Dear Stockholders,

1998-99 was another milestone year for your company.

Revenues of Polaris and its wholly owned subdiaries rose to Rs.823.98 million, up 93.2%

Profit after taxes increased by 182.5% to Rs.153 million.

Polaris Software Lab Ltd., had a net revenue of Rs.605.5 million with an operating profit of Rs.173 million (28.6%) and profit after tax of Rs.146.5 million (24.2%)

The return on equity (ROE) has gone up from 32.9% to 59.7% and the return on capital employed (ROCE) has gone up from 28.0% to 51.4%.

This performance is the result of the contemporary practice of Enterprise Development which has not only been able to sustain growth from Rs.63.3 million to Rs.823.9 million in just three years, it has also thrown up refreshing strategies.

Any business environment is directed either by demand or by supply. As for Indian software companies, the supply scarcity of software skills in the global arena has thrown open exciting opportunities.

These opportunities are only limited by the ability of software firms to identify appropriate technologies at the right time for the right applications. The capacity to form teams of highly skilled and ambitious professionals to deliver world class solutions is the other determining factor. In order to make the most of these opportunities Polaris has built a vibrant and sustainable growth model based on four fundamental pillars.

Organization Development – Polaris has evolved strategic business units and assigned them the responsibility of delivering effective software solutions to customers. Meanwhile the corporate group facilitates the working of these SBU’s and enables them to fulfill their responsibilities. Using this model it was possible to develop sharp-focused units with highly energetic and ambitious professionals contributing beyond what is expected of them.

Business Domains – To meet the higher expectations of global customers Polaris focuses on selected business domains. This is effective in achieving a high level business competence and an effective knowledge base.

Each domain area has been added in a planned manner. Polaris has been contributing positively to the area of Banking and Financials since 1993. The domain of Retail was added in 1996 and Transportation in 1997. Foreseeing the rich opportunities which will be unfolding in the Insurance sector, we are planning to add this domain to the Polaris portfolio in the coming year.

The millennium conversion problem is undoubtedly the largest business opportunity for the IT industry.
Indian organizations have rightly leveraged on the scope of this new area. We however took a strategic decision to focus more on building knowledge and competencies around domains and new technologies. As a result of this approach our company is now insulated from the Y2K black-out effect.

Technology Domains – Lakshya, our annuyal goal-setting meet, has enabled us to keep Polaris on track in terms of the latest technologies. With technology obsolescence taking place real time, the need of the hour is architecture – based solutions which are reusable and scalable. With the Internet revolution gaining momentum in India and abroad, its impact on business worldwide will be far-reaching and diverse. It is slowly changing the way we work, transact and communicate. Keeping this in mind we have built up competencies in the areas of ERP tools. Component objects and Web-based technologies, local area network and wide area network client server based technologies, and Work flow based technologies.

Global Reach – Since all Polarites view Polais as a global corporation rather than as an India focused organization we consciously built a spread out model for reaching our services globally. We currently have four international offices of our own i.e., Singapore, London, New Jersey, and California and five international operations with partners i.e., Bahrain, United Arab Emirates (UAE), Kingdm of Saudi Arabila (KSA), Australia and Germany. Polaris is planning to add four more international offices in the current year.

The Polaris management team has invested a very high amount of energy in building the above mentioned organization architecture. Thanks to it we are in the business of executing complete software development life cycle (SDLC) projects.

We implicitly have a quality certification of ISAO 9001 and we will be soon going for SEI-CMM (Capability Maturity Model) Level 4 certification during the current year.

To accommodate the rapid growth of the company, we have initiated an infrastructure development project in the South of Chennai (Navaloor). This facility will have a built-up area of 87,000 sq.ft. and can house upto 850 software professionals in 12 independent modules of 60 fully empowered workstations each. In addition it will have recreational facilities, landscaped greens and fully captive power supply and a high bandwidth leased line for communications.

We move into the financial year 1999-2000 filled with confidence, backed by the right initiatives, the right culture and the right teams geared –up to seize the opportunities this dynamic industry is throwing up.
We would like to acknowledge that one of the above would have been possible without the support and energy of our fellow associates, suppliers and customers. We would also like to place on record the valuable contribution of the Board of Directors and Corporate Executive Council, which has made Polaris a global organization.

Thank you

Arun Jain
Chairman & Managing Director.

Place: New Delhi
Date: 6th April 1999