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INVESTORPRESENTATION
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be republished without prior consent 2
How did we get here?
POLARISSoftware LabIncorporated
Orbitech Merger
CAGR of over22.3% for the last6 years
1993 2002 20061999
Listed onmajor stockexchanges
Major transformation
1999 Key statistics
Revenues $14mn
Headcount 885
2006 Key statistics
Revenues $187mn
Headcount 6092
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Polaris Today
Business
Global presence
Customer profile
Global Solutions Specialist with a dedicated focus on the Banking,Financial Services and Insurance vertical
20 years of experience in BFSI Banking, Financial Services &InsuranceOver 2,500 projects and 28,000 person years of experience
Global Delivery Capabilities(10 development centers)
22 relationship offices across 14 countries
16 Business Solution Centers
Employees
Financials
6000+ associates
FY 06 Revenues:$187mn EBITDA:$17.4 mn
Zero debt, Large Cash Reserves
Focused on Long-Term Customer Relationships(Repeat business ofover 86%)
2nd longest single relationship with global customers (20 years)
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Organization structure
Board of Directors
Business Leadership Council
Sales
Customer
Corporatefunctions
M
arke
tin
g
Quality & Process management
Relationship
BankingC
enter
SmartLeg
acy
Modernization
Center
Insurance
Centeran
d
Enterprise
Innovatio
ns
CapitalMarkets
Center
Corporate
BankingC
enter
Technolo
gies
forGloba
lly
Efficient
Enterprise
s
SmartBuil
d
Architect
ure
Group
Business
Process
Outsourci n
g
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Polaris positioning
Proven pointsolutions leveraging
innovativeprocesses and
technology that
have beendelivered costeffectively and
provided significantbusiness benefits in
terms of riskmitigation, TCO and
time to market.
Application management services tomaintain, reengineer, aggregate and.
upgrade portfolios of custom applicationscost-effectively, by leveraging Polariscontinuously replenished warehouse of
intellectualproperty
Calibrated modernization ofexisting legacy platforms in a non-disruptive manner byway of deployment of innovative(SmartBuild) solutions that are
SOA compliant and backwardcompatible.
Provider ofSmart LegacyModernization services tothe worlds
leading banks
and financialinstitutions
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Polaris Business model: 100-5-7
100 RelationshipsBuild a few (but more than a handful) long-term relationships
5 Values to be deliveredto the customer
CostQuality
Reliability
FlexibilityTime to market
Using the 7 Levers
1. Technology Knowledge2. Domain Knowledge3. Customer Environment Knowledge4. Process5. Methods and Tools
6. Reusable components7. Energy and Passion of People
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On our way to a global BFSI player
Technology Delivery Quality
C O M P E T E N C I E S C A P A B I L I T I E S
Strategy
Leadership
Branding
COMPREHENSIVE OFFERINGS PORTFOLIO
Products SolutionsFixed BidProjects
BusinessProcesses
StrategicOutsourcing
BUILDING & GROWING STRATEGIC PARTNERSHIPS
Products SolutionsFixed BidProjects
BusinessProcesses
COMPREHENSIVE OFFERINGS PORTFOLIO
R E S O U R C E S
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Polaris Business Mix
Banking, Financial Services & Insurance Sectors
Run-the-Bank Offerings
Change-the-Bank Offerings
HorizontalPractices
Operate-the-Bank Offerings
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Polaris Business MixBanking, Financial Services & Insurance Sectors
Change-the-Bank Offerings
HorizontalPractices
Operate-the-Bank Offerings
Global ATM networks
Core BankingCredit Card ProcessorsLendingMortgage Processing
Insurance
SecuritiesCustodyDerivatives/FixedIncome/Equities
Wealth ManagementCorporate BankingTreasuryCash
Trade Finance
SAPOracleBaaNMainframe
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Polaris Business Mix
Banking, Financial Services & Insurance Sectors
