WIPRO LIMITED DIRECTORS REPORT The Directors present the Annual Report of Wipro Limited for the year ended March 31, 2001 FINANCIAL RESULTS (Rs. in Mns) 2001 2000 Sales and other income(net of excise duty) 30,922 22,921 Profit before tax 7,655 3,507 Provision for tax 992 501 Profit after tax before extraordinary items 6,663 3,006 Extraordinary gains (Loss) 16 (523) Profit for the year 6,679 2,483 Appropriations : Interim dividend on preference shares 18 26 Interim dividend on equity shares - 69 Proposed dividend on equity shares 116 - Corporate tax on distributed dividend 14 10 Transfer to Capital Redemption Reserve 250 - Transfer to General Reserve 6,281 2,378 Sales of the Company in the year ended March 31, 2001 were Rs.30,922 mns up by 35% and Profit after Tax before extraordinary items was Rs.6,663 mns up by 122% over the previous year. Over the last 10 years the sales have grown at an average annual rate of 23% and Profit after Tax at 50%. The Companys export at Rs.18,134 mns has registered a growth of 73% compared to the previous year. Dividend The Directors recommend a dividend of Re. 0.50 per equity share to be appropriated from the profits of the year 2000-01 subject to the approval by the members at the Annual General Meeting. Directors Mr. Arun K Thiagarajan, resigned as a Director of the Company with effect from November 30, 2000. The Directors place on record their appreciation of the valuable advice and guidance given by him while he was a Director of the Company. Dr Ashok Ganguly, Dr Jagdish N Sheth and Mr P S Pai, retire by rotation and being eligible offer themselves for re- appointment. Fixed Deposits Fixed deposits from the public as at March 31, 2001 were Rs.0.89 mns and the unclaimed deposits as at that date were Rs 0.89 millions. Subsidiary Companies As required under Section 212 of the Companies Act, 1956, the Annual Reports for the year 2000-01 and Accounts for the year ended March 31, 2001, of the subsidiary companies Wipro Welfare Limited, Wipro Net Limited, Wipro Trademarks Holding Limited, Wipro Prosper Limited, Wipro Inc., Enthink Inc., and Wipro Japan KK are attached. Auditors The auditors M/s N M Raiji & Co., retire at the conclusion of the ensuing Annual General Meeting and offer themselves for re-appointment. Personnel Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975 is given in the Annexure forming part of this report. Issue of American Depository Receipts and listing on New York Stock Exchange (NYSE) Your Company had issued 3,162,500 American Depository Receipts representing 3,162,500 American Depository Shares each representing one equity share of Rs.2/- each which were issued and allotted at an offer price of USD 41.375 and the same were listed on the New York Stock Exchange (NYSE) on October 19, 2000. The ticker symbol of Wipro in NYSE is WIT. The underlying equity shares were listed on all the stock exchanges in India where the other equity shares of the Company are listed. 28 WIPRO LIMITED Wipro Employee Stock Option Plan (WESOP) The Wipro Employee Stock Option Plan 1999 and 2000 were successful in enhancing employee commitment. The details of options granted under WESOP 1999 and 2000 are given below. Sl. No Description WESOP 1999 WESOP 2000 a. Options granted 5,230,150 3,520,300 b. The pricing formula Fair Market Value i.e., the market Fair Market Value i.e., the price as defined by Securities and market price as defined by Exchange Board of India from Securities and Exchange Board time to time. of India from time to time. c. Options vested 86,491 NIL d. Options exercised 114,169 NIL e. Total number of shares 114,169 NIL arising as a result of exercise of option f. Options lapsed * NIL NIL g. Variation of terms of options NIL NIL h. Money realised by exercise Rs.123,987,534 NIL of options i. Total number of options in force 4,564,431 3,214,350 Employee wise details of options granted to: (i) Senior Management No.of Options Vivek Paul 55,000 - P S Pai 25,000 - Dileep K Ranjekar 16,000 - Suresh C Senapaty 16,000 - Suresh Vaswani 13,500 - M S Rao 4,000 - Vineet Agrawal 9,000 - (ii) Employees holding 5% or more NIL NIL of the total number of options granted during the year (iii) Identified employees who were NIL NIL granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant * As per