Future is bright, Premji tells Wiproites ahead of his last AGM as CMD
17 July 2019
Wipro will continually transform to scale new heights as the world changes, while remaining firmly committed to its values, chairman and managing director Azim Premji stated in a letter to shareholders on Tuesday, a day ahead of Wirpo’s June quarter earnings announcement.
Premji will step down on 31 July from the company handing over charge of executive chairman to his son, Rishad Premji, who is currently chief strategy officer and member of the board.
Premji who started off with his vegetable oil unit, subsequently built a technology services empire over a period of five decades, but devoted more attention to philanthropic initiatives.
Premji said that digital, loud, engineering services and cyber security would be areas of big investments for Wipro.
He also said that the operating margins of the company had improved by 1.8 per cent. The company’s EPS for the year ended 31 March 2019 grew 18.6 per cent YoY, which was the best in the last 5 years, he added.
He said while the company is committed to enhancing value for stakeholders, as a large technology company which employs 170,000 plus people, Wipro has the responsibility to drive an inclusive growth. “Technologies like digital and AI are disrupting the way services are rendered and the ability to learn becomes vital for our employees. At Wipro, we have made significant investments in re-skilling our employees in digital technologies,” he said.
Full text of Azim Premji’s last letter to shareholders as CMD of Wipro:
This year, we embark on our 75th year of creating value for our stakeholders. It is an important milestone for us and we take great pride in how Wipro is an exemplar of a successful, ethical and a socially responsible organization. If we look back at the Wipro journey in the last seven decades, from a small vegetable oil company to a leading information technology company that we are today, we have evolved by constantly re-inventing ourselves and creating 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.
Along the journey, we have focused on continuous evaluation of the capabilities we need to win. This year as a part of the strategic plan exercise, we identified four technologies that will lead us into the future - Digital, Cloud, Engineering Services and Cyber Security. Based on the approval from the Board, we have decided to step up our investments significantly in these four big bets. Furthermore, we also divested our data enter business which has improved our return on capital employed.
We are committed to enhancing value for our stakeholders. Our EPS for the year ended March 31, 2019 grew by 18.6 per cent YoY, which was the best in the last 5 years. We improved our working capital substantially and our free cash flows 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.
Consistent with this philosophy, we declared a dividend of Rs 1 per share, completed a bonus issue of one equity share for every three held in March 2019 and also announced a buyback of Rs 105 billion through buyback to the shareholders in April 2019. The shareholders have approved the proposal to buyback equity shares of the company and the process is likely to be completed by August 2019.
As a large technology company which employs 170,000 plus people, we have the responsibility to drive an inclusive growth. Technologies like digital and AI are disrupting the way services are rendered and the ability to learn becomes vital for our employees. At Wipro, we have made significant investments in re-skilling our employees in digital technologies.
There are three levels of training that start from awareness programs, extensive learning programs through virtual labs and immersive programs that provide opportunities to build deep expertise.
We are also using TopGear, our social learning and crowdsourcing platform as a workforce transformation tool as it has 2000+ plus learning assignments across 200+ skills. Today, we already have 55,000+ employees on TopGear. Localization is an important initiative we are driving to create a global, diverse and distributed talent base.
In the last few years of running this program we have successfully localized all our major markets like USA, UK, Australia, Canada, Singapore, Africa and Middle East.
We are acutely aware that much of the economic progress in the world has come at the cost of climate change and therefore we have a responsibility towards creating a sustainable community. We have significantly scaled up renewable energy for our operations, contributing to 40% of our total consumption. Recycled water now contributes to 42 % of our total water usage. Education has been the primary focus of our work for close to two decades now. Till date, we have partnered with 166 organizations working in school education. Wipro Earthian, a sustainability education program focused on water and bio-diversity, has reached out to 8,600 schools over the last nine years. The Wipro Science Education fellowship in the USA, which we started in 2013, works in seven sites across 35 school districts on improving STEM learning in schools serving disadvantaged communities. This year, we are 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.
Through Wipro cares, our employee giving program, we have worked on education for disadvantaged children and children with disabilities and worked with partners who provide quality primary health care services to underserved communities. My own thinking of wealth & philanthropy is that we must remain ‘trustees’ of our wealth for society, not its owners. As announced earlier, I have irrevocably renounced more of my personal assets and earmarked them to the endowment which supports the Azim Premji Foundation’s philanthropic activities. The total value of the philanthropic endowment corpus contributed over time is USD 21 billion, which includes 67% of economic ownership of Wipro Limited.
We remain committed to building a glorious future. I am pleased to share that Rishad Premji, Chief Strategy Officer and Member of the Board, will take over as the Executive Chairman of Wipro Limited with effect from July 31, 2019. Rishad brings to this role new ways of thinking, experience, and competence that will lead Wipro to greater heights. He has been an integral part of the leadership team since 2007, and has a deep understanding of the company, business strategy, culture and heritage. He is also deeply committed to the values which form the bedrock of Wipro. I will continue to serve on the Board of Wipro Limited as Non-executive Director and Founder Chairman while dedicating most of my time and energy to the philanthropic efforts of the Foundation. Leading Wipro from 1966 till now has been the greatest privilege of my life, it has been an extraordinary journey. I want to thank the generations of Wiproites and their families or their contribution towards building our company to what it is today. I am grateful to our clients, partners, and other stakeholders who have reposed trust and confidence in us.
Wipro will continually transform to scale new heights as the world changes while remaining firmly committed to its values. I am confident that the future of Wipro will far outshine anything that we have done before.