Polaris Investor Presentation - Polaris Software is the world's ...

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Polaris Investor Presentation - Polaris Software is the world's ...

  1. 1. INVESTOR PRESENTATION
  2. 2. How did we get here? POLARIS Software Lab Incorporated Orbitech Merger CAGR of over 22.3% for the last 6 years 1993 2002 2006 1999 Listed on major stock exchanges Major transformation 1999 Key statistics Revenues $14mn Headcount 885 2006 Key statistics Revenues $187mn Headcount 6092
  3. 3. Polaris Today Business Global presence Customer profile <ul><li>Global Solutions Specialist with a dedicated focus on the Banking, Financial Services and Insurance vertical </li></ul><ul><li>20 years of experience in BFSI – Banking, Financial Services & Insurance </li></ul><ul><li>Over 2,500 projects and 28,000 person years of experience </li></ul><ul><li>Global Delivery Capabilities(10 development centers) </li></ul><ul><li>22 relationship offices across 14 countries </li></ul><ul><li>16 Business Solution Centers </li></ul>Employees Financials <ul><li>6000+ associates </li></ul><ul><li>FY 06 Revenues:$187mn EBITDA:$17.4 mn </li></ul><ul><li>Zero debt, Large Cash Reserves </li></ul><ul><li>Focused on Long-Term Customer Relationships(Repeat business of over 86%) </li></ul><ul><li>2nd longest single relationship with global customers (20 years) </li></ul>
  4. 4. Organization structure Board of Directors Business Leadership Council Sales Customer Corporate functions Marketing Quality & Process management Relationship Banking Center Smart Legacy Modernization Center Insurance Center and Enterprise Innovations Capital Markets Center Corporate Banking Center Technologies for Globally Efficient Enterprises SmartBuild Architecture Group Business Process Outsourcing
  5. 5. Polaris positioning 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. Application management services to maintain, reengineer, aggregate and. upgrade portfolios of custom applications cost-effectively, by leveraging Polaris’ continuously replenished warehouse of intellectual property Calibrated modernization of existing legacy platforms in a non-disruptive manner by way of deployment of innovative (‘SmartBuild’) solutions that are SOA compliant and backward compatible. “ Provider of ‘Smart Legacy Modernization’ services to the world’s leading banks and financial institutions ”
  6. 6. 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 <ul><ul><li>Using the 7 Levers </li></ul></ul><ul><li>Technology Knowledge </li></ul><ul><li>Domain Knowledge </li></ul><ul><li>Customer Environment Knowledge </li></ul><ul><li>Process </li></ul><ul><li>Methods and Tools </li></ul><ul><li>Reusable components </li></ul><ul><li>Energy and Passion of People </li></ul>
  7. 7. On our way to a global BFSI player C O M P E T E N C I E S C A P A B I L I T I E S COMPREHENSIVE OFFERINGS PORTFOLIO Products Solutions Fixed Bid Projects Business Processes Strategic Outsourcing BUILDING & GROWING STRATEGIC PARTNERSHIPS Products Solutions Fixed Bid Projects Business Processes COMPREHENSIVE OFFERINGS PORTFOLIO R E S O U R C E S Technology Delivery Quality Strategy Leadership Branding
  8. 8. Polaris Business Mix Banking, Financial Services & Insurance Sectors ‘ Run-the-Bank’ Offerings ‘ Change-the-Bank’ Offerings Horizontal Practices ‘ Operate-the-Bank’ Offerings
  9. 9. Polaris Business Mix Banking, Financial Services & Insurance Sectors ‘ Change-the-Bank’ Offerings Horizontal Practices ‘ Operate-the-Bank’ Offerings 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 BaaN Mainframe
  10. 10. Polaris Business Mix Banking, Financial Services & Insurance Sectors Horizontal Practices ‘ Operate-the-Bank’ Offerings 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 BaaN Mainframe MCI SLM for Credit Cards Home Lending Originations Branch Renewal Internet banking STP Lending Front end Integration using workflow and portal Client service Platforms for Private Banks SLM Custodial solutions Liquidity Sweeping & Pooling Corporate Online Treasury MM/FX Global roll Out TechPort – Global Dashboards and Analytics Imaging and Workflow with ERP
  11. 11. Polaris Business Mix Banking, Financial Services & Insurance Sectors Horizontal Practices 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 BaaN Mainframe MCI SLM for Credit Cards Home Lending Originations Branch Renewal Internet banking STP Lending Front end Integration using workflow and portal Client service Platforms for Private Banks SLM Custodial solutions Liquidity Sweeping & Pooling Corporate Online Treasury MM/FX Global roll Out Hosted Services Transaction Processing Voice Based Services
