Dear Shareholders,

The value migration in favour of Indian IT firms continued to gain strength in the year gone by. Protectionism not withstanding, offshore outsourcing is a global mega trend that is here to stay and the reasons are not far to seek. Most industries are characterized by the quality - price divide: precision quality at a premium price and mass quality at a popular price. The Indian software industry is a rare exception. It offers world class quality at an unbeatable cost advantage, a value proposition rarely matched in any industry. When combined with the passion of our IT work force and the Indian entrepreneurial spirit, this translates to a globally competitive industry across the value chain.

We, at Polaris, are at the threshold of the next wave of opportunity. We are poised strategically to move up the value chain, by decisively breaking into the high-end of the market, both in products and solutions. We have consciously built up the domain knowledge and technological capabilities necessary to engineer such world class products and solutions. 2002 saw your company taking several initiatives in that direction. The merger of OrbiTech into Polaris was, of course, the biggest and boldest of them all.

It helped us acquire 57 IPRs (Intellectual Property Rights) in the banking domain, all developed and honed in the fiercely innovative and competitive arena of global banking: retail, investment and wholesale.

I am happy to announce to you the successful completion of the merger. As one would expect from a merger of this scale - the largest in the Indian IT industry to date, there were Polaris Annual Report - 2003 i i i numerous challenges but the people from both sides rose to the occasion as a team to pull it off.

As a 4000 plus strong organization, with 12 international offices and an enhanced sales force, your company looks optimistically to the next phase of growth. This phase will need substantial investments up-front in product engineering and marketing.

For example, Polaris will continue to invest in Orbi One in the coming months. Your company, fortunately, has the financial strength and resources to make such investments, as well as the people power to make the investments work for you.

In addition to new business, our existing relationships with clients such as Citigroup will continue to flourish.

I look forward to your continued support and patronage as we march forward on this promising journey.

With best regards

Arun Jain
CEO, Chairman & Managing Director
Chennai, 28 July, 2003.