Polaris Software Lab Limited Q3 FY2009 Earnings Conference call 20 by Levone

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									  Polaris Software Lab Limited
Q3 FY2009 Earnings Conference call
     20th January 2009

Thank you for standing by and welcome to the Q3 FY ’08-‘09 Polaris Investors Earnings
Conference Call, presented by the Polaris management. At this time all participants are in
a listen-only mode. There will be a presentation followed by a question-and-answer
session. At which time, if you wish to ask a question, please press “star” “one” on your
telephone. Please be advised this conference is being recorded today.

I would like to hand the conference over to Mr. Srikanth. Over to you, sir.

Srikanth:

Thanks. Good evening ladies and gentlemen. Welcome to Polaris Earnings Call Q3 ’09.
Let me begin with the financial highlights of the company. Our revenue for Q3 ’09 was at
Rs 372.58 crore as against Rs 351.14 crore for Q2 ‘09 showing an increase of 6.1% on Q-
on-Q basis, and showing an increase of 32.05% on Y-on-Y basis. Our same period last
year, our revenue was Rs 282.14 crores.

Our intellect brand product revenue contributed Rs 61.71 crores in Q3 ’09 representing
16.56% of our revenue on a consolidated basis as against Rs 56.03 crore in Q2 ’09
representing 15.96% of revenue as against Rs 57.28 crores the same period last year.

Our BPO arm, Optimus’ revenue for the current quarter was at Rs 14.35 crore as against
Rs 15.86 crore for the immediate preceding quarter and Optimus contributed to 3.85% of
our revenue in the current quarter.
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Gross margin for the company at the consolidated level was at Rs 140.23 crore in Q3 ’09
compared to Rs 121.97 crore in Q2 ’09 showing an increase of 14.97% on Q-on-Q basis
and the same number was Rs 95.18 crore in Q3 of last year showing an increase of
47.34%. Our gross margin as a percentage of revenue was at 37.64% in Q3 ’09 as
compared to 34.74% in Q2 ’09 with an improvement of 290 basis points. Gross margin as
a percentage of revenue was at 33.73% in same period last year resulting in an increase of
391 basis points.

Earnings before interest and tax and deprecation called EBITDA stands at Rs 75.4 crores
in the current quarter compared to Rs 57.5 crores in the preceding quarter, showing the
growth of 31.12% on a quarter-on-quarter basis. EBITDA at the same period last year
was at Rs 33.81 crores, therefore showing a growth 123%. EBITDA as a percentage of
revenue was at 20.24% in the current quarter and 16.38% in the immediate preceding
quarter presenting an improvement of 386 basis points - it was 11.98% for the same
period last year.

Profit after tax for the current quarter is at Rs 37.17 crores as against Rs 34.43 crores for
the immediate preceding quarter, showing an increase of 8% on a quarter-on-quarter
basis and an increase of 94.41% on Y-on-Y basis. Same period last year the PAT was Rs
19.12 crore. Days outstanding have come down from the level of 62 days to 52 days as
of 31st December 2008. Cash and cash equivalents at the end of December 2008 was at
Rs 298 crores as against Rs 225 crores as of the end of September ‘08. This is despite our
SEEC acquisition which we completed in October 2008 to the extent of Rs 37.8 crore.

Current quarter tax provision consisted of our gross tax provisions of Rs 4.54 crore
during the current quarter and deferred tax provision of Rs 0.35 crore in the current
quarter and Fringe benefit tax provision of Rs 0.71crore in the current quarter.

EPS on an annualized basis stood at Rs 15.08 in the current quarter as against Rs 13.96 in
the immediate preceding quarter on an annualized basis. Dollar appreciated 11.19% on a
quarter-on-quarter basis during the current quarter. The average rate of the dollar for the
current quarter was Rs 48.70 as against in the previous quarter’s 43.80. In the same
quarter the last year it was Rs 39.47. Our closing dollar rate was Rs 48.71 as at the end of
December 2008.

