Chennai: Post-merger with OrbiTech Solutions, Polaris Software Lab, the city-based software company, has declared a lower after tax profit of Rs 19.94 crore on a turnover of Rs 155.92 crore for the quarter ended 31 March 2003.

The net further goes down to Rs 13.03 crore if one takes into account extraordinary write-offs like the Rs 6.39-crore provision for diminution in value of investments and the Rs 51-lakh loss made by associate companies.

For the previous quarter ended 31 December 2002, Polaris had declared a turnover of Rs 145.03 crore and an after-tax profit of Rs 28.13 crore. After taking into account the Rs 5.28-crore provision for doubtful debt, the net was Rs 22.85 crore. The Polaris-OrbiTech merger got effective from 1 November 2002.

For the full year ended 31 March 2003, the consolidated revenue of Polaris is Rs 428.27 crore and the net profit is Rs 54.52 crore (after taking into account extraordinary provisions and write-offs of Rs.14.22 crore - diminution in investment value: Rs.6.39 crore; loss made by associate companies: Rs.51 lakh; provision for doubtful debts: Rs 7.32 crore).

For the year 2001-02 (prior to the merger with OrbiTech) Polaris had declared a net profit of Rs 58.85 crore on a total revenue of Rs.283.98 crore. The company board has recommended a dividend of 35 per cent.

Last year the software development expenses as a percentage of business revenues stood at 58.7 per cent (Rs 251.35 crore) as against 61.7 per cent during the previous year. On the other hand, the selling and marketing expenses showed an 1.1-per cent increase to 6.1 per cent (Rs 26.17 crore). At the end of the last financial year the total number of software professionals with Polaris stood at 4,248.

Says Polaris CEO and chairman and managing director Arun Jain: "The cost of operations is expected to be higher in the post-merger scenario for a few more quarters. We will also be incurring higher sales and marketing costs for supporting product revenues from OrbiOne. The software services market is becoming very complex and it is not practical any more to use straight-line methods for forecasting growth. Our focus on Optimus Outsourcing Company and our outsourcing business will continue with renewed vigour."

He says in the next three-to-four quarters, the company will be under pressure to perform and make the merger work for generating a greater shareholder value. "The next nine months or so will be defining moments in the growth of the company."

Polaris, in the meantime, has effected some board-level changes in its business process outsourcing subsidiary, Optimus. R C Bhargava, former chairman and managing director, Maruti Udyog, and G N Mathur have been inducted as board members. And Govind Singhal, executive director, Polaris, has been appointed as CEO, Optimus.

Polaris CEO Harpal Dugal and Suren Khirwadar, executive director, had quit Optimus on strange conditions recently. It is also reported that Polaris had obtained orders from the court restraining Dugal from talking about the spat. This action of Polaris has in fact put a question mark on the ability of Polaris from attracting professional talent from the market.

Consolidated profit and loss of Polaris Software Group (including P&L of Orbitech Solutions) (Rupees in lakh)
	Q4 '03	Q3 '03	FY 2003	FY 2002
Particulars	Quarter ending March 2003	Quarter ending December 2002	Year ending March 2003	Year ending March 2002
Income from software services and products	15,591.60	14,503.00	42,827.52	28,398.19
Software development expenses	9,455.38	7,507.00	25,134.57	17,517.77
Gross profit	6136.22	6,996.00	17,692.95	10,880.42
Selling and marketing expenses	960.20	821.00	2,616.66	1,412.36
General and administrative expenses	1,849.97	1,727.00	4,902.18	3,216.31
Operating profit before interest and depreciation	3,326.05	4,448.00	10,174.11	6,251.75
Interest	93.78	4.00	100.54	-
Depreciation	561.74	857.00	1,858.14	958.25
Operating profit after interest and depreciation	2,670.53	3,587.00	8,215.43	5,293.50
(+) Other income	33.89	22.00	278.73	982.07
Profit before tax	2704.42	3,609.00	8,494.16	6,275.57
Provision for taxation	710.06	796.00	1,617.06	389.87
Profit after tax	1,994.36	2,813.00	6,877.10	5,885.70
Provision for diminution in value of investments	639.78	-	639.78	-
Loss of associate companies	51.45	-	51.45	-
Provisions for doubtful debts	-	528.00	732.90	-
PAT post-extraordinary items	1,303.13	2285.00	5,452.97	5,885.70

*Note: The consolidated financials for Q4 & FY03 is the performance reported of the merged entities of Polaris and OrbiTech Solutions post the merger effective November 1, 2002. The Q3 03 reported numbers are consolidated for the purpose of comparison.

	Polaris Software - key metrics
I	Geographic Revenue Break-up	Q4 FY03		Q3 FY03	V	Client concentration	Q4 FY03	Q3 FY03
	US/North America	42.5%		40.8%		Top Client	18.2%	18.6%
	Europe	25.6%		27.0%		Top 5%	37.5%	44.2%
	India	9.1%		8.4%		Top 10%	50.4%	66.2%
	Asia Pacific & Japan	22.8%		23.8%		Citigroup	65.5%	60.7%
	Total	100%		100%	VI	Average Billing Rates (USD/hour)	Q4 FY03	Q3 FY03
II	Domain concentration risks	Q4 FY03		Q3 FY03		- Onsite	57.95	57.10
	Banking, finance, services, insurance		85.4%	84.8%		- Offshore	20.20	20.25
	Emerging Verticals	14.6%		15.2%
	Total	100.0%		100.0%	VII	Human Resource Mix	Q4 FY03	Q3 FY03
	Product Contribution	14.2%		14.5%		Manpower (end of period)	4248	4098
III	Client data	Q4 FY03		Q3 FY03		Software Professionals (%)	89.5%	88.0%
	New major clients added	6		6		Support Staff (%)	10.5%	12.0%
	Repeat Business	87.3%		86.0%		Overall Utilisation	74.2%	74.1%
IV	Revenue Mix	Q4 FY03		Q3 FY03		Attrition Rate (%)	9.3%	9.8%
	- Onsite	40.22%		37.3%	VIII	Efforts Mix	Q4 FY03	Q3 FY03
	- Offshore	59.78%		62.7%		- Onsite	19%	18.0%
						- Offshore	81%	82.0%