Dear Shareholders,

This time of the year holds a special place in my heart. As I sit down to write a personal note to you I always look forward to this quiet time to reflect on the year that has gone by, document my learnings and share the plans for the coming year.

Let me step back a little and draw your attention to the agenda we set for ourselves in April 2009, when we launched Polaris 3.0. We identified four focus areas.

Repeatable Predictable Profitable Growth

Enhance our business model, from one Value Pyramid to two Value Pyramids

Expand strategic engagements in customer accounts

Expand in chosen geographies

So, where are we against the stated agenda of Polaris 3.0 ? I am delighted to share that with immense contribution from our employees, we have doubled our Revenues and Profits (PBDT) in the last 4 years. Our revenues crossed the Rs 2000 crore mark and profits crossed the Rs 300 crore mark. From Rs 1090 crore revenue in FY '08, we have clocked Rs 2049 crore this year. Echoing a similar trend, from Rs 136 crore PBDT in FY '08, our profits stood at Rs 333 crore this year. We are all aware, Numbers, however good they are, reflect only one half of the success story. In addition to the Services Value Pyramid, we enhanced our portfolio of offerings for the Financial industry with a comprehensive, truly next-generation product suite, Intellect. With a formidable & comprehensive combination of FT Sourcing business, FT Product, FT Practices, FT Consulting and FT Infra, Polaris is now known as the world's most FT- Rich business. This translates in to a mindboggling 146 strong treasure-chest of critical solutions across 78 countries.

The Power of having these two value pyramids is reflected in the way Polaris weathered the economic downturn and features amongst the elite group of Top 10 organisations in the Financial Technology world, that have doubled their revenues in this time frame. Intellect Value Pyramid now contributes to 25% of Polaris Revenues. This year, revenues from Intellect crossed the significant Rs 500 crore mark.

Intellect's positioning in Gartner's Magic Quadrant as Leader, is a validation of Intellect's phenomenal success in the global market place, with over 200 successful implementations.

Our Services Value Pyramid recorded 77% growth between FY ’08 till date. This fiscal, our services crossed the Rs 1500 crore mark, with an enviably balanced revenue distribution across the major geographies and a clearly identified Global Account strategy and organisation structure for sustained expansion in key accounts. To fuel growth, Polaris entered specifically chosen growth markets such as Norway, Turkey, Africa, Malaysia, Thailand, Philippines, Manila, Srilanka and Bangladesh.

Here are some of the achievements of this year, that I am honoured to share with you.

Our Product business recorded 43% growth, highest in a single year. This year also saw Intellect's dominance in the global arena with 47 new wins.

Our Services Business grew 25%. A few strategic engagements for reference :

The leading Stock Exchange in the US signed Polaris to deploy its FT services.

A leading Insurance company in Asia chose Polaris front-end systems for the APAC region.

A leading financial institution in the Middle East picked Polaris consultancy services to build Testing Practice Center of Excellence.

FY ’12 was also the year of not just large deals but long-term deals and global roll outs. The largeness of the deal or the the tenure of the deal or the global nature of the deal reflect the maturity of our Product suite and the Trust placed by major financial institutions on Intellect. These include: A unique opportunity to participate in building the infrastructure of our nation - through the Core Banking Replacement at the Reserve Bank of India

A 15-year deal with a large Norwegian Bank

Sonali Bank, the largest Bangladesh Bank, chose Intellect as the enabler for its transformation

A multi-country roll out deal with a large bank in Asia Pacific

We were named in 50 reports from the world's leading Analysts such as Gartner, Forrester, Everest, Celent, IBS, Aite for our Product stream and Services stream, testimony to the depth and width of our solution offerings for the Financial technology world. To put this in perspective, our closest competition had 30 mentions in the Analyst world.

Polaris launched the world's largest FT Grid, its largest cloud offering that would enable us to offer our Financial technology infrastructure and banking products on a pay-per-use model.

Polaris launched Intellect CBX 3.0 at SIBOS, a widget-based technology, offering the most integrated, agile and informed decision making solution designed for the Next Era of banking.

Polaris launched Intellect FABX on iPad at the Harvard Club, a Financial Advisor workstation with a single point interface that increases Relationship Manager productivity by over 30%

Polaris launched first ever cloud-ready platform for the Insurance sector, offering over 70 business services to improve business agility as well as lower run & change costs, built on Polaris proprietary PCM architecture

The American Society for Training & Development certified Polaris as a "Champion of Learning" for the second consecutive year, for promoting Value of Learning among Employees.

The proof of any robust operational engine is the timeliness & quality of delivery. To drive genuine customer delight, we measure successful deliveries with a single Quality measure - have we delivered 3 days before schedule and in full (D-3 OTIF).

Solution business effectiveness is also dependent on our capability to engage with the ecosystem of Partners. HP has recognised Polaris as the Best global Partner for converged infrastructure. We are privileged to have been adjudged the best ISV by global giants such as Oracle & Red Hat.

Our Social initiative runs under the umbrella of Ullas Trust. The Trust focuses on shaping the thinking of young students from Grades 9 to 12, coming up from Municipal, Corporation and Government schools by conducting weekend enrichment programs. In addition to 6000 students in the metros who are covered by the Ullas programs, our Diary of Dreams workshop has reached 30000 students in the remote districts in India, with a reach of 60 districts and 284 schools. Ullas won Blue Dart's Global CSR Award this year, a lovely recognition for the dedicated work by Polaris volunteers.

