Indian IT major Wipro announced on Wednesday, October 18, that its board has approved the merger of five wholly-owned subsidiaries into the main company, creating a more streamlined corporate structure. The move is part of a broader strategy to consolidate business operations and reduce administrative overhead. The five subsidiaries set to merge with Wipro Ltd. are Wipro HR Services, Wipro Overseas IT Services, Wipro Technology Product Services, Wipro Trademark Holding, and Wipro VLSI Design Services.
The merger, outlined in a regulatory filing by Wipro, is subject to the approval of regulatory authorities, including the National Company Law Tribunal. According to the statement, the company seeks to achieve various objectives through the amalgamation:
- Consolidation of Business Operations: By merging the five subsidiaries into the main company, Wipro aims to streamline and consolidate its business operations, creating a more efficient corporate structure.
- Synergies of Operations: The merger will enable the realization of synergies among the consolidated entities, fostering better collaboration and resource utilization.
- Overheads Reduction: Wipro anticipates a reduction in overheads, including administrative and managerial expenses, leading to cost savings.
- Optimized Legal Entity Structure: The merger will help optimize the company’s legal entity structure, simplifying it for greater operational efficiency.
- Legal and Regulatory Compliance: Simplifying the corporate structure will significantly reduce the multiplicity of legal and regulatory compliances, making compliance management more efficient.
The company clarified that since the transferor companies are wholly-owned subsidiaries of the transferee company (Wipro Limited), no new shares of the transferee company will be allotted under the scheme of amalgamation in lieu or exchange of the shares of the transferor companies. Furthermore, the shareholding pattern of Wipro Limited will remain unchanged as a result of the merger.
Wipro announced this merger after releasing its financial results for the July-September quarter of fiscal 2023-24 (Q2 FY24). The company reported a consolidated net profit of ₹2,667.3 crore and consolidated revenue of ₹22,515.9 crore. The merger is part of Wipro’s broader strategic initiatives to optimize its operations and corporate structure.