Capital expenditure incurred during the current quarter was Rs 4.38 crore. We have Rs
10.29 crore in the immediate preceding quarter. There is an exchange loss of Rs 28.54
crore incurred during the current quarter as against Rs 7.7 crores in the immediately
preceding quarter.

Let me highlight some of the operational highlights. Our on-site and off-shore revenue
mix was 53% and 47% respectively. Our utilization for the current quarter is at 81% as
against 80% in the preceding quarter resulting in a 100 basis point improvement. There
are 13 strategic new account wins during the current quarter.


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Headcount at the end of the period is at 9,887 consisting of PSL 7,264, Optimus 2,430,
SEEC 78 and PRIL 115. The headcount of 10,367 in the immediate preceding quarter
consisted of PSL 7,507, Optimus 2756 and PRIL 104. Our attrition, ie associate attrition
for the current quarter was at 14.11%.

These are some of the financial and operational highlights and I will answer questions
based on the same at the end of the session. I would now like to hand over the mike to
Mr. Arun Jain, Chairman and Managing Director.

Arun Jain:

Welcome to all and thanks for attending the call. Let me introduce the team that is
present here. With me is Mr. Arup Gupta, Chief Operating Officer and Executive
Director. We have Ramaswamy S. R who is heading a Business Solution Center, and is
Head of Testing and Insurance Practice. We also have Mr. Kartik Kaushik who is Head
of Polaris Americas and we have Ravi Koka, who created SEEC and who has newly
joined Polaris - I welcome him in this call He joins us in this conference call to update
you on what SEEC is all about and what it does in the US market place. Srikanth the
CFO is here, I also have S. Swaminathan from Business Finance and Padmini who heads
Corporate Communications.

This is the year the global economy got rewritten. A year in which, I think we are, as a
industry, searching for an anchor. For customers and for the customers’ business what is
right, what is wrong? We are searching for an answer to this. In these nine months, what
the industry has learnt, what we are learning including Indian episodes – (what happened
unfortunately in the Indian market). This is a kind of uncertainty we are living in and I
think all those kind of news items coming in as I said rate cut, client cut at last minute,
assignments get off, all the things are kind of a reality.

Some of the things that helped Polaris to deliver good results, in this quarter, are some
principles around which we have stood by since the beginning our journey. We are part
of the mission critical applications for the customer. This is a space where the anchoring
is much stronger than the anchoring on a peripheral side. With IP which is used by the
bank, Polaris will be the last among all the other peers if they come out. So these are the
two principles I think we anchored around and that helped in somewhat better anchoring
than other players in the market place. I don’t thing we have performed very greatly.
We performed over the last three quarters consistently. What message we are giving to
you is that we are likely do 10% with growth in profit quarter-on-quarter. We mentioned
that profit process is there - I think we just maintained those numbers and we planned for
those numbers starting from the beginning of 2008. If I want to highlight the two
elements which we focus at, one is ‘On Time Full Delivery’, which we call OTIF and
second is what we call in Polaris as FCBC - what is my funnel, fill rate, what is my
closure on the funnel, what is my invoicing,

Now to elaborate on some other elements – in the data element, if you see in the quarter
results, we find suddenly, there is a big shift in the collection. But its not just a one
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quarter effort, the results maybe coming in one quarter, but it happened when all the five
elements came together - when we are doing the invoicing at the right time, the collection
comes in at right time and that happens on the right time because OTIF happened in the
right time. So the collection is an outcome of On Time in Full .What you saw this quarter
is not a one quarter phenomena, it’s the effort of almost six quarters which is resulting in
this kind of impact of higher collection which is Rs 298 crore and at a Rs 112 crore
incremental. Secondly the cash is higher because we didn’t have to spend on capital
expenses.

This quarter we spent only close to Rs 4.5 crore on Capex compared to the expenses we
were doing earlier because most of the Capital expenses we were doing in our campuses
and facilities have come down dramatically.