Our EPS grew 9% to Rs 22.22.

Whether it is global recognition of our Financial technology solutions or our customer landscape, it stems from our deep-rooted focus in Financial technology. Indeed, you would agree we have literally earned our name change. From Polaris Software to Polaris Financial Technology (FT). Yes, we have truly established our position as an FT Powerhouse.

Once again, we are at an interesting stage in our growth journey. So, what is the next big thing for Polaris ? What can you expect from Polaris 4.0 ? Is the momentum of Outsourcing slowing down ? World over, Product business has exhibited the phenomenon of saturation. Why should it be any different for Polaris Intellect? Valid questions.

Before I answer this, let's take a look at the world of opportunities in front of Polaris.

For World 1, comprising financial institutions in highly developed countries like the US, Western Europe, technology upgrade is key, as they were the pioneers and early adopters of technology in order to optimise financial operations. We have painstakingly created 5 offerings for this world. This includes Business Outcome outsourcing, revolutionary technologies such as the CBX and Hub to maximise operational productivity, sharp usage of iPad technology for leaner branches and most productive relationship management layer, Core Banking Replacements and Progressive Modernisation for the Insurance Majors.

For World 2, where financial institutions embarked on their technology journey in the '90's and have accelerated their technology adoption in the last decade, these institutions have a large appetite for new products that enable them to acquire new customers and increase their speed and scale of operations. For this world, we have product offerings for Global Transaction Banking, Treasury and Capital markets, HNI and Private Banking, Insurance (Underwriter work station, Claims and FNOL), products for the Central bank and Government- Citizen exchanges. These products come up with a phenomenal "customer experience" layer.

For World 3, comprising small banks in developed as well as emerging markets. to enable them build competitive advantage with the larger banks and help them leverage their deep customer relationships, we have Universal Banking solution, Lending, Credit Card, Mobile Banking and a Capital Market infrastructure solution. Given this canvas of opportunities and our sharp offerings that are a perfect match, Polaris 4.0 will focus on doubling our current revenues in the next four years.

Value Pyramid 1 - FT Services

The outsourcing momentum may be temporarily slowing down. Yes. But in the medium term it is only players like Polaris that can provide sustained cost rationalisation to large Financial Institutions, with our unique value differentiators - be it FT Services or FT products or FT technologies. This is where our passionate efforts and investment into FT Research is expected to yield business results. Our next-generation technologies such as the CBX technology and the Hub technology is grabbing the attention of customers with their "Ease of use" in driving operational productivity.

In order to make sure our execution is impeccable and the customer is always at the core of our model, we have created a customer-focused structure rather than a mere geography-focused structure. And because it is vital to deepen such strategic engagements by consistently moving up the value chain, we have a proven strategy for Level 5 Value creation, from infrastructure, to technology to operations to business solutions to entire transformation.

These three levers i.e. Productivity technologies, customer centric governance model and the Level 5 value creation strategy for chosen accounts will drive the FT Services strategy.

Value Pyramid 2 - FT Products

Coming to FT Products and the concern on business 'saturation'. Yes it is true that this saturation phenomenon is common to single product line organisations. Which is why, your company chose the multi-product stream and invested significantly in building a future-proof model.

We have 22 product streams under the Intellect umbrella. True, they are in different stages of evolution. Our mature products like Core or Cash & Liquidity are in the Rs 100 crore bracket. We have a Wealth, Asset Management or Treasury in the Rs 10 to Rs 50 crore bracket. Every year, we add 2-4 products to our Go-To-Market.

Currently it takes about 7 years to build a single product line into a Rs 100 crore business. Our focus would be to reduce this cycle time to less than 5 years. We do have a silver bullet in the form of our unmatched agility for global roll outs.

Besides our robust Products and Services Value Pyramids, we would continue to invest in two major areas.

1. We have tremendous traction in the market place with our rich offerings. The Sales funnel for the organisation is over $800 million. To leverage the full benefit of this traction, we would need to make the right investments into Sales and Marketing. At this point of time, we will be investing an additional Rs 50 - 60 crore in Sales and Marketing.

2. Our differentiator is our FT Richness - in our people and our service and product offerings. The kind of talent required to service Global FT customers is not easily available in the market. Therefore we have stepped up our efforts to nurture in-house talent in Financial Technology. Rather than looking at business and technology disparately, our learning programs delve deep into the "connects" between business and technology. Where this level of domain and technology cohabit, your company can drive greater efficiency in Banking and Insurance.

Your company has been carefully building the infrastructure to remain rich and relevant to the entire customer life cycle. In building high performance technologies, we have been carefully straddling the aspect of technology cost reduction whilst enabling superior technology value. Your company has been the Trusted choice of Banks that measure technology effectiveness by way of number of employees required to service per branch or per million customers. So, what would be our single objective in all that we do ? Continued investments being made by the Financial Institutions in keeping legacy architecture up and running have significantly increased inefficiency, what we call sticky tape technologies. Rampant innovation, without tight roadmaps have increased complexity in the Banking world. This is exactly the sweet spot for your company to make a profound impact on business efficiency. Therefore the single mantra that you would hear from us is COMPLEXITY REDUCTION. There is a huge opportunity available in the market to simplify complex systems and drive unmatched operational productivity, by deploying technologies carved by Polaris FT Research.

As we commence the Polaris 4.0 journey, my leadership team and I gratefully acknowledge your inputs and support.

Arun Jain
Chairman & CEO