Chennai deluge to impact revenues for Dec quarter: Wipro

Says company has incurred one-time cost towards business continuity plan deployment

After Tata Consultancy Services (TCS), Wipro too has issued a warning, saying disruption at its Chennai facilities due to recent floods and the costs associated with subsequent invocation of business continuity plans would have a material impact on the performance of the company in the October-December quarter of FY16.

The Bengaluru-based company said it would incur a “higher one-time cost” towards deployment of business continuity plan, which would not only adversely impact its revenue performance during the quarter, but also its operating margins. Wipro, India’s third largest IT services company, has over 22,000 employees in Chennai across multiple centres.

“For the quarter ending December 31, 2015, the incident is expected to have a material impact on the revenues and will result in higher one-time cost incurred towards deployment of our business continuity plan. Both these factors will impact our operating margins for the quarter,” said Wipro in a statutory filing to stock exchanges on Wednesday. For the quarter ended September 30, 2015, operating margins for Wipro’s IT services business stood at 20.7 per cent. The company also said it expects its revenues to be in the lower half of its guidance range.

For the December quarter, Wipro had said it was expecting IT services revenues to be in the range of $1,841 million -$1,878 million.

Last week, TCS had also issued a similar warning saying the company was expecting material impact on its revenues in the seasonally weak December quarter due to the Chennai deluge.

Meanwhile, Wipro said its operations in Chennai have largely been restored to normal. The company is in touch with insurance companies to assess the damage. Wipro’s share price closed 0.64 per cent down at Rs 555 on the BSE.