UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

Commission File Number 001-16139

WIPRO LIMITED

(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s name into English)

Karnataka, India
(Jurisdiction of incorporation or organization)

Indicate by check mark if registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F þ           Form 40-F o

     Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g- 3-2(b) under the Securities Exchange Act of 1934.

Yes o           No þ

     If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 12g 3-2(b)

     Not applicable.

 

 

Currency of Presentation and Certain Defined Terms

In this Quarterly Report references to “U.S.” or “United States” are to the United States of America, its territories and its possessions. References to “India” are to the Republic of India. References to U.K. are to the United Kingdom. Reference to “$” or “US$” or “dollars” or “U.S. dollars” are to the legal currency of the United States, references to “£” or “Pound Sterling” are to the legal currency of the United Kingdom, references to “€”or “Euro” are to the legal currency of the European Union, and references to “Rs.” or “Rupees” or “Indian rupees” are to the legal currency of India. All amounts are in Rs. or in U.S. dollars unless stated otherwise. Our financial statements are presented in Indian rupees and translated into U.S. dollars and are prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). References to “Indian GAAP” are to Indian Generally Accepted Accounting Principles. References to a particular “fiscal” year are to our fiscal year ended March 31 of such year.

All references to “we”, “us”, “our”, “Wipro” or “the Company” shall mean Wipro Limited and, unless specifically indicated otherwise or the context indicates otherwise, our consolidated subsidiaries. “Wipro” is our registered trademark in the United States and India. All other trademarks or trade names used in this Quarterly Report on Form 6K are the property of the respective owners.

Except as otherwise stated in this Quarterly Report, all translations from Indian rupees to U.S. dollars are based on the noon buying rate in the City of New York on June 29, 2007, for cable transfers in Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York which was Rs. 40.58 per $1.00. No representation is made that the Indian rupees amounts have been, could have been or could be converted into United States dollars at such a rate or any other rate. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Information contained in our website, www.wipro.com, is not part of this Quarterly Report.

Forward-Looking Statements May Prove Inaccurate

     IN ADDITION TO HISTORICAL INFORMATION, THIS QUARTERLY REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE SECTIONS ENTITLED “RISK FACTORS” AND “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS” AND ELSEWHERE IN THIS REPORT AS WELL AS THE SECTIONS ENTITLED “RISK FACTORS” IN OUR ANNUAL REPORT ON FORM 20-F FOR THE FISCAL YEAR ENDED MARCH 31, 2007. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENT’S ANALYSIS ONLY AS OF THE DATE HEREOF. IN ADDITION, READERS SHOULD CAREFULLY REVIEW THE OTHER INFORMATION IN THIS QUARTERLY REPORT AND IN THE COMPANY’S PERIODIC REPORTS AND OTHER DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) FROM TIME TO TIME.

PART I – FINANCIAL INFORMATION

     Item 1. Financial Statements

WIPRO LIMITED AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)

		As of June 30,												As of March 31,
		2006				2007				2007				2007
										Convenience
										translation into
										US$
		(Unaudited)				(Unaudited)				(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (Note 4)		Rs.	4,347				18,020			$	444			Rs.	12,412
Restricted Cash (Note 16)			—				—				—				7,238
Investments in liquid and short-term mutual funds (Note 8)			35,966				25,630				632				32,410
Accounts receivable, net of allowances (Note 5)			21,602				27,911				688				28,083
Costs and earnings in excess of billings on contracts in progress			5,351				6,090				150				5,096
Inventories (Note 6)			2,307				4,426				109				4,150
Deferred income taxes			197				428				11				382
Other current assets (Note 7)			9,838				11,991				295				11,479
Total current assets			79,608				94,496				2,329				101,251
Property, plant and equipment, net (Note 9)			19,365				28,083				692				26,541
Investments in affiliates (Note 13)			1,108				1,295				32				1,242
Investment securities			13				357				9				357
Deferred income taxes			113				63				2				49
Purchase price pending allocation			1,150				—				—				—
Intangible assets, net (Note 10)			2,248				2,495				61				2,671
Goodwill (Note 3,10)			10,294				12,348				304				12,698
Other assets (Note 7)			1,343				3,050				75				1,959
Total assets		Rs.	115,242				142,187			$	3,504			Rs.	146,767
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Borrowings from banks (Note 15)		Rs.	726				730			$	18			Rs.	2,893
Current portion of long-term debt			—				436				11				328
Accounts payable			6,958				9,363				231				10,202
Accrued expenses			5,209				4,735				117				5,139
Accrued employee costs			4,548				5,368				132				5,187
Advances from customers			1,111				1,431				35				1,315
Billings in excess of costs and earnings on contracts in progress			538				1,209				30				1,818
Other current liabilities (Note 11)			8,786				7,438				183				16,623
Total current liabilities			27,876				30,710				757				43,505
Long-term debt, excluding current portion			—				286				7				560
Deferred income taxes			226				593				15				464
Other liabilities			480				1,991				49				770
Total liabilities			28,582				33,580				828				45,299
Minority interest			—				54				1				—
Stockholders’ equity:
Equity shares at Rs. 2 par value: 1,650,000,000 shares authorized; Issued and outstanding: 1,458,999,650, 1,431,992,871 and 1,459,113,115 shares as of March 31, 2007, June 30, 2006 and 2007 (Note 16)			2,864				2,918				72				2,918
Additional paid-in capital (Note 21)			16,374				24,860				613				24,508
Accumulated other comprehensive income (Note 14)			119				(277	)			(7	)			94
Retained earnings (Note 17)			67,303				81,052				1,997				73,948
Equity shares held by a controlled Trust: 7,961,760, 7,869,060 and 7,961,760 shares as of March 31, 2007, June 30, 2006 and 2007 (Note 21)			(0	)			(0	)			(0	)			(0	)
Total stockholders’ equity			86,660				108,553				2,675				101,468
Total liabilities and stockholders’ equity		Rs.	115,242				142,187			$	3,504			Rs.	146,767

See accompanying notes to the unaudited consolidated financial statements.

