Thu, Dec 02, 2010 | Updated 06.41AM IST
Azim Premji donates 8.6% stake to own charity foundation
MUMBAI: Azim Premji, who cut short his education to look after the family business after
the death
of his father in 1966, will use a portion of the wealth accumulated in shares of his company ,
Wipro, to build schools, train teachers , and fund other educational activities.
Premji, chairman of India's thirdbiggest IT services exporter , will do this by transferring
about 8.6% stake worth over 8,000 crore to a private trust controlled by him.
The trust will then use the money to finance the educational initiatives being carried
out under the ambit of the Azim Premji Foundation.
The shares, at current market prices, are worth 8,846 crore, and represent the single-largest
donation by an individual towards philanthropic activities. Premji's stake in the company is
expected to come down to just over 70% from 79% now.
The move comes at a time when there is greater awareness about and spotlight on the social
responsibility activities of corporates and industrialists. Many industrialists such as Sunil Mittal
of Bharti and Shiv Nadar of HCL Technologies are spending money on education and the
government is also stressing greater corporate involvement in social service activities.
Nadar recently donated over 580 crore by selling his 2.5% stake in HCL Technologies to fund the
education initiatives of his eponymous foundation. Mittal's Bharti Foundation is running free
English-medium schools for about 30,000 students in Punjab, Haryana, Rajasthan , Tamil Nadu
and Uttar Pradesh.
ET was the first to report that Premji was planning to sell a small part of his stake in the country's
third-largest software exporter to fund education activities , in its edition dated October 21.
The Azim Premji Foundation runs philanthropic activities and has so far been funded directly
by the Wipro chairman. By transferring the shares to an irrevocable trust, the funds cannot be
used for any other purpose, said Azim Premji Foundation CEO Dileep Ranjekar.
Premji was forced to leave his studies in electrical engineering at Stanford University, California,
USA, at the age of 21 to take over the family business when his father MH Premji passed away
suddenly in 1966. He completed his degree in 1996 after a gap of over 30 years.
"The foundation is scaling up its activities significantly and the trust has been constituted
to meet the long-term commitments of the foundation," Ranjekar told ET. The foundation is
embarking on the next phase of its strategy, which includes setting up the Azim Premji
University , focused on post-graduate courses in the field of education and development ,
continuing education programmes for teachers and other professionals in the area of
development and education, and expanding its reach at the district and state level through
resource centres.
It will also set up elementary schools to demonstrate quality education at low cost.
All the initiatives will be targeted at underprivileged people in rural and urban India.
The university, which will have its first campus in Bangalore, will require about
Rs 250 crore annually to run operations, said Ranjekar.
KR Lakshminarayana, who was responsible for Wipro's strategy and mergers & acquisitions,
has been appointed as the endowment management officer. His role will not only be to make funds
available to the foundation, but also to manage the corpus and grow it.
"What Premji has done is very exceptional and will hopefully set the direction for other industry captains.
I would compare it to initiatives like Bill and Melinda Gates Foundation and Warren Buffet Foundation ,"
said an industry expert. "Instead of selling the shares, Premji has chosen to transfer the shares.
There is not much difference between the two," said Nitin Podar of law firm, JS Sagar and Associates .
Ranjekar said the foundation had taken legal opinion and there was unlikely to be any immediate tax
implication because the sale proceeds will be used for not-for-profit purposes.
The foundation has touched over 25,000 schools and over 2.5 million children since it was
set up in 2001 by working with state governments and assisting government-run schools.
For the first time, it will now set up and run a few elementary schools on its own.
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