CORPORATE

FINANCE - I
ASSIGNMENT

(WIPRO LIMITED)
Question 1.
How does the firm interact with financial markets? How do markets get
information about the firm?
Answer :
A Financial Market is a market in which people trade financial
securities, commodities at low transaction cost and at prices that reflect
demand and supply. Financial market consist of CAPITAL MARKET
(includes stock and debt) long term debt and financing, MONEY
MARKET (includes Treasury bills, Certificate of deposits) short term
debt and financing instrument. The capital market is further divided into
PRIMARY MARKET(for first time issue of securities) and
SECONDARY MARKET(for existing securities). Wipro interacts with
financial market through capital market, money market, primary market
and secondary market. Market gets information about the firm in case of
primary market through prospectus, underwriters in case of secondary
market through stock exchange

Question 2.
How does the firm view its social obligations and manage its image in
society?
Answer :
Wipros deliberate engagement with important social issues goes back a
long time. In 2001 they added their first organized community initiatives
(Wipro Cares) followed by a program on school education in 2002
(Wipro Applying Thought in Schools). They started working
methodically on Ecology & Environment in 2008. In 2014, under the
overarching umbrella of Education, they added a significant new
initiative on Children with Disability. This program, at a conceptual
level, is an extension of their long running and successful program for
Persons with Disability. This compelling imperative of boundary-less
thinking is a fundamental driving principle of all their programs. They
run all social programs on a strong foundation of ethical principles, good
governance and sound management. Their Good Citizen manifesto
articulates a set of guiding principles that inform their thinking and
actions. The manifesto covers a wide range a foundation of values as
embedded in Spirit of Wipro, compliance with laws and regulations, a
robust framework of corporate governance, proactive and strategic
engagement with key challenges of the environment and society, serving
their multiple stakeholders and working with proximate communities, all
in a manner that is thoughtful, deliberative and systemic. It must be
emphasized that their sustainability and social programs are wide
ranging and global in scope.

A. Education
Their work in education is based on the guiding principles that (a) It
must contribute to systemic or institutional improvement in education
and / or (b) It should address the needs of underserved and
underprivileged sections and (c) In all cases, the work must be deep and
meaningful. Their programs span school and college education across
India as well as in the U.S. and address the themes of Organizational
Capability Building, Good Quality Educational Material,Advocacy
and Sustainability in Education.

1. Wipro Applying Thought in Schools (WATIS) is a social initiative

working on building capacity in school education reform in India.
Over the past 14 years, WATIS has worked closely with 35
organizations working in improvement of school education. Their
work, spread over 67 educational projects, has involved over 2300
 schools and 13,250 educators across 17 states reaching out to about
1 million students. A point to emphasize here is that the indirect
impact of their work is manifold the above numbers. During 2014-
15, six new partners theirre added in Assam, Koppal in Karnataka,
Hyderabad, Kerala and Mumbai. Their work include improving the
quality of education in government schools, strengthening social
science and ecology education in schools and supporting education
of children from marginalized communities
2. Complementing the systemic engagements of WATIS is the work
of their trust, Wipro Cares that supports in a more direct way,
access to educational opportunities for underprivileged and
marginalized children.
3. During the year, their started a significant new initiative for
Children with Disability. In the first year, their programs
supported the educational and rehabilitative needs of 1350
underprivileged children with disability through five projects in the
cities of Bangalore, Pune, Jaipur and Hyderabad. Their focus is on
early intervention and inclusive education: the first element is
crucial in the battle against disability as early actions help prevent
many subsequent complications; the second element underpins the
principle that children with disability must grow in a school
environment that empowers them by helping integrate with the
mainstream.
4. They started a significant program in school education in 2013 in
the U.S.A. While the expenditure associated with this may not be
allowable as CSR as per the Companies Act 2013, this is an
integral part of their global CSR strategy and therefore something
that merits disclosure. The program is currently running in
Chicago, New Jersey, New York and Boston. They are partnering
with University of Massachusetts, Boston and Michigan State
University. Mercy College in New York and Montclair State
University in New Jersey are also involved. The program works in
close collaboration in over 20 school districts wherein 250-350
teachers go through a 2-3 year fellowship with intense support to
develop their capacities to be better teachers and change leaders.
 The district administrators are a part of the program. They intend
to expand these programs to other cities in future. The current
commitment of Wipro to these programs is about 7.8 million USD
over a period of 5 years. This is a large and substantial
commitment to improving science and math in school education,
one of the largest such commitments made by a non US company.
5. Developing workplace relevant engineering and technology skills
that is also up-to-date and relevant is critical for a country like
India where the IT Services industry contributes to nearly 8% of
the GDP. Their efforts in this direction go back several years and
address two important dimensions: (a) Skills development for
students that is based on a comprehensive framework of post-
graduate level education and (b) Capacity building among the
faculty of engineering colleges.