WIPRO LIMITED AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except share data)

		Three months ended June 30,
		2006				2007				2007
										Convenience
										translation into
										US$
		(Unaudited)				(Unaudited)				(Unaudited)
Revenues:
Global IT Services and Products
IT Services		Rs.	22,414			Rs.	27,460			$	677
BPO Services			2,099				2,570				63
India and AsiaPac IT Services and Products
Services			1,608				2,486				61
Products			2,748				4,088				101
Consumer Care and Lighting			1,650				2,221				55
Others			793				3,007				74
Total			31,312				41,832				1,031
Cost of revenues:
Global IT Services and Products
IT Services			14,617				18,288				451
BPO Services			1,493				1,652				41
India and AsiaPac IT Services and Product
Services			891				1,515				37
Products			2,488				3,565				88
Consumer Care and Lighting			1,056				1,472				36
Others			635				2,604				64
Total			21,182				29,096				717
Gross profit			10,131				12,737				314
Operating expenses:
Selling and marketing expenses			(2,036	)			(2,761	)			(68	)
General and administrative expenses			(1,478	)			(2,060	)			(51	)
Research and development expenses			(57	)			(173	)			(4	)
Amortization of intangible assets (Note 10)			(54	)			(105	)			(3	)
Foreign exchange losses, net			(19	)			(852	)			(21	)
Others, net			23				80				2
Operating income			6,509				6,865				169
Other income, net (Note 18)			508				991				24
Equity in earnings of affiliates (Note 13)			65				87				2
Income before income taxes, minority interest and cumulative effect of change in accounting principle			7,082				7,943				196
Income taxes (Note 20)			(979	)			(839	)			(21	)
Minority interest			—				—				—
Income before cumulative effect of change in accounting principle			6,103				7,105				175
Cumulative effect of change in accounting principle (Note 2)			39				—				—
Net income		Rs.	6,142			Rs.	7,105			$	175
Earnings per equity share: (Note 22)
Basic
Income before cumulative effect of change in accounting principle			4.30				4.90				0.12
Cumulative effect of change in accounting principle			0.03				—				—
Net income			4.33				4.90				0.12
Diluted
Income before cumulative effect of change in accounting principle			4.25				4.87				0.12
Cumulative effect of change in accounting principle			0.03				—				—
Net income			4.28				4.87				0.12
Weighted average number of equity shares used in computing earnings per equity share:
Basic			1,419,404,399				1,449,892,856
Diluted			1,436,644,785				1,457,885,337

See accompanying notes to the unaudited consolidated financial statements.

WIPRO LIMITED AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
(in millions, except share data)

																						Accumulated
										Additional												Other								Equity Shares held by a								Total
		Equity Shares								Paid in				Deferred stock				Comprehensive				Comprehensive				Retained				Controlled Trust								Stockholders’
		No. of Shares				Amount				Capital				Compensation				Income				Income/(loss)				Earnings				No. of Shares				Amount				Equity
Balance as of March 31, 2006			1,425,754,267			Rs.	2,852			Rs.	16,521			Rs.	(2,202	)						Rs.	434			Rs.	61,161				(7,869,060	)		Rs.	(0	)		Rs.	78,764
Elimination of deferred stock compensation balance on adoption of SFAS No. 123 (R) (unaudited)			—				—				(2,202	)			2,202				—				—				—				—				—				—
Cumulative effect of change in accounting policy (unaudited)			—				—				(39	)			—				—				—				—				—				—				(39	)
Issuance of equity shares on exercise of options (unaudited)			6,238,604				12				1,897				—								—				—				—				—				1,909
Compensation cost related to employee stock incentive plan (unaudited) (Note 2)			—				—				199				—								—				—				—				—				199
Comprehensive income
Net income (unaudited)			—				—				—				—			Rs.	6,142				—				6,142				—				—				6,142
Other comprehensive income / (loss)
Translation adjustments (unaudited)			—				—				—				—				60				—				—				—				—				—
Unrealized gain/(loss) on investment securities, net (net of tax effect of Rs. 21.50) (unaudited)			—				—				—				—				40				—				—				—				—				—
Unrealized gain/(loss) on cash flow hedging derivatives, net (unaudited)			—				—				—				—				(415	)			—				—				—				—				—
Total other comprehensive income / (loss) (unaudited)			—				—				—				—				(315	)			(315	)			—				—				—				(315	)
Comprehensive income (unaudited)																		Rs.	5,827
Balance as of June 30, 2006 (unaudited)			1,431,992,871			Rs.	2,864			Rs.	16,374			Rs.	—							Rs.	119			Rs.	67,303				(7,869,060	)		Rs.	(0	)		Rs.	86,660

