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How Wipro, Infosys used their cash heaps

B G Shirsat

Cash-rich software majors, Wipro and Infosys Technologies, followed pretty similar treasury management strategies during 2001-02.

Both companies parked their liquid cash in investments, bank deposits and advances.

The only difference was that Wipro invested Rs 584 crore (Rs 5.84 billion) in liquid mutual funds, while Infosys stayed away from the sector.

Wipro had Rs 1,711.22 crore (Rs 17.112 billion) in liquid cash, while Infosys Technologies had Rs 1,224.28 crore (Rs 12.242 billion).

Wipro's cash earned it Rs 103.79 crore (Rs 1.037 billion) of which dividend from mutual funds accounted for Rs 27.95 crore (Rs 279.5 million), dividend from companies Rs 0.51 crore (Rs 5.1 million)and interest on deposits Rs 75.33 crore (Rs 753.3 million).

Infosys earned Rs 51.23 crore (Rs 512.3 million) as interest on deposits with banks and others.

Of Wipro's Rs 1,711 crore (Rs 17.11 billion) liquid cash, Rs 293.54 crore (Rs 2.935 billion) was set aside as cash and bank balance, Rs 514.46 crore (Rs 5.144 billion) was invested in liquid mutual funds and subsidiary companies and Rs 903.24 crore (Rs 9.032 billion) accounted for loans and advances, including deposits with foreign banks and financial institutions.

Infosys' kitty was split in a cash and bank balance of Rs 772.22 crore (Rs 7.722 billion), Rs 44.44 crore (Rs 444.4 million) was invested mostly in overseas firms and Rs 407.62 crore (Rs 4.076 billion) accounted for loans and advances.

Wipro, however, redeemed Rs 172 crore (Rs 1.72 billion) worth of units invested in 10 private mutual funds.

At the end of March 2002, the company's investment in liquid mutual funds stood at Rs 412.60 crore (Rs 4.126 billion).

Prudential ICICI fund was the most preferred fund with an investment of Rs 92.50 crore / Rs 925 million), followed by HDFC Mutual Fund (Rs 52.19 crore / Rs 521.9 million), Reliance Mutual Fund (Rs 50.51 crore / Rs 505.1 million), Pioneer ITI (Rs 45.22 crore / Rs 452.2 million) and Zurich India Mutual Fund (Rs 40.05 crore / Rs 400.5 million).

Wipro's loans and advances were mainly in the form of deposits with foreign banks (Rs 528.72 crore / Rs 5.287 billion), inter-corporate deposits (Rs 201.15 crore / Rs 2.011 billion) and recoverable advances (Rs 92.76 crore / Rs 927.6 million).

The cash and bank balance of the company was mostly in foreign banks (Rs 194.82 crore / Rs 1.948 billion) and in the current account (Rs 98.72 crore / Rs 987.2 million).

Infosys' cash and bank balance included Rs 551.62 crore (Rs 5.516 billion) in rupee deposits and Rs 147.41 crore (Rs 1.474 billion) in foreign currency accounts.

The company's loans and advances were mostly in the form of deposits with financial institutions (Rs 254.74 crore / Rs 2.547 billion), while loans to employees aggregated Rs 101 crore (Rs 1.01 billion) during the year.

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