, Wipro acquired the global energy practice of
American Management Systems for an aggregate consideration of Rs. 1,165,161. The Company leverages the domain expertise of the GEP team engaged in
providing specialized IT services to clients in the energy and utilities
sector. The Company believes that this acquisition enhances its ability to
deliver end-to-end IT solutions primarily in the areas of design and
maintenance of complex billing and settlement systems for energy markets and
systems and enterprise application integration services. The total purchase price has been allocated, based on managements
estimates and independent appraisals, to the acquired assets and liabilities as
follows: Description
    
    Fair valueNet tangible assets
    
    Rs.
    126,940Customer-related intangibles
    
    
    98,000Goodwill
    
    
    940,221Total
    
    Rs.
    1,165,161
 Nervewire Inc (Wipro Nervewire) In May 2003, Wipro acquired Wipro Nervewire, a Massachusetts-based
business and IT consulting company serving customers in the financial services
sector, for a consideration of Rs. 877,679. Through this acquisition, the
Company intends to enhance its IT consulting capabilities by leveraging the
domain expertise of Wipro Nervewire in providing strategy and business case
development, business requirements definition, IT strategy and program
management and systems development and integration services to customers in the
financial services sector. The total purchase price has been preliminarily allocated to the acquired
assets and liabilities as follows: Description
    
    Fair valueNet tangible assets
    
    Rs.
    544,608Customer-related intangibles
    
    
    40,000Goodwill
    
    
    293,071Total
    
    Rs.
    877,679
 The purchase consideration has been allocated on a preliminary basis based
on managements estimates and independent appraisals. However, an independent
appraisers report is yet to be received by the Company. Finalization of the
purchase price allocation, which is expected to be completed by May 2004, may
result in certain adjustments to the above allocation.




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##### Table of Contents



Pro forma information (Unaudited) The un-audited pro forma consolidated results of operations, as if the
acquisition of Wipro Nervewire had been made at the beginning of periods
presented below is as follows: Year ended March 31,2003
    
    2004(Unaudited)
    
    (Unaudited)Revenues
    
    Rs.
    44,243,188
    
    
    Rs.
    58,529,391Income from continuing
operations
    
    
    8,129,685
    
    
    
    9,959,710Loss from operations of the
discontinued corporate
internet services division,
net of
taxes
    
    
    (377,545
    )
    
    
    Net income
    
    Rs.
    7,752,140
    
    
    Rs.
    9,959,710Earnings per share : BasicContinuing operations
    
    
    35.16
    
    
    
    43.06Net income
    
    Rs.
    33.53
    
    
    Rs.
    43.06Earnings per share : DilutedContinuing operations
    
    
    35.11
    
    
    
    43.02Net income
    
    Rs.
    33.48
    
    
    Rs.
    43.02
 The pro forma consolidated results of operations include adjustments to
give effect to amortization of acquired intangible assets other than goodwill,
and certain other adjustments together with related income tax effects. The
unaudited pro forma information is not necessarily indicative of the results of
operations that would have occurred had the purchase been made at the beginning
of the periods presented or the future results of the combined operations. 4. Dilution of Ownership Interest in a Subsidiary As more fully described in note 23, as of March 31, 2003, Wipro
Spectramind had 9,329,762 employee stock options outstanding under the Wipro
Spectramind option plan. In the year ended March 31, 2004, 4,178,294 options
vested and were exercised. 3,339,279 options were exercised at a weighted
average exercise price of Rs. 29.41 and 839,015 options were exercised at a
weighted average exercise price of Rs. 57. As a result of the option exercise, the Companys ownership interest in
Wipro Spectramind reduced from 100% to 93%. As the exercise price per option
was less than the Companys carrying value per share, the exercise resulted in
a decline in the carrying value of the Companys ownership interest by Rs.
206,000. In accordance with the accounting policy adopted by the Company, this
decline in carrying value has been included in the statement of income as a
loss on direct issue of stock by subsidiary. Of the 4,178,294 shares arising out of these option exercises, 3,996,387
shares are covered by a share purchase feature that entitles the Company to
repurchase these shares at fair value and also gives the employee the right to
sell the shares back to the Company at fair value. The Company and the employee
can exercise this repurchase right after six months from the date of option
exercise. 5. Discontinued Operations The Company was involved in the corporate Internet services (ISP) business
since 1999. For strategic reasons, the Company decided to concentrate on its
core businesses and as a result in June 2002, the Company decided to exit this
division and approved a formal plan of disposal. In accordance with the plan,
the Company has sold the customer contracts, disposed off the long-lived
assets, settled the trade receivables and settled all outstanding vendor
obligations, except certain claims relating to a particular vendor. The Company
is in negotiations with this vendor for settling these claims.




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##### Table of Contents



Upon approval of the plan of disposal, the related long-lived assets were
reported as held-for-sale and were measured at their fair value, less cost to
sell, which was lower than their carrying amount. During the year ended March
31, 2003, the loss of Rs. 274,780 resulting from the write-down/sale of the
long-lived assets was reported as a loss on disposal. Proceeds from sale of
customer contracts aggregating Rs. 28,660 were reduced from the loss on
disposal. The estimated liabilities with respect to settlement of the vendor
obligations aggregating to Rs. 97,605 were reported as other exit costs. The operations of the ISP division qualified as a component of an entity,
being an asset group. As the operations and cash flows of the component were
eliminated from the ongoing operations as a result of the disposal transaction
and the Company did not have any significant continuing involvement in the
operations of the component after the disposal, the results of operations of
the ISP division were reported in discontinued operations during the year ended
March 31, 2003. The result of operations of the discontinued component comprise: Year ended March 31,2002
    
    2003Revenue
    
    Rs.
    508,019
    
    
    Rs.
    67,259Operating costs
    
    
    (634,790
    )
    
    
    (260,057
    )Other exit costs
    
    
    
    
    
    
    (97,605
    )Loss on disposal
    
    
    
    
    
    
    (246,120
    )Income tax benefit
    
    
    45,257
    
    
    
    158,978Loss on discontinued operations
    
    Rs.
    (81,514
    )
    
    Rs.
    (377,545
    )
 6. Cash and Cash Equivalents Cash and cash equivalents as of March 31, 2003 and 2004 comprise of cash,
cash on deposit with banks and highly liquid investments. 7. Accounts Receivable Accounts receivable as of March 31, 2003, and 2004 are stated net of
allowance for doubtful accounts. The Company maintains an allowance for
doubtful accounts based on present and prospective financial condition of its
customers and aging of the accounts receivable. Accounts receivable are
generally not collateralized. The activity in the allowance for doubtful
accounts receivable is given below: Year ended March 31,2003
    
    2004Balance at the beginning of the period
    
    Rs.
    491,644
    
    
    Rs.
    598,887Additional provision during the period
    
    
    153,190
    
    
    
    144,860Bad debts charged to provision
    
    
    (45,947
    )
    
    
    (23,723
    )Balance at the end of the
period
    
    Rs.
    598,887
    
    
    Rs.
    720,024
 8. Inventories Inventories consist of the following: As of March 31,2003
    
    2004Stores and spare parts
    
    Rs.
    25,951
    
    
    Rs.
    31,509Raw materials and components
    
    
    398,216
    
    
    
    551,402Work-in-process
    
    
    119,028
    
    
    
    159,523Finished
goods
    
    
    906,303
    
    
    
    695,759Rs.
    1,449,498
    
    
    Rs.
    1,438,193




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##### Table of Contents



Finished goods as of March 31, 2003, and 2004 include inventory of
Rs. 438,972 and Rs. 146,171 respectively, with customers pending installation. 9. Other Assets Other assets consist of the following: As of March 31,2003
    
    2004Prepaid expenses
    
    Rs.
    576,159
    
    
    Rs.
    790,100Due from officers and employees
    
    
    700,491
    
    
    
    1,029,770Advances to suppliers
    
    
    94,741
    
    
    
    139,270Balances with statutory authorities
    
    
    16,699
    
    
    
    31,085Deposits
    
    
    638,472
    
    
    
    743,993Intercorporate deposits
    
    
    285,803
    
    
    
    Advance income taxes
    
    
    872,974
    
    
    
    636,098Derivative asset
    
    
    139,953
    
    
    
    1,607,049Others
    
    
    298,312
    
    
    
    564,3093,623,604
    
    
    
    5,541,674Less: Current assets
    
    
    (3,015,817
    )
    
    
    (4,772,086
    )Rs.
    607,787
    
    
    Rs.
    769,588




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##### Table of Contents



10. Investment Securities Investment securities consist of the following: As of March 31, 2003
    
    As of March 31, 2004Gross Unrealized
    
    Gross Unrealized
    
    
    
    
    
    
    
    
    
    Gross UnrealizedCarrying Value
    
    Holding Gains
    
    Holding Losses
    
    Fair Value
    
    Carrying Value
    
    Holding Gains
    
    Fair ValueAvailable-for-sale:Investments in
liquid and
short-term mutual
funds
    
    Rs.
    7,813,400
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    7,813,400
    
    
    Rs.
    18,464,492
    
    
    Rs.
    14,553
    
    
    Rs.
    18,479,045Equity securities
    
    
    207
    
    
    
    1,400
    
    
    
    
    
    
    
    1,607
    
    
    
    
    
    
    
    
    
    
    
    Debt securities
    
    
    492,478
    
    
    
    
    
    
    
    (15,068
    )
    
    
    477,410
    
    
    
    
    
    
    
    
    
    
    
    8,306,085
    
    
    
    1,400
    
    
    
    (15,068
    )
    
    
    8,292,417
    
    
    
    18,464,492
    
    
    
    14,553
    
    
    
    18,479,045Held-to-maturity:Debt securities
    
    
    47,952
    
    
    
    
    
    
    
    
    
    
    
    47,952
    
    
    
    
    
    
    
    
    
    
    
    47,952
    
    
    
    
    
    
    
    
    
    
    
    47,952
    
    
    
    
    
    
    
    
    
    
    
    Rs.
    8,354,037
    
    
    Rs.
    1,400
    
    
    Rs.
    (15,068
    )
    
    Rs.
    8,340,369
    
    
    Rs.
    18,464,492
    
    
    Rs.
    14,553
    
    
    Rs.
    18,479,045
 Dividends from available for sale securities during the year ended March
31, 2004 was Rs. 736,430 and is included in other income.




