Polaris Software Lab

The Directors have great pleasure in presenting the Fifteenth Annual
 Report together with the Audited Statements of Accounts for the year
 ended March 31, 2008.  
 
 1. Financial Results
 
 a. Stand alone results of Polaris Software Lab Limited
 
                                                       Rs. in Lacs 
 Year ended March 31                       2008           2007
 
 Profit (including other income) 
 before Depreciation,
 Finance Charges, provision for 
 diminution in value of
 investments and Tax                     10,478          13,790
 Less:
 Finance charges                             60              57
 Provision for diminution in 
 value of investments                       103              18
 Depreciation & Amortisation              3,907           4,330
 Profit Before Tax                        6,408           9,385
 Less: Provision for tax 
 including Deferred
 Tax and Fringe Benefit Tax               1,145           1,426
 Profit After Tax                         5,263           7,959
 Add: Surplus brought forward            19,233          14,599
 Profit available for appropriation      24,496          22,558
 Appropriations:
 Provision for proposed dividend          1,480           2,218
 Tax on Distributed profits                 251             311
 Transferred to General Reserve             526             796
 Balance Transferred to Balance Sheet    22,239          19,233
 
 2.  Results of operations
 
 The consolidated income of Polaris Software Lab Limited from Software
 development services, products and Business Process Outsourcing for the
 year ended March 31, 2008 stood at Rs.109,930 Lacs, registering a
 growth of around 6.48% over the previous years revenues of Rs.103,237
 Lacs. The consolidated Net Profit for the fiscal year ended March 31,
 2008 stood at Rs.7,321 Lacs as against the previous years Consolidated
 Net Profit of Rs.10,106 Lacs. The Reserves increased from Rs.55,225
 Lacs in 2006-07 to Rs.  60,815 Lacs in 2007-2008.
 
 The Company caters to its clients through its worldwide offices and its
 global business distribution encompasses United State of America (USA),
 Europe, Asia Pacific, India and Middle East. In 2007-08, USA
 contributed 35.10%, Europe contributed 31.34%, Asia Pacific, and India
 & Middle East contributed 33.56%.
 
 3.  Future outlook
 
 According to the Nasscom report of 2008, India continues to be a
 primary destination for outsourcing and is also emerging as a hotbed
 for products and innovation. Within the outsourcing arena, the Money
 Verticals - Banking Financial and Insurance form the lions share and
 are the most highly evolved outsourcing sectors both for IT outsourcing
 and BPO. Continued growth predicted in these verticals provides the
 opportunity for Polaris to increase the share of the business in these
 verticals, given the following advantages:
 
 Only top 10 players from India to be fully focused on the Money
 Verticals
 
 Ownership of the most contemporary and broad range of Intellectual
 Property for the Money Verticals (Intellect Suite) including investment
 into R&D
 
 From the Geographic perspective, market analysts like Gartner predict a
 slower growth rate for Banking and Insurance Technology Outsourcing in
 the industrialized countries, while high growth is expected in the
 emerging economies. In addition the US markets are also experiencing a
 slow down due to the Sub prime crisis.
 
 For Polaris, the emerging markets pose lucrative opportunities for
 growth led by the Intellect Suite, while a broad geographic spread
 across regions enables the company to tide over the impact of economic
 slowdown in the USA. Outsourcing services such as Testing, Enterprise
 Solutions, and Business Intelligence are expected to experience good
 demand over the next few years.
 
 Acute shortage of legacy technology skills and inability of older core
 systems to offer the global growth demanded, today is causing banks
 across the world to commence modernization programs. Redundant
 functionality and existing rigid systems are also inhibiting banks to
 respond to time-to-market needs and with the advent of Service Oriented
 Architecture (SOA) based solutions and software services, Banks are
 able to respond faster to their customer needs.
 
 Trends showing increased adoption of SOA and the predicted opening up
 of the legacy modernization market as well as core banking renewal are
 also favorable to the companys growth strategy and direction and its
 focus on next generation solutions that leverage latest concepts such
 as SOA.
 
