Polaris Investor Presentation

8/14/2019 Polaris Investor Presentation

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INVESTORPRESENTATION


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Copyright Polaris Software Lab Limited, 2005.Confidential. Not to

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


Global ATM networks

Core BankingCredit Card ProcessorsLendingMortgage Processing

Insurance

SecuritiesCustodyDerivatives/FixedIncome/Equities

Wealth ManagementCorporate BankingTreasuryCash

Trade Finance

SAPOracleBaaNMainframe


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HorizontalPractices


Global ATM networks


Insurance



Trade Finance


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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HorizontalPractices

Global ATM networks


Insurance



Trade Finance








Hosted Services Transaction Processing Voice Based Services


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Global ATM networks


Insurance



Trade Finance








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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Solution Expertise


Thought



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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Solution Expertise


Thought



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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Solution Expertise


Thought



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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Solution Expertise


Thought



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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Solution Expertise


Thought



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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Copyright Polaris Software Lab Limited, 2005.Confidential. Not tobe republished without prior consent 19

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

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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
http://www.abnamro.com/com/homepage.asphttp://www.orpheus.org.uk/images/our_sp15.jpghttp://www.standardchartered.com/


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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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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.)




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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


Revenue profile


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Copyright Polaris Software Lab Limited, 2005.

Confidential. Not tobe republished without prior consent 52

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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THANK YOU

Polaris Investor Presentation

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