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##### Table of Contents



11. Property, Plant and Equipment Property, plant and equipment consist of the following: As of March 31,2003
    
    2004Land
    
    Rs.
    530,037
    
    
    Rs.
    591,435Buildings
    
    
    2,210,427
    
    
    
    3,121,021Plant and machinery
    
    
    6,569,392
    
    
    
    7,756,395Furniture, fixtures and equipment
    
    
    1,551,629
    
    
    
    1,876,149Vehicles
    
    
    566,714
    
    
    
    781,933Computer software for internal use
    
    
    1,053,065
    
    
    
    1,164,463Capital work-in-progress
    
    
    1,006,892
    
    
    
    1,427,28513,488,156
    
    
    
    16,718,681Accumulated depreciation and
amortization
    
    
    (6,178,372
    )
    
    
    (7,461,479
    )Rs.
    7,309,784
    
    
    Rs.
    9,257,202
 Depreciation expense for the years ended March 31, 2002, 2003 and 2004,
are Rs. 1,289,988, Rs. 1,531,707 and Rs. 1,971,847 respectively. This includes
Rs. 204,492, Rs. 210,889 and
Rs. 203,663 as amortization of capitalized internal use software, during
the years ended March 31, 2002, 2003 and 2004, respectively. 12. Goodwill and Intangible Assets Information regarding the Companys intangible assets acquired either
individually or in a business combination consist of the following: As of March 31,2003
    
    2004Gross carrying
    
    Accumulated
    
    
    
    
    
    Gross carrying
    
    Accumulatedamount
    
    amortization
    
    Net
    
    amount
    
    Amortization
    
    NetTechnology-based
intangibles
    
    Rs.
    34,300
    
    
    Rs.
    4,790
    
    
    Rs.
    29,510
    
    
    Rs.
    34,300
    
    
    Rs.
    8,790
    
    
    Rs.
    25,510Customer-related
intangibles
    
    
    547,833
    
    
    
    149,651
    
    
    
    398,182
    
    
    
    578,556
    
    
    
    433,974
    
    
    
    144,582Marketing-related
intangibles
    
    
    34,300
    
    
    
    11,630
    
    
    
    22,670
    
    
    
    84,309
    
    
    
    31,537
    
    
    
    52,772Others
    
    
    950
    
    
    
    950
    
    
    
    
    
    
    
    950
    
    
    
    950
    
    
    
    Rs.
    617,383
    
    
    Rs.
    167,021
    
    
    Rs.
    450,362
    
    
    Rs.
    698,115
    
    
    Rs.
    475,251
    
    
    Rs.
    222,864
 The estimated amortization schedule for the intangible assets, on a straight line
basis, for the next five years is set out below: Year ending March 31,
    
    Amount2005
    
    Rs.
    143,0402006
    
    
    20,0202007
    
    
    15,1702008
    
    
    11,0652009
    
    
    2,500Total
    
    Rs.
    191,795
 The movement in goodwill balance is given below: Year ended March 31,2003
    
    2004Balance at the
beginning of the
period
    
    Rs.
    656,240
    
    
    Rs.
    5,186,617Goodwill relating to
acquisitions
consummated during
the period
    
    
    4,530,377
    
    
    
    293,071Effect of
translation
adjustments
    
    
    
    
    
    
    (110,991
    )Balance at the end
of the
period
    
    Rs.
    5,186,617
    
    
    Rs.
    5,368,697




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##### Table of Contents



Goodwill as of March 31, 2003 and 2004 has been allocated to the following
reportable segments: Segment
    
    As of March 31, 2003
    
    As of March 31, 2004India and AsiaPac IT Services
and Products
    
    Rs.
    656,240
    
    
    Rs.
    656,240Global IT Services and Products
    
    
    4,530,377
    
    
    
    4,712,457Total
    
    Rs.
    5,186,617
    
    
    Rs.
    5,368,697
 13. Other Current Liabilities Other current liabilities consist of the following: As of March 31,2003
    
    2004Statutory dues payable
    
    Rs.
    406,013
    
    
    Rs.
    867,927Taxes payable
    
    
    48,134
    
    
    
    81,866Warranty obligations
    
    
    293,260
    
    
    
    357,356Others
    
    
    47,866
    
    
    
    41,264Rs.
    795,273
    
    
    Rs.
    1,348,413
 The activity in warranty obligations is given below: Year ended March 31,2003
    
    2004Balance at the beginning of the period
    
    Rs.
    292,052
    
    
    Rs.
    293,260Additional provision during the period
    
    
    299,154
    
    
    
    319,322Reduction due to payments
    
    
    (297,946
    )
    
    
    (255,226
    )Balance at the end of the period
    
    Rs.
    293,260
    
    
    Rs.
    357,356
 14. Operating Leases The Company leases office and residential facilities under cancelable and
non-cancelable operating lease agreements that are renewable on a periodic
basis at the option of both the lessor and the lessee. Rental payments under
such leases were Rs. 320,029, Rs. 345,898 and Rs. 518,061 for the years ended
March 31, 2002, 2003 and 2004, respectively. Details of contractual payments under non cancelable leases is given below: Year ending March 31,2005
    
    
    175,5782006
    
    
    148,0482007
    
    
    155,5732008
    
    
    156,5562009
    
    
    158,430Thereafter
    
    
    359,793Total
    
    
    1,153,978
 Prepaid expenses as of March 31, 2003 and 2004 include Rs. 211,331 and Rs.
207,824 respectively, being prepaid operating lease rentals for lands obtained
on lease for a period of 60 years. The prepaid expense is being charged over
the lease term. 15. Investments in Affiliates Wipro GE Medical Systems (Wipro GE)




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##### Table of Contents



The Company has accounted for its 49% interest in Wipro GE by the equity
method. The carrying value of the investment in Wipro GE as of March 31, 2003
and 2004, was Rs. 400,599 and Rs. 456,459 respectively. The Companys equity in
the losses of Wipro GE for year ended March 31, 2003 was Rs.371,250 and the
Companys equity in the income of Wipro GE for the year ended March 31, 2002
and 2004 was Rs. 234,100 and Rs. 55,860 respectively. WeP Peripherals The Company has accounted for its 39.7% and 40.5% interest as of March 31,
2003 and 2004 respectively, in WeP Peripherals by the equity method. The
carrying value of the equity investment in WeP Peripherals as of March 31, 2003
and 2004, was Rs.133,470 and Rs.163,100 respectively. The Companys equity in
the income of WeP Peripherals for the year ended March 31, 2002, 2003 and 2004
was Rs. 23,676, Rs. 16,000 and Rs. 40,130 respectively. NetKracker In December 2000, the Company established NetKracker and transferred its
retail internet business into this entity. A strategic investor acquired a 51%
equity interest in the entity with Wipro retaining the balance 49%.
Additionally, Wipro acquired convertible preference shares in NetKracker. The
Companys equity in the loss of NetKracker for the year ended March 31, 2002
was Rs. 110,698. In March 2002, Wipro and the strategic investor entered into certain
agreements whereby the convertible preference shares were converted to common
stock increasing Wipros equity interest from 49% to 79%. Additionally, Wipro
would acquire a 19% equity interest in NetKracker from the strategic investor
for a cash consideration of Rs. 30,000 and a contingent consideration that is
payable on occurrence of specified events. The Company determined that the
events that trigger contingent payments are within its control and no
contingent consideration will be payable under the arrangement. The transaction was accounted for as a purchase business combination.
Prior to the acquisition, NetKracker had a deferred tax asset of Rs. 135,000
for carry-forward business losses, for which a valuation allowance had been
established due to the significant uncertainty on realization on a standalone
basis. Subsequent to the acquisition, the Company will fully utilize the
benefit of the carry-forward business losses and accordingly the valuation
allowance was reversed. The amounts assigned to the net assets of NetKracker
exceeded the cost of acquisition. This excess was initially used to reduce the
amounts allocable to certain eligible assets and the remaining excess of
Rs. 96,000 was reported as a component of other income. As the remaining
excess was not material it was not reported as an extraordinary gain. 16. Financial Instruments and Concentration of Risk Concentration of risk. Financial instruments that potentially subject the
Company to concentrations of credit risk consist principally of cash and cash
equivalents, investments in liquid and short-term mutual funds, other
investments securities, accounts receivable and inter-corporate deposits. The
Companys cash resources are invested with financial institutions and
commercial corporations with high investment grade credit ratings. Limits have
been established by the Company as to the maximum amount of cash that may be
invested with any such single entity. To reduce its credit risk, the Company
performs ongoing credit evaluations of customers. No single customer accounted
for 10% or more of the accounts receivable / revenues as of / for the years
ended March 31, 2003 and 2004. Derivative financial instruments. The Company is exposed to foreign
currency fluctuations on foreign currency assets and forecasted cash flows
denominated in foreign currency. The Company limits the effects of foreign
exchange rate fluctuations by following established risk management policies
including the use of derivatives. The Company enters into forward foreign
exchange contracts, where the counterparty is a bank. The Company considers the
risks of non-performance by the counterparty as non-material. The forward
foreign exchange contracts mature between one to thirteen months.




