Equity research report on Wipro Limited and Abacus computers Limited; ICFAI-SRC, Hyderabad

Abstract

Wipro was incorporated in 1945 as Western India Vegetable Products. Wipro is a diversified group with interests in Information Technology, Health Care ,Consumer Products, Fluid Power , Financial Services and Lighting Products. Initially, Wipro started as an oil trading company and set up its first manufacturing facility in 1947 for Vanaspati. Then in late 70s came the diversification in Toiletries and Hydraulic Cylinder manufacturing. The Information technology business was started in 1981 and the health care business came into existence in 1988. The Financial Services division ( a separate 100% subsidiary company ) was started in 1992. Each business is headed by 2 President) Chief Executive Officer. The businesses are organized as divisions (even if they are incorporated as separate companies ) of the Wipro Corporation. The two Corporate functions - Finance and Human Resource Development allocate resources and out together Corporate initiatives and other programs and transfer ideas from outside into’ the company and across businesses. The Corporation is well integrated by values it holds. The value driven leadership has been able to imbibe ethic and discipline in each and every Wiproite. This ethic has reflected in the distinctive approach to business that Wipro follows. Wipro Information Technology Group (Erstwhile Wipro Infotech and Wipro Systems ) has been the flagship company of Wipro Corporation. Around 45% of the turnover comes from TT business. This has left the Vanaspati business by which Wipro began its journey far behind in terms of turnover profitability and growth. The Consumer Products Division has launched new range of Baby care products besides establishing itself in the toilet soap market through "Santoor” and “Wipro Shikakai". While IT business has been consistently growing above 25%, Wipro Consumer Products turnover has grown only by 6% a year. Wipro Biomed has been marketing different products from the world leaders and plans to set up its manufacturing facilities soon. Wipro GE has captured the second position in terms of market share and first in the manufacturing of medical equipment: This division is likely to acquire market leadership within a year. The Wipro Lighting division has launched a full range of products in 1993-94. The turnover is expected to grow very fast given the distribution strength of Wipro. Wipro Financial Services has targeted the middle corporate for leasing/hire purchase and other support services, A category I merchant banker it has lead managed 9 issues and has 14 issues on hand. The turnover of this division has increased 5 folds in one year.