Premji envisions Wipro’s 4 big future bets in his last letter to shareholders
Premji said Wipro would focus on Digital, Cloud, Engineering Services & Cyber Security.
In his final letter to Wipro shareholders, Premji recalled the seven-decades journey of Wipro, which transformed from a vegetable oil company into a leading information technology player. He also talked about development plans for employees and his own philanthropic activities.
Below are the key highlights from his letter:
Philanthropy: Premji said he has renounced more personal assets to support his philanthropic efforts. He said the total value of his philanthropic endowment corpus contributed over time is around $21 billion, which includes 67 per cent of economic ownership of Wipro.
Succession planning: Premji said Rishad Premji, Chief Strategy Officer and member of the board, will take over as the Executive Chairman of Wipro with effect from July 31, 2019. Meanwhile, he will continue to serve on the board of Wipro as non-executive director and founder chairman.
Technologies: He said the company has identified four technologies that will lead them into the future, which include Digital, Cloud, Engineering Services and Cyber Security. Based on the approval from the board, the company has decided to step up investment significantly in these four big bets.
EPS and cash flows: For the year ended March 2019, the company’s earnings per share (EPS) grew 18.60 per cent year-on-year, which was best in last five years, Premji said. “We improved our working capital substantially and our free cash flow was robust at 106 per cent of our net profits. We have a capital allocation philosophy of providing regular and stable payout to investors keeping two important considerations, one that of building long term stakeholder value and two that allows us to make required investments for future growth,” he said.
Capital allocation philosophy: Premji said Wipro has a capital allocation philosophy of providing regular and stable payouts to investors keeping two important considerations: one, building long-term stakeholder value, and two, making required investments for future growth. “Consistent with this philosophy, we declared a dividend of Re 1 per share, completed a bonus issue of one equity share for every three held in March 2019 and also announced a share buyback of Rs 10,500 crore in April 2019. Shareholders have approved the proposal to buy back equity shares of the company and the process is likely to be completed by August 2019,” he said.
Wipro’s evolution: Pemji said the company has evolved by constantly re-inventing itself and tapping newer opportunities. “This has been possible because of the deep commitment and hard work of Wiproites and the core values that have remained our guiding light,” he said.
Investing in employees: The company employs 1,70,000-plus employees. He said technologies like digital and artificial intelligence are disrupting the way services are rendered and the ability to learn becomes vital for our employees. The company has made significant investment in re-skilling our employees in digital technologies.
Focus on environment: Economic progress of the world has come at the cost of climate change and, therefore, Wipro has a responsibility towards creating a sustainable community, Premji said. “We have significantly scaled up renewable energy for our operations, contributing to 40 per cent of our total consumption. Recycled water now contributes to 42 per cent of our total water usage,” he said.
Education: The company has partnered with 166 organisations working in school education. Wipro Earthian, a sustainability education program focused on water and bio-diversity, has reached out to 8,600 schools over last nine years. The Wipro Science Education fellowship in the USA, which started in 2013, works in seven sites across 35 school districts on improving STEM learning in schools serving disadvantaged communities. This year, Wipro is collaborating with Kings College London and Sheffield Hallam University to provide rigorous continuous professional development to STEM teachers working in government designated ‘opportunity areas’ in the UK, which by definition have a high proportion of failing-schools.