  12. 12. 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 BaaN Mainframe MCI SLM for Credit Cards Home Lending Originations Branch Renewal Internet banking STP Lending Front end Integration using workflow and portal Client service Platforms for Private Banks SLM Custodial solutions Liquidity Sweeping & Pooling Corporate Online Treasury MM/FX Global roll Out Hosted Services Transaction Processing Voice Based Services Siebel, BI/DW, Linux, Rational, PACE, Portals, dotNET, Imaging & Workflow, Infrastructural Management, Professional Services
  13. 13. Why customers choose Polaris? Solution Expertise Reliable Solutions Speed To Market Higher Savings Thought Leadership & Innovation Process Capabilities <ul><li>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 </li></ul><ul><li>72 country Risk Management solution </li></ul><ul><li>60 country Trade Finance solution </li></ul><ul><li>23 country Treasury solution </li></ul><ul><li>32 country Cash Management Solution </li></ul><ul><li>3 continent ATM solutions </li></ul><ul><li>Multi-currency, multi-lingual, multi-entity </li></ul>
  14. 14. Why customers choose Polaris? Solution Expertise Reliable Solutions Speed To Market Higher Savings Thought Leadership & Innovation Process Capabilities <ul><li>Speed to Market through knowledge reuse of 750+ domain experts involved in developing BFSI solutions over the last 19 years </li></ul><ul><ul><li>Reuse of use cases and test scripts for multiple banking business processes </li></ul></ul><ul><li>Speed to Market using SMARTBUILD; through Component reuse of 56 Modular GeneS designed for Universal Banking needs </li></ul><ul><ul><li>Delivered a Working Capital Management solution for a large Asian bank in 6 months reusing Polaris Payments, Optimization and reconciliation GeneS </li></ul></ul><ul><ul><li>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 </li></ul></ul>
  15. 15. Why customers choose Polaris? Solution Expertise Reliable Solutions Speed To Market Higher Savings Thought Leadership & Innovation Process Capabilities <ul><li>Polaris’ ENTITY model and Domain Expertise have resulted in reduced total cost of ownership </li></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>Global Support of ATM solutions through the onsite and offshore model have resulted in savings of $50 MM for a large MNC Bank </li></ul></ul><ul><ul><li>Offshore Development and Support of Custody Solution have resulted in savings of $40 MM for a Global MNC </li></ul></ul>
  16. 16. Why customers choose Polaris? Solution Expertise Reliable Solutions Speed To Market Higher Savings Thought Leadership & Innovation Process Capabilities <ul><li>Polaris has delivered market differentiating solutions to large global MNCs in the past 2 decades: </li></ul><ul><li>First global Credit Cards solution in open architecture dramatically reduced processing costs (Smithsonian Award) </li></ul><ul><ul><li>Delivered market differentiating Automated Cash Management System in early 90’s which was later implemented in 30 countries </li></ul></ul><ul><ul><li>Improved transaction throughput & customer service for the highly competitive and low margin Trade Finance business through global consolidation of platform and transaction processing </li></ul></ul><ul><ul><li>Reduced technology cost per transaction by delivering the first global Core Banking solution in a distributed architecture </li></ul></ul><ul><ul><li>First global Corporate Banking portal empowering users to transact rather than merely query </li></ul></ul>
  17. 17. Why customers choose Polaris? Solution Expertise Reliable Solutions Speed To Market Higher Savings Thought Leadership & Innovation Process Capabilities <ul><li>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: </li></ul><ul><li>Consumer Banking </li></ul><ul><li>Corporate Banking </li></ul><ul><li>Wealth Management </li></ul><ul><li>Brokerage & Securities </li></ul><ul><li>Insurance </li></ul>
  18. 18. Why customers choose Polaris? Solution Expertise Reliable Solutions Speed To Market Higher Savings Thought Leadership & Innovation Process Capabilities Stringent adherence to Quality standards such as ISO, CMM and Six Sigma Continuous process improvement and process streamlining to ensure 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