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##### Table of Contents



During the year ended March 31, 2004, the Company increased the amount of
forward foreign exchange contracts to hedge the underlying foreign currency
assets and a significant portion of the anticipated US dollar cash flows during
the year ended March 31, 2005. Further, during the year ended March 31, 2004, the Company has
re-evaluated its risk management program and hedging strategies in respect of
forecasted transactions. Effective March 2004, upon completion of the formal
documentation and testing for effectiveness, the Company has designated the
forward contracts in respect of forecasted transactions, which meet the hedging
criteria, as cash flow hedges. Changes in the derivative fair values that are
designated effective and qualify as cash flow hedges, under SFAS No. 133
Accounting for Derivative Instruments and Hedging Activities, are deferred and
recorded as a component of accumulated other comprehensive income until the
hedged transactions occur and are then recognized in the consolidated
statements of income. The ineffective portion of a hedging derivative is
immediately recognized in the consolidated statements of income. Consequently,
as of March 31, 2004, the Company has recorded an amount of Rs. 1,058,967 as a
component of accumulated other comprehensive income within stockholders
equity. In addition, during the year ended March 31, 2004, the Company purchased
put options to sell US dollars. Contemporaneously, the Company has written put
options to sell US dollars. These options qualify as net written options
ineligible for hedge accounting under SFAS No. 133. Consequently, the increase
in fair value of the net written options of Rs. 153,086 is recognized in the
consolidated statement of income. The following table presents the aggregate contracted principal amounts of
the Companys derivative contracts outstanding: As of March 31,2003
    
    2004Forward contracts (sell)
    
    $
    113,500
    
    
    $
    867,000£
    2,500
    
    
    £
    3,250Net written options (sell)
    
    
    
    
    
    $
    113,000
 As of March 31, 2004, there were no significant gains or losses on
derivative transactions or portions thereof that were either ineffective as
hedges, excluded from the assessment of hedge effectiveness, or associated with
an underlying exposure that did not occur. 17. Borrowings from Banks The Company has an Indian line of credit of Rs. 1,540,000 and a US line of
credit of $ 10,000 from its bankers for working capital requirements. Both the
lines of credit are renewable annually. The Indian line of credit bears
interest at the prime rate of the bank, which averaged 12.2% for the year ended
March 31, 2002 and 12.7% for the years ended March 31, 2003 and 2004. The US
line of credit bears interest at 60 basis points over the London Inter-Bank
Offered Rate. The facilities are secured by inventories, accounts receivable
and certain property and contain financial covenants and restrictions on
indebtedness. 18. Equity Shares and Dividends The Company presently has only one class of equity shares. For all
matters submitted to vote in the shareholders meeting, every holder of equity
shares, as reflected in the records of the Company on the date of the
shareholders meeting shall have one vote in respect of each share held. In October 2000, the Company made a public offering of its American
Depositary Shares, or ADSs, to international investors. The offering consisted
of 3,162,500 ADSs representing 3,162,500 equity shares (one ADS represents one
equity share), at an offering price of $41.375 per ADS. The equity shares
represented by the ADS carry similar rights as to voting and dividends as the
other equity shares. Should the Company declare and pay dividend, such dividend will be paid in
Indian rupees. Indian law mandates that any dividend, exceeding 10% of the
equity shares, can be declared out of distributable profits only




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##### Table of Contents



after the transfer of upto 10% of net income computed in accordance with
current regulations to a general reserve. Also, the remittance of dividends
outside India is governed by Indian law on foreign exchange. Dividend payments
are also subject to applicable taxes. In the event of liquidation of the affairs of the Company, all
preferential amounts, if any, shall be discharged by the Company. The
remaining assets of the Company, after such discharge, shall be distributed to
the holders of equity shares in proportion to the number of shares held by
them. The Company paid cash dividends, including tax on distribution of
dividends, of Rs. 128,534, Rs. 232,466 and Rs. 262,361 during the years ended
March 31, 2002, 2003 and 2004. The dividends per share were Rs. 0.50 during the
year ended March 31, 2002 and Rs. 1.00 during the years ended March 31, 2003
and 2004. 19. Retained Earnings The Companys retained earnings as of March 31, 2003 and 2004, include
restricted retained earnings of Rs. 259,538, which are not distributable as
dividends under Indian company laws. These relate to requirements regarding
earmarking a part of the retained earnings on redemption of preference shares. Retained earnings as of March 31, 2003 and 2004, also include Rs. 390,469
and Rs. 475,959 respectively, of undistributed earnings in equity of
affiliates. 20. Other Income, Net Other income consists of the following: Year ended March 31,2002
    
    2003
    
    2004Interest income/(expense), net
    
    
    420,059
    
    
    Rs.
    245,801
    
    
    Rs.
    (7,019
    )Dividend income
    
    
    
    
    
    
    
    
    
    
    736,430Gain/(loss) on sale of investment securities, net
    
    
    201,536
    
    
    
    410,360
    
    
    
    (2,070
    )Others
    
    
    217,243
    
    
    
    61,790
    
    
    
    140,865Rs.
    838,838
    
    
    Rs.
    717,951
    
    
    Rs.
    868,206
 21. Shipping and Handling Costs Selling general and administrative expenses for the year ended March 31,
2002, 2003 and 2004, include shipping and handling costs of Rs. 47,922, Rs.
62,803 and Rs. 60,712 respectively. 22. Income Taxes Income taxes have been allocated as follows: Year ended March 31,2002
    
    2003
    
    2004Continuing operations
    
    Rs.
    1,016,003
    
    
    Rs.
    1,342,248
    
    
    Rs.
    1,611,389Discontinued operations
    
    
    (45,257
    )
    
    
    (158,978
    )
    
    
    Stockholders equity for:Exercise of stock options
    
    
    (10,577
    )
    
    
    
    
    
    
    Unrealized gains/(loss) on investment securities, net
    
    
    29,205
    
    
    
    (29,249
    )
    
    
    5,078Total income taxes
    
    Rs.
    989,374
    
    
    Rs.
    1,154,021
    
    
    Rs.
    1,616,467
 Income taxes relating to continuing operations consist of the following: Year ended March 31,2002
    
    2003
    
    2004Current taxesDomestic
    
    Rs.
    493,153
    
    
    Rs.
    712,624
    
    
    Rs.
    867,606




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##### Table of Contents



Year ended March 31,2002
    
    2003
    
    2004Foreign
    
    
    442,804
    
    
    
    585,167
    
    
    
    820,000Rs.
    935,957
    
    
    Rs.
    1,297,791
    
    
    Rs.
    1,687,606Deferred taxesDomestic
    
    
    194,320
    
    
    
    73,507
    
    
    
    5,007Foreign
    
    
    (114,274
    )
    
    
    (29,050
    )
    
    
    (81,224
    )80,046
    
    
    
    44,457
    
    
    
    (76,217
    )Total income tax expense
    
    Rs.
    1,016,003
    
    
    Rs.
    1,342,248
    
    
    Rs.
    1,611,389
 Income taxes relating to discontinued operations consist of the following: Year ended March 31,2002
    
    2003Current taxes
    
    Rs.
    (21,614
    )
    
    Rs.
    (62,912
    )Deferred
taxes
    
    
    (23,643
    )
    
    
    (96,066
    )Total income
tax
benefit
    
    Rs.
    (45,257
    )
    
    Rs.
    (158,978
    )
 The reconciliation between the provision of income tax of the Company and
amounts computed by applying the Indian statutory income tax rate is as
follows: Year ended March 31,2002
    
    2003
    
    2004Income before taxes and minority interest
    
    Rs.
    9,427,495
    
    
    Rs.
    9,848,969
    
    
    Rs.
    11,659,475Enacted tax rate in India
    
    
    35.70
    %
    
    
    36.75
    %
    
    
    35.875
    %Computed expected tax expense
    
    
    3,365,616
    
    
    
    3,619,496
    
    
    
    4,182,837Effect of:Income exempt from tax in India
    
    
    (2,505,711
    )
    
    
    (2,263,078
    )
    
    
    (2,925,320
    )Income taxed at lower rates in foreign jurisdiction
    
    
    (27,726
    )
    
    
    (61,235
    )
    
    
    Difference between tax basis and amount for financial reporting of a
domestic subsidiary reversed
    
    
    199,512
    
    
    
    
    
    
    
    Loss on direct issue of stock by subsidiary
    
    
    
    
    
    
    
    
    
    
    73,542Income taxes relating to prior years
    
    
    
    
    
    
    
    
    
    
    274,020Others
    
    
    (15,688
    )
    
    
    47,065
    
    
    
    6,310Total income tax expense
    
    Rs.
    1,016,003
    
    
    Rs.
    1,342,248
    
    
    Rs.
    1,611,389
 Deferred tax assets as of March 31, 2001 included Rs. 199,512 being the
difference between the tax basis and the amount for financial reporting of
Wipro Net, a domestic subsidiary. The deferred tax asset was reversed during
the year ended March 31, 2002, on merger of Wipro Net as a result of which the
benefit of the deferred tax asset was no longer available to the Company. A substantial portion of the profits of the Companys India operations are
exempt from Indian income taxes being profits attributable to export operations
and profits from undertakings situated in Software Technology and Hardware
Technology Parks. Under the tax holiday, the taxpayer can utilize an exemption
from income taxes for a period of any ten consecutive years. The Company has
opted for this exemption from the year ended
March 31, 1997, for undertakings situated in Software Technology and
Hardware Technology Parks. Profits from certain other undertakings are also
eligible for preferential tax treatment. In addition, dividend income from
certain category of investments was exempt from tax in the years ended March
31, 2002 and 2004. The aggregate rupee and per share (basic) effects of these
tax exemptions, are Rs. 2,505,711 and Rs. 10.84 per share for the year ended
March 31, 2002, Rs.2,263,078 and Rs.9.79 per share for the year ended March 31,
2003 and Rs. 2,925,320 and Rs. 12.65 per share for the years ended March 31,
2004. For the year ended, March 31, 2003 Indian tax laws were amended to
restrict the exempt income from an export oriented undertaking from 100% to 90%
of its aggregate income. During the year ended March 31 2004, the Indian tax
laws were amended to restore exemption of the income of an export oriented
undertaking from tax to 100%.




