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Directors Report of Polaris Consulting & Services Ltd.

Mar 31, 2016

We are pleased to present the Twenty third Annual Report on our business and operations for the year ended 31st March 2016, of Polaris Consulting & Services Limited ("Company") (formerly known as Polaris Financial Technology Limited)

1. Results of Operation: (Rs. in Lacs, except EPS data)

Description Standalone Consolidated

March 31, March 31, March 31, March 31, 2016 2015 2016 2015

Income (Including Other Income) 185,483.91 171,588.04 205,259.70 193,448.84

Expenses(including exceptional items) 165,925.51 150,494.43 180,640.58 167,515.02

Profit before Interest, Depreciation & Tax (PBIDTA) 19,558.40 21,093.61 24619.12 25,933.82

Finance Charges - Depreciation & amortization 2,493.71 2,650.14 2,655.40 2,790.87

Net Profit Before Tax 17,064.69 18,443.47 21,963.72 23,142.95

Provision for tax including Deferred Tax 8,088.84 5,371.72 9,261.62 6,422.28

Net Profit after tax 8,975.85 13,071.75 12,702.10 16,720.67

Add / (Less): Share of Profit/(Loss) on Associate Companies - - - 1.19

Add / (Less): Minority Interest - Share of Profit / (Loss) - - 5.32 5.12

Net Profit 8,975.85 13,071.75 12,707.42 16,726.98

EPS

Basic Rs. 8.95 13.10 12.68 16.77

Diluted Rs. 8.81 12.81 12.48 16.39

2. Open Offer by Virtusa Consulting Services Private Limited under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011

On the 5th of November 2015, the promoter and promoter group of the Company along with other sellers and institutional sellers entered into a Share Purchase Agreement ("SPA") with Virtusa Consulting Services Private Limited ("Virtusa") for selling 52.42% of their shareholding by means of sale of their shares in the Company.

Upon fulfillment of the conditions precedent laid down in the SPA, the shares were transferred to Virtusa on 3rd March 2016 which led to the change in control/management of the company.

The above acquisition of Virtusa triggered the open offer for acquiring 26% of the paidup share capital of the Company under SEBI (SAST) Regulations, 2011 which was carried out subsequently and the current holding of Virtusa in Polaris is 78.72%

3. Business Performances

The consolidated revenue of the Company from Software Development Services for the year ended March 31, 2016 stood at Rs.203,714.97 lakhs as against the previous year''s revenue of Rs. 189,334.54 lakhs. The consolidated Net Profit for the fiscal year ended March 31, 2016 stood at Rs.12,707.42 lakhs as against the previous year''s Net Profit of Rs.16,726.98 lakhs. The Reserves and Surplus as of 31st March 2016 stood at Rs.91,179.26 lakhs as against Rs.80,086.74 lakhs of the period as of March 31,2015.

4. Subsidiaries

Details of Subsidiary Companies, Joint Ventures and their financial position

Your Company has 10 subsidiary company(ies) for the financial year ended on March 31, 2016 which includes 2 subsidiaries which were incorporated in Switzerland and Dubai during the financial year 2015-16 and 4 step down subsidiaries of Polaris Consulting & Services Pte Ltd, Singapore and Polaris Consulting & Services Limited, UK Polaris Consulting & Services Limited, India has divested its 45% stake in Intellect Polaris Design LLC and the same has been sold to Intellect Design Arena Limited on 31st December 2015. As a result, the shareholding of the company in Intellect Polaris Design LLC is now reduced to 50%

The information as required under the first proviso to sub-section (3) of Section 129 is given in Form AOC-1 in Annexure 1

Further, pursuant to the provisions of Section 136 of the Companies Act, 2013, ("Act") financial statements of the Company, Consolidated financial statements along with the relevant documents and separate audited accounts in respect of the subsidiaries of the Company are available in the website of the Company and the weblink is provided below www.polarisft.com/investor/investor.asp

5. Cash & Cash Equivalents

Your Company''s liquidity remains healthy with a cash reserve of Rs.426.53 crores. The DSO is at an impressive 78 days

6. Share Capital

During the year, under ASOP 2003 Scheme the company has allotted 213,600 equity shares of Rs.5/- each to 73 Associates / Directors and under ASOP 2004 Scheme the Company has transferred 60,400 equity shares of Rs.5/- each to 16 Associates and under ASOP 2011 Scheme the Company has allotted 12,26,950 equity shares of Rs.5/- each to 164 Associates/Directors pursuant to exercise of options granted and under ASOP 2015 Scheme the Company has allotted 11,700 equity shares of Rs.5/- each to 6 Associates/Directors pursuant to exercise of options granted

As a result of the above allotments paid-up equity share capital of the company was increased from Rs.499,573,120/- comprising of 99,914,624 number of equity shares of Rs.5/- each as on March 31, 2015 to Rs.506,834,370/- comprising of 101,366,874 number of equity shares of Rs.5/- each as on March 31, 2016. The allotted equity shares are listed and traded in the Stock Exchanges

The information as required under the relevant provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, and also the information required under the Guidance note of ICAI, in relation to ESOPs are set out in the Annexure 2 to the Directors'' Report.

7. Research and Development

The Company has incurred expenditure on R&D during the year 2015-16 as per the Standalone financials, and the same is provided in Annexure 3 of this report.

8. Dividend

The Company has not declared any dividend during the financial year 2015-16

9. Closure of Register of Members and Share Transfer Books :

The Register of Members and Share Transfer books of the company will be closed with effect from 28th June, 2016 to 7th July, 2016 (both days inclusive)

10. Transfer to Reserves

The company did not transfer any amounts to General Reserve during the year.

11. Corporate Governance

Your Company has been complying with the provisions of Corporate Governance as stipulated in Regulations 24, 27 and other relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A separate report on Corporate Governance along with Auditors'' certificate on compliance of the Corporate Governance norms as stipulated in Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Management Discussion & Analysis forming part of this report are provided elsewhere in this Annual Report.

12. Internal Financial Control

The Company has kick started Internal Financial Control (IFC) program in the financial year 2015-16 partnering with leading audit firms, as per Section 134(e) of the Companies Act, 2013

The Company has engaged with Deloitte Haskins & Sells LLP ("Deloitte") for performing the risk evaluation of the design level controls

- Deloitte performed walkthrough of the processes and existing controls and identified significant account balances and flows of transactions and the risk within each of the processes including entity level controls and IT General Controls and finalized the IFC scope

- Deloitte also documented key risks and controls and developed risk control matrices (RCMs) and developed the IFC Framework

- Controls are implemented and/or enhanced as required

The Company has also engaged ANB & Co. for testing the operating effectiveness of controls. Sample transactions were selected as per the sampling methodology and tests are carried out.

Adequate systems and processes, commensurate with the size of the company and of its business are put in place to ensure compliance with the provisions of all applicable laws and such systems and processes are operating effectively.

