Polaris Investor Presentation June06F

INVESTOR PRESENTATION

How did we get here?1993POLARIS Software Lab Incorporated

1999Listed on major stock exchanges

2002Orbitech Merger

2006CAGR of over 22.3% for the last 6 years

Major transformation1999 Key statistics Revenues $14mn Headcount 885 2006 Key statistics Revenues $187mn Headcount 6092Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Polaris TodayBusinessGlobal Solutions Specialist with a dedicated focus on the Banking, Financial Services and Insurance vertical 20 years of experience in BFSI Banking, Financial Services & Insurance Over 2,500 projects and 28,000 person years of experience

Global presence

Global Delivery Capabilities(10 development centers) 22 relationship offices across 14 countries 16 Business Solution Centers Focused on Long-Term Customer Relationships(Repeat business of over 86%) 2nd longest single relationship with global customers (20 years)

Customer profile Employees Financials

6000+ associates

FY 06 Revenues:$187mn EBITDA:$17.4 mn Zero debt, Large Cash ReservesCopyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Corporate functionsRelationship Banking Center Smart Legacy Modernization Center Insurance Center and Enterprise Innovations Capital Markets Center Corporate Banking Center Technologies for Globally Efficient Enterprises SmartBuild Architecture Group Business Process Outsourcing

Customer Sales

Business Leadership Council Board of Directors

Quality & Process management

Organization structure

Marketing

Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Polaris positioning

Calibrated modernization of existing legacy platforms in a nondisruptive manner by way of deployment of innovative (SmartBuild) solutions that are SOA compliant and backward compatible.

Provider of Smart Legacy Application management services to Modernization maintain, reengineer, aggregate and. services to upgrade portfolios of custom applications the worlds cost-effectively, by leveraging Polaris leading banks continuously replenished warehouse of and financial intellectual institutions property

Proven point solutions leveraging innovative processes and technology that have been delivered cost effectively and provided significant business benefits in terms of risk mitigation, TCO and time to market. Copyright Polaris Software Lab Limited, 2005.Confidential. Not to be republished without prior consent

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Polaris Business model: 100-5-7100 Relationships Build a few (but more than a handful) long-term relationships

5 Values to be delivered to the customer Cost Quality Reliability Flexibility Time to market

Using the 7 Levers 1. 2. 3. 4. 5. 6. 7. Technology Knowledge Domain Knowledge Customer Environment Knowledge Process Methods and Tools Reusable components Energy and Passion of People


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On our way to a global BFSI player

Branding Leadership Strategy

BUILDING & GROWING STRATEGIC PARTNERSHIPSTechnology Delivery Quality COMPREHENSIVE OFFERINGS PORTFOLIO Products Solutions Fixed Bid Projects Business Processes Strategic Outsourcing

COMPETENCIES RESOURCES

CAPABILITIES


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Polaris Business MixBanking, Financial Services & Insurance SectorsRun-the-Bank Offerings

Change-the-Bank Offerings

Operate-the-Bank Offerings

Horizontal Practices


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Polaris Business MixBanking, Financial Services & Insurance SectorsGlobal ATM networks Core Banking Credit Card Processors Lending Mortgage Processing Insurance Securities Custody Derivatives/Fixed Income/Equities Wealth Management Corporate Banking Treasury Cash Trade Finance SAP Oracle BaaN Mainframe

Change-the-Bank Offerings




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Polaris Business MixBanking, Financial Services & Insurance SectorsGlobal ATM networks Core Banking Credit Card Processors Lending Mortgage Processing MCI SLM for Credit Cards Home Lending Originations Branch Renewal Internet banking Insurance Securities Custody Derivatives/Fixed Income/Equities STP Lending Front end Integration using workflow and portal Client service Platforms for Private Banks Wealth Management Corporate Banking Treasury Cash Trade Finance SAP Oracle BaaN Mainframe

SLM Custodial solutions TechPort Global Liquidity Sweeping & Pooling Dashboards and Corporate Online Analytics Treasury MM/FX Imaging and Workflow Global roll Out with ERP


Horizontal PracticesCopyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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SLM Custodial solutions Liquidity Sweeping & Pooling Corporate Online Treasury MM/FX Global roll Out