  19. 19. How did we acquire this capability? Single Customer Turnaround time & Quality of delivery as Key Success Factors (KSF) Single Customer Co-author customer growth thru technology led innovation as KSF Single Customer Customer relevant Competency additions, Domain Grasp as KSF Multiple Relationships Domain Focus, Large Soln Delivery Precision, Customer need Sensitivity as KSFs Multiple Relationships Domain expertise Competency Map Width Delivery precision as KSFs Multiple Relationships Domain expertise Solution Supermarket Buy, Build & Rapid Deploy as KSFs 1990 1995 1984 1999 2002 20 year history with Citibank <ul><li>Citigroup relationship stands at USD 105MM for FY05(single largest offshore solutions partner) </li></ul><ul><li>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. </li></ul><ul><li>Citigroup accumulated relationship of solutions worth over USD 1 Billion over the last decade </li></ul>
  20. 20. Quality process in Polaris <ul><li>First company in the world to be assessed at CMMi Level 5 </li></ul><ul><li>ISO 9001:2000 certified </li></ul><ul><li>Independent Software Engineering Process Group </li></ul><ul><li>Over 700 Person years of Quality Engineering experience </li></ul><ul><li>Largest pool of IFPUG Certified FP specialists (CFPS) amongst Indian Companies </li></ul><ul><li>Mature and uniform FP counting methodology across the organization ensuring uniform implementation </li></ul>1991 1995 1999 2001 TQM Practice SEI CMM Level 3 ISO 9001 SEI CMMi Level 5 & ISO 9001 : 2000 Polaris’ Quality Journey
  21. 21. Service offerings Application Development Re-engineering Maintenance Solution Integration Global Deployment Application Certification Business Consulting Front end Technology Internet Technology Customer Relationship Management Enterprise Knowledge Management Network Management Mainframe Middleware Technology Mobile Technology Enterprise Resource Planning Enterprise Application Integration Application Certification Data Warehousing B r o k e r a g e & S e c u r i t i e s C o r p o r a t e B a n k i n g I n s u r a n c e C o n s u m e r B a n k i n g W e a l t h M a n a g e m e n t Verticals Horizontals
  22. 22. Service Oriented Architecture 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.” What is SOA? <ul><li>Business agility depends on the free flow of information, services and business processes across the organization. However this flow is stymied by the heterogeneous nature of the typical large enterprise. Multiple platforms (IBM, BEA, Microsoft, SAP, Oracle etc) and technologies (J2EE, .NET, Legacy, etc.) require IT to hard code the point to point connections, hampering the swift flow of information and slowing the delivery of new business services. </li></ul><ul><li>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. </li></ul><ul><li>The desire for Organizations to be service driven is creating a significant pull for IT to adopt SOA. </li></ul>Why SOA?
  23. 23. SOA gaining priority in the marketplace
  24. 24. 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 <ul><ul><li>“ 70% of CIOs plan to invest in SOA” </li></ul></ul><ul><ul><li>“ 45% of banks have some SOA plans over the next year. ” </li></ul></ul><ul><ul><li>“ 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” </li></ul></ul>Yankee survey IDFC survey Infoworld survey
  25. 25. SOA oppurtunity While most large banks have existing offshore relationships, degree of work offshored varies widely offering Polaris window of opportunity “ 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 Per cent of total workforce relocated Number of FTEs relocated* 10 10,000 Market shapers Building the platform 20 Ahead of the pack 12,000 Customers are open to giving vendor like Polaris a chance * Includes some BPO revenue in cases where it is not separately broken out Source: Press releases; company websites
  26. 26. Product offering <ul><li>What are GeneS? </li></ul><ul><li>Intellect Suite is designed and built with re-usable components called GeneS (Generalised Services). </li></ul><ul><li>Several GeneS come together to form a product. </li></ul><ul><li>Intellect Suite has over 56 GeneS in different combinations to develop a variety of banking solutions. </li></ul><ul><li>Being functional-centric components, many GeneS are common across solutions. </li></ul><ul><li>Intellect Suite TM is an enterprise platform that meets the needs of retail, private and corporate bankingDesigned using J2EE technology </li></ul><ul><li>Over 56 modular components or GeneS for 10 banking business lines </li></ul><ul><li>Supports over 10 million customers </li></ul><ul><li>Developed on contemporary technology (Open API standards) enabling easy integration with legacy systems </li></ul><ul><li>Web-enabled, multi-currency and multi-lingual </li></ul>Intellect suite Infrastructure Cards Treasury Loans Portfolio Mgt Trade Cash Mgmt Core Banking Integrated Multichannel