Audit Committee and Board of Directors of the company were appraised on the performance of the IFC

13. Transfer to Investor Education and Protection Fund

As required under the provisions of Section 124(5) and 125(2)(c) of the Companies Act, 2013, dividends that remain unpaid/ unclaimed for a period of seven years, are to be transferred to the account administered by the Central Government viz hvestor Education and Protection Fund ("IEPF"). Once the amounts that are due for refund are transferred to the IEPF, no claim shall lie in respect of those amounts against the Company. The Company had transferred unpaid dividend amounts within the stipulated time to the IEPF. During the financial year 2015-16, unpaid or unclaimed dividend for the Final Dividend declared for the year ended 31st March 2008 on 17th July 2008 amounting to Rs.821,165 and Interim dividend declared on 20th January 2009 amounting to Rs.8,76,710 were transferred to Investors Education and Protection Fund on 25th August 2015 and 29th February 2016 respectively.

The Board draws your attention that the unclaimed/unpaid dividend for the Final Dividend declared for the financial year ended 31st March 2009 on 16th July 2009 and Interim Dividend declared on 20th January 2010 are due for transfer to IEPF on 15th August 2016 and 19th February 2017 respectively. Members, who have not yet encashed their dividend warrant(s) or those are yet to claim their dividend amounts which were declared for the financial year ended 31st March 2009 and Interim dividend declared on 20th January 2010, may write to the Company/Company''s Registrar and Share Transfer Agent, Karvy Computershare Private Limited

14. Conservation of energy, technology absorption, foreign exchange earnings and outgo

The particulars as prescribed under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in the Annexure 3 to this Report.

15. Particulars of employees

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available at the Registered Office of the Company. Further, the report and the accounts are being sent to the members excluding the aforesaid statement. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.

16. Directors'' responsibility statement as required under Section 134 (5) of the Companies Act, 2013

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors of your company confirm that

a) In the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

c) The Directors have 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

d) The Directors have prepared the Annual Accounts on a "going concern basis"

e) The Board of Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f) The Board of Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

17. Board Meetings, Board of Directors, Key Managerial Personnel & Committees of Directors

(a) Board Meetings:

The Board of Directors of the Company met 12 times during the year 2015-16. The details of various Board Meetings are provided in the Corporate Governance Report. The gap intervening between two meetings of the board is as prescribed in the Act.

(b) Changes in Directors & Key Managerial Personnel (b-1) Directors :

Pursuant to the change in control and management of the company and upon fulfillment of the conditions precedent laid down in the Share Purchase Agreement dated 5th November, 2015, the Board of Directors of the company was reconstituted in the meeting held on 04th March 2016 to give effect to the same

The following directors have resigned from the Board effective 4th March 2016:

1. Mr.Arun Jain, Chairman and Director

2. Mr.R.C Bhargava, Non Executive and Independent Director

3. Mr.Arvind Kumar, Non Executive and Independent Director

4. Mr.Raju Venkatraman, Non Executive and Independent Director

5. Mr. Abhay Aggarwal, Non Executive Director

6. Mrs.Uma Ratnam Krishnan, Non Executive and Independent Director

7. Dr.Ashok Jhunjhunwala, Non Executive and Independent Director

8. Mr.V.Balaraman, Non Executive and Independent Director

9. Mr.Rajesh Mehta, Non Executive and Non Independent Director

10. Mr.Jonathan Eric Beyman, Non Executive Director

11. Dr.Theodore Roosevelt Malloch Jr, Non Executive Director

The following persons were appointed as Additional Directors in the Board on 4th March 2016:

1. Mr.Krishan Aruna Canekeratne, Non Executive Director

2. Mr.Anuranjan Krishan Kalia, Non Executive Director

3. Mrs.Rama Sivaraman, Executive Director

4. Mr.Jayaraman Ramachandran, Non-Executive and Independent Director

5. Mr.Sunil Bowry, Non-Executive and Independent Director

6. Mr.Arvind Sharma, Non-Executive and Independent Director

7. Mr.Hari Raju Mahadevu, Non-Executive and Independent Director

Mr.Krishan Aruna Canekeratne and Mr.Jayaraman Ramachandran have been appointed as Chairman and Vice Chairman respectively by the Board in its meeting held on 4th March 2016

(b-2) : Key Managerial Personnel :

Mrs.Rama Sivaraman was appointed as Additional Director by the Board of Directors of the Company on 4th March 2016 She will be categorized as Executive Director and her appointment in the Company will be regularized subsequent to the approval of the members in the Postal Ballot. Pursuant to the above, she will be categorized under Key Managerial Personnel as defined under Section 2(51) of the Act.

Mrs. Christina Pauline Beulah, Company Secretary and Mr. N.M.Vaidyanathan, Chief Financial Officer are categorised under Key Managerial Personnel. There has been no change in the same.

(c) Re-Appointment

As per Article 10.22 of the Articles of Association of the Company, one third of the Directors are liable to retire by rotation at the Annual General Meeting of the Company. Mr.Jitin Goyal (DIN: 02851976) retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting

(d) Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Act, that they meet the criteria of independence as laid down in Section 149(6) of the Act.

(e) Details of remuneration to Directors:

The information relating to remuneration of directors as required under Section 197(12) of the Act, is given in Annexure 7.

(f) Board Committees

The Company has the following Committees of the Board

1. Audit Committee

2. Nomination and Remuneration committee

3. Stakeholder''s Relationship committee

4. Corporate Social Responsibility committee

5. Risk Management Committee

Sub-committees:

(a) Share Transfer Committee

(b) M&A Committee

The composition of each of the above Committees, their respective role and responsibility is as detailed in the Report of Corporate Governance

The policy framed by the Nomination and Remuneration committee under the provisions of Section 178(4) of the Act, is as below

Remuneration policy

The remuneration policy of the Company has been so structured in order to match the market trends of the IT industry. The Board in consultation with the Nomination and Remuneration Committee decides the remuneration policy for the Directors

The Company has made adequate disclosures to the members on the remuneration paid to Directors from time to time Remuneration/ Commission payable to Directors is determined by the contributions made by the respective directors for the growth of the Company. Further the Company also has in place a Remuneration Policy

(g) Board Evaluation

As the present Board of Directors of the Company was appointed on 4th March 2016, the Directors are of the opinion that the evaluation of the Board shall be carried out in the financial year 2016-17

(h) Vigil Mechanism

The Company has established a whistle-blower policy and also established a mechanism for directors and employees to report their concerns. The details of the same is explained in the Corporate Governance Report.

(i) Related Party Transactions

All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company during the year with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large

The details of the related party transactions as required under Section 134(3)(h) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is attached as Annexure 5

18) Auditors

The company''s Statutory Auditors, M/s. S.R.Batliboi & Associates LLP, Chennai, Chartered Accountants issued their report on the standalone and consolidated financial statements of the company. The Auditor''s Report on the Standalone and Consolidated Financial Statements does not contain any qualification, reservation or adverse remarks

Statutory Auditors: M/s.S.R.Batliboi & Associates LLP, Chennai, Chartered Accountants who are the Statutory Auditors of the Company hold office as statutory auditors until the conclusion of the 23rd Annual General Meeting of the company to be held in the calendar Year 2016.

