Wipro's Accounting Policies ( Page 2 )

Abstract

Wipro is one of India''s most well known computer software companies. The financial statements of the company are prepared in accordance with the Indian generally accepted accounting principles (GAAP) as well as the US GAAP. The case discusses Wipro''s accounting policies with special reference to revenue recognition, investments, intangible assets, goodwill, and employee stock plans.

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Background Note

Wipro had grown from a small producer of cooking oil founded in 1945 to a large diversified company by Indian standards with 23,000 employees, $902 million in revenues, and $170 million in profits for the fiscal year ended March, 2003.

Premji immediately began to professionalize the company, hiring MBAs and giving them sufficient operational autonomy. Gradually, Premji diversified into toilet soaps, competing with giants such as Hindustan Lever. Later, he decided to move into hydraulic power systems.

Even as Wipro made good money, Premji continued to look for new opportunities. In 1977, India's socialist government asked IBM to leave the country. Premji decided to get into computer hardware. In 1979, he began developing his own computer and in 1981, started selling the finished machine -- the first in a string of products that would make Wipro, India's top-selling computer maker for two decades. The company licensed technology from Sentinel Computers in the United States and began building India's first mini-computers. Premji hired managers who were computer illiterate, and strong on business experience. They learnt quickly about technology and made hardware an extremely profitable venture. It was only a matter of time before Wipro engineers started developing software packages that were not available off-the-shelf at that time, for hardware customers.

        Case Code   FINA006
   Case Length    14 Pages
              Period    2003
 Organization     Wipro
        Pub Date     2004
Teaching Note    Not Available
     Countries    India
      Industry    Information Technolog (IT)

Issues

Wipro's Accounting Policies

Wipro Limited; Indian generally accepted accounting principles (GAAP); US GAAP; Consolidated financial analysis; Revenue recognition; Intangible assets; Goodwill; Sock based compensation; Deferred taxation; Segment reporting

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.