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##### Table of Contents



The components of the net deferred tax asset are as follows: As of March 31,2003
    
    2004Deferred tax assetsAllowance for doubtful accounts
    
    
    89,143
    
    
    
    92,653Accrued expenses and
liabilities
    
    
    105,635
    
    
    
    180,655Carry-forward capital losses
    
    
    126,422
    
    
    
    57,250Carry-forward business losses
    
    
    175,296
    
    
    
    500,341Others
    
    
    59,566
    
    
    
    43,126Total gross deferred tax assets
    
    
    556,062
    
    
    
    874,025Less: valuation allowance
    
    
    (142,172
    )
    
    
    (263,479
    )Net deferred tax assets
    
    
    413,890
    
    
    
    610,546Deferred tax liabilitiesProperty, plant and equipment
    
    Rs.
    16,927
    
    
    Rs.
    31,762Intangible
assets
    
    
    83,184
    
    
    
    13,079Amortizable
goodwill
    
    
    
    
    
    
    21,200Undistributed earnings of affiliates
    
    
    32,849
    
    
    
    65,299Others
    
    
    143
    
    
    
    38,065Total gross deferred tax liability
    
    
    133,103
    
    
    
    169,405Net deferred tax assets
    
    Rs.
    280,787
    
    
    Rs.
    441,141
 In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment. Based
upon the level of historical taxable income and projections for future taxable
income over the periods in which the deferred tax assets are deductible,
management believes it is more likely than not that the Company will realize
the benefits of these deductible differences, net of the existing valuation
allowances at March 31, 2004. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. Management believes that based on a number of factors, the available
objective evidence creates sufficient uncertainties regarding the generation of
future capital gains and realizability of the carry-forward capital losses.
Accordingly, the Company has established a valuation allowance for the
carry-forward capital losses. These losses expire after eight years succeeding
the year in which they were first incurred. Based on historical taxable income, projections of future taxable income
and tax planning strategies management believes that it is more likely than not
that the Company will be able to realize the benefit on the carry-forward
business losses arising out of its Indian and foreign operations, except
certain foreign operations of a subsidiary for which a valuation allowance has
been established. Upon acquisition of Wipro Nervewire, the Company was entitled to utilize
tax benefits of Rs. 264,552 on carry forward business losses. Based on
projections of future taxable income and tax planning strategies management
believes that the Company will be able to realize tax benefits only to the
extent of Rs. 74,073 on the carry forward losses. Consequently, the Company has
recorded a valuation allowance for the remaining amount. Reversal, if any, of
the valuation allowance would be recorded as a reduction of goodwill arising
from the acquisition of Wipro Nervewire. The carry-forward business losses as of March 31, 2004, expire as follows: Year ending March 31:2020
    
    Rs.
    72,2302021
    
    
    79,5152022
    
    
    44,1182023
    
    
    85,4412024
    
    
    409,4502027
    
    
    778,094Rs.
    1,468,848




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##### Table of Contents



The increase in valuation allowance of Rs.19,362 and Rs.121,307 for the
years ended March 31, 2003 and 2004 respectively is primarily on account of
valuation allowance on a portion of carry forward tax losses, at the date of
acquisition, in Wipro Spectramind and Wipro Nervewire. The Company is subject to a 15% branch profit tax in the US to the extent
the net profit during the fiscal year attributable to its US branch are greater
than the increase in the net assets of the US branch during the fiscal year,
computed in accordance with the Internal Revenue Code. As of March 31, 2004,
the US branchs net assets amounted to $83 million. The Company has not
triggered the branch profit tax and intends to maintain the current level of
its net assets in the US as is consistent with its business plan. Accordingly,
a provision for branch profit tax has not been recorded as of March 31, 2004. 23. Employee Stock Incentive Plans Wipro Equity Reward Trust (WERT).In 1984, the Company established a
controlled trust called the WERT. Under this plan, the WERT would purchase
shares of Wipro out of funds borrowed from Wipro. The Companys Compensation
Committee would recommend to the WERT, officers and key employees, to whom the
WERT will grant shares from its holding. The shares have been granted at a
nominal price. Such shares would be held by the employees subject to vesting
conditions. The shares held by the WERT are reported as a reduction from
stockholders equity. 229,755 and 218,855 shares held by employees as of March
31, 2003 and 2004 respectively, subject to vesting conditions are included in
the outstanding equity shares. The movement in the shares held by the WERT is given below: Year ended March 31,2002
    
    2003
    
    2004Shares held at the beginning of the period
    
    
    1,280,885
    
    
    
    1,321,335
    
    
    
    1,303,610Shares granted to employees
    
    
    
    
    
    
    (19,300
    )
    
    
    Grants forfeited by employees
    
    
    40,450
    
    
    
    1,575
    
    
    
    10,900Shares held at the end of the period
    
    
    1,321,335
    
    
    
    1,303,610
    
    
    
    1,314,510
 Deferred compensation is amortized on a straight-line basis over the
vesting period of the shares. The amortization of deferred stock compensation,
net of reversals, for the years ended March 31, 2002, 2003 and 2004, was Rs.
78,723, Rs. 52,047 and Rs. 44,866 respectively. The stock-based compensation
has been allocated to cost of revenues and selling, general and administrative
expenses as follows: Year ended March 31,2002
    
    2003
    
    2004Cost of revenues
    
    Rs.
    29,504
    
    
    Rs.
    19,734
    
    
    Rs.
    14,955Selling, general and administrative expenses
    
    
    49,219
    
    
    
    32,313
    
    
    
    29,911Rs.
    78,723
    
    
    Rs.
    52,047
    
    
    Rs.
    44,866
 Wipro Employee Stock Option Plan 1999 (1999 Plan).In July 1999, the
Company established the 1999 Plan. Under the 1999 Plan, the Company is
authorized to issue up to 5 million equity shares to eligible employees.
Employees covered by the 1999 Plan are granted an option to purchase shares of
the Company subject to the requirements of vesting. The Company has not
recorded any deferred compensation as the exercise price was equal to the fair
market value of the underlying equity shares on the grant date.




---



##### Table of Contents



Stock option activity under the 1999 Plan is as follows: Year ended March 31, 2002Weighted-averageWeighted-
    
    remainingShares arising
    
    Range of
    
    average exercise
    
    contractualout of options
    
    exercise prices
    
    price
    
    life(months)Outstanding at the beginning of the period
    
    
    1,883,268
    
    
    Rs.
    1,024  1,086
    
    
    Rs.
    1,085
    
    
    54 months2,681,163
    
    
    
    1,853  2,522
    
    
    
    1,863
    
    
    62 monthsForfeited during the period
    
    
    (286,890
    )
    
    
    1,024  1,086
    
    
    
    1,086
    
    
    
    (358,913
    )
    
    
    1,853  2,522
    
    
    
    1,854
    
    
    
    Exercised during the period
    
    
    (32,670
    )
    
    
    1,024  1,086
    
    
    
    1,086
    
    
    
    Outstanding at the end of the period
    
    
    1,563,708
    
    
    
    1,024  1,086
    
    
    
    1,085
    
    
    42 months2,322,250
    
    
    
    1,853  2,522
    
    
    
    1,863
    
    
    50 monthsExercisable at the end of the period
    
    
    390,927
    
    
    
    1,024  1,086
    
    
    
    1,085
    
    
    42 months246,135
    
    
    Rs.
    1,853    2,522
    
    
    Rs.
    1,863
    
    
    50 months
 Year ended March 31, 2003Weighted-averageWeighted-
    
    remainingShares arising
    
    Range of
    
    average exercise
    
    contractualout of options
    
    exercise prices
    
    price
    
    life(months)Outstanding at the beginning of the period
    
    
    1,563,708
    
    
    Rs.
    1,024  1,086
    
    
    Rs.
    1,085
    
    
    42 months2,322,250
    
    
    
    1,853  2,522
    
    
    
    1,863
    
    
    50 monthsForfeited during the period
    
    
    (55,427
    )
    
    
    1,024  1,086
    
    
    
    1,086
    
    
    
    (108,250
    )
    
    
    1,853  2,522
    
    
    
    1,863
    
    
    
    Exercised during the period
    
    
    (96,923
    )
    
    
    1,024  1,086
    
    
    
    1,086
    
    
    
    (980
    )
    
    
    1,853  2,522
    
    
    
    1,853
    
    
    
    Outstanding at the end of the period
    
    
    1,411,358
    
    
    
    1,024  1,086
    
    
    
    1,085
    
    
    30 months2,213,020
    
    
    
    1,853  2,522
    
    
    
    1,863
    
    
    38 monthsExercisable at the end of the period
    
    
    635,111
    
    
    
    1,024  1,086
    
    
    
    1,085
    
    
    30 months554,055
    
    
    Rs.
    1,853    2,522
    
    
    Rs.
    1,863
    
    
    38 months
 Year ended March 31, 2004Weighted-averageWeighted-
    
    remainingShares arising
    
    Range of
    
    average exercise
    
    contractualout of options
    
    exercise prices
    
    price
    
    life(months)Outstanding at the beginning of the period
    
    
    1,411,358
    
    
    Rs.
    1,024  1,086
    
    
    Rs.
    1,085
    
    
    30 months2,213,020
    
    
    
    1,853  2,522
    
    
    
    1,863
    
    
    38 monthsForfeited during the period
    
    
    (79,829
    )
    
    
    1,024  1,086
    
    
    
    1,086
    
    
    
    (113,650
    )
    
    
    1,853  2,522
    
    
    
    1,853
    
    
    
    Exercised during the period
    
    
    (145,752
    )
    
    
    1,024  1,086
    
    
    
    1,086
    
    
    
    Outstanding at the end of the period
    
    
    1,185,777
    
    
    
    1,024  1,086
    
    
    
    1,085
    
    
    18 months2,099,370
    
    
    
    1,853  2,522
    
    
    
    .1,863
    
    
    26 monthsExercisable at the end of the period
    
    
    830,096
    
    
    
    1,024  1,086
    
    
    
    1,085
    
    
    18 months944,967
    
    
    Rs.
    1,853  2,522
    
    
    Rs.
    1,863
    
    
    26 months
 Wipro Employee Stock Option Plan 2000 (2000 Plan).In July 2000, the
Company established the 2000 Plan. Under the 2000 Plan, the Company is
authorized to issue up to 25 million equity shares to eligible employees.
Employees covered by the 2000 Plan are granted an option to purchase equity
shares of the Company subject to vesting. The Company has not recorded any
deferred compensation as the exercise price was equal to the fair market value
of the underlying equity shares on the grant date.