HorizontalPractices
Operate-the-Bank Offerings
Global ATM networks
Core BankingCredit Card ProcessorsLendingMortgage Processing
Insurance
SecuritiesCustodyDerivatives/FixedIncome/Equities
Wealth ManagementCorporate BankingTreasuryCash
Trade Finance
SAPOracleBaaNMainframe
MCISLM for Credit Cards
Home Lending OriginationsBranch RenewalInternet banking
STP LendingFront end Integration
using workflow and portalClient service Platformsfor Private Banks
SLM Custodial solutionsLiquidity Sweeping & Pooling
Corporate OnlineTreasury MM/FXGlobal roll Out
TechPort GlobalDashboards and
AnalyticsImaging and Workflowwith ERP
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Polaris Business Mix
Banking, Financial Services & Insurance Sectors
HorizontalPractices
Global ATM networks
Core BankingCredit Card ProcessorsLendingMortgage Processing
Insurance
SecuritiesCustodyDerivatives/FixedIncome/Equities
Wealth ManagementCorporate BankingTreasuryCash
Trade Finance
SAPOracleBaaNMainframe
MCISLM for Credit Cards
Home Lending OriginationsBranch RenewalInternet banking
STP LendingFront end Integration
using workflow and portalClient service Platformsfor Private Banks
SLM Custodial solutionsLiquidity Sweeping & Pooling
Corporate OnlineTreasury MM/FXGlobal roll Out
Hosted Services Transaction Processing Voice Based Services
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Polaris Business Mix
Banking, Financial Services & Insurance Sectors
Global ATM networks
Core BankingCredit Card ProcessorsLendingMortgage Processing
Insurance
SecuritiesCustodyDerivatives/FixedIncome/Equities
Wealth ManagementCorporate BankingTreasuryCash
Trade Finance
SAPOracleBaaNMainframe
MCISLM for Credit Cards
Home Lending OriginationsBranch RenewalInternet banking
STP LendingFront end Integration
using workflow and portalClient service Platformsfor Private Banks
SLM Custodial solutionsLiquidity Sweeping & Pooling
Corporate OnlineTreasury MM/FXGlobal 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?
Solution Expertise
ReliableSolutions Speed ToMarket HigherSavings
Thought
Leadership& Innovation
Process Capabilities
Polaris has been able to deliver reliable solutions in more than 150 countries over thepast 20 years because of its strong domain expertise, proven delivery capabilities, toolsand processes
72 country Risk Management solution
60 country Trade Finance solution23 country Treasury solution
32 country Cash Management Solution
3 continent ATM solutions
Multi-currency, multi-lingual, multi-entity
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Why customers choose Polaris?
Solution Expertise
ReliableSolutions Speed ToMarket HigherSavings
Thought
Leadership& Innovation
Process Capabilities
Speed to Market through knowledge reuse of 750+ domain experts involved in developingBFSI solutions over the last 19 years
Reuse of use cases and test scripts for multiple banking business processesSpeed to Market using SMARTBUILD; through Component reuse of 56 Modular GeneSdesigned for Universal Banking needs
Delivered a Working Capital Management solution for a large Asian bank in 6months reusing Polaris Payments, Optimization and reconciliation GeneSImplementation of Fund transfer, Relationship, ATM, Funds Loans and Swiftmodules in the core banking infrastructure of large Japanese Bank resulted in 4calendar years savings
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Why customers choose Polaris?
Solution Expertise
ReliableSolutions Speed ToMarket HigherSavings
Thought
Leadership& Innovation
Process Capabilities
Polaris ENTITY model and Domain Expertise have resulted in reduced total cost ofownership
Multi-vendor and Virtual delivery model in the development of end to end retailbanking solutions resulted in savings of $50 MM over a period of 5 years for a large
Japanese BankGlobal Support of ATM solutions through the onsite and offshore model haveresulted 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 MNC
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Why customers choose Polaris?
