THE SPIRIT OF ENQUIRY

The importance of asking the right questions has never been more relevant. Getting this right enables a deeper understanding of customer needs. It ensures a more rigorous appreciation of our chosen domains, and their many nuances. It powerfully positions our capacity to address customer challenges. The rigour of enquiry builds and nurtures an environment in which innovation thrives. From an investor perspective, asking the right questions will help stakeholders gain insights into why leading financial institutions around the world rely on Polaris, and how we continually stake our claim on Financial Technology Leadership!

Q1. Why do customers pay Polaris?

We build, maintain, expand and extend Financial Technology infrastructure for banks, financial institutions and insurance companies using most efficient technologies, methodologies and prebuilt solutions (products).

Q2. What are the Polaris key offerings?

FT Consulting for organisation-wide transformation driven by the 7 dimension COPARIS efficiency and innovation framework. This includes Business Process Mapping, Application Rationalisation, Enterprise Service Bus consulting, Channel Optimisation Strategy, Data Management consulting, Cloud consulting and SOA consulting.

FT Sourcing drives Global Sourcing and Managed Services. IP-driven sourcing is delivered by the Polaris Global Account Management Group aligned around five distinct business clusters. Seven Global Centres of Excellence dynamically enhance collective competencies. Chennai houses Intellect Court, home to our Product Group, the Speciality Centre for Retail Banking and the Speciality Centre for Insurance and Testing; Mumbai houses our two Centres of Excellence for Risk and Treasury and Corporate Banking; Gurgaon is home to Polaris Enterprise Solutions Ltd, and Hyderabad is where our Speciality Centre for Investment Banking is. All these Centres are supported with leading edge and proven Frameworks, Tools and Methodologies.

FT Products encompass the formidable Intellect™ iGCB M180 Enterprise Solutions that provide lifecycle assurance and the efficiency of SOA architecture. Hubs, Role based workstations, and CBX technology have provided never before efficiency in building extendable solutions closely aligned with customer business imperatives and an evolving economic and regulatory environment. These products include Core Banking, Credit Cards, Wealth, Brokerage, Asset Management, Cash Management, Liquidity, Trade Finance, Treasury, Risk Management, among others.

FT Practices leverage domain expertise, maximising ROI, with aggressive solution delivery. Our Speciality Testing Centres of Excellence offer the most comprehensive enterprise testing solutions. Our Test repository across core, lending and cards cover over 750 business scenarios and over 2500 test data patterns, with superior iGCB driven test alignment and COPARIS based execution to deliver assured application throughput and reliability.

FT Practices also span functional implementation of FT CRM, FT Operations, FT Performance, FT Data, FT Risk, FT Integration, FT Security, FT PCM and FT Self Service across industry protocols and enhancing performance efficiency.

FT Infra harnesses the power of aggregated efficiencies. With the outsourcing of technology infrastructure related capital expenses, this presents a compelling business advantage for smaller banks and financial institutions early in their growth lifecycle. The offering extends to Remote Data Centre Management (RDCMS), Complete Application Management, and Hosting. The Cloud is finally moving from hype to reality and Polaris has engineered solution architecture to be private, hybrid and public-cloud ready.

Intellect SEEC was well received as an SOA compliant platform which is both easy to implement and highly efficient. Claims CBX, our peerless technology based delivery enabler connects to the legacy systems, providing seamless integration and straight through processing for critical business processes.

Q3. What proprietary knowledge ensures relevant differentiation and customer value?

The Polaris proprietary Banking Knowledge Shelving and Wiring framework (L0) scans the many facets in banking and insurance. Our comprehensive enterprise solutions address each of the delivery facets. It is architected to drive efficiency at every process and sub process stage of our customer’s operations.

HUBs harness business intelligence in one place. They mitigate risk and provide better regulatory control and intelligence. Documents, Rules and Services are driven by the Hubs.