---



##### Table of Contents



Stock option activity under the 2000 Plan is as follows: Year ended March 31, 2002Weighted-averageremainingShares arising
    
    Range of exercise
    
    Weighted-average
    
    contractual lifeout of options
    
    prices
    
    exercise price
    
    (months)Outstanding at the beginning of the period
    
    
    75,067
    
    
    Rs.
    1,586  2,375
    
    
    Rs.
    2,375
    
    
    69 months3,139,283
    
    
    
    2,382  2,746
    
    
    
    2,398
    
    
    66 monthsGranted during the period
    
    
    90,250
    
    
    
    1,032  1,532
    
    
    
    1,331
    
    
    65 months5,655,594
    
    
    
    1,586  2,375
    
    
    
    1,586
    
    
    71 monthsForfeited during the period
    
    
    (14,000
    )
    
    
    1,032  1,532
    
    
    
    1,277
    
    
    
    (4,330
    )
    
    
    1,586  2,375
    
    
    
    2,207
    
    
    
    (469,350
    )
    
    
    2,382  2,746
    
    
    
    2,432
    
    
    
    Outstanding at the end of the period
    
    
    76,250
    
    
    
    1,032  1,532
    
    
    
    1,341
    
    
    65 months5,726,331
    
    
    
    1,586  2,375
    
    
    
    1,596
    
    
    71 months2,669,933
    
    
    
    2,382  2,746
    
    
    
    2,397
    
    
    54 monthsExercisable at the end of the period
    
    
    7,283
    
    
    
    1,586  2,375
    
    
    
    2,375
    
    
    57 months400,490
    
    
    Rs.
    2,382  2,746
    
    
    Rs.
    2,397
    
    
    54 months
 Year ended March 31, 2003Weighted-averageremainingShares arising
    
    Range of exercise
    
    Weighted-average
    
    contractual lifeout of options
    
    prices
    
    exercise price
    
    (months)Outstanding at the beginning of the period
    
    
    76,250
    
    
    Rs.
    1,032  1,532
    
    
    Rs.
    1,341
    
    
    65 months5,726,331
    
    
    
    1,586  2,375
    
    
    
    1,596
    
    
    71 months2,669,933
    
    
    
    2,382  2,746
    
    
    
    2,397
    
    
    54 monthsGranted during the period
    
    
    95,550
    
    
    
    1,032  1,532
    
    
    
    1,487
    
    
    62 months4,000
    
    
    
    1,586  2,375
    
    
    
    1,691
    
    
    60 monthsForfeited during the period
    
    
    (76,450
    )
    
    
    1,032  1,532
    
    
    
    1,483
    
    
    
    (210,850
    )
    
    
    1,586  2,375
    
    
    
    1,599
    
    
    
    (183,850
    )
    
    
    2,382  2,746
    
    
    
    2,415
    
    
    
    Exercised during the period
    
    
    (400
    )
    
    
    1,032  1,532
    
    
    
    1,215
    
    
    
    Outstanding at the end of the period
    
    
    94,950
    
    
    
    1,032  1,532
    
    
    
    1,374
    
    
    57 months5,519,481
    
    
    
    1,586  2,375
    
    
    
    1,596
    
    
    59 months2,486,083
    
    
    
    2,382  2,746
    
    
    
    2,396
    
    
    42 monthsExercisable at the end of the period
    
    
    5,540
    
    
    
    1,032  1,532
    
    
    
    1,335
    
    
    53 months1,104,597
    
    
    
    1,586  2,375
    
    
    
    1,598
    
    
    59 months621,521
    
    
    Rs.
    2,382  2,746
    
    
    Rs.
    2,396
    
    
    42 months
 Year ended March 31, 2004Weighted-averageWeighted-
    
    remainingShares arising
    
    Range of exercise
    
    average exercise
    
    contractual lifeout of options
    
    prices
    
    price
    
    (months)Outstanding at the beginning of the period
    
    
    94,950
    
    
    Rs.
    1,032  1,532
    
    
    Rs.
    1,374
    
    
    57 months5,519,481
    
    
    
    1,586  2,375
    
    
    
    1,596
    
    
    59 months2,486,083
    
    
    
    2,382  2,746
    
    
    
    2,396
    
    
    42 monthsForfeited during the period
    
    
    (8250
    )
    
    
    1,032  1,532
    
    
    
    1,325
    
    
    
    (327,760
    )
    
    
    1,586  2,375
    
    
    
    1,599
    
    
    
    (214,900
    )
    
    
    2,382  2,746
    
    
    
    2,396
    
    
    
    Exercised during the
period
    
    
    (900
    )
    
    
    1,032  1,532
    
    
    
    1,254
    
    
    
    (2,545
    )
    
    
    1,586  2,375
    
    
    
    1,586
    
    
    
    Outstanding at the end of the period
    
    
    85,800
    
    
    
    1,032  1,532
    
    
    
    1,381
    
    
    45 months5,189,176
    
    
    
    1,586  2,375
    
    
    
    1,596
    
    
    47 months2,271,183
    
    
    
    2,382  2,746
    
    
    
    2,390
    
    
    30 monthsExercisable at the end of the period
    
    
    19,459
    
    
    
    1,032  1,532
    
    
    
    1,376
    
    
    45 months2,062,851
    
    
    
    1,586  2,375
    
    
    
    1,592
    
    
    47 months1,021,732
    
    
    Rs.
    2,382  2,746
    
    
    Rs.
    2,390
    
    
    30 months




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##### Table of Contents



Weighted average grant date fair values for options granted during the
years ended March 31, 2002 and 2003, under the 1999/2000 plan, are Rs. 875 and
Rs. 831 respectively. Stock Option Plan (2000 ADS Plan).In April 2000, the Company established
the 2000 ADS Plan. Under the 2000 ADS Plan, the Company is authorized to issue
options to purchase up to 1.5 million American Depositary Shares (ADSs) to
eligible employees. Employees covered by the 2000 ADS Plan are granted an
option to purchase ADSs representing equity shares of the Company subject to
the requirements of vesting. The Company has not recorded any deferred
compensation as the exercise price was equal to the fair market value of the
underlying ADS on the grant date. Stock option activity under the 2000 ADS Plan is as follows: Year ended March 31, 2002Weighted-averageWeighted-
    
    remainingShares arising
    
    Range of exercise
    
    average exercise
    
    contractualout of options
    
    prices
    
    price
    
    life (months)Outstanding at the beginning of the period
    
    
    264,750
    
    
    $
    34.90  41.375
    
    
    $
    41.375
    
    
    67 monthsGranted during the period
    
    
    26,000
    
    
    
    20.75  30.05
    
    
    
    22.44
    
    
    66 months383,200
    
    
    
    34.90  36.40
    
    
    
    36.38
    
    
    70 monthsForfeited during the period
    
    
    (26,500
    )
    
    
    34.90  41.375
    
    
    
    41.375
    
    
    
    Outstanding at the end of the period
    
    
    26,000
    
    
    
    20.75  30.05
    
    
    
    22.44
    
    
    66 months621,450
    
    
    
    34.90  41.375
    
    
    
    38.29
    
    
    64 monthsExercisable at the end of the period
    
    
    23,825
    
    
    $
    34.90  41.375
    
    
    $
    41.375
    
    
    54 months
 Year ended March 31, 2003Weighted-averageWeighted-
    
    remainingShares arising
    
    Range of exercise
    
    average exercise
    
    contractualout of options
    
    prices
    
    price
    
    life (months)Outstanding at the beginning of the period
    
    
    26,000
    
    
    $
    20.75  30.05
    
    
    $
    22.44
    
    
    66 months621,450
    
    
    
    34.90  41.375
    
    
    
    38.29
    
    
    64 monthsGranted during the period
    
    
    88,300
    
    
    
    20.75  30.05
    
    
    
    27.95
    
    
    53 monthsForfeited during the period
    
    
    (30,500
    )
    
    
    20.75  30.05
    
    
    
    28.66
    
    
    
    (4,900
    )
    
    
    34.90     41.375
    
    
    
    35.82
    
    
    
    Outstanding at the end of the period
    
    
    83,800
    
    
    
    20.75  30.05
    
    
    
    25.98
    
    
    54 months616,550
    
    
    
    34.90  41.375
    
    
    
    38.31
    
    
    45 monthsExercisable at the end of the period
    
    
    2,400
    
    
    
    20.75  30.05
    
    
    
    22.58
    
    
    54 months153,388
    
    
    $
    34.90  41.375
    
    
    $
    38.33
    
    
    45 months
 Year ended March 31, 2004Weighted-averageWeighted-
    
    remainingShares arising out
    
    Range of exercise
    
    average
    
    contractualof options
    
    prices
    
    exercise price
    
    life (months)Outstanding at the beginning of the period
    
    
    83,800
    
    
    $
    20.75  30.05
    
    
    $
    25.98
    
    
    54 months616,550
    
    
    
    34.90  41.375
    
    
    
    38.31
    
    
    45 monthsForfeited during the period
    
    
    (6,700
    )
    
    
    20.75  30.05
    
    
    
    27.63
    
    
    
    (10,800
    )
    
    
    34.90  41.375
    
    
    
    39.85
    
    
    
    Exercised during the period
    
    
    (5,550
    )
    
    
    20.75  30.05
    
    
    
    24.91
    
    
    
    (40,413
    )
    
    
    34.90  41.375
    
    
    
    38.14
    
    
    
    Outstanding at the end of the period
    
    
    71,550
    
    
    
    20.75  30.05
    
    
    
    25.91
    
    
    42 months565,337
    
    
    
    34.90  41.375
    
    
    
    38.30
    
    
    33 monthsExercisable at the end of the period
    
    
    17,888
    
    
    
    20.75  30.05
    
    
    
    25.91
    
    
    42 months270,588
    
    
    $
    34.90-41.375
    
    
    $
    38.18
    
    
    33 months
 Weighted average grant date fair values for options granted during the
years ended March 31, 2002 and 2003 are $ 19 and $ 15 respectively.