Hosted Services

Transaction Processing

Voice Based Services



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SLM Custodial solutions Liquidity Sweeping & Pooling Corporate Online Treasury MM/FX Global roll Out

Hosted Services

Transaction Processing

Voice Based Services

Siebel, BI/DW, Linux, Rational, PACE, Portals, dotNET, Imaging & Workflow, Infrastructural Management, Professional Services


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Why customers choose Polaris?Reliable Solutions Speed To Market Higher Savings Thought Leadership & Innovation

Solution Expertise Process CapabilitiesPolaris has been able to deliver reliable solutions in more than 150 countries over the past 20 years because of its strong domain expertise, proven delivery capabilities, tools and processes 72 country Risk Management solution 60 country Trade Finance solution 23 country Treasury solution 32 country Cash Management Solution 3 continent ATM solutions Multi-currency, multi-lingual, multi-entityCopyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Solution Expertise Process CapabilitiesSpeed to Market through knowledge reuse of 750+ domain experts involved in developing BFSI solutions over the last 19 years Reuse of use cases and test scripts for multiple banking business processes Speed to Market using SMARTBUILD; through Component reuse of 56 Modular GeneS designed for Universal Banking needs Delivered a Working Capital Management solution for a large Asian bank in 6 months reusing Polaris Payments, Optimization and reconciliation GeneS Implementation of Fund transfer, Relationship, ATM, Funds Loans and Swift modules in the core banking infrastructure of large Japanese Bank resulted in 4 calendar years savingsCopyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Solution Expertise Process CapabilitiesPolaris ENTITY model and Domain Expertise have resulted in reduced total cost of ownership Multi-vendor and Virtual delivery model in the development of end to end retail banking solutions resulted in savings of $50 MM over a period of 5 years for a large Japanese Bank Global Support of ATM solutions through the onsite and offshore model have resulted in savings of $50 MM for a large MNC Bank Offshore Development and Support of Custody Solution have resulted in savings of $40 MM for a Global MNCCopyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Solution Expertise Process CapabilitiesPolaris has delivered market differentiating solutions to large global MNCs in the past 2 decades: First global Credit Cards solution in open architecture dramatically reduced processing costs (Smithsonian Award) Delivered market differentiating Automated Cash Management System in early 90s which was later implemented in 30 countries Improved transaction throughput & customer service for the highly competitive and low margin Trade Finance business through global consolidation of platform and transaction processing Reduced technology cost per transaction by delivering the first global Core Banking solution in a distributed architecture First global Corporate Banking portal empowering users to transact rather than merely queryCopyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Solution Expertise Process CapabilitiesLaser beam focus on various sub-verticals within the BFSI domain through internal alignment. This ensures an in-depth understanding of Industry practices, an awareness of Industry trends & an appreciation of Industry specific nuances: Consumer Banking Corporate Banking Wealth Management Brokerage & Securities Insurance


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Solution Expertise Process CapabilitiesStringent adherence to Quality standards such as ISO, CMM and Six Sigma Continuous process improvement and process streamlining to ensure resource optimization Effective use of Tools to monitor and control processes providing transparency Internal metrics and performance measures reviewed by top management on a monthly basis Escalation procedures and Change Control Board in place to effectively manage change and resolve issues


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How did we acquire this capability?Multiple Relationships 2 Domain expertise 0 Solution Supermarket 0 Buy, Build & Rapid Deploy 2 as KSFs Multiple Relationships 1 Domain expertise 9 Competency Map Width 9 Delivery precision 9 as KSFs Multiple Relationships 1 Domain Focus, Large 9 Soln Delivery Precision, 9 Customer need 5 Sensitivity as KSFs 1 9 9 0 Single Customer Co-author customer growth thru technology led innovation as KSF Single Customer Customer relevant Competency additions, Domain Grasp as KSF

20 year history with Citibank

Citigroup accumulated relationship of solutions worth over USD 1 Billion over the last decade Citigroup relationship stands at USD 105MM for FY05(single largest offshore solutions partner) Started as supplier to Citibank India retail business and today support solutions and services in more than 70 countries, 120 locations across all lines of business in the Citigroup world.

