The Hindu Business Line : Polaris plans Rs 60-cr capex this year

Polaris Software Lab will spend about Rs 60 crore on capital expenditure this year. Last year, it spent about Rs 70 crore on capex, according to Mr Arun Jain, Chairman and Managing Director, Polaris.

In the March quarter, the Chennai-based software company got entries into 10 new global accounts out of which four are AAA accounts (revenues of $10 million and above). Previously, it used to take the company nine months to get one AAA account.

Earlier, Polaris had four large accounts — NEC, AIG, UBS and Citi — and a major issue was making inroads into large bank accounts.

This is the first quarter where Polaris has been able to get four AAA accounts in a single quarter — two from Europe and two from Asia-Pacific.

This is a positive change, especially in Australia-New Zealand, with two banks signing up in the same quarter, he said.

Focus on Mumbai

Speaking to investors/analysts at a conference call on the company's fourth quarter and annual financial results last week, Mr Jain said majority of capex spending this year would be in developing new facilities.

Last year, it was Hyderabad and this year it will be Mumbai, which is the corporate banking centre, he said.

In 2005-06, Polaris set up an investment banking focused centre at Hyderabad. This centre has a capacity to seat 2,000 people and currently there are around 1,200 people in it.

"This is one of the growth-oriented centres from our perspective. We believe that corporate banking is the next growth area than the retail banking area and hence our plans are on developing the Mumbai centre," he said.

Mr Jain said on the one side Polaris' results show that revenue numbers are flat at around $45 million. In rupee terms, the revenues look lower at Rs 198.85 crore as compared to Rs 203.38 crore in the third quarter. This can be attributed to currency appreciation, and in dollar terms revenues have been flat — $44.6 in third quarter of 2005-06 and $44.9 in fourth quarter.

"From investors' perspective, I think the concern would be that growth is visible but is not translating into financial numbers. We, as a management team, share the same concern and feel that there is a delay in translating leads into results.

In this quarter, there were expectations to grow again, but the growth or ramp-up got slightly delayed in a couple of clients, which resulted in us not meeting the expected revenue growth numbers.

"But that is the low side of the results. The high side and one by which we are enthusiastic about as a management team, is the kind of access we are getting into global accounts," he said.