Wipro's bagful of ideas
Rahul Sachitanand November 15, 2009
In an office located down a narrow passage in the C block of Wipro’s Sarjapur Road headquarters, 47-year-old Vineet Agrawal, President of Wipro Consumer Care and Lighting (WCCL), is up to his elbows in work. Agrawal is wrapping up quarterly reviews and planning strategy for a division that is as old as the company itself (which started in 1947 as Western India Palm Refined Oils, a vegetable oil trading company). After a few quarters of struggle, this unit is finally showing some signs of stability, with its Santoor soaps sneaking ahead of Dettol to become the third-most popular personal wash brand across urban and rural India.
Now, Agrawal, who joined Wipro way back in 1982, is looking to take his company to the next level by first expanding his consumer care products out of India into East Asia and beyond, and then rapidly ramping up a slew of new initiatives he has either built or bought over the last few years.
Agrawal is only one part of the emerging face of Wipro, a company most readers would immediately link to its $4 billon-plus (Rs 19,200-croreplus) IT business. But there’s much more, both old (other than vegetable oil and consumer care, there’s also hydraulics) and new (clean energy and waste). The result? An eclectic and seemingly esoteric mix of businesses that aren’t even remotely connected to each other—but which account for a billion dollars or roughly 25 per cent of Wipro’s total revenues. For Wipro Chairman Azim Premji, amidst this apparent madness lies a clear-cut method—and huge prospects. “We do this (diversify) strategically, looking into the mid and long term, and making definitive bets on what Wipro should be doing, and which opportunities should we be creating and pursuing,” says Premji, the architect of the soaps-to-software conglomerate.
Long-time Wipro watchers say that Premji prefers to make opportunistic moves into segments with massive—and latent—potential, adding its own twist to the conglomerate approach of large Indian business houses. “When Wipro started the IT business, it was one of the (hidden) gems,” points out Bala Balachandran, the J.L. Kellogg Distinguished Professor Emeritus of Accounting and Information Management at Northwestern University, and Founder and Dean, Great Lakes Institute of Management, Chennai. “(Premji) found IT to be a strategically a superior opportunity. As a company Wipro is a nexus of opportunities rather than simply a diversified conglomerate.”
Just one manifestation of that “nexus of opportunities” is visible in consumer care and lighting, where the company is looking beyond its core business of soaps and bulbs into emerging categories of health foods. These include a honey range and sugar substitutes, which Wipro is rolling out nationally. And last fortnight, Wipro closed a deal to buy the Asia-Pacific and North Africa business of Yardley, a personal care products brand, which is part of the $650 million Lornamead Group. The Rs 215-crore deal for the more than two-century-old Yardley will help WCCL string together a complete range of personal care products.
A World Leader
For a business that generates $300 million in revenue for Wipro, its JV with GE for the healthcare business, Wipro-GE Healthcare, gets scant attention. The venture, where Wipro holds a 49 per cent stake, was recently reshaped when three related businesses, GE Medical Systems India, GE Healthcare Life Sciences and GE Healthcare Medical Diagnostics, were absorbed into it. The 19-year-old entity is growing at 25 per cent annually— double the rate of the $3 billion (Rs 14,400-crore) industry—and is expected to also double its revenues in three to five years.
Picture of the Future
The 300-strong team includes some 90 energy specialists, who provide solutions on the use of clean energy to companies. The company claims to be have implemented 30-odd contracts for companies such as Dabur, UB and Asian Paints to improve their energy efficiency and increase the use of renewable energy sources. For the second quarter of this fiscal, Wipro Eco-Energy reported deal wins amounting to over Rs 75 crore, including contracts to set up a ‘green’ data centre and factory.
On the water front, Wipro made its first clear move when it acquired Aquatech Industries back in December 2007 to increase its presence in the commercial water purification market. Wipro’s using its own water recycling initiatives—it reuses 65 per cent of water at its Electronics City campus near Bangalore—to promote this nascent business. For the moment, at least, the water business will be focussed on India, before possibly expanding into Asia and beyond. “In India, just 0.2 per cent of water is recycled, compared to 10 per cent in Australia,” says Behar.
Wipro by the Numbers
This patience may be severely tested by the current slowdown, which has especially hit the fortunes of Wipro’s infrastructure engineering activities. According to some industry estimates, the revenues for the business have come down from $250 million in 2007-08 to $200 million in the last fiscal, as orders have dried up from struggling mining, real estate and infrastructure companies, which form a large chunk of its customer base. “There is little sign of a recovery in Europe, but we have been untouched in India,” says a defiant Behar. He’s betting on a strong recovery, first in India and the emerging markets, followed by the developed countries, to reignite growth. As a regular and fanatical runner, Behar seems to be preparing more for a marathon rather than a 100 metre-dash.