Single Customer 1 Turnaround time & 9 Quality of delivery as 8 4 Key Success Factors (KSF)


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Quality process in PolarisFirst company in the world to be assessed at CMMi Level 5 ISO 9001:2000 certified Independent Software Engineering Process Group Over 700 Person years of Quality Engineering experience Largest pool of IFPUG Certified FP specialists (CFPS) amongst Indian Companies Mature and uniform FP counting methodology across the organization ensuring uniform implementation

SEI CMMi Level 5 ISO 9001 : 2000 ISO 9001 SEI CMM 2001

&

Level 3TQM

1999

Practice1991

1995

Polaris Quality Journey


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Service offeringsHorizontalsApplication Development Application Development Re-engineering Re-engineering Maintenance Maintenance Solution Integration Solution Integration Global Deployment Global Deployment Application Certification Application Certification Business Consulting Business Consulting Front end Technology Front end Technology Internet Technology Internet Technology Customer Relationship Management Customer Relationship Management Enterprise Knowledge Management Enterprise Knowledge Management Network Management Network Management Mainframe Mainframe Middleware Technology Middleware Technology Mobile Technology Mobile Technology Enterprise Resource Planning Enterprise Resource Planning Enterprise Application Integration Enterprise Application Integration Application Certification Application Certification Data Warehousing Data Warehousing

VerticalsC C oo rr pp oo rr aa tt ee B B aa nn kk ii nn gg W W ee aa ll tt hh M M aa nn aa gg ee m m ee nn tt B B rr oo kk ee rr aa gg ee & & S S ee cc uu rr ii tt ii ee ss

C C oo nn ss uu m m ee rr B B aa nn kk ii nn gg

II nn ss uu rr aa nn cc ee


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Service Oriented ArchitectureWhat is SOA?Service-Oriented Architecture is an IT and Business strategy that organizes the discrete functions contained in an enterprise applications into interoperable, standards-based services that can be combined and reused quickly to meet business needs.

Why SOA?

Business agility depends on the free flow of information, services and business processes across the organization. However this flow is stymied by the heterogeneous nature of the typical large enterprise. Multiple platforms (IBM, BEA, Microsoft, SAP, Oracle etc) and technologies (J2EE, .NET, Legacy, etc.) require IT to hard code the point to point connections, hampering the swift flow of information and slowing the delivery of new business services. Service Oriented Architecture (SOA) has emerged as the leading IT strategy for streamlining service delivery. SOA takes the discrete business functions contained in enterprise applications and organizes them into interoperable, standards-based services that can be quickly be combined and reused in composite applications and processes. The desire for Organizations to be service driven is creating a significant pull for IT to adopt SOA.Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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SOA gaining priority in the marketplace


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SOA wave and Componentisation has been endorsed and adopted by many leading vendors and analystsSOA wave and componentization has been endorsed and adopted by many leading technology vendors . . . Software Services companies

Software product companies

Yankee survey

70% of CIOs plan toinvest in SOA

IDFC survey

45% of banks havesome SOA plans over the next year. 27% of banks are already adopting SOA, nearly 1/3 of them enterprise-wide. Companies are beginning to realize and articulate significant benefits from SOA

Infoworld survey


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SOA oppurtunityWhile most large banks have existing offshore relationships, degree of work offshored varies widely offering Polaris window of opportunity 20Per cent of total workforce relocatedCustomers are open to giving vendor like Polaris a chance

105 4 3 2 1 0 0 1,000

Market shapers

A new vendor like Polaris can enter our banks, if it has some specific business expertise, in new and growing areas such as derivativesVP, IT, Top tier, Wholesale bank

The biggest proof point for us is internal. If you have delivered something well then there is no reason why you cant get more businessVP, Vendor Management, Investment Bank

Ahead of the pack Building the platform 3,000

2,000

4,000

10,000* Includes some BPO revenue in cases where it is not separately broken out Source: Press releases; company websites

12,000

Number of FTEs relocated*Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Product offeringIntegrated Multichannel Core BankingPortfolio Mgt Cash Mgmt

