UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

o		Registration statement pursuant to section 12(b) or (g) of the Securities Exchange Act of 1934

þ		Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended March 31, 2006

o		Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

o		Shell Company Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		Date of event requiring this shell company report

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)

Doddakannelli
Sarjapur Road
Bangalore, Karnataka 560035, India
+91-80-2844-0011
(Address of principal executive offices)

 

Currency of Presentation and Certain Defined Terms

In this Annual Report on Form 20-F, 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 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 United Kingdom and references to “Rs.” or “Rupees” or “Indian rupees” are to the legal currency of India. All amounts are in Rs. unless otherwise stated. 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 a registered trademark of Wipro in the United States and India. All other trademarks or trade names used in this Annual Report on Form 20-F are the property of the respective owners.

Except as otherwise stated in this Annual Report, all translations from Indian rupees to U.S. dollars are based on the noon buying rate in the City of New York on March 31, 2006, for cable transfers in Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York which was Rs. 44.48 per $1.00. No representation is made that the Indian rupee 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 Annual Report.

Forward-Looking Statements May Prove Inaccurate

IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”). 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 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION” AND ELSEWHERE IN THIS REPORT. 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 ANNUAL REPORT AND IN THE COMPANY’S PERIODIC REPORTS AND OTHER DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) FROM TIME TO TIME.

This Annual Report includes statistical data about the IT industry that comes from information published by sources including International Data Corporation (IDC), Gartner Inc. (Gartner), National Association of Software and Service Companies (NASSCOM), and Dataquest India (Dataquest). This type of data represents only the estimates of IDC, Gartner, NASSCOM, Dataquest and other sources of industry data. In addition, although we believe that data from these companies is generally reliable, this type of data is inherently imprecise. We caution you not to place undue reliance on this data.

TABLE OF CONTENTS

Part I -			4
Item 1. Identity of Directors, Senior Management and Advisers			4
Item 2. Offer Statistics and Expected Timetable			4
Item 3. Key Information			5
Item 4. Information on the Company			19
Item 5. Operating and Financial Review and Prospects			42
Item 6. Directors, Senior Management and Employees			67
Item 7. Major Shareholders and Related Party Transactions			79
Item 8. Financial Information			80
Item 9. The Offer and Listing			81
Item 10. Additional Information			84
Item 11. Quantitative and Qualitative Disclosure About Market Risk			105
Item 12. Description of Securities Other Than Equity Securities			106
Part II -			106
Item 13. Defaults, Dividend Arrearages and Delinquencies			106
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds			106
Item 15. Controls and Procedures			106
Item 16 A. Audit Committee Financial Expert			106
Item 16 B. Code of Ethics			107
Item 16 C. Principal Accountant Fees and Services			107
Item 16 D. Exemptions from the Listing Standards for Audit Committees			108
Item 16 E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers			108
Part III -			108
Item 17. Financial Statements			108
Item 18. Financial Statements			108
Item 19. Exhibits			146
EXHIBIT 4.10
EXHIBIT 12.1
EXHIBIT 12.2
EXHIBIT 13
EXHIBIT 23.1
EXHIBIT 99.4

PART I

Item 1. Identity of Directors, Senior Management and Advisers

     Not applicable.

Item 2. Offer Statistics and Expected Timetable

     Not applicable.

Item 3. Key Information

Summary of Selected Consolidated Financial Data

     The selected consolidated financial data should be read in conjunction with the consolidated financial statements, the related notes and operating and financial review and prospects which are included elsewhere in this Annual Report. The selected consolidated statements of income data for the five years ended March 31, 2006 and selected consolidated balance sheet data as of March 31, 2002, 2003, 2004, 2005 and 2006 have been derived from our audited consolidated financial statements and related notes, which have been prepared and presented in accordance with U.S. GAAP.

		(In millions, except per equity share data)
										Year ended March 31,
		2002				2003				2004				2005				2006				2006
																						Convenience
																						translation into
																						US$
Consolidated statements of Income data:
Revenues:
Global IT Services & Products IT Services and Products		Rs. 22,412				Rs. 28,623				Rs. 39,102				Rs. 54,280				Rs. 73,061				$	1,642
BPO Services			—				1,644				4,363				6,433				7,664				172
India and AsiaPac IT Services and Products
Services			1,914				2,240				3,109				4,709				6,097				137
Products			5,037				5,801				6,305				8,694				10,380				233
Consumer Care and Lighting			2,939				2,942				3,567				4,555				5,625				126
Others			1,171				1,599				1,987				2,681				3,279				74
Total			33,473				42,849				58,433				81,353				106,107				2,385
Cost of revenues:
IT Services and Products			12,310				16,763				25,047				33,780				46,986				1,056
BPO Services			—				975				2884				4740				5810				131
Global IT Services & Products			12,310				17,738				27,931				38,520				52,796				1,187
India and AsiaPac IT Services and Products
Services			1,160				1,187				1,661				2,679				3,549				80
Products			4,268				5,100				5,643				7,815				9,286				209
Consumer Care and Lighting			1,999				2,008				2,355				2,926				3,556				80
Others			924				1,143				1,410				1,914				2,460				55
Total			20,661				27,176				39,000				53,855				71,647				1,611
Gross Profit			12,812				15,673				19,433				27,498				34,460				775
Operating expenses:
Selling and marketing expenses			(2,601	)			(2,916	)			(5,278	)			(5,466	)			(6,764	)			(152	)
General and administrative expenses			(1,758	)			(3,277	)			(3,172	)			(3,744	)			(5,239	)			(118	)
Amortization of intangible assets			—				(166	)			(308	)			(140	)			(64	)			(1	)
Other operating income/ (expenses)			(11	)			172				226				(291	)			(421	)			(9	)
Operating income			8,442				9,486				10,901				17,857				21,972				494
Gain/ (loss) on sale of stock by affiliates, including direct issue of stock by affiliate			—				—				(206	)			(207	)			—				—
Other income/ (expense), (net)			838				718				868				800				1276				29
Equity in earnings of affiliates			147				(355	)			96				158				288				6
Income before taxes and minority interest			9,427				9,849				11,659				18,608				23,536				529
Income taxes			(1,016	)			(1,342	)			(1,611	)			(2,694	)			(3,265	)			(73	)
Minority interest (1)			—				(30	)			(56	)			(81	)			(1	)			(0	)
Income from continuing operations (4)		Rs. 8,411				Rs. 8,477				Rs. 9,992				Rs. 15,833				Rs. 20,270				$	456
Earnings per share from continuing operations:
Basic			6.07				6.11				7.20				11.38				14.41				0.32
Diluted			6.06				6.10				7.20				11.29				14.24				0.32
Cash dividend per equity share			0.09				0.17				0.17				4.84				2.50				0.12
Additional data:
Revenue by Segment IT Services and Products		Rs. 22,668				Rs. 28,949				Rs. 39,412				Rs. 54,256				Rs. 72,888				$	1,639

										Year ended March 31,
		2002				2003				2004				2005				2006				2006
																						Convenience
																						translation into
																						US$
BPO Services			—				1,644				4,363				6,433				7,626				171
Global IT Services and Products		Rs. 22,668				Rs. 30,593				Rs. 43,775				Rs. 60,689				Rs. 80,514				$	1,810
India and AsiaPac IT Services and Products			6,950				8,046				9,445				13,395				16,475				370
Consumer Care and Lighting			2,939				2,942				3,567				4,555				5,625				126
Others			916				1,268				1,646				2,714				3,493				79
Total		Rs. 33,473				Rs. 42,849				Rs. 58,433				Rs. 81,353				Rs. 106,107				$	2,385
Operating Income by Segment      IT Services and Products		Rs. 7,609				Rs. 8,034				Rs. 8,505				Rs. 14,817				Rs. 18,398				$	414
BPO Services			—				247				795				1,008				1,011				22
Global IT Services and Products		Rs. 7,609				Rs. 8,281				Rs. 9,300				Rs. 15,825				Rs. 19,409				$	436
India and AsiaPac IT Services and Products			578				539				761				970				1,405				32
Consumer Care and Lighting			404				422				546				671				798				18
Others			41				256				308				466				487				11
Reconciling items (2)			(190	)			(12	)			(14	)			(75	)			(127	)			(3	)
Total		Rs. 8,442				Rs. 9,486				Rs. 10,901				Rs. 17,857				Rs. 21,972				$	494

Transitional disclosures pertaining to adoption of SFAS No. 142, Goodwill and Other Intangible Assets.

		2002
Income from continuing operations, as reported		Rs. 8,411
Add: Amortization of goodwill			175
Income from continuing operations, adjusted			8,586
Earnings per share: Basic Continuing operations, as reported			6.07
Add: Amortization of goodwill			0.12
Continuing operations, adjusted			6.19
Earnings per share: Diluted Continuing operations, as reported			6.06
Add: Amortization of goodwill			0.12
Continuing operations, adjusted			6.18
Consolidated Balance Sheet Data:
Cash and Cash equivalents		Rs. 3,251				Rs. 6,283				Rs. 3,297				Rs. 5,671				Rs. 8,858				$	199
Investments in liquid and short-term mutual funds			4,126				7,813				18,479				22,958				30,328				682
Working Capital (3)			18,495				21,473				30,649				36,449				50,704				1,140
Total assets			33,639				42,781				57,738				72,075				100,394				2,257
Total debt			291				537				969				564				705				16
Total stockholders equity			27,457				35,431				46,364				56,729				78,764				1,771

     Exchange Rates

          Fluctuations in the exchange rate between the Indian rupee and the U.S. dollar will affect the U.S. dollar equivalent of the Indian rupee price of our equity shares on the Indian stock exchanges and, as a result, will likely affect the market price of our American Depositary Shares, or ADSs, listed on the New York Stock Exchange, and vice versa. Such fluctuations will also affect the U.S. dollar conversion by our depository for the ADSs, Morgan Guaranty Trust Company of New York, or Depositary, of any cash dividends paid in Indian rupees on our equity shares represented by the ADSs.

          The following table sets forth, for the fiscal years indicated, information concerning the number of Indian rupees for which one U.S. dollar could be exchanged based on the average of the noon buying rate in the City of New York on the last business day of each month during the period for cable transfers in Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York. The column titled “Average” in the table below is the average of the daily noon buying rate on the last business day of each month during the year.

Fiscal Year Ended March 31,		Period End				Average				High				Low
2006		Rs.	44.48			Rs.	44.21			Rs.	46.26			Rs.	43.05
2005			43.62				44.87				46.45				43.27
2004			43.40				45.78				47.46				43.40
2003			47.53				48.36				49.07				47.53
2002			48.83				47.81				48.91				46.58

          On June 9, 2006, the noon buying in the City of New York as certified for customs purposes by the Federal Reserve Bank of New York was Rs. 45.81.

          The following table sets forth the high and low exchange rates for the previous six months and are based on the noon buying rate in the City of New York on each business day during the period for cable transfers in Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York:

Month		High				Low
May 2006		Rs.	46.22			Rs.	44.69
April 2006			45.09				44.39
March 2006			44.58				44.09
February 2006			44.54				44.10
January 2006			44.92				43.89
December 2005			46.26				44.94

Capitalization and Indebtedness

     Not applicable.

Reasons for the Offer and Use of Proceeds

     Not applicable.

RISK FACTORS

          This Annual Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in the following risk factors and elsewhere in this Annual Report. The following risk factors should be considered carefully in evaluating us and our business.

          Risks Related to our Company and our Industry

          Our revenues and expenses are difficult to predict because they can fluctuate significantly given the nature of the markets in which we operate. This increases the likelihood that our results could fall below the expectation of market analysts, which could cause the price of our equity shares and ADSs to decline.

          Our revenue historically has fluctuated and may fluctuate in the future depending on a number of factors, including:

	•		the size, complexity, timing, pricing terms and profitability of significant projects or product orders;
	•		changes in our pricing policies or those of our competitors;
	•		the proportion of services we perform at our clients’ sites rather than at our offshore facilities;
	•		seasonal changes that affect the mix of services we provide to our clients or the relative proportion of services and product revenue;
	•		seasonal changes that affect purchasing patterns among our consumers of desktops, notebooks, servers, communication devices, consumer care and other products;
	•		unanticipated cancellations, contract terminations or deferral of projects or those occurring as a result of our clients reorganizing their operations;
	•		the duration of tax holidays or exemptions and the availability of other Government of India incentives;
	•		the effect of seasonal hiring patterns and the time we require to train and productively utilize our new employees;
	•		unanticipated variations in the duration, size and scope of our projects, as well as changes in the corporate decision-making process of our clients;
	•		currency exchange fluctuations; and
	•		other economic and political factors.

          Approximately 52% of our total operating expenses in our IT Services and Products business, particularly personnel and facilities, are fixed in advance of any particular quarter. As a result, unanticipated variations in the number and timing of our projects or employee utilization rates may cause significant variations in operating results in any particular quarter. Therefore, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. Thus, it is possible that in the future some of our quarterly results of operations may be below the expectations of public market analysts and investors, and the market price of our equity shares and ADSs could decline.

          Our net income increased 28% in the year ended March 31, 2006, as compared to the year ended March 31, 2005. We continue to face increasing competition, pricing pressures for our products and services and wage pressures for our work force in India primarily due to large U.S. multinational corporations establishing offshore operations in India. We are also investing in developing capabilities in new technology areas and deepening our domain expertise. While we believe that our global delivery model allows us to manage costs efficiently, as the proportion of our services delivered at client sites increases, we may not be able to keep our operating costs as low in the future. In our Business Process Outsourcing, or BPO, business, we are diversifying our service offerings to include process transformation services. High attrition levels and higher proportion of revenues from customer interaction services could adversely impact our

operating margins. As a result, there can be no assurance that we will be able to sustain our historic levels of profitability.

          If we do not continue to improve our administrative, operational and financial personnel and systems to manage our growth, the value of our shareholders’ investment may be harmed.

          We have experienced significant growth in all our businesses. We expect our growth to continue to place significant demands on our management and other resources. This will require us to continue to develop and improve our operational, financial and other internal controls, both in India and elsewhere. In particular, our continued growth will increase the challenges involved in:

	•		recruiting and retaining sufficiently skilled technical, marketing and management personnel;
	•		adhering to our high quality standards;
	•		maintaining high levels of client satisfaction;
	•		developing and improving our internal administrative infrastructure, particularly our financial, operational, communications and other internal systems; and
	•		preserving our culture, values and entrepreneurial environment.

          If we are unable to manage our growth effectively, the quality of our services and products may decline, and our ability to attract clients and skilled personnel may be negatively affected. These factors in turn could negatively affect the growth of our Global IT Services and Products business and harm the value of our shareholders’ investment.

          Intense competition in the market for IT services could adversely affect our cost advantages, and, as a result, decrease our revenues.

          The market for IT services is highly competitive. Our competitors include software companies, IT companies, systems consulting and integration firms, other technology companies and client in-house information services departments. We may also face competition from IT companies operating from China and the Philippines. Many of our competitors command significantly greater financial, technical and marketing resources and generate greater revenue than we do. We cannot be reasonably certain that we will be able to compete successfully against such competitors or that we will not lose our key employees or clients to such competitors. Additionally, we believe that our ability to compete also depends in part on factors outside our control, such as the availability of skilled resources, the price at which our competitors offer comparable services, and the extent of our competitors’ responsiveness to their clients’ needs.

          We may face difficulties in providing end-to-end business solutions for our clients that could cause clients to discontinue their work with us, which in turn could harm our business.

          We have been expanding the nature and scope of our engagements and have added new service offerings, such as IT consulting, business process management, systems integration and outsourcing of entire portions of IT infrastructure. The success of these service offerings is dependent, in part, upon continued demand for such services by our existing and new clients and our ability to meet this demand in a cost-competitive and effective manner. In addition, our ability to effectively offer a wider breadth of end-to-end business solutions depends on our ability to attract existing or new clients to these service offerings. To obtain engagements for such end-to-end solutions, we also are more likely to compete with large, well-established international consulting firms, resulting in increased compensation and marketing costs. Accordingly, we cannot be certain that our new service offerings will effectively meet client needs or that we will be able to attract existing and new clients to these service offerings.

          The increased breadth of our service offerings may result in larger and more complex projects with our clients. This will require us to establish closer relationships with our clients and a thorough understanding of their operations. Our ability to establish such relationships will depend on a number of factors, including the proficiency of our IT professionals and our management personnel. Our failure to understand our client requirements or our failure to deliver services which meet the requirements specified by our clients could result in termination of client contracts, and we could be liable to our clients for significant penalties or damages.

          Larger projects may involve multiple engagements or stages, and there is a risk that a client may choose not to retain us for additional stages or may cancel or delay additional planned engagements. These terminations, cancellations or delays may result from the business or financial condition of our clients or the economy generally, as opposed to factors related to the quality of our services. Such cancellations or delays make it difficult to plan for project resource requirements, and inaccuracies in such resource planning may have a negative impact on our profitability.

          Our success depends in large part upon our management team and other highly skilled professionals. If we fail to retain and attract these personnel, our business may be unable to grow and our revenue could decline, which may decrease the value of our shareholders’ investment.

