HARD QUESTIONS TO WHICH YOU NEED DIRECT ANSWERS
 
 Gain A Better Understanding Of A Financial Technology Powerhouse
 
 THE SPIRIT OF ENQUIRY
 
 The importance of asking the right questions has never been more
 relevant.  Getting this right enables a deeper understanding of
 customer needs. It ensures a more rigorous appreciation of our chosen
 domains, and their many nuances. It powerfully positions our capacity
 to address customer challenges. The rigour of enquiry builds and
 nurtures an environment in which innovation thrives. From an investor
 perspective, asking the right questions will help stakeholders gain
 insights into why leading financial institutions around the world rely
 on Polaris, and how we continually stake our claim on Financial
 Technology Leadership!
 
 Q1. Why do customers pay Polaris?
 
 We build, maintain, expand and extend Financial Technology
 infrastructure for banks, financial institutions and insurance
 companies using most efficient technologies, methodologies and prebuilt
 solutions (products).
 
 Q2. What are the Polaris key offerings?
 
 FT Consulting for organisation-wide transformation driven by the 7
 dimension COPARIS efficiency and innovation framework. This includes
 Business Process Mapping, Application Rationalisation, Enterprise
 Service Bus consulting, Channel Optimisation Strategy, Data Management
 consulting, Cloud consulting and SOA consulting.
 
 FT Sourcing drives Global Sourcing and Managed Services. IP-driven
 sourcing is delivered by the Polaris Global Account Management Group
 aligned around five distinct business clusters. Seven Global Centres of
 Excellence dynamically enhance collective competencies. Chennai houses
 Intellect Court, home to our Product Group, the Speciality Centre for
 Retail Banking and the Speciality Centre for Insurance and Testing;
 Mumbai houses our two Centres of Excellence for Risk and Treasury and
 Corporate Banking; Gurgaon is home to Polaris Enterprise Solutions Ltd,
 and Hyderabad is where our Speciality Centre for Investment Banking is.
 All these Centres are supported with leading edge and proven
 Frameworks, Tools and Methodologies.
 
 FT Products encompass the formidable Intellect™ GUB M180 Enterprise
 Solutions that provide lifecycle assurance and the efficiency of SOA
 architecture. Hubs, Role- based workstations, and CBX technology have
 provided never before efficiency in building extendable solutions
 closely aligned with customer business imperatives and an evolving
 economic and regulatory environment. These products include Core
 Banking, Credit Cards, Wealth, Brokerage, Asset Management, Cash
 Management, Liquidity, Trade Finance, Treasury, Risk Management, among
 others.
 
 FT Practices leverage domain expertise, maximising ROI, with aggressive
 solution delivery. Our Speciality Testing Centres of Excellence offer
 the most comprehensive enterprise testing solutions. Our Test
 repository across core, lending and cards cover over 750 business
 scenarios and over 2500 test data patterns, with superior GUB driven
 test alignment and COPARIS based execution to deliver assured
 application throughput and reliability.
 
 FT Practices also span functional implementation of FT CRM, FT
 Operations,
 
 FT Performance, FT Data, FT Risk, FT Integration, FT Security, FT PCM
 and FT Self Service across industry protocols and enhancing performance
 efficiency.
 
 FT Infra harnesses the power of aggregated efficiencies. With the
 outsourcing of technology infrastructure related capital expenses, this
 presents a compelling business advantage for smaller banks and
 financial institutions early in their growth lifecycle. The offering
 extends to Remote Data Centre Management (RDCMS), Complete Application
 Management, and Hosting. The Cloud is finally moving from hype to
 reality and Polaris has engineered solution architecture to be private,
 hybrid and public-cloud ready.
 
 Intellect SEEC was well received as an SOA compliant platform which is
 both easy to implement and highly efficient. Claims CBX, our peerless
 technology based delivery enabler connects to the legacy systems,
 providing seamless integration and straight through processing for
 critical business processes.
 
 Q3. What proprietary knowledge ensures relevant differentiation and
 customer value?
 
 The Polaris proprietary Banking Knowledge Shelving and Wiring framework
 (L0) scans the many facets in banking and insurance.  Our comprehensive
 enterprise solutions address each of the delivery facets. It is
 architected to drive efficiency at every process and sub process stage
 of our customers operations.
 
 HUBs harness business intelligence in one place. They mitigate risk and
 provide better regulatory control and intelligence.  Documents, Rules
 and Services are driven by the Hubs.
 