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##### Table of Contents



Wipro Spectramind Option Plan (Wipro Spectramind Plan).Prior to its
acquisition by the Company, Wipro Spectramind had established the Wipro
Spectramind Plan. Employees covered by the Wipro Spectramind Plan were granted
options to purchase shares of Wipro Spectramind. As of the date of acquisition of Wipro Spectramind by the Company, options
to purchase 17,462,520 shares were outstanding under the Wipro Spectramind
Plan. As per the terms of the acquisition, the Company acquired/settled
7,960,704 options for cash. The cost of settlement of these options is included
as a component of the purchase price of Wipro Spectramind. Out of the balance
9,501,816 outstanding options, the Company modified the vesting
schedule/exercise period and increased the exercise price of 6,149,191 options.
In accordance with FIN No. 44, Accounting for Certain Transactions involving
Stock Compensation (an interpretation of APB Opinion No.25) and EITF Issue No.
00-23, Issues Related to the Accounting for Stock Compensation under APB
Opinion No. 25 and FIN No. 44, the above modifications resulted in a new
measurement of compensation cost at the date of modification. As the new
exercise price was equal to the fair value of the underlying equity shares on
the new measurement date, the Company has not recorded any additional
compensation cost. Stock option activity under the Wipro Spectramind Plan is as follows: Year ended March 31, 2003Weighted-averageWeighted-
    
    remainingShares arising
    
    Range of
    
    average
    
    contractual lifeout of options
    
    exercise prices
    
    exercise price
    
    (months)Assumed at the date of acquisition
    
    
    514,358
    
    
    Rs.
    1  13
    
    
    Rs.
    8
    
    
    
    9 months3,157,372
    
    
    
    31
    
    
    
    31
    
    
    
    15 months6,149,191
    
    
    
    57
    
    
    
    57
    
    
    
    31 monthsForfeited during the period
    
    
    (158,708
    )
    
    
    57
    
    
    
    57
    
    
    
    Exercised during the period
    
    
    (332,451
    )
    
    
    1  13
    
    
    
    13
    
    
    
    Outstanding at the end of the period
    
    
    181,907
    
    
    
    1  13
    
    
    
    2
    
    
    
    3 months3,157,372
    
    
    
    31
    
    
    
    31
    
    
    
    6 months5,990,483
    
    
    
    57
    
    
    
    57
    
    
    
    22 monthsExercisable at the end of the period
    
    
    181,907
    
    
    Rs.
    1  13
    
    
    Rs.
    2
    
    
    
    3 months
 Year ended March 31, 2004Weighted- averageremainingShares arising out of
    
    Range of
    
    Weighted- average
    
    contractual lifeoptions
    
    exercise prices
    
    exercise price
    
    (months)Outstanding at the beginning of the period
    
    
    181,907
    
    
    Rs.
    1  13
    
    
    Rs.
    2
    
    
    
    3 months3,157,372
    
    
    
    31
    
    
    
    31
    
    
    
    6 months5,990,483
    
    
    
    57
    
    
    
    57
    
    
    
    22 monthsForfeited during the period
    
    
    (405,737
    )
    
    
    57
    
    
    
    57
    
    
    
    Exercised during the period
    
    
    (181,907
    )
    
    
    1  13
    
    
    
    8
    
    
    
    (3,157,372
    )
    
    
    31
    
    
    
    31
    
    
    
    (839,015
    )
    
    
    57
    
    
    
    57
    
    
    
    Outstanding at the end of the period
    
    
    4,745,731
    
    
    Rs.
    57
    
    
    Rs.
    57
    
    
    
    10 monthsExercisable at the end of the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Options outstanding as at March 31, 2004, are covered by a share purchase
feature that entitles the Company to repurchase the shares at fair value and
gives the employee the right to sell the shares back to the Company at fair
value. The Company and the employees can exercise this repurchase right only
after six months of the date of option exercise. In accordance with FIN No. 44
and EITF Issue No. 00-23, this share repurchase feature does not result in
variable accounting. 24. Earnings Per Share A reconciliation of equity shares used in the computation of basic and
diluted earnings per equity share is set out below:




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##### Table of Contents



Year ended March 31,2002
    
    2003
    
    2004Equity sharesWeighted average number of
equity shares outstanding
    
    
    231,132,500
    
    
    
    231,204,326
    
    
    
    231,290,130Effect of dilutive
equivalent shares-stock
options
outstanding
    
    
    402,376
    
    
    
    368,112
    
    
    
    224,977Weighted average number of
equity shares and equivalent
shares
outstanding
    
    
    231,534,876
    
    
    
    231,572,448
    
    
    
    231,515,107
 Shares held by the controlled WERT have been reduced from the equity
shares outstanding and shares held by employees subject to vesting conditions
have been included in outstanding equity shares for computing basic and diluted
earnings per share. Options to purchase 5,451,924, 10,865,284 and 9,559,729 equity shares were
outstanding during the year ended March 31, 2002, 2003 and 2004, respectively,
but were not included in the computation of diluted earnings per share because
the exercise price of the options was greater than the average market price of
the equity shares. 25. Employee Benefit Plans Gratuity. In accordance with applicable Indian laws, the Company provides
for gratuity, a defined benefit retirement plan (Gratuity Plan) covering
certain categories of employees. The Gratuity Plan provides a lump sum payment
to vested employees, at retirement or termination of employment, an amount
based on the respective employees last drawn salary and the years of
employment with the Company. The Company provides the gratuity benefit through
annual contributions to a fund managed by the Life Insurance Corporation of
India (LIC). Under this plan, the settlement obligation remains with the
Company, although the Life Insurance Corporation of India administers the plan
and determines the contribution premium required to be paid by the Company. As of March 31,2003
    
    2004Change in the benefit obligationProjected Benefit Obligation (PBO) at the beginning of the year
    
    Rs.
    59,187
    
    
    Rs.
    62,356Service cost
    
    
    3,583
    
    
    
    5,924Interest cost
    
    
    5,346
    
    
    
    4,527Benefits paid
    
    
    (4,550
    )
    
    
    (1,461
    )Actuarial (gain)/loss
    
    
    (1,210
    )
    
    
    43,695PBO at the end of the year
    
    
    62,356
    
    
    
    115,041Change in plan assetsFair value of plan assets at the beginning of the year
    
    
    26,719
    
    
    
    33,745Actual return on plan assets
    
    
    2,342
    
    
    
    (1,342
    )Employer contributions
    
    
    9,234
    
    
    
    1,591Benefits paid
    
    
    (4,550
    )
    
    
    (1,461
    )Plan assets at the end of the year
    
    
    33,745
    
    
    
    32,533Funded status
    
    
    (28,611
    )
    
    
    (82,508
    )Unrecognized actuarial (gain)/loss
    
    
    2,548
    
    
    
    54,105Unrecognized transition obligation
    
    
    5,520
    
    
    
    4,492Unrecognized actuarial cost
    
    
    7,563
    
    
    
    6,375Accrued liability
    
    Rs.
    (12,980
    )
    
    Rs.
    (17,536
    )




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##### Table of Contents



Net gratuity cost for the years ended March 31, 2002, 2003 and 2004
included: Year ended March 31,2002
    
    2003
    
    2004Service cost
    
    Rs.
    3,798
    
    
    Rs.
    3,583
    
    
    Rs.
    5,924Interest cost
    
    
    5,723
    
    
    
    5,346
    
    
    
    4,527Expected return on assets
    
    
    (2,992
    )
    
    
    (2,091
    )
    
    
    (2,224
    )Amortization of transition liabilities
    
    
    2,516
    
    
    
    2,625
    
    
    
    2,051Net gratuity cost
    
    Rs.
    9,045
    
    
    Rs.
    9,463
    
    
    Rs.
    10,278
 The actuarial assumptions used in accounting for the Gratuity Plan are: As of March 31,2003
    
    
    
    
    
    2004Discount rate
    
    
    8
    %
    
    
    
    
    
    
    7
    %Rate of increase in compensation levels
    
    
    8
    %
    
    
    
    
    
    
    7
    %Rate of return on plan assets
    
    
    8
    %
    
    
    
    
    
    
    7
    %
 Expected contribution to the
fund during the year ending March 31, 2005
    
    Rs.
    11,684Expected benefit payments to the fund during
the year ending March 31:2005
    
    
    10,1692006
    
    
    10,4592007
    
    
    11,2002008
    
    
    11,7522009
    
    
    13,465Thereafter
    
    
    68,027Total
    
    Rs.
    125,072
 The Company estimates the long term return on plan assets based on the
average rate of return expected to prevail over the next 15 to 20 years in the
types of investments held by LIC. Superannuation. Apart from being covered under the Gratuity Plan
described above, the senior officers of the Company also participate in a
defined contribution plan maintained by the Company. This plan is administered
by the LIC. The Company makes annual contributions based on a specified
percentage of each covered employees salary. The Company has no further
obligations under the plan beyond its annual contributions. Provident fund.In addition to the above benefits, all employees receive
benefits from a provident fund, a defined contribution plan. The employee and
employer each make monthly contributions to the plan equal to 12% of the
covered employees salary. A portion of the contribution is made to the
provident fund trust established by the Company, while the remainder of the
contribution is made to the Governments provident fund. The Company has no
further obligations under the plan beyond its monthly contributions. The Company contributed Rs. 322,899, Rs. 442,855 and Rs. 715,634 to
various defined contribution and benefit plans during the years ended March 31,
2002, 2003 and 2004 respectively.