On questions whether Polaris is sustainable, Polaris is viable etc, whether it is one
quarter’s performance you are looking at or of the last six quarters, I look at it in small
steps, we want to anchor around those small steps and keep moving. This has been done
by the team that has been put in place in these last three years. A team which has
brought in consistency. Consistency is taking a one focus at a time and I leave it to Arup
to give some more details on the elements.

If you have any questions regarding Americas, Kartik Kaushik can answer the same, I
have Ramaswami who will give more colur on the Insurance front, and for those
questions on delivery, Arup will provide the answers.

On Questions regarding how we will perform next quarter, we have communicated that
we can forecast the company on an annual basis, than on a quarterly basis.

As an integrated product service model we can predict performance on an annualized
basis. Arup has predicted an excellent growth despite what the condition the market is in
now. We feel confident of a 20% growth next year. That is the kind of a best case
guidance we can give you - not beyond that. The questions, we have about the guidance,
on a quarterly basis, I will not able to address those questions. I will like to say that there
is a 20% growth we can still achieve and accordingly, profit can be sustainable.

Coming to currency, as a tailwind - is it a tailwind or headwind? I don’t know, but I
think Rs 48.70 to a dollar is favoring us to deliver a better profit margin, but tomorrow if
the currency starts having a headwind, then we may have a problem on the profit margin.

Next year our hedging is at Rs 44 to a dollar. Our losses will come down on the
exchange loss part, next year. That will better the profit margin. We hedged the entire
business plan at 40 Rs a dollar this year We looked at it in the month of March, when the
currency was at Rs 38.50 a dollar, we had a hedge at Rs 40, and we were happy at that
time. But, today we see that inspite of doing 20% EBITDA and a Rs 75 crore EBITDA
margin, Rs 28 crore is what we lost as the exchange loss.



4                                            -4-
But that’s the kind of hard luck which we have to live in this kind of economic scenario
where we can’t predict anything. We’ve taken a cautious view that at 40 we are
surviving, if the dollar would have been at Rs 35, I may not have existed in the market
place.

On this thought let me now ask Arup, to explain, what kind of changes he brought in, in
the last quarter and what kind of a thinking he has, going forward. We have given you a
successful quarter, a consistent performance across 3 quarters, now we can look forward
at next three years. If anybody has a question if Polaris will be there, three years down
the line - Why we should be here three years down the line, what gives us the confident
that we should be existing after three years…Polaris is a banyan tree that would remain
three years down the line, how we will do it……let my team give you more colour on
that…..

Arup Gupta:

Thank you Arun for laying an excellent foundation. Building up on that, I would like to
add that for the last 10 to 12 quarters, we have been articulating our account led strategy
with a clear focus on the strategic accounts. In terms of dedicated account management
structure and dedicated delivery structure. when we analyze, as to what has really helped
us to deliver the results that we have delivered, it is very clearly due to the focus we have
had on the domain led and the solution led up approach., This is what we have been
articulating repeatedly. What is critical is that we have been able to get into the core
business of the mission critical applications of the customer, as opposed to the ones that
are discretionary spends. There is a clear focus on delivery excellence and clear focus on
adding some value to the customer, which has helped us to get into the core business of
the mission critical applications of the customer and that is why we have been able to
sustain our growth and deliver the results. Therefore, there will continue to be an
excessive focus on ensuring that we are geared up to deliver complex solutions going
forward. Polaris’s key strength is the combination of solutions and services using
Intellect as the core - and the domain expertise. To leverage all that, and also to deliver
complex solutions by increasing delivery excellence is one of the key focus from the
operations side.

The second thing going forward will be to ensure that our revenue pipeline continues to
grow and what we have analyzed and what we feel, in spite of the market conditions and
uncertainties that Arun referred to, our funnel size continues to be very healthy and the
funnel size gives us the confidence that we should be able to deliver the growth that Arun
just referred. Therefore, the focus of the management - that is myself, Arun included, and
my management team will be to ensure that we close these opportunities and develop
further some of the hygiene things like the relationship with the customer etc. There is a
clear management focus in closing these opportunities and that, coupled with delivery
excellence using our solution led and product led approach, we believe, will give us
sustainable results.