 Role-based Workstations enable common front ends and drive efficiency
 with emphasis on customer-facing operations. Claims and New Business
 are given new life through Role-based Workstation in the PCM Insurance
 Solution Stack.
 
 CBXs are next generation exchanges that allow customer direct access in
 a manner that promises to transform the industry and set new standards
 in customer experience. CBXs are the ultimate end-to-end real time
 application standards through four key functions that work in perfect
 harmony to produce a superior multi-dimensional view.  These are: i)
 Information ii)Analytics iii) Decisioning Support and iv) Action
 
 Q4. To what extent does Polaris make a discernible and positive impact
 on its customers operations?
 
 Financial institutions continue to grapple with the challenge of legacy
 modernisation. The older and more established the enterprise, the
 greater the challenge in migration to new solutions. Costs are
 significant as are the risks associated with business innovation
 protection. There is gradual realisation that ‘legacy modernisation is
 an issue that cannot be addressed at one go and just once in the
 lifetime of an enterprise. Dealing with the phenomenon of ‘continuous
 migration for real time or near real time enterprise (as relevant for
 customers) requires a fundamentally new approach to solution
 architecture. We are heartened by the trend of customers investing
 more time to get under the hood of architecture design, instead of
 being typically diverted with easily replicated functionality claims of
 solution vendors!
 
 Polaris has critical relevance in the sustainability of financial
 institutions. Our solutions enable business outcome-based decision
 making. We proactively address emerging digital security threats and
 leverage Financial Technology to drive business and application
 efficiency.
 
 Q5. What have we done in the last year to consolidate our Financial
 Technology leadership position?
 
 We continued to build on strong partnerships with existing customers,
 and began a transformational journey with new customers. Today, 9 of
 the top 10 banks and 7 of the top 10 insurance companies from around
 the world rely on us for business application efficiency solutions.
 Customers recognise the comprehensiveness of our solutions and see
 relevance in dealing with us for services, products, or both. The depth
 of our Services business is well recognised.  Polaris well-researched
 proprietary frameworks and methodologies have repeatedly demonstrated
 value delivered to customers.
 
 The revolutionary Intellect™ GUB M180 was premiered at the prestigious
 Financial Services Club of London to an audience of 50 leading
 transaction banking and payments experts.
 
 Engineered to provide 15 years in-built solution longevity with
 concurrent and subsequent technology upgrades, the
 
 enterprise solution delivers superior technology, functionality and
 real time manageability, without compromising on performance and
 profitability, directly cutting into the inefficiencies spawned by 4 –
 5 generations of legacy technology.
 
 Intellect™ CBX was launched at Payments 2011, NACHAs (National
 Automated Clearing House Association) annual event on payments
 convergence and next generation solutions.  The multi-channel offering
 focuses on expanding financial institutions ability to generate more
 transaction fee based income.
 
 Intellect SEEC™ Insurance CBX was launched at the Acord Loma Insurance
 signature event.  Showcasing demonstrated results of renovated Claims
 business process within 120 days, New Business and Automated
 Underwriting Systems in 180 days, and a 360 degree customer view
 through a portal based, intuitive user interface. One of the largest
 Insurance carriers in Australia has since gone live on the Intellect™
 Insurance platform.
 
 Through the year numerous solutions went live, from Customer On
 Boarding at the Bank of Montreal (Capital Markets), to Application Data
 Management in North America, and Data Warehousing in APAC, to Testing
 in EMEA and Intellect™ Business Process studio enabled centralisation
 of country-wide operations in Tanzania.
 
 The Intellect™ Payment Services Hub powers transformational change for
 superior payments governance and high quality management of payment
 operations.  Augmentation of payments services capabilities is made
 possible by the main features of the Intellect™ Payment Services Hub:
 ERP Integration, Orchestration, Exception Management and Business
 Activity Monitoring with comprehensive plug-on
 
 modules for AML Services and Fraud Monitoring. Polaris has proven
 deployments of the two largest Payment Solution Hubs in the world.
 
 Intellect™ GUB went live at the Mekong Housing Bank (MHB), Vietnam,
 enabling the countrys fastest growing bank maintain its competitive
 advantage. The SOA based modular design facilitates the combination of
 different banking components into an integrated solution, providing
 agility in new products and services design, while managing cost
 efficiencies.
 