Solution Expertise
ReliableSolutions Speed ToMarket HigherSavings
Thought
Leadership& Innovation
Process Capabilities
Polaris has delivered market differentiating solutions to large global MNCs in the past 2decades:First global Credit Cards solution in open architecture dramatically reduced processingcosts(Smithsonian Award)
Delivered market differentiating Automated Cash Management System in early 90swhich was later implemented in 30 countries
Improved transaction throughput & customer service for the highly competitive andlow margin Trade Finance business through global consolidation of platform andtransaction processingReduced technology cost per transaction by delivering the first global Core Bankingsolution in a distributed architectureFirst global Corporate Banking portal empowering users to transact rather thanmerely query
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Why customers choose Polaris?
Solution Expertise
ReliableSolutions Speed ToMarket HigherSavings
Thought
Leadership& Innovation
Process Capabilities
Laser beam focus on various sub-verticals within the BFSI domain through internalalignment. This ensures an in-depth understanding of Industry practices, an awareness ofIndustry trends & an appreciation of Industry specific nuances:
Consumer Banking
Corporate BankingWealth Management
Brokerage & Securities
Insurance
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Why customers choose Polaris?
Solution Expertise
ReliableSolutions Speed ToMarket HigherSavings
Thought
Leadership& Innovation
Process Capabilities
Stringent adherence to Quality standards such as ISO, CMM and Six Sigma
Continuous process improvement and process streamlining to ensure resourceoptimization
Effective use of Tools to monitor and control processes providing transparency
Internal metrics and performance measures reviewed by top management on a monthlybasis
Escalation procedures and Change Control Board in place to effectively manage changeand resolve issues
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How did we acquire this capability?
Single CustomerTurnaround time &
Quality of delivery asKey Success Factors (KSF)
Single CustomerCo-author customer
growth thru technologyled innovation as KSF
Single CustomerCustomer relevant
Competency additions,Domain Grasp as
KSF
Multiple Relationships
Domain Focus, LargeSoln Delivery Precision,
Customer needSensitivity as KSFs
Multiple RelationshipsDomain expertise
Competency Map WidthDelivery precision
as KSFs
Multiple RelationshipsDomain expertise
Solution Supermarket
Buy, Build & Rapid Deployas KSFs
199
0
1995
1984
1999
20
02
20 year history with Citibank
Citigroup relationship stands at USD
105MM for FY05(single largest offshoresolutions partner)
Started as supplier to Citibank Indiaretail business and today supportsolutions and services in more than 70countries, 120 locations across all linesof business in the Citigroup world.
Citigroup accumulated relationship ofsolutions worth over USD 1 Billionover the last decade
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Quality process in Polaris
First company in the world to be assessedat CMMi Level 5
ISO 9001:2000 certified
Independent Software Engineering ProcessGroup
Over 700 Person years of QualityEngineering experience
Largest pool of IFPUG Certified FPspecialists (CFPS) amongst IndianCompanies
Mature and uniform FP countingmethodology across the organizationensuring uniform implementation
1991
1995
1999
2001
TQM
Practice
SEI CMMLevel 3
ISO 9001
SEI CMMi Level 5
&ISO 9001 : 2000
Polaris Quality Journey
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Service offerings
Application DevelopmentApplication Development
Re-engineeringRe-engineering
MaintenanceMaintenance
Solution IntegrationSolution Integration
Global DeploymentGlobal Deployment
Application CertificationApplication Certification
Business ConsultingBusiness Consulting
Front end TechnologyFront end Technology
Internet TechnologyInternet Technology
Customer Relationship ManagementCustomer Relationship Management
Enterprise Knowledge ManagementEnterprise Knowledge Management
Network ManagementNetwork Management
MainframeMainframe
Middleware TechnologyMiddleware Technology
Mobile TechnologyMobile Technology
Enterprise Resource PlanningEnterprise Resource Planning
Enterprise Application IntegrationEnterprise Application Integration
Application CertificationApplication Certification
Data WarehousingData Warehousing
B
r
o
k
e
r
a
g
e&
S
e
c
u
r
i
t
i
e
s
Br
o
k
e
r
a
g
e&
S
e
c
u
r
it
i
e
s
C
o
r
p
o
r
a
te
B
a
n
k
i
n
g
C
o
r
p
o
r
a
te
B
a
n
k
in
g
I
n
su
r
a
n
c
e
I
n
su
r
a
n
c
e
C
o
n
s
u
m
er
B
a
n
k
i
n
g
C
o
n
s
u
m
er
B
a
n
k
in
g
W
e
a
l
t
h
Ma
n
a
g
e
m
e
n
t
W
e
a
l
t
h
Ma
n
a
g
e
m
en
t
VerticalsHorizontals
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Service Oriented ArchitectureService-Oriented Architecture is an IT and Businessstrategy that organizes the discrete functions containedin an enterprise applications into interoperable,standards-based services that can be combined and
reused quickly to meet business needs.
