Dear Shareholder,

Greetings. 365 days loaded with action has passed so quickly that before I realised it, it is time to reflect on the year that has gone by and connect and share with you our plans for the next stage in our growth journey.

Last year I shared with you, the step by step approach of our journey to become one of the largest owners of Financial Technologies, products and services. While the journey started in 2001, we saw the validation of our strategy and execution model over the last three years of sustained growth. This year, you company has achieved gross revenues of 273 million USD, a growth of 21% over last year. At the time of the merger of Polaris with OrbiTech in 2003, your company had revenues of just 40 million USD coming from accounts other than Citigroup. Today this has swelled to over 16 million USD ie. a four-fold growth during the last 15 years.

I had also mentioned in my earlier letter to you that our strategy has been validated and our focus will only be Execution, Execution and Execution. Globally, last year was not such as great year for the financial sector. The Financial sector has gone through one of the most turbulent times due to the Subprime crisis. Besides this, appreciation of about 12% in a single year has created another set of challenges to be managed. The Polaris strategy of distributing the business portfolio risk across Geographies (North America ~ 35%, Asia Pacific ~ 30%) has enabled us to mitigate the risk slightly better but still I would like to acknowledge that the year was tough. On behalf of all of you, I would like to appreciate all the Polarites who took this double whammy head-on and enabled the company to grow by 21%. This reflects their unparalleled understanding of the technology connect to business and their personal commitment. I take great pride in sharing with you that our customers have genuinely appreciated this and have rewarded us with increased business, as we continue to bring the best price-performance proposition to our customers.

The potential for Progressive Modernization that we envisaged way back in 2002 and invested over six million person hours of intellectual work is now being endorsed by most of the industry leaders like SAP, IBM and Oracle. This kind of focus by the industry leaders helped to significantly grow the market size. Our key customer relationships are seeing traction at co-creation (level 3 outsourcing) beyond cost arbitrage (which is purely technology) and transformation (focus on operational efficiency). During the year, your company won several deals in space of Progressive Modernization from some of the largest financial institutions across the world. This is what I refer to as strong validation of our strategy.

Your company owns the largest suite of financial application platforms ranging from Credit Cards, Universal Banking, Wealth Management, Integrated Lending, Cash & Liquidity Management, Risk and Treasury, Investors Services and a Unified Portal Platform. Therefore our ability to 'lead the space' is emerging better with each of the light house (or Tier 1) implementations. During the year, national Bank of Abu Dhabi, 2nd largest bank in the Middle East, has gone live on Intellect Consumer Banking Platform. Similarly the largest private sector bank in India, ICICI Bank, has gone live on Intellect Wealth Management platform. In addition, several International and Indian banks have chosen Intellect as their platform of choice during the year.

During the year, we added over 40 new accounts thus taking the key customer base to over 100. Our services business comprises of Domain led services as well as Testing services. In Insurance sector we added 11 new clients. Business Intelligence, Data Warehousing and underleveraged financial ERP implementations of SAP and Oracle have provided good growth leads in major accounts. Our large accounts have clearly indicated more off-shoring opportunities in the Retail Banking, Corporate Banking and operational risk management areas.

During the year, we SIMPLIFIED execution. Arup and his Leadership team at Polaris have focused sharply on integrating every bit of information to a common '4 in 1' database. This Business Intelligence infrastructure enables us to take week on week corrective actions based on the changing landscape of customers and their needs. This operation excellence project went live on the 15th of January. Now we measure only 4 critical elements – Profit Improvement, week on week, Delivery of projects – On Time & In Full, Talent Fulfillment and Talent Retention.

The key challenge that we faced on the execution front was 'accelerating talent development'. Though we have prepared and groomed a large number of experts in our chosen domains, the market needs many more. Since we are specialized players, we do not always get the required talent from the market. Thus we chose to invest time and resources in building a learning infrastructure that enables accelerated learning. Nalanda, our corporate university has put together a well integrated Learning Architecture during the year and has aligned the education and development processes around it.

Our second major challenge now is to move from chosen Tier 1 segment i.e. banks that own more than 50 billion USD in assets to the banks that have assets between 5 to 50 billion USD. This is the new market segment which requires almost 'ready to use' products to compete with the big banks who are now penetrating into their 'local' space. Intellect banking platforms that have Tier 1 and global practices merged into is very aptly suited for our entry to markets beyond G7 countries. We are planning to build partnership models to monetize our successes in G7 countries and leverage the same beyond, in the rest of the 70 countries.

During the year we saw our BPO subsidiary, Optimus Global Services growing 76%. Optimus is now over 8 global clients and has nurtured capabilities to handle over 18 unique processes for Banking and Insurance sector.

Adrenalin has emerged the leader in the Human Capital Management Software space. This year alone, 110 companies have chosen Adrenalin as their human capital management software, the largest sale ever in this space. Polaris owns over 40% equity in Adrenalin e-Systems Pvt Ltd.

Polaris Retail InfoTech Limited, through its product Retail Excel and Smart Store has reached to fifteen thousand point of sale counters across India. It has now established its leadership among the best retail products in India and has made its foray into international frontiers, starting with Middle East and Africa.

Over all, the year was a combination of some achievement, some challenge, some struggle and a huge amount of learnings that can be deployed in the years to come. Now we have a very sound and integrated portfolio of services from Smart Outsourcing, Domain led services and IP led services along with the most comprehensive suite of Intellect banking products. This is supported by a global infrastructure (23 international offices and 4 global near shore development centers at Sydney, Singapore, Belfast & Toronto and 7 Business Solution Centers each focusing in micro verticals in Retail, Corporate, Investment Banking and Insurance, simplified & integrated operations infrastructure and above all, a highly competent and committed team delivering high performance technology based business solutions on cost on time.

It is said that Experience isn't interesting till it begins to repeat itself. I am very delighted to see that now Polaris is poised for Repeatable, Predictable, and Profitable growth.

On behalf of the 10500 associates in Polaris, I would like to convey my sincere thanks to each and every one of you for trusting and supporting our dream of becoming one of the largest financial technology players in the global market place from India.

Warm Regards,

Arun Jain
Founder, Chairman and CEO