          We are highly dependent on the senior members of our management team, including the continued efforts of our Chairman and Managing Director. Our ability to execute project engagements and to obtain new clients depends in large part on our ability to attract, train, motivate and retain highly skilled professionals, especially project managers, software engineers and other senior technical personnel. If we cannot hire and retain additional qualified personnel, our ability to bid on and obtain new projects and to continue to expand our business will be impaired and our revenue could decline. We believe that there is significant competition for professionals with the skills necessary to perform the services we offer. We may not be able to hire and retain enough skilled and experienced employees to replace those who leave. Additionally, we may not be able to re-deploy and retain our employees to keep pace with continuing changes in technology, evolving standards and changing client preferences. We are experiencing high employee attrition rates, in line with industry, in our BPO services business. Continued employee attrition rates in this business may adversely affect our revenues and profitability.

          The Central Government in India is considering introducing legislation mandating employers to give preferential hiring treatment to under-represented groups. State Governments in India may also introduce such legislation. The quality of our work force is critical to our business. The legislation may affect our ability to hire the most qualified and competent technology and other professionals.

          Appreciation of Indian Rupee against major currencies of the world could negatively impact our revenue and operating results.

          Approximately 79% of our revenues are earned in major currencies of the world while a significant portion of our costs is in Indian rupees. The exchange rate between the rupee and major currencies of the world has fluctuated significantly in recent years and may continue to fluctuate in the future. Appreciation of the rupee against the major currencies of the world can adversely affect our revenues and competitive positioning, and can adversely impact our gross margins. We enter into forward exchange contracts to minimize the impact of currency fluctuations on our revenues. However, volatility in exchange rate movement and/or sustained rupee appreciation will negatively impact our revenue and operating results.

          Our hedging strategy could negatively impact our competitive positioning.

          We have entered into forward contracts to hedge a significant portion of our forecasted foreign currency inflows through fiscal 2007. Although the forward contracts minimize the impact of volatility in foreign exchange rates on our income statement, this could result in our realizations of foreign currency denominated revenues or foreign currency denominated expenses to be at a rate different from prevailing market rates and different from the rates realized or incurred by our competitors. This could adversely affect our competitive positioning in the market, our revenues and our operations.

          An economic slowdown, terrorist attacks in the United States, and other acts of violence or war could delay or reduce the number of new purchase orders we receive and disrupt our operations in the United States, thereby negatively affecting our financial results and prospects.

          Approximately 65% of our Global IT Services and Products revenue is from the United States. During an economic slowdown our clients may delay or reduce their IT spending significantly, which may in turn lower the demand for our services and affect our financial results. Further, terrorist attacks in the United States could cause clients in the U.S. to delay their decisions on IT spending, which could affect our financial results. Any significant decrease in the IT industry, or significant consolidation in that industry or decrease in growth or consolidation in other industry segments on which we focus, may reduce the demand for our services and negatively affect our revenues and profitability. Although we continue to believe that we have a strong competitive position in the United States, we have increased our efforts to geographically diversify our clients and revenue.

          Our Global IT Services and Products service revenue depend to a large extent on a small number of clients, and our revenue could decline if we lose a major client.

          We currently derive, and believe we will continue to derive, a significant portion of our Global IT Services and Products service revenue from a limited number of corporate clients. The loss of a major client or a significant reduction in the service performed for a major client could result in a reduction of our revenue. Our largest client for the years ended March 31, 2004, March 31, 2005 and March 31, 2006, accounted for 5%, 4% and 3% of our Global IT Services and Products revenue, respectively. For the same periods, our ten largest clients accounted for 33%, 27% and 27% of our Global IT Services and Products revenue. The volume of work we perform for specific clients may vary from year to year, particularly since we typically are not the only outside service provider for our clients. Thus, a major client in one year may not provide the same level of revenue in a subsequent year.

          There are a number of factors, other than our performance, that could cause the loss of a client and that may not be predictable. In certain cases, clients have reduced their spending on IT services due to challenging economic environment and consequently have reduced the volume of business with us. If we were to lose one of our major clients or have significantly lower volume of business with them, our revenue and profitability could be reduced. We continually strive to reduce our dependence on revenue from services rendered to any one client.

          Restrictions on immigration may affect our ability to compete for and provide services to clients in the United States, which could hamper our growth and cause our revenue to decline.

          If U.S. immigration laws change and make it more difficult for us to obtain H-1B and L-1 visas for our employees, our ability to compete for and provide services to clients in the United States could be impaired. In response to recent terrorist attacks in the United States, the U.S. Citizenship and Immigration Services has increased the level of scrutiny in granting visas and has decreased the number of its grants. This restriction and any other changes in turn could hamper our growth and cause our revenue to decline. Our employees who work on site at client facilities or at our facilities in the United States on temporary and extended assignments typically must obtain visas.

          A majority of our personnel in the United States hold H-1B visas or L-1 visas. An H-1B visa is a temporary work visa, which allows the employee to remain in the United States while he or she remains an employee of the sponsoring firm, and the L-1 visa is an intra-company transfer visa, which only allows the employee to remain in the United States temporarily. Although there is no limit to new L-1 petitions, there is a limit to the aggregate number of new H-1B petitions that the U.S. Citizenship and Immigration Services may approve in any government fiscal year. The U.S. Citizenship and Immigration Services have limited the number of H-1B visas that may be granted as of the 2005 fiscal year to 65,000 per year, from 195,000 in each of the three years prior to 2004. Although the U.S. government has approved the grant of approximately 20,000 additional H-1B visas, these visas are only available to skilled workers who possess a Master’s or higher degree from educational institutions in the United States.

          The L-1 and H-1B Visa Reform Act of 2004 further proposes to preclude foreign companies from obtaining L-1 visas for employees with specialized knowledge: (1) if such employees will be stationed primarily at the worksite of another company in the U.S. and the employee will not be controlled and supervised by his employer, or (2) if the placement is essentially an arrangement to provide labor for hire rather than in connection with the employee’s specialized knowledge. The L1 Reforms Act provisions became effective in June 2005.

          Immigration laws in the United States may also require us to meet certain levels of compensation, and to comply with other legal requirements, including labor certifications, as a condition to obtaining or maintaining work visas for our technology professionals working in the United States.

          Immigration laws in the United States and in other countries are subject to legislative change, as well as to variations in standards of application and enforcement due to political forces and economic conditions. It is difficult to predict the political and economic events that could affect immigration laws, or the restrictive impact they could have on obtaining or monitoring work visas for our technology professionals.

          Although we currently have sufficient personnel with valid H-1B visas, we cannot assure you that we will continue to be able to obtain any or a sufficient number of H-1B visas on the same time schedule as we have previously obtained, or at all.

          We focus on high-growth industries, such as networking and communications. Any decrease in demand for technology in such industries may significantly decrease the demand for our services, which may impair our growth and cause our revenue to decline.

          Approximately 37% of our IT Services and Products business is derived from clients in high growth industries who use our IT services for networking and communications equipment. These industries have experienced periods of above normal growth and periods of contraction. Any significant decrease in the growth of these industries will decrease the demand for our services and could reduce our revenue.

          Our failure to complete fixed-price, fixed-timeframe contracts on budget and on time may negatively affect our profitability, which could decrease the value of our shareholders’ investment.

          We offer a portion of our services on a fixed-price, fixed-timeframe basis, rather than on a time-and-materials basis. Although we use specified software engineering processes and our past project experience to reduce the risks associated with estimating, planning and performing fixed-price, fixed-timeframe projects, we bear the risk of cost overruns, completion delays and wage inflation in connection with these projects. If we fail to accurately estimate the resources and time required for a project, future rates of wage inflation and currency exchange rates, or if we fail to complete our contractual obligations within the contracted timeframe, our profitability may suffer.

          Disruptions in telecommunications could harm our service model, which could result in a reduction of our revenue.

          A significant element of our business strategy is to continue to leverage and expand our software development centers in Bangalore, Chennai, Hyderabad and Pune, India, as well as overseas. We believe that the use of a strategically located network of software development centers will provide us with cost advantages, the ability to attract highly skilled personnel in various regions of the country and the world, the ability to service clients on a regional and global basis and the ability to provide services to our clients 24 hours a day, seven days a week. Part of our service model is to maintain active voice and data communications between our main offices in Bangalore, our clients’ offices, and our other software development and support facilities. Although we maintain redundancy facilities and satellite communications links, any significant loss in our ability to transmit voice and data through satellite and telephone communications could result in a disruption in business, thereby hindering our performance or our ability to complete client projects on time. This, in turn, could lead to a reduction of our revenue.

          The markets in which we operate are subject to the risk of earthquakes, floods and other natural disasters.

          Some of the regions that we operate in are prone to earthquakes, flooding and other natural disasters. In the event that any of our business centers are affected by any such disasters, we may sustain damage to our operations and properties, suffer significant financial losses and be unable to complete our client engagements in a timely manner, if at all. Further, we may also incur costs in redeploying personnel and property. In addition, if there is a major earthquake, flood or other natural disaster in any of the locations in which our significant customers are located, we face the risk that our customers may incur losses, or sustained business interruption and/or loss which may materially impair their ability to continue their purchase of products or services from us. A major earthquake, flood or other natural disaster in the markets in which we operate could have a material adverse effect on our business, financial condition, results of operations and cash flows.

          We may be liable to our clients for damages caused by disclosure of confidential information or system failures.

          We often have access to or are required to collect and store confidential client and customer data. Many of our client agreements do not limit our potential liability for breaches of confidentiality. If any person, including any of our employees, penetrates our network security or misappropriates sensitive data, we could be subject to significant liability from our clients or from our clients’ customers for breaching contractual confidentiality provisions or privacy laws. Unauthorized disclosure of sensitive or confidential client and customer data, whether through breach of our computer systems, systems failure or otherwise, could damage our reputation and cause us to lose clients.

          We are investing substantial cash assets in new facilities and physical infrastructure, and our profitability could be reduced if our business does not grow proportionately.

          As of March 31, 2006, we had contractual commitments of approximately Rs. 1,714 million ($ 39 million) related to capital expenditures on construction or expansion of our software development facilities. We may encounter cost overruns or project delays in connection with new facilities. These expansions may increase our fixed costs. If we are unable to grow our business and revenues proportionately, our profitability will be reduced.

          Our international operations subject us to risks inherent in doing business on an international level that could harm our operating results.

          Currently, we have software development facilities in eight countries around the world. The majority of our software development facilities are located in India. We intend to establish new development facilities in Southeast Asia and Europe. We have not yet made substantial contractual commitments to establish any new facilities and we cannot assure you that we will not significantly alter or reduce our proposed expansion plans. Because of our limited experience with facilities outside of India, we are subject to additional risks related to our international expansion strategy, including risks related to complying with a wide variety of national and local laws, restrictions on the import and export of certain technologies and multiple and possibly overlapping tax structures. In addition, we may face competition in other countries from companies that may have more experience with operations in such countries or with international operations generally. We may also face difficulties integrating new facilities in different countries into our existing operations, as well as integrating employees that we hire in different countries into our existing corporate culture. Our international expansion plans may not be successful and we may not be able to compete effectively in other countries.

          Our business will suffer if we fail to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology and the industries on which we focus.

          The IT services market is characterized by rapid technological change, evolving industry standards, changing client preferences and new product and service introductions. Our future success will depend on our ability to anticipate these advances and develop new product and service offerings to meet client needs. We may not be successful in anticipating or responding to these advances in a timely basis, or, if we do respond, the services or technologies we develop may not be successful in the marketplace. Further, products, services or technologies that are developed by our competitors may render our services non-competitive or obsolete.

          Most of our client contracts can typically be terminated without cause and with little or no notice or penalty, which could negatively impact our revenue and profitability.

          Our clients typically retain us on a non-exclusive, project-by-project basis. Most of our client contracts, including those that are on a fixed-price, fixed-timeframe basis, can be terminated with or without cause, with between zero and ninety days’ notice and without termination-related penalties. Additionally, most of our contracts with clients are typically limited to discrete projects without any commitment to a specific volume of business or future work. Our business is dependent on the decisions and actions of our clients, and there are a number of factors relating to our clients that are outside our control that might result in the termination of a project or the loss of a client, including:

	•		financial difficulties for a client;
	•		a change in strategic priorities, resulting in a reduced level of IT spending;
	•		a demand for price reductions; and
	•		a change in outsourcing strategy by moving more work to client in-house IT departments or to our competitors.

          We may engage in future acquisitions, investments, strategic partnerships or other ventures that may harm our performance, dilute our shareholders’ ownership and cause us to incur debt or assume contingent liabilities.

          We have acquired and in the future may acquire or make investments in complementary businesses, technologies, services or products, or enter into strategic partnerships with parties who can provide access to those assets. For example, in December 2005, we acquired 100% of the equity of mPower Software Service Inc. and its subsidiaries, a U.S. based company in the payment processing sector, and we acquired 100% of the equity of BVPENTE BETEILIGUNGSVERWALTUNG GmbH and its subsidiaries (NewLogic Technologies AG), a European system-on-

chip design company. In the future, we may not identify suitable acquisition, investment or strategic partnership candidates, or if we do identify suitable candidates, we may not complete those transactions on terms commercially acceptable to us or at all. We could have difficulty in assimilating the personnel, operations, technology and software of the acquired company. In addition, the key personnel of the acquired company may decide not to work for us. If we make other types of acquisitions, we could have difficulty in integrating the acquired products, services or technologies into our operations. These difficulties could disrupt our ongoing business, distract our management and employees and increase our expenses.

          Our revenues could be significantly affected if the governments, in geographies we operate in, restrict companies from outsourcing work to foreign corporations

          In the United States, despite economic recovery, the unemployment levels have not declined significantly from the pre- economic recovery levels. There has been concern among the legislators about the impact of outsourcing on unemployment levels in the United States. Legislation has been proposed to prohibit federal and state governments from outsourcing IT and IT enabled services to foreign corporations. Legislators have also proposed to introduce economic deterrents for U.S. companies outsourcing work to foreign corporations.

          Independent research agencies have conducted research and concluded that outsourcing benefits the U.S. economy. Several U.S. companies have also supported outsourcing as a competitive advantage. However, if the proposed laws come into effect it would adversely affect our revenues and profitability.

          Our BPO services revenue depend to a large extent on a small number of clients, and our revenue could decline if a major client reduces the volume of services obtained from us.

          We currently derive, and believe we will continue to derive, a significant portion of our BPO services revenue from a limited number of corporate clients. The reduction in volume of work done to a major client could result in a reduction of our revenue. Since we recruit and train employees in anticipation of continued growth in volume, reduction in the volume of work from these major clients would adversely impact our gross margins.

          There are a number of factors that could cause the loss of a client and such factors are not predictable. We could fail to achieve performance standards due to a lack of clarity between us and the client on the performance standards or due to deficiencies in processes. In certain cases, a client could reduce their spending on such services due to a challenging economic environment and consequently reduce the volume and profitability of business with us. In other cases, a client could reduce its spending on such services with us and form internal competing operations in the U.S., India or other price competitive geographies.

          Some of our long-term client contracts contain benchmarking provisions which, if triggered could result in lower contractual revenues and profitability in the future.

          As the size and complexity of our client engagements increase, our clients may require further benchmarking provisions in our client contracts. Benchmarking provisions allow a customer in certain circumstances to request a benchmark study prepared by an agreed upon third-party comparing our pricing, performance and efficiency gains for delivered contract services to that of an agreed upon list of other service providers for comparable services. Based on the results of the benchmark study and depending on the reasons for any unfavorable variance, we may be required to reduce the pricing for future services to be performed under the balance of the contract, which could have an adverse impact on our revenues and profitability.

          We may be liable to our clients for damages caused by system failures, which could damage our reputation and cause us to lose customers.

          Many of our contracts involve projects that are critical to the operations of our clients’ businesses and provide benefits that may be difficult to quantify. Any failure in a client’s system could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we attempt to limit our contractual liability for consequential damages in rendering our services, we cannot be assured that the limitations on liability we provide for in our service contracts will be enforceable in all cases, or that they will otherwise protect us from liability for damages. A successful assertion of one or more large claims against us that exceeds our available insurance coverage or changes in our insurance policies, including premium increases or the imposition of a large deductible or co-insurance requirement, could adversely affect our operating results.

          Our earnings will be adversely affected upon adoption of an accounting policy to expense stock options based on fair value method.

          We do not currently deduct the expense of employee stock option grants from our income based on the fair value method. We have adopted the pro forma disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation. In December 2004, the Financial Accounting Standards Board issued FASB Statement No. 123 (revised 2004), Share-Based Payment, requiring companies to change their accounting policies to record the fair value of stock options issued to employees as an expense. We are required to adopt SFAS No. 123R as of April 1, 2006. The change in our accounting policy with respect to the treatment of employee stock option grants will adversely affect our earnings, operating results and earnings per share in the event that we make any grants in the future. If we had amortized the stock based employee compensation expense determined under the fair value method of SFAS No. 123, our net income as reported for the years ended March 31, 2004, 2005 and 2006 would have been reduced by Rs. 2,080 million, Rs. 1,244 million and Rs. 571 million respectively.

          Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance.

          Changing laws, regulations and standards relating to accounting, corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations, NYSE rules, Securities and Exchange Board of India rules and Indian stock market listing regulations, are creating uncertainty for companies like ours. These new or changed laws, regulations and standards may lack specificity and are subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards.

          Pursuant to the requirements of Sarbanes Oxley Act, 2002, in the annual report for the year ended March 31, 2007, the company is required to report on the effectiveness of internal controls over financial reporting. The company is documenting the internal controls over financial reporting, assessing the design and operating effectiveness and correcting the deficiencies, if any, in the internal controls over financial reporting. There can be no assurance that the company would be able to complete this exercise on time or the company would not report any material weakness in the internal controls over financial reporting.

          We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In addition, the new laws, regulations and standards regarding corporate governance may make it more difficult for us to obtain director and officer liability insurance. Further, our board members, chief executive officer and chief financial officer could face an increased risk of personal liability in connection with their performance of duties. As a result, we may face difficulties attracting and retaining qualified board members and executive officers, which could harm our business. If we fail to comply with new or changed laws or regulations and standards differ, our business and reputation may be harmed.

          Risks Related to Investments in Indian Companies and International Operations generally.

          We are incorporated in India, and substantially all of our assets and our employees are located in India. Consequently, our financial performance and the market price of our ADSs will be affected by political, social and economic developments affecting India, Government of India policies, including taxation and foreign investment policies, Government currency exchange control, as well as changes in exchange rates and interest rates.

          Wages in India have historically been lower than wages in the United States and Europe, which has been one of our competitive advantages. Wage increases in India may prevent us from sustaining this competitive advantage and may reduce our profit margins.

          Our wage costs in India have historically been significantly lower than wage costs in the United States and Europe for comparably skilled professionals, and this has been one of our competitive advantages. However, wage increases in India may prevent us from sustaining this competitive advantage and may negatively affect our profit margins. We may need to increase the levels of our employee compensation more rapidly than in the past to retain talent. Unless we are able to continue to increase the efficiency and productivity of our employees or source talent from other low cost locations, like Eastern Europe, China or South-East Asia, wage increases in the long term may reduce our profit margins.

          Our costs could increase if the Government of India reduces or withholds tax benefits and other incentives it provides to us.

          Currently, we benefit from certain tax incentives under Indian tax laws. As a result of these incentives, our operations have not been subject to significant Indian tax liabilities. These tax incentives currently include a tax holiday from payment of Indian corporate income taxes for our Global IT Services and Products business operated from specially designated “Software Technology Parks” and “Special Economic Zones” in India and an income tax deduction of 100% for profits derived from exporting information technology services. As a result, a substantial portion of our pre-tax income has not been subject to significant tax in recent years. For the years ended March 31, 2004, 2005 and 2006 our tax benefits were Rs. 2,925 million, Rs. 4,591 million and Rs. 4,721 million respectively, from such tax incentives. We are currently also eligible for exemptions from other taxes, including customs duties. The Finance Act, 2000 phases out the tax holiday for “Software Technology Parks” over a ten year period from the financial year 1999-2000 to financial year 2008-2009. Our current tax holidays expire in stages by 2009. For companies opting for the 100% tax deduction for profits derived from exporting information technology services, the Finance Act, 2000 phases out the income tax deduction over a period of five years from April 1, 2000. Additionally, the Government of India could enact similar laws in the future, which could further impair our other tax incentives.

          In the Finance Act, 2005, the Government of India introduced a separate tax holiday scheme for units set up under designated special economic zones engaged in manufacture of articles or in provision of services. Under this scheme, units in designated special economic zones which begin providing services on or after April 1, 2005 will be eligible for a deduction of 100 percent of profits or gains derived from the export of services for the first five years from commencement of provision of services and 50 percent of such profits or gains for a further five years. Certain tax benefits are also available for a further five years subject to the unit meeting defined conditions. When our tax holiday and income tax deduction exemptions expire or terminate, our costs will increase.

          In March 2004 and March 2005, we had received demands from the Indian income tax authorities for our 2000 and 2001 fiscal years respectively for a total of Rs. 5,232 million. The tax demands were primarily due to the denial of deductions claimed by us under Section 10A of the Income Tax Act 1961, with respect to profits earned by our undertakings at our Software Technology Park located at Bangalore. We have appealed against these demands. In March 2006, the first Income tax appellate authority substantially upheld the deductions claimed by us under Section 10A of the Act, which will vacate a substantial portion of the demands for these years.

          In March 2006, we received an assessment order from the tax authorities for our 2002 fiscal year on similar grounds. The order has demanded a tax of Rs. 2,869 million (including interest of Rs.750 million). We will file an appeal against this assessment order within the prescribed statutory timeframe.

          Considering the facts and nature of disallowances, the order of the appellate authority upholding our deduction claims for our 2000 and 2001 fiscal years, our management believes that the final outcome of the 2002 dispute should also be resolved in our favour and there should not be any material impact on our financial statements.

          Although we currently believe we will ultimately prevail in our appeal, the results of such appeal, and any subsequent appeals, cannot be predicted with certainty. Should we fail to prevail in our appeal, or any subsequent appeals, in any reporting period, the operating results of such reporting period could be materially adversely affected.

          After considering the provision made in the books based on our assessment, as of March 31, 2006, our net exposure on these tax demands was Rs. 2,413 million, or approximately $ 54 million.

          The Indian Finance Act, 2005 imposes an additional income tax on companies called a “Fringe Benefits Tax”, or FBT. Pursuant to this Act, companies are deemed to have provided fringe benefits to their employees if certain defined expenses are incurred. A portion of these expenses is deemed to be a fringe benefit to the employees and subjects a company to tax at a rate of 30%, exclusive of applicable surcharge and cess. The Fringe Benefits Tax and other similar taxes enacted in the future by the Government of India could adversely affect our profitability.

          Regional conflicts in South Asia could adversely affect the Indian economy, disrupt our operations and cause our business to suffer.

          South Asia has from time to time experienced instances of civil unrest and hostilities among neighboring countries, including between India and Pakistan. In recent years there have been military confrontations between India and Pakistan that have occurred in the region of Kashmir and along the India-Pakistan border. The potential for hostilities between the two countries is high due to terrorist incidents in India and the aggravated geopolitical situation in

the region. Both countries have initiated active measures to reduce hostilities. Military activity or terrorist attacks in the future could influence the Indian economy by disrupting communications and making travel more difficult and such political tensions could create a greater perception that investments in Indian companies involve higher degrees of risk. This, in turn, could have a material adverse effect on the market for securities of Indian companies, including our equity shares and our ADSs, and on the market for our services.

          Political instability in the Indian Government could delay the liberalization of the Indian economy and adversely affect economic conditions in India generally, which could impact our financial results and prospects.

          Since 1991, successive Indian Governments have pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian Central and State Governments in the Indian economy as producers, consumers and regulators has remained significant. The last general elections were held in May 2004. The ruling coalition Government, which has over last several years pushed significant economic reforms, was voted out of power and a new coalition Government has come to the helm. The new Government has announced policies and taken initiatives that support the continued economic liberalization policies that have been pursued by previous Government. Although we believe that the process of economic liberalization will continue, the rate of economic liberalization could change, and specific laws and policies affecting technology companies, foreign investment, currency exchange and other matters affecting investment in our securities could change as well. A significant change in India’s economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and our business in particular.

          The new Government is a coalition of several parties and withdrawal of one or more of these parties could result in political instability. Such instability could delay the reform of the Indian economy and could have a material adverse effect on the market for securities of Indian companies, including our equity shares and our ADSs, and on the market for our services.

          Indian law limits our ability to raise capital outside India and may limit the ability of others to acquire us, which could prevent us from operating our business or entering into a transaction that is in the best interests of our shareholders.

          Indian law constrains our ability to raise capital outside India through the issuance of equity or convertible debt securities. Generally, any foreign investment in, or an acquisition of, an Indian company requires approval from relevant Government authorities in India, including the Reserve Bank of India. However, subject to certain exceptions, the Government of India currently does not require prior approvals for IT companies like us. If we are required to seek the approval of the Government of India and the Government of India does not approve the investment or implements a limit on the foreign equity ownership of IT companies, our ability to seek and obtain additional equity investment by foreign investors will be limited. In addition, these restrictions, if applied to us, may prevent us from entering into a transaction, such as an acquisition by a non-Indian company, which would otherwise be beneficial for our company and the holders of our equity shares and ADSs.

          Our ability to acquire companies organized outside India depends on the approval of the Government of India. Our failure to obtain approval from the Government of India for acquisition of companies organized outside India may restrict our international growth, which could negatively affect our revenue.

          The Ministry of Finance of the Government of India and/or the Reserve Bank of India must approve our acquisition of any company organized outside of India. The Government of India has recently issued a policy statement permitting the acquisition of companies organized outside India for a transaction value not exceeding 200% of the net worth of the acquiring company and:

	•		if the transaction consideration is paid in cash, up to 100% of the proceeds from an ADS offering; and
	•		if the transaction consideration is paid in stock (i.e., by issue of ADRs/GDRs), the greater of $ 100 million or ten times the acquiring company’s previous fiscal year’s export earnings.

          We cannot assure you that any required approval from the Reserve Bank of India and or the Ministry of Finance or any other Government agency can be obtained. Our failure to obtain approval from the Government of India for acquisitions of companies organized outside India may restrict our international growth, which could negatively affect our revenue.

          It may be difficult for you to enforce any judgment obtained in the United States against us, the selling shareholders or our affiliates.

          We are incorporated under the laws of India and many of our directors and executive officers, reside outside the United States. Virtually all of our assets and the assets of many of these persons are located outside the United States. As a result, you may be unable to effect service of process upon us outside India or upon such persons outside their jurisdiction of residence. In addition, you may be unable to enforce against us in courts outside of India, or against these persons outside the jurisdiction of their residence, judgments obtained in courts of the United States, including judgments predicated solely upon the federal securities laws of the United States.

          We have been advised by our Indian counsel that the United States and India do not currently have a treaty providing for reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the United States on civil liability, whether or not predicated solely upon the federal securities laws of the United States, would not be enforceable in India. However, the party in whose favor such final judgment is rendered may bring a new suit in a competent court in India based on a final judgment that has been obtained in the United States. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. A party seeking to enforce a foreign judgment in India is required to obtain approval from the Reserve Bank of India under the Foreign Exchange Management Act, 1999, to execute such a judgment or to repatriate any amount recovered.

          The laws of India do not protect intellectual property rights to the same extent as those of the United States, and we may be unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property may result in development of technology, products or services which compete with our products. We may also be subject to third-party claims of intellectual property infringement.

          Our intellectual property rights are important to our business. We rely on a combination of copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property. However, the laws of India do not protect proprietary rights to the same extent as laws in the United States. Therefore, our efforts to protect our intellectual property may not be adequate. Our competitors may independently develop similar technology or duplicate our products or services. Unauthorized parties may infringe upon or misappropriate our products, services or proprietary information.

          The misappropriation or duplication of our intellectual property could disrupt our ongoing business, distract our management and employees, reduce our revenue and increase our expenses. We may need to litigate to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Any such litigation could be time-consuming and costly. As the number of patents, copyrights and other intellectual property rights in our industry increases, and as the coverage of these rights increases, we believe that companies in our industry will face more frequent infringement claims. Defending against these claims, even if not meritorious, could be expensive and divert our attention and resources from operating our company.

          Although we believe that our intellectual property rights do not infringe on the intellectual property rights of any other party, infringement claims may be asserted against us in the future. If we become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial damage award and be forced to develop non-infringing technology, obtain a license or cease selling the applications or products that contain the infringing technology. We may be unable to develop non-infringing technology or to obtain a license on commercially reasonable terms, or at all.

          Risks Related to the ADSs

          Sales of our equity shares may adversely affect the prices of our equity shares and the ADSs.

          Sales of substantial amounts of our equity shares, including sales by insiders, in the public market, or the perception that such sales may occur, could adversely affect the prevailing market price of our equity shares or the ADSs or our ability to raise capital through an offering of our securities. In the future, we may also sponsor the sale of shares currently held by some of our shareholders, or issue new shares. We can make no prediction as to the timing of any such sales or the effect, if any, that future sales of our equity shares, or the availability of our equity shares for future sale, will have on the market price of our equity shares or ADSs prevailing from time to time.

          An active or liquid trading market for our ADSs is not assured.

          An active, liquid trading market for our ADSs may not be maintained in the long term. Loss of liquidity could increase the price volatility of our ADSs.

          Indian law imposes foreign investment restrictions that limit a holder’s ability to convert equity shares into ADSs, which may cause our ADSs to trade at a premium or discount to the market price of our equity shares.

          Under certain circumstances, the Reserve Bank of India must approve the sale of equity shares underlying ADSs by a non-resident of India to a resident of India. The Reserve Bank of India has given general permission to effect sales of existing shares or convertible debentures of an Indian company by a resident to a non-resident, subject to certain conditions, including the price at which the shares may be sold. Additionally, except under certain limited circumstances, if an investor seeks to convert the rupee proceeds from a sale of equity shares in India into foreign currency and then repatriate that foreign currency from India, he or she will have to obtain an additional Reserve Bank of India approval for each transaction. Required approval from the Reserve Bank of India or any other Government agency may not be obtained on terms favorable to a non-resident investor or at all.

          Investors who exchange ADSs for the underlying equity shares and are not holders of record will be required to declare to us details of the holder of record, and the holder of record will be required to disclose the details of the beneficial owner. Any investor who fails to comply with this requirement may be liable for a fine of up to Rs. 1,000 for each day such failure continues. Such restrictions on foreign ownership of the underlying equity shares may cause our ADSs to trade at a premium or discount to the equity shares.

          An investor in our ADSs may not be able to exercise preemptive rights for additional shares and may thereby suffer dilution of his or her equity interest in us.

          Under the Indian Companies Act, a company incorporated in India must offer its holders of equity shares preemptive rights to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages prior to the issuance of any new equity shares, unless such preemptive rights have been waived by three-fourths of the shares voting on the resolution to waive such rights. Holders of ADSs may be unable to exercise preemptive rights for equity shares underlying ADSs unless a registration statement under the Securities Act is effective with respect to such rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to prepare and file such a registration statement and our decision to do so will depend on the costs and potential liabilities associated with any such registration statement, as well as the perceived benefits of enabling the holders of ADSs to exercise their preemptive rights, and any other factors we consider appropriate at the time. No assurance can be given that we would file a registration statement under these circumstances. If we issue any such securities in the future, such securities may be issued to the Depositary, which may sell such securities for the benefit of the holders of the ADSs. There can be no assurance as to the value, if any, the Depositary would receive upon the sale of such securities. To the extent that holders of ADSs are unable to exercise preemptive rights granted in respect of the equity shares represented by their ADSs, their proportional interests in us would be reduced.

          ADS holders may be restricted in their ability to exercise voting rights.

          At our request, the Depositary will mail to you any notice of shareholders’ meeting received from us together with information explaining how to instruct the Depositary to exercise the voting rights of the securities represented by ADSs. If the Depositary receives voting instructions from you in time, relating to matters that have been forwarded to you, it will endeavor to vote the securities represented by your ADSs in accordance with such voting instructions. However, the ability of the Depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure that you will receive voting materials in time to enable you to return voting instructions to the Depositary in a timely manner. Securities for which no voting instructions have been received will not be voted. There may be other communications, notices or offerings that we only make to holders of our equity shares, which will not be forwarded to holders of ADSs. Accordingly, you may not be able to participate in all offerings, transactions or votes that are made available to holders of our equity shares.

Item 4. Information on the Company

History and Development of the Company

          Wipro Limited was incorporated in 1945 as Western India Vegetable Products Limited under the Indian Companies Act, VII of 1913, which is now superseded by the Companies Act, 1956. We are deemed to be registered

under the Companies Act, 1956, or the Companies Act. We are registered with the Registrar of Companies, Karnataka, Bangalore, India as Company No. 20800. Our registered office is located at Doddakannelli, Sarjapur Road, Bangalore 560 035, and the telephone number of our registered office is +91-80-2844-0011. The name and address of our registered agent in the United States is CT Corporation, located at 1350 Treat Blvd., Suite 100, Walnut Creek, California 94596.

          Wipro Limited was initially engaged in the manufacture of hydrogenated vegetable oil. Over the years, we have diversified into the areas of Information Technology, or IT, services, IT products and Consumer Care and Lighting Products. We are headquartered in Bangalore, India and have operations in North America, Europe and Asia. For the fiscal year ended March 31, 2006, 95% of our operating income was generated from our IT business segments. For the same period, IT Services and Products represented 84% of our operating income, BPO Services represented 4% of our operating income, India and AsiaPac IT Services and Products represented 6% of our operating income and Consumer Care and Lighting represented 4% of our operating income.

          In October 2000, we raised gross aggregate proceeds of approximately $ 131 million in our initial U.S. public offering of our ADSs on the New York Stock Exchange. We used a portion of these proceeds to consummate the acquisition of Wipro BPO, Global Energy Practice and Wipro Nervewire.