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##### Table of Contents



26. Related Party Transactions The Company has the following transactions with related parties. Year ended March 31,2002
    
    2003
    
    2004Wipro GE:Revenues from sale of computer equipment and administrative
and management support services
    
    Rs.
    26,208
    
    
    Rs.
    33,121
    
    
    Rs.
    116,490Fees received for usage of trade mark
    
    
    39,344
    
    
    
    19,000
    
    
    
    WeP Peripherals:Revenues from sale of computer equipment and
services
    
    
    9,230
    
    
    
    6,163
    
    
    
    8,002Fees received for usage of trade mark
    
    
    53,016
    
    
    
    53,016
    
    
    
    22,040Payment for services
    
    
    1,160
    
    
    
    14,665
    
    
    
    4,047Interest received on debentures
    
    
    5,000
    
    
    
    
    
    
    
    Purchase of
printers
    
    
    138,676
    
    
    
    105,727
    
    
    
    79,892Netkracker :Fees received for technical and infrastructure
support services
    
    
    96,155
    
    
    
    
    
    
    
    Revenues from sale of computer equipment and
services
    
    
    987
    
    
    
    
    
    
    
    Azim Premji Foundation:Revenues from sale of computer equipment and
services
    
    
    1,442
    
    
    
    2,029
    
    
    
    1,966Principal shareholder:Payment of lease rentals
    
    
    1,200
    
    
    
    1,200
    
    
    
    1,425
 The Company has the following receivables from related parties, which are
reported as other assets / other current assets in the balance sheet. As of March 31,2003
    
    2004Wipro GE
    
    Rs.
    87,410
    
    
    Rs.
    31,321WeP Peripherals
    
    
    14,472
    
    
    
    3,043Azim Premji Foundation
    
    
    158
    
    
    
    43Security deposit given
to Hasham Premji, a
firm under common
control
    
    
    25,000
    
    
    
    25,000Rs.
    127,040
    
    
    Rs.
    59,407
 The Company has the following payables to related parties, which are
reported as other current liabilities in the balance sheet. As of March 31,2003
    
    2004WeP Peripherals
    
    Rs.
    22,186
    
    
    Rs.
    34,459Rs.
    22,186
    
    
    Rs.
    34,459
 27. Commitments and Contingencies Capital commitments. As of March 31, 2003 and 2004, the Company had
committed to spend approximately Rs. 321,410 and Rs. 529,111 respectively,
under agreements to purchase property and equipment. These amounts are net of
capital advances paid in respect of these purchases.




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##### Table of Contents



Other commitments. The Companys Indian operations have been established
as a Software Technology Park Unit under a plan formulated by the Government of
India. As per the plan, the Companys India operations have export obligations
to the extent of 1.5 times the employee costs for the year on an annual basis
and 5 times the amount of foreign exchange released for capital goods imported,
over a five year period. The consequence of not meeting this commitment in the
future, would be a retroactive levy of import duty on certain computer hardware
previously imported duty free. As of March 31, 2004, the Company has met all
commitments required under the plan. Guarantees. As of March 31, 2003 and 2004, performance and financial
guarantees provided by banks on behalf of the Company to the Indian Government,
customers and certain other agencies amount to approximately Rs. 1,883,338 and
Rs. 1,892,563 respectively, as part of the bank line of credit. Contingencies and lawsuits. In March 2004, the Company received a demand
from the tax authorities of Rs. 2,614,569, including interest, upon completion
of their tax review for the financial year ended March 31, 2001. The tax demand
is mainly on account of disallowances of deduction claimed by Company under
Section 10A of the Income Tax Act of India, 1961, which allows a tax holiday in
respect of profits earned on some of the undertakings of the Company. As of
March 31, 2004, the net exposure of the Company was Rs. 2,315,569. Management,
including external counsel, have concluded that the ultimate outcome of this
proceeding will not have a material adverse effect on the Companys financial
position or overall trends in results of operations. The Company intends to
contest this claim vigorously. Certain other income-tax related legal proceedings are pending against the
Company. Potential liabilities, if any, have been adequately provided for, and
the Company does not currently estimate any incremental liability in respect of
these proceedings. Additionally, the Company is also involved in lawsuits, claims,
investigations and proceedings, including patent and commercial matters, which
arise in the ordinary course of business. There are no such matters pending
that Wipro expects to be material in relation to its business. 28. Segment Information The Company is organized by segments, including Global IT Services and
Products, India and AsiaPac IT Services and Products, Consumer Care and
Lighting and Others. Each of the segments has a Vice Chairman/Chief
Executive Officer who reports to the Chairman of the Company. The Chairman of
the Company has been identified as the Chief Operating Decision Maker (CODM) as
defined by SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information. The Chairman of the Company evaluates the segments based on their
revenue growth, operating income and return on capital employed. The Global IT Services and Products segment provides research and
development services for hardware and software design to technology and
telecommunication companies, software application development services to
corporate enterprises and Business Process Outsourcing (BPO) services to large
global corporations. In July 2002, the Company acquired Wipro Spectramind. The operations of
Wipro Spectramind were initially organized as a new business segment named IT
Enabled Services. This segment provided BPO services to large global
corporations in the US, UK, Australia and other developed markets. From April
2003, the CODM evaluates Wipro Spectramind as an integral component of the
Global IT Services and Products business segment. Consequently, from April
2003, Wipro Spectramind is included in the Global IT Services and Products
segment. With effect from April 1, 2003, the CODM evaluates all critical
acquisitions separately for a period of time ranging from two to four quarters. In April 2002, the Company established a new business segment named
HealthScience, to address the IT requirements of the emerging healthcare and
life sciences market. The healthcare and life sciences sector clients of the
Global IT Services and Products segment were transferred to the newly
established HealthScience segment. Further, Wipro Biomed, a business segment
which was previously reported in Others, became a part of the




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##### Table of Contents



HealthScience segment. In April 2003, the Company reorganized the
HealthScience business segment, whereby all components of the HealthScience
segment, except Wipro Biomed, were integrated with Global IT Services and
Products business segment. Subsequent to the reorganization, Wipro Biomed is
being reported in Others. Similarly, during the year ended March 31, 2003,
certain other business segments previously reported in Others were integrated
with India and AsiaPac IT Services and Products segment. The India and AsiaPac IT Services and Products segment focuses primarily
on addressing the IT and electronic commerce requirements of companies in
India, MiddleEast and AsiaPacific region. The Consumer Care and Lighting segment manufactures, distributes and sells
soaps, toiletries, lighting products and hydrogenated cooking oils for the
Indian market. The results of operations for the discontinued ISP division were
previously reported in Others. The segment information presented excludes
these results of operations, which are now reported outside of continuing
operations. Others consist of business segments that do not meet the requirements
individually for a reportable segment as defined in SFAS No. 131. Corporate
activities such as treasury, legal and accounting, which do not qualify as
operating segments under SFAS No. 131 have been considered as reconciling
items. Segment data for previous periods has been reclassified on a comparable
basis.




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##### Table of Contents



Information on reportable segments is as follows: Year ended March 31, 2002India and AsiaPacGlobal IT Services
    
    IT Services and
    
    Consumer Care
    
    
    
    
    
    Reconcilingand Products
    
    Products
    
    and Lighting
    
    Others
    
    Items (2)
    
    Entity TotalRevenues
    
    Rs.
    22,412,226
    
    
    Rs.
    6,950,495
    
    
    Rs.
    2,938,630
    
    
    Rs.
    1,172,119
    
    
    Rs.
    
    
    
    Rs.
    33,473,470Exchange rate fluctuations
    
    
    255,810
    
    
    
    (202
    )
    
    
    411
    
    
    
    87
    
    
    
    (256,106
    )
    
    
    Total revenues
    
    
    22,668,036
    
    
    
    6,950,293
    
    
    
    2,939,041
    
    
    
    1,172,206
    
    
    
    (256,106
    )
    
    
    33,473,470Cost of revenues
    
    
    (12,310,029
    )
    
    
    (5,428,938
    )
    
    
    (1,999,434
    )
    
    
    (923,006
    )
    
    
    
    
    
    
    (20,661,407
    )Selling, general and
administrative expenses
    
    
    (2,533,337
    )
    
    
    (945,785
    )
    
    
    (539,347
    )
    
    
    (226,658
    )
    
    
    (113,775
    )
    
    
    (4,358,902
    )Research and development expenses
    
    
    (213,457
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213,457
    )Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (250
    )
    
    
    (250
    )Exchange rate fluctuations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218,968
    
    
    
    218,968Others, net
    
    
    (2,395
    )
    
    
    2,786
    
    
    
    3,256
    
    
    
    18,542
    
    
    
    (39,032
    )
    
    
    (16,843
    )Operating income of segment
    
    Rs.
    7,608,818
    
    
    Rs.
    578,356
    
    
    Rs.
    403,516
    
    
    Rs.
    41,084
    
    
    Rs.
    (190,195
    )
    
    Rs.
    8,441,579Total assets of segment (3)
    
    Rs.
    11,196,573
    
    
    Rs.
    3,532,129
    
    
    Rs.
    1,076,291
    
    
    Rs.
    1,032,379
    
    
    Rs.
    16,801,762
    
    
    Rs.
    33,639,134Capital employed (3)
    
    
    8,724,898
    
    
    
    966,997
    
    
    
    708,041
    
    
    
    666,185
    
    
    
    16,789,912
    
    
    
    27,864,081Return on capital employed (1),
(3)
    
    
    92
    %
    
    
    56
    %
    
    
    52
    %
    
    
    
    
    
    
    
    
    
    
    Accounts receivable
    
    
    3,700,657
    
    
    
    1,810,889
    
    
    
    172,426
    
    
    
    188,224
    
    
    
    108,707
    
    
    
    5,980,903Cash and cash equivalents and
investments in liquid and
short-term mutual funds
    
    
    1,088,507
    
    
    
    72,103
    
    
    
    162,348
    
    
    
    27,389
    
    
    
    6,026,853
    
    
    
    7,377,200Depreciation
    
    
    974,452
    
    
    
    153,157
    
    
    
    61,596
    
    
    
    33,274
    
    
    
    67,509
    
    
    
    1,289,988
 Year ended March 31, 2003India andGobal IT
    
    AsiaPac ITServices and
    
    Services and
    
    Consumer Care
    
    
    
    
    
    ReconcilingProducts
    
    Products
    
    and Lighting
    
    Others
    
    Items (2)
    
    Entity TotalRevenues
    
    Rs.
    30,267,465
    
    
    Rs.
    8,040,567
    
    
    Rs.
    2,942,071
    
    
    Rs.
    1,599,797
    
    
    
    
    
    
    Rs.
    42,849,900Exchange rate fluctuations
    
    
    325,167
    
    
    
    5,685
    
    
    
    607
    
    
    
    (6,752
    )
    
    
    (324,707
    )
    
    
    Total revenues
    
    
    30,592,632
    
    
    
    8,046,252
    
    
    
    2,942,678
    
    
    
    1,593,045
    
    
    
    (324,707
    )
    
    
    42,849,900Cost of revenues
    
    
    (17,737,823
    )
    
    
    (6,286,506
    )
    
    
    (2,008,178
    )
    
    
    (1,143,932
    )
    