What isSOA?
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 ofthe 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 pointconnections, hampering the swift flow of information andslowing the delivery of new business services.
Service Oriented Architecture (SOA) has emerged as theleading IT strategy for streamlining service delivery. SOAtakes the discrete business functions contained in enterprise
applications and organizes them into interoperable,standards-based services that can be quickly be combinedand reused in composite applications and processes.
The desire for Organizations to be service driven is creatinga significant pull for IT to adopt SOA.
W
hySOA?
SOA i i i it i th k t l
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SOA gaining priority in the marketplace
SOA wave and Componentisation has been endorsed and adopted by
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SOA wave and Componentisation has been endorsed and adopted bymany leading vendors and analysts
SOA wave and componentization has beenendorsed and adopted by many leadingtechnology vendors . . .
Software productcompanies
Software Servicescompanies
70% of CIOs plan toinvest in SOA
45% of banks havesome SOA plans over
the next year.
27% of banks are alreadyadopting SOA, nearly 1/3of them enterprise-wide.Companies are beginningto realize and articulatesignificant benefits fromSOA
Yankeesurvey
IDFC
survey
Infoworld
survey
SOA t it
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SOA oppurtunityWhile most large banks have existing offshore relationships, degree of workoffshored varies widely offering Polaris window of opportunity
A new vendor like Polaris can enterour banks, if it has some specificbusiness expertise, in new andgrowing areas such as derivatives
VP, IT, Top tier, Wholesale bank
The biggest proof point for us isinternal. If you have deliveredsomething well then there is noreason why you cant get morebusiness
VP, Vendor Management, Investment Bank
0
1
2
3
4
5
0 1,000 2,000 3,000 4,000
Perce
nt
oftota
lworkforce
relocate
d
Number of FTEs relocated*
10
10,000
Market shapers
Building theplatform
20
Ahead of the pack
12,000
Customers are open to giving vendorlike Polaris a chance
* Includes some BPO revenue in cases
where it is not separately broken out
Source: Press releases; company websites
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Product offering
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.
