Wipro

1. In December 2007, the Institute of Chartered Accountants of India
 (ICAI) issued Accounting Standard 30 - Financial Instrument:
 Recognition and Measurement (AS 30).  Although AS 30 becomes
 recommendatory in respect of accounting periods commencing on or after
 April 1, 2009 and mandatory in respect of accounting periods commencing
 on or after April 1, 2011, in March 2008 the ICAI announced that the
 earlier adoption of AS 30 is encouraged.
 
 Pursuant to ICAI Announcement Accounting for Derivatives on the early
 adoption of AS 30, the Company has early adopted the entire Standard
 from April 1,2008, to the extent that the adoption does not conflict
 with existing mandatory accounting standards and other authoritative
 pronouncements, Company law and other regulatory requirements.
 
 Until March 31,2008, die Company applied the recognition and
 measurement principles as set out in AS 30 in accounting for
 derivatives and hedge accounting. Changes in the fair values of
 derivative financial instruments designated as cash flow hedges were
 recognized directly in shareholders fund and reclassified into the
 profit and loss account upon the occurrence of the hedged transaction.
 Changes in fair value relating to the ineffective portion of the hedges
 and derivatives not designated as hedges were recognized in the profit
 and loss account as they arose.
 
 As the Company was already applying the principles of AS 30 in respect
 of its accounting for derivative financial instruments in relation to
 derivative and hedge accounting, the early adoption of AS 30 did not
 have a material impact on the Company.
 
 In addition, the Company has designated USD 267 Million and Euro 40
 Million of forward contracts as hedges of equity investments in foreign
 subsidiaries. The Company has also designated a yen-denominated foreign
 currency borrowing amounting to JPY 27 Billion, along with a floating
 for floating Cross-Currency Interest Rate Swap (CCIRS), as a hedging
 instrument to hedge its net investment in a non-integral foreign
 operation. Further, the Company has also designated yen-denominated
 foreign currency borrowing amounting to JPY 8 Billion along with
 floating for fixed CCIRS as cash flow hedge of the yen- denominated
 borrowing and also as a hedge of net investment in a non- integral
 foreign operation. As equity investments in foreign subsidiaries are
 stated at historical cost, in the standalone financial statements, the
 changes in fair value of forward contract, the yen- denominated foreign
 currency borrowing and the related CCIRS amounting to Rs. 7,454 Million
 for the year ended March 31, 2009 has been recorded in the profit and
 loss account.
 
 Derivatives
 
 As of March 31, 2009, the Company had derivative financial instruments
 to sell USD 1,060 Million, GBP 54 Million, and JPY 6,130 Million
 relating to highly probable forecasted transactions. As of March 31,
 2008, the Company had derivative financial instruments to sell
 
 USD 2,497 Million, GBP 84 Million, EUR 24 Million and JPY 7,682 Million
 relating to highly probable forecasted transactions. As of March 31,
 2009 the Company has recognized mark-to-market losses of Rs. 16,859
 Million (2008: Rs.1,097 Million) relating to derivative financial
 instruments that are designated as effective cash flow hedges in the
 shareholders fund.
 
 As of March 2009, the Company had undesignated derivative financial
 instruments to sell USD 612 Million, GBP 53 Million and EUR 39 Million.
 As of March 31, 2008, the Company had undesignated derivative financial
 instruments to sell USD 414 Million, GBP 58 Million and EUR 39 Million.
 As of March 31, 2009, the Company has recognized mark-to-market
 gain/(losses) on such derivative financial instruments through the
 profit and loss account.  (Note 4 in the Notes to Accounts of the
 annual parent financial statements).
 
 2.  Acquisitions
 
 In January 2009, the Company acquired 100% shareholding in India based
 Citi Technology Services Limited (subsequently renamed as Wipro
 Technology Services Limited - WTS) for a purchase consideration of US
 $ 127 Million. WTS is an India based provider of information technology
 services and solutions to Citi Group worldwide.  WTS has a strong
 competency in Technology Infrastructure Services (TIS), application
 development and maintenance services (ADM) for cards, capital markets
 and corporate banking. The acquisition will enhance Wipros
 capabilities to compete for both TIS business and ADM business in the
 financial service industry. (Note 5 in the Notes to Accounts of the
 annual parent financial statements).
 
