Wipro approves demerger of non-IT businesses into Wipro Enterprises
01 Nov 2012
Wipro, the country's third largest software services provider, has approved the demerger of all its non-IT businesses into a new unlisted firm, Wipro Enterprises Ltd, a move that will permit the company to focus on information technology.
Following the news, the company's share price rallied more than 3.2 per cent after the news.
The company's board on Wednesday has approved the demerger of Wipro Consumer Care & Lighting (including furniture business), Wipro Infrastructure Engineering (hydraulics and water businesses) and medical diagnostic product and services business (through its strategic joint venture), into Wipro Enterprises.
Wipro Enterprises will be an unlisted company, while Wipro will remain a publicly-listed company that will focus exclusively on information technology.
In fiscal year 2011-12, the IT business contributed to 86 per cent of Wipro's revenue and 94 per cent of its operating profit. The demerger is anticipated to provide fresh impetus for both Wipro and Wipro Enterprises to pursue their individual growth strategies. The demerger is also expected to improve the competitiveness in their respective markets, it said in statement.
The Board of Wipro will remain unchanged, and the demerger will have no impact on the management structure of Wipro. There will be no change in the leadership of any of Wipro Enterprises's constituent businesses. Wipro brand will be jointly owned by both the companies.