Intellect SuiteTM is an enterprise platform that meets the needsof retail, private and corporate bankingDesigned using J2EEtechnology
Over 56 modular components or GeneS for 10 banking businesslines
Supports over 10 million customers
Developed on contemporary technology (Open API standards)enabling easy integration with legacy systems
Web-enabled, multi-currency and multi-lingualIntellect suite
Infrastructure
Cards Treasury
Loans
Portfolio Mgt
Trade
Cash Mgmt
CoreBanking
Integrated Multichannel
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Products
GeneS (Generalised Services)
RUSAs (Reusable Software Assets)
APIs (Application ProgrammingInterfaces)
Intellect Suite Built on Component based Architecture
ll S i d l i G
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Intellect Suite-Underlying Genes
CustomerCustomer
CommunicationCommunication
Dr. CardDr. CardMgmtMgmt
TimeTime
DepositsDeposits
ReportsReports
StatementsStatements
ParametersParameters
RelationshipRelationship
CurrentCurrent
&&
SavingsSavings
ChargesCharges
TellerTeller
ReconReconLimitsLimits
IntegratorIntegrator
GLGL
SignSignPaymentsPayments
S tB ild V l iti
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Smart Build value proposition
a
Lending Core
Customer Fee Collateral GeneS
Source Code
Accelerated Build
Integrated best of Breed
Integrator
Web services
SmartBuild Value proposition
Benefits of Smartbuild approach
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Benefits of Smartbuild approach
Smart Build advantage
Customizable solution
Reusable solution
Tested product processor
Service Oriented architecture
Standard process flows
Faster time tomarket
Reduced cost
Reduced risk
Competitive advantage
Application Certification offering
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Application Certification offering
PACE Services
Test process consultancy
Quality Indexing
Benchmarking
Process Gap Analysis
Process Alignment
Test automation Tools Selection
Tools Scripting
Performance Analysis
End to end testingProduct testing
Project testing
Independent Testing and Certification Unit
Vast experience in testing mission criticalapplications
20% of the testing team are domain experts
Tested and certified over 300 releases with manyzero defect deliveries
1500+ person years of testing experience
Expertise in Project and Product testing
Continuous process improvement throughQuantitative Project Management (QPM)
Expertise in Test Automation tools
WinRunner, Test Director, Quick TestProfessional (QTP), SilkTest, LoadRunner,OptimizeIT, Purify, Jverify
Performance Metrics
Defect unearthing efficiency of 95%
Test case efficiency of 80%
PACE Expertise
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Two pronged future strategy
Use IP led solutions delivered as
Smart Build as arrowheads to opennew doors
Transform core ADM services into higher margin business byleveraging IP
Intellectual Property Rights factory for Tier 1Products for Tier 2, 3
Major
Focusdisproportionately ontop 100 banks in US
and Europe
Smart-Build, SLM for Tier 1 Banks of Europe, NA
Selected products for Tier 2 Banks of ME, Latam, ASPAC Cards
Liquidity
Collect
Origination
Lending
St t g I l t ti
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Strategy Implementation
Ensure current growthtrajectory in IT servicesbusinessFocus on IP ledsolutions, leverage SOAin the marketing messageand get internal orgn
alignmentRealign organizationalstructure and keyprocesses to create
Customer-back designEnd to end responsibilityEfficient operationalplatform
Ramp up to 10-15 of top 100
banks and deliver distinctive IP
led solutions to establish a
platform for growth within theseaccounts
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 indelivery of conventional service
lines Enhance full service
offerings with new service lines
such as Linux migrations and
niche package implementation
Accelerate growth by firmly
establishing IP driven off
shoring approach
Transform large accounts
into AAA relationships
Deliver enhanced
profitability on account of
client diversity, sharper
expertise positioning andbetter operating platform
Stabilizeand focus
Penetrate topaccounts with IPled positioning
AccelerategrowthTiming
Q3-Q4 FY06 FY07 FY08 onwards
Critical
initiatives
Key corporatetheme
O i BPO ff i
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Copyright Polaris Software Lab Limited, 2005.Confidential. Not tobe republished without prior consent 34
Optimus-BPO offering
Aims to fulfill emerging customer requirements for an integrated technology andoperations offering using its expertise in the banking and financial services domain
Application,Development,Managemen
t & Support
BusinessProcessing
Featurecustomization/desi
gnConsulting
complete spectrum of back office solutions.