 Key high growth areas visible across geos and across all Banking
 domains are:
 
 - Retail, Core and Private Banking Front Office Applications
 
 - SOA Reengineering and Modernization of Core Banking Platforms
 
 - Global Portal solutions
 
 - Global Cash and Liquidity solutions
 
 - Wealth Management and Investor Services
 
 - Application Testing
 
 - Specialist Services and Consulting
 
 - BPO
 
 4.  Dividend
 
 Your Directors please to recommend a dividend @ 1.50 per share (30% on
 the nominal value of Rs.5/- per equity share) for the financial year
 2007-08. The dividend, if approved at the forth coming Annual General
 Meeting, will be paid out of profits of the Company for the year to
 those equity shareholders whose name appear on the Register of Members
 of the Company on 10th July 2008 and to those whose names appear as
 beneficial owners in the records of National Securities Depository
 Limited and Central Depository Services (India) Limited on the said
 date.
 
 5.  Strategic Initiatives during the Year
 
 - The Company entered the African Market with a significant win from
 one of the largest Banks in Africa, with the Intellect Treasury
 platform
 
 - Total employee strength crossed the significant milestone of 10,000
 this year and the talent program continued around the strategy of
 nurturing specialists in sub verticals and specialty skills.
 
 - The Company has set up a Centre of Excellence (CoE) for Algorithmic
 create a talent pool of trained resources in the Risk Management arena
 
 - Polaris set up a dedicated Test Lab at Sydney to offer round the
 clock availability of testing services
 
 - Corporate Heights, a center for Modernization of Treasury Technology
 was opened at Goregaon, Mumbai. This new state-of-the-art, 66000 square
 foot facility housing 500 experts would focus on providing technology
 modernization services in treasury departments of banks and
 multi-national companies, besides offering specialized products and
 components for trading, operations and liquidity management.
 
 6.  Increase in share capital
 
 The Company has allotted 92,470 number of Equity Shares of Rs.5/- each
 pursuant to the exercise of employee stock options during the year as
 detailed hereunder:-
 
 Date of           Scheme              Option
 Allotment                             Price (Rs.)
 
 18/07/2007        ASOP 2000           123.65
                   ASOP 2000            71.50
                   ASOP 2001           123.65
                   ASOP 2001            57.00
                   ASOP 2003            137.4
                   ASOP 2003            76.60
                   ASOP 2003           116.10
                   ASOP 2003           152.95
 17/10/2007        ASOP 2000            71.50
                   ASOP 2001            57.00
                   ASOP 2001            71.50
                   ASOP 2003            76.60
 23/01/2008        ASOP 2000            71.50
                   ASOP 2003            76.60
 
 No. of             No. of         Total Shares
 Allottees          Shares
 
 2                  4,000            66,655
 1                     50
 2                  4,000 
 6                  1,305
 4                  1,000
 27                52,600
 2                    700
 3                  3,000
 1                    100            20,175
 6                  2,775
 2                  3,000
 6                 14,300
 2                    140             5,640
 6                  5,500  
 
 
 In view of the above, the issued, subscribed and paid-up equity share
 capital increased from 98,582,127 equity shares of Rs.5/- each as on
 March 31, 2007 to 98,674,597 equity shares of Rs.5/- each as on March
 31, 2008. All the above newly alloted shares are listed and traded on
 stock exchanges.
 
 7. Employees Stock Option Scheme
 
 The Company has 4 Stock Option Schemes as on 31st March 2008. During
 the year, your Company has granted options to the eligible Associates
 under the Associate Stock Option Plan 2003 as per SEBI Guidelines on
 (ESOP & ESPS). The Company has not granted any options under ASOP 2000,
 ASOP 2001 and ASOP 2004 Plans during the year 2007-08.
 