          We incurred capital expenditure of Rs. 4,135 million, Rs. 6,613 million and Rs. 7,486 million during the fiscal years ended March 31, 2004, 2005 and 2006, respectively. These capital expenditures were primarily incurred on new software development facilities in India for our IT Services and Products business segment. As of March 31, 2006, we had contractual commitments of Rs. 1,714 million ($ 39 million) related to capital expenditures on construction or expansion of software development facilities. We currently intend to finance our planned construction and expansion entirely from internal sources of capital.

Business Overview

          We are a leading global IT services company. We have been acknowledged as leading offshore providers of technology services by Gartner, Forrester and other leading research and advisory firms. We are the only Indian company to be ranked among the ‘Top 10 Global Outsourcing Providers’ in the International Association of Outsourcing Professionals – Fortune Global 100 listings. We are also winners of NASSCOM’s Technology Innovation Award 2005.

          We provide a comprehensive range of IT services, software solutions, IT consulting, business process outsourcing, or BPO, services and research and development services in the areas of hardware and software design to leading companies worldwide. We combine the business knowledge and industry expertise of our domain specialists and the technical knowledge and implementation skills of our delivery team in our development centers located in India and around the world, to develop and integrate solutions which enable our clients to leverage IT for achieving their business objectives. We use our quality processes and global talent pool for delivering time to development advantage, cost savings and productivity improvements.

          In India, we are a leader in providing IT solutions and services. We also have a profitable presence in the Indian markets for consumer products and lighting.

          We have three principal business segments:

•

Global IT Services and Products. Our Global IT Services and Products segment provides IT services to customers in the Americas, Europe and Japan. The range of our services includes IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, technology infrastructure outsourcing, BPO services and research and development services in the areas of hardware and software design. Our service offerings in BPO services include customer interaction services, finance and accounting services and process improvement services for repetitive processes.

o

Until June 30, 2005, we reported Global IT Services and Products as an integrated business segment. Effective as of July 1, 2005, we reorganized the management structure of our Global IT Services and Products segment. Pursuant to this reorganization, we have reorganized our business into new operating segments. Business lines with similar economic characteristics and which comply with segment aggregation criteria specified in U.S. GAAP have been combined to form our new reportable segments. Consequently, IT Services and Products and BPO Services now qualify as separate

reportable segments. Segment data for previous periods have been reclassified to conform to the current period presentation.

	o		In December 2005, we acquired 100% of the equity of mPower Software Service Inc. and its subsidiaries, a U.S. based company in the payment processing space, for an aggregate cash consideration equal to Rs. 1,275 million ($28 million). Pursuant to the terms of this acquisition, we also acquired 100% of the equity of MPact India, a joint venture between MasterCard International and mPower Software Services Inc..
	o		In December 2005, we acquired 100% of the equity of BVPENTE Beteiligungsverwaltung GmbH and its subsidiaries (NewLogic Technologies AG), a European system-on-chip design company. The consideration included a cash payment of Rs. 1,157 million and an earn-out of Euro 26 million to be determined and paid in the future based on certain financial targets being achieved over a three-year period. A portion of this earn-out, up to a maximum of Euro 3 million, is linked to the continuing employment of one of the selling shareholders.
	o		The operations of mPower and New Logic, which are now part of our IT Services and Products, are currently reviewed by our Chief Operating Decision Maker, or CODM, separately, and have accordingly been reported separately under “Acquisitions” in the Notes to our Financial Statements. We intend to include all acquisitions made within 2 to 4 quarters preceding the reporting date within “Acquisitions”.
	o		In April 2006, we acquired cMango Inc., a privately held California, US – headquartered company, in an all cash deal. cMango is a provider of Business Service Management (BSM) solutions. The consideration included a cash payment of Rs.886 Million ($20 million) paid at the closing of the transaction and additional earn-out payments based on achieving specified financial metrics over a two year period.
	o		In May 2006, we acquired, subject to completion of certain closing conditions, US based Quantech Global Services LLC and India based Quantech Global Services Limited for a total consideration of Rs. 444.80 million ($ 10 million) and additional earn outs based on achieving specified financial targets over a three year period.. Quantech, founded 16 years ago, is a leading provider of Computer Aided Design and Engineering services to Fortune 500 companies, particularly in the automotive, aerospace and consumer goods industries. We currently intend to fund this acquisition through our internal accruals.
	o		In May 2006, we acquired, subject to completion of certain closing conditions, a Europe based retail solutions provider, Enabler for a consideration of Euros 41 Million ($ 53 million) payable on closure of the transaction as well as earn-outs on achieving agreed financial targets over a two year period. We currently intend to fund this acquisition through our internal accruals. Enabler is one of the leading specialists in consulting and implementation of integrated solutions and effective support of retail systems.
	o		Our Global IT Services and Products segment accounted for 76% of our revenues and 88% of our operating income for the year ended March 31, 2006. Of these percentages, our IT Services and Products segment accounted for 69% of our revenue and 84% of our operating income for the year ended March 31, 2006, and our BPO Services segment accounted for 7% of our revenue and 4% of our operating income for the year ended March 31, 2006.

	•		India and AsiaPac IT Services and Products. Our India and AsiaPac IT Services and Products segment is a leader in the Indian IT market and focuses primarily on meeting the IT products and services requirements of companies in India, Asia-Pacific and the Middle East region. This business segment accounted for 16% of our revenue and 6% of our operating income for the year ended March 31, 2006.
	•		Consumer Care and Lighting. We leverage our brand name and distribution strengths to sustain a profitable presence in niche markets in the areas of soaps, toiletries and lighting products for the Indian market. This business segment accounted for 5% of our revenue and 4% of our operating income for the year ended March 31, 2006.

     Industry Overview

     IT Services and Products

          The role of IT in transforming businesses and economies has been widely recognized. Changing economic and business conditions, rapid technological innovation, proliferation of the Internet and increasing globalization are creating an increasingly competitive market environment that is driving corporations to transform the manner in which they operate. Customers are increasingly demanding improved products and services with accelerated delivery times and at lower prices. To adequately address these needs, corporations are focusing on their core competencies and are using outsourced technology service providers to help improve productivity, develop new products, conduct research and development activities, reduce business risk and manage operations more effectively.

          The IT and information technology-enabled service or IT-ITES, sector has been experiencing growth in India, with multinational companies building a global presence through cross-border acquisitions and organic growth in other low cost locations. This is complemented by major global players continuing to significantly develop their offshore delivery capabilities, predominantly in India, validating the success of the global delivery model and highlighting India’s increasing role in outsourcing.

          The shift in the role of IT from merely supporting business to transforming business, which is driving productivity gains and creating new business models, has increased the importance of IT to the success of companies worldwide. The ability to design, develop, implement, and maintain advanced technology platforms and solutions to address business and customer needs has become a competitive advantage and a priority for corporations worldwide. We have found that companies are now focused on moving data residing in disparate IT systems to the decision makers within the company real-time and in a seamless manner. Companies have recognized the transformational capabilities of real-time data and have started integrating IT processes with core business activities, with their clients and with their suppliers. Concurrently, the prevalence of multiple technology platforms and a greater emphasis on network security and redundancy have increased the complexity and cost of IT systems, and have resulted in greater technology-related risks. The need for more dynamic technology solutions and the increased complexity, cost and risk associated with these technology platforms has created a growing need for specialists with experience in leveraging technology to help drive business strategy.

          To serve these companies, there is an increasing need for highly skilled technology professionals in the markets in which we operate. IT service providers need cross functional teams of domain experts with deep industry knowledge and process and implementation specialists with technical expertise and application development skills. The cross functional teams should have the ability to integrate solutions across disparate IT systems.

          The focus for companies is on objective factors such as:

	•		providing decision makers with real-time data from disparate IT systems to enhance the effectiveness of the decision making process;
	•		realizing measurable cost efficiencies;
	•		realizing a defined return on investment on their IT spending;
	•		reducing the cycle time of introducing new software applications, commonly known as time-to-application advantage;
	•		reducing the time it takes to develop new technologies, commonly known as time-to-market advantage;
	•		increasing the focus on core activities by outsourcing IT infrastructure to integrated IT service providers; and
	•		strengthening individual portfolio and expanding geographic footprints through cross-border mergers and acquisitions.

          According to the Worldwide Services Spending Forecast, a report published by International Data Corporation, or IDC, in May 2005, the global IT services market is estimated to grow from approximately $ 383 billion in 2003 to approximately $512 billion by 2008, reflecting a compound annual growth rate, or CAGR, of 6%.

          According to NASSCOM Strategic Review Report 2006, the IT-ITeS exports are targeted to reach $60 billion by 2010, reflecting a CAGR of 27%.

          Companies are increasingly using external professional services as an effective tool to meet their IT requirements. Outsourcing IT requirements enable companies to acquire high quality and cost competitive services. We believe that effective outsourcing provides various benefits, including lower total cost of ownership of IT infrastructure, better productivity from IT, converting a portion of fixed costs into variable costs and quick access to the latest technology. By deploying high-speed communications equipment, companies can access skilled IT services from remote locations to meet their complex IT requirements in a cost-effective manner.

          Increasing Trend Towards Offshore Technology Services. Companies are increasingly turning to offshore technology service providers to meet their need for high quality, cost competitive technology solutions. Technology companies have been outsourcing software research and development and related support functions to offshore technology service providers to reduce cycle time for introducing new products and services. These companies are now outsourcing a larger portion of their IT activities, including core software research and development activities, to offshore locations to access skilled resources at lower costs.

          According to Gartner’s Global Offshore Sourcing Predictions report published in June 2004, less than 3% of global corporate IT services spending are being globally sourced. By 2007, Gartner expects that the globally sourced component of IT services spending will be 7% of total global IT services spending.

          According to NASSCOMM Strategic Review Report 2006, IDC forecasts a growth of over 7% (CAGR) in worldwide IT-ITeS spends, and a growth of over 15% (CAGR) in offshore IT spending, over 2005-09.

          Pure play IT services is becoming a high-volume commoditized service offering. Indian IT service providers have traditionally addressed the application development and maintenance markets. The Indian IT service providers are now acquiring or developing consulting skills to effectively compete against leading global IT services companies as integrated service providers. Indian IT service providers are also benefiting from the growing trend of companies breaking up large IT services contracts into smaller components. The companies can diversify their vendor base, realize cost savings by off-shoring certain components and retain flexibility to ramp up or scale down IT operations lockstep with changing business requirements. Indian IT service providers can now compete more effectively against established IT services companies like Accenture, EDS and IBM.

          The India Advantage. We believe that India is a premiere destination for offshoring IT services. According to the June 2004 Gartner Strategic Analysis Report, titled India Maintains Its Offshore Leading Position, India will remain the dominant offshore service provider through 2008. According to the report, no other nation will have a double-digit share of global offshore service revenue.

          According to NASSCOM’s Strategic Review Report 2006, the total combined Indian IT services and IT-enabled services export market in fiscal 2006 was nearly $ 23 billion. According to NASSCOM’s Strategic Review Report 2006, the total Indian IT services and IT-enabled services export market is projected to grow to $ 60 billion by fiscal 2010.

          We believe that there are several key factors contributing to this growth of India-based IT services:

	•		India-based IT companies have proven their capability to deliver IT services that satisfy the requirements of international clients who expect the highest quality standards. According to a report by Dataquest published in October 2003, 75% of the world’s SEI-CMM Level 5-assessed development centers were located in India. According to NASSCOM’s Strategic Review Report 2006, out of the 400 companies which have various quality certifications, 82 are assessed at SEI-CMM Level 5 and 90 more companies are reported to be in the process of getting certified. SEI-CMM is the Software Engineering Institute’s Capability Maturity Model, which assesses the quality of organizations’ management system processes and methodologies.
	•		India has a large, highly skilled English-speaking labor pool that is available at a relatively low labor cost. According to NASSCOM Strategic Review Report 2006, the Indian IT industry employed nearly 920,000 software professionals as of March 31, 2006, making it the second largest employer in the IT services industry after the United States. Approximately 280,000 engineering degree and diploma holders enter the workforce annually, with a majority of them entering the IT industry. According to this report, client organisations could expect total savings of 25% to 50% by using offshore processes primarily because of

the differential in wages paid by these companies in comparison to their India-based counterparts. Although wages in India are rising at a faster pace, the labor rate differential is currently anticipated to remain a competitive advantage for Indian companies.

	•		With the time differential between India and its largest market, the United States, Indian companies are able to provide a combination of onsite and offshore services on a 24-hour basis on specific projects.
	•		In addition to strong telecom links and physical connectivity to and within India via road and air have also been stepped up over the past few years. According to the mid term review of the Tenth Five Year Plan 2002-2007 India currently has the second largest road network in the world totaling over 3.3 million kilometers.

          The traditional model for most large companies has been to manage most functions internally. However, current global macroeconomic conditions and intense competitive pressures have forced companies to pursue new business models. Companies are focusing on their core activities and outsourcing critical but non-core activities to companies that specialize in such non-core functions. Outsourcing enables companies to reduce their operating costs, realize benefits of scale and flexible cost structures and achieve significant process improvements.

BPO Services

          India is a leading destination for BPO services. The proven track record and client relationships of established Indian IT services companies, favorable wage differentials, availability of a large, high quality, English speaking talent pool and a regulatory environment more friendly to investment are facilitating India’s emergence as a global outsourcing hub. According to the March 2005 report published by IDC, titled “Worldwide and US Business Process Outsourcing (BPO) 2004-2008 forecast”, the worldwide spending on BPO services is expected to grow from $ 448 billion in 2004 to approximately $ 682 billion by 2008, a CAGR of 11%. According to NASSCOM Strategic Review Report 2006, the worldwide spending on ITeS-BPO services is expected to grow at a CAGR of more than 10% over 2005-2009.

India and Asia Pac IT Services and Products

          The domestic Indian IT industry is primarily composed of hardware, packaged software and IT services. According to IDC, while the domestic packaged software and IT services market is expected to grow at 19.6% and 18.1% respectively for the period 2004-2009, the hardware market is expected to show a comparatively modest growth rate of 17.9% for the same period. However, India is expected to continue to be the fastest growing IT market in the APAC region.

          IDC predicts that Indian IT market will grow at 19% in 2006 over 2005. WLAN equipments will show the highest growth in the hardware segment, while Application Life Cycle Management Software and Security Software will witness major growth in the software segment. According to IDC, the IT services market in India is expected to grow to approximately to $ 3.5 billion in 2006 from an estimated $ 2.9 billion in 2005. Outsourcing Services are expected to be the largest contributor with 24% of this market. Increasing focus on vertical orientation is expected to lead to IT vendors and independent software vendors, or ISVs bringing to market products and solutions that have ‘in-built’ industry-specific customization capabilities or templates. Government and education verticals are also emerging as major IT spenders in the country.

Consumer Care and Lighting

          The consumer care market that we address includes soaps, toiletries and infant care products. A large portion of our revenues is derived from the sale of soaps. The market for soaps in India is dominated by established players like Hindustan Lever (a subsidiary of Unilever). We have a strong brand presence in a niche segment and have significant market share in select regional geographies. We expect to increase our market share organically in our identified geographies and in addition we look at acquiring established brands which complement our brand presence and distribution strengths. In lighting, we operate in the domestic market for household lamps as well as institutional market for luminaries and lamps. The market for lighting is led by Philips India (subsidiary of Philips NV). We have a strong brand presence in select regional geographies for domestic lighting, as well as an established institutional presence in select segments like retailing, pharma lighting and software development centre lighting.

Our Competitive Strengths

          We believe that the following are our principal competitive strengths:

          Comprehensive range of IT services

          We provide a comprehensive and integrated suite of IT solutions, ranging from consulting to application development and maintenance and take end-to-end responsibility for project execution and delivery. We have over 15 years of experience in software development, re-engineering and maintenance for our corporate customers and provide managed IT support services at the client’s site through our offshore development centers in India and several near shore development centers located in countries closer to our clients’ offices. We believe that this integrated approach positions us to take advantage of key growth areas in enterprise solutions, including IT services data warehousing, implementation of enterprise package application software such as enterprise resource planning, or ERP, supply chain management or SCM and customer relationship management or CRM. In many large outsourcing deals, BPO services are an integral part of the total services outsourced. Integrating BPO services into our portfolio of service offerings has provided us with a strong competitive advantage over other IT services providers.

          World-class quality as measured by SEI-CMM and Six Sigma initiatives

          One of the crucial factors in our success has been our commitment to pursue the highest quality standards in all aspects of our business. We were assessed at SEI-CMM Level 5, the highest level of quality certification, in January 1999, making us the first IT services provider in the world to achieve this standard. SEI-CMM is widely accepted in the software industry as a standard to measure the maturity and effectiveness of software processes. Our SEI-CMM Level 5 rating is supported by our Six Sigma initiative, which is an internationally recognized program focusing on defect reduction and cycle time reduction. Our Six Sigma program was launched in 1998. Six Sigma represents a quality standard of less than 3.4 defects per million opportunities in which a defect may arise. In our continuous quest of doing more with less, we pioneered the application of LEAN thinking in software services and support transactions. We believe that LEAN is a proven manufacturing philosophy that has been sustained over several decades. The focus is on streamlining activities solely from the customer’s viewpoint, eliminating waste, and a collaborative way of working. We have found that this enhances productivity. We believe that our approach of continuous enrichment through effective experimentation has proven fruitful. Preliminary results, from over 300 projects, indicate improvement in cycle time reduction and effort saving – leading to financial benefit with better teamwork.