DESIGN OPERATEOPERATEDELIVER
Customer
Interactions Services
Business
Infrastructure ServicesComplete Card Solutions
Transaction processing
Asset Management
Custodial services
Mortgage
A holistic offering
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A holistic offering
OPTIMUS
Advantage
Technology
ProcessExpertise
Infrastructur
e
Polaris
Lin
eage
Integrated Technologyand Operations
Leveraging Economics ofExpertise
Some of our differentiators
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Some of our differentiators
Increased processefficiencies
Minimizedcapital outlay
Accessto latesttechnology
Decreased time tomarket
Enchanced customersatisfaction
OptimusIntegrated
Outsourcing
seeks to delivermuch more than
just costsavings
O ti Th f t t f t i
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Optimus-The perfect partner for outsourcing
Complete spectrum of back office solutions.
Focused yetComprehensive
Product Offering
Polaris Advantage
TechnologyExpertise
ExperiencedManagement
Skilled inStrategy/
Implementation
India OffshoreAdvantage
TalentedResource Pool
Focus on LongTerm
Relationships
Strong QualityOrientation
Expertise inFinancial Services
Domain
Rich ProcessKnowledge
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People Practices @ Polaris
A i t St ti ti
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Age Group Distr ibut
20-25
23 %
25-30
40 %
30-35
24 %
35-40
8%
40 Plus
5%
Education Profile
Graduates
59%
Masters/
Post
Graduates
31%
Doctorates
1%
Others
9%
Associate Statistics
Flat Hierarchy 6 levels to CEO
6000 + Associates
25% Female Associates: diversity critical
20% onsite employees- US, UK, Singapore90% Qualified Professionals (Engineers, MBAs, MS etc)
Talent Acquisition Recruiting the best
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Fuel 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 structuredAssessment Centre
Recruited 500 fresh engineers out of 1.5 lakh applications across thecountry
Cross-national hiring to move towards a global organizationLocal hires in US, Japan, Germany & UK
Talent Acquisition- Recruiting the best
Attrition Statistics
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Attrition Analysis (General)
0 to 1 yrs
27%
1 to 2 yrs
38%
2 to 4 yrs
19%
4 to 6 yrs
12%
More than 6yrs
4%
Attrition Statistics
Voluntary Attrition %age of 16%-17% for FY 05-06
Attrition at middle management level is much lower
T i i g & D l t
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All associate go through person-days of training every year
Key focus on Project Management Certification & LeadershipDevelopment
Certified Project Management is extended to a large part ofthe organization
All Project Directors (PD) and Project Managers (PM) willhave to spend 6 hrs of conducting training every month
Onsite programs executed through Technology MediatedLearningTM
All Chief Executive Council members will have to spend totalof at least 40 hours in a year in conducting training
Training & Development
Career Development
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Career Development
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FINANCIALS
Financials
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Financials
Background
Revenue Profile
Profitability Profile
Balance Sheet
Conclusions
Context Setting : Key Events impacting Financials
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Context Setting : Key Events impacting Financials
Merger with Orbitech
Products Investments
Quest towards Differentiated Positioning
IP Led Growth Strategy
Transformation Agenda
The Market and Our Hybrid Strategy
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The Market and Our Hybrid Strategy
Two Trends in the market
Banks under pressure to bring innovative products tomarket more quickly, to improve operationalefficiency through continued process optimisation andto implement comprehensive regulatory complianceprograms
Growing recognition of Service Oriented Architectures(SOA) as a viable approach to gradual and non-disruptive replacement of legacy systems
Polaris transforming the application development andmaintenance (ADM) business lines from a cost-arbitrage
based resource augmentation model to a solution basedvalue proposition through the use of a hybrid model ofservices combined with Intellectual Property (IP)
Early Adoption of our solutions by the Market
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Strong references for our Lending suite covering the
full spectrum of origination, loan processing andcollections - in diverse markets of Japan, Germany, theUS, India and the Middle East
Initial success with Cards in the local market in India
has resulted in opening up of new markets for consumerfinance in Latin America
Achieved a position of leadership with our Cash andLiquidity management offerings with leading banks inthe UK market
Early Adoption of our solutions by the Market
Through:-Investments in IPs
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g
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, theEBITDA would have been higher by $ 1.2 Mn perquarter 2% increase in EBITDA margins.