    
    
    
    
    
    (27,176,439
    )Selling, general and administrative expenses
    
    
    (4,159,614
    )
    
    
    (1,283,235
    )
    
    
    (513,310
    )
    
    
    (203,350
    )
    
    
    (33,144
    )
    
    
    (6,192,653
    )Research and development expenses
    
    
    (260,481
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (260,481
    )Amortization of intangible assets
    
    
    (166,321
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (166,321
    )Exchange rate fluctuations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    306,639
    
    
    
    306,639Others, net
    
    
    12,163
    
    
    
    62,801
    
    
    
    891
    
    
    
    9,993
    
    
    
    39,775
    
    
    
    125,623Operating income of segment
    
    Rs.
    8,280,556
    
    
    Rs.
    539,312
    
    
    Rs.
    422,081
    
    
    Rs.
    255,756
    
    
    Rs.
    (11,437
    )
    
    Rs.
    9,486,268Total assets of segment (3)
    
    Rs.
    22,429,810
    
    
    Rs.
    3,472,801
    
    
    Rs.
    1,085,692
    
    
    Rs.
    1,139,563
    
    
    Rs.
    14,653,025
    
    
    Rs.
    42,780,891Capital employed (3)
    
    
    18,961,472
    
    
    
    1,012,091
    
    
    
    662,134
    
    
    
    820,140
    
    
    
    14,708,270
    
    
    
    36,164,107Return on capital
employed (1), (3)
    
    
    60
    %
    
    
    55
    %
    
    
    62
    %
    
    
    
    
    
    
    
    
    
    
    Accounts receivable
    
    
    5,809,072
    
    
    
    1,665,747
    
    
    
    197,412
    
    
    
    258,616
    
    
    
    
    
    
    
    7,930,847Cash and cash equivalents and investments in liquid and
short-term mutual funds
    
    
    2,308,841
    
    
    
    20,765
    
    
    
    196,963
    
    
    
    60,190
    
    
    
    11,509,655
    
    
    
    14,096,414Depreciation
    
    
    1,210,626
    
    
    
    173,766
    
    
    
    61,276
    
    
    
    36,000
    
    
    
    50,039
    
    
    
    1,531,707




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##### Table of Contents



Year ended March 31, 2004India andGlobal IT
    
    AsiaPac ITServices and
    
    Services and
    
    Consumer Care
    
    
    
    
    
    ReconcilingProducts
    
    Products
    
    and Lighting
    
    Others
    
    Items (2)
    
    Entity TotalRevenues
    
    Rs.
    43,465,340
    
    
    Rs.
    9,413,252
    
    
    Rs.
    3,567,444
    
    
    Rs.
    1,987,323
    
    
    
    
    
    
    Rs.
    58,433,359Exchange rate fluctuations
    
    
    309,714
    
    
    
    32,202
    
    
    
    54
    
    
    
    (2,411
    )
    
    
    (339,559
    )
    
    
    Total revenues
    
    
    43,775,054
    
    
    
    9,445,454
    
    
    
    3,567,498
    
    
    
    1,984,912
    
    
    
    (339,559
    )
    
    
    58,433,359Cost of revenues
    
    
    (27,931,091
    )
    
    
    (7,303,527
    )
    
    
    (2,354,821
    )
    
    
    (1,410,500
    )
    
    
    
    
    
    
    (38,999,939
    )Selling, general and
administrative expenses
    
    
    (6,012,799
    )
    
    
    (1,411,567
    )
    
    
    (667,939
    )
    
    
    (266,386
    )
    
    
    (91,379
    )
    
    
    (8,450,070
    )Research and development
expenses
    
    
    (232,048
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (232,048
    )Amortization of intangible
assets
    
    
    (299,537
    )
    
    
    
    
    
    
    (8,693
    )
    
    
    
    
    
    
    
    
    
    
    (308,230
    )Exchange rate fluctuations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    377,559
    
    
    
    377,559Others, net
    
    
    529
    
    
    
    31,100
    
    
    
    10,278
    
    
    
    (299
    )
    
    
    39,040
    
    
    
    80,648Operating income of
segment
    
    
    9,300,108
    
    
    
    761,460
    
    
    
    546,323
    
    
    
    307,727
    
    
    
    (14,339
    )
    
    
    10,901,279Total assets of segment (3)
    
    
    28,609,995
    
    
    
    5,257,109
    
    
    
    1,199,666
    
    
    
    1,643,825
    
    
    
    21,027,715
    
    
    
    57,738,310Capital employed (3)
    
    
    23,183,873
    
    
    
    2,113,274
    
    
    
    622,188
    
    
    
    1,195,777
    
    
    
    20,901,815
    
    
    
    48,016,927Return on capital
employed (1), (3)
    
    
    44
    %
    
    
    49
    %
    
    
    85
    %
    
    
    
    
    
    
    
    
    
    
    Accounts receivable
    
    
    7,658,305
    
    
    
    2,688,384
    
    
    
    227,379
    
    
    
    398,868
    
    
    
    
    
    
    
    10,972,936Cash and cash equivalents
and investments in liquid
and short-term mutual
funds
    
    
    2,598,915
    
    
    
    168,243
    
    
    
    167,297
    
    
    
    502,936
    
    
    
    18,338,818
    
    
    
    21,776,209Depreciation
    
    
    1,686,500
    
    
    
    131,805
    
    
    
    67,361
    
    
    
    38,275
    
    
    
    47,906
    
    
    
    1,971,847
  (1)
    
    Return on capital employed is computed based on the
average of the capital employed at the beginning and at
the end of the period.  (2)
    
    Reconciling items include assets of the discontinued ISP division.  (3)
    
    The total assets, capital employed and return on
capital employed for the India and AsiaPac IT Services
and Products segment excludes the impact of certain
acquisition-related goodwill relating to the segment.
This goodwill of Rs. 656,240 as of March 31, 2003 and
2004 has been reported as a component of reconciling
items. The Company has four geographic segments: India, the United
States, Europe and Rest of the world. Revenues from the geographic segments based on domicile of the customer is
as follows: Year ended March 31,2002
    
    2003
    
    2004India
    
    Rs.
    11,044,014
    
    
    Rs.
    12,141,251
    
    
    Rs.
    14,782,650United States
    
    
    12,688,593
    
    
    
    20,047,947
    
    
    
    30,868,815Europe
    
    
    8,255,195
    
    
    
    8,502,650
    
    
    
    10,458,734Rest of the world
    
    
    1,485,668
    
    
    
    2,158,052
    
    
    
    2,323,160Rs.
    33,473,470
    
    
    Rs.
    42,849,900
    
    
    Rs.
    58,433,359
 29. Fair Value of Financial Instruments The fair values of the Companys current assets and current liabilities
approximate their carrying values because of their short-term maturity. Such
financial instruments are classified as current and are expected to be
liquidated within the next twelve months.




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##### Table of Contents



30. Subsequent Events The Board of Directors, in its meeting held on April 16, 2004, proposed a
stock dividend in the ratio of two equity shares or ADS for every one equity
share or ADS outstanding on the record date. This proposal is subject to the
approval of the shareholders at the Annual General Meeting, scheduled to be
held on June 11, 2004.




---



##### Table of Contents



Item 19. Exhibits ExhibitNumber
    
    Description*3.1
    
    Articles of Association of Wipro Limited, as amended*3.2
    
    Memorandum of Association of Wipro Limited, as amended*3.3
    
    Certificate of Incorporation of Wipro Limited, as amended*4.1
    
    Form of Deposit Agreement (including as an exhibit, the form of American Depositary Receipt)*4.2
    
    Wipros specimen certificate for equity shares*10.1
    
    1999 Employee Stock Option Plan*10.2
    
    2000 Employee Stock Option Plan*10.3
    
    Wipro Equity Reward Trust**10.4
    
    2000 ADS Option Plan10.5
    
    Form of Indemnification Agreement, as amended31
    
    Certification of Chief Executive Officer and Chief Financial Officer under Section 302 of
the Sarbanes Oxley Act32
    
    Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of
the Sarbanes Oxley Act***99.3
    
    Code of Ethics for Principal and Finance Officers***99.4
    
    Wipros Ombudsprocess
   *
    
    Incorporated by reference to exhibits filed with the Registrants
Registration Statement on Form F-1 (File No. 333-46278) in the form
declared effective September 26, 2000.**
    
    This document is being refiled solely to correct a typographical error.***
    
    Incorporated by reference to Exhibits filed with Registrants Annual
report on Form 20-F filed on June 9, 2003.




---



##### Table of Contents



Signatures The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this Annual Report on its behalf. For Wipro Limited/s/ Azim H. PremjiMay 17, 2004
    Azim H. Premji,Chairman and Managing Director /s/ Suresh C. SenapatySuresh C. Senapaty,Executive Vice President, Finance




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##### Table of Contents



EXHIBIT INDEX  ExhibitNumber
    
    Description*3.1
    
    Articles of Association of Wipro Limited, as amended*3.2
    
    Memorandum of Association of Wipro Limited, as amended*3.3
    
    Certificate of Incorporation of Wipro Limited, as amended*4.1
    
    Form of Deposit Agreement (including as an exhibit, the form of American Depositary Receipt)*4.2
    
    Wipros specimen certificate for equity shares*10.1
    
    1999 Employee Stock Option Plan*10.2
    
    2000 Employee Stock Option Plan*10.3
    
    Wipro Equity Reward Trust**10.4
    
    2000 ADS Option Plan10.5
    
    Form of Indemnification Agreement, as amended31
    
    Certification of Chief Executive Officer and Chief Financial Officer under Section 302 of
the Sarbanes Oxley Act32
    
    Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of
the Sarbanes Oxley Act***99.3
    
    Code of Ethics for Principal and Finance Officers***99.4
    
    Wipros Ombudsprocess
   *
    
    Incorporated by reference to exhibits filed with the Registrants
Registration Statement on Form F-1 (File No. 333-46278) in the form
declared effective September 26, 2000.**
    
    This document is being refiled solely to correct a typographical error.***
    
    Incorporated by reference to Exhibits filed with Registrants Annual
report on Form 20-F filed on June 9, 2003.