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INVESTOR

PRESENTATION
How did we get here?

1993 1999 2002 2006

POLARIS Listed on CAGR of over


Software Lab major stock 22.3% for the last
Orbitech Merger 6 years
Incorporated exchanges

Major transformation

1999 Key statistics 2006 Key statistics


Revenues $14mn Revenues $187mn
Headcount 885 Headcount 6092

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

Global Delivery Capabilities(10 development centers)


Global presence 22 relationship offices across 14 countries
16 Business Solution Centers

Focused on Long-Term Customer Relationships(Repeat business of


Customer profile over 86%)
2nd longest single relationship with global customers (20 years)

6000+ associates
Employees

FY 06 Revenues:$187mn EBITDA:$17.4 mn
Financials Zero debt, Large Cash Reserves

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Corporate functions

Relationship
Banking Center

Smart Legacy
Modernization
Center
Insurance
Center and
Enterprise
Innovations

Capital Markets
Center

Corporate
Sales

Banking Center
Customer

Technologies
for Globally
Board of Directors Efficient

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Enterprises
SmartBuild
Business Leadership Council

Confidential. Not to
Architecture
Quality & Process management
Organization structure

Group

Business
Process
Outsourcing

Marketing
4
Polaris positioning

“Provider of
Calibrated modernization of ‘Smart Legacy Application management services to
existing legacy platforms in a non- Modernization maintain, reengineer, aggregate and.
disruptive manner by ’ services to upgrade portfolios of custom applications
way of deployment of innovative the world’s cost-effectively, by leveraging Polaris’
(‘SmartBuild’) solutions that are leading banks continuously replenished warehouse of
SOA compliant and backward and financial intellectual
compatible. 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.
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Polaris Business model: 100-5-7

100 Relationships
Build a few (but more than a handful) long-term relationships

Using the 7 Levers


5 Values to be delivered
to the customer
1. Technology Knowledge
2. Domain Knowledge
Cost
3. Customer Environment Knowledge
Quality
4. Process
Reliability
5. Methods and Tools
Flexibility
6. Reusable components
Time to market
7. Energy and Passion of People

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On our way to a global BFSI player

Branding

Leadership

Strategy

BUILDING & GROWING STRATEGIC PARTNERSHIPS

COMPREHENSIVE
Technology OFFERINGS
Delivery PORTFOLIO
Quality

Solutions Fixed Bid Business Strategic


Products Projects Processes Outsourcing

COMPETENCIES CAPABILITIES

RESOURCES

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Polaris Business Mix
Banking, Financial Services & Insurance Sectors

‘Run-the-Bank’ Offerings

‘Change-the-Bank’ Offerings

‘Operate-the-Bank’ Offerings

Horizontal Practices

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

‘Change-the-Bank’ Offerings

‘Operate-the-Bank’ Offerings

Horizontal Practices

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

MCI STP Lending SLM Custodial solutions TechPort – Global


SLM for Credit Cards Front end Integration Liquidity Sweeping & Pooling Dashboards and
Home Lending Originations using workflow and portal Corporate Online Analytics
Branch Renewal Client service Platforms Treasury MM/FX Imaging and Workflow
Internet banking for Private Banks Global roll Out with ERP

‘Operate-the-Bank’ Offerings

Horizontal Practices

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

MCI STP Lending SLM Custodial solutions


SLM for Credit Cards Front end Integration Liquidity Sweeping & Pooling
Home Lending Originations using workflow and portal Corporate Online
Branch Renewal Client service Platforms Treasury MM/FX
Internet banking for Private Banks Global roll Out

Hosted Services Transaction Processing Voice Based Services

Horizontal Practices

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

MCI STP Lending SLM Custodial solutions


SLM for Credit Cards Front end Integration Liquidity Sweeping & Pooling
Home Lending Originations using workflow and portal Corporate Online
Branch Renewal Client service Platforms Treasury MM/FX
Internet banking for Private Banks 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?

Thought
Reliable Speed To Higher
Leadership
Solutions Market Savings
& Innovation

Solution Expertise

Process Capabilities

Polaris 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-entity

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Why customers choose Polaris?

Thought
Reliable Speed To Higher
Leadership
Solutions Market Savings
& Innovation

Solution Expertise

Process Capabilities

Speed 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’ savings

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Why customers choose Polaris?

Thought
Reliable Speed To Higher
Leadership
Solutions Market Savings
& Innovation

Solution Expertise

Process Capabilities

Polaris’ 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 MNC

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Why customers choose Polaris?

Thought
Reliable Speed To Higher
Leadership
Solutions Market Savings
& Innovation

Solution Expertise

Process Capabilities

Polaris 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 90’s
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 query
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Why customers choose Polaris?