Over to you Arun
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Arun Jain:

Thank you Arup. I would like to introduce Ravi. Ravi set up SEEC, Ravi he set up one of
the first product business in the country in 1986. He used to do project management
software and some software development at that time. He set up SEEC in Pittsburgh and
he is closely associated with Carnegie Mellon University there. He was one of the first set
of tool writers for the Y2K business. His SEEC tool, which we call the application
manager, was one of the most popular tools during those Y2K business. Ravi is always
on the cusp of new technology. It’s his fashion to get the best in the technology space and
that too when its emerging in the market place..he embarks on it and he has been
recognized by a global effort platform as a leader in 2007 on SOA and he has translated
SOA into one area which is insurance , where he saw the advantage of componentizing
an industry which has lived on its laurels. That’s my introduction of Ravi, who took a
challenge head on to firstly, get into a new industry segment, secondly to a new
technology segment in 2004 - 2005 and where is has led him today, Ravi will elaborate
on

Ravi:

Thank you, Arun. Good evening everyone. There is couple of points I want to make - as
Arun said, SEEC brings certain aspects to the Polaris family. One of the first products we
introduced, which used to modernize the large amount of legacy systems in the world.
And this is the application manager - which is currently being used by a large number of
banks, insurance companies and even other verticals. The second thing is that we brought
innovation into the insurance industry, made a significant investment in developing a set
of Java components, these are off- the- shelf components roughly about 300 components,
which are of use in both life and non-life insurance.

SOA (service oriented architecture) is one of the new technologies that relates to new
technologies and also to industry standards such as ACCORD. This is a significant piece
of innovation because in the industry, the way the software is sold today is like a package
software. What we have proven is that software can also be unbundled as parts. Basically
we are selling blocks, as sort of Lego blocks, which an insurance company or a system
integrator can then rapidly assemble and then deliver value build, very fast, efficient,
applications to improve channel efficiency in the insurance industry.

We have worked with some of the largest insurance companies in the world, people like,
New York Life, Country Financial, and Prudential Financial and have won awards. Last
year, both IBM and Accord recognized us as a leader in the industry.

This is what SEE brings to the table. As to the benefits of the Polaris Merger, Polaris has
a significant global presence and great delivery capability. It also has other horizontal
capabilities such as the Microsoft expertise, the testing expertise, which we can now offer
to the SEEC accounts. SEEC roughly has 20 large insurance accounts and now we can
deep mine these, through the proven account management practices that Arup and his
6                                          -6-
team put together, and this should lead to significantly more revenue in the insurance
space. This is what we are looking at and I feel very confident, having within the last two
months of working closely with the Polaris team, also on the IP assets and the ability to
delivery cost efficiency solutions using Polaris Global delivery capability.


Arun:

Thank you Ravi. Any questions on Americas, Kartik can answer. Ramaswami is also
here, and any questions on the Insurance space, he can answer. Now you can open the
bridge for question and answer session.

Operator:

Certainly,sir. At this time participants if you wish to ask a question please press “star”
“one” on your telephone keypad and wait for your name to be announced. If you wish to
cancel your request please press the “hash” or the “pound” key. First on line we have Mr.
Srivatsal R from Spark Capital. Please go ahead.

Srivatsal R:

Hi, congratulations Arun on a great quarter. First I wanted to get an overall sense in terms
of pricing, especially from some of the large clients, like Citi etc. what is it that you are
dealing? Are they kind of pushing you for a major price cut? That seems to be what we
are hearing from some of the other vendors?

Arun:

There is pressure yes…but we deliver the best price to performance ratio. As to how we
improve productivity and give a better price - we try to get a best throughput on the
technology spend. So, I think that is a yes, to your answer.

Srivatsal R:

What would be rates kind of pricing cut most of these customers are asking for?