          Service offerings in emerging growth areas

          We focus on identifying emerging growth areas and developing service offerings in these areas. For example, we identified technology infrastructure outsourcing as an emerging growth area in 1998. We developed service offering in this area and familiarized customers with the concept of remote network management. Today this comprises 8% of our revenues from IT Services and Products. We have established centers of excellence in emerging growth areas. These centers focus on understanding technology and developing customized business solutions for our customers.

          Broad range of research and development services

          Our strengths in research and development services position us to take advantage of a recovery in global research and development spending. We are one of few major IT services companies in the world capable of providing an entire range of research and development services from concept to product realization. According to NASSCOM’s Strategic Review Report 2005, Indian Research and Development services and software products exports are expected to grow from $ 2.3 billion in 2004 to grow to $ 8 billion by 2008, with a CAGR of 37%. This is higher than the 28% CAGR projected for IT / ITeS Services by NASSCOM in their strategic review report. The annuity nature of revenues from research and development services helps in mitigating the cyclic nature of IT services. We provide IT services for designing, enhancing and maintaining platform technologies including servers and operating systems, communication subsystems, local area and wide area network protocols, optical networking systems, Internet protocol based switches, routers and embedded software, including software used in mobile phones, home or office appliances, industrial automation and automobiles. We acquired these skill sets through our earlier research and development efforts in the design of computer hardware products for the Indian market when the Government of India did not allow these products to be imported.

          Global delivery model

          One of our strengths is our global delivery model, which includes our offshore development centers, or ODCs, and our near shore development centers. We were among the first India-based IT services companies to implement the offshore development model as a method for delivering high-quality services at a relatively low cost to international clients. Our global delivery model has many features that are attractive to our clients, including:

	•		a time difference between the client site and the ODC which allows a 24-hour work schedule for specific projects;
	•		the ability to quickly increase the scale of development operations;
	•		increased access to our large pool of highly skilled IT professionals located in India; and
	•		physical and operational separation from all other client projects, providing enhanced security for a client’s intellectual property.

          Established track record with premier international customer base

          As of March 31, 2006, our IT Services and Products segment had over 494 active clients and our BPO Services had over 30 active customers and over 100 processes and 73% of our revenues of IT Services and products segment was derived from Fortune 1000 and Global 500 clients. We had 79 clients that represented at least $5.0 million in revenues in the fiscal year ended March 31, 2006. We believe that having an established base of high quality, high technology clients provide us with the following competitive advantages:

	•		the type of clients we target are likely to maintain or increase their IT outsourcing budgets;
	•		our ODCs support critical IT applications of our large clients, so the clients are therefore likely to provide a high level of repeat business; and
	•		our IT professionals are consistently exposed to the latest technologies that we are then able to leverage to procure business from other clients.

          Ability to access, attract and retain skilled IT professionals

          We have continued to develop innovative methods of accessing and attracting skilled IT professionals. We partnered with a leading Indian university to establish a program for on the job training and a Masters degree in software engineering. We have also sought to open facilities in various cities in India to better access local professionals. We believe that our ability to retain highly skilled personnel is enhanced by our leadership position, opportunities to work with leading edge technologies and focus on training and compensation. In fiscal 2002 we were assessed at People Capability Maturity Model or PCMM level 5, the highest level of certification. PCMM is widely accepted as a standard to measure the maturity and effectiveness of human resources practices within a company. As of March 31, 2006, in our IT Services and Products business segment we had over 29,800 IT professionals. We expect to grow these numbers in the foreseeable future. One of the keys to attracting and retaining qualified personnel is our variable and performance

linked compensation programs. We have had an employee stock purchase program since 1984 and employee stock option plan and a productivity bonus plan since October 1999.

          Robust systems and processes to support growth in business

          We have proactively invested in systems, processes and infrastructure to support growth in our business. We have developed systems and processes to ensure that we have adequate infrastructure, robust recruitment systems and processes to maintain our culture of ethical behaviour, openness and transparency. Our employee base in our IT Services and Products segment grew from approximately 9,900 employees as of March 31, 2001 to approximately 37,650 employees as of March 31, 2006 and our employee base in BPO Services stands at approximately 16,080 employees as of March 31, 2006. During the same period, our revenues from our IT Services and Products segment have grown from Rs. 17,816 million to Rs. 72,887 million. Our revenues from BPO Services have grown from Rs. 1,644 million for the year ending March 31, 2003 to Rs. 7,626 million for the year ending March 31, 2006.

          Broad distribution network and strong sales force in India

          We have a large and growing distribution network for our domestic businesses. For our Indian IT Services and Products business segment, our direct sales force targets large corporate clients and over 190 channel partners throughout India, and focuses on medium and small enterprises. For our consumer care and lighting products, we have access to more than 1.5 million retail outlets. This distribution reach provides us with a significant competitive advantage and allows us to grow our business with minimal increases in personnel.

          Strong brand recognition in the Indian market

          We believe that our brands are some of the most well recognized brands in the Indian market. We have been operating in the Indian market for over 60 years and believe that customers equate our brand with high quality standards and a commitment to customer service. We enhance the value of our brands through aggressive and selective advertising and promotions.

Our Strategy

          Our objective is to be a world leader in providing a comprehensive range of IT services to our clients. The markets we address are undergoing rapid change due to the pace of developments in technology, changes in business models and changes in the sourcing strategies of clients. We believe that these trends provide us with significant growth opportunities. The key elements of our strategy include:

          Significantly expand our IT Services and Products business and our BPO Services Business

          We expect to continue to grow each of our IT Services and Products business and our BPO Services business and the percentage of our total revenues and profits contributed by these businesses over the next few years. We believe that we can achieve this objective through the following means:

	•		Identify and develop service offerings in emerging growth areas as separate business opportunities. Currently we are focusing on areas such as business intelligence services, package implementation, niche consulting, data warehousing and network storage;
	•		Increase our share of the total IT spending by our large customers through focused account management and more effective selling of all service lines to our existing customers;
	•		Develop industry specific point solutions and use them as entry strategies by demonstrating industry knowledge and understanding of customer businesses and the benefits of outsourcing;
	•		Offer new pricing models, sharing the risks and rewards of the impact of IT solutions on business, productivity improvements and timeliness of delivery;
	•		Use efficient global sourcing models to source IT services from various geographies and develop methodologies to develop and integrate solutions from around the globe.
	•		Leverage our experience in providing IT infrastructure management services in the Indian market and our access to existing clients outside India to provide technology infrastructure support services;

	•		Grow our research and development services by focusing on high growth markets such as telecommunications, mobile communications and the Internet, and high growth technologies such as embedded software;
	•		Expand our market presence by providing enterprise application integration and system integration services; and
	•		Expand our business consulting services and position consulting services as strategic differentiator over other competing entities.

          Increase the number and penetration of our IT Services and Products and our BPO Services clients

          We intend to increase the number of our clients through a dedicated sales team focused on new client acquisitions and increasing our presence in Europe and Asia. Our goal is to make every new client account earn over $ 1 million in annual revenues within twelve months. We intend to increase our share of business with existing clients by expanding our range of IT solutions and by increasing our knowledge of industry segments and individual client businesses to allow us to better understand client requirements. We intend to grow our BPO Services business by leveraging our existing client relationships to offer BPO Services to clients of our IT Services and Products segment. We intend to expand our range of service offerings, migrate from providing solely rules-based processing activities to offering an entire set of enhanced processes, provide value- added services and partner with clients in business transformation initiatives.

          Focus on services-led growth in India and AsiaPac IT Services and Products segment

          We plan to grow in the IT market in India and AsiaPac by focusing on IT services. We believe that by offering clients a full service technology solution, including IT consulting, systems integration, support services, software and networking solutions along with branded hardware products, we can enhance our profitability significantly.

          Aggressively build awareness of the Wipro brand name

          We plan to continue aggressively building awareness among clients and consumers both domestically and internationally of the Wipro brand name. We believe we can leverage the strength of an international brand name across all of our businesses by ensuring that our brand name is associated with Wipro’s position as a market leader that is committed to high quality standards. To achieve this objective, we intend to expand our marketing efforts with advertising campaigns and promotional efforts that are targeted at specific groups.

          Pursue selective acquisition of IT companies

          We continue to pursue selective acquisitions of IT service companies that will allow us to expand our service portfolio and acquire additional skills that are valued by our clients. We believe this will strengthen our relationships with clients and allow us to realize higher revenues from them. In pursuing acquisitions, we focus on companies where we can leverage domain expertise and specific skill sets, and where a significant portion of the work can be moved offshore to India to leverage our low cost offshore delivery model and realize higher margins.

          In December 2005, we acquired 100% equity of mPower Software Services Inc. and subsidiaries (mPower) including the minority shareholding held by MasterCard International in MPact India, a joint venture between MasterCard International and mPower Software Services Inc. This acquisition has enabled us to provide a wide range of additional technology services, including application development and maintenance, infrastructure services, package implementation, BPO and testing. We believe that through this acquisition, we will be able to expand our domain expertise in the payments space and increase the addressable market for IT services.

          In December, 2005, we also acquired 100% equity of BVPENTE Beteiligungsverwaltung GmbH and subsidiaries (New Logic). Through this acquisition, we have acquired strong domain expertise in semiconductor Intellectual Property (IP) cores and complete system-on-chip solutions with digital, analog mixed signal and Radio Frequency (RF) design services. The acquisition also enables us to access over 20 customers in the product engineering space.

          In April 2006, we acquired cMango Inc, a privately held California, US-headquartered company, in an all cash deal. cMango is a provider of Business Service Management (BSM) solutions. The consideration included a cash payment of Rs.886 million ($20 million) paid at the closing of the transaction and additional earn-out payments based on achieving specified financial metrics over a two-year period.

          In May 2006, we acquired, subject to completion of certain closing conditions, US based Quantech Global Services LLC and India based Quantech Global Services Ltd. for a total consideration of Rs. 444.80 million ($ 10 million) and additional earn outs based on achieving specified financial targets over a three year period. Quantech, founded 16 years ago, is a leading provider of Computer Aided Design and Engineering services to Fortune 500 companies, particularly in the automotive, aerospace and consumer goods industries. We currently intend to fund this acquisition through our internal accruals.

          In May 2006, we acquired, subject to completion of certain closing conditions, a Europe based retail solutions provider, Enabler for a consideration of Euros 41 Million ($ 53 million) payable on closure of the transaction as well as earn-outs on achieving agreed financial targets over a two year period. We currently intend to fund this acquisition through our internal accruals. Enabler is one of the leading specialists in consulting and implementation of integrated solutions and effective support of retail systems.

          We continue to explore potential strategic partnerships and other relationships.

          Sustain growth in operating income and cash flow of our traditional businesses

          We have been in the consumer care business since 1945 and the lighting business since 1992. The consumer care business has historically generated surplus cash for us to be able to grow our other businesses. Our strategy is to maintain a steady growth in operating income for these businesses through efficient capital utilization, strong brand name recognition and expanding our nationwide distribution network. We have invested in brands which complement our brand and distribution strengths.

          Continue development of our deep industry knowledge

          We continue to build specialized industry expertise in the IT service industry. We combine deep industry knowledge with an understanding of our clients’ needs and technologies to provide high value, quality services. Our industry expertise can be leveraged to assist other clients in the same industries, thereby improving quality and reducing the cost of services to our clients. We will continue to build on our extensive industry expertise and enter into new industries.

IT Services and Products

          Our IT Services and Products business segment, which we call Wipro Technologies, is a leader in providing IT services to international companies. We provide our clients customized IT solutions to improve their business competitiveness. Our IT services are focused on the following areas:

	•		enterprise IT services;
	•		technology infrastructure support services; and
	•		research and development services;

          In our IT service offerings, we typically assume primary project management responsibility. We offer these services globally through a team of over 29,800 IT professionals.

          Enterprise Solutions Business

          We provide a comprehensive range of enterprise solutions primarily to Fortune 1000 and Global 500 companies to meet their business needs. We combine the business knowledge and industry expertise of our domain specialists and the technical knowledge and implementation skills of our delivery team to create customized solutions for delivering time to development advantage, cost savings and productivity enhancements. Our delivery capabilities are supplemented by a holistic quality approach that integrates quality processes like Six Sigma, SEI CMM Level 5 and CMM to eliminate deficiencies in execution.

          We address the banking and financial services segment, the manufacturing sector, and the retail, energy and utilities industries through our broad range of service offerings. Our enterprise solutions division accounted for 64%, 63% and 63% of our IT Services and Products revenues for the fiscal years ended March 31, 2004, 2005, and 2006, respectively.

          Our services include:

          Custom applications. We enable our clients to leverage IT to achieve business goals and to align their IT systems with their business strategy by creating customized solutions, selecting appropriate technologies, implementing systems on a fast-track basis, and ensuring overall quality.

	•		Development. We offer our software development services over a broad spectrum of technology areas that include client or server applications, object-oriented software, Internet or intranet applications and mainframe applications. For example, a leading electronics company in the United States used to sell products of a particular division online. We helped the client to develop online sales capability at other divisions by building an oracle application interface with EDI systems, third-party softwares and third-party suppliers. Through this process, the client now obtains online information about inventory levels of various products, reconciles sales returns, credits and charge backs and generates automated invoices.
	•		Re-engineering. We study a client’s business processes and existing systems and convert or redevelop them to improve efficiency and reduce costs. For example, we assisted one of the world’s largest water companies in a strategic re-engineering initiative to streamline its IT operations to ensure better service delivery, improved customer relationship and closer links with business. Over a two year period, through a series of strategic initiatives, we enabled the client to realize significant cost savings and improvements in the quality of the IT applications. We followed a cycle of define, perform, review and refine for each of the IT applications assigned to us. We realized savings in the IT application support budget by consolidating IT applications to derive economies of scale and redistributing IT applications among third party vendors for optimum cost savings.
	•		Maintenance. To meet the needs of a changing business environment with limited internal resource utilization, we address legacy software applications for our clients that require upgrades. For example for a leading integrated utility company which sells and delivers electricity and energy related products and services, we significantly reduced the cost of maintaining IT applications by rationalizing disparate IT applications, offshoring application maintenance work and automating certain processes to improve process efficiency.

          Enterprise application integration services. We implement packaged enterprise applications that integrate information in an organization with key business processes to improve the efficiency and effectiveness of our clients. Through strategic alliances with other vendors, we assist our clients in implementing services in the areas of enterprise resource planning, supply chain management and customer relationship management. For example, a leading utility company in the United Kingdom which supplies gas and electricity to residential and commercial centers was facing challenges of deregulation and wanted to improve their relationship with customers. We developed a technical architecture to integrate legacy systems with standard energy industry systems of ERP applications. The application now provides critical information on customer interactions across multiple channels and enables the client to develop a deeper understanding of customer requirements.

          Business intelligence and data warehousing. We develop strategies and implement solutions for our clients to manage multiple sources of data for use in their decision-making processes. For example, a leading specialty retailer of consumer electronics wanted to develop a deeper understanding of customer preferences and develop a customer centric business model for creating competitive advantages and sustaining growth. We developed an application to deliver data about customers segmented into demographics, buying patterns and profitability. We segmented 65 million customers into five critical segments based on 20 parameters. We integrated over three billion records of demographic information from POS terminals, rebates and warranties. We also developed organization wide performance trackers, rollup of profitability and cost metrics at various levels, including the store, product line and customer segments.

          Package Implementation. We use our expertise in package software to architect, implement and maintain client specific solutions. For example, we assisted a leading manufacturer of consumer electronics, communications and IT products in the United States to successfully implement an ERP application. The solution involved business process improvements across 26 cross-functional business units and plants, configuration for two different versions of ERP covering three time zones and two countries, and the training of over 300 users in multiple geographies.

          Consulting. We leverage our domain expertise and knowledge base in specific areas to provide consulting services. For example, we worked with one of the largest foreign exchange and travel companies in designing the architecture of a global, online commercial foreign exchange system. The system is intended to facilitate end-to-end automatic foreign exchange transactions with minimal manual intervention and delays, customer relationship

management and provide value added services to members. We defined a multi-tiered, multi-layered architecture to meet these requirements. The architecture comprised disparate software technologies such as J2EE, XML, CORBA, VB and COM-Java/EJB bridging.

          Testing Services. We are the largest Offshore Testing Services provider in the world with annual revenues aggregating to around $ 164 million, 4500 dedicated employees and 165 customers across the globe, including engagements with fortune 500 companies. We have been operating our Independent Testing Services division since 1997. Our service portfolio in testing covers the entire gamut of user needs from product concept to deployment, across the stages of the product/ application life cycle.