The Board of Directors has recommended the appointment of M/s.BSR & Co., LLP as Statutory auditors of the Company, which has also been recommended by audit committee, in the Board Meeting held on 12th May 2016, subject to the approval of the shareholders in the 23rd Annual General Meeting to be held on 7th July 2016. M/s.BSR & Co., LLP has expressed its intention to be appointed as statutory auditors and provided declaration under Section 141(3) of the Act.

Secretarial Audit: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Secretarial Audit has been carried out by Mr.Jayanth Viswanathan, Practising Company Secretary, and his report is annexed as Annexure 6 to this report. In connection with the Secretarial auditor''s observation in the report, it is clarified that the non-filing of Form MGT-14is a technical lapse that occurred inadvertently. Secretarial Standards are being complied with in full from the later part of the year. In respect of Chairman of Audit Committee and Nomination and Remuneration Committee not being present in the Annual General Meeting held on 23rd June 2015, the company hereby confirms that the reason for their absence was expressed at the meeting and that the Chairman of the Board was available to answer all the queries raised by the shareholders. The Board hereby confirms that all the matters covered in the matter of emphasis have subsequently been complied with by the company.

19) Fixed Deposits

Your Company has not accepted any deposits during the financial year and as such, no amount of principal or interest was outstanding as on 31st March, 2016

20) Social Connect Ullas Trust

A humble initiative which started in 1997 with an aim to integrate associates with the larger community to enable them to enjoy the bliss of working with young minds in the country continues to grow into a movement exemplifying the power of inclusive Corporate Social Responsibility. In its 18 year journey Ullas has awarded scholarships to more than 50,000 students across Chennai, Delhi, Hyderabad, Mumbai and Pune. Over and above the merit scholarships, the weekend enrichment programs called SUMMIT engages our associate community with the young achievers - through packaged modules of 5 interventions of 3 hours each - 15 magical hours per year over the four year period of the child''s association with Ullas. This academic year, over 6100 children from Corporation, Government and Government-Aided schools in five cities - Chennai, Delhi, Hyderabad, Mumbai, and Pune attended these intervention programs - that aid not just with life skills but also in design thinking. Under the rural re-connect program "Touch The Soil", over 1.9 lakh young minds were ignited with the power of "Can Do" with the active engagement and support of over 1000 volunteers across 86 districts in 4 states

Ullas - Chennai

Ullas Trust celebrated its 18th Annual workshop on 28th August, 2015 at The Music Academy Auditorium in Chennai The workshop was all about Igniting Young Minds and celebrated over 1091 grade IX Ullas Young Achievers from 192 - Corporation, Government and Government-Aided schools, who not only participated in the inspirational "Can Do" workshop but also were awarded the Ullas Young Achievers Scholarships. The workshop saw real life role models Shri. Gopalkrishna Gandhi, Captain Divya Ajith Kumar, and our then Chennai City Corporation Commission Mr. Vikram Kapoor - share their life journey, inspire and interact with the students. Continuing its endeavor of recognizing and encouraging excellence in education, 3 schools one each from corporation, government, and government aided were awarded the EEE award Associate volunteers conducted the weekend enrichment program across 7 Ullas chapters in the city covering 3,817 young achievers from grade 9-12. As part of the Touch The Soil program, over 315 volunteers visited 310 schools in the 32 districts of TN, igniting over 1.3 lakh grade 9-12 students, conducting the Diary of Dreams and Planning workshop. A total of 2987 scholarships were given to toppers in grade 9 and 10 in the district schools. During this academic year Ullas inducted 73 Higher Education Scholars (28 professional stream, and 45 arts and science students) while continuing to support an overal of 168 Higher Education Scholars who come back as mentors to the incoming Ullas Young Achievers. Ullas continues to sponsor Easy Learning English (ELE) program of Vidyarambam Trust (VT) for grade 6 to 8 students in over 25 schools in the districts of TN. In the spirit of partnering with likeminded partners to reach as many young minds in schools, Ullas SUMMIT Level 1 and 2 was delivered to over 4,500 students in 29 schools across 14 districts of Tamil Nadu, in collaboration with Vidyarambam Trust, Talent Quest for India and Entecon

Ullas - Mumbai

Mumbai Ullas chapter conducted the Diary of Dreams workshop on 5th December, 2015 at Mahakavi Kalidas Auditorium, celebrating over 520 young achievers from 23 schools (13 Municipal and 10 Govt-Aided schools). The interactive workshop encouraged the students to dream big, and dream big with conviction. Associate volunteers including volunteers from Morgan Stanley conducted SUMMIT in the chapter schools during the weekends - reaching out to a total of 999 students between grade 9 and 10. As part of the Touch The Soil program, 86 volunteers visited 47 schools in 10 districts covering 10,226 grade 9 and 10 students with 466 scholarships for the toppers in 9th and 10th, and conducting the Diary of Dreams workshop igniting young minds

Ullas - Hyderabad

In Hyderabad, 252 students enthusiastically participated in the Annual "Can Do" Workshop on 6th February, 2016 which was held at The Capital, Polaris Hyderabad office premises. The Young Achievers enthralled everyone with their rendering of Saraswathi Vandanam and cultural performances. The Diary of Dreams workshop was very interactive and enabled students to share their aspirational dreams. SUMMIT classes also saw our associate volunteers conduct the weekend intervention program for 252 grade 9 students and 254 grade 10 students at school chapters. As part of the Touch the Soil initiative, 95 associate volunteers went in teams to 165 schools from 25 districts conducting the "Can Do" and Planning workshop for 27,030 grade 9 and 10 students.

Ullas-Delhi

Ullas NCR chapter conducted the Annual CAN Do workshop on 19th December, 2015, at Chinmaya Mission, New Delhi. 247 grade 9 young achievers from 20 government and government-aided schools were inducted into the portals of Ullas Trust. The workshop also saw 40 school teachers and 60 associate volunteers who cheered and supported the young achievers The weekend enrichment program -SUM MIT was conducted by our associate volunteers in school chapters for the selected

Ullas Young Achievers and was received very well by the students and their school authorities. As part of the Touch The Soi initiative, 43 volunteers travelled to 12 districts of NCR, reaching 9,205 students of grade 9-12 from 28 schools, inspiring and gniting young minds delivering the Diary the Diary of Dreams workshop and Planning workshop, and also with a scholarship to 260 toppers in 9th and 10th

Ullas - Pune

Ullas Pune Chapter expanded its footprint from 1 school to 4 schools this year. The Annual Diary of Dreams workshop was conducted on 28th November, 2016 for incoming young achievers, covering over 200 eager students across three locations A total of 51 scholarships were awarded in the urban schools as part of the SUMMIT program. 25 volunteers along with family and friends conducted the subsequent weekend enrichment programs in the schools over 8 weekends. As part of the Touch The Soil initiative, 38 volunteers went to 13 locations, across 6 districts covering 37 district schools, reaching 8,300 students from grade 9 and 10 with the diary of dreams and planning workshop. 360 scholarships were given to 5 toppers each from grade 9 and 10 in these 37 schools

Corporate Social Responsibility: Details of the policy and implementation of the CSR activities during the year are as provided under Annexure 8

21) Audit Committee Recommendation

During the year all the recommendations of the Audit Committee were accepted by the Board. The Composition of the Audit Committee is as described in the Corporate Governance Report.

22) Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure 7

23) Significant & Material Orders passed by the Regulators or Courts

The company has not obtained any significant and material orders passed by any regulators or court.

24) Particulars of Loans, Guarantees and Investments u/s 186 of the Act

Investments made in Subsidiaries during the year 2015-16 :

Name of the Subsidiary No. of Face Value Amount Amount Shares invested in Rs. in lacs FCY

Polaris Consulting and Services FZ-LLC 1500 AED 1000 AED 261.00 1,500,000

Polaris Consulting & Services SA, Switzerland 200,000 CHF 5 CHF 685.30 1,000,000

Disinvestments made by the Company during the year 2015-16

Name of the Subsidiary No. of Face Value Amount Amount Shares divested in Rs. in lacs FCY

Intellect Polaris Design LLC 45 US$50,000 21,37,500 1,380.15

FCY: Foreign Currency

Hiving off BPO business :

The Board of Directors in the meeting held on 29th October 2015 approved the hiving-off of BPO business of the Company.

The Company has entered into a Business Transfer Agreement with M/s Gamma Process Hub India Limited on 25th February 2016.

25) Risk Management Policy:

Risk Management Committee was constituted by the Board of Directors in the meeting held on 29th March 2016. The Board of Directors of the Company approved Risk Management Policy in the meeting held on 26th April 2016 as per Regulation 21(4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The Policy provides integrated approach for managing the risks in various aspects of the business

26) Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Complaints Committee ("ICC") has been set up to redress the complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of the complaints received and disposed off during the financial year 2015-16:

a) No. of complaints received NIL

b) No. of complaints disposed off NIL

27) Listing Fees

The Company confirms that it has paid the annual listing fees for the year 2016-17 to both National Stock Exchange Limited and BSE Limited

28) Acknowledgement

Your Directors take this opportunity to express the gratitude to all investors, clients, vendors, bankers, Regulatory and Government authorities, Stock Exchanges and business associates for their cooperation, encouragement and continued support extended to the Company. Your Directors also wish to place on record their appreciation to the Associates for their continuing support and unstinting efforts in ensuring an excellent all round operational performances at all levels

By Order of the Board

For Polaris Consulting & Services Limited

(formerly known as Polaris Financial Technology Limited)





Place: Chennai Krishan Aruna Canekeratne

Date: May 12, 2016 Chairman


Mar 31, 2015

Dear members,

We are pleased to present the Twenty Second Annual Report on our business and operations for the year ended 31st March 2015, of Polaris Consulting & Services Limited ("Company") (formerly known as Polaris Financial Technology Limited).

1. Results of operations (Rs. in Lakhs, except EPS data)

Standalone Consolidated

Description March 31, March 31, March 31, March 31, 2015* 2014 2015* 2014

Income(Including 171,588.04 203,531.47 193,448.84 245,604.89 Other Income)

Expenses(Including 150,494.43 187,582.70 167,515.02 216,086.71 exceptional items)

Profit before 21,093.61 15,948.77 25,933.82 29,518.18 Interest, Depreciation & Tax (PBIDTA)

Finance Charges - 104.10 - 197.72

Depreciation & 2,650.14 4,797.99 2,790.87 5,444.03 amortization

Net Profit 18,443.47 11,046.68 23,142.95 23,876.43 Before Tax

Provision for 5,371.72 2,650.09 6,422.28 3,968.78 tax including Deferred Tax

Net Profit after 13,071.75 8,396.59 16,720.67 19,907.65 tax

Add/(Less):Share of - - 1.19 11.55 Profit / (Loss) on Associate Companies

Add/(Less):Minority - - 5.12 - Interest Share of Profit / (Loss)

Net Profit 13,071.75 8,396.59 16,726.98 19,919.20

EPS

Basic Rs. 13.10 8.44 16.77 20.01

Diluted Rs. 12.81 8.42 16.39 19.97

*Consequent to the demerger of Product Business Undertaking effective from April 1, 2014, the figures for the year ended March 31, 2015 are not comparable with the corresponding figures disclosed under previous year ended March 31, 2014.

2. Scheme of arrangement-cum-demerger between Polaris Consulting & Services Limited (Formerly known as Polaris Financial Technology Limited) and Intellect Design Arena Limited (formerly known as Fin Tech Grid Limited):

The Scheme of Arrangement Cum Demerger ("the Scheme") between the Company and Intellect Design Arena Limited ("Resulting Company") was approved by the Board of Directors in the meeting held on 18th March 2014 and by the shareholders in the Court Convened Meeting held on 23rd July 2014 and by the Hon''ble High Court of Judicature, Madras vide its order dt.15/09/2014 received by the Company on 24th September 2014 for demerging the Product Business Undertaking of the Company and the Scheme came into effect from 25th September 2014. Subsequent thereto, the transfer of the Product Business Undertaking with effect from the appointed date, 1st April 2014 has been completed.

3. Business Performances

The consolidated revenue of the Company from Software Development Services for the year ended March 31, 2015 stood at Rs.189,335 lakhs as against the previous year''s revenue of Rs.242,370 lakhs. The consolidated Net Profit for the fiscal year ended March 31, 2015 stood at Rs.16,727 lakhs as against the previous year''s Net Profit of Rs.19,919 lakhs. The reserves and surplus as of 31st March 2015 stood at Rs. 80,087 lakhs as against Rs. 149,764 lakhs of the period as of March 31, 2014. Reserves of Rs.71,171 lakhs was transferred to the resulting company pursuant to the scheme of arrangement.

As explained in the preceding paragraph, in line with the Scheme of arrangement which was effective from the 1st of April 2014 [Appointed Date as per the order issued by the High Court of Judicature, Madras] the erstwhile product division of the Company was transferred to the resulting company. Therefore the figures of the current financial year are not comparable to that of the previous financial year.

During the year, consequent to the demerger, and the transfer of the Product Business Undertaking of the Company, the Company continues to be engaged only in the business of providing software services, and is not engaged in software product business. The following subsidiary and associate companies associated with the Product Business Undertaking have been transferred with effect from April 1, 2014 to the Resulting Company under the Scheme of Arrangement Cum Demerger.