Thought
Reliable Speed To Higher
Leadership
Solutions Market Savings
& Innovation

Solution Expertise

Process Capabilities

Laser 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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Why customers choose Polaris?

Thought
Reliable Speed To Higher
Leadership
Solutions Market Savings
& Innovation

Solution Expertise

Process Capabilities

Stringent 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 20 year history with Citibank
9 Soln Delivery Precision,
9 Customer need
5 Sensitivity as KSFs
Citigroup accumulated relationship of
Single Customer Single Customer solutions worth over USD 1 Billion
1
Co-author customer Customer relevant over the last decade
9
growth thru technology Competency additions,
9 Citigroup relationship stands at USD
led innovation as KSF Domain Grasp as
0 105MM for FY05(single largest offshore
KSF
solutions partner)
1 Single Customer Started as supplier to Citibank India
9 Turnaround time & retail business and today support
8 Quality of delivery as solutions and services in more than 70
4 Key Success Factors (KSF) countries, 120 locations across all lines
of business in the Citigroup world.

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Quality process in Polaris

First company in the world to be assessed


SEI CMMi Level 5 at CMMi Level 5
&
ISO 9001 : 2000 ISO 9001:2000 certified

ISO 9001 Independent Software Engineering Process


2001
Group
SEI CMM
Level 3 1999 Over 700 Person years of Quality
Engineering experience
TQM
1995
Practice Largest pool of IFPUG Certified FP
specialists (CFPS) amongst Indian
1991
Companies

Mature and uniform FP counting


Polaris’ Quality Journey
methodology across the organization
ensuring uniform implementation

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Service offerings
Horizontals Verticals
Application
ApplicationDevelopment
Development Front
Frontend
endTechnology
Technology BB
Internet CC W rr
InternetTechnology
Technology W
CC oo ee oo
Re-engineering Customer
Re-engineering CustomerRelationship
RelationshipManagement
Management oo rr aa kk
nn pp ll ee
Enterprise
EnterpriseKnowledge
KnowledgeManagement
Management ss oo tt rr
Maintenance
Maintenance uu rr hh aa II
Network
NetworkManagement
Management mm aa gg nn
Mainframe ee tt MM ee ss
Solution Mainframe
SolutionIntegration
Integration rr ee aa && uu
Middleware
MiddlewareTechnology
Technology nn SS rr
BB BB aa ee aa
Global Mobile
MobileTechnology
Technology aa aa gg cc nn
GlobalDeployment
Deployment
nn nn ee uu cc
Enterprise
EnterpriseResource
ResourcePlanning
Planning kk kk mm rr ee
Enterprise ii ii ee ii
Application
ApplicationCertification
Certification EnterpriseApplication
ApplicationIntegration
Integration nn nn nn tt
Application gg gg tt ii
ApplicationCertification
Certification
ee
Business
BusinessConsulting Data
Consulting DataWarehousing
Warehousing ss

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

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
Why SOA?

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.

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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 analysts
SOA wave and componentization has been
endorsed and adopted by many leading
technology vendors . . .
Yankee “70% of CIOs plan to
survey invest in SOA”
Software product Software Services
companies companies

IDFC
“45% of banks have
survey some SOA plans over
the next year. ”

“27% of banks are already


adopting SOA, nearly 1/3
Infoworld of them enterprise-wide.
survey Companies are beginning
to realize and articulate
significant benefits from
SOA”

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

Market shapers “A new vendor like Polaris can enter


10 our banks, if it has some specific
business expertise, in new and
growing areas such as derivatives”
VP, IT, Top tier, Wholesale bank
5

4 “The biggest proof point for us is


internal. If you have delivered
3 something well then there is no
reason why you can’t get more
business”
2
VP, Vendor Management, Investment Bank

1 Ahead of the pack

0 Building the
0 1,000 2,000 platform
3,000 4,000

10,000 12,000

* Includes some BPO revenue in cases


Number of FTEs relocated*
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Source: Press releases; company websites
Product offering
Intellect SuiteTM is an enterprise platform that meets the needs
of retail, private and corporate bankingDesigned using J2EE
Integrated Multichannel technology
Core Banking
Over 56 modular components or GeneS for 10 banking business
Portfolio Mgt Cash Mgmt lines
Loans Trade Supports over 10 million customers
Cards Treasury
Developed on contemporary technology (Open API standards)
Infrastructure enabling easy integration with legacy systems
Intellect suite Web-enabled, multi-currency and multi-lingual

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 Teller
Charges Reports
Recon Sign
Limits Relationship
Dr. Card Mgmt

