INVESTOR PRESENTATION Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 1
How did we get here? 1993 POLARIS Software Lab Incorporated 1999 Listed on major stock exchanges 2002 2006 Orbitech Merger CAGR of over 22. 3% for the last 6 years Major transformation 1999 Key statistics 2006 Key statistics Revenues $14 mn Revenues $187 mn Headcount 885 Headcount 6092 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 2
Polaris Today Business Global presence Global Solutions Specialist with a dedicated focus on the Banking, Financial Services and Insurance vertical 20 years of experience in BFSI – Banking, Financial Services & Insurance Over 2, 500 projects and 28, 000 person years of experience Global Delivery Capabilities(10 development centers) 22 relationship offices across 14 countries 16 Business Solution Centers Customer profile Focused on Long-Term Customer Relationships(Repeat business of over 86%) 2 nd longest single relationship with global customers (20 years) Employees Financials 6000+ associates FY 06 Revenues: $187 mn EBITDA: $17. 4 mn Zero debt, Large Cash Reserves Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 3
Quality & Process management Marketing Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent Business Process Outsourcing Smart. Build Architecture Group Technologies for Globally Efficient Enterprises Corporate Banking Center Capital Markets Center Smart Legacy Modernization Center Insurance Center and Enterprise Innovations Relationship Banking Center Corporate functions Organization structure Customer Sales Business Leadership Council Board of Directors 4
Polaris positioning Calibrated modernization of existing legacy platforms in a non -disruptive manner by way of deployment of innovative (‘Smart. Build’) solutions that are SOA compliant and backward compatible. “Provider of ‘Smart Legacy Modernization ’ services to the world’s leading banks and financial institutions” Application management services to maintain, reengineer, aggregate and. upgrade portfolios of custom applications cost-effectively, by leveraging Polaris’ continuously replenished warehouse of intellectual property Proven point solutions leveraging innovative processes and technology that have been delivered cost effectively and provided significant business benefits in terms of risk mitigation, TCO and time to market. Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 5
Polaris Business model: 100 -5 -7 100 Relationships Build a few (but more than a handful) long-term relationships 5 Values to be delivered to the customer Cost Quality Reliability Flexibility Time to market Using the 7 Levers 1. 2. 3. 4. 5. 6. 7. Technology Knowledge Domain Knowledge Customer Environment Knowledge Process Methods and Tools Reusable components Energy and Passion of People Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 6
On our way to a global BFSI player Branding Leadership Strategy BUILDING & GROWING STRATEGIC PARTNERSHIPS Technology Delivery Quality COMPREHENSIVE OFFERINGS PORTFOLIO Products Solutions Fixed Bid Projects COMPETENCIES Business Processes Strategic Outsourcing CAPABILITIES RESOURCES Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 7
Polaris Business Mix Banking, Financial Services & Insurance Sectors ‘Run-the-Bank’ Offerings ‘Change-the-Bank’ Offerings ‘Operate-the-Bank’ Offerings Horizontal Practices Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 8
Polaris Business Mix Banking, Financial Services & Insurance Sectors Global ATM networks Core Banking Credit Card Processors Lending Mortgage Processing Insurance Securities Custody Derivatives/Fixed Income/Equities Wealth Management Corporate Banking Treasury Cash Trade Finance SAP Oracle Baa. N Mainframe ‘Change-the-Bank’ Offerings ‘Operate-the-Bank’ Offerings Horizontal Practices Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 9
Polaris Business Mix Banking, Financial Services & Insurance Sectors Global ATM networks Core Banking Credit Card Processors Lending Mortgage Processing MCI SLM for Credit Cards Home Lending Originations Branch Renewal Internet banking Insurance Securities Custody Derivatives/Fixed Income/Equities STP Lending Front end Integration using workflow and portal Client service Platforms for Private Banks Wealth Management Corporate Banking Treasury Cash Trade Finance SAP Oracle Baa. N Mainframe SLM Custodial solutions Tech. Port – Global Liquidity Sweeping & Pooling Dashboards and Corporate Online Analytics Treasury MM/FX Imaging and Workflow Global roll Out with ERP ‘Operate-the-Bank’ Offerings Horizontal Practices Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 10
Polaris Business Mix Banking, Financial Services & Insurance Sectors Global ATM networks Core Banking Credit Card Processors Lending Mortgage Processing MCI SLM for Credit Cards Home Lending Originations Branch Renewal Internet banking Insurance Securities Custody Derivatives/Fixed Income/Equities STP Lending Front end Integration using workflow and portal Client service Platforms for Private Banks Hosted Services Wealth Management Corporate Banking Treasury Cash Trade Finance SAP Oracle Baa. N Mainframe SLM Custodial solutions Liquidity Sweeping & Pooling Corporate Online Treasury MM/FX Global roll Out Transaction Processing Voice Based Services Horizontal Practices Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 11