 8. Subsidiaries
 
 The subsidiary companies of your Company along with the country(s) of
 incorporation are given below:-
 
 Polaris Software Lab Pte Ltd.  Singapore
 
 Polaris Software Lab Ltd.  United Kingdom
 
 Polaris Software Lab GmbH Germany
 
 Polaris Software Lab S.A Switzerland
 
 Polaris Software Pty Ltd.  Australia 
 
 Polaris Software Lab Ireland Ltd. Ireland
 
 Polaris Software Lab Japan KK Japan
 
 Polaris Software Lab Canada Inc.  Canada
 
 Polaris Software Lab Chile Limitada Chile
 
 Polaris Software Lab B.V.  Netherlands
 
 Polaris Retail Infotech Ltd India
 
 Optimus Global Services Ltd.  India
 
 The overseas subsidiaries, in addition to providing service to various
 international clients have greatly enhanced the capability of your
 Company in generating more business opportunities in international
 markets. The Board of Directors of your Company has reviewed the
 affairs of the subsidiary Companies. Details of the investment made by
 your Company in its subsidiaries & Associate Companies are shown in
 Note No.6, in Abridged Financials and also Note No. (B) 15 of
 Significant Accounting Policies and Notes to Accounts provided as an
 annexure to the complete and full Balance Sheet and Profit & Loss
 Account.
 
 Your Company has applied for an exemption under Section 212 of the
 Companies Act, 1956 to the Central Government, Ministry of Company
 Affairs (MCA) from attaching the Balance Sheet, Profit & Loss Account,
 Directors Report and the Auditors Report of its subsidiaries to the
 Annual Report. This Annual Report does not contain the financial
 statements of the subsidiaries, instead contains the Consolidated
 Audited Financials of your Company and its subsidiaries, based on the
 expected approval form MCA.  Further, information relating to each
 subsidiary has been disclosed in an abstract format, which is forming
 part of the consolidated Balance Sheet.
 
 The Annual Accounts of the subsidiary companies will be made available
 to the holding and subsidiary company investors seeking such
 information at any point of time. Annual Accounts of the subsidiary
 companies will also be kept for inspection during business hours at the
 Companys Registered Office and that of the subsidiary companies
 concerned.
 
 9.  Notable accolades received during the year
 
 a.  Market Recognition for Consulting and Outsourcing at Polaris
 
 - Recognized as Leader in the category of Specialty Application
 Development among the Top 100 Global Companies from Cyber Media
 Publication for two consecutive years in 2006 and 2007.
 
 - Polaris ranked by Tower group among worlds top Professional services
 and Consulting organizations - in line and at par with all other key
 tier I players in the IT and business consulting segments
 
 - Optimus ranks among Tower Groups list of Select Offshore Business
 Process Outsourcing Providers in Financial Services
 
 - Polaris Optimus placed among the select outsourcing providers
 offering lending outsourcing and collections/delinquency management
 services
 
 - Polaris ranks among top 3 global financial services testing
 specialists in report by Gartner on Outsourced Testing in Financial
 Services
 
 b.  Market Recognition for Intellect Global Banking Platform
 
 - Polaris Intellect Ranked by Forrester Research (07) as Global
 Challenger and among top 5 Banking Platforms worldwide
 
 - Polaris Intellect Treasury wins the The Banker Award for Capital
 Markets Projects, 2007
 
 - Polaris Intellect listed among the most contemporary global core
 banking solutions in Cap Gemini Survey of Core Banking Solution
 Providers
 
 - A report on Corporate Banking Portals by Tower Group has recognized
 Intellect portals as a comprehensive portal framework that closely
 matches the vision of most leading US banks
 
 10.  Society Connect
 
 The Ullas Trust was founded in 1997 with a desire to integrate Polaris
 Associates with a larger community. The Charter for the Trust includes:
 
 - Encouraging a Can Do It spirit among the young, economically
 challenged students, during the vulnerable stage of adolescence.
 
 - Recognising academic excellence in students from Corporation and
 Government Schools between classes 9th to 12th and enabling them to
 dream big and work towards realizing their dreams.
 
 Ullas celebrated 10th Annual workshop on 15th December 2007. Last year,
 3313 students were awarded young achievers scholarship awards. On this
 number, 40 scholarships benefitted students from Killai, a Tsunami
 affected village near Chidambaram. Ullas Young Achieves Higher
 Education Scholarships were also awarded to 24 students.
 
 11.  Fixed Deposits
 
 Your Company has not accepted any deposits and, as such, no amount of
 principal or interest was outstanding on the date of the Balance Sheet.
 