																		Accumulated
										Additional								Other								Equity Shares held by a								Total
		Equity Shares								Paid in				Comprehensive				Comprehensive				Retained				Controlled Trust								Stockholders’
		No. of Shares				Amount				Capital				Income				Income/(loss)				Earnings				No. of Shares				Amount				Equity
Balance as of March 31, 2007			1,458,999,650			Rs.	2,918			Rs.	24,508							Rs.	94			Rs.	73,948				(7,961,760	)		Rs.	(0	)		Rs.	101,468
Issuance of equity shares on exercise of options (unaudited)			113,465				0				39								—				—				—				—				39
Compensation cost related to employee stock incentive plan (unaudited) (Note 2)			—				—				312								—				—				—				—				312
Comprehensive income
Net income (unaudited)			—				—				—			Rs.	7,105				—				7,105				—				—				7,105
Other comprehensive income / (loss)
Translation adjustments (unaudited)			—				—				—				(585	)			—				—				—				—				—
Unrecognized actuarial loss (net of tax effect of Rs. (0.06)) (unaudited)			—				—				—				4				—				—				—				—				—
Unrealized gain/(loss) on investment securities, net (net of tax effect of Rs. 34) (unaudited)			—				—				—				(67	)			—				—				—				—				—
Unrealized gain/(loss) on cash flow hedging derivatives, net (unaudited)			—				—				—				278				—				—				—				—				—
Total other comprehensive income / (loss) (unaudited)			—				—				—				(370	)			(370	)			—				—				—				(370	)
Comprehensive income (unaudited)														Rs.	6,734
Balance as of June 30, 2007 (unaudited)			1,459,113,115			Rs.	2,918			Rs.	24,860							Rs.	(277	)		Rs.	81,052				(7,961,760	)		Rs.	(0	)		Rs.	108,553
Balance as of June 30, 2007 (unaudited)($)						$	72			$	613							$	(7	)		$	1,997							$	0			$	2,675

See accompanying notes to the unaudited consolidated financial statements.

WIPRO LIMITED AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

		Three Months ended June 30,
		2006				2007				2007
										Convenience
										translation into
										US$
		(Unaudited)				(Unaudited)				(Unaudited)
Cash flows from operating activities:
Net income		Rs.	6,142			Rs.	7,105			$	175
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of property, plant and equipment			(1	)			(159	)			(4	)
Gain on sale of liquid and short-term mutual funds			(122	)			(351	)			(9	)
Cumulative effect of change in accounting principle			(39	)			—				—
Depreciation and amortization			963				1,290				32
Deferred tax charge/(benefit)			(6	)			102				2
Unrealized exchange (gain)/loss			398				(380	)			(9	)
Stock compensation cost			199				312				8
Equity in earnings of affiliates			(65	)			(87	)			(2	)
Changes in operating assets and liabilities:
Accounts receivable			(347	)			230				6
Costs and earnings in excess of billings on contracts in progress			(942	)			(993	)			(24	)
Inventories			(183	)			(275	)			(7	)
Other assets			(319	)			(1,346	)			(33	)
Accounts payable			(508	)			(625	)			(15	)
Accrued expenses and employee costs			793				(223	)			(5	)
Advances from customers			32				(493	)			(12	)
Other liabilities			319				(389	)			(9	)
Net cash provided by operating activities			6,314				3,718				92
Cash flows from investing activities:
Expenditure on property, plant and equipment			(2,256	)			(2,979	)			(73	)
Proceeds from sale of property, plant and equipment			29				232				6
Purchase of investments			(27,842	)			(32,373	)			(798	)
Proceeds from sale of investments			22,375				39,438				972
Investments in inter-corporate deposits			—				150				4
Advances towards business combinations			(54	)			—				—
Payment for acquisitions, net of cash acquired			(4,689	)			(65	)			(2	)
Net cash provided by/ (used in) investing activities			(12,438	)			4,402				108
Cash flows from financing activities:
Proceeds from issuance of equity shares			1,866				49				1
Proceeds from issuance of equity shares by a subsidiary			—				54				1
Proceeds from/(repayments of) short-term borrowing from banks, net			(23	)			(1,756	)			(43	)
Repayment of long-term debt			(236	)			(574	)			(14	)
Payment of cash dividends			—				(271	)			(7	)
Net cash provided by/(used in) financing activities			1,607				(2,497	)			(62	)
Net increase/(decrease) in cash and cash equivalents during the period			(4,516	)			5,623				139
Effect of exchange rate changes on cash			5				(15	)			(0	)
Cash and cash equivalents at the beginning of the period			8,858				12,412				306
Cash and cash equivalents at the end of the period		Rs.	4,347			Rs.	18,020			$	444
Supplementary information:
Cash paid for interest		Rs.	2			Rs.	131			$	3
Cash paid for taxes			604				1,264				31

See accompanying notes to the unaudited consolidated financial statements.

WIPRO LIMITED AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share data and where otherwise stated)

1. Overview

     Wipro Limited (Wipro), together with its subsidiaries (collectively, the Company) is a leading India based provider of IT Services and Products, including Business Process Outsourcing (BPO) services, globally. Further, Wipro has other businesses such as India and AsiaPac IT Services and Products and Consumer Care and Lighting. Wipro is headquartered in Bangalore, India.

2. Significant Accounting Policies

     The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

     Basis of preparation of financial statements. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S.GAAP.

     Interim information presented in the consolidated financial statements has been prepared by the management without audit and, in the opinion of management, includes all adjustments of a normal recurring nature that are necessary for the fair presentation of the financial position, results of operations and cash flows for the periods shown, and is in accordance with U.S. GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s annual report on Form 20-F for the fiscal year ended March 31, 2007.