Polaris Business Mix Banking, Financial Services & Insurance Sectors Global ATM networks Core Banking Credit Card Processors Lending Mortgage Processing MCI SLM for Credit Cards Home Lending Originations Branch Renewal Internet banking Hosted Services Insurance Securities Custody Derivatives/Fixed Income/Equities STP Lending Front end Integration using workflow and portal Client service Platforms for Private Banks Wealth Management Corporate Banking Treasury Cash Trade Finance SAP Oracle Baa. N Mainframe SLM Custodial solutions Liquidity Sweeping & Pooling Corporate Online Treasury MM/FX Global roll Out Transaction Processing Voice Based Services Siebel, BI/DW, Linux, Rational, PACE, Portals, dot. NET, Imaging & Workflow, Infrastructural Management, Professional Services Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 12
Why customers choose Polaris? Reliable Solutions Speed To Market Higher Savings Thought Leadership & 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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 13
Why customers choose Polaris? Reliable Solutions Speed To Market Higher Savings Thought Leadership & 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 Gene. S 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 Gene. S • 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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 14
Why customers choose Polaris? Reliable Solutions Speed To Market Higher Savings Thought Leadership & 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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 15
Why customers choose Polaris? Reliable Solutions Speed To Market Higher Savings Thought Leadership & 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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 16
Why customers choose Polaris? Reliable Solutions Speed To Market Higher Savings Thought Leadership & 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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 17
Why customers choose Polaris? Reliable Solutions Speed To Market Higher Savings Thought Leadership & 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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 18
How did we acquire this capability? Multiple Relationships 2 Domain expertise 0 Solution Supermarket 0 Buy, Build & Rapid Deploy 2 as KSFs Multiple Relationships 1 Domain expertise 9 Competency Map Width 9 Delivery precision 9 as KSFs Multiple Relationships 1 Domain Focus, Large 9 Soln Delivery Precision, 9 Customer need 5 Sensitivity as KSFs Single Customer 1 Co-author customer 9 9 growth thru technology 0 led innovation as KSF Single Customer 1 Turnaround time & 9 Quality of delivery as 8 4 Key Success Factors (KSF) Single Customer relevant Competency additions, Domain Grasp as KSF 20 year history with Citibank Citigroup accumulated relationship of solutions worth over USD 1 Billion over the last decade Citigroup relationship stands at USD 105 MM for FY 05(single largest offshore solutions partner) Started as supplier to Citibank India retail business and today support solutions and services in more than 70 countries, 120 locations across all lines of business in the Citigroup world. Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 19
Quality process in Polaris SEI CMMi Level 5 & ISO 9001 : 2000 ISO 9001 SEI CMM Level 3 TQM Practice 1999 1995 1991 Polaris’ Quality Journey 2001 First company in the world to be assessed at CMMi Level 5 ISO 9001: 2000 certified Independent Software Engineering Process Group Over 700 Person years of Quality Engineering experience Largest pool of IFPUG Certified FP specialists (CFPS) amongst Indian Companies Mature and uniform FP counting methodology across the organization ensuring uniform implementation Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 20
Service offerings Horizontals Application Development Verticals Front end Technology Internet Technology Re-engineering Customer Relationship Management Enterprise Knowledge Management Maintenance Solution Integration Network Management Mainframe Middleware Technology Global Deployment C o n s u m e r C o r p o r a t e B a n k Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent i B a n k i Mobile Technology Enterprise Resource Planning Application Certification Enterprise Application Integration Application Certification Business Consulting Data Warehousing W e a l t h M a n a g e m e B r o k e r a g e & S e c u r 21 i I n s u r a n c e
Service Oriented Architecture Why SOA? What is SOA? Service-Oriented Architecture is an IT and Business strategy that organizes the discrete functions contained in an enterprise applications into interoperable, standards-based services that can be combined and reused quickly to meet business needs. ” 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 (J 2 EE, . NET, Legacy, etc. ) require IT to hard code the point to point connections, hampering the swift flow of information and slowing the delivery of new business services. Service Oriented Architecture (SOA) has emerged as the leading IT strategy for streamlining service delivery. SOA takes the discrete business functions contained in enterprise applications and organizes them into interoperable, standards -based services that can be quickly be combined and reused in composite applications and processes. The desire for Organizations to be service driven is creating a significant pull for IT to adopt SOA. Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 22
SOA gaining priority in the marketplace Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 23
