Wipro: You Can’t Win

Hat Tip: Contrarian EPS

Source: Wipro Q1 FY2018-19 Conference Call Transcript


How Muhammad Anwar Ahmed made 500 Crores from 10,000 Rs

There are few signs of overt affluence in what’s still a small town in the India’s sleepy hinterland. At the time of independence, farmers in the region cultivated groundnut, the source of the edible oil that Premji senior was selling through what was then known as Western India Vegetable Products Ltd. Shareholders didn’t see much by way of gains in the early years, recalled Shantilal Jain, who worked at the factory.

A rights offer in the late 1970s wasn’t fully subscribed and Jain was asked to help make up the numbers. He bought one share at a face value of Rs 100. It didn’t seem like a great deal. “Its price fell below the face value and there were no buyers even at Rs 35. Rs 100 at that time was not a small amount and it was not easy to sell it at a loss. So I decided to hold the share,” Jain said. Azim Premji would transform Wipro into a global IT services company.

The worth of that Rs 100 share, after adjusting for splits and bonuses, is now Rs 5.5 crore. Jain, who is 77, has sold some of it but still holds stock valued at more than Rs 1 crore. Rameshlal Korani has been able to build a house funded by Wipro dividends and stock sales. He’s named it Wipro. The biggest bet was probably that of Muhammad Anwar Ahmed. He happened to meet a broker who visited Amalner to buy Wipro shares from the locals in 1980. He invested Rs 10,000, half of all he had.

That’s worth Rs 500 crore now. Ahmed shifted from Amalner to Nashik a few years ago but still keeps in touch with friends and family. For Amalner’s Wipro shareholders, the stock has provided a dependable source of income. None of them would ever want to let go entirely, regardless of what analysts say. “Why should I sell all the shares and buy any other asset. Price volatility does not bother me

Total dividends I have got are in crores and worth more than my shares’ value,” said Korani. Jain said: “If needed, I will sell 10-20 shares in a year but that’s it. As long as the company exists, these shares will remain with us. We trust Sethji (Premji). Whatever he does is will be good for us.”-from ET


Wipro’s Kurien explains why IT Middle Management is Screwed

Ethiraj: You have been asked before about headcount, do you see it coming down?

Wipro CEO Kurien: I think it’s going to be tough given the social context. It’s easy to do using technology; it’s tougher using it given the social context in mind. We, as an industry, have evolved by adding head count. We have got a whole bunch of middle managers and senior managers who have seen that model. Once you see something happening for 20 years, you believe that’s the only reality. That’s the problem. So, I think it’s going to be the biggest problem that we are going to have in that area is going to be internal change management than the external change management.

Ethiraj: Are you also being self critical of your middle management?

Wipro CEO Kurien: I think that’s true. It’s not middle management by itself and I wouldn’t define middle management very clearly. There’s middle management that really adds to technology and I think that’s fabulous to have. We absolutely need those guys. And those are people we really treasure.

 There are other people who just manage people and that’s the game that you don’t want in the future. Because, having a person who sits as a router, routing traffic from one end to the other, communicating upward and managing downwards is not a function that you require long term. That particular skill set is not going to be required any more.- from Boom


Software biggies had a rocking July 2013

I had blogged earlier (here and here) about how Export oriented stocks have become the new meme amongst the investing community.

For subscribers of the Investor Wisdom Newsletter,I had mentioned the stocks where LIC had poured money in the last quarter.

So it turns out that software biggies were the biggest gainers of July 2013 as can be seen from the table below:

Symbol Close on 28 June,2013 Close on 30 July,2013 Gain
OFSS 2699 2958.7 9.62%
TECHM 1059.8 1246.3 17.60%
INFY 2498.85 2969.65 18.84%
TCS 1518.15 1815.5 19.59%
HCLTECH 776 937.55 20.82%
WIPRO 349 438 25.50%

Investor Presentation:Wipro Q4 and Year Ended March 31, 2013

This post is in continuation of my Investor Presentation Series (see here)

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