     Functional currency and exchange rate translation. The functional currency of Wipro and its domestic subsidiaries is the Indian rupees, the national currency of India. The functional currency of Wipro’s foreign subsidiaries is determined based on an evaluation of the individual and collective economic factors as discussed in Statement of Financial Accounting Standard (SFAS) No. 52, Foreign Currency Translation. The translation of the functional currency of these foreign subsidiaries into Indian rupees is performed for balance sheet accounts using the exchange rate in effect at the balance sheet date and for revenue and expense accounts using an appropriate monthly weighted-average exchange rate for the respective periods. The gains or losses resulting from such translation are reported as a separate component of stockholders’ equity.

     Foreign currency transactions are translated into the functional currency at the rates of exchange prevailing on the date of respective transactions. Monetary assets and liabilities in foreign currency are translated into functional currency at the exchange rates prevailing on the balance sheet date. The resulting exchange gains/losses are included in the statement of income.

     Convenience translation. The accompanying consolidated financial statements have been reported in Indian rupees. Solely for the convenience of the readers, the financial statements as of and for the three months ended June 30, 2007, have been translated into U.S. dollars at the noon buying rate in New York City on June 29, 2007, for cable transfers in Indian rupees, as certified for customs purposes by the Federal Reserve Bank of New York of $1 = Rs. 40.58. No representation is made that the Indian rupees amounts have been, could have been or could be converted into United States dollars at such a rate or any other rate.

     Principles of consolidation. The consolidated financial statements include the financial statements of Wipro and all of its subsidiaries, which are more than 50% owned and controlled. All inter-company accounts and transactions are eliminated on consolidation. The Company accounts for investments by the equity method where its investment in the voting stock gives it the ability to exercise significant influence over the investee. The Company does not consolidate entities where the minority shareholders have certain significant participative rights, which provide for effective involvement in significant decisions in the ordinary course of business. Such investments are accounted for by the equity method of accounting.

     Cash equivalents. The Company considers investments in highly liquid instruments with remaining maturities, at the date of purchase/investment, of three months or less to be cash equivalents.

     Revenue recognition. Revenue from services, as rendered, are recognized when persuasive evidence of an arrangement exists, the sales price is fixed or determinable and collectibility is reasonably assured. Revenues from software development services comprise revenues from time-and-material and fixed-price contracts. Revenue on time-and-material contracts is recognized as the related services are performed. Revenue from fixed-price, fixed-time frame contracts is recognized in accordance with the percentage of completion method. Guidance has been drawn from the Accounting Standards Executive Committee’s conclusion in paragraph 95 of Statement of Position (SOP) 97-2, Software Revenue Recognition, to account for revenue from fixed price arrangements for software development and related services in conformity with SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts. The input (cost expended) method has been used to measure progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses on contracts-in-progress are recorded in the period in which such losses become probable based on the current contract estimates. Maintenance revenue is deferred and recognized ratably over the term of the agreement. Revenue from customer training, support and other services is recognized as the related service is performed. Costs that are incurred for a specific anticipated contract and that will result in no future benefits unless the contract is obtained are not included in contract costs before the receipt of the contract. However, such costs are deferred only if the cost can be directly associated with a specific anticipated contract and the recoverability from that contract is deemed to be probable.

     Revenue from sale of products is recognized when persuasive evidence of an arrangement exists, the product has been delivered in accordance with sales contract, the sales price is fixed or determinable and collectibility is reasonably assured.

     The Company has adopted the guidance in EITF Issue No. 00-21 for all revenue arrangements with multiple deliverables.

     Based on this guidance, the Company recognizes revenues on the delivered products or services only if:

•

The revenue recognition criteria applicable to the unit of accounting is met;

•

The delivered element has value to the customer on a standalone basis. The delivered unit will have value on a standalone basis if it is being sold separately by other vendors or the customer could resell the deliverable on a standalone basis;

•

There is objective and reliable evidence of the fair value of the undelivered item(s); and

•

If the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in control of the Company.

     The arrangement consideration is allocated to the units of accounting based on their fair values. The revenue recognized for the delivered items is limited to the amount that is not contingent upon the delivery or performance of the undelivered items.

     In certain cases, the application of the contingent revenue provisions of EITF Issue No. 00-21 could result in recognizing a loss on the delivered element. In such cases, the cost recognized is limited to the amount of non-contingent revenues recognized and the balance costs are recorded as an asset and are reviewed for impairment based on the estimated net cash flows to be received for future deliverables under the contract. These costs are subsequently recognized on recognition of the revenue allocable to the balance deliverables.

     Revenues from BPO Services are derived from both time-based and unit-priced contracts. Revenue is recognized as the related services are performed, in accordance with the specific terms of the contract with the customers.

     Revenues are shown net of excise duty, sales tax, value added tax, service tax and applicable discounts and allowances.

     When the Company receives advance payments from customers for sale of products or provision of services, such payments are reported as advances from customers until all conditions for revenue recognition are met.

     Volume discount. The Company accounts for volume discounts and pricing incentives to customers using the guidance in EITF Issue 01-09, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products). The discount terms in the Company’s arrangements with customers generally entitle the customer to discounts, if the customer completes a specified level of revenue transactions. In some arrangements, the level of discount varies with increases in the levels of revenue transactions. The Company recognizes discount obligations as a reduction of revenue based on the ratable allocation of the discount to each of the underlying revenue transactions that result in progress by the customer toward earning the discount. The Company recognizes the liability based on its estimate of the customer’s future purchases. If the Company cannot reasonably estimate the customer’s future purchases, then the liability is recorded based on the maximum potential level of discount. The Company recognizes changes in the estimated amount of obligations for discounts using a cumulative catch-up adjustment.

