Will Wipro's Demerger Benefit Investors?

Based on the demerger scheme, the new entity (Wipro Enterprises) will have cash and cash equivalents of Rs 1492.2 crore, as of March 31, 2012.

"We were never a cash-sucking business for Wipro. We generate enough cash, which we have used for many of our inorganic activities and we will continue to do so," says Agarwal. "We want to be the fastest-growing from a top line perspective with a healthy margin."

But since they were a segment of the IT giant, the non –IT firms didn’t get the exposure as the other companies in their sector. But with the effect of the demerger, the non-IT entities would have better autonomy with their own directors on board, and also would have the advantage to reinvest back into business for growth.

The company says that profit margins in the non-IT businesses are comparable with the industry. Premji had said, when the demerger was announced, that each of his businesses "is the best of breed in its respective industry."

Wipro is an Indian based Multinational Company which has its headquarters in Bangalore, India. Wipro has mainly 4 segments of IT products and services, Consumer care and lighting, Healthcare and Infrastructure engineering. The Company has more than 130,000 employees and it’s placed in almost 54 countries all over the world.

The current CEO and Chairman is Azim Premji, also the second richest man in India. When Azim Premji, the billionaire chairman of Wipro, took charge of the company in 1966, all he inherited was an oil mill, a solvent plant and the vanaspati business.