IRIS
Polaris is targeting 50 per cent growth in fiscal 2002-03. Of this, 17-25 per
cent will come from leveraging existing & prospective businesses and the
products business. The remaining may come from seizing inorganic growth
opportunities. The company board has approved a decision to actively consider
merger and acquisition (M&A) deals. `We are looking at companies which will
get us more client relationships on the one hand and expand our product or
solution portfolio on the other,` said Arun Jain, chairman and CEO of Polaris
Software Lab in an interview with Myiris.com.
The company reported a net profit of Rs 61.65 crore for the year ended March
31, 2002, compared to Rs 60.10 crore for the previous year ended March 31, 2001.
Total income stood at Rs 283.94 crore as against Rs 269.67 crore.
Following is the text of the full interview:
Polaris has established BankWare. What it is? What is its focus area?
BankWare is a product in banking space. It is a complete fluid of retail banking
application and there are eight more sub products. We launched this product last
year and in the last one year we have established our credibility in the market
place. Going forward we expect higher growth in this particular space.
What is the market size you are looking for BankWare?
The market size is quite huge which is the entire Asian market. This is a
product, which has been picked up from United States and customised as per
requirements.
Besides banking and financial services, which are the other areas Polaris
will be entering?
The other areas are ERP space. We have a strong initiation in ERP space. We
would like to continue to standard our ERP practice.
How many clients do you have presently and how many more will you be adding
this year?
Totally we have 98 clients as per the data published and we are planning to add
10 clients per quarter.
Who are your top clients?
Top clients are Citigroup, AIG, Commerce Bank, NEC and Hitachi. Our top clients
contribute about 60 per cent of revenues.
In how many countries do you have offices presently and in how many do you
plan to open?
We have 15 international offices ranging form Asia, Singapore, Tokyo, Hongkong,
London, Frankfurt and United States.
You are targeting 50 per cent growth in current fiscal and are looking at
mergers and acquisition as a growth driver. So what type of companies are you
looking at?
We are looking at companies, which get us more client relationship on the one
hand and expand our product or solution portfolio on the other side. So these
are the two kinds of companies we are looking at.
What about the funding?
We have cash otherwise equity is always a funding possibility.
Your imaging vertical contributed some 28 per cent to revenues. Can you tell
us something more about this?
We have a very strong presence in CRM and ERP and enterprise application
integration. All horizontal ways to get the client based on the technology we
define into imaging verticals and why we call it imaging vertical is because
when we build up skills in a particular vertical we expand it to that vertical
but till that time still fundamentally it is coming from the horizontal
competency and because of that we would like to penetrate those accounts and we
can contribute in creating value for customers.
Do you see any downtrend continuing in billing rates?
I think the market is tough for all players. Fortunately we were not very higher
on billing rates so our pressure on billing rates was slightly lower than those
with higher billing rates for the offshore. I think over the last nine months it
has settled down. Things are more stable and everybody has come down to the
level of billing rates and I think growth will be more driven by volumes than
billing rates.
81 per cent of your revenues come from repeat business so it is that new
clients are contributing very marginally to your revenues?
Obviously because it takes time for the strategic account to nearly bring in
significant changes in the percentage terms. It takes almost three-four quarters
to bring changes in the bottomline line or topline. So it is a cycle time which
is the part of nature of the business we are in.
Are these new clients coming up above average level or below average?
We are not changing rates for each client. We are almost on a similar kind of
rate before and would like to like to see that is a good way to go for the
industry.
Revenues from domestic services is on the rise. Which are the services you
offer in the domestic market?
This size of 10 per cent is normal because some of the US market contracts have
been converted into rupee billing contracts. That is why it is showing an
increase.
Is there any renegotiations with existing clients?
Not now.
Which are new technology initiatives you have undertaken recently?
One is component warehouse, which we had undertaken last year. We had built up a
product on the top office and have lot of product built on component warehouse.
Secondly we launched a new product called `tagport`. It is a IT helper to cater
to needs of global customers for supporting their ERP applications.
How are your subsidiaries doing?
Subsidiaries are doing well. The Singapore subsidiary has grown more than 40 per
cent last year. UK is also doing fine. Germany subsidiary was started one year
back. And some large relationships like Commerce bank. Switzerland subsidiary is
taking some more time because of slightly conservative market. Japan subsidiary
we started just this January. We are looking for positive developments there.
Two more subsidiaries such as Hongkong and Ireland are there which we have set
up recently.
If you see Indian companies are adopting a branch in overseas market rather
than subsidiaries. Are you comfortable of having subsidiaries in overseas
market?
I think it depends from market to market. In countries like US which are as open
for the branch as for the subsidiary it does not matter. But in certain
countries they put preference for the business rather than preference for the
branch. That scenario goes in favour of subsidiaries.
What is your relationship with Orbitech?
Orbitech is our customer. We deliver solutions to it. Through them we deliver
solutions to customers.
What about billing rates in Orbitech?
Orbitech billing rates is a long-term relationship so they enjoy long-term
billing rates which are lower than the normal market rate.
The company entered into a strategic alliance with two big clients. Can you
tell us more about it?
They are two big clients — one a bank from United States which was one of the
top 15 banks in US. They have identified the outsourcing partner. The other is
Magnum Motor which was a part of the airbus industry.
What are the strategies you are adopting for growth and revenues?
We have started a strategy last year where we think we need to create demand for
servicing. For creating demand we need to package and value the services. We
also restructured the organization over the last one year. Now we are geared up
to take the challenges. The acquisition strategy can be put into place for the
company. This year we are looking to come back on a higher growth path of 50 per
cent.