Role-based Workstations enable common front ends and drive efficiency with emphasis on customer-facing operations. Claims and New Business are given new life through Role-based Workstation in the PCM Insurance Solution Stack.

CBXs are next generation exchanges that allow customer direct access in a manner that promises to transform the industry and set new standards in customer experience. CBXs are the ultimate end-to-end real time application standards through four key functions that work in perfect harmony to produce a superior multi-dimensional view.

These are: i) Information ii) Analytics iii) Decisioning Support iv) Action

Q4. To what extent does Polaris make a discernible and positive impact on its customers’ operations?

Financial institutions continue to grapple with the challenge of legacy modernisation. The older and more established the enterprise, the greater the challenge in migration to new solutions. Costs are significant as are the risks associated with business innovation protection. There is gradual realisation that‘legacy modernisation’ is an issue that cannot be addressed at one go and just once in the lifetime of an enterprise. Dealing with the phenomenon of ‘continuous migration’ for real time or near real time enterprise (as relevant for customers) requires a fundamentally new approach to solution architecture.We are heartened by the trend of customers investing more time to get under the hood of architecture design, instead of being typically diverted with easily replicated functionality claims of solution vendors!

Polaris has critical relevance in the sustainability of financial institutions. Our solutions enable business outcome-based decision making. We proactively address emerging digital security threats and leverage Financial Technology to drive business and application efficiency.

Q5. What have we done in the last year to consolidate our Financial Technology leadership position?

We continued to build on strong partnerships with existing customers, and began a transformational journey with new customers. Today, 9 of the top 10 banks and 7 of the top 10 insurance companies from around the world rely on us for business application efficiency solutions. Customers recognize the comprehensiveness of our solutions and see relevance in dealing with us for services, products, or both. The depth of our Services business is well recognised. Polaris’ well-researched proprietary frameworks and methodologies have repeatedly demonstrated value delivered to customers.

The revolutionary Intellect™ iGCB M180 was premiered at the prestigious Financial Services Club of London to an audience of 50 leading transaction banking and payments experts. Engineered to provide 15 years in-built solution longevity with concurrent and subsequent technology upgrades, the enterprise solution delivers superior technology, functionality and real time manageability, without compromising on performance and profitability, directly cutting into the inefficiencies spawned by 4 – 5 generations of legacy technology.

Intellect™ CBX was launched at Payments 2011, NACHA’s (National Automated Clearing House Association) annual event on payments convergence and next generation solutions. The multi-channel offering focuses on expanding financial institutions ability to generate more transaction fee based income.

Intellect SEEC™ Insurance CBX was launched at the Acord Loma Insurance signature event. Showcasing demonstrated results of renovated Claims business process within 120 days, New Business and Automated Underwriting Systems in 180 days, and a 360 degree customer view through a portal based, intuitive user interface. One of the largest Insurance carriers in Australia has since gone live on the Intellect™ Insurance platform.

Through the year numerous solutions went live, from Customer On Boarding at the Bank of Montreal (Capital Markets), to Application Data Management in North America, and Data Warehousing in APAC, to Testing in EMEA and Intellect™ Business Process studio enabled centralisation of country-wide operations in Tanzania.

The Intellect™ Payment Services Hub powers transformational change for superior payments governance and high quality management of payment operations. Augmentation of payments services capabilities is made possible by the main features of the Intellect™ Payment Services Hub: ERP Integration, Orchestration, Exception Management and Business Activity Monitoring with comprehensive plug-on modules for AML Services and Fraud Monitoring. Polaris has proven deployments of the two largest Payment Solution Hubs in the world.

Intellect™ iGCB went live at the Mekong Housing Bank (MHB), Vietnam, enabling the country’s fastest growing bank maintains its competitive advantage. The SOA based modular design facilitates the combination of different banking components into an integrated solution, providing agility in new products and services design, while managing cost efficiencies.

