World Bank bar on Wipro, Megasoft hammers IT scrips

12 January 2009

Information technology stocks took a beating on the bourses today following revelations that IT majors Wipro and Megasoft too have been barred from doing business with New York-based World Bank.

Wipro was barred for four years beginning June 2007 for "providing improper benefits to Bank staff" while Megasoft was barred for an identical period beginning December 2007 for "participating in a joint venture with Bank staff while also conducting business with the Bank."

Megasoft Consultants Ltd, the US associate of Hyderabad-based Megasoft Limited, said the ban on business with World Bank since 2004 had no financial impact on the company.

Wipro also said a 4-year World Bank ban, imposed some 18 months ago, had not affected its business or operations.

"To date, Wipro's revenue from World Bank is insignificant. Our inability to get future business from World Bank will not adversely affect our business and results of operations," Wipro said in a statement.

According to Wipro, the ban is in connection with its initial public offer of American depository Shares (ADS) programme. In 2000, Wipro offered a commonly utilised and Securities and Exchange Commission-approved directed share programme (DSP) for employees and clients to purchase ADSs at the IPO market price.