Integrator Customer
Communication
Time
Deposits Current GL
Statements &
Savings

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SmartBuild Value proposition

Integrated best of Breed

Smart Build value proposition


Lending Integrator Core

a
Web services Collateral GeneS
Customer Fee

Accelerated Build

Source Code

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Benefits of Smartbuild approach

Customizable 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 offering

PACE Expertise
PACE Services Independent Testing and Certification Unit
Vast experience in testing mission critical
End to end testing applications
• Product testing 20% of the testing team are domain experts
• Project testing
Tested and certified over 300 releases with many
Test process consultancy zero defect deliveries
• Quality Indexing 1500+ person years of testing experience
• Benchmarking
Expertise in Project and Product testing
• Process Gap Analysis
• Process Alignment Continuous process improvement through
Quantitative Project Management (QPM)
Test automation
Expertise in Test Automation tools
• Tools Selection
• Tools Scripting WinRunner, Test Director, Quick Test
• Performance Analysis Professional (QTP), SilkTest, LoadRunner,
OptimizeIT, Purify, Jverify
Performance Metrics
Defect unearthing efficiency of 95%
Test case efficiency of 80%
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Two pronged future strategy
Focus
disproportionately on
Use IP led solutions delivered as
top 100 banks in US
‘Smart Build’ as arrowheads to open
and Europe
new doors
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
 Lending
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Strategy Implementation
Q3-Q4 FY’06 FY’07 FY’08 onwards

Timing Accelerate growth

Penetrate top
Accelerate growth by firmly
accounts with IP
establishing IP driven off
led positioning shoring approach
Key corporate Transform large accounts
theme into AAA relationships
Ramp up to 10-15 of top 100 Deliver enhanced
Stabilize banks and deliver distinctive ‘IPprofitability on account of
and focus led solutions’ to establish a client diversity, sharper
platform for growth within these ‘expertise’ positioning and
accounts better operating platform
Ensure current growth Build partnerships with key
trajectory in IT services players to leverage current
business componentization/SOA wave
Focus on ‘IP led and gain market credibility
solutions’, leverage SOA Enhance front end capabilities
in the marketing message and key account management
Critical and get internal orgn function
alignment Induct IP driven approach in
initiatives Realign organizational delivery of conventional service
structure and key lines Enhance full service
processes to create offerings with new service lines
‘Customer-back’ design
End to end responsibility such as Linux migrations and
Efficient operational niche package implementation
platform

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

DESIGN DELIVER OPERATE

Feature Application,Develo
Consulting customization/desi pment,Managemen Business
gn t & Support Processing

complete spectrum of back office solutions….

Transaction processing
•Asset Management
Customer Business
•Custodial services Complete Card Solutions
Interactions Services Infrastructure Services
•Mortgage

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A holistic offering

Integrated Technology Technolog


and Operations y
Process
Expertise
Infrastructur
e

g e
ea
OPTIMUS

n
Li
Advantage

ris
la
Po
Leveraging Economics of
Expertise

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Some of our differentiators

Enchanced customer
satisfaction

Access to latest
Decreased time to
technology
market
Optimus
Integrated
Outsourcing
seeks to deliver
much more than Minimized
Increased process just cost capital outlay
efficiencies savings…

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Optimus-The perfect partner for outsourcing
Complete spectrum of back office solutions….

Talented Technology
Resource Pool Expertise

Focus on Long Expertise in


Term Financial Services
Relationships Domain

Experienced
Management
Focused yet
Skilled in
Comprehensive
Strategy/
Product Offering
Implementation

Rich Process Strong Quality


Knowledge Orientation

India Offshore
Polaris Advantage
Advantage
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People Practices @ Polaris
Associate Statistics
Education Profile Ag e Gro u p D istrib u tio n
Others
9%
35-4040 P lus 20-25
Doctorates
8% 5% 23%
1%
30-35
Masters/
24%
Post
Graduates
Graduates
59%
31%
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 best

Fuel Campaign - Future Leaders


Nationwide 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 Schools
Tie 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 engineers
All 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 organization
Local hires in US, Japan, Germany & UK

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Attrition Statistics
Attrition Analysis (General)

More than 6yrs


4%
0 to 1 yrs
4 to 6 yrs 27%
12%

2 to 4 yrs
19%

1 to 2 yrs
38%

Voluntary Attrition %age of 16%-17% for FY 05-06


Attrition at middle management level is much lower

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Training & Development
All 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 Financials

Merger with Orbitech

Products Investments

Quest towards Differentiated Positioning

IP Led Growth Strategy

Transformation Agenda

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The Market and Our Hybrid Strategy
Two 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 non-
disruptive 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)

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Early Adoption of our solutions by the Market

Strong 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.