Subsidiary Companies:

1. Laser Soft Infosystems Limited

2. Indigo Tx Software Private Limited

4. SFL Properties Private Limited

5. Fin Tech Grid Ltd

6. Polaris Enterprise Solutions Limited

7. Polaris Software Lab Vietnam Co. Ltd, Vietnam

8. Polaris Software Lab FZ-LLC, Dubai

9. Sonali Polaris FT Limited, Bangladesh

10. Polaris Software Lab Pte Ltd, Singapore

11. Polaris Software Lab Limited, UK

12. Polaris Software Lab SA, Switzerland

Associate Companies :

1. Adrenalin eSystems Limited

2. NMS Works Software Private Limited

4. Subsidiaries

Details of Subsidiary Companies, Joint Ventures and Associate Companies, and their financial position.

Your Company has 9 subsidiary company(ies) for the financial year ended on March 31, 2015. The information as required under the first proviso to sub-section (3) of Section 129 is given in Form AOC-1 in Annexure [1].

5. Cash & Cash Equivalents

The Company''s liquidity remains healthy with a cash reserve of Rs.314.43 crores. The DSO is at an impressive 44 days.

6. Share Capital

During the year, under ASOP 2003 Scheme the company has allotted 258,100 equity shares of Rs.5/- each to 74 Associates / Directors, under ASOP 2004 Scheme company has transferred 17,800 equity shares of Rs.5/- each to 2 Associates and under ASOP 2011 Scheme company has transferred 106,250 equity shares of Rs.5/- each to 47 Associates pursuant to exercise of options granted.

No options were exercised during the year under Scheme ASOPT 2011. As the result of the above allotments paid-up equity share capital of the company has increased from Rs.497,751,370/-comprising of 99,550,274 number of equity shares of Rs.5/- each as on March 31, 2014 to 499,573,120/- comprising of 99,914,624 number of equity shares of Rs.5/- each as on March 31, 2015. The allotted equity shares have been listed and traded in the Stock Exchanges.

The information as required under the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, and also the information required under the Guidance note of ICAI, in relation to ESOPs are set out in the Annexure 2 to the Directors'' Report.

7. Research and Development Design Centre

We continued our investments in developing innovative solutions for our customers in the identified strategic focus areas viz. Digital Enterprise, Risk & Compliance, Payments and Data & Analytics.

We have further extended facilities at our labs in Chennai and Hyderabad with state of the art infrastructure and tools where our practice teams work on multiple areas of interest and Proofs of Concept.

Areas like Digital architecture, security, AML, Fraud analytics, etc. have been jointly identified by our practice experts and our customers for research. A significant achievement during the financial year has been multiple intensive co-creation sessions with our customers in many of these areas. These sessions and results they generated have generated great excitement with our customers and this, in turn reflects very positively on our expertise and Design Thinking approach we take to develop solutions that are relevant to them.

The Expenditure incurred on R&D during the year 2014-15 as per Standalone financials:

Rs.in Lakhs Particulars March 31, 2015

Capital -

Revenue 1,005.12

Total 1,005.12

8. Dividend

a) Final dividend:

The Board of Directors at its meeting held on 30th April 2015 proposed a final dividend of Rs.10/-per equity share of face value of Rs.5/- per equity share (200%) upon approval of the shareholders at the 22nd Annual General Meeting. This dividend will be paid out of the profits of the Company.

b) Interim Dividend:

The Board of Directors at its meeting held on 19th March, 2015 declared interim dividend of Rs. 5/- per equity share of face value of Rs.5/- per equity share (100%) for the financial year 20142015 to those shareholders whose names were in the Register of Members as on 31st March 2015.

With this, the company''s total dividend payout is 300% for the financial year 2014-2015.

9. Closure of Register of Members and Share Transfer Books :

The Register of Members and Share Transfer books of the company will be closed with effect from 12th June, 2015 to 23rd June, 2015 (both days inclusive).

10. Transfer to Reserves

The company did not transfer any amounts to General Reserve during the year.

11. Corporate Governance

Your Company has been complying with the provisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. A separate report on Corporate Governance along with Auditors'' certificate on compliance of the Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement and Management Discussion & Analysis forming part of this report are provided elsewhere in this Annual Report.

12. Transfer to Investor Education and Protection Fund

As required under the provisions of Section 205A and 205C and other applicable provisions of Companies Act, 1956 (the corresponding provisions in the Companies Act, 2013 have not been notified, and hence the earlier law is still applicable in respect of these provisions), dividends that remain unpaid/unclaimed for a period of seven years, are to be transferred to the account administered by the Central Government viz: Investor Education and Protection Fund ("IEPF"). Once the amounts that are due for refund are transferred to the IEPF, no claim shall lie in respect of those amounts against the Company. The Company had transferred unpaid dividend amounts within the stipulated time to the IEPF. During the financial year 2014-15, unpaid or unclaimed dividend for the Final dividend declared as on 31st March 2007 amounting to Rs.5,92,968 was transferred to Investors Education and Protection Fund.

The Board draws your attention that the unclaimed/unpaid dividend for the Final Dividend declared as on 31st March 2008 is due for transfer to IEPF during August 2015. Members, who have not yet encashed their dividend warrant(s) or those who are yet to claim their dividend amounts which was declared for the financial year ended 31st March 2008, may write to the Company/Company''s Registrar and Share Transfer Agent, Karvy Computershare Private Limited.

13. Conservation of energy, technology absorption, foreign exchange earnings and outgo

The particulars as prescribed under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in the Annexure 3 to this Report.

14. Particulars of employees

Information pursuant to the provisions of Rules 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are attached to this Report in Annexure 4. Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, exempts from inclusion, the particulars of employees posted and working outside India not being directors or their relatives, drawing more than Rs. 6 million per financial year or Rs. 500,000 per month, but requires such particulars shall be furnished to the Registrar of Companies. Hence, the statement included in Annexure 4 does not contain the particulars of employees who are posted and working outside India. Any Member interested in obtaining a copy of such details may write to the Company in this regard.

15. Directors'' responsibility statement as required under Section 134 (5) of the Companies Act, 2013

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013 the Directors of your company confirm that:

a) In the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) 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 company at the end of the financial year and of the profit or loss of the company for that period;

c) 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.

d) The Directors have prepared the Annual Accounts on a "going concern basis" and

e) The Directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

Explanation : For the purposes of this clause, the term "Internal Financial Controls" means the policies & procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy & completeness of the accounting records, and the timely preparation of liable financial informations;

f) The Board of Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

16. Board Meetings, Board of Directors, Key Managerial Personnel & Committees of Directors

(a) Board Meetings:

The Board of Directors of the Company met 7 times during the year 2014-15. The details of various Board Meetings are provided in the Corporate Governance Report. The gap intervening between two meetings of the board is as prescribed in the Companies Act, 2013 (hereinafter "the Act").

(b) Changes in Directors & Key Managerial Personnel

(b-1) Directors :

1. Mr.Arun Jain had expressed his intention to relinquish his designation as Managing Director and the Board of Directors of the Company at its meeting held on 7th November 2014 have approved the same and effective 7th November 2014, Mr.Arun Jain became the Chairman and Whole Time Director of the Company.