     Warranty costs. The Company accrues the estimated cost of warranties at the time when the revenue is recognized. The accruals are based on the Company’s historical experience of material usage and service delivery costs.

     Shipping and handling costs. Shipping and handling costs are included in selling and marketing expenses.

     Inventories. Inventories are stated at the lower of cost and market value. Cost is determined using the weighted-average method for all categories of inventories.

     Investment securities. The Company classifies its debt and equity securities in one of the three categories: trading, held-to-maturity or available-for-sale, at the time of purchase and re-evaluates such classifications as of each balance sheet date. Trading and available-for-sale securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Unrealized holding gains and losses on trading securities are included in income. Temporary unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from income and are reported as a part of other comprehensive income in stockholders’ equity until realized. Realized gains and losses from the sale of trading and available-for-sale securities are determined on a first in first out basis and are included in income. A decline in the fair value of any available-for-sale or held-to-maturity security below cost that is deemed to be other than temporary results in a reduction in carrying amount to fair value with a charge to the income statement. Fair value for mutual fund units is based on published per unit value, which is the basis for current transactions. Non-readily marketable equity securities for which there is no readily determinable fair value are recorded at cost, subject to an impairment charge to the income statement for any other than temporary decline in value.

     Investments in affiliates. The Company’s equity in the earnings/(losses) of affiliates is included in the statement of income and the Company’s share of net assets of affiliates is included in the balance sheet.

     Shares issued by subsidiary/affiliate. The issuance of stock by a subsidiary/affiliate to third parties reduces the proportionate ownership interest in the investee. Unless the issuance of such stock is part of a broader corporate reorganization or unless realization is not assured, the Company recognizes a gain or loss, equal to the difference between the issuance price per share and the Company’s carrying amount per share. Such gain or loss is recognized in the statement of income when the transaction occurs.

     Property, plant and equipment. Property, plant and equipment are stated at cost. The Company depreciates property, plant and equipment over the estimated useful life using the straight-line method. Assets under capital lease are amortized over their estimated useful life or the lease term, as appropriate. The estimated useful lives of assets are as follows:

Buildings		30 to 60 years
Plant and machinery		2 to 20 years
Computer equipment		2 to 3 years
Furniture, fixtures and equipment		5 years
Vehicles		4 years
Computer software		2 years

     Software for internal use is primarily acquired from third-party vendors and is in ready to use condition. Costs for acquiring this software are capitalized and subsequent costs are charged to the statement of income. The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software.

     Advances paid towards the acquisition of property, plant and equipment outstanding as of each balance sheet date and the cost of property, plant and equipment not ready for use before such date are disclosed under capital work-in-progress. The interest cost incurred for funding an asset during its construction period is capitalized based on the actual investment in the asset and the average cost of funds. The capitalized interest is included in the cost of the relevant asset and is depreciated over the estimated useful life of the asset.

     Business combinations, goodwill and intangible assets. In accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, the Company uses the purchase method of accounting for all business combinations consummated after June 30, 2001. Intangible assets acquired in a business combination are recognized and reported apart from goodwill if they meet the criteria specified in SFAS No. 141. Any purchase price allocated to an assembled workforce is not accounted separately.

     In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, all assets and liabilities of the acquired business including goodwill are assigned to the reporting units. The Company does not amortize goodwill but instead tests goodwill for impairment at least annually, using a two step impairment process.

     The fair value of the reporting unit is first compared to its carrying value. The fair value of reporting units is determined using the income approach. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the implied fair value of the reporting unit’s goodwill is compared with the carrying value of the reporting unit’s goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then an impairment loss equal to the difference is recorded.

     Intangible assets acquired individually, with a group of other assets or in a business combination are carried at cost less accumulated amortization. The intangible assets are amortized over their estimated useful lives in proportion to the economic benefits consumed in each period. The estimated useful lives of the intangible assets are as follows:

Customer-related intangibles		2 to 5 years
Marketing-related intangibles		2 to 20 years
Technology-based intangibles		5 years

     Start-up costs. Cost of start-up activities including organization costs are expensed as incurred.

     Research and development. Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on equipment and facilities that are acquired or constructed for research and development activities and having alternative future uses is capitalized as tangible assets when acquired or constructed. Software product development costs are expensed as incurred until technological feasibility is achieved.

     Impairment or disposal of long-lived assets. Long-lived assets, including certain identifiable intangible assets, to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Such assets are considered to be impaired if the carrying amount of the assets is higher than the future undiscounted net cash flows expected to be generated from the assets. The impairment amount to be recognized is measured by the amount by which the carrying value of the assets exceeds its fair value.

     The Company measures long-lived assets held-for-sale, at the lower of carrying amount or fair value, less costs to sell.

     Earnings per share. In accordance with SFAS No. 128, Earnings per Share, basic earnings per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of common and dilutive common equivalent shares outstanding during the period, using the treasury stock method for options and warrants, except where the results would be antidilutive.

     Income taxes. Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The deferred tax asset is reduced by a valuation allowance if it is more likely than not that some portion or all of the asset will not be realized. Excess income tax benefit on exercise of employee stock options is credited to additional paid-in capital.

     The Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 (FIN 48) on April 1, 2007. FIN 48 clarifies the accounting and reporting for uncertainties in income tax law. This Interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions considered or to be considered in income tax returns. The Company recognizes penalties and interest related to unrecognized tax benefits as a component of other income, net. Refer note 20 for additional information relating to impact of adoption of FIN 48.