Arun:

There is a difference between what the customer asks and what we can deliver, but that is
not the point. If I am in their shoes I will also ask for a rate cut. we will definitely give
the customer a better price to performance ratio. Price is one tool, another is to move
more business from onsite to offshore,and that would also give us a similar kind of
leverage. Giving Intellect lead solution which are very advantageous for the customer,
and a bigger price advantage on a license are other methods These are the three methods
that can give a better price to performance ration on the technology front
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Srivatsal R:

Is this pricing pressure even in the Intellect based offering in IP?

Arun:

In the IP there is never a pricing pressure ….there is always a negotiation in IP.

Srivatsal R:

Okay. What is Citi’s contributions this quarter?

Arun:

Above 40%.

Srivatsal R:

Above 40%. Okay, just wanted to get some insight into what this would mean with the
current restructuring in Citi that’s been announced and what kind of volume guarantees
are you kind of getting from them. I am referring to the restructuring of Citi Corp and
Citi Holding and all that just wanted to get some note on what sort of visibility is there
into Citi account because of these restructuring?

Arun:

As Arup mentioned, we are in a mission critical area in the bank’s business which is the
closest to customer business in a good bank.

Srivatsal R:

That’s great Arun. You have five implementations this quarter Can you little bit more
detail as to what are the platforms and what is the total number of implementations that
you will be having at this point of time?


Arun:

The Intellect implementation number is at 47 globally as of now and in these five wins
there is a big win in the Core banking space, a big deal in the Portal space a big deal in
the Treasury space, in the Liquidity space ….so these are the major ones….

Arup:
We are also getting a lot of traction in countries like Vietnam, a lot of core banking deals
are coming out of there, a lot of consumer finance deals are coming from the Middle
8                                            -8-
East in countries like Egypt etc. We are seeing a lot of traction as well in Africa,Latin
America etc

Srivatsal R:

We can think of this five Intellect deals in the 14 deals for this quarter… what was it
same time last year?

Arun:

I have not calculated… we can come back to you on this

Srivatsal R:

Okay. Just wanted to know if there are any delays in ramp up after the deal went through
…are customer kind of delaying, even if you are ready to implement …are customers
delaying it, are they pushing it , feeling if they push it the implementation, if it can be
spread over the nine months or twelve months…they can tide over the current crisis?

Arun:

I don’t think there is a crisis in a bank on the IT spend. There is no crisis that the banks
can’t pay the money or something like that. All the banks are flush with cash, there is no
issue about that …we are conserving the cash for future liabilities of that nature if
something of the sort happens …maybe the customers may postpone the decision ..but
that I don’t think anybody including American banks are taking back or slowing down
any decision


Arup:

We are seeing only delays in deal closure not in deal implementation. In Implementation
we’re not seeing any significant delays at all.




Srivatsal R:

Okay. The numbers show a strong improvement to offshore, is this something that is
sustainable on an ongoing basis given that you have lot of implementation related work

Arun Jain:

These numbers should not be read on a quarterly basis..


9                                          -9-
Srivatsal R:

Okay. Thank you.

Arun Jain:

Next.

Operator:

Thank you, sir. Next in line we have Mr. Kaushik Poddar from KB Capital. Please go
ahead.

Kaushik Poddar:

Some time back you had talked about unlocking your real-estate. Can you highlight that?

Arun Jain:

Srikanth, would you like to highlight that.

Srikanth:

The real-estate business is somehthing we have talked about two quarters ago. And we
have obtained all the regulatory approvals and the shareholders approvals and statutory
approvals. But by the time this fell in place, the market crashed, real-estate market really
crashed. So, that’s why we have kept it in the backburner for a while….

Kaushik Poddar:

So, how much real-estate do you plan to sell? Can you give approximate numbers in
terms of area or something?

Srikanth:

We will come to that once the real estate market is in better shape.

Kaushik Poddar:

Okay.

Arun:

It is not yet a good time to talk about real-estate and software together.

Kaushik Poddar:
10                                            - 10 -
Okay, thanks, fine, fair enough. Okay.