2. With effect from 7th November, 2014, Mr. Jitin Goyal has been appointed as Executive Director, subject to approval of the members in the ensuing Annual General Meeting.

3. With effect from 7th November, 2014, Dr.Theodore Roosevelt Malloch Jr. has been appointed as Executive Director & Vice Chairman and then re-designated as Non-Executive Director in the meeting held on 30th April, 2015, subject to the approval of the members in the ensuing Annual General Meeting.

4. With effect from 22nd January, 2015, Mr. Jonathan Eric Beyman has been appointed as the Executive Director and re-designated as Non-Executive Director in the Board Meeting held on 30th April, 2015, subject to the approval of the members in the ensuing Annual General Meeting.

5. With effect from 19th March, 2015 Mrs. Uma Ratnam Krishnan has been appointed as Independent Director, subject to the approval of the members in the ensuing Annual General Meeting.

(b-2) : Key Managerial Personnel :

During the year, Mr.N.M.Vaidyanathan, was appointed as Chief Financial Officer of the Company with effect from 4th March 2015 in place of Mr.S. Swaminathan, who resigned from the post of Chief Financial Officer on 14th October 2014.

During the year, Mrs. Christina Pauline Beulah was appointed as Company Secretary and Compliance Officer of the Company on 7th November 2014 in place of Mr.V.V.Naresh, who resigned from the post of Company Secretary and Compliance Officer on 14th October 2014.

(c) Re-Appointment

As per Article 10.22 of the Articles of Association of the Company, one third of the Directors are liable to retire by rotation at the Annual General Meeting of the Company. The following Directors retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting:

1. Mr.Abhay Agarwal (DIN: 00042882)

2. Mr.Rajesh Mehta (DIN: 06410765)

Brief resumes of the Director(s), as required under the provisions of Clause 49 of the Listing Agreement is furnished along with the Explanatory Statement to the notice to the 22nd Annual General Meeting.

(d) Independent Directors

The following independent directors who were appointed in 21st Annual General Meeting for a period of three (3) years continue to be on the Board till the conclusion of 24th Annual General Meeting of the Company in the calendar year 2017, not liable to retire by rotation.

Mr.R.C.Bhargava

Dr.Ashok Jhunjhunwala

Mr.Arvind Kumar

Mr.Raju Venkatraman

Mr.V.Balaraman

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Act, that they meet the criteria of independence as laid down in Section 149(6) of the Act.

(e) Details of remuneration to Directors: The information relating to remuneration of directors as required under Section 197(12) of the Act, is given in Annexure 5.

(f) Board Committees

The Company has the following Committees of the Board:

1. Audit Committee

2. Nomination and Remuneration and Compensation committee

3. Stakeholder''s Relationship committee

4. Corporate Social Responsibility committee

Sub-committees:

1. Share transfer Committee

2. Investment Committee

3. Special Committee

The composition of each of the above Committees, their respective role and responsibility is as detailed in the Report of Corporate Governance. The Lokhandwala property Committee was dissolved on the 30th of April 2015.

The policy framed by the Nomination and Remuneration and Compensation committee under the provisions of Section 178(4) of the Act, is as below:

Remuneration policy

The remuneration policy of the Company has been so structured in order to match the market trends of the IT industry. The Board in consultation with the Nomination and Remuneration & Compensation Committee decides the remuneration policy for directors. The Company has made adequate disclosures to the members on the remuneration paid to Directors from time to time. Remuneration/ Commission payable to Directors is determined by the contributions made by the respective directors for the growth of the Company.

(g) Board Evaluation

As required under the provisions of Section 134(3)(p) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, and the manner in which such performance evaluation was carried out is as under:

The performance evaluation framework is in place and has been circulated to all the directors to seek their response on the evaluation of the entire Board and independent directors. The Nomination and Remuneration & Compensation Committee shall carry out evaluation of director''s performance.

The criteria of evaluation is exercise of responsibilities in a bona fide manner in the interest of the Company, striving to attend meetings of the Board of Directors / Committees of which he is a member/ general meetings, participating constructively and actively in the meetings of the Board / committees of the Board etc.

(h) Vigil Mechanism

The Company has established a whistle-blower policy and also established a mechanism for directors and employees to report their concerns. The details of the same is explained in the Corporate Governance Report.

(i) Related Party Transactions

All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The details of the related party transactions as required under Section 134(3)(h) of the Companies Act 2013, r/w Rule 8 of the Companies (Accounts) Rules, 2014, is attached as Annexure 6.

16. Auditors

Financial Auditors: M/s. S.R.Batliboi & Associates LLP, Chennai, Chartered Accountants who are the Financial Auditors of the Company hold office as financial auditors until the conclusion of the 23rd Annual General Meeting of the company to be held in the calendar Year 2016. Their appointment is subject to ratification by the members at the 22nd annual general meeting.

Secretarial Audit: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Secretarial Audit has been carried out by M/s. S Eshwar, Company Secretaries, and his report is annexed as Annexure 7.

17. Fixed Deposits

Our Company has not accepted any deposits during the financial year and as such, no amount of principal or interest was outstanding as on March 31, 2015.

18. Social Connect

Ullas Trust

A humble initiative which started in 1997 with just 32 children has today turned into a silent movement exemplifying the power of inclusive CSR. So far, Ullas Trust has awarded more than 50,000 scholarships to students in schools across Chennai, Hyderabad, Mumbai and Delhi. More than merit based scholarships, there has been active support from the associate community in the mentoring programs called SUMMIT, packaged in modules of five interventions per year over the four year period of a child''s association with Ullas. During this academic year, over six thousand children studying in Corporation and Government schools in the four metros attended these life skills program. This year under the rural re-connect "Touch the Soil" program, we ignited 1,47,435 young minds with the support of 498 volunteers across 4 states and 86 districts in rural India

Ullas - Chennai

Ullas Trust celebrated its 17th Annual workshop on Aug 30th, 2014 in The Music Academy auditorium where over 1000 Ullas achievers from class IX participated in the " Can DO" workshop and were awarded Ullas Young Achievers Scholarships. Continuing its unrelenting endeavor of recognizing academic excellence in students from Corporation, Government and Government aided schools, the Ullas Trust awarded scholarships to students from 244 schools in Chennai. As part of the Touch the Soil initiative, volunteer teams went to 285 schools from all 32 districts headquarters of Tamil Nadu to conduct the ''Can Do'' workshops in these schools thus covering 1,00,928 children. In addition to that, 139 students were awarded Higher Education Scholarships for pursuing professional courses in colleges. Ullas also sponsored Easy Learning of English (ELE) classes for the 6th to 8th Std children in 19 schools of Three districts in Tamil Nadu covering 2733 students through collaboration with a local NGO-Vidyarambam. Ullas Summit Level-1 was successfully conducted in 37 schools in 12 districts of Tamil Nadu covering 4474 students, by joining hands with our partners - Vidyarambam Trust, Talent Quest for India and Entecon.