 12.  Auditors
 
 M/s S.R. Batliboi & Associates, Chennai, Chartered Accountants, who are
 the Statutory Auditors of the Company retire at the forthcoming Annual
 General Meeting and are eligible for re-appointment. The retiring
 Auditors have furnished a Certificate of their eligibility for
 re-appointment under Section 224 (IB) of the Companies Act, 1956 and
 have indicated their willingness to be re-appointed.
 
 13.  Directors
 
 Messrs Satya Pal, Dr.Ashok Jhunjhunwala and Anil Khanna directors,
 retire at the forthcoming Annual General Meeting and, being eligible,
 offer themselves for re- appointment.
 
 14.  Corporate Governance
 
 Your company perceives Corporate Governance as an endeavor for
 transparency and a wholehearted approach towards establishing
 Professional Management, aimed at continuous enhancement of
 Shareholders value. Your Company has been complying with the
 conditions of Corporate Governance as stipulated in Clause 49 of the
 Listing Agreement. Separate reports on Corporate Governance along with
 Auditors Certificate on compliance with of the Corporate Governance
 norms as stipulated in Clause 49 of the Listing Agreement and
 Management Discussions & Analysis forming part of this report are
 provided elsewhere in this Annual Report.
 
 15.  Impending Litigation(s)
 
 Details of impending litigations are shown in Note No.2 of the Abridged
 Financial Statements and also in Note No. (B)5 under Significant
 Accounting Policies and Notes to Accounts provided as an annexure to
 the complete and full Balance Sheet and Profit & Loss Account.
 
 16.  Conservation of Energy, Technology Absorption, Foreign Exchange
 Earnings & Outgo
 
 The particulars, as prescribed under clause (e) of sub-section (1) of
 Section 217 of the Companies Act, 1956 read with the Companies
 (Disclosure of Particulars in the Report of Board of Directors) Rules,
 1988 are set out in the Annexure to the Directors Report forming part
 of the complete and full Annual Report 2007-08. (In view of the
 expected exemption under the Companies Act, the said Annexure has not
 been enclosed with the Directors Report forming part of the abridged
 Annual Report).
 
 17.  Particulars of Employees
 
 As required under the provisions of Section 217 (2A) of the Companies
 Act, 1956 read with the Companies (Particulars of Empl.oyees) Rules,
 1975, as amended, a statement showing the names and other particulars
 of employees are set out in the Annexure to the Directors Report
 forming part of the complete and full Annual Report 2007-08. (In view
 of the expected exemption under the Companies Act, the said Annexure
 has not been enclosed with the Directors Report forming part of the
 abridged Annual Report).  The Department of Company Affairs, has vide
 GSR. 212(E) dated 24.03.2004, amended the Companies (Particulars of
 employees) Rules, 1975 to the effect that particulars of employees of
 the companies engaged in Information Technology sector posted and
 working outside India not being directors or their relatives, drawing
 more than rupees twenty four lakh per financial year or rupees two lakh
 per month, as the case may be, need not be included in the statement
 but, such particulars shall be furnished to the Registrar of Companies.
 Accordingly, the statement referred above does not contain the
 particulars of employees who are posted and working outside India not
 being Directors or their relatives. However, on specific request, such
 particulars shall be made available to any shareholder.
 
 18.  Directors Responsibility Statement
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956 the Directors of your Company confirm that:
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards had been followed along with proper explanation
 relating to material departures;
 
 (ii) the Directors had selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the cpmpany at the end of the financial year and of the profit or
 loss of the company for that period;
 
 (iii) the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the company and
 for preventing and detecting fraud and other irregularities;
 
 (iv) the Directors had prepared the annual accounts on a going concern
 basis;
 
 19.  Acknowledgment
 
 Your Directors take this opportunity to thank all investors, clients,
 vendors, banks, regulatory and government authorities, and stock
 exchanges for their continued support. Your Directors also wish to
 place on record their appreciation for the contribution made by the
 Associates at all levels.
 
 Place: Chennai                               By Order of the Board
 Date : April 23, 2008             For Polaris Software Lab Limited
 
                                                    Arun Jain
                                        Chairman & Managing Director