After Tata Consultancy Services, another IT major Wipro on Wednesday informed the bourses that the recent floods and rains in Chennai will have a material impact on its third-quarter earnings.
Wipro, which has multiple facilities in Chennai with over 22,000 employees, said the recent heavy rainfall and resultant flooding impacted the regular business operations of the company’s facilities during the first week of December.
The company also said it has largely seen the restoration of normal operations in Chennai facilities.
“Wipro has adequate insurance coverage and is in touch with the insurance companies to assess the damage and the claim will be subject to policy terms,” it added.
“Chennai 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. Revenues from our IT Services business are expected to be in the previously communicated range of $1,841 million to $ 1,878 million; However, we expect revenues to be in the lower half of the guidance range, ” the company said in a release.
Shares of India’s third largest IT services exporter were trading 0.16 per cent down at Rs 557.70 (at 9.20 am) on Wednesday.
The company’s stocks fell 3.93 per cent from Dec 1 to Dec 15. The state of Tamil Nadu witnessed heavy rains in December that affected the business operation of IT majors and auto firms in Chennai.
Last week, TCS had announced that Chennai floods are expected to have a “material impact” on the company’s current quarter revenues.
The October-December quarter is usually a weak quarter for the Indian IT players as business is impacted by low volume growth amid Christmas and New Year holidays and furloughs in the US and Europe.