 The Intellect™ Quantum Core Banking Solution implementation at the
 Saigon Hanoi Bank (SHB) resulted in powerful business outcomes within a
 few months, emphasising the rigour of need-gap identification and a
 robust solution that enabled between 26% through 89% growth in number
 of customers, deposits, loans, at optimised costs and within
 significantly improved turnaround time!
 
 Multi-country single-instance application that integrates front to
 back-end operations, and provides actionable information for
 Relationship Managers at the SAMBA Financial Group. The Polaris
 Intellect™ Wealth implementation leveraged the functionalities of
 customer risk profiling, financial planning, retirement planning,
 insurance planning, global portfolio management and analytics. The
 deployment won industry recognition receiving the Best Banking
 Application Award at the recent Asian Bankers Awards ceremony in Hong
 Kong.
 
 During this period Intellect™ Quantum Core Banking went live within 7
 months at the Central Bank of Seychelles, and at a major bank in Japan.
 This solution has also gone
 
 live in five Indian banks across private, public and co-operative
 sectors.
 
 The year witnessed improvement in global sourcing traction, especially
 in Europe where 3 of the top 4 banks in UK chose Polaris to manage
 their applications. During the year, all global G10 accounts showed
 quarter-on- quarter growth.
 
 We are winning and living up to the trust reposed in us. Our solutions
 are uniquely comprehensive and functionally superior. We have
 demonstrated business outcomes for customers and their powerful
 testimony is further enhanced by analyst commendations and industry
 recognition.
 
 Q6. What are the significant financial highlights investors should be
 aware of?
 
 There has been a lot of comment on the likely success of a product and
 services company.  The solution architecture of Polaris necessarily
 requires a mix of the two. Simplistic comparisons with other
 organisations that do one or the other do not do justice to our
 significant achievements in influencing customer perceptions and
 behaviour related to Financial Technology adoption in banking and
 insurance.
 
 Polaris is consolidating its position as the pre- eminent driver of
 efficiency in banking and insurance. Financial achievements this year
 validate the progress we have made. The total number of customers
 reached 199 during the year with 26 new additions. Intellect deal
 sizes, which were in the range of USD 1 million-USD 3 million two years
 back, have grown to USD 5 million and in the last quarter of the
 financial year, the company
 
 closed two deals of more than USD 10 million.
 
 On a key value metric, the annualised Earnings Per Share has grown from
 2.17 in 2005, through 7.42 in 2007, 15.48 in 2009, and 20.43 in
 2010-11.We have strengthened our presence in several countries, and the
 revenue mix now reads Americas 44%, Europe 24%, IMEA (India, Middle
 East & Africa)14% and APAC 18%.
 
 Q7. How has Polaris fared in terms of industry recognition?
 
 Later in this report, a summary of analyst and industry recognition is
 featured.  Winning industry awards for architecture design,
 functionality and implementation are particularly heartening because
 the success is co-authored with the customer. Teams who have worked on
 the particular solutions are buoyed, and others are motivated to ensure
 their efforts do not go unrecognised!
 
 Analysts have the benefit of reviewing solutions from the perspective
 of customers and solution vendors. Polaris solutions have consistently
 won critical acclaim. Moving into more prominent positions in Magic
 Quadrants, domain-specific Frameworks, winning ‘best functionality and
 various specialist solutions accolades. This year, Polaris was featured
 in an astounding 43 reports from leading analysts that include Gartner,
 Forrester, Tower, Aite, Celent, among others. This number is testimony
 to the breadth of our offerings as our competitors whose limited
 offerings were featured in less than 20 such reports.  Recognition of
 this nature gives customers comfort that the vendors they work with,
 are rated well in their chosen areas of specialisation.
 
 Q8. Have recent acquisitions added value to Polaris?
 
 The smooth integration of acquired businesses has been the most
 formidable M&A challenge. The very complimentary nature of the
 offerings mix and the shared value systems of Laser Soft and IndigoTX,
 made their transitioning into Polaris a natural progression, where in
 planned stages, technologists and customers alike have gained from the
 mergers. Our solution set is stronger than ever and has allowed us to
 present differentiated offerings to meet geographical and customer
 lifecycle stage requirements, through multiple component and delivery
 models.
 
 Q9. Are CSR initiatives relevant in creating value for the brand and
 the shareholder?
 