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. . . Software product companies Software Services companies “ 70% of CIOs plan to Yankee survey IDFC survey Infoworld survey invest in SOA” “ 45% of banks have some SOA plans over the next year. ” “ 27% of banks are already adopting SOA, nearly 1/3 of them enterprise-wide. Companies are beginning to realize and articulate significant benefits from SOA” Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 24
SOA oppurtunity While most large banks have existing offshore relationships, degree of work offshored varies widely offering Polaris window of opportunity Per cent of total workforce relocated 20 10 Customers are open to giving vendor like Polaris a chance Market shapers “A new vendor like Polaris can enter our banks, if it has some specific business expertise, in new and growing areas such as derivatives” VP, IT, Top tier, Wholesale bank “The biggest proof point for us is internal. If you have delivered something well then there is no reason why you can’t get more business” VP, Vendor Management, Investment Bank Ahead of the pack Building the platform 10, 000 12, 000 Number of FTEs relocated* *Includes some BPO revenue in cases where it is not separately broken out Source: Press releases; company websites Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 25
Product offering Integrated Multichannel Core Banking Portfolio Mgt Cash Mgmt Loans Trade Cards Treasury Infrastructure Intellect suite Intellect Suite. TM is an enterprise platform that meets the needs of retail, private and corporate banking. Designed using J 2 EE technology Over 56 modular components or Gene. S for 10 banking business lines Supports over 10 million customers Developed on contemporary technology (Open API standards) enabling easy integration with legacy systems Web-enabled, multi-currency and multi-lingual What are Gene. S? Intellect Suite is designed and built with re-usable components called Gene. S (Generalised Services). Several Gene. S come together to form a product. Intellect Suite has over 56 Gene. S in different combinations to develop a variety of banking solutions. Being functional-centric components, many Gene. S are common across solutions. Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 26
Intellect Suite – Built on Component based Architecture Products Gene. S (Generalised Services) APIs (Application Programming Interfaces) RUSAs (Reusable Software Assets) 27
Intellect Suite-Underlying Genes Parameters Teller Payments Recon Sign Charges Limits Relationship Dr. Card Mgmt Customer Communication Integrator Time Deposits Statements Reports Current & Savings Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent GL 28
Smart. Build Value proposition Integrated best of Breed Smart Build value proposition Integrator Lending Core a Customer Fee Web services Collateral Gene. S Accelerated Build Source Code Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 29
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 Competitive advantage Standard process flows Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 30
Application Certification offering PACE Expertise PACE Services End to end testing • Product testing • Project testing Test process consultancy • Quality Indexing • Benchmarking • Process Gap Analysis • Process Alignment Test automation • Tools Selection • Tools Scripting • Performance Analysis Independent Testing and Certification Unit Vast experience in testing mission critical applications 20% of the testing team are domain experts Tested and certified over 300 releases with many zero defect deliveries 1500+ person years of testing experience Expertise in Project and Product testing Continuous process improvement through Quantitative Project Management (QPM) Expertise in Test Automation tools Win. Runner, Test Director, Quick Test Professional (QTP), Silk. Test, Load. Runner, Optimize. IT, Purify, Jverify Performance Metrics Defect unearthing efficiency of 95% Test case efficiency of 80% Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 31
Two pronged future strategy Major Use IP led solutions delivered as ‘Smart Build’ as arrowheads to open new doors Focus disproportionately on top 100 banks in US and Europe 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 n Cards n Liquidity n Collect n Origination n Lending Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 32
Strategy Implementation Q 3 -Q 4 FY’ 06 FY’ 07 FY’ 08 onwards Accelerate growth Timing Penetrate top accounts with IP led positioning Key corporate theme Stabilize and focus Critical initiatives Ensure current growth trajectory in IT services business Focus on ‘IP led solutions’, leverage SOA in the marketing message and get internal orgn alignment Realign organizational structure and key processes to create ‘Customer-back’ design End to end responsibility Efficient operational platform Accelerate growth by firmly establishing IP driven off shoring approach Transform large accounts into AAA relationships Ramp up to 10 -15 of top 100 Deliver enhanced banks and deliver distinctive ‘IP profitability on account of led solutions’ to establish a client diversity, sharper platform for growth within these ‘expertise’ positioning and accounts better operating platform Build partnerships with key players to leverage current componentization/SOA wave and gain market credibility Enhance front end capabilities and key account management function Induct IP driven approach in delivery of conventional service lines Enhance full service offerings with new service lines such as Linux migrations and niche package implementation Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 33