B. Primary Health Care and Communities

1. Along with education, access to primary health care is a key

determinant of an individuals future trajectory in life, including
the ability to engage in productive livelihoods and responsible
citizenship, In India, nearly 600 million people do not have access
to basic health care which is affordable and of good quality. At
Wipro, their approach in this regard is to focus on the health needs
of their proximate communities around the major centers of their
operations. They run these programs through Wipro Cares, their
public trust. Wipro Cares works with partners who oversee the
delivery of good quality primary health care services to
underserved communities covering more than 75000 people in 53
villages across Maharashtra, Karnataka, Andhra Pradesh &
Uttarakhand. They follow an integrated approach that along with
the delivery of regular health services, lays emphasis on building
the capacity of the communities in developing a higher degree of
self-reliance to handle their own primary health care needs.
 2. Disadvantaged communities face several challenges and one that
visits them at regular frequency in their country is natural disasters
like earthquakes, floods and cyclonic storms. The already fragile
basis of their livelihoods gets further disrupted in the wake of a
natural disaster. Since 2002,they have responded in both monetary
terms and in-kind to several natural calamities wherein Wipros
employees have also risen to the occasion and played a sterling
role. By design, their focus on the more difficult challenge of long
term rehabilitation of the affected communities. During 2014, their
initiated two disaster rehabilitation projects in Uttarakhand and
Odisha in response to the floods and cyclone events in 2013. In
line with their approach, both these projects focus on long term
rehabilitation and strengthening of the affected communities. In
Uttarakhand, in collaboration with very credible local partners
with a long track record, multiple activities on strengthening local
livelihoods they re-initiated. 20 village level farmers group have
been formed with the objective of training them on alternate
methods of farming.8964 fruit saplings have been planted in farms
belonging to 293 farmers while 236 beneficiaries have been
identified for vegetable plantation. Their work in Odisha touched
the lives of 250 farmers and their families who they provided
fishing nets and awareness training around them.

C. Ecology & Environment

Ecological sustainability is one of the defining challenges facing
humanity in the 21st century. How they manage the issues of climate
change, water scarcity, biodiversity loss and pollution will determine the
trajectory of their development. Wipros engagement with these issues
goes back several years and is based on the dual approach of (a)
continually improving the energy, water, waste and biodiversity
footprint of their business operations and (b) engaging on community-
level actions and advocacy on these issues.
1. They initiated the Participative Community Water Program in
the Sarjapur area in Bangalore which is completely dependent on
groundwater. The initiative seeks to involve proximate
communities in a unique citizen-led governance model of
groundwater. The year saw the successful completion of the first
phase of developing a detailed groundwater aquifer map for a 33
sq km area around their Sarjapur campus. The aquifer map along
with a citizen portal will help inform collective decision making
on groundwater management in a more scientific manner.
2. Their urban biodiversity program addresses the twin goals of
creating biodiversity in their urban campuses while also using it
as a platform for wider education and advocacy, Their first project
of a unique Butterfly Park in the Electronic City campus in
Bangalore was initiated two years back and completed in early
2014. In 2014-15 they progressed as per plan on the next phase of
an innovatively conceived biodiversity zone that will use recycled
water. In their Pune campus, the first phase has been completed
with a tripling of the number of native species from 59 to 167.
Both these projects will serve a larger purpose of education on
biodiversity and the plan going forward is to link it with their
earthian program for schools on sustainability education.
3. Rapid development of renewable energy (RE) solutions is a
crucial element in combating climate change. India has put
together a clear road map of adding RE capacity over the next 10
years. Business can play an important role in both, the production
ecosystem and through conscious choices in purchasing RE in its
own operations. At Wipro, renewable energy accounts for more
than 20% of the electricity footprint and in 2014-15, they
procured 66 Million units of RE translating into 52000 metric
tons of greenhouse gas emissions avoided.
4. Effective and efficient management of urban solid waste is a
pressing problem in all their cities. While the use of right
technology, good governance and the active participation of civil
society are important determinants of success, the work of the
informal sector is often unrecognized. They initiated a project in
 Bangalore that will provide skills upgrading to 260 workers in the
informal sector of waste along with access to better nutrition,
safety gear and health insurance.
5. They have been supporting a program in social forestry in rural
Tamil Nadu near Chennai for the past four years. The program
works towards the twin goals of afforestation and improved
livelihood options. More than 80 farmers are the beneficiaries of
the income that will accrue from the produce of more than a
hundred thousand trees that have been planted.

D. Employee Engagement
Employees are integral to many social programs. The Wipro Cares trust
is built on a model of employee contribution that is matched by Wipro.
Nearly one in three employees or more than 48,000 Wiproites are
contributors to Wipro Cares making this possibly the largest such
initiative in India and one of the largest in the world. During 2014-15,
nearly 1600 employees also engaged with more
than 3600 hours of volunteer work, Employees have also keen
participants in other significant initiatives including those on campus
biodiversity and improving public transportation services.

In conclusion, they recognize that this is a journey where one learns all
the time. While on the matter of ethics and values, their will hold
themselves up to the highest standards, on matters of governance and
management of their CSR programs, they recognize that there could be
many opportunities for improvement. Their will continually self-reflect,
act, and review all the time.