Ullas - Mumbai

Around 500 students from 13 municipal and 10 Govt - aided schools were awarded scholarships in the Mumbai workshop held in Mahakavi Kalidas Natya Mandir on November 22nd, 2014. The Diary of Dreams session was very interactive making the students participate by penning down their dreams. 98 associates volunteered to travel to different zones in Mumbai to participate as Mentors in the SUMMIT classes in local schools and conducted the classes there during the weekends. As part of the Touch the Soil initiative, volunteer teams went to 45 schools in 9 rural districts of Maharashtra to conduct the ''Can Do'' workshops in these schools thus covering approx 9073 children.

Ullas - Hyderabad

In Hyderabad, 250 students eagerly participated in the Hyderabad Annual Workshop on November 29th, 2014 which was held at The Capital, Polaris Hyderabad office premises. The Young Achievers entertained everyone with a few cultural performances. The Diary of Dreams workshop was very interactive and enabled students to share their dreams. SUMMIT classes were a great hit at Hyderabad which saw the participation of not only the Ullas children but also their friends who attended the classes in order to improve their communication skills. As part of the Touch the Soil initiative, volunteer teams went to 178 schools from 25 districts headquarters of Andhra Pradesh to conduct the ''Can Do'' workshops in these schools thus covering approx 23,902 children.

Ullas - Delhi

The Delhi Chapter of Ullas conducted their Annual Workshop on November 16th, 2013 where 250 Young Achievers participated from NCR. The Diary of Dreams Workshop conducted went down very well with children interacting cheerfully with the Ullas Volunteers. In Delhi the volunteers also travelled to schools to take the SUMMIT classes in the school premises. As part of the Touch the Soil initiative, volunteer teams went to 48 schools from all 9 districts of NCR to conduct the ''Can Do'' workshops covering approximately 6425 children.

Ullas - Pune

The Pune Chapter of Ullas conducted their Annual Workshop in a school on December 20th, 2014 where 100 Young Achievers participated and 10 were awarded scholarships. As part of the Touch the Soil initiative, volunteer teams went to 35 schools from 7 districts of Maharashtra to conduct the ''Can Do'' workshops covering approx 6390 children.

19) Audit Committee Recommendation

During the year all the recommendations of the Audit Committee were accepted by the Board. The Composition of the Audit Committee is as described in the Corporate Governance Report.

20) Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure [8].

21) Significant & Material Orders passed by the Regulators or Courts

During the Financial year 2014-15, the Company has obtained an order from Hon''ble High Court of Judicature, Madras dt.15/09/2014 on 24/09/2014 approving the Scheme of Arrangement-cum-Demerger for demerger of Products Business Undertaking of the Company into Intellect Design Arena Limited.

22) Risk Management Policy: -

The Company continues to use the Risk Management Framework adopted by the Board of Directors on January 21, 2005. The framework provides an integrated approach for managing the risks in various aspects of the business. A write up on the above is provided in the Management Discussion and Analysis Report.

23) Corporate Social Responsibility: Details of the policy and implementation of the CSR activities during the year are as provided under Annexure 9.

24) Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Complaints Committee ("ICC") has been set up to redress the complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of the complaints received and disposed off during the financial year 2014-15:

a) No. of complaints received: NIL

b) No. of complaints disposed off: NIL

25) Listing Fees

The Company confirms that it has paid the annual listing fees for the year 2015-16 to both National Stock Exchange and Bombay Stock Exchange.

26) Acknowledgement

Your Directors take this opportunity to express the gratitude to all investors, clients, vendors, bankers, Regulatory and Government authorities, Stock Exchanges and business associates for their cooperation, encouragement and continued support extended to the Company. Your Directors also wish to place on record their appreciation to the Associates for their continuing support and unstinting efforts in ensuring an excellent all round operational performance at all levels.

By Order of the Board For Polaris Consulting & Services Limited (formerly known as Polaris Financial Technology Limited)

Place: Chennai Arun Jain Date : April 30, 2015 Chairman


Mar 31, 2013

To the members,

The are pleased to present the Twentieth Annual Report on our business and operations for the year ended 31st March 2013.

1. Results of operations

(Rs. in Lakhs, except EPS data)

Standalone Consolidated Description March 31, March 31, March 31, March 31, 2013 2012 2013 2012

Income (Including Other Income) 189,052.02 179,748.90 229,277.02 209,544.73

Expenses 163,852.24 152,058.70 199,349.90 176,307.61

Profit before Interest, 25,199.78 27,690.20 29,927.12 33,237.12 Depreciation & Tax (PBIDTA)

Finance Charges 190.50 109.11 249.08 170.55

Depreciation & amortization 4,634.35 3,932.83 5,369.09 4,723.07

Net Profit Before Tax 20,374.93 23,648.26 24,308.95 28,343.50

Provision for tax including 3,669.23 4,796.83 4,903.67 6,300.29 Deferred Tax

Net Profit after tax 16,705.70 18,851.43 19,405.28 22,043.21

Add/ (Less): Share of Profit / (Loss) - - 452.01 - on Associate Companies

Add / (Less): Minority Interest - - 223.03 27.65 Share of Loss / (Profit)

Net Profit 16,705.70 18,851.43 20,080.32 22,070.86

EPS

Basic Rs. 16.79 18.98 20.19 22.22

Diluted Rs. 16.76 18.92 20.15 22.15

2. Business Performances

The consolidated revenue of Polaris Financial Technology Limited from Software Development services and Products for the year ended March 31, 2013 stood at Rs.225,863.10 lakhs as against the previous year''s revenue of Rs.204,915.14 lakhs. The consolidated Net Profit for the fiscal year ended March 31, 2013 stood at Rs.20, 080.32 lakhs as against the previous year''s consolidated Net Profit of Rs.22,070.86 lakhs. The reserves and surplus increased to Rs.129,297.15 lakhs (2012-13) from Rs.117,009.15 lakhs (2011-12).

In an endeavour to maximise shareholder value, Boston Consulting Group (BCG) was asked by the Management team to do a strategic study on our current segmental strategy as it relates to Services and Products segments.

Based on a report from BCG, the Board asked the Management team to explore with further analysis of any possible restructuring options and make recommendations.

A Task Force was set up with four member Senior leaders including a Chairperson, to conduct this study of options including formal segmenting of business between services and products and any likelihood of seeking or making additional strategic investments.

Task force, after a detailed analysis and study, gave a detailed update to the Board of Directors and the Board reviewed the information provided and authorized the management to take appropriate decisions.

3. Subsidiaries

The Ministry of Corporate Affairs (MCA), Government of India vide its Circular No.2/2011 dated February 8, 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956 subject to certain conditions being fulfilled by the Company. As required in the circular, the Board of Directors of the Company at its meeting held on April 27, 2013 passed a resolution giving consent for not attaching the Balance Sheet of subsidiary company(s).