The Intellect™ Quantum Core Banking Solution implementation at the Saigon Hanoi Bank (SHB) resulted in powerful business outcomes within a few months, emphasising the rigour of need-gap identification and a robust solution that enabled between 26% through 89% growth in number of customers, deposits, loans, at optimised costs and within significantly improved turnaround time!

Multi-country single-instance application that integrates front to back-end operations, and provides actionable information for Relationship Managers at the SAMBA Financial Group. The Polaris Intellect™

Wealth implementation leveraged the functionalities of customer risk profiling, financial planning, retirement planning, insurance planning, global portfolio management and analytics. The deployment won industry recognition receiving the Best Banking Application Award at the recentAsian Bankers Awards ceremony in Hong Kong.

During this period Intellect™ Quantum Core Banking went live within 7 months at the Central Bank of Seychelles, and at a major bank in Japan. This solution has also gone live in five Indian banks across private, public and co-operative sectors. The year witnessed improvement in global sourcing traction, especially in Europe where 3 of the top 4 banks in UK chose Polaris to manage their applications. During the year, all global G10 accounts showed quarter-on-quarter growth.

We are winning and living up to the trust reposed in us. Our solutions are uniquely comprehensive and functionally superior. We have demonstrated business outcomes for customers and their powerful testimony is further enhanced by analyst commendations and industry recognition.

Q6. What are the significant financial highlights investors should be aware of?

There has been a lot of comment on the likely success of a product and services company. The solution architecture of Polaris necessarily requires a mix of the two. Simplistic comparisons with other organisations that do one or the other do not do justice to our significant achievements in influencing customer perceptions and behaviour related to Financial Technology adoption in banking and insurance.

Polaris is consolidating its position as the preeminent driver of efficiency in banking and insurance. Financial achievements this year validate the progress we have made. The total number of customers reached 199 during the year with 26 new additions. Intellect deal sizes, which were in the range of USD 1 million-USD 3 million two years back, have grown to USD 5 million and in the last quarter of the financial year, the company closed two deals of more than USD 10 million.

On a key value metric, the annualized Earnings per Share has grown from 2.17 in 2005, through 7.42 in 2007, 15.48 in 2009, and 20.43 in 2010-11. We have strengthened our presence in several countries, and the revenue mix now reads Americas 44%, Europe 24%, IMEA (India, Middle East & Africa)14% and APAC 18%.

Q7. How has Polaris fared in terms of industry recognition?

Later in this report, a summary of analyst and industry recognition is featured. Winning industry awards for architecture design, functionality and implementation are particularly heartening because the success is co-authored with the customer. Teams who have worked on the particular solutions are buoyed, and others are motivated to ensure their efforts do not go unrecognised!

Analysts have the benefit of reviewing solutions from the perspective of customers and solution vendors. Polaris solutions have consistently won critical acclaim. Moving into more prominent positions in Magic Quadrants, domain-specific Frameworks, winning ‘best functionality’ and various specialist solutions accolades. This year, Polaris was featured in an astounding 43 reports from leading analysts that include Gartner, Forrester, Tower, Aite, Celent, among others. This number is testimony to the breadth of our offerings as our competitors’ whose limited offerings were featured in less than 20 such reports.

Recognition of this nature gives customers comfort that the vendors they work with are rated well in their chosen areas of specialisation.

Q8. Have recent acquisitions added value to Polaris?

The smooth integration of acquired businesses has been the most formidable M&A challenge. The very complimentary nature of the offerings mix and the shared value systems of Laser Soft and IndigoTX, made their transitioning into Polaris a natural progression, where in planned stages, technologists and customers alike have gained from the mergers. Our solution set is stronger than ever and has allowed us to present differentiated offerings to meet geographical and customer lifecycle stage requirements, through multiple component and delivery models.

Q9. Are CSR initiatives relevant in creating value for the brand and the shareholder?