Intellect SuiteTM is an enterprise platform that meets the needs of retail, private and corporate bankingDesigned using J2EE technology Over 56 modular components or GeneS for 10 banking business lines Supports over 10 million customers Developed on contemporary technology (Open API standards) enabling easy integration with legacy systems Web-enabled, multi-currency and multi-lingual

Loans Cards

Trade Treasury

Infrastructure Intellect suite

What are GeneS? Intellect Suite is designed and built with re-usable components called GeneS (Generalised Services). Several GeneS come together to form a product. Intellect Suite has over 56 GeneS in different combinations to develop a variety of banking solutions. Being functional-centric components, many GeneS are common across solutions.


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Intellect Suite Built on Component based Architecture

Products

GeneS (Generalised Services) APIs (Application Programming Interfaces) RUSAs (Reusable Software Assets)


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Intellect Suite-Underlying Genes

Parameters Payments Recon Sign Limits Teller Charges Relationship Reports

Dr. Card Mgmt Customer Communication

Integrator Time Deposits Statements

Current & Savings

GL


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SmartBuild Value propositionIntegrated best of Breed

Smart Build value propositionLending Integrator Core

aCustomer Fee Web services Collateral GeneS

Accelerated Build

Source CodeCopyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Benefits of Smartbuild approachCustomizable solution Faster time to market

Reusable solution Reduced cost Tested product processor

Smart Build advantage

Reduced risk Service Oriented architecture

Standard process flows

Competitive advantage


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Application Certification offeringPACE Expertise

PACE ServicesEnd to end testing Product testing Project testing

Independent Testing and Certification Unit Vast experience in testing mission critical applications 20% of the testing team are domain experts Tested and certified over 300 releases with many zero defect deliveries 1500+ person years of testing experience Expertise in Project and Product testing Continuous process improvement through Quantitative Project Management (QPM) Expertise in Test Automation tools WinRunner, Test Director, Quick Test Professional (QTP), SilkTest, LoadRunner, OptimizeIT, Purify, Jverify Performance Metrics Defect unearthing efficiency of 95%Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

Test process consultancy Quality Indexing Benchmarking Process Gap Analysis Process Alignment

Test automation Tools Selection Tools Scripting Performance Analysis

Test case efficiency of 80% 31

Two pronged future strategyUse IP led solutions delivered as Smart Build as arrowheads to open new doors Focus disproportionately on top 100 banks in US and Europe

Major

Transform core ADM services into higher margin business by leveraging IP

Intellectual Property Rights factory for Tier 1 Products for Tier 2, 3

Smart-Build, SLM for Tier 1 Banks of Europe, NA Selected products for Tier 2 Banks of ME, Latam, ASPAC Cards Liquidity Collect Origination LendingCopyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Strategy ImplementationQ3-Q4 FY06 Timing Penetrate top accounts with IP led positioning Key corporate theme Stabilize and focusEnsure current growth trajectory in IT services business Focus on IP led solutions, leverage SOA in the marketing message and get internal orgn alignment Realign organizational structure and key processes to createCustomer-back design End to end responsibility Efficient operational platform

FY07

FY08 onwards Accelerate growth

Critical initiatives

Accelerate growth by firmly establishing IP driven off shoring approach Transform large accounts into AAA relationships Ramp up to 10-15 of top 100 Deliver enhanced banks and deliver distinctive IPprofitability on account of client diversity, sharper led solutions to establish a platform for growth within these expertise positioning and better operating platform accounts Build partnerships with key players to leverage current componentization/SOA wave and gain market credibility Enhance front end capabilities and key account management function Induct IP driven approach in delivery of conventional service lines Enhance full service offerings with new service lines such as Linux migrations and niche package implementation


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Optimus-BPO offeringAims to fulfill emerging customer requirements for an integrated technology and operations offering using its expertise in the banking and financial services domain

DESIGN

DELIVERApplication,Develo pment,Managemen t & Support

OPERATEBusiness Processing

Consulting

Feature customization/desi gn

complete spectrum of back office solutions.Transaction processing Asset Management Custodial services Mortgage Customer Interactions Services Business Infrastructure Services Complete Card Solutions