Arun:

Don’t try to even link it.

Kaushik Poddar:

Okay, thank you.

Operator:

Thank you, sir. Participants who wish to ask the question can press star “one” on their
telephone keypad and wait for your name to be announced. I repeat if you wish to ask a
question, please press star one on your telephone. Next in line we have Mr Priyank from
Edelweiss Asset Management. Please go ahead.

Priyank:

Good evening sir, congratulation on a great quarter. I’m not sure if you gave out the
numbers, I logged in late, so may have missed on. But if you could just repeat the amount
of hedges you have outstanding and the rate at which you have them outstanding?

Srikanth:

$100 million at the rate of Rs 44 per USD, 44.24 per USD.

Priyank:

Okay, sir. And –

Srikanth:

That is for the year 2009-2010. And for $72 million for the year 2010-2011 at the average
rate of Rs 47.50.

Priyank:

Right, sir. Now you’ve been talking about the guidance of 30%, this guidance is for
FY10, right 2009-2010?

Srikanth:

2009-2010, 20%.


11                                       - 11 -
Priyank:

20% for year ending March ’09?

Arun:

March ’09, Quarterly guidance we can’t give…. and that’s the stand we are taking for a
long time. We give only annual guidance…Last year we said that we will do 20% and we
are sticking to that number

Priyank:

Fair enough, sir. We have seen significant amount of margin expansion this quarter, do
you see those margin being sustainable going forward or do you see a decline or an
increase?

Arun:

When we look at the margin improvement, margin improvement is an element of what
kind of investment are you doing in the product business. Over the last two years, lot of
investments are were going to the product business. This has now stopped and margin
improvement will naturally be seen. Secondly on the margin improvement, if you look at
it, EBITDA margin has improved to Rs 75 crore. When we analyzed it, we noted a few
things, First is a cost improvement, which we are able to bring about due to, one an
onsite to offshore movement and second due to the fact that a lot of internal cost control
measures we put in place sometime in April, May started delivering results for us
sometime in October, November and December… whether it is the extra premises that
we vacated…the benefit of cost, also Rs 9 crore benefit on currency, ie margin
improvement because of the Rs48.70 to a dollar. These were the two major. Last year we
hedged at Rs 40, this year we are planning to hedge at Rs 44 from April onwards. We
will have 40 till March. I know there is $30 million more for this year.


Srikanth:
We have another $30 million for the current quarter. For FY 10-11 we have 72 million
at the rate of 47.50

Priyank:

Sir, if you could just very quickly repeat the fourth quarter rates, you said $30 million?

Srikanth:

Roughly Rs 40.08.

Priyank:
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Rs. 40.08. Thank you, sir.

Operator:

Thank you, sir. Next on line we have Mr. Sujith Joshi from Crisil.

Sujit Joshi:

All my questions have been answered. Thank you.

Operator:

Thank you, sir. Next on line, we have Mr. Kunal Dayal from Merrill Lynch. Please go
ahead.

Kunal Dayal:

Hi, just wanted to understand what kind of trends, are you beginning to see in your
budgets for your clients for the year. And secondly, the 20% growth FY10 that you
mentioned is that more on account of increased planned budgets or is it more in terms of
growth in market share for you?

Arun:

Let me give this question to Kartik to answer… he is from the geography and he is
communicating with the customer in person more than I am.

Kartik:

Thanks, Arun. Kunal, we’re seeing couple of trends, one that, there is clearly a bit of
pressure in terms of the overall technology spend. It’s not that budgets are increasing for
most of our customer. In the current accounts, where we are seeing primary increases,
this is coming from gain and share of market, we have been also seeing our source of
growth as entry into many new accounts on account of domain lead specialization model,
which is becoming more and more prevalent and relevant in the change that is happening
in the market. Many of our customers are using this opportunity to realign and to
recalibrate their current investments in IT. And are looking at whether they can
undertake progressive modernization, and also discard some of their incumbency issues
and make the movement that is possibly doable during the recessionary trend. There is a
reallocation of budgets that’s coming our way, and since we play mostly …as Arup and
Arun has indicated that earlier as well, since we play predominately in the core machine
critical areas in the bank’s environment. We are seeing that our combination of solutions,
services and the product components is helping us bring in very different approaches,
which are better costing to the customers, than just a low cost option. So that’s how we
are seeing the market share improve, I hope I have been able to give you that flavor.
13                                        - 13 -
Kunal Dayal:

Sure, thanks. And secondly what would be your volume led growth in the quarter?