The requisite information about subsidiaries is furnished elsewhere in this Annual Report. Shareholders who wish to have a copy of the full report and accounts of the subsidiary(s) would be provided the same on receipt of a written request and those documents will be made available for inspection at the Registered Office on any working day at the business hours during the notice tenure of Annual General Meeting.

4. Cash & Cash Equivalents

Polaris liquidity remains healthy with a cash reserve of Rs.489.76 crores. The DSO is at an impressive 63 days.

5. Share Capital

During the year, under ASOP 2003 Scheme the Company has allotted 63,700 equity shares of Rs.5 each to 27 employees, which includes Directors. Further your company during this year, under ASOP 2004 Scheme transferred 34,800 equity shares of Rs.5 each to 14 associates of Orbitech Employees Welfare Trust, on exercise of the options granted under the said scheme and 277 shares have been allotted, pursuant to Optimus demerger based on scheme of demerger as approved by Honourable High Court of Chennai.

No options were exercised during the year under Schemes ASOP 2011 and ASOPT 2011.

As a result of the above allotments the issued, subscribed and paid-up equity share capital of the company was increased from Rs.497,210,485 comprising of 99,442,097 equity shares of Rs.5 each as on 1st April 2012 to Rs.497,530,370 comprising of 99,506,074 numbers of equity shares of Rs.5 each as on March 31, 2013.

6. Research and Development Design Centre

Polaris is deeply committed to fostering a culture of innovation, research and learning to actively support the Financial Services industry, be it their acceleration agenda or rationalisation agenda or transformational agenda. We believe that offshore development centers need to now move to collaborative research centers, where the customers, technology providers and eco system partners come together to explore "possibilities" and connect business, technology and operations more smoothly, in order to drive unprecedented productivity gains. Your company took a big step by investing in a unique design center, FT 8012.

8012 FT Design Center is the world''s first Center dedicated to Financial Technology and is spread over 30,000 sq. ft at Polaris in Chennai. The Center is the culmination of over two decades of the company''s singular focus on the Banking and Financial Services vertical and stands testimony to Collaborative Design emerging as the next big game changer for Financial Technology and Financial Institutions.

The Center is equipped with a holistic array of product offerings, domain-rich solutions, proprietary frameworks and methodologies to craft impactful solutions. The entire physical space is designed uniquely to stimulate the collective genius of diverse teams, expand their thinking and explore possibilities. The Center launched five major technologies that can enable banks deliver superior customer experience and unprecedented operational productivity. These include:

- Master Process Exchange (MPX) technology to connect business and technology

- Canvas technology that is envisaged to drive front-office efficiencies

- Hub technology that will drive back-office efficiencies

- Workplace technology that will bring out the collective genius of diverse teams

- FT Grid technology for inclusive and exclusive banking

7. Dividend

We propose a final dividend of Rs. 5/- per share upon approval of the shareholders at the 20th Annual General Meeting. This dividend will be paid out of the profits of the Company.

The Register of Members and Share Transfer books of the company will be closed w.e.f 30th July, 2013 to 8th August, 2013 (both days inclusive).

8. Corporate Governance

Your Company has been complying with the provisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. A separate report on Corporate Governance along with Auditors'' certificate on compliance of the Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement and Management Discussion & Analysis forming part of this report are provided elsewhere in this Annual Report.

9. Conservation of energy, technology absorption, foreign exchange earnings and 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 section.

10. Particulars of employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure to the Directors'' Report section. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956 the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

11. Directors'' responsibility statement as required under Section 217(2AA) of the Companies Act, 1956

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 judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company 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".

12. Directors

Mr. Arvind Kumar and Mr. Satya Pal, Directors of the Company are retiring by rotation at the forthcoming Annual General Meeting of the Company.

Mr. Satya Pal is unable to offer himself for reappointment in the ensuing annual general meeting due to personal reasons. He is also the Chairperson of the shareholders'' committee. The Directors place on the record their appreciation of the valuable contribution made by him.

Mr. Arvind Kumar, being eligible, offers himself for reappointment.

Since the conclusion of the last Annual General Meeting, the Board of Directors appointed Mr. Rajesh Mehta and Mr. V.Balaraman as additional directors on the Board. As per Section 260 of the Companies Act, 1956, an Additional Director holds office upto the date of the ensuing Annual General Meeting.

Notices under section 257 of the Companies Act, 1956 have been received by the Company from the member(s) for the appointment of Mr. Rajesh Mehta and Mr. V.Balaraman, as Directors of the Company.

13. Auditors

M/s S.R.Batliboi & Associates LLP, 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 with the provisions of Section 224(1B) of the Companies Act, 1956 and have indicated their willingness to be re-appointed.

14. Auditor''s Qualification and Management reply Auditor''s Qualification

Attention is drawn to Note 12(III)C to the financial statements regarding investments and advances aggregating Rs.90.30 Crores in IdenTrust Inc a subsidiary of the Company. Pursuant to an order received from the Committee on Foreign Investment in the United States, the Board of Directors have decided to sell its investment and is in the process of finalizing a prospective buyer and completing the transaction. Pending disposal of the investment and in the absence of the estimated realizable value, we are unable to comment on carrying value of such investments and advances in the books of the Company and the consequential adjustments thereof that may be required to the accompanying financial statements.

Attention of the members is also drawn to the Auditors'' Report on the consolidated financial statements on this issue.

Management Reply

IdenTrust Inc., (Iden Trust) a subsidiary of the Company, a company engaged in the business of trusted identity solutions and digital identity authentication services based in the United States. During the current year, the Company has received an order from Committee on Foreign Investment in United States (CFIUS) that the business of IdenTrust is critical to United States security infrastructure and therefore ruled that the Company must be controlled by a US management and imposed certain restriction of the operations of the Company. Pursuant to the order, the Board of Directors have made a decision to sell its investment in IdenTrust Inc., and are in the process of finalizing a prospective buyer and completing the transaction. Management is confident of being able to complete the transaction shortly and expects a positive return on such sale. Hence the management believes that investment / advances can continue to be carried at cost and there is no requirement for any impairment / recoverability provision.

A detailed table, summarizing the revenues, profits, assets, liabilities and Cash Flows attributable to this operation is given under Note No.32 to Consolidated Financial Statements. Also the members'' attention is drawn to note no.13(iv)(a) of consolidated financial statements.

15. Fixed Deposits

Your Company has not accepted any deposits during the financial year and as such, no amount of principal or interest was outstanding on the date of the Balance Sheet.

16. Social Connect Ullas Trust

A humble initiative which started in 1997 with just 32 children has today turned into a silent movement exemplifying the power of inclusive CSR. So far, Ullas Trust has awarded more than 30,000 scholarships to students in schools across Chennai, Hyderabad, Mumbai and Delhi. More than merit based scholarships; there has been active support from the associate community in the mentoring programs called SUMMIT, packaged in modules of five interventions per year over the four year period of a child''s association with Ullas. This year under "Touch the Soil" program, we targeted to ignite 1 lakhs young minds but with