     The income tax provision for the interim periods is based on the best estimate of the effective tax rate expected to be applicable for the full fiscal year. Changes in interim periods to tax provisions, for changes in judgments or settlements relating to tax exposure items of earlier years, are recorded as discrete items in the interim period of change.

     Stock-based compensation. Effective April 1, 2006, the Company adopted SFAS No. 123 (revised 2004), Share-Based Payment, (SFAS No. 123 (R)), which requires the measurement of compensation expense for all stock-based payment awards based on the grant-date fair value of those awards and recognition on straight line basis over the requisite service period. The Company includes a forfeitures estimate in the amount of compensation expense being recognized. The Company adopted SFAS No. 123(R) using the modified prospective application method. Under this approach, the Company has recognized compensation expense for share-based payment awards granted prior to, but not yet vested as of April 1, 2006, based on the grant date fair value under Black-Scholes model estimated in accordance with the provisions of SFAS No. 123.

     SFAS No. 123(R) requires that deferred stock-based compensation previously recorded under APB Opinion No. 25 and outstanding on the date of adoption be eliminated against additional paid-in capital. Accordingly, the deferred compensation balance of Rs. 2,202 was eliminated against additional paid-in capital on April 1, 2006.

     Under APB Opinion No. 25, the Company had a policy of recognizing the effect of forfeitures only as they occurred. Accordingly, as required by SFAS No. 123 (R), on April 1, 2006, the Company estimated the number of outstanding instruments, which are not expected to vest and recognized a gain of Rs. 39 representing the reversal of compensation cost for such instruments previously recognized in the Company’s statement of income as cumulative effect of changes in accounting principle.

     The Company recorded stock compensation expense of Rs. 199 and Rs. 312 respectively during the three months ended June 30, 2006 and 2007.

     Derivatives and hedge accounting. The Company purchases forward foreign exchange contracts/option contracts (derivatives) to mitigate the risk of changes in foreign exchange rates on accounts receivable and forecasted cash flows denominated in certain foreign currencies. The strategy also includes purchase of series of short term forward foreign exchange contracts which are replaced with successive new contracts up to the period in which the forecasted transactions are expected to occur (roll-over hedging). The Company also designates zero-cost collars, which qualify as net purchased options, to hedge the exposure to variability in expected future foreign currency cash inflows due to exchange rate movements beyond a defined range.

     In accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, the Company recognizes all derivatives as assets or liabilities measured at their fair value, regardless of the purpose or intent of holding them. In respect of derivatives designated and effective as cash flow hedges, gains or losses resulting from changes in the fair value are deferred and recorded as a component of accumulated other comprehensive income within stockholder’s equity until the hedged transaction occurs and are then recognized in the consolidated statements of income along with the hedged item. The Company assesses hedge effectiveness based on the overall change in fair value of the derivative instrument. However, for derivatives acquired pursuant to roll-over hedging strategies, the forward premium/discount points are excluded from assessing hedge effectiveness.

     Changes in fair value for derivatives not designated as hedging derivatives and ineffective portion of the hedging instruments are recognized in consolidated statements of income of each period and are reported within foreign exchange gains/ (losses), net under operating expenses.

     In respect of derivatives designated as hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in fair values or cash flows of the hedged item. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, the Company, prospectively, discontinues hedge accounting with respect to that derivative.

     Reclassifications. Certain amounts in the consolidated financial statements and notes have been reclassified to conform to the current period’s presentation.

     Recent accounting pronouncements

     SFAS No. 157. In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 defines ‘fair value’ as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 provides guidance on determination of fair value and lays down the fair value hierarchy to classify the source of information used in fair value measurement. The Company is currently evaluating the impact of SFAS No. 157 on its financial statements and will adopt the provisions of SFAS No. 157 for the fiscal year beginning April 1, 2008.

     SFAS No. 159. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159). This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for the fiscal year beginning April 1, 2008. The Company is currently evaluating the impact that the adoption of SFAS No. 159 will have on its consolidated financial statements.

3. Acquisitions

During the years ended March 31, 2006 and 2007, the Company completed a number of acquisitions. These acquisitions have been accounted for under the purchase method and have been included in the Company’s consolidated financial statements from the date of the acquisition. The developments during the current period are as follows:

Unza Holdings Limited

     In July 2007, the Company signed definitive agreements to acquire 100% of the equity of Unza Holdings Limited (Unza), a Singapore based Fast Moving Consumer Goods (FMCG) company for total cash consideration of US$ 247, subject to the completion of certain closing conditions. Unza is an independent manufacturer and marketer of personal care products. Unza markets a wide portfolio of personal care brands and detergent brands across several countries. The Company has consummated the acquisition on July 30, 2007. The consideration included an upfront payment of US$ 222 and deferred payment of US$ 25.

cMango Inc and subsidiaries

     In April 2006, the Company acquired 100% of the equity of cMango Inc and subsidiaries (cMango). cMango is a provider of Business Service Management (BSM) solutions. The consideration (including direct acquisition costs) included a cash payment of Rs. 884 and an earn-out of US$ 12 to be determined and paid in the future based on specific financial metrics being achieved over a two year period. The earn-out will be recorded as additional purchase price when the contingency is resolved.

     The Company believes that through this acquisition it will expand its operations in Business Management Services sector. This acquisition also enables the Company to access over 20 customers in the Business Management Services sector.