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A holistic offering

Integrated Technology and Operations

Technolog y Process Expertise Infrastructur e

Leveraging Economics of Expertise


Po la

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OPTIMUS Advantage

Li n

ea g

e

Some of our differentiators

Enchanced customer satisfaction

Decreased time to market Optimus Integrated Outsourcing seeks to deliver much more than just cost savings

Access to latest technology

Increased process efficiencies

Minimized capital outlay


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Optimus-The perfect partner for outsourcingComplete spectrum of back office solutions.Talented Resource Pool Technology Expertise

Focus on Long Term Relationships

Expertise in Financial Services Domain Experienced Management Skilled in Strategy/ Implementation

Focused yet Comprehensive Product Offering

Rich Process Knowledge

Strong Quality Orientation

Polaris Advantage

India Offshore Advantage


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People Practices @ Polaris

Associate StatisticsEducation ProfileOthers 9% Doctorates 1% M asters/ P ost Graduates 31%

Ag e Gro u p D istrib u tio n35-4040 P lus 8% 5% 30-35 24%Graduates 59%

20-25 23%

25-30 40%

Flat Hierarchy 6 levels to CEO 6000 + Associates 25% Female Associates: diversity critical 20% onsite employees- US, UK, Singapore 90% Qualified Professionals (Engineers, MBAs, MS etc)


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Talent Acquisition- Recruiting the bestFuel Campaign - Future LeadersNationwide campaign to recruit the best domain experts in the country 150 Domain Experts (BFSI) recruited over the last 2 years

Tie-Up with Tier-1 B SchoolsTie Up with 6 out of Top Ten B Schools in India Day 0/Day 1 Slot at all Campuses we visit

Tie- Up with top T Schools for fresh engineersAll India Aptitude Test(Polaris Aptitude Test) followed by structured Assessment Centre Recruited 500 fresh engineers out of 1.5 lakh applications across the country

Cross-national hiring to move towards a global organizationLocal hires in US, Japan, Germany & UK


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Attrition StatisticsA ttritio A a s (G era n n ly is en l)M re th n 6 o a yrs 4 % 4 to 6 yrs 12 % 2 to 4 yrs 19 % 1 to 2 yrs 3 8%

0 to 1 yrs 2% 7

Voluntary Attrition %age of 16%-17% for FY 05-06 Attrition at middle management level is much lower


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Training & DevelopmentAll associate go through person-days of training every year Key focus on Project Management Certification & Leadership Development Certified Project Management is extended to a large part of the organization All Project Directors (PD) and Project Managers (PM) will have to spend 6 hrs of conducting training every month Onsite programs executed through Technology Mediated LearningTM All Chief Executive Council members will have to spend total of at least 40 hours in a year in conducting training


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Career Development


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FINANCIALS

Financials Background Revenue Profile Profitability Profile Balance Sheet Conclusions


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Context Setting : Key Events impacting FinancialsMerger with Orbitech Products Investments Quest towards Differentiated Positioning IP Led Growth Strategy Transformation Agenda


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The Market and Our Hybrid StrategyTwo Trends in the market Banks under pressure to bring innovative products to market more quickly, to improve operational efficiency through continued process optimisation and to implement comprehensive regulatory compliance programs Growing recognition of Service Oriented Architectures (SOA) as a viable approach to gradual and nondisruptive replacement of legacy systems Polaris transforming the application development and maintenance (ADM) business lines from a cost-arbitrage based resource augmentation model to a solution based value proposition through the use of a hybrid model of services combined with Intellectual Property (IP)Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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Early Adoption of our solutions by the MarketStrong references for our Lending suite covering the full spectrum of origination, loan processing and collections - in diverse markets of Japan, Germany, the US, India and the Middle East Initial success with Cards in the local market in India has resulted in opening up of new markets for consumer finance in Latin America Achieved a position of leadership with our Cash and Liquidity management offerings with leading banks in the UK market


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Through:-Investments in IPs

Total Costs incurred for developing the products $ 36.90 Mn (3.5 years) Part of the Product development costs were capitalized till Dec 04 $ 11.48 Mn Total Costs charged to P&L till Dec 05 is $ 25.41 Mn Had the accounting treatment not changed, the EBITDA would have been higher by $ 1.2 Mn per quarter 2% increase in EBITDA margins.Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent

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All these investments have helped Polaris inExpanding domain expertise & improving implementation capacity Hiring and training career bankers Aligning investment and roadmap plans with the market needs Engaging with Strategy consultants to validate market needs and product investment priorities Enhancing our Smart Build Solution capability SOAization of select GeneS Development of new GeneS such as BRE Improving product options, quality, capability, performance & user experience Benchmarking Adding new Product features Implementing Common Look and Feel and other architectural / design guidelines Testing and fine-tuning of products in different hardware and operating platform combinations Development of industry standard documentation (User manuals, implementation manuals, etc.)


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All these investments have helped Polaris inImproving engineering quality and productivity Investing in third-party tools and development of in-house tools Developing product development disciplines such as customisation strategy, engineering golden rules and estimation methodology Instituting Quality processes such as defect free programming handbook and SOA handbook Helping us to expand user base Developing product collateral Setting up product demonstration infrastructure Marketing and Sales Investment Developing product branding


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Revenue profileRevenue for FY06 was Rs 825 croreRs in Crores 900 800 700 600 500 400 300 200 100 FY 2 0 0 1 FY 2 0 0 2 FY 2 0 0 3 FY 2 0 0 4 FY 2 0 0 5 FY 2 0 0 6 Fina nc ia l Ye a r

CAGR : 19.5%

FY06 revenue break-up

USA 39.73%

A SPA C 21.32%

Re v e nue Split80.0% 60.0% Citi Non Citi

Eu r o p e 27.89% In d ia 11.06%

40.0% 20.0% 0.0% Citi Non Citi 2005-06 58.2% 41.8% Financial Year 2004-05 60.1% 39.9%


%

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Revenue Geo Mix 2005-065 0 .0 0% 4 0 .0 0% 3 0 .0 0% 2 0 .0 0% 1 0 .0 0% 0 .0 0% Q1 U S/N orth A m e ric a Q2 E urope India Q3 Q4 A s ia Pa c ific & Ja pan

Ge o g r a p h yU S/ N o r t h A m e r ic a Eur ope I n d ia A s ia P a c ific & J a p a n

Q1 064 2 .9 0 % 2 7 .6 0 % 1 0 .5 0 % 1 9 .0 0 %

Q2 064 0 .7 0 % 2 8 .4 5 % 1 0 .1 0 % 2 0 .7 5 %

Q3 063 7 .5 4 % 2 9 .7 2 % 1 1 .8 0 % 2 0 .9 4 %

Q4 063 8 .4 2 % 2 8 .5 3 % 1 1 .2 9 % 2 1 .7 6 %


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Revenue Customer mix70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Q1 Q2 2005-06 Citibank Non Citi Bank Q3 Q4

% of revenue

Q1 06C itib a n k N o n C iti B a n k 5 9 .6 3 % 4 0 .3 7 %

Q2 065 7 .7 0 % 4 2 .3 0 %

Q3 065 7 .2 4 % 4 2 .7 6 %

Q4 065 8 .2 1 % 4 1 .7 9 %


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EBITDAEBITDA for FY06 was Rs.77.07 cr140 120 100 80 60 40 20 FY2002 FY2003 FY2004 FY2005 FY2006 FY2001 25 % 20 % 15 % 10 % 5% 0%

Reasons for decline in EBITDA

Product Investments Change in accounting treatment Salary Increases Investments in Sales Infrastructure Muted Revenue Growth

EB ITDA

EBITDA as % of Rev


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PAT

70.00 60.00 50.00

in Rs. cr

40.00 30.00 20.00 10.00 0.00 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006


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Expenditure AnalysisIn Rs.cr

Rs in Crores

Expenditure has been under control over the last 4 quarters Increase mainly due to salary hikes in Q2 Further optimization underway