All these investments have helped Polaris in
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Expanding domain expertise & improving implementation capacity
Hiring and training career bankers
Aligning investment and roadmap plans with the market needsEngaging with Strategy consultants to validate market needs andproduct 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 & userexperience
Benchmarking Adding new Product features
Implementing Common Look and Feel and other architectural / designguidelines
Testing and fine-tuning of products in different hardware andoperating platform combinations
Development of industry standard documentation (User manuals,implementation manuals, etc.)
All these investments have helped Polaris in
All these investments have helped Polaris in
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Improving engineering quality and productivity
Investing in third-party tools and development of in-house tools
Developing product development disciplines such ascustomisation strategy, engineering golden rules andestimation methodology
Instituting Quality processes such as defect free programminghandbook and SOA handbook
Helping us to expand user base
Developing product collateral
Setting up product demonstration infrastructure
Marketing and Sales Investment
Developing product branding
All these investments have helped Polaris in
Revenue profile
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Revenue profile
Revenue for FY06 was Rs 825crore
-
10 0
20 0
30 0
40 0
50 0
60 0
70 0
80 0
90 0
FY 2 001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006
Financial Ye
RsinCror
es
Revenue Split
0.0%
20.0%
40.0%
60.0%
80.0%
Financial Year
%Citi
Non Citi
Citi 58.2% 60.1%
Non Citi 41.8% 39.9%
2005-06 2004-05
Europe
27.89India
11.06
ASPA
21.32USA
39.73
FY06 revenue break-up
CAGR : 19.5%
Revenue Geo Mix 2005-06
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Revenue Geo Mix 2005 06
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
Q1 Q2 Q3 Q4
U S /N or th A m e ric a E ur op e Ind ia A s ia P ac if ic & Ja p
Ge o g r a p h y Q 1 0 6 Q 2 0 6 Q 3 0 6 Q 4 0
U S/ N o r t h Am e r ic a 4 2 .9 0 % 4 0 .7 0 % 3 7 .5 4 % 3 8 . 4 2
E u r o p e 2 7 .6 0 % 2 8 .4 5 % 2 9 .7 2 % 2 8 . 5 3
I n d ia 1 0 .5 0 % 1 0 .1 0 % 1 1 .8 0 % 1 1 . 2 9
A s ia P a c if ic & Ja p a n 1 9 .0 0 % 2 0 .7 5 % 2 0 .9 4 % 2 1 . 7 6
Revenue Customer mix
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Revenue Customer mix
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Q1 Q2 Q3 Q4
2005-06
%o
frevenue
Citibank Non Citi Bank
Q 1 0 6 Q 2 0 6 Q 3 0 6 Q 4 0 6
C i t i b a n k 5 9 . 6 3 % 5 7 . 7 0 % 5 7 . 2 4 % 5 8 . 2 1
N o n C iti B a n k 4 0 . 3 7 % 4 2 . 3 0 % 4 2 . 7 6 % 4 1 . 7 9
EBITDA
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EBITDA
EBITDA for FY06 was Rs.77.07 cr
-
20
40
60
80
10 0
12 0
14 0
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
0%
5%
10%
15%
20%
25%
EBITDA EBITDA as % of
Reasons for decline in EBITDA
Product Investments
Change in accounting
treatment
Salary Increases
Investments in SalesInfrastructure
Muted Revenue Growth
PAT
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PAT
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
inRs.cr
FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006
Expenditure Analysis
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Expenditure Analysis
