Dear Shareholders,

The ultimate test for a business model is during change. What we witnessed the previous year was the world economy reeling from the impact of an unprecedented crisis. Negative growth of global economies pushed back the growth trajectory by atleast 3 years. In this situation, your company grew its earnings by 17%. This laudable effort speaks volumes of your company’s robust business model with the world’s most efficient suite of Products (branded under Intellect™) and Services and the commitment of Polaris to deliver higher technology throughput to an enviable landscape of global customers.

This year also marked the coming of age of our strategy to establish ourselves as a leader in the Financial Technology space. Your company today finds itself in the consideration set of the world’s leading banks, and is increasingly being invited to the table for key technology decisions.

During the year over 50 new customers chose Intellect™ as their technology platform from needs as diverse as customer responsiveness to risk mitigation. Cumulatively, Intellect™ powers 200 customers across the world! The Intellect™ led revenues which were 17% in the March’09 quarter has grown to 23% during the quarter ending March’10 Your Company’s strength is now well accepted in the global industry analyst community. Polaris solutions were covered in 22 reports by the leading analysts of the world.

Early on your company broke away from the strategy of mid-tier companies and decided to position itself as a leader in the Financial Technology space. This positioning has been built around the conscious strategy of offering the largest possible suite of banking products together with the services model. During the year your company made relentless progress on this strategy and acquired two more specialist product companies - Laser Soft Infosystems and IndigoTX Software. These companies augmented our capability to expand our strategy to specific markets.

As a prelude to market expansion, your company invested significantly in branding activities. The presence of Polaris was well noticed during global industry events like SIBOS, Meftec, etc. During the year Polaris launched a very aggressive advertising campaign of 1000 spots per week at NewYork - the financial center of the world.

As you are aware, Polaris had identified four growth levers in its 3.0 journey, viz – Growth through Products - Intellect Expansion; Growth through expanding business in accounts - Account expansion; Growth through entering new countries - Country expansion and Growth in new segment - Insurance.

We started the year where customers gave us deal sizes of Rs 2 crore to Rs 5 crore and we closed the year with 4 customers trusting Polaris with transformation budgets of over Rs 20 crore.

Needless to say, to make this strategy work, some very clever people had to work very hard. The ability to provide higher technology efficiency to our clients was built on innovation in our learning and knowledge management framework. Your company today owns the complete industry process model for the banking industry including Retail Banking, Credit Cards, Mortgages, Mutual Funds, Derivatives, Custody and Securities, Global Cash Management, Trade Finance, Treasury, Liquidity, Life Insurance, Property and Casualty Insurance, Reinsurance. etc. Polaris developed these models during the year through its Proprietary methodology called ‘L0’.

This knowledge framework has been the foundation for Polaris to differentiate itself in the market place. The knowledge framework allows Polaris to shorten the cycle time for learning. In an industry short of talent, the ability to create experts is as essential as the ownership of Intellectual Property in the form of products.

This differentiation supported by account management framework and enterprise program management methodology (D-3 OTIF) deployed across Polaris helped customers to get software delivery on predicted date. During the year Polaris delivered over 26% projects ahead of schedule.

During the year, Polaris expanded its presence in Vietnam in the Asia Pacific region, Chile in Latam region and Egypt in MEA region. I must place on record the efforts of Polaris Managers and Associates who took world class global solutions and implemented them flawlessly in the language of the local country.

The ‘Can Do It’ spirit of Polaris got further validated through these ‘tough terrain’ implementations’ and opened up Polaris markets in a more than 60 countries.

I would also like to put on record the achievements of the Quality department, which enabled Polaris to get re-certified at CMMi level 5. Human Resources has designed and implemented several global best practices like Partnership Council (shared destiny model), comprehensive leadership development using LB SCORE (leadership bandwidth) and PDD (performance development) frameworks. The Technology department helped in taking the reusability index to the next level by applying its principles in Financial technology architectures, tool based engineering and tool based development environment (ZING). 24X7 world class secured technology and physical infrastructure across 22 locations has been managed most cost efficiently to provide leverage in winning global sourcing deals.

Insurance companies were one of the earliest sectors to adopt technology in the world. In other words, these Insurance companies are today saddled with huge inefficiencies of legacy technologies which are prone to high risks and poor customer responsiveness. Polaris owns some of the best Intellect™ Insurance technology that allows it to assemble solutions from components and thereby cut down both on risk of delivery as well as cycle times. More than 15 Global customers accepted this technology to renovate their business processes across Australia, India, Hong Kong, the United Kingdom and the United States. This revolutionary technology helped Insurance companies through effective agent portals, responsive customer acquisition, underwriting and claim solutions. Polaris uses these solutions to establish trust with clients and then cross sell comprehensive services in this domain.

Cost control and cash collection are the two key metrics the Finance department aligned during the year. Cash kitty crossed Rs 500 crore without any debt because of best DSO days in the industry. We effectively completed three acquisitions in last 18 months and assimilated into direct operations of the company.

During Lakshya -2010 (the annual direction setting forum), Polaris came out with Integrated Enterprise Value Creation model around 6 dimensions called - Enterprise Value Cuboid. The value dimensions are Customer Capital, Human Capital, Execution Capital, Intellectual Property (IP) Capital, Brand Capital and Finance Capital. We assigned leaders and teams to enhance each capital. I am introducing them to you in subsequent pages of this document.

Your company has always been a passionate proponent of the thought that the true potential of India will be realized when the children of India can believe in themselves and their potential. The Ullas Trust - a social trust managed by associates of the company - is the company’s vehicle to ignite the ‘CAN DO IT’ spirit among teenagers at government schools. This year it provided scholarships and mentoring to over 3500 students across 28 districts of Tamil Nadu, Andhra Pradesh, Maharashtra, Haryana and Delhi.

Further reinforcing this belief are more than 100 associates who are challenged physically but in performance stand tall among their peers. Your company is very proud of these associates and the SAMPADA initiative whose purpose is to integrate actively the physically challenged amongst us.

In summary, I look back with satisfaction on the year gone by. I look forward to the coming year with confidence. We will have our challenges in the year ahead and most notably around continued investments in talent development and speed at which we can develop this talent. On behalf of management team of Polaris, I want to communicate to all shareholders that we value the trust that you have placed in us and we will actively work to manage these challenges and continue to strive to outperform your expectations.

I once again thank each of you for the trust placed in Polaris Board, Management and Polaris associates.

Warm Regards,

Arun Jain
Founder, Chairman & CEO