  27. 27. APIs (Application Programming Interfaces ) Intellect Suite – Built on Component based Architecture Products GeneS (Generalised Services) RUSAs (Reusable Software Assets )
  28. 28. Intellect Suite-Underlying Genes Customer Communication Dr. Card Mgmt Time Deposits Reports Statements Parameters Relationship Current & Savings Charges Teller Recon Limits Integrator GL Sign Payments
  29. 29. 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
  30. 30. Benefits of Smartbuild approach Smart Build advantage Customizable solution Reusable solution Tested product processor Service Oriented architecture Standard process flows Faster time to market Reduced cost Reduced risk Competitive advantage
  31. 31. Application Certification offering PACE Services Test process consultancy <ul><li>Quality Indexing </li></ul><ul><li>Benchmarking </li></ul><ul><li>Process Gap Analysis </li></ul><ul><li>Process Alignment </li></ul>Test automation <ul><li>Tools Selection </li></ul><ul><li>Tools Scripting </li></ul><ul><li>Performance Analysis </li></ul>End to end testing <ul><ul><li>Product testing </li></ul></ul><ul><ul><li>Project testing </li></ul></ul><ul><li>Independent Testing and Certification Unit </li></ul><ul><li>Vast experience in testing mission critical applications </li></ul><ul><li>20% of the testing team are domain experts </li></ul><ul><li>Tested and certified over 300 releases with many zero defect deliveries </li></ul><ul><li>1500+ person years of testing experience </li></ul><ul><li>Expertise in Project and Product testing </li></ul><ul><li>Continuous process improvement through Quantitative Project Management (QPM) </li></ul><ul><li>Expertise in Test Automation tools </li></ul><ul><ul><li>WinRunner, Test Director, Quick Test Professional (QTP), SilkTest, LoadRunner, OptimizeIT, Purify, Jverify </li></ul></ul><ul><li>Performance Metrics </li></ul><ul><ul><li>Defect unearthing efficiency of 95% </li></ul></ul><ul><ul><li>Test case efficiency of 80% </li></ul></ul>PACE Expertise
  32. 32. Two pronged future strategy Use IP led solutions delivered as ‘Smart Build’ as arrowheads to open new doors Transform core ADM services into higher margin business by leveraging IP Intellectual Property Rights factory for Tier 1 Products for Tier 2, 3 Major Focus disproportionately on top 100 banks in US and Europe <ul><li>Smart-Build, SLM for Tier 1 Banks of Europe, NA </li></ul><ul><li>Selected products for Tier 2 Banks of ME, Latam, ASPAC </li></ul><ul><ul><li>Cards </li></ul></ul><ul><ul><li>Liquidity </li></ul></ul><ul><ul><li>Collect </li></ul></ul><ul><ul><li>Origination </li></ul></ul><ul><ul><li>Lending </li></ul></ul>
  33. 33. Strategy Implementation <ul><ul><li>Ensure current growth trajectory in IT services business </li></ul></ul><ul><ul><li>Focus on ‘IP led solutions’, leverage SOA in the marketing message and get internal orgn alignment </li></ul></ul><ul><ul><li>Realign organizational structure and key processes to create </li></ul></ul><ul><ul><ul><li>‘ Customer-back’ design </li></ul></ul></ul><ul><ul><ul><li>End to end responsibility </li></ul></ul></ul><ul><ul><ul><li>Efficient operational platform </li></ul></ul></ul><ul><ul><li>Ramp up to 10-15 of top 100 banks and deliver distinctive ‘IP led solutions’ to establish a platform for growth within these accounts </li></ul></ul><ul><ul><li>Build partnerships with key players to leverage current componentization/SOA wave and gain market credibility </li></ul></ul><ul><ul><li>Enhance front end capabilities and key account management function </li></ul></ul><ul><ul><li>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 </li></ul></ul><ul><li>Accelerate growth by firmly establishing IP driven off shoring approach </li></ul><ul><ul><li>Transform large accounts into AAA relationships </li></ul></ul><ul><ul><li>Deliver enhanced profitability on account of client diversity, sharper ‘expertise’ positioning and better operating platform </li></ul></ul>Stabilize and focus Penetrate top accounts with IP led positioning Accelerate growth Timing Q3-Q4 FY’06 FY’07 FY’08 onwards Critical initiatives Key corporate theme
