Current drain to bring in gains: Polaris

Polaris Software Lab hopes that one of the main reasons for its recent lacklustre performance will eventually provide the platform for growth.

The investment in research and development and some losses incurred by the BPO arm had an impact on its bottomline, though the company was able to maintain the topline growth, Arun Jain, chairman and chief executive officer of Polaris Software, told Business Standard.

Polaris has invested over Rs 100 crore in research and development in the last two years. The company has developed a software product, IntellectSuite, for financial institutions.

Jain claims that intellectual property-led business has already started showing results as the company was able to win accounts from three large global financial institutions in the last quarter. Each of these clients has potential to grow to a revenue size of $ 5-10 million annually in the next couple of years.

"We hope to clinch accounts from two large US banks and a bank from Europe, which are listed among the top 50 banks in the world," he added.

Anees Sen, senior VP, said that the gestation cycle for go-to-market during transformations is normally over 36 months. However, he said that Polaris was able to reduce this period because of its domain experience in this vertical.

Today, Polaris' product portfolio Intellect Suite has gone live at five top clients' locations. The Intellect Suite contributes about 10 per cent to the total revenue of the company.

With sequential growth of bottomlines in the last couple of quarters and expected addition of large clients, driven by IP-led business, the company hopes to increase its margins significantly in the next four quarters. Its margins at present are 15-18 per cent, including the investment in research and development.

Prabul Basu Roy, group financial officer and executive vice-president, Polaris, said that the company had chalked out a strategy to focus on IPR-led business to attract more clients as its pricing of products and services were limited since Citigroup was occupying major share in its business.

The product IPRs are giving us the option of better pricing for the new clients, which include large global financial institutions. Since no other player is offering such solutions, we hope to win large customer accounts.

The company reported an income of Rs 213.55 crore for the quarter ended September 30, as compared to Rs 209.26 crore in the previous quarter of this fiscal. Net profit also increased to Rs 13.26 crore from Rs 11.62 crore. However, net profit of this quarter was down by 43 per cent compared to the same period last fiscal.

Polaris is creating a 1,800-seat facility at Hyderabad for capital market solutions and this is expected to be operational during the next quarter. It is also hoping to expand its operations in Mumbai, where it is focusing on corporate banking solutions. "We hope to finalise our expansion in the next 6-9 months," Jain added.