Wipro Net Income Rises 3.7% Helped by Rupee’s Drop

April 22 (Bloomberg) -- Wipro Ltd., India’s third-largest software provider, reported fourth-quarter profit rose 3.7 percent as a weaker rupee boosted the value of overseas earnings.

Net income climbed to 9.07 billion rupees ($180 million), or 6.23 rupees a share in the three months ended March 31, from 8.75 billion rupees, or 6.03 rupees, a year earlier, the Bangalore-based company said in a statement today.

The rupee’s 21 percent decline against the dollar in the past year has helped Wipro hold down prices, enabling U.S. customers to save costs as they contend with the worst recession in six decades. Chairman Azim Premji has deferred pay increases for the company’s almost 100,000 employees to minimize expenses.

“In a difficult environment, companies that provide savings in the total cost of a project, they tend to do well,” Srividhya Rajesh, who supervises the equivalent of $520 million in equities including technology shares at Sundaram BNP Paribas Asset Management Co., said by telephone from Chennai before the announcement.

Profit was projected at 8.9 billion rupees, according to the median of 21 analysts’ estimates compiled by Bloomberg.

Wipro gained 2.4 percent to 281.05 rupees in Mumbai trading, the second best performer today on the benchmark Sensitive Index. The stock has climbed 20 percent this year, outperforming the key index’s 12 percent gain.

Sales Forecast

The software exporter forecast sales at its information- technology services business will decline to between $1.01 billion and $1.03 billion this quarter, from $1.07 billion in the year-earlier period.

Wipro and its Indian peers will continue to face “headwinds,” Julio Quinteros, Goldman Sachs Group Inc.’s San Francisco, California-based analyst, wrote in a note to clients. “We believe that continued delays in decision making, elongated sales cycles” and slower increases in existing contracts will continue to damp revenue growth for software providers, he wrote.

Second-ranked Infosys Technologies Ltd. last week forecast its first-ever annual decline in dollar sales as clients cut spending. Industry leader Tata Consultancy Services Ltd. is factoring in a pricing decline of “lower single digits,” Chief Operating Officer N. Chandrasekaran said on April 20, after the company reported a 5.9 percent drop in quarterly dollar revenue.

Wipro, which also makes hydraulic equipment, light bulbs and soaps, earned 75 percent of its annual revenue and 94 percent of operating profit from its information technology services business. The unit manages computer networks, operates call centers and provides back-office support for clients including Cisco Systems Inc. and Boeing Co.

Overseas Orders

Sales gained 17 percent to 65.5 billion rupees helped by orders from Australia and the U.S. Revenue was projected at 65.3 billion rupees, the median of analysts’ estimates.

Wipro won a multimillion dollar, multi-year contract from Englewood, Colorado-based CSG Systems International Inc., the company reported on its Web site on March 11.

Origin Energy Ltd., Australia’s second-biggest energy retailer, in February said it will move back-office billing functions to Wipro, outsourcing 400 jobs, including 270 employees that it will transfer to Wipro.

Sales at the technology services unit was also boosted last quarter by a $22 million contribution from Citi Technology Services Ltd. that Wipro bought from Citigroup Inc. for $127 million in January.

Pay Freeze

The computer-services provider won’t increase salaries in the current fiscal year, Pratik Kumar, head of human resources, told reporters in Bangalore today.

Wipro added a net 845 employees during the quarter, including 1,650 people from the Citi Technology unit, taking its total workforce to 97,810 at the end of March.

The Indian provider may face stiffer competition after smaller rival Tech Mahindra Ltd. last week won the bidding for control of Satyam Computer Services Ltd. following a $1 billion accounting scandal.

Satyam, at the center of India’s biggest corporate fraud inquiry after founder Ramalinga Raju said he inflated assets, sold itself to Tech Mahindra to prevent an exodus of clients and to restore investor and employee confidence.

India Lures LNG Cargoes as Asia, Europe Cut Imports

April 22 (Bloomberg) -- India may rank among the largest markets for spot cargoes of liquefied natural gas this year as Japan, South Korea and Spain slash purchases.

India faces a shortage of 80 million cubic meters of gas a day, or more than half of domestic demand, even as economic growth slows, said Upendra Datta Choubey, chairman of gas distribution monopoly GAIL India Ltd.