          Technology Infrastructure Support Services

          Our service offerings include help desk management, systems management and migration, network management and messaging services. We are able to provide our IT Services and Products clients with high quality, 24-hour, seven-day-a-week support services by leveraging our expertise in managing IT infrastructures for our clients in India. For example, we assist a large insurance company in the United States, in monitoring the network, which supports 20,000 employees, independent contractors and independent agents, for any intrusion, scanning, breach of network by use of hacking tools or potential DOS attacks. We monitor and sustain firewalls by monitoring incident detection, incident response and incident notification systems, analysis of logs and MIS reporting. We formed this division at the end of 1998 and it accounted for 7%, 7%, 8% of our IT Services and Products revenues for the year ended March 31, 2004, March 31, 2005 and March 31, 2006, respectively. We anticipate that this division of our Global IT Services business will continue to grow over the next few years.

          Research and Development Services

          We provide product development services for both hardware and software systems that are implemented in computers and communications equipment. We acquired these skill sets from earlier research and development efforts in the design of computer hardware products for the Indian market when the Government of India did not allow these products to be imported. We have leveraged our research and development skills to become an outsourcing resource for companies that seek highly skilled product development services for some of their core technologies. We are able to assume complete responsibility for all phases of the development, beginning with the requirements analysis to the transfer of technology and information to the client.

          Our research and development services division accounted for 36%, 37% and 37% of our IT Services and Products revenue for the fiscal years ended March 31, 2004, 2005 and 2006. Our services include:

          Hardware design and development. We design and develop various types of integrated electronic circuits, or ICs, including application specific integrated circuits, or ASICs and field programmable gate arrays, or FPGAs. We offer our services over a broad spectrum of technology areas, and are able to provide our clients complete subsystems or entire products.

          Software system design and development. We develop software applications, including computer operating system software applications commonly known as middleware, electronics communication protocols and software that helps computers manage networks and control peripheral devices such as printers and monitors. We focus on embedded software technologies that involve the design and development of software solutions that are embedded in the hardware of a particular device.

          IT Professionals. We have approximately 12,500 IT professionals trained in a broad array of computing platforms and communication technologies. By focusing on selected markets and technologies we are able to leverage our expertise and create greater efficiencies as well as faster delivery times. Our research and development services are organized into three areas of focus, which are described below with illustrative examples of projects we have completed for our clients:

          Telecommunications and inter-networking. We provide software and hardware design, development and implementation services in areas such as fiber optics communication networks, wireless networks, data networks, voice switching networks and networking protocols. For example, one of our clients, a European Leader in telematics products, wanted to develop a fully integrated infotainment system featuring global navigation system, GSM phone, audio, emergency services, internet access, voice activation and climate control. We designed a software application interface, using Object Oriented Design methodology, integrating multiple functionalities, comprised of human machine interface, functional modules (API layers), resource schedulers and graphics library. Our client was able to offer the product ahead of competition and maintain the technology leader position in the market.

          Embedded systems and Internet access devices. The software solution we provide is programmed into the hardware IC or ASIC to eliminate the need for running the software through an external source. The technology is particularly important to portable computers, hand held devices, consumer electronics, computer peripherals, automotive electronics and mobile phones, as well as other machines such as process-controlled equipment. For example, we helped one of our customers in Japan to gain first-mover advantage by providing mobile printing solution for business travelers. We created an extensive architecture, used device simulators for development and testing and managed the seamless migration of the solution to real-time environment. The solution interfaces with laptops and multiple other mobile devices to cater to needs of ‘anywhere printing’ solutions for an estimated 45 million business travelers across the globe every year.

          Telecommunications and service providers. We provide software application integration, network integration and maintenance services to telecommunications service providers, Internet service providers, application service providers and Internet data centers.

Our Global Delivery Model

          In our IT service offerings, we typically assume primary project management responsibility for all stages of implementation of the project. Typically, a project team consists of a small number of IT professionals based at the client’s location who define the scope of the project, track changes to specifications and requirements during project implementation, assist in installing the software or system at the client’s site and ensure its continued operation. The large proportion of the development work on the project is performed at one of our dedicated offshore development centers, or ODCs, located in India. Our project management techniques, risk management processes and quality control measures enable us to complete projects on time and seamlessly across multiple locations with a high level of quality.

          The Offshore Development Center. We were one of the first Indian IT services companies to implement the offshore development model as a method for delivering high-quality services at a relatively low cost to our international clients. Our ODC is a virtual extension of the client’s working environment with a dedicated facility and dedicated hardware and software infrastructure that replicates the client’s facilities. Certain Clients have had ODCs with us over thirteen years This is further enhanced by a dedicated high-speed telecommunication link with the client’s onsite facilities and a secure working environment. In all our projects, we endeavor to increase the proportion of work performed at the ODCs in order to be able to take advantage of the various benefits associated with this approach, including higher gross margins and increased process control. Due to the level of investment required by our clients in an ODC and the quality of services we provide, the ODC model has provided us a high percentage of repeat business and a stable revenue stream.

          The Nearshore Development Center. Based on specific client needs, we have established dedicated development centers in close proximity to our clients’ business locations, which we call nearshore development centers. These nearshore development centers have employees with specialized functional expertise and provide on-call support to our customers. We currently have nearshore development centers in Reading, in the U.K., Windsor, Ontario in Canada, Kiel in Germany, Tampere in Finland, Shanghai in China and Yokohama in Japan. In addition to providing software development services, these centers, with their significant local talent, also provide a local customer interface.

          Our Clients

          We provide IT software solutions to clients from a broad array of industry sectors. Several of our clients purchase our services across several of our business divisions. We seek to expand the level of business with our existing clients by increasing the type and range of services we provide to them. The table below illustrates the size of our client project engagement size as measured by revenues.

		Number of clients in
		Year ended				Year ended				Year ended
		March 31,				March 31,				March 31,
Per client revenue($)		2004				2005				2006
1-3 million			74				64				103
3-5 million			19				28				30
>5 million			44				65				79
Total			137				157				212

          For the fiscal years ended March 31, 2005 and 2006, the largest client of our IT Services and Products segment accounted for 5% and 3% of the revenues of IT Services and Products and the largest client of our BPO Services segment accounted for 29% and 24% of the revenues of BPO Services. For the same periods, the five largest clients of our IT Services and Products segment accounted for 18% and 15% of IT Services and Products revenues.

          Sales and Marketing

          Our headquarters are located at Bangalore, India. We sell and market our IT Services primarily through our direct sales force, with locations worldwide, including in the United States, France, Germany, Holland, Japan, Sweden and the United Kingdom. Our sales teams are organized in three ways:

	•		by the vertical market segment of the client’s business;
	•		by the geographic region in which the client is located; and
	•		by the specific practice specialization or skill set that the client requires.

          We use an integrated team sales approach that allows our sales teams to pass a client over to an execution team once the sale is completed. Our sales personnel work together with the appropriate software professionals and technical managers in analyzing potential projects and selling our expertise to potential clients. Global IT Services and Products also gets support from our corporate marketing team to assist in brand building and other corporate level marketing efforts. Our sales and marketing team in IT Services and Products has increased from 173 to 213 personnel from March 31, 2005 to March 31, 2006. We intend to expand our global marketing efforts through increased presence in targeted geographical regions.

          Competition

          The market for IT services is highly competitive and rapidly changing. Our competitors in this market include consulting firms, big four accounting firms, global IT services companies, such as Accenture, EDS, IBM Global Services and India based IT services companies such as Cognizant, Infosys, Satyam and Tata Consultancy Services.

          These competitors are located internationally as well as in India. We expect that further competition will increase and potentially include companies from other countries that have lower personnel costs than those currently in India. A significant part of our competitive advantage has historically been a wage cost advantage relative to companies in the United States and Europe. Because wage costs in India are presently increasing at a faster rate than those in the United States our ability to compete effectively will increasingly become dependent on our ability to provide high quality, on-time, complex deliverables that depend on increased expertise in certain technical areas. We also believe that our ability to compete will depend on a number of factors not within our control, including:

	•		the ability of our competitors to attract, retain and motivate highly skilled IT services professionals;
	•		the extent to which our international competitors expand their operations in India and benefit from the favorable wage differential;
	•		the price at which our competitors offer their services; and
	•		the extent to which our competitors can respond to a client’s needs.

          We believe we compete favorably with respect to each of these factors and believe our success has been driven by quality leadership, our ability to create client loyalty and our expertise in targeted select markets.

          In BPO Services, we primarily compete against the in-house business process outsourcing units of international companies, other Indian IT service providers, global competitors and competitors from other offshore locations like the Philippines and Ireland.

Business Process Outsourcing (BPO) Services

          Wipro BPO is one of India’s largest third party offshore BPO providers. Wipro BPO enables clients to improve their quality of processes, reduce costs and realize benefits of scale. Our service offerings include:

	•		customer interaction services, such as IT-enabled customer services, marketing services, technical support services and IT helpdesks;
	•		finance and accounting services, such as accounts payable and accounts receivable processing; and
	•		process improvement services that provide benefits of scale for repetitive processes like claims processing, mortgage processing and document management.

          In BPO Services, we primarily compete against the in-house business process outsourcing units of international companies, other Indian IT service providers, global competitors and competitors from other offshore locations like the Philippines and Ireland. In many large outsourcing deals, BPO services are an integral part of the total services outsourced. Integrating BPO services into our portfolio of service offerings has provided us with a strong competitive advantage over other IT services providers.

          For BPO projects, we have a defined framework to manage the complete BPO process migration and transition. The process has been developed based on the experience of our senior management team over the past ten years in migrating more than 390 remote business processes to India. This defined framework is designed to ensure process integrity and minimize inherent migration risks. The framework includes a proprietary transition toolkit, which ensures that there is a documented methodology with formats, tools, guidelines and a repository of past experiences to aid the transition team during the transition phase. For example, for one of the large broadband service providers in the United States, we have been providing outsourced technical support services. We now have 24x7 customer support facilities, whereas earlier it took 8-9 hours to start attending customer requirements. Call volume has increased by a multiple of 30 times from pilot stage and there is an overall increase in customer satisfaction.

          Our employee base in our BPO Services segment is approximately 16,000 employees as of March 31, 2006. Our revenues from our BPO Services segment have grown from Rs. 1,644 million for the year ended March 31, 2003 to Rs. 7,626 million for the year ended March 31, 2006.

India and AsiaPac IT Services and Products

          Our India and AsiaPac IT Services and Products business segment, which we call Wipro Infotech, is focused on the Indian, Asia-Pacific and Middle-East markets and provides enterprise clients with comprehensive IT solutions. Our suite of services and products consists of the following:

	•		technology products;
	•		technology integration, IT management and infrastructure outsourcing services;
	•		custom application development, application integration, package implementation and maintenance; and
	•		consulting.

          Additionally, we provide our domestic customers with access to our full range of global IT services, including enterprise solutions and research and development services.

          Services and Products

          Technology Products. We manufacture our own brand of personal desktop computers, servers and notebooks, and offer in India a portfolio of international brands in desktops, servers, notebooks, storage products, networking solutions and packaged software to meet our clients’ requirements. We source components from domestic and international companies for manufacturing our own brand of computers, servers and notebooks.

          Technology integration and management services and outsourcing services. We enable our customers to leverage our IT skill and expertise to maximize returns on their technology investments. We have over 23 years of

experience and currently support approximately 400,000 systems with over 7,500 contracts, with approximately 5,600 IT professionals, including outsourced professionals. Our offerings include:

	•		Availability Services. Includes hardware and software maintenance, and network availability services. We provide these services through an annual service or maintenance contract with the client which provides for both preventive and breakdown maintenance services.
	•		System Integration. We are one of the largest system integrators in India and our services include integration of computing platforms, networks, storage, data center and enterprise management software. These services are typically bundled with sales of our technology products.
	•		Infrastructure Management and Total Outsourcing. Includes management and operations of customer’s IT infrastructure on a day-to-day basis. Our Total Outsourcing practice encompasses process, function or activity of the IT department in a client’s organization that can be outsourced to us by the client, through a long term contractual agreement. The scope of outsourcing typically covers two or more of the following areas: applications management, infrastructure management, asset outsourcing and human resources transition.
	•		Technology Support Services. Includes technology support services for upgrades, system migrations, messaging, network audits and new system implementation. When combined with our expertise in availability and managed IT services, we can provide the client with a complete solution for enhanced system performance.

          We supplement our in-house resources with approximately 130 franchisees, which we train, and provide support for to allow them to provide both Availability and Managed IT services. This allows us to grow our business substantially without corresponding increases in our personnel.

     Custom application development, application integration, package implementation and maintenance. We design, develop and implement enterprise applications for corporate customers. Our solutions include custom application development, package implementation, sustenance of enterprise applications, including industry-specific applications, and enterprise application integration.

     Consulting. We provide consulting services in the areas of business continuity and risk management, technology, process and strategy.

          Clients

          We provide products and services to clients in a variety of areas such as manufacturing, banking, financial services and insurance, Government, IT and IT-enabled services, telecommunications and education. Our clients also include channel partners, who are value-added resellers of our services and products. As of March 31, 2006, we had close to 190 channel partners throughout India. We have a diverse range of clients, none of whom account for more than 5% of our India and AsiaPac IT Services and Products business segment revenues.

          Sales and Marketing

          We sell and market our products and services to major corporate clients through our direct sales force, and to smaller clients and retail clients through an extensive network of channel partners. Sales teams are organized based on vertical segments, geographies, client size or product or service segment. Compensation to our sales team is comprised of salary and additional compensation linked to achievement of revenue or profit target and collections that a particular sales team produces. Sales efforts are supplemented through a corporate wide web based ordering system and a marketing team that assists in brand building, and other corporate level marketing efforts. As of March 31, 2006, we had 430 sales and marketing staff.

          Competition

          The market for our services and products is highly competitive and rapidly changing. Our competitors include global players like IBM, Hewlett Packard, EDS, Dell and Indian companies such as TCS, HCL Infosystems and Infosys. We anticipate that Lenovo, which has acquired the PC business of IBM, will be a significant player in Indian IT products market. Global players like IBM and Hewlett Packard and to some extent Sun Microsystems have been increasingly focusing on increasing their presence in the Indian markets. Some of these competitors have secured large IT services

contracts in India. We anticipate this competition to continue to grow as the demand for these services increases and we also expect additional companies to enter the Indian market.

Consumer Care and Lighting

          Our consumer care and lighting business segment focuses on niche profitable market segments and has historically generated cash to support the growth of our other business segments. We began with the hydrogenated oil business in 1946, and have continued to expand our business, currently offering a mix of consumer products including hydrogenated cooking oil, soaps and toiletries, wellness products, light bulbs and fluorescent tubes, and lighting accessories.

          Products

          Soaps and toiletries. Our product lines include soaps and toiletries, as well as baby products, using ethnic ingredients. Our umbrella brands include Santoor, Chandrika and Wipro Active. The Wipro Baby Soft line of infant and child care products, which includes soap, talcum powder, oil, diapers and feeding bottles and Wipro Sanjeevani line of wellness products.

          Lighting. Our product line includes incandescent light bulbs, compact fluorescent lamps and luminaries. We operate both in commercial and retail markets. We have also developed commercial lighting solutions for pharmaceutical production centers, retail stores, software development centers and other industries.

          Hydrogenated cooking oils. Our product line consists of hydrogenated cooking oils, a cooking medium used in homes, and bulk consumption points like bakeries and restaurants. We sell this product under our brand name Wipro Sunflower, which was launched in the 1950s and has been a leading brand in western and southern India.

          Sales and Marketing

          We sell and market our consumer care products primarily through our distribution network in India, which has access to 2 million retail outlets throughout the country. We sell our lighting products to major industrial and commercial customers through our direct sales force, from 29 sales offices located throughout India. We also have access to over 250,000 retail outlets for our lighting products.

          We leverage our brand recognition by successfully incorporating the Wipro identity with our consumer brands. We intend to expand our marketing efforts with advertising campaigns and promotional efforts targeted to specific regions of India.

          Competition

          Our competitors in consumer care and lighting are located primarily in India, and include multinational and Indian companies such as Hindustan Lever for soaps, toiletries and General Electric and Philips for lighting. Certain competitors have recently focused sales strategies on increasing volumes through lower prices. Sustained price pressures by competitors may require us to respond with similar or different pricing strategies. We cannot be reasonably certain that we will be able to compete successfully against such competitors or that continued competition may not adversely affect our gross and operating profits.

          Raw Materials and Manufacturing

          The primary raw materials for many of our soap and hydrogenated oil products are agricultural commodities, such as vegetable oils. We normally purchase these raw materials domestically and internationally through various suppliers’ contracts. Prices of vegetable oils, agricultural commodities tend to fluctuate due to seasonal, climatic and economic factors, which generally also affect our competitors.

          Our lighting products are manufactured from glass and industrialized parts. We purchase these parts from various domestic and foreign distributors and manufacturers, pursuant to a combination of requirement and other supply contracts.

          We have six manufacturing facilities located across India.