     The purchase price paid has been allocated to the acquired assets and liabilities as follows:

Description		Fair value
Net tangible assets		Rs.	(23	)
Customer-related intangibles			83
Deferred tax liabilities			(29	)
Goodwill			853
Total		Rs.	884

RetailBox BV and subsidiaries

     In June 2006, the Company acquired 100% of the equity of RetailBox BV and subsidiaries (Enabler). Enabler is in the business of providing comprehensive IT solutions and services. The consideration (including direct acquisition costs) included a cash payment of Rs. 2,442 and an earn-out of Euro 11 to be determined and paid in the future based on specific financial targets being achieved over a two year period. The earn-out will be recorded as additional purchase price when the contingency is resolved.

     Through this acquisition the Company aims to provide a wide range of services including Oracle retail implementation, digital supply chain, business optimization and integration. Further, through this acquisition, the Company aims to expand domain expertise both in retail and technology sectors and obtain a presence in five different geographical locations.

     The purchase price paid has been allocated to the acquired assets and liabilities as follows:

Description		Fair value
Net tangible assets		Rs.	389
Customer-related intangibles			298
Deferred tax liabilities			(105	)
Goodwill			1,860
Total		Rs.	2,442

4. Cash and Cash Equivalents

     Cash and cash equivalents as of March 31, 2007, June 30, 2006 and 2007 comprise of cash, cash on deposit with banks and highly liquid investments.

5. Accounts Receivable

     Accounts receivable are stated net of allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts based on financial condition of its customers and aging of the accounts receivable. Accounts receivable are generally not collateralized. The activity in the allowance for doubtful accounts receivable is given below:

										Year ended
		Three months ended June 30,								March 31,
		2006				2007				2007
		((Unaudited))				(Unaudited)
Balance at the beginning of the period		Rs.	1,116			Rs.	1,246			Rs.	1,116
Additional provision during the period, net of collections			86				93				280
Bad debts charged to provision			—				—				(150	)
Balance at the end of the period		Rs.	1,202			Rs.	1,339			Rs.	1,246

6. Inventories

     Inventories consist of the following:

		As of June 30,								As of March 31,
		2006				2007				2007
		(Unaudited)				(Unaudited)
Stores and spare parts		Rs.	226			Rs.	289			Rs.	298
Raw materials and components			699				1,890				1,584
Work-in-process			337				638				491
Finished goods			1,045				1,609				1,777
		Rs.	2,307			Rs.	4,426			Rs.	4,150

7. Other Assets

     Other assets consist of the following:

		As of June 30,								As of March 31,
		2006				2007				2007
		(Unaudited)				(Unaudited)
Prepaid expenses		Rs.	1,877			Rs.	2,260			Rs.	2,426
Prepaid rentals for leasehold land			320				626				597
Due from officers and employees			887				1,059				884
Advances to suppliers			509				784				712
Balances with statutory authorities			116				331				207
Deposits			1,537				1,663				1,591
Interest-bearing corporate deposits			500				500				650
Advance income taxes			3,954				5,261				4,844
Deferred contract costs			342				668				397
Derivative asset			6				798				379
Others			1,133				1,091				751
			11,181				15,041				13,438
Less: Current assets			(9,838	)			(11,991)				(11,479	)
		Rs.	1,343			Rs.	3,050			Rs.	1,959

8. Investment Securities

     Investment securities consist of the following:

As of June 30, 2006

As of June 30, 2007

(Unaudited)

(Unaudited)

Gross Unrealized

Gross Unrealized

Carrying Value

Holding Gains

Fair Value

Carrying Value

Holding Gains

Fair Value

Available-for-sale:

Investments in liquid and short-term mutual funds

Rs.

35,406

Rs.

560

Rs.

35,966

Rs.

25,161

Rs.

469

Rs.

25,630

As of March 31, 2007

Gross Unrealized

Carrying Value

Holding Gains

Fair Value

Available-for-sale:

Investments in liquid and short-term mutual funds

Rs.

31,841

Rs.

569

Rs.

32,410

     Dividends from available-for-sale securities during the year ended March 31, 2007 and three months ended June 30, 2006 and 2007 were Rs. 1,689, Rs. 338 and Rs. 354, respectively and are included in other income.

9. Property, Plant and Equipment

     Property, plant and equipment consist of the following:

		As of June 30,								As of March 31,
		2006				2007				2007
		(Unaudited)				(Unaudited)
Land		Rs.	1,261			Rs.	1,571			Rs.	1,571
Buildings			4,771				6,274				6,096
Plant and machinery			4,783				7,160				6,644
Computer equipment			8,252				10,442				9,959
Furniture, fixtures and equipment			3,063				4,117				3,934
Vehicles			1,446				1,976				1,821
Computer software for internal use			1,877				2,940				2,831
Capital work-in-progress			7,514				11,156				10,189
			32,967				45,636				43,045
Accumulated depreciation and amortization			(13,602	)			(17,553	)			(16,504	)
		Rs.	19,365			Rs.	28,083			Rs.	26,541

     Depreciation expense for the year ended March 31, 2007 and the three months ended June 30, 2006 and 2007 were Rs. 3,931, Rs. 888 and Rs. 1,164 respectively. This includes Rs. 386, Rs. 65 and Rs. 179 as amortization of capitalized internal use software, for the year ended March 31, 2007 and the three months ended June 30, 2006 and 2007, respectively.