  34. 34. 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 Application,Development,Management & Support Business Processing Feature customization/design Consulting complete spectrum of back office solutions …. Customer Interactions Services Business Infrastructure Services Complete Card Solutions <ul><li>Transaction processing </li></ul><ul><li>Asset Management </li></ul><ul><li>Custodial services </li></ul><ul><li>Mortgage </li></ul>DESIGN OPERATE DELIVER
  35. 35. A holistic offering Technology Process Expertise Infrastructure Polaris Lineage Integrated Technology and Operations Leveraging Economics of Expertise OPTIMUS Advantage
  36. 36. Some of our differentiators Increased process efficiencies Minimized capital outlay Access to latest technology Decreased time to market Enchanced customer satisfaction Optimus Integrated Outsourcing seeks to deliver much more than just cost savings…
  37. 37. Optimus-The perfect partner for outsourcing Complete spectrum of back office solutions…. Focused yet Comprehensive Product Offering Polaris Advantage Technology Expertise Experienced Management Skilled in Strategy/ Implementation India Offshore Advantage Talented Resource Pool Focus on Long Term Relationships Strong Quality Orientation Expertise in Financial Services Domain Rich Process Knowledge
  38. 38. People Practices @ Polaris
  39. 39. Associate Statistics <ul><li>Flat Hierarchy – 6 levels to CEO </li></ul><ul><li>6000 + Associates </li></ul><ul><li>25% Female Associates: diversity critical </li></ul><ul><li>20% onsite employees- US, UK, Singapore </li></ul><ul><li>90% Qualified Professionals (Engineers, MBAs, MS etc) </li></ul>
  40. 40. Talent Acquisition- Recruiting the best <ul><li>Fuel Campaign - Future Leaders </li></ul><ul><ul><li>Nationwide campaign to recruit the best domain experts in the country </li></ul></ul><ul><ul><ul><li>150 Domain Experts (BFSI) recruited over the last 2 years </li></ul></ul></ul><ul><li>Tie-Up with Tier-1 B Schools </li></ul><ul><ul><li>Tie Up with 6 out of Top Ten B Schools in India </li></ul></ul><ul><ul><ul><ul><li>Day 0/Day 1 Slot at all Campuses we visit </li></ul></ul></ul></ul><ul><li>Tie- Up with top T Schools for fresh engineers </li></ul><ul><ul><li>All India Aptitude Test(Polaris Aptitude Test) followed by structured Assessment Centre </li></ul></ul><ul><ul><ul><ul><li>Recruited 500 fresh engineers out of 1.5 lakh applications across the country </li></ul></ul></ul></ul><ul><li>Cross-national hiring to move towards a global organization </li></ul><ul><ul><ul><ul><li>Local hires in US, Japan, Germany & UK </li></ul></ul></ul></ul>
  41. 41. Attrition Statistics <ul><li>Voluntary Attrition %age of 16%-17% for FY 05-06 </li></ul><ul><li>Attrition at middle management level is much lower </li></ul>
  42. 42. <ul><li>All associate go through person-days of training every year </li></ul><ul><li>Key focus on Project Management Certification & Leadership Development </li></ul><ul><li>Certified Project Management is extended to a large part of the organization </li></ul><ul><li>All Project Directors (PD) and Project Managers (PM) will have to spend 6 hrs of conducting training every month </li></ul><ul><li>Onsite programs executed through Technology Mediated LearningTM </li></ul><ul><li>All Chief Executive Council members will have to spend total of at least 40 hours in a year in conducting training </li></ul>Training & Development
  43. 43. Career Development
  44. 44. FINANCIALS
  45. 45. Financials <ul><li>Background </li></ul><ul><li>Revenue Profile </li></ul><ul><li>Profitability Profile </li></ul><ul><li>Balance Sheet </li></ul><ul><li>Conclusions </li></ul>
  46. 46. Context Setting : Key Events impacting Financials <ul><li>Merger with Orbitech </li></ul><ul><li>Products Investments </li></ul><ul><li>Quest towards Differentiated Positioning </li></ul><ul><li>IP Led Growth Strategy </li></ul><ul><li>Transformation Agenda </li></ul>
  47. 47. The Market and Our Hybrid Strategy <ul><li>Two Trends in the market </li></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>Growing recognition of Service Oriented Architectures (SOA) as a viable approach to gradual and non-disruptive replacement of legacy systems </li></ul></ul><ul><li>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) </li></ul>
