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November 01, 2012

Wipro Will Likely Separate off its Non-IT Businesses, Focus on Software

Wipro (News - Alert) will likely separate off its non-IT businesses sectors and become solely a software business – during the next fiscal year.

If approvals are given by regulators, the new company based in India will be called Wipro Enterprises, according to TMCnet. It includes Wipro's consumer and infrastructure businesses.

The IT business represents 86 percent of the company’s revenue and 94 percent of its operating profit, The Associated Press reported.

"Creating a technology-focused company will allow us to better serve the needs of our customers, and accelerate investments necessary to capitalize on market growth opportunities," T.K. Kurien, chief executive of Wipro's IT business, said in a company statement.

"I am confident that the demerger will enhance value for our shareholders, and provide fresh momentum for growth,” Azim Premji, chairman, Wipro Limited, added in the statement. “We are committed to both the businesses.”

In an analysis of the latest move by the company, Forbes India speculates that Wipro decided to make the change now for two reasons.

Its non-IT businesses are “growing fast, and some of them have achieved scale,” Forbes said. Premji predicts its non-IT business, such as environment and sustainability, can grow much larger. Also, in June 2013 there is a deadline to increase Wipro’s public float to 25 percent, Forbes reported.

Future growth is definitely at the core of the decision.

"The businesses of Wipro Enterprises Limited are diverse, and this demerger gives them an opportunity to pursue their independent growth plans. I believe the demerger scheme reflects a high standard of governance, transparency and fairness for all stakeholders,” Suresh Senapaty, CFO and executive director, Wipro Limited, added in the company statement.

Edited by Brooke Neuman

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