10. Goodwill and Intangible Assets

     Information regarding the Company’s intangible assets acquired either individually or in a business combination consists of the following:

		As of June 30,
		2006												2007
						(Unaudited)												(Unaudited)
		Gross carrying				Accumulated								Gross carrying				Accumulated
		amount				amortization				Net				amount				Amortization				Net
Technology-based intangibles		Rs.	101			Rs.	40			Rs.	61			Rs.	130			Rs.	82			Rs.	48
Customer-related intangibles			1,455				661				794				2,097				1,034				1,063
Marketing-related intangibles			1,480				87				1,393				1,481				97				1,384
		Rs.	3,036			Rs.	788			Rs.	2,248			Rs.	3,708			Rs.	1,213			Rs.	2,495

		As of March 31, 2007
		Gross carrying				Accumulated
		amount				Amortization				Net
Technology-based intangibles		Rs.	130			Rs.	71			Rs.	59
Customer-related intangibles			2,147				937				1,210
Marketing-related intangibles			1,481				79				1,402
		Rs.	3,758			Rs.	1,087			Rs.	2,671

     The movement in goodwill balance is given below:

										Year ended
		Three months ended June 30,								March 31,
		2006				2007				2007
		(Unaudited)				(Unaudited)
Balance at the beginning of the period		Rs.	7,481			Rs.	12,698			Rs.	7,481
Goodwill relating to acquisitions			2,785				65				5,393
Adjustment relating to finalization of purchase price allocation			—				50				(104	)
Tax benefit allocated to goodwill			—				—				(14	)
Effect of translation adjustments			28				(465	)			(58	)
Balance at the end of the period		Rs.	10,294			Rs.	12,348			Rs.	12,698

Goodwill has been allocated to the following reportable segments:

		As of June 30,								As of March 31,
		2006				2007				2007
Segment		(Unaudited)				(Unaudited)
IT Services and Products		Rs.	5,556			Rs.	6,219			Rs.	6,503
BPO Services			3,982				3,982				3,982
India and AsiaPac IT Services and Products			756				1,021				1,045
Others			—				1,126				1,168
Total		Rs.	10,294			Rs.	12,348			Rs.	12,698

11. Other Current Liabilities

     Other current liabilities consist of the following:

		As of June 30,								As of March 31,
		2006				2007				2007
		(Unaudited)				(Unaudited)
Statutory dues payable		Rs.	1,990			Rs.	2,839			Rs.	2,635
Taxes payable			3,914				2,561				4,573
Dividend payable			—				—				7,238
Warranty obligations			776				723				742
Derivative liability			651				76				110
Others			1,455				1,239				1,325
		Rs.	8,786			Rs.	7,438			Rs.	16,623

     The activity in warranty obligations is given below:

		Three months ended June 30,								Year ended March 31,
		2006				2007				2007
		(Unaudited)				(Unaudited)
Balance at the beginning of the period		Rs.	665			Rs.	742			Rs.	665
Additional provision during the period			196				187				827
Reduction due to payments			(85	)			(206	)			(750	)
Balance at the end of the period		Rs.	776			Rs.	723			Rs.	742

12. Operating Leases

     The Company leases office and residential facilities under cancelable and non-cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. Rental payments under such leases were Rs. 1,412, Rs. 258 and Rs. 394 for the year ended March 31, 2007 and three months ended June 30, 2006 and 2007, respectively.

     Details of contractual payments under non-cancelable leases are given below:

		(Unaudited)
Year ending June 30,
2008		Rs.	381
2009			346
2010			326
2011			273
2012			249
Thereafter			898
Total		Rs.	2,473

     Prepaid rentals for leasehold land represent leases obtained for a period of 60 years and 90 years. The prepaid expense is being charged over the lease term and is included under other assets.

13. Investments in Affiliates

Wipro GE Medical Systems (Wipro GE)

     The Company has accounted for its 49% interest in Wipro GE by the equity method. The carrying value of the investment in Wipro GE as of March 31, 2007, June 30, 2006 and 2007 was Rs. 1,120, Rs. 916 and Rs. 1,183 respectively. The Company’s equity in the income of Wipro GE for three months ended June 30, 2006 and 2007 was Rs. 74 and Rs. 97 respectively.

WeP Peripherals

     The Company previously accounted for its 36.9% interest as of June 30, 2006 in WeP by the equity method. The carrying value of the equity investment in WeP Peripherals as of June 30, 2006 was Rs. 193.

     In December 2006, the Company sold a portion of its interest in WeP Peripherals. Subsequent to this sale, the Company’s ownership interest in WeP Peripherals was reduced to 15% and the Company does not have the ability to exercise significant influence over the operating and financial policies of WeP Peripherals. Accordingly, the Company has subsequently accounted for the balance investment of Rs. 80 under the cost method.

W M Netserv

     The carrying value of the equity investment in WM NetServ as of March 31, 2007 and June 30, 2007 was Rs. 122 and Rs. 112. The Company’s equity in the loss of WM NetServ for three months ended June 30, 2007 was Rs. 10.

14. Financial Instruments

     Derivative financial instruments. The Company is exposed to foreign currency fluctuations on foreign currency assets and forecasted cash flows denominated in foreign currency. The Company follows established risk management policies, including the use of derivatives to hedge foreign currency assets and foreign currency forecasted cash flows. The counter party is a bank and the Company considers the risks of non-performance by the counterparty as non-material. The forward foreign exchange/option contracts generally mature between one to twelve months and the forecasted transactions are expected to occur during the same period.

     The following table presents the aggregate contracted principal amounts of the Company’s derivative contracts outstanding:

		As of June 30,								As of March 31,
		2006				2007				2007
		(Unaudited)				(Unaudited)
Forward contracts
Sell		$	601			$	441			$	345
		€	6			€	18			€	16
		£	38			£	80			£	88
Buy			—			$	40			$	185
Options (sell)		$	190			$	122			$	36
		£	10							€	13