 3.  Merger of certain subsidiaries
 
 In March 2008, pursuant to the scheme of amalgamation approved by the
 Honorable High Court of Karnataka and High Court of Judicature at
 Bombay, the Company had merged mPower Software Services India Private
 Limited (mPower), mPact Technology Service Private Limited (mPact)
 and cMango India Private Limited (cMango) with the Company
 retrospectively from April 1, 2007, the Appointed Date. mPower, mPact
 and cMango were fully held by Wipro Inc, which in turn is a wholly
 owned subsidiary of the Company. In the current year, pursuant to the
 scheme of amalgamation, the Company has allotted 968,803 fully-paid
 equity shares with a market value as on April 1,2007 of Rs. 542 Million
 as consideration to a Wipro Inc Trust to be held for the benefit of
 Wipro Inc. (Note 6 in the Notes to Accounts of the annual parent
 financial statements).
 
 4.  Employees covered under Stock Option Plans and Restricted Stock
 Unit (RSU) Option Plans are granted an option to purchase shares of the
 Company at the respective exercise prices, subject to requirements of
 vesting conditions. These options generally vest over a period of five
 years from the date of grant. Upon vesting, the employees can acquire
 one equity share for every option. The maximum contractual term for
 aforementioned stock option plans is generally 10 years.
 
 The stock compensation cost is computed under the intrinsic value
 method and amortised on a straight line basis over the total vesting
 period of five years. The Company has granted 8,366,676 options under
 RSU Options Plan and 120,000 options under Stock Options Plan during
 the year ended March 31, 2009.
 
 For the year ended March 31, 2009, the Company has recorded stock
 compensation expense of Rs. 1,685 Million.  (2008: Rs. 1,101 Million).
 (Note 10 in the Notes to Accounts of the annual parent financial
 statements).
 
 5.  The Company had received tax demands from the Indian income tax
 authorities for the financial years ended March 31, 2001, 2002, 2003
 and 2004 aggregating to Rs. 11,127 Million (including interest of Rs.
 1,503 Million). The tax demand was primarily on account of denial of
 deduction claimed by the Company under Section 10A of the Income Tax
 Act 1961, in respect of profits earned by its undertakings in Software
 Technology Park at Bangalore. The appeals filed by the Company for the
 above years to the first appellate authority were allowed in favour of
 the Company, thus deleting substantial portion of the demand raised by
 the Income tax authorities. On further appeal filed by the income tax
 authorities, the second appellate authority upheld the claim of the
 Company for the years ended March 31,2001,2002,2003 and 2004. In
 December 2008, the Company received, on similar grounds, an additional
 tax demand of Rs. 5,388 Million (including interest of Rs.  1,615
 Million) for the financial year ended March 31,2005.  The Company has
 filed an appeal against the said demand within the time limits
 permitted under the statute.
 
 Considering the facts and nature of disallowance and the order of the
 first appellate authority upholding Companys claims for earlier years,
 the Company expects the final outcome of the above disputes in Wipros
 favour. (Note 11 in the Notes to Accounts of the annual parent
 financial statements).
 
 5.  Estimated amount of contracts remaining to be executed on capital
 accounts and contingent liabilities:
 
                                                   (Rs. in Million)
 Particulars                                        As at March 31,
                                                2009       2008
 Estimated amount of contracts remaining 
 to be executed on Capital account and 
 not provided for                              5,089      7,166
 
 Contingent liabilities in respect of:
 
 a) Disputed demands for excise
    duty, customs duty, income tax,
    sales tax and other matters                  872       333
 
 b) Performance and financial guarantees 
    given by the Banks on behalf of 
    the Company                                6,103      3,751
 
 c) Guarantees given by the Company
    on behalf of subsidiaries                  4,493        _
 
 (Note 14 in the Notes to Accounts of the annual parent financial
 statements).
 
 6.  As at March 31, 2009 and 2008, the aggregate market value of quoted
 investments is Rs. 15,211 Million and Rs. 14,702 Million respectively.