  48. 48. <ul><li>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 </li></ul><ul><li>Initial success with Cards in the local market in India has resulted in opening up of new markets for consumer finance in Latin America </li></ul><ul><li>Achieved a position of leadership with our Cash and Liquidity management offerings with leading banks in the UK market </li></ul>Early Adoption of our solutions by the Market
  49. 49. Through:-Investments in IPs <ul><li>Total Costs incurred for developing the products $ 36.90 Mn (3.5 years) </li></ul><ul><li>Part of the Product development costs were capitalized till Dec 04 $ 11.48 Mn </li></ul><ul><li>Total Costs charged to P&L till Dec 05 is $ 25.41 Mn </li></ul><ul><li>Had the accounting treatment not changed, the EBITDA would have been higher by $ 1.2 Mn per quarter 2% increase in EBITDA margins . </li></ul>
  50. 50. <ul><li>Expanding domain expertise & improving implementation capacity </li></ul><ul><ul><li>Hiring and training career bankers – </li></ul></ul><ul><li>Aligning investment and roadmap plans with the market needs </li></ul><ul><ul><li>Engaging with Strategy consultants to validate market needs and product investment priorities – </li></ul></ul><ul><li>Enhancing our Smart Build Solution capability </li></ul><ul><ul><li>SOA’ization of select GeneS – </li></ul></ul><ul><ul><li>Development of new GeneS such as BRE </li></ul></ul><ul><li>Improving product options, quality, capability, performance & user experience </li></ul><ul><ul><li>Benchmarking Adding new Product features </li></ul></ul><ul><ul><li>Implementing Common Look and Feel and other architectural / design guidelines – </li></ul></ul><ul><ul><li>Testing and fine-tuning of products in different hardware and operating platform combinations </li></ul></ul><ul><ul><li>Development of industry standard documentation (User manuals, implementation manuals, etc.) </li></ul></ul>All these investments have helped Polaris in…
  51. 51. <ul><li>Improving engineering quality and productivity </li></ul><ul><ul><li>Invest ing in third-party tools and development of in-house tools </li></ul></ul><ul><ul><li>Developing product development disciplines such as customisation strategy, engineering golden rules and estimation methodology </li></ul></ul><ul><ul><li>Instituting Quality processes such as defect free programming handbook and SOA handbook </li></ul></ul><ul><li>Helping us to expand user base </li></ul><ul><ul><li>Developing product collateral </li></ul></ul><ul><ul><li>Setting up product demonstration infrastructure </li></ul></ul><ul><ul><li>Marketing and Sales Investment </li></ul></ul><ul><ul><li>Developing product branding </li></ul></ul>All these investments have helped Polaris in…
  52. 52. Revenue profile <ul><li>Revenue for FY06 was Rs 825 crore </li></ul>FY’06 revenue break-up CAGR : 19.5 %
  53. 53. Revenue – Geo Mix – 2005-06
  54. 54. Revenue – Customer mix
  55. 55. EBITDA <ul><li>EBITDA for FY06 was Rs.77.07 cr </li></ul><ul><li>Reasons for decline in EBITDA </li></ul><ul><li>Product Investments </li></ul><ul><li>Change in accounting treatment </li></ul><ul><li>Salary Increases </li></ul><ul><li>Investments in Sales Infrastructure </li></ul><ul><li>Muted Revenue Growth </li></ul>
  56. 56. PAT
  57. 57. Expenditure Analysis <ul><li>Expenditure has been under control over the last 4 quarters </li></ul><ul><li>Increase mainly due to salary hikes in Q2 </li></ul><ul><li>Further optimization underway </li></ul>In Rs.cr
  58. 58. Balance Sheet
  59. 59. Cash Flows <ul><li>Company has been consistent in generating cash from operational activities </li></ul><ul><li>There are no debts in the company </li></ul><ul><li>Cash & Cash balances of Rs.122 crores as of 31 Mar 06 </li></ul>
  60. 60. Important Financial Ratios
  61. 61. Utilization
  62. 62. Associate Strength
  63. 63. Debtors Outstanding - DSO
  64. 64. Realization – 2005-06
  65. 65. Conclusions <ul><li>Healthy Balance sheet, No Debt </li></ul><ul><li>Strong Cash Flows </li></ul><ul><li>Significant investments in Products to differentiate Polaris Software Lab from other vanilla outsourcing service providers </li></ul><ul><li>All product and other investments through internal accruals </li></ul><ul><li>Cost Structure stable over the last 5 quarters </li></ul><ul><li>Revenue uptake will drive significant increase in profitability </li></ul>
  66. 66. <ul><li>THANK YOU </li></ul>

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