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 Feature customization/design Consulting OPERATE Application, Developme nt, Management & Support Business Processing complete spectrum of back office solutions…. Transaction processing • Asset Management • Custodial services • Mortgage Customer Interactions Services Business Infrastructure Services Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent Complete Card Solutions 34
A holistic offering Integrated Technology and Operations Technology Process Expertise ne Li is lar Po OPTIMUS Advantage ag e Infrastructure Leveraging Economics of Expertise Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 35
Some of our differentiators Enchanced customer satisfaction Access to latest technology Decreased time to market Increased process efficiencies Optimus Integrated Outsourcing seeks to deliver much more than just cost savings… Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent Minimized capital outlay 36
Optimus-The perfect partner for outsourcing Complete spectrum of back office solutions…. Talented Resource Pool Technology Expertise in Financial Services Domain Focus on Long Term Relationships Experienced Management Skilled in Strategy/ Implementation Focused yet Comprehensive Product Offering Rich Process Knowledge Strong Quality Orientation Polaris Advantage India Offshore Advantage Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 37
People Practices @ Polaris
Associate Statistics 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) Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 39
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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 40
Attrition Statistics Voluntary Attrition %age of 16%-17% for FY 05 -06 Attrition at middle management level is much lower Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 41
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 Learning. TM All Chief Executive Council members will have to spend total of at least 40 hours in a year in conducting training Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 42
Career Development Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 43
FINANCIALS
Financials Background Revenue Profile Profitability Profile Balance Sheet Conclusions Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 45
Context Setting : Key Events impacting Financials Merger with Orbitech Products Investments Quest towards Differentiated Positioning IP Led Growth Strategy Transformation Agenda Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 46
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 nondisruptive replacement of legacy systems Polaris transforming the application development and maintenance (ADM) business lines from a cost-arbitrage based resource augmentation model to a solution based value proposition through the use of a hybrid model of services combined with Intellectual Property (IP) Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 47
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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 48
Through: -Investments in IPs Total Costs incurred for developing the products $ 36. 90 Mn (3. 5 years) Part of the Product development costs were capitalized till Dec 04 $ 11. 48 Mn Total Costs charged to P&L till Dec 05 is $ 25. 41 Mn Had the accounting treatment not changed, the EBITDA would have been higher by $ 1. 2 Mn per quarter 2% increase in EBITDA margins. Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 49
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 Gene. S – Development of new Gene. S 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. ) Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 50
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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 51
Revenue profile Revenue for FY 06 was Rs 825 crore CAGR : 19. 5% FY’ 06 revenue break-up Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 52
Revenue – Geo Mix – 2005 -06 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 53
Revenue – Customer mix Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 54
EBITDA for FY 06 was Rs. 77. 07 cr Reasons for decline in EBITDA n n n Product Investments Change in accounting treatment Salary Increases Investments in Sales Infrastructure Muted Revenue Growth Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 55
PAT Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 56
Expenditure Analysis In Rs. cr Expenditure has been under control over the last 4 quarters Increase mainly due to salary hikes in Q 2 Further optimization underway Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 57
Balance Sheet Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 58
Cash Flows 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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 59
Important Financial Ratios Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 60
Utilization Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 61
Associate Strength Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 62
Debtors Outstanding - DSO Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 63
Realization – 2005 -06 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 64
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 Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 65
THANK YOU Copyright Polaris Software Lab Limited, 2005. Confidential. Not to be republished without prior consent 66
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