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All these investments have helped Polaris in…
Expanding 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
SOA’ization 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 in…

Improving 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 profile
Revenue for FY06 was Rs 825
900
800

crore 700
600
CAGR : 19.5%

Rs in Crores
500
400
300
200
100
FY’06 revenue break-up -
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

A SPA C Re v e nue Split


USA 21.32%
39.73%
80.0%

60.0%
Citi
Eu r o p e 40.0%
%

27.89% Non Citi


In d ia 20.0%
11.06%
0.0%
2005-06 2004-05

Citi 58.2% 60.1%


Non Citi 41.8% 39.9%
Financial Year

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Revenue – Geo Mix – 2005-06

5 0 .0 0%

4 0 .0 0%

3 0 .0 0%

2 0 .0 0%

1 0 .0 0%

0 .0 0%
Q1 Q2 Q3 Q4

U S/N orth A m e ric a E urope India A s ia Pa c ific & Ja pan

Ge o g r a p h y Q1 06 Q2 06 Q3 06 Q4 06
U S/ N o r t h A m e r ic a 4 2 .9 0 % 4 0 .7 0 % 3 7 .5 4 % 3 8 .4 2 %
Eur ope 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 ific & J a p a n 1 9 .0 0 % 2 0 .7 5 % 2 0 .9 4 % 2 1 .7 6 %

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Revenue – Customer mix

70.00%
60.00%

% of revenue
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Q1 Q2 Q3 Q4
2005-06

Citibank Non Citi Bank

Q1 06 Q2 06 Q3 06 Q4 06
C itib 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 %

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EBITDA
EBITDA for FY06 was Rs.77.07 cr
140 25 %
Reasons for decline in EBITDA
120
20 %
 Product Investments
100
80 15 %
 Change in accounting
60 10 % treatment
40
5%
 Salary Increases
20
- 0%  Investments in Sales
Infrastructure
FY2002

FY2003

FY2004

FY2005

FY2006
FY2001

 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 Analysis

In Rs.cr
250
Expenditure has been
200
under control over the
150 SG&A
last 4 quarters

Rs in Crores
100 S DE
Increase mainly due to
50
salary hikes in Q2 -
Q1 Q2 Q3 Q4
Further optimization
SG&A 44 45 49 47
underway S DE 139 141 142 140
Q u a r t e r - FY 2 0 0 5 - 0 6

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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

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Cash Flows
In C r
Fy 05-06 Fy 04-05
Op e n in g Balan ce 137 80

Cas h f low f rom Operating A c tiv ities 72 121


Cas h f low f rom Inv es tement A c tiv ities (72) (49)
Cas h f low f rom Financ ing A c tiv ities (16) (15)

C lo s in g Balan ce 122 137

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 Ratios

Balance Sheet Ratios 2001 2002 2003 2004 2005 2006


Earnings Per Share (EPS), Diluted 11.66 11.49 7.76 7.17 5.93 2.17
Book 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 1217.34
Cash & 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

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Utilization

78.0% 77.1%
76.0%
76.0%
74.0% 72.8%
Utilisation %

72.0%
70.0%
70.0%
68.0%
66.0%
Q1 Q2 Q3 Q4

Utilis ation % 76.0% 77.1% 72.8% 70.0%


2005-06 - Q1 to Q4

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Associate Strength

6 ,2 0 0
6092
6 ,1 0 0
No. of associates

6 ,0 0 0 5954
5 ,8 9 0
5 ,9 0 0 5 ,8 5 0

5 ,8 0 0

5 ,7 0 0
Q1 Q2 Q3 Q4
To ta l As s o cia te s tre n g th 5 ,8 5 0 5 ,8 9 0 5954 6092
2 0 0 5 -0 6 - Q1 to Q4

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Debtors Outstanding - DSO

DSO

80
63 70
60
No. of days

40 40 B ille d
40
U n b ille d
20
-
2 0 0 5 -0 6 2 0 0 4 -0 5
B ille d 63 70
U n b ille d 40 40
Fin a n c ia l Ye a r

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Realization – 2005-06

8 0 .0 0

6 0 .0 0
USD per hour
4 0 .0 0

2 0 .0 0

-
Q1 Q2 Q3 Q4

O n s ite 5 7 .2 5 5 7 .4 0 5 7 .6 0 5 7 .5 0
Of f s hore 1 9 .6 5 1 9 .7 0 1 9 .0 0 1 9 .0 0
2005-06

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Conclusions

Healthy 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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