Non-IT Brings Riches For Azim Premji

BACK IN NOVEMBER 2012, when he was still the chairman of Wipro, Azim Premji decided to demerge consumer care & lighting, Wipro Infrastructure Engineering (hydraulics & water business) and medical diagnostic products & services into a separate company — Wipro Enterprises Ltd. (WEPL). The listed Wipro Ltd. would focus on IT while WEPL would be taken private. In June 2019, when he decided to step down from Wipro Ltd. chairmanship and pass on the baton to his son, Rishad Premji, he told employees that with Azim Premji Foundation owning 67% in Wipro Ltd., he would continue on the board while dedicating most of his time to the foundation. He has contributed a major part of his wealth in Wipro to create a philanthropic endowment, valued around ₹2.4 lakh crore ($29 billion) in January 2023. On the other hand, WEPL’s revenue has grown from ₹6,000 crore-plus in FY13 to ₹15,971 crore in FY23. Azim Premji Trust holds 20.3% in the company; the remaining 77.7% stake accounts for a major bump in his wealth considering that the IT business has been struggling to grow. This April, Wipro Ltd. got Srini Pallia as CEO, the third in last eight years, to bring back industry standard growth. For the last few years, barring FY21-22, Wipro Ltd. has been reporting either single digit or negative growth while battling a huge churn at the top, including long-time CFO Jatin Dala, who joined competitor Cognizant last year. In dollar terms, Wipro revenue grew -1.45%, 27.28%, 8.48% and -3.83% in FY21, FY22, FY23 and FY24, respectively. WEPL’s main businesses, on the other hand, are being run by two old-timers — Vineet Agrawal, CEO & MD, Wipro Consumer Care & Lighting, and Pratik Kumar, CEO & MD, Wipro Infrastructure Engineering (Wipro Infra). Under Vineet Agrawal, Wipro’s personal care brands, Santoor, Wipro Shikakai and Sunflower Vanaspati, have become leaders in their categories. Pratik Kumar was made Wipro Infra’s head in 2010; before that, he led global talent function at the IT services company. Other associate companies of WEPL are Wipro GE Healthcare Private Ltd. and Wipro Kawasaki Precision Machinery Private Ltd.

In FY20, WEPL’s consolidated revenues were a little over ₹10,000 crore. In FY23, the consumer care division alone crossed ₹10,000 crore in gross sales with one of its growth drivers being 15 acquisitions in last 20 years. In FY23, the division expanded its food portfolio with acquisition of Kerala-based ready-to-cook range and spice brand Brahmin and launched an R&D centre in Bengaluru to develop innovative food products. starting with snacks; the company is test-marketing south Indian snacks such as butter murukku and kara boondi. “FY25 has started well with India consumer business volumes growing 7.6% and South Africa and Middle East continuing to do well. China and Vietnam are seeing relatively low growth,” says Agrawal. With Santoor touching ₹2,700 crore in sales and commercial lighting business seeing 20% year-on-year growth, the company’s next ambitious goal is expanding the food business to around ₹500 crore in next three-five years by growing organically as well as through acquisitions. WEPL’s India business expanded 16.8% and international business grew 11.9% on a constant currency basis in FY23.

Agrawal is cautiously optimistic about the year ahead despite global uncertainties as a favourable monsoon augurs well for rural demand. “In FY25, emphasis remains on innovation and geographic expansion to sustain growth and accelerated investments in digital transformation and e-commerce,” he says. In the near term, WCCL hopes to innovate and expand brands such as Santoor, Chandrika, Yardley and Enchanteur by developing new product variants and focusing on direct-to-consumer growth for its Bio-essence brand. The company also wants to utilise the ₹250 crore second fund from Wipro Consumer Care Ventures to make strategic investments and provide follow-on funding to build a robust portfolio of 15-16 companies, he says.

Wipro Infrastructure Engineering, which makes hydraulic cylinders, hydraulic/pneumatic components and aerospace actuators and provides industrial automation and water treatment solutions, is also looking to fast-track growth. The engineering segment is just over half of consumer care division with ₹5,400-plus crore revenue in FY23. The company wants to touch $1 billion-plus revenue in FY25. “We expect to grow at a CAGR of ~ 30-32% over next three years, driven by organic and inorganic growth across key segments,” says Pratik Kumar. While industrial automation has been a key growth driver over the last few years, the company also foresees good momentum in e-mobility and hydraulics. “Our strategic acquisitions have been progressing smoothly and we remain committed to scaling up non-automotive segment, end-of-line automation and warehouse automation through further acquisitions,” he says.

Wipro Hydraulics is among the leading hydraulic cylinder manufacturers of the world. With U.S. planning nearly $1.2 trillion federal investment in transportation, energy and climate infrastructure, the company sees a strategic growth opportunity in the North America market. Wipro Infra has also been on an acquisition spree over past two-three years. “Our acquisition of Mailhot, JARP and, recently, Columbus Hydraulics, has bolstered our position in the North American market, solidifying our leadership across diverse hydraulic segments and applications, from construction and material handling to agriculture and forestry,” says Pratik Kumar. Some of these acquisitions include Linecraft.ai in (an Industry 4.0 company which uses automation, AI and machine learning to boost manufacturing productivity, quality and real-time operational efficiency) in December 2022, Ferretto Automation (Italian company specialising in advanced automated storage systems and intra-logistics solutions, including automated storage and retrieval systems handling) in October 2023 and Mailhot (Canadian leader in hydraulic cylinders for refuse trucks and snow removal) in May 2024.

With widespread presence across geographies, Kumar says the company is well-positioned to navigate geopolitical tensions. “Our geographical diversification and strategic global acquisitions provide us the flexibility to mitigate potential risks and adapt to evolving challenges,” he says.

Last year, when the company carried out a valuation exercise through Ernst & Young Merchant Banking Services LLP, shares of WEPL were valued at ₹1,582, taking the enterprise value of the company to ₹76,500 crore-plus or nearly $10 billion, out of which Azim Premji holds over $7 billion worth of shares in his personal capacity. Premji Invest, the VC firm set up by Azim Premji that is also aimed at growing the endowment and supporting the foundation, has invested in over 140 companies. Led by CEO T.K. Kurien, another old-timer at Wipro who is former CEO & vice chairman of Wipro Ltd., Premji Invest has been an investor in many unicorns such as Canva, Purplle, Firstcry, Lenskart and seen successful exits in Flipkart, Crowdstike, Myntra and Robinhood. In 2024, it invested in start-ups such as Dezerv, BilliontoOne, Enveds, KreditBee and according to reports is looking to sharpen its focus on AI companies as well as leveraging AI in its own bets. That is where the future winners will come from.