Wipro Infrastructure Engineering Limited

     Our fluid power business started in 1975, as a result of our strategy to enter new emerging markets with profitable business and high margins. We focus on the hydraulics market, especially the mobile construction equipment business and believe the growth of this business is linked to the growth of infrastructure spending in India. We manufacture and sell cylinders and truck hydraulics, and we also distribute hydraulic steering equipment and pumps, motors and valves for international companies. The initiatives by the Government of India in improving physical infrastructure have increased the demand for our products. We anticipate that this demand will continue to remain strong until 2006. Our main competitors include Hitachi Ltd., Hyundai Motor Company, UT Limited (India) and overseas suppliers such as the Danfoss Group and Komatsu Ltd.

Markets and Sales Revenue

     Our revenues for the last three fiscal years by geographic areas are as follows:

(In millions)

		Year ended March 31,
		2004				2005				2006
India		Rs. 14,783				Rs. 19,350				Rs. 21,804
United States			30,869				41,812				53,481
Europe			10,459				16,602				24,310
Rest of the world			2,323				3,589				6,512
		Rs. 58,434				Rs. 81,353				Rs. 106,107

Wipro GE Medical Systems Private Limited

     In 1990, we formed a joint venture with General Electric called Wipro GE Medical Systems Private Limited to learn new technologies and management processes from world class companies like General Electric and to enter new markets. General Electric currently holds 51% of the equity in the joint venture and we hold 49%. The joint venture partners have equal representation on the board of directors and the chairman of the joint venture is the chairman of Wipro Limited. The joint venture provides customers in South Asian markets after sales services for all GE Medical Systems products sold to them. Products offered in this market consist of GE Medical Systems products manufactured world wide and portable ultrasound equipment manufactured in India by this joint venture for the global markets. This venture also leverages our strength in software development to develop embedded software for medical equipment designed and developed by General Electric for their global product portfolio. The main competitors of Wipro GE Medical Systems Private Limited include Siemens and Philips.

Intellectual Property

     Our intellectual property rights are important to our business. We rely on a combination of patent, copyright, trademark and design laws, trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property. We require employees, independent contractors and, whenever possible, vendors to enter into confidentiality agreements upon the commencement of their relationships with us. These agreements generally provide that any confidential or proprietary information being developed by us or on our behalf be kept confidential. These agreements also provide that any confidential or proprietary information disclosed to third parties in the course of our business be kept confidential by such third parties. However, our clients usually own the intellectual property in the software we develop for them.

     Our efforts to protect our intellectual property may not be adequate. Our competitors may independently develop similar technology or duplicate our products and/or services. Unauthorized parties may infringe upon or misappropriate our products, services or proprietary information. In addition, India has now complied with all World Trade Organization, or WTO, requirements, which means, that India meets the international mandatory and statutory requirements regarding the protection of intellectual property rights.

     We could be subject to intellectual property infringement claims as the number of our competitors grows and our product or service offerings overlap with competitive offerings. In addition, we may become subject to such claims since we may not always be able to verify the intellectual property rights of third parties from which we license a variety of technologies. Defending against these claims, even if not meritorious, could be expensive and divert our attention from operating our company. If we become liable to third parties for infringing their intellectual property rights, we

could be required to pay substantial damage awards and be forced to develop non-infringing technology, obtain a license or cease selling the applications that contain the infringing technology. The loss of some of our existing licenses could delay the introduction of software enhancements, interactive tools and other new products and services until equivalent technology could be licensed or developed. We may be unable to develop non-infringing technology or obtain a license on commercially reasonable terms, if at all.

     As of March 31, 2006, Wipro Limited and its subsidiaries hold more than 450 trademarks in India, including Wipro, Santoor and Wipro Babysoft. Wipro Trademarks Holding Limited, our wholly owned subsidiary, has more than 500 trademark applications pending in India. We have four registered trademarks in Japan, five registered trademark in the United States, five registered community trademarks. We have one trademark application pending registration in Nepal and twelve applications in Sri Lanka. We have four community trademark applications pending in Europe. It is uncertain whether we will obtain registration for pending trademark and service mark applications.

     We have three patent applications that are currently pending in India. We have one registered patent for our hydraulic tipping valve. We have twenty three registered copyrights and five pending copyright registrations in India. We also have ten designs registered in India. We cannot guarantee that we will obtain patent, design and copyright registration for any of our pending applications.

     On April 12, 2005, Wilmer Cutler, attorneys representing Wipro Werbeagentur GmbH an advertising company in Germany sent us a letter alleging infringement. The letter alleged that our use of the WIPRO name and trademark in Germany constitutes infringement of Wipro Werbeagentur GmbH’s rights. On April 27, 2005, we replied denying the substantive allegations and asserted various defenses. We were served with an ex parte injunction on June 3, 2005. We are moving the court to vacate the injunction. Based on our review on this matter, we believe that, the allegations of Wipro Werbeagentur GmbH’s are without merit. However, there can be no assurance that we will prevail. An unfavorable outcome of this matter could have a material adverse effect on our consolidated financial position, results of operations and cash flows in Germany.

Effect of Government Regulation of our Business

     Regulation of our business by the Indian Government affects our business in several ways. We benefit from certain tax incentives promulgated by the Government of India, including a ten-year tax holiday from Indian corporate income taxes for the operation of most of our Indian facilities and a partial taxable income deduction for profits derived from exported IT services under Indian tax laws. As a result of these incentives, our operations have been subject to relatively insignificant Indian tax liabilities. We have also benefited from the liberalization and deregulation of the Indian economy by the successive Indian Governments since 1991, including the current Indian Government. Further, there are restrictive parts of Indian law that affect our business, including the fact that we are generally required to obtain approval under the Factories Act and the Shops and Establishment Act, from the Reserve Bank of India and/or the Ministry of Finance of the Government of India to acquire companies organized outside India, and we are generally required, subject to some exceptions, to obtain approval from relevant Government authorities in India in order to raise capital outside India. The conversion of our equity shares into ADSs is governed by guidelines issued by the Reserve Bank of India.

     Finally, we are subject to several legislative provisions relating to the Prevention of Food Adulteration, Weights and Measures, Drugs and Cosmetics, Storage of Explosives, Environmental Protection, Pollution Control, Essential Commodities and operation of manufacturing facilities. Non-compliance with these provisions may lead to civil and criminal liability. We are and generally have been in compliance with these provisions.

     Please see the section titled “Risk Factors” in Item 3, Key Information, as well as the section titled “Additional Information” in Item 10, for more information on the effects of Governmental regulation of our business.

Organizational Structure

     Our subsidiaries and affiliates are provided in the table below as at March 31, 2006.

		Country of		Percentage
Name		Incorporation		Held by Wipro
Wipro Inc.		United States			100	%
Enthink Inc. (1)		United States		—
Wipro Japan KK		Japan			100	%
Wipro Chandrika Limited		India			90	%
Wipro Consumer Care Limited		India			100	%
Wipro Travel Services Limited		India			100	%
Wipro Trademarks Holding Limited		India			100	%
Wipro Holdings (Mauritius) Limited		Mauritius			100	%
Wipro Holdings (UK) Limited (2)		United Kingdom		—
Wipro Technologies UK Limited (3)		United Kingdom		—
Wipro HealthCare IT Limited		India			100	%
Wipro Infrastructure Engineering Limited		India			100	%
WeP Peripherals Limited		India			36.93	%
Wipro GE Medical Systems Private Limited		India			49	%
Wipro Shanghai Limited		China			100	%
Spectramind Inc.		United States			100	%
Cygnus Negri Investments Pvt. Ltd. (4)		India		—
BVPENTE Beteiligungsverwaltung GmbH (5)		Austria		—
New Logic Technologies AG (6)		Austria		—
New Logic Technologies SARL (7)		France		—
New Logic Technologies SA (7)		Switzerland		—
New Logic Technologies Inc. (7)		United States		—
mPower Software Services Inc. (8)		USA		—
mPower Software Services India Pvt Ltd. (9)		India		—
MPACT Technology Services Pvt. Ltd. (10)		India		—

Property, Plant and Equipment

     Our headquarters and corporate offices are located at Doddakannelli, Sarjapur Road, Bangalore, India. The offices are approximately 300,000 square feet. We have purchased approximately 2,062,000 square feet of land adjoining our corporate offices for future expansion plans. Additionally, our most significant leased and owned properties are listed in the table below.

     We have one sales and marketing office located in each of the following countries: Canada, France, Germany, Japan, Sweden, Italy, Switzerland, Finland, the Netherlands, the United Kingdom, China and Japan. In addition, we have eleven sales and marketing offices in the United States.

     We operate ten manufacturing sites, aggregating approximately 12,64,871 square feet and approximately 4,037,979 square feet of land. We own seven of these facilities, located in Amalner, Tumkur, Bangalore, Mysore, Hindupur, Chennai and Pondicherry, India. We have leased on a long-term basis two facilities located in Waluj and Baddi, India. We have one software development facility in London, United Kingdom.

     Our software development and manufacturing facilities are equipped with a world class technology infrastructure that includes networked workstations, servers, data communication links, captive power generators and other plants and machinery.

     We believe that our facilities are optimally utilized and that appropriate expansion plans are being planned and undertaken to meet our future growth.

		Building				Land (1)
Location		Approx. Sq.ft.				Approx. Sq.ft.				Ownership
Software Development Facilities
Bangalore (M.G.Road), Karnataka			56,000				—			Leased
Bangalore (ITPL), Karnataka			45,000				—			Leased
Bangalore (Koramangala 1), Karnataka			48,000				—			Leased
Bangalore (Koramangala 2), Karnataka			52,500				30,000			Owned
Bangalore (Madivala – 1), Karnataka			48,000				—			Leased
Bangalore (Madivala – 2), Karnataka			74,800				—			Leased
Bangalore (Madivala – 3), Karnataka			70,000				—			Leased
Bangalore (Madivala – 4), Karnataka			69,803				—			Leased
Bangalore (Electronic City 1), Karnataka			225,000				217,800			Long term lease
Bangalore (Electronic City 2), Karnataka (2)			430,000				522,000			Owned
Bangalore – SIRI Tech, Karnataka			42,272				—			Leased
Bangalore (Electronic City 4), Karnataka (2)			1,000,000				2,015,000			Owned
Bangalore (Sigma Infotech Park-Whitefield), Karnataka			45,800				—			Leased
Bangalore (Ahmed Plaza)			9,270				—			Leased
Bangalore (Subramanya Arcade)			7,308				—			Leased
Chennai (Guindy), Tamil Nadu			35,000				16,000			Owned
Chennai (Guindy), Tamil Nadu			78,000				—			Owned
Chennai (Sholinganalur), Tamil Nadu			450,000				610,000			Owned
Chennai (Anna Salai), Tamil Nadu			44,713				—			Leased
Cochin Info Park			11,956				—			Leased
Cochin Info Park			—				10,96,841			Long term lease
Mysore (Mettagalli Inudstrial Area), Karnataka			10,000				—			Owned
Carlton Towers, Bangalore, Karnataka			4,100				—			Leased
Okhla Industrial Estate, Delhi			139,991				—			Leased
Gurgaon – 2 and 3, Haryana			74,624				—			Long term lease
Hyderabad (Madhapur), Andhra Pradesh			250,000				196,000			Long term lease
Hyderabad (Manikonda), Andhra Pradesh (2)			900,000				1,300,000			Long term lease
Queens Plaza, SP Road, Hyderabad			55,970				—			Leased
Kolkatta (2)			350,000				522,000			Long term lease
New Mumbai (Belapur), Maharashtra			156,000				—			Long term lease
Pune, (Hinjawadi), Maharashtra			270,000				1,084,000			Long term lease
Secunderabad (Begumpet), Andhra Pradesh			40,000				—			Long term lease
Reading, United Kingdom			10,380				—			Leased
Stockholm, Sweden			9,226				—			Leased
Windsor, Canada			24,662				—			Leased
Kiel, Germany			3,745				—			Leased
Yokohoma, Japan			5,328				—			Leased
Shanghai, China			3,660				—			Leased
Total			5,452,063				6,512,800

Factories		Building				Land				Ownership
		Approx. Sq.ft.				Approx. Sq.ft.
Amalner, Maharashtra			727,000				1,108,000			Owned
Bangalore, Karnataka			63,000				397,000			Owned
Tumkur, Karnataka			139,000				736,000			Owned
Hindupur, Andhra Pradesh			31,000				114,000			Owned
Guduvancherry, Chennai			90,000				80,000			Owned
Mysore, Karnataka			60,000				327,000			Owned
Thirubhvanai, Pondicherry			20,000				400,000			Owned
Waluj, Aurangabad			124,000				767,000			Long term lease
Baddi , Himachal Pradesh			10,871				108,979			Long term lease
Total			1,264,871				4,037,979

Material Plans to Construct, Expand and Improve Facilities

     As of March 31, 2006, we have capital commitments of Rs. 1,714 million ($ 39 million) related to the construction or expansion of our software development facilities. Additional expansion plans are currently intended to be funded by internal accruals.

Legal Proceedings

     In the ordinary course of business, we may from time to time become involved in certain legal proceedings. Except as otherwise described herein, Wipro Limited, our directors, executive officers and subsidiaries are not currently a party to any material legal proceedings. Please see the description of our tax proceedings before the Deputy Commissioner of Income, Tax, Bangalore, India, under the section tiled “Income Taxes” under Item 5 of this Annual Report.

Item 5. Operating and Financial Review and Prospects

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Readers are cautioned that this discussion contains forward-looking statements that involve risks and uncertainties. When used in this discussion, the words “anticipate”, “believe”, “estimate”, “intend” ,”could”, “may”, “plan”, “predict”, “should”, “would”, “will” and “expect” and other similar expressions as they relate to the company or our business are intended to identify such forward-looking statements. These forward–looking statements speak only as of the date of this report, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. Factors that could cause or contribute to such differences include those described under the heading “Risk Factors”, as well as the other factors discussed in this report. Readers are cautioned not to place undue reliance on these forward-looking statements. The following discussion and analysis should be read in conjunction with our financial statements included herein and the notes thereto.

Overview

     We are a leading global information technology, or IT, services company founded in 1945, and headquartered in Bangalore, India. We provide a comprehensive range of IT services, software solutions and research and development services in the areas of hardware and software design to the leading companies worldwide. We use our development centers located in India and around the world, quality processes and global resource pool to provide cost effective IT solutions and deliver time-to-market and time-to-development advantages to our clients. We also provide business process outsourcing, or BPO, services.

     In India, we are a leader in providing IT solutions and services. We also have a profitable presence in the Indian markets for consumer products and lighting.

     We have three principal business segments:

     Global IT Services and Products. Our Global IT Services and Products segment provides IT services to customers in the Americas, Europe and Japan and BPO Services to clients in North America, Europe, Australia and other markets. The range of IT services we provide includes IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, technology infrastructure outsourcing, testing services and research and development services in the areas of hardware and software design. Our services offerings in BPO Services include customer interaction services, finance and accounting services and process improvement services for repetitive processes.

     Until June 30, 2005, we reported Global IT Services and Products as an integrated business segment. Effective as of July 1, 2005, we reorganized the management structure of our Global IT Services and Products segment. Pursuant to this reorganization, we have reorganized our business into new operating segments. Business lines with similar economic characteristics and which comply with segment aggregation criteria specified in U.S. GAAP have been combined to form our new reportable segments. Consequently, IT Services and Products, and BPO Services now qualify as reportable segments and are reported separately. Segment data for previous periods have been reclassified to conform to the current period presentation.

     In December 2005, we acquired 100% of the equity of mPower Software Service Inc. and its subsidiaries, a U.S. based company in the payment processing space, for an aggregate cash consideration equal to Rs. 1,275 million ($28 million). Pursuant to the terms of this acquisition, we also acquired 100% of the equity of MPact India, a joint venture between MasterCard International and mPower Software Services Inc..

     In December 2005, we also acquired 100% of the equity of BVPENTE Beteiligungsverwaltung GmbH and its subsidiaries (NewLogic Technologies AG), a European system-on-chip design company. The consideration included a cash payment of Rs. 1,157 million and an earn-out of Euro 26 million to be determined and paid in the future based on certain financial targets being achieved over a three-year period. A portion of this earn-out, up to a maximum of Euro 3 million, is linked to the continuing employment of one of the selling shareholders.

     The operations of mPower and New Logic, which are now part of our IT Services, are currently reviewed by our Chief Operating Decision Maker, or CODM, separately, and have accordingly been reported separately under “Acquisitions” in our Notes to Financial Statements. We intend to include all acquisitions made within 2 to 4 quarters preceding the reporting date within “Acquisitions”.

Our Global IT Services and Products segment accounted for 76% of our revenue and 88% of our operating income for the year ended March 31, 2006. Of these percentages, our IT Services and Products segment accounted for 69% of our revenue and 84% of our operating income for the year ended March 31, 2006 and our BPO Services segment accounted for 7% of our revenue and 4% of our operating income for the year ended March 31, 2006.

In April 2006, we acquired cMango Inc., a privately held California, US – headquartered company, in an all cash deal. cMango is a provider of Business Service Management (BSM) solutions. The consideration included a cash payment of Rs.886 Million ($20 million) paid at the closing of the transaction and additional earn-out payments based on achieving specified financial metrics over a two year period.