250 200 150 100 50 SG&A S DE Q1 44 139 Q2 45 141 Q3 49 142 Q4 47 140 SG&A S DE

Q u a r t e r - FY 2 0 0 5 - 0 6


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Balance SheetIn Rs Crores 31-Mar-06 Sources of Funds Shareholders Capital Secured Loans Total Application of Funds Net Book Value Cash & Bank balances Working Capital Investments Miscellaneous Expenditure Total 31-Mar-05

540.90 1.88 542.78

531.10 2.10 533.20

237.63 121.70 169.79 12.91 0.75 542.78

216.26 136.71 172.15 6.93 1.15 533.20


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Cash FlowsFy 05-06 Op e n in g Balan ce Cas h f low f rom Operating A c tiv ities Cas h f low f rom Inv es tement A c tiv ities Cas h f low f rom Financ ing A c tiv ities C lo s in g Balan ce 137 72 (72) (16) 122 In C r Fy 04-05 80 121 (49) (15) 137

Company has been consistent in generating cash from operational activities There are no debts in the company Cash & Cash balances of Rs.122 crores as of 31 Mar 06


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Important Financial RatiosBalance Sheet Ratios Earnings Per Share (EPS), Diluted Book Value Per Share Return on Assets(ROA) Return on Equity (ROE) Liquidity Ratios Current Ratio Cash & Mkt Securities Cash & Mkt Securities/Current Assets Profitability Ratios EBDITA/Net Sales Operating Margin Net Profit Margin Other ratios No. of Employees Sales/Employee(Rs.mn) 2001 11.66 37.13 24.6% 31.4% 2001 4.21 719.76 43.0% 2001 22.6% 20.1% 21.4% 2001 2415 1.15 2002 11.49 46.71 22.4% 24.6% 2002 4.61 784.83 43.6% 2002 22.0% 18.6% 20.7% 2002 2556 1.14 2003 7.76 61.88 22.7% 12.6% 2003 3.78 1172.03 35.1% 2003 22.2% 17.8% 12.7% 2003 4248 1.26 2004 7.17 50.75 19.4% 14.2% 2004 4.63 804.16 22.0% 2004 19.8% 14.7% 10.8% 2004 4976 1.40 2005 5.93 54.32 12.4% 10.9% 2005 3.69 1366.51 32.2% 2005 13.0% 7.8% 7.4% 2005 6003 1.43 2006 2.17 55.08 6.7% 3.9% 2006 3.46 1217.34 29.9% 2006 9.3% 3.3% 2.6% 2006 6092 1.36


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Utilization78.0% 76.0% Utilisation % 74.0% 72.0% 70.0% 68.0% 66.0% Utilis ation % Q1 76.0% Q2 77.1% Q3 72.8% Q4 70.0% 72.8% 70.0%

76.0%

77.1%

2005-06 - Q1 to Q4


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Associate Strength

6 ,2 0 0 6 ,1 0 0 No. of associates 6 ,0 0 0 5 ,9 0 0 5 ,8 0 0 5 ,7 0 0 Q1 Q2 5 ,8 9 0 Q3 5954 Q4 6092 5 ,8 5 0 5 ,8 9 0 5954 6092

To ta l As s o cia te s tre n g th 5 ,8 5 0

2 0 0 5 -0 6 - Q1 to Q4


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Debtors Outstanding - DSODSO80 60 No. of days 40 20 B ille d U n b ille d 2 0 0 5 -0 6 63 40 Fin a n c ia l Ye a r 2 0 0 4 -0 5 70 40 63 40 70 40 B ille d U n b ille d


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Realization 2005-068 0 .0 0 6 0 .0 0 USD per hour 4 0 .0 0 2 0 .0 0 O n s ite Of f s hore

Q1 5 7 .2 5 1 9 .6 5

Q2 5 7 .4 0 1 9 .7 0 2005-06

Q3 5 7 .6 0 1 9 .0 0

Q4 5 7 .5 0 1 9 .0 0


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ConclusionsHealthy Balance sheet, No Debt Strong Cash Flows Significant investments in Products to differentiate Polaris Software Lab from other vanilla outsourcing service providers All product and other investments through internal accruals Cost Structure stable over the last 5 quarters Revenue uptake will drive significant increase in profitability


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THANK YOU


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Polaris Investor Presentation June06F

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