Expenditure has been
under control over the
last 4 quarters
Increase mainly due to
salary hikes in Q2
Further optimization
underway
In Rs.cr
-
5 0
1 0 0
1 5 0
2 0 0
2 5 0
Q u a r t e r - FY 2 0
Rsin
Crores S G &
S DE
S G & A 4 4 4 5 4 9 4 7
S D E 1 3 9 1 4 1 1 4 2 1 4 0
Q 1 Q 2 Q 3 Q 4
Balance Sheet
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Balance Sheet
In Rs Crores
31-Mar-06 31-Mar-05
Sources of Funds
Shareholders Capital 540.90 531.10
Secured Loans 1.88 2.10
Total 542.78 533.20
Application of Funds
Net Book Value 237.63 216.26
Cash & Bank balances 121.70 136.71
Working Capital 169.79 172.15
Investments 12.91 6.93
Miscellaneous Expenditure 0.75 1.15
Total 542.78 533.20
Cash Flows
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Cash Flows
Company has been consistent in generating cash from operationalactivities
There are no debts in the company
Cash & Cash balances of Rs.122 crores as of 31 Mar 06
In Cr
Fy 05- 06 Fy 04- 0
Ope n in g Balance 137 80
Cas h f low f rom Operating A c tiv ities 72 121
Ca s h f lo w f r om In v es te me nt A c t iv itie s ( 72 ) (49)
Cas h f low f rom Financ ing A ctiv ities (16) (15)
Closing Balance 122 137
Important Financial Ratios
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p
Balance Sheet Ratios 2001 2002 2003 2004 2005 2006
Earnings Per Share (EPS), Diluted 11.66 11.49 7.76 7.17 5.93 2.17Book Value Per Share 37.13 46.71 61.88 50.75 54.32 55.08
Return on Assets(ROA) 24.6% 22.4% 22.7% 19.4% 12.4% 6.7%
Return on Equity (ROE) 31.4% 24.6% 12.6% 14.2% 10.9% 3.9%
Liquidity Ratios 2001 2002 2003 2004 2005 2006
Current Ratio 4.21 4.61 3.78 4.63 3.69 3.46
Cash & Mkt Securities 719.76 784.83 1172.03 804.16 1366.51 1217.34Cash & Mkt Securities/Current Assets 43.0% 43.6% 35.1% 22.0% 32.2% 29.9%
Profitability Ratios 2001 2002 2003 2004 2005 2006
EBDITA/Net Sales 22.6% 22.0% 22.2% 19.8% 13.0% 9.3%
Operating Margin 20.1% 18.6% 17.8% 14.7% 7.8% 3.3%
Net Profit Margin 21.4% 20.7% 12.7% 10.8% 7.4% 2.6%
Other ratios 2001 2002 2003 2004 2005 2006
No. of Employees 2415 2556 4248 4976 6003 6092
Sales/Employee(Rs.mn) 1.15 1.14 1.26 1.40 1.43 1.36
Utilization
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Utilization
76.0%
70.0%
77.1%
72.8%
66.0%
68.0%
70.0%
72.0%
74.0%
76.0%
78.0%
2005-06 - Q1 to
Utilisation%
Utilisation % 76.0% 77.1% 72.8% 70.0%
Q1 Q2 Q3 Q4
Associate Strength
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Associate Strength
5,8505,890
5954
6092
5,700
5,800
5,900
6,000
6,100
6,200
2005 -06 - Q1 to
No.o
fassociates
Total As so ciate strength5 ,850 5 ,890 5954 6092
Q1 Q2 Q3 Q4
Debtors Outstanding - DSO
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Debtors Outstanding DSO
D S
7 06 3
4 04 0
-
2 0
4 0
6 0
8 0
Fina nc ia l Y
No.
ofdays
B i l l e d
U n b i l l e
B i l l e d 6 3 7 0
U n b i l l e 4 0 4 0
2 0 0 5 -0 6 2 0 0 4 -0 5
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Conclusions
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Healthy Balance sheet, No Debt
Strong Cash Flows
Significant investments in Products to differentiatePolaris Software Lab from other vanilla outsourcingservice providers
All product and other investments through internalaccruals
Cost Structure stable over the last 5 quarters
Revenue uptake will drive significant increase inprofitability
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