 At Polaris, we pride ourselves in ‘Inclusive CSR activities where
 every associate is involved in contributing by way of mentoring or
 volunteering time and sharing knowledge.  The Ullas Trust held its 13th
 Annual Workshop this year. This initiative ‘shapes young minds by
 reaching out to less privileged students in standards 9 through 12,
 enhancing their regular schooling with guidance on personality
 development, communication and technology skills. The structured
 programme is supported by Polaris associates, and provides children
 with mentorship, public speaking opportunities, guided peer group
 engagement, corporate exposure, and prize money.
 
 The Higher Education programme incorporates modules on personality
 development, responsibility,team work, placement preparedness, business
 
 communication, grooming, mentoring by successful professionals, and
 merit based financial support.
 
 The Ullas Trust now operates across Chennai and in all districts of
 Tamil Nadu, in Hyderabad, and in seven districts of Andhra Pradesh, and
 in Mumbai and Delhi. Over 30,000 students have benefited from the
 programme.
 
 Active involvement in the Ullas initiative provides perspective on what
 it takes to shape and realise dreams to all team members involved. It
 strengthens our value system, and our belief that we can, and will,
 make a powerful and positive impact, through direct and personal
 intervention.  Customers have been visibly moved by the way in which
 the initiative has opened up new vistas for deserving students and in
 some cases have volunteered their participation in our endeavour.
 
 It was an honour to win the ‘Best Corporate Social Responsibility
 Practice Award at the 6th Bombay Stock Exchange (BSE) Social &
 Corporate Governance Awards Function in Mumbai this year. The Polaris
 SAMPADA (Special Appreciation & Mentoring Program Acknowledging
 Differently Abled) initiative continues to be inspiring in its ability
 to harness a very special potential for unimpaired productivity.
 
 Q10. Are there specific target milestones against performance that
 should be tracked in the coming financial year?
 
 With 9 of the top 10 global banks, and 7 of the top 10 global insurance
 companies
 
 already on our customer list, we have adequately demonstrated our
 ability to build business together. Our focus this year must be on
 expanding our presence in these accounts in a structured manner,
 establishing referenceable relationships on the basis of successful
 delivery of customer business outcomes.
 
 The products business gives us tremendous growth possibilities with
 license revenues that are in the range of millions of dollars. The
 acknowledged depth of our Services business will continue to drive
 Global Sourcing and Managed Services. The Service pipeline moved from
 USD 120 million to USD 200 million while product pipeline moved to
 almost USD 600 million. Our robust Frameworks and Methodologies will be
 further strengthened with technology and process innovation.
 
 Financial Institutions around the world are acutely conscious of the
 criticality of their Core Banking Systems, to the efficiency of their
 enterprise. Analysts suggest staggering volumes and immediacy of change
 in Core Banking Systems. This poses unprecedented opportunity as well
 as demands on the flexibility of the new age systems, that must
 seamlessly integrate in constantly changing environments.
 
 Intellect™ Quantum Core Banking Solutions from Polaris are the most
 efficient comprehensive frameworks for all manner of banks, ranging
 from commercial, co-operative banks, community and NBFCs, to the
 central / federal banks of countries. This financial year will register
 significant strides in establishing our authority in Core Banking
 Re-invention.
 
 As Continuous Migration is recognised as a constant phenomenon across
 banking and insurance, we will further strengthen our
 
 narrative and offer distinct solution architecture relevant for near
 and real time enterprise.
 
 Backed by referenceable deployments, we will see new impetus in
 specific function areas including Payments, Liquidity, AML and Fraud
 Monitoring, and Claims and New Business in Insurance.
 
 The year to come will see further acquisitions to strengthen
 capabilities for exponential leaps in solution offering, with direct
 relevance to customers at any growth lifecycle stage, always conscious
 of emerging technologies and their adoption trends, and more efficient
 delivery models.
 
 Polaris will be increasingly present and will play an active role in
 the industry eco system, where banking and insurance transformation is
 being conceptualised. The company will continue its aggressive business
 outcome-driven focus on customer imperatives of business decisioning,
 digital security, speed of deployment, cost management, and regulatory
 compliance.
 
 In the coming year, the distinctly superior Polaris Architecture design
 will dominate Financial Technology conversations.
 
 Progressive customers are investing more time on reviewing
 architecture design, instead of being diverted with easily replicated
 functionality claims of solution vendors!  This is where our solution
 maturity is truly appreciated!
 
 Arun Jain
 Chairman & CEO 
 Polaris Software Lab Ltd.