Wipro Announces Merger of Five Subsidiaries with Parent Company, Know reasons

On Wednesday, Wipro, the prominent IT services company based in Bengaluru, revealed its decision to merge five of its wholly-owned subsidiaries into its parent entity, Wipro Limited.

This strategic move to merge Wipro HR Services, Wipro Overseas IT Services, Wipro Technology Product Services, Wipro Trademarks Holding, and Wipro VLSI Design Services was approved during a board meeting that also gave the green light to the September quarter earnings.

It’s important to note that the merger plan is subject to statutory and regulatory approvals, including the nod from the National Company Law Tribunal (NCLT).

Wipro outlined four significant reasons behind this merger:

1. Consolidation of Business Operations: This merger aims to streamline and consolidate Wipro’s various business operations.
2. Synergy of Operations: The integration of these subsidiaries with the parent company is expected to create synergies, enhancing overall efficiency.
3. Reduction in Overheads: The merger is anticipated to bring about a reduction in overhead costs, encompassing administrative, managerial, and other expenses.
4. Optimized Legal Entity Structure: This move seeks to optimize the legal entity structure within the organization, simplifying it for better management.
5. Reduced Legal and Regulatory Compliances: By merging these subsidiaries, Wipro will significantly reduce the complexity of legal and regulatory compliances.

As this merger involves wholly-owned subsidiaries, it will not result in the issuance of new shares, ensuring that there will be no alteration in the existing shareholding pattern.

In terms of revenue, Wipro Overseas IT Services reported no revenue as of the end of March 2023. On the other hand, Wipro HR Services reported revenue of Rs 67,753 crore, Wipro Technology Product Services Rs 85.3 crore, Wipro VLSI Design Rs 218 crore, and Wipro Trademarks Rs 29 lakh.

In the most recent quarter, Wipro posted a consolidated net profit of Rs 2,667.3 crore, marking a 0.70% year-on-year (YoY) increase. Meanwhile, its consolidated revenue from operations experienced a marginal rise of 0.1% to reach Rs 22,515.90 crore.

Wipro’s CEO and MD, Thierry Delaporte, shared, “We ended the second quarter with 22 accounts above the $100M range, which is double the number we had in FY’21. Our large deal total contract value reached $1.3 billion — highest in the last nine quarters.”

For the upcoming December quarter, the company expects revenue from its IT services business segment to fall within the range of $2,617 million to $2,672 million, translating to sequential guidance of -3.5% to -1.5% in constant currency terms.