Question 3.
Has there been any conflict of the company with its stockholders or
stakeholders or with its network.
Answer :
A conflict is a process emerging from opposition of interest of the
involved individual. It may be personal, intragroup or intergroup.
Wipro had conflicts like :

A former employee of Indias third largest IT services firm Wipro, has

sued the company for a compensation of around 1 million, in a case of
sexual discrimination, unequal pay and unfair dismissal.

Shreya Ukil, 39, who worked in the Bengaluru-based companys

London office alleged that she was subjected to a deeply predatory,
misogynistic culture.

She also accused Wipro of sex discrimination, unequal pay, harassment

and unfair dismissal. The culture within Wipro requires women to be
subservient,
Question 4.
How much equity do the promoters own in the company and in what
form?
Answer :
A promoter is a person who solicits people to invest money into a
corporation, usually when it is being formed.
In Wipro promoters held equity mostly in equity share capital form
These are :
 No. Total
Name Of Shareholder Number Of
Shares Held
Mr. Azim Hasham Premji
1 Partner Representing Hasham 370,956,000
Trader
2 Azim H Premji 93,405,100
3 Yasmeen H Premji 1,062,666
Mr. Azim Hasham Premji
4 Partner Representing Prazim 452,906,791
Traders
5 Rishad Azim Premji 686,666
Mr. Azim Hasham Premji
6 Partner Representing Zash 451,619,790
Traders
Hasham Investment and
7 562,998
Trading Co. Pvt Ltd
8 Tariq Azim Premji 265,000

Question 5.
Does the company have listings in foreign markets?
Answer :
Wipro is a public limited company incorporated and domiciled in India.
The address of its registered office is Wipro Limited, Doddakannelli,
Sarjapur Road, Bangalore - 560 035, Karnataka, India. Wipro has its
primary listing with Bombay Stock Exchange and National Stock
Exchange in India. The Companys American Depository Shares
representing equity shares are also listed on the New York Stock
Exchange.
Question 6.
What is the risk profile of your company? (How much overall risk is
there in this firm? Where is the risk coming from (market, firm, industry
or currency).
Answer :
Wipro gets into a number of risks like risks related to impact of policies
and strategy to industry and competitors, societal risks relating to impact
of strategy on environment, local communities and conservation of
natural resources. Risks also arise from uncontrollable factors (outside
the organization) like risk of adverse development in regulatory
environment in which it operates, unfavorable trend in the
macroeconomic environment like attacks on physical and technology
infrastructure. As Wipro is an IT company its operational risks are
inefficiencies in the design, risk of non-compliance to policies,
information security, data privacy, intellectual property, individual
engaging in unlawful or fraudulent activity or breaches of contractual
obligations.
Wipro gets the majority of its business from outside India. As a result,
Wipro feels the impact of foreign exchange fluctuations more than most
companies. In recent years, the dollar has appreciated against the rupee.
Although Wipro is able to adjust its fees to compensate for a weaker
dollar, continuing weakening of the dollar will make outsourcing to
India less attractive to American firms. Wipro is also focused on
becoming a more global firm and has hired employees in Eastern Europe
as well as other parts of Asia resulting in an increase in currency risk.

Question 7.
 What return would you have earned investing in this company? What
return would you have earned investing in this companys stock?
Answer :
Wipro has been a wealth creator for loyal shareholders after 10 bonus
issues and two stock splits.
An investor in Wipro would be holding 960,000 shares, assuming he
bought 10 shares in its IPO for Rs 100 per share in 1980. Today, the
value of these shares would be Rs 56.11 crore (excluding dividends).
Question 8.
Find out the published historical beta of your company stock against
returns on a market index. What does it tell you about the risk of the
stock?
Answer :

Daily - Daily - Weekly Weekly Monthly

Long Fortnightly
One Three - One - Two - Two
Period Term - Two Year
Month Month Year Year Year
Beta * Range
Range Range Range Range Range
Beta 0.067 0.512 0.458 0.601 0.682 0.596 0.683

*Long Term Beta - Calculated on monthly period calculated over four

year and updated daily

Beta is a measure of the volatility, or systematic risk, of a security or a

portfolio in comparison to the market as a whole. Beta is used in the
capital asset pricing model (CAPM), which calculates the expected
return of an asset based on its beta and expected market returns. Beta is
also known as the beta coefficient.

Beta is calculated using regression analysis. Beta represents the

tendency of a security's returns to respond to swings in the market. A
security's beta is calculated by dividing the covariance the security's
returns and the benchmark's returns by the variance of the benchmark's
returns over a specified period.
A beta of 1 indicates that the security's price moves with the market. A
beta of less than 1 means that the security is theoretically less volatile
than the market. A beta of greater than 1 indicates that the security's
price is theoretically more volatile than the market. So here, a Beta of
0.067 indicates that the stock of Wipro Limited is theoretically less
volatile than the market, since every time the market moves up by 1
point, the stock of Wipro Limited moves up by 0.067 points.