the Plan, options lapses only on termination of the Plan. If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased shares, which were subject thereto, shall become available for future grant or sale under the Plan. 29 WIPRO LIMITED ADS 2000 Stock Option Plan Under the ADS 2000 Stock Option Plan, 268,250 stock options representing 268,250 American Depository Shares each representing one equity share of Rs.2/- each were granted to the employees. The details of options granted under the ADS Stock Option Plan 2000 to Senior Management are given below: Options granted to Senior Management Name Options Vivek Paul 60,000 Suresh C Senapaty 3,000 Research and Development Our R&D efforts continued in the area of IEEE 1394, Bluetooth, SoC and Voice Infrastructure. We have developed resuable components which enables us to deliver a variety of high end design services. To mention a few are the 1394 links, Bluetooth Broadband controllers, Ethernet Media Access Controller, 4 Port packet cables, etc., Significant investment of resources has been made in developing an OSGi. Infrastructure for this is being accepted as the framework for delivery of services to residential users. The total expenditure on R&D during the year was Rs . 93.87 millions including capital expenditure of Rs.10.88 millions. Foreign Exchange Earnings and Outgoings The foreign exchange earnings of the Company during the year were Rs. 18,134 mns while the outgoings were Rs. 8,330 millions (including materials imported) Report on Corporate Governance A detailed report on Corporate Governance has been included separately in the Annual Report. Directors Responsibility Statement As required under Section 217 (2AA) of the Companies Act, 1956 it is hereby stated that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and d) the Directors had prepared the annual accounts on a going concern basis. Acknowledgements The Directors thank the Companys customers, suppliers, bankers, financial institutions, Central and State Governments and shareholders for their consistent support to the Company. The Directors also sincerely acknowledge the significant contributions made by all the employees for their dedicated services to the Company. On behalf of the Board Azim H Premji Bangalore, April 20,2001 Chairman 30 WIPRO LIMITED REPORT ON CORPORATE GOVERNANCE I BOARD OF DIRECTORS A. The Board of Directors of the Company shall have an optimum combination of executive and non-executive directors with not less than fifty per cent of the Board of Directors comprising of non executive directors. In case the company has an executive chairman, at least half of the Board should comprise of independent directors. The details of the Directors on the Board of your Company for the year 2000-2001 are given below: Name Category Month & Designation No. of No. of Number of Year of meetings held meetings memberships Appointment during the last attended in Boards of financial year other companies Azim H Premji Promoter September Chairman & 5 5 11 Director 1968 Managing Director P S Pai Executive December Vice Chairman 5 5 Nil Director 1998 Vivek Paul ** Executive July 1999 Vice Chairman 5 5 Nil Director Arun K Executive February 1999 Vice Chairman 5 4 1 Thiagarajan* Director Hamir K Non-Executive September 1956 Director 5 5 2 Vissanji Director N Vaghul ** Non-Executive July 1997 Director 5 4 10 Director B C Prabhakar Non-Executive February 1997 Director 5 5 Nil Director Jagdish N Sheth Non-Executive January 1999 Director 5 2 2 Director Nachiket Mor Nominee November 1996 Director 5 5 3 Director Ashok Ganguly Non-Executive January 1999 Director 5 5 8 Director * Resigned from the Board effective November 2000. Information provided till resignation period. ** Participated in one of the Board meetings through conference calls. 31 WIPRO LIMITED B. All pecuniary relationship or transactions of the non executive directors vis-a-vis, the company should be disclosed in the Annual report. The Company had entered into a contract with Technology Network (India) Private Limited in December 2000 to evolve and set up a process for managing Innovation in Wipro Technologies. Two of our non executive directors viz., Mr N Vaghul and Dr Ashok Ganguly are also directors on the Board of Technology Network (India) Private Limited.