Arun:

What do you mean by that?

Kunal Dayal:

You mentioned that your revenue growth in the quarter was 6.1%?

Arun:

The revenue growth, I think was smaller than that, 1.5%, 2% kind of number of was there
…. the 2% number was there because of the onsite to offshore shift…we are talking
about number of billed hours… I think there was a growth of 2% there…

Kunal Dayal:

Okay, okay. Thank you.

Operator:

Thank you, sir. Next question comes from Mr. Kumar Shankar Roy from Times of India.
Please go ahead.

Kumar Shankar Roy:
Hi, hello. I want to know about, probably a mistake,… there was this talk about cash in
hand actually going down from 299 crore to 228 crore as a substantial part had been used
for the acquisition of SEEC Inc, that you took up this quarter?




Srikanth:

No its actually reverse…. our cash in the beginning of the quarter was 224 crores and our
cash at the end of the quarter was 299 crores, despite the SEEC acquisition for 377 crore.

Kumar Shankar Roy:

Thanks so much. Thanks a lot.


14                                        - 14 -
Operator:

Thank you, sir. We have a follow up question from Mr. Srivatsal R from Spark Capital.

Srivatsal R:

I just wanted to get some colour on what kind of revenue you look from SEEC and what
kind of revenues are you looking for in the next 2 years, kind of time frame from the
SEEC acquisition?

Arun:

I think Ramaswamy can answer about Insurance as an overall vertical because now we
are seeing SEEC as a major driver on two fronts. One is helping us out in Smart Legacy
Modernization to be completed where we pick up a current application and run it
through the Cobol analyzer for what kind of legacy data domains are there and then doing
a modernizing on those applications and then the second is a component business model
which is also there… SRR would you like to answer that…

Ramaswamy S R:

SEEC brings in 20 plus customers, fom Polaris there are 40 plus customers in the
insurance. Polaris is entering insurance in a significant way and as Arun mentioned
earlier and Ravi mentioned earlier the Smart Legacy Modernization application manager
will form the backbone along with our proven services of testing and other areas to
provide the operational benefit because insurance companies this decade look for
improving the profit margin in operations…. that area is to be supported and the business
components of SEEC provide an insurance front office. This is where we are looking for
growth in the couple of quarters moving forward.

Srivatsal R:

Okay I just wanted to know if it is possible for you to give us how much of a run rate on
insurance totally it would be for Polaris if we include SEEC?




Arun:

The insurance space, today if you look at it, it would be close to $20 million.

Arun:




15                                         - 15 -
Yes. It is around $20 million, on a $300 million revenue, it will be close to $20 million. I
think we are likely to double it for the next year.. if you want to look from that
perspective in order to extrapolate that number.

Srivatsal R:

Okay. Thanks a lot.

Operator:

Thank you. At this time there are no further questions. I would like to hand over the floor
to Mr. Srikanth for the final remarks.

Srikanth:

Okay. Thanks a lot for the effective participation in Polaris Q3 earnings call. I sincerely
appreciate the time and effort spent by all the investors and analysts community and
should there be any specific questions or clarifications please feel free to write to my
Investor Relations and Corporate Communications team and we will be more than happy
to elaborate on all the answers given today, or to other questions…Thanks a lot.

Operator:

That does conclude our conference for today. Thank you for participating on Reliance
Conference Bridge. You may all disconnect now.



<The transcript has been edited to enhance readability>




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