In May 2006, we acquired, subject to completion of certain closing conditions, US based Quantech Global Services LLC and India based Quantech Global Services Ltd. for a total consideration of Rs. 444.80 million ($ 10 million) and additional earn outs based on achieving specified financial targets over a three year period. Quantech, founded 16 years ago, is a leading provider of Computer Aided Design and Engineering services to Fortune 500 companies, particularly in the automotive, aerospace and consumer goods industries. We currently intend to fund this acquisition through our internal accruals.

In May 2006, we acquired, subject to completion of certain closing conditions, a Europe based retail solutions provider, Enabler for a consideration of Euros 41 Million ($ 53 million) payable on closure of the transaction as well as earn-outs on achieving agreed financial targets over a two year period. We currently intend to fund this acquisition through our internal accruals. Enabler is one of the leading specialists in consulting and implementation of integrated solutions and effective support of retail systems.

     India and AsiaPac IT Services and Products. Our India and AsiaPac IT Services and Products segment is a leader in the Indian IT market and focuses primarily on meeting the requirements for IT products and services of companies in India, AsiaPacific and the Middle East region. Our India and AsiaPac IT Services and Products segment accounted for 16% of our revenue and 6% of our operating income for the year ended March 31, 2006.

     Consumer Care and Lighting. We leverage our brand name and distribution strengths to sustain a profitable presence in niche markets in the areas of soaps, toiletries, lighting products and hydrogenated cooking oils for the Indian market. Our Consumer Care and Lighting segment accounted for 5% of our revenue and 4% of our operating income for the year ended March 31, 2006.

     Our revenue and net income for the years ended March 31, 2004, 2005 and 2006 are provided below.

		Wipro Limited and its subsidiaries
		Years ended March 31,
		2004				2005				2006
		(in millions except earnings per share
						data)
Revenue		Rs.	58,433			Rs.	81,353			Rs.	106,107
Cost of revenue			(39,000	)			(53,895	)			(71,647	)
Gross profit			19,433				27,458				34,460
Gross margins			33	%			34	%			32	%
Operating income			10,901				17,857				21,972
Loss on direct issue of stock by subsidiary			(206	)			(207	)			—
Net income			9,992				15,833				20,270
Earnings per share
Basic			7.20				11.38				14.41
Diluted			7.20				11.29				14.24

     In June 2004, our shareholders approved a stock dividend, which was previously approved by our Board of Directors. The stock dividend declared was two equity shares for every one equity share outstanding on the record date. As each ADS represented one equity share of the Company, ADS holders also received two ADSs for every one ADS outstanding on the record date. Accordingly, we have issued 465,631,260 additional equity shares, which amount

includes 6,419,576 additional ADSs issued in respect of outstanding ADSs on the record date, and have transferred an amount of Rs. 931 million from retained earnings to equity shares (and ADSs) on our balance sheet. Share and per share data for all periods reported have been adjusted to reflect the stock dividend, and the share and per share numbers reflected herein are post-stock dividend numbers.

     In July 2005, the members of the Company approved a stock dividend, effective August 24, 2005, in the ratio of 1 additional equity shares or ADS for every equity share or ADS held. Accordingly, we issued 705,893,574 additional shares and has transferred an amount of Rs. 1,162 million from additional paid in capital and Rs. 250.04 from retained earnings, to equity shares. The allocation between additional paid in capital and retained earnings is in line with the local statutory accounts. Share and per share data for all periods reported have been adjusted to reflect the stock split effected in the form of stock dividend. Capitalization of additional paid in capital and retained earnings aggregating Rs. 1,412 million has been recorded for the year ended March 31, 2006.

Acquisitions

Acquisition of Ownership Interest in a Subsidiary

     As of March 31, 2005, we held approximately 93% of the outstanding equity shares of Wipro BPO Solutions Limited or Wipro BPO. The remaining shares were held by the employee shareholders.

     During the year ended March 31, 2006, we acquired the balance 7% of the equity shares from the employee shareholders at fair value for an aggregate consideration of Rs. 852 million. The step-acquisition resulted in goodwill and intangibles of Rs. 304 million and Rs. 15 million respectively. As a result of this transaction, Wipro BPO became our wholly owned subsidiary.

     In terms of the scheme of amalgamation approved by the Reserve Bank of India on February 11, 2006, the High Court of Karnataka on April 5, 2006, the Registrar of Companies, Mauritius on January 6, 2006 and the Ministry of Finance, Bermuda on March 28, 2006, Wipro BPO Solutions Limited, India, Spectramind Limited, Mauritius and Spectramind Limited, Bermuda amalgamated with the Company as of April 1, 2005. The Scheme of Amalgamation became effective in April 2006 pursuant to obtaining necessary approvals and filing with the Registrar of Companies. In accordance with the scheme, the merger became effective as of the Appointed Date of April 1, 2005. The transfer of assets being a transfer from subsidiary to parent was recorded at the carrying value and therefore does not have any impact on the consolidated financial statements of the Company.

mPower Software Services Inc. and subsidiaries

     In December 2005, we acquired 100% equity of mPower Software Services Inc. and subsidiaries (MPower) including the minority shareholding held by MasterCard International in MPact India, a joint venture between MasterCard International and mPower Software Services Inc. for an aggregate cash consideration of Rs.1,274. mPower Software Services Inc. is a US based Company engaged in providing IT services in the payments service sector.

     We believe that through this acquisition, we will be able to expand our domain expertise in providing IT services to customers in payments processing sector and increase the addressable market. Further, a part of this acquisition, we aim to provide MasterCard a wide range of services including application development and maintenance, infrastructure services, package implementation, BPO and testing.

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

Description		Fair value
Net tangible assets		Rs. 185
Customer Related Intangibles			357
Deferred tax liability			(125	)
Goodwill			857
Total		Rs. 1,274

     The purchase consideration has been allocated on a preliminary basis based on our estimates. We are in the process of making a final determination of the carrying value of assets and liabilities, which may result in changes in the carrying value of net assets recorded. Finalization of the purchase price allocation based on an independent third party appraisal, which is expected to be completed by June 2006, may result in certain adjustments to the above allocation.

     mPower Software Services Inc. merged with Wipro Inc effective upon the close of business on March 31, 2006.

BVPENTE Beteiligungsverwaltung GmbH and subsidiaries

     On December 28, 2005, we acquired 100% equity of BVPENTE Beteiligungsverwaltung GmbH and subsidiaries (New Logic). New Logic is a European system-on-chip design company. The consideration includes cash payment of Rs. 1,157 and an earn-out of Euro 26.00 million to be determined and paid in the future based on certain financial targets being achieved over a 3 year period. We have determined that a portion of this earn-out, up to a maximum of Euro 2.50 million that is linked to the continuing employment of one of the selling shareholders is compensatory in nature. The balance earn-out will be recorded as additional purchase price when the contingency is resolved.

     We believe that through this acquisition, we have acquired strong domain expertise in semiconductor Intellectual Property (IP) cores and complete system-on-chip solutions with digital, analog mixed signal and Radio Frequency (RF) design services. The acquisition also enables us to access over 20 customers in the product engineering service sector.

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

Description		Fair value
Net tangible assets		Rs. 307
Customer Related Intangibles			147
Technology Related Intangibles			67
Deferred Tax Liability			(53	)
Goodwill			690
Total		Rs. 1,158

     The purchase consideration has been allocated on a preliminary basis based on our estimates. The Company is in the process of making a final determination of the carrying value of assets and liabilities which may result in changes in the carrying value of net assets recorded. Finalization of the purchase price allocation based on an independent third party appraisal, which is expected to be completed by June 2006, may result in certain adjustments to the above allocation.

     Our revenue and operating income by business segment are provided below for the years ended March 31, 2004, 2005 and 2006:

		Year ended March 31,
		2004				2005				2006
Revenue:
Global IT Services and Products
IT Services and Products			67	%			67	%			68	%
BPO Services			8	%			8	%			7	%
Acquisitions			—				—				1	%
Total			75	%			75	%			76	%
India and AsiaPac IT Services and Products			16				16				16
Consumer Care and Lighting			6				6				5
Others			3				3				3
			100	%			100	%			100	%
Operating Income:
Global IT Services and Products
IT Services and Products			78	%			83	%			84	%
BPO Services			7	%			6	%			5	%
Acquisitions			0	%			0	%			0	%
Total			85	%			89	%			88	%
India and AsiaPac IT Services and Products			7				5				6
Consumer Care and Lighting			5				4				4
Others			3				2				2
			100	%			100	%			100	%

     The Others category in the table above includes our other lines of business such as Wipro Infrastructure Engineering and Wipro Biomed. Wipro Biomed, which was earlier reported as part of the Health Science business segment for purposes of financial reporting, is now being reported as part of Others. As discussed previously, we reorganized our business segments in July 2005. We reorganized the management structure of our Global IT Services and Products segment. Pursuant to this reorganization, we have reorganized our business into new operating segments. Business lines with similar economic characteristics and which comply with segment aggregation criteria specified in U.S. GAAP have been combined to form our new reportable segments. Consequently, IT Services and Products and BPO Services now qualify as a separate reportable segments. Corporate activities such as treasury, legal, accounting and human resources which do not qualify as operating segments under SFAS No. 131, have been considered as reconciling items. Reconciling items are net of common costs allocated to other business segments.

Global IT Services and Products

		Year ended March 31,
		2004				2005				2006
						(in millions)
Revenue
IT Services and Products		Rs.	39,412			Rs.	54,256			Rs.	72,887
BPO Services			4,363				6,433				7,626
Total			43,775				60,689				80,513
Gross profit
IT Services and Products			14,364				20,476				25,901
BPO Services			1,480				1,693				1,817
Total			15,844				22,169				27,718
Selling and marketing expenses			(3,520	)			(3,223	)			(3,942	)
General and administrative expenses			(2,493	)			(2,739	)			(4,144	)
Research and Development expenses			(232	)			(274	)			(202	)
Amortization of intangibles			(300	)			(122	)			(31	)
Others, net			1				14				10
Operating income			9,300				15,825				19,409
Revenue growth rate over prior period			43	%			39	%			33	%
Gross margin			36	%			37	%			34	%
Operating margin			21	%			26	%			24	%

     Revenue from our Global IT Services and Products segment consists of revenue from our IT Services and Products and BPO Services business operating segments. Until June 30, 2005, we reported Global IT Services and Products as an integrated business segment. Effective as of July 1, 2005, we reorganized the management structure of our Global IT Services and Products segment into IT Services and Products and BPO Services.

IT Services and Products

		Year ended March 31,
		2004				2005				2006
		(in millions)				(in millions)								(in millions)
										IT Services				Acquisitions				Total
Revenue		Rs.	39,412			Rs.	54,256			Rs.	72,419				Rs.468			Rs.	72,887
Gross profit			14,364				20,476				25,813				88				25,901
Selling and marketing expenses			(3,418	)			(3,122	)			(3864	)			(29	)			(3,893	)
General and administrative expenses			(2,126	)			(2,226	)			(3345	)			(47	)			(3,392	)
Research and Development expenses			(232	)			(274	)			(202	)			—				(202	)
Amortization of intangibles			(84	)			(52	)			(8	)			(18	)			(26	)
Others, net			1				15				7				3				10
Operating income			8,505				14,817				18,401				(3	)			18,398
Revenue growth rate over prior period			38	%			38	%			33	%			0				34	%
Gross margin			36	%			38	%			36	%			19	%			36	%
Operating margin			22	%			27	%			25	%			(1	)%			25	%

     Revenue from our IT Services and Products is derived from technology and software services provided on a time-and-materials or fixed-price, fixed-timeframe basis. Our business segment revenue includes the impact of exchange rate fluctuations. Revenue from IT services provided on a time-and-materials basis is recognized in the period that services are provided and costs are incurred. Revenue from IT services provided through fixed-price, fixed-timeframe projects is recognized on a percentage of completion basis. Provisions for estimated losses on projects in progress are recorded in the period in which we determine such losses to be probable. Maintenance revenue is deferred and recognized ratably over the term of the agreement. To date, a substantial majority of our services revenue has been derived from time-and-materials projects. From time to time, we may experience pricing pressure from our clients, especially during economic downturns, which could adversely affect our revenue, margins and gross profits. For example, clients often expect that as we do more business with them they will receive volume discounts. Additionally, clients may ask for fixed-price arrangements or reduced rates. As such, we believe the proportion of revenue from fixed-price, fixed-timeframe projects may increase. Our operating results could be adversely affected by factors such as cost overruns due to delays, unanticipated costs, and wage inflation.

     The cost of revenue for services in our IT Services and Products segment consists primarily of compensation expenses, data communication expenses, computer maintenance, travel expenses and occupancy expenses associated with services rendered. We recognize these costs as incurred. Selling and marketing expenses consist primarily of sales, advertising and marketing expenses and allocated corporate overhead expenses associated with corporate marketing. General and administrative expenses consist primarily of administrative expenses and allocated corporate overhead expenses associated with management, human resources, information management systems, quality assurance and finance.

     The revenue and profits for any period of our IT services is significantly affected by the proportion of work performed at our facilities in India and at client sites overseas and by the utilization rates of our IT professionals. The higher rates we charge for performing work at client sites overseas do not completely offset the higher costs of performing such overseas work, and therefore, services performed in India generally yield better profit margins. For this reason, we seek to move a project as early as possible from overseas locations to our Indian development centers. As of March 31, 2006, 75% of our professionals engaged in providing IT services were located in India. For the year ended March 31, 2006, 48% of the revenues of our IT services were generated from work performed at our facilities in India.

     In our segment reporting only, management has included the impact of exchange rate fluctuations in revenue. Excluding the impact of exchange rate fluctuations, revenue, as reported in our statements of income, is Rs. 39,162 million, Rs. 54,236 million and Rs. 73,061 million for the years ended March 31, 2004, 2005 and 2006 respectively.

BPO Services

		Year ended March 31,
		2004				2005				2006
						(in millions)
Revenue		Rs.	4,363				6,433				7,626
Gross profit			1,480				1,693				1,817
Selling and marketing expenses			(102	)			(102	)			(49	)
General and administrative expenses			(367	)			(513	)			(752	)
Research and Development expenses			0				0				0
Amortization of intangibles			(216	)			(70	)			(5	)
Others, net			0				0				0
Operating income			795				1,008				1,011
Revenue growth rate over prior period			165	%			47	%			19	%
Gross margin			34	%			26	%			24	%
Operating margin			18	%			16	%			13	%

     Revenue from BPO Services is derived from both time-based and unit-priced contracts. Our business segment revenue includes the impact of exchange rate fluctuations. Revenue from BPO Services is recognized as services are performed under the specific terms of the contracts with our customers. Provisions for estimated losses on projects in progress are recorded in the period in which we determine such losses to be probable. Maintenance revenue is deferred and recognized ratably over the term of the agreement. To date, a substantial majority of our services revenue has been derived from time-and-materials projects. From time to time, we may experience pricing pressure from our clients, especially during economic downturns, which could adversely affect our revenue, margins and gross profits. For example, clients often expect that as we do more business with them they will receive volume discounts. Additionally, clients may ask for fixed-price arrangements or reduced rates. As such, we believe the proportion of revenue from fixed-price, fixed-timeframe projects may increase. Our operating results could be adversely affected by factors such as cost overruns due to delays, unanticipated costs, and wage inflation.

     The cost of revenue for services in our BPO Services segment consists primarily of compensation expenses, data communication expenses, computer maintenance, travel expenses and occupancy expenses associated with services rendered. We recognize these costs as incurred.

     Selling and marketing expenses and general and administrative expenses for our BPO Services business segment are similar in type to those for our IT Services and Products business segment.

     The revenue and profits for any period of our BPO Services is significantly affected by the proportion of work performed at our facilities in India and at client sites overseas and by the utilization rates of our BPO professionals. The higher rates we charge for performing work at client sites overseas do not completely offset the higher costs of performing such overseas work, and therefore, services performed in India generally yield better profit margins. For this reason, we seek to move a project as early as possible from overseas locations to our Indian development centers.

     In our segment reporting only, management has included the impact of exchange rate fluctuations in revenue. Excluding the impact of exchange rate fluctuations, revenue, as reported in our statements of income, is Rs. 4,303 million, Rs. 6,477 million and Rs. 7,664 million for the years ended March 31, 2004, 2005 and 2006 respectively.

India and AsiaPac IT Services and Products

		Year ended March 31,
		2004				2005				2006
						(in millions)
Revenue
Services		Rs.	3,109			Rs.	4,709			Rs.	6,097
Products			6,336				8,686				10,378
Total			9,445				13,395				16,475
Gross profit
Services			1,448				2,030				2,548
Products			693				871				1092
Total			2,141				2,901				3,640
Selling and marketing expenses			(919	)			(1,150	)			(1,392	)
General and administrative expenses			(492	)			(788	)			(841	)
Others, net			31				7				(3	)
Operating income			761				970				1404
Revenue growth rate over prior period			17	%			42	%			23	%
Gross margin			23	%			22	%			22	%
Operating margin			8	%			7	%			9	%