The emergence of India in the spot LNG market may prop up prices that fell 70 percent from last year’s peak, while diverting tankers from the U.S. and Europe. India is importing at least nine so-called spot cargoes outside of long-term contracts in March and April, compared with two from November to February, AIS Live ship-tracking data compiled by Bloomberg show.

“This recession has no effect on demand of natural gas in India,” Choubey said by telephone from New Delhi. “Currently, we’re meeting hardly 60 percent of gas demand in India.”

New Delhi-based Petronet LNG Ltd., Royal Dutch Shell Plc, Total SA and GAIL-led Ratnagiri Gas are doubling the country’s import capacity this year at three facilities on India’s west coast, anticipating higher demand for LNG as prices fall.

“India may be the only serious buyer for spot LNG in Asia,” said Tony Regan, a Singapore-based independent consultant who worked for Shell and was involved in spot LNG trades. “Cargoes are turning back from Northeast Asia.”

LNG Trade

Spot imports by India and China in April may have been twice as much as the combined spot purchases of Japan and South Korea, the world’s biggest LNG importers, according to ship- tracking data. India and China probably bought eight regular cargoes and a small shipment in April on spot terms compared with about five for Japan, Taiwan and South Korea.

Global LNG trading probably declined in 2008 for the first time in three decades, slipping 0.3 percent to about 172 million metric tons, based on preliminary numbers from Alexis Aik, a consultant with Facts Global Energy.

Asia’s demand for LNG, or gas chilled to a liquid for transportation by tanker, may drop by as much as 10 percent this year, Poten & Partners said in March.

Spot LNG sells for $4.60 per million British thermal units, a 47 percent discount to crude oil, JPMorgan Chase & Co. said in a note on April 3. LNG sold for a premium to oil in 2008.

Falling Prices

Utilities in Asia paid more than $20 per million Btu last year for spot cargoes, according to official data from Japan, South Korea and Taiwan.

“We should expect a fall in LNG prices to around $6 or so,” GAIL India’s Choubey said. The level is about 70 percent below the record reached last year.

Asian LNG buyers typically pay a few dollars more than gas costs at the U.K.’s benchmark National Balancing Point to attract spot cargoes from Europe and the Americas, according to Andy Flower, an independent consultant and a former BP Plc employee. U.K. natural gas for immediate delivery rose to $3.79 per million Btu as of 8:31 a.m. London time.

China, the world’s second-largest energy user, has increased imports of the cleaner-burning fuel to reduce coal consumption and pollution.

China bought three spot cargoes in April after a seven- month halt. Japan, the world’s biggest LNG buyer, reduced spot imports 50 percent in February after the recession lowered electricity demand from manufacturers.

Domestic Gas

Reliance Industries Ltd. started pumping gas from the Krishna Godavari area off India’s east coast on April 2 and plans to increase production to 80 million cubic meters a day, almost double current output, Indian Oil Secretary R.S. Pandey said.

Reliance’s gas may cost $6.50 per million Btu, cheaper than the $7 per million Btu charged for LNG from Petronet and Shell, said an official from one of India’s biggest fertilizer makers, declining to be identified because prices are confidential. Naphtha, a competing oil-based energy source, costs about $10.50 in Gujarat, India’s most industrialized state, he said.

“Next year will be worse for spot LNG because Reliance’s output is expected to rise from 15 million cubic meters a day to 80 million,” said Ballabh Modani, a Mumbai-based analyst at Enam Securities Ltd. “So most of India’s demand will be covered.”

India’s gap between gas demand and production is equal to about half of consumption in South Korea, the world’s second- largest LNG buyer. The nation’s gas production increased 1.2 percent to a provisional 30 billion cubic meters in the 11 months ended February, according to the Oil Ministry.

Asian Demand

South Korea’s LNG purchases fell 14 percent in March, according to the Korea International Trade Association.

Japan’s LNG imports dropped 8.4 percent in March, according to data from the Ministry of Finance. Spot LNG supplies fell more than 50 percent in February, the most recent data available. Tokyo Electric Power Co., the world’s biggest LNG buyer, said in March it may cut imports this year by about 9 percent.

Shipments to Spain, the dominant LNG importer in Europe, may decline because of a deteriorating economy and plans to start up a second gas pipeline from Algeria, PanEurasian Enterprises Inc., a Raleigh, North Carolina-based consultant, said in a report.