At Polaris, we pride ourselves in ‘Inclusive CSR’ activities where every associate is involved in contributing by way of mentoring or volunteering time and sharing knowledge. The Ullas Trust held its 13 Annual Workshop this year. This initiative ‘shapes young minds’ by reaching out to less privileged students in standards 9 through 12, enhancing their regular schooling with guidance on personality development, communication and technology skills. The structured programme is supported by Polaris associates, and provides children with mentorship, public speaking opportunities, guided peer group engagement, corporate exposure, and prize money.

The Higher Education programme incorporates modules on personality development, responsibility, team work, placement preparedness, business communication, grooming, mentoring by successful professionals, and merit based financial support.

The Ullas Trust now operates across Chennai and in all districts of Tamil Nadu, in Hyderabad, and in seven districts of Andhra Pradesh, and in Mumbai and Delhi. Over 30,000 students have benefited from the programme.

Active involvement in the Ullas initiative provides perspective on what it takes to shape and realise dreams to all team members involved. It strengthens our value system, and our belief that we can, and will, make a powerful and positive impact, through direct and personal intervention.

Customers have been visibly moved by the way in which the initiative has opened up new vistas for deserving students and in some cases have volunteered their participation in our endeavour.

It was an honour to win the ‘Best Corporate Social Responsibility Practice’ Award at the 6 Bombay Stock Exchange (BSE) Social & Corporate Governance Awards Function in Mumbai this year. The Polaris SAMPADA (Special Appreciation & Mentoring Program Acknowledging Differently Abled) initiative continues to be inspiring in its ability to harness a very special potential for unimpaired productivity.

Q10. Are there specific target milestones against performance that should be tracked in the coming financial year?

With 9 of the top 10 global banks, and 7 of the top 10 global insurance companies already on our customer list, we have adequately demonstrated our ability to build business together. Our focus this year must be on expanding our presence in these accounts in a structured manner, establishing referenceable relationships on the basis of successful delivery of customer business outcomes.

The products business gives us tremendous growth possibilities with license revenues that are in the range of millions of dollars. The acknowledged depth of our Services business will continue to drive Global Sourcing and Managed Services. The Service pipeline moved from USD 120 million to USD 200 million while product pipeline moved to almost USD 600 million. Our robust Frameworks and Methodologies will be further strengthened with technology and process innovation.

Financial Institutions around the world are acutely conscious of the criticality of their Core Banking Systems, to the efficiency of their enterprise. Analysts suggest staggering volumes and immediacy of change in Core Banking Systems. This poses unprecedented opportunity as well as demands on the flexibility of the new age systems that must seamlessly integrate in constantly changing environments.

Intellect™ Quantum Core Banking Solutions from Polaris are the most efficient comprehensive frameworks for all manner of banks, ranging from commercial, co-operative banks, community and NBFCs, to the central / federal banks of countries. This financial year will register significant strides in establishing our authority in Core Banking Re-invention.

As Continuous Migration is recognised as a constant phenomenon across banking and insurance, we will further strengthen our enterprise. Backed by referenceable deployments, we will see new impetus in specific function areas including Payments, Liquidity, AML and Fraud Monitoring, and Claims and New
Business in Insurance.

The year to come will see further acquisitions to strengthen capabilities for exponential leaps in solution offering, with direct relevance to customers at any growth lifecycle stage, always conscious of emerging technologies and their adoption trends, and more efficient delivery models.

Polaris will be increasingly present and will play an active role in the industry eco system, where banking and insurance transformation is being conceptualised. The company will continue its aggressive business outcome-driven focus on customer imperatives of business decisioning, digital security, speed of deployment, cost management, and regulatory compliance.

In the coming year, the distinctly superior Polaris Architecture design will dominate Financial Technology conversations.

Progressive customers are investing more time on reviewing architecture design, instead of being diverted with easily replicated functionality claims of solution vendors! This is where our solution maturity is truly appreciated!

Arun Jain
Chairman & CEO