Wipro Ltd does not see any changes to the equity structure in joint venture Wipro-GE Healthcare post integration of all the GE Healthcare units in India with the joint venture.
GE Healthcare owns a majority stake of 51% in the joint venture while Wipro holds the rest.
GE recently announced plans to integrate its units such as GE Healthcare Life Sciences, GE Healthcare Medical Diagnostics and GE Medical Systems India with the joint venture.
“There is no extra voting rights they have. The decision of companies is unanimous and the board representation is equal. Mr Premji is the Chairman of the joint venture and the partnership has worked well for several years,” Mr Suresh Senapaty, Chief Financial Officer, Wipro, said.
However, Mr Senapaty said the joint venture might use the cash that they have to buy out the GE entities without disclosing the cash balance.
“For the balance, they will get a debt also. They will use a combination of debt and cash. As and when they generate more cash, automatically the loan gets redeemed,” Mr Senapaty said.
Wipro has not disclosed the revenues from the joint venture, but expects to consolidate before March 2010. “As Wipro own 49 per cent stake, we follow the equity consolidation method. We take 49% of profits after tax from the joint venture and add it to our PAT (profit after tax),” Mr Senapaty said.
The Wipro-GE Healthcare business is estimated to be about $240 million, growing at 10-15% annually. “With the integration of more GE entities, the business could go up to $280-290 million,” Mr Senapaty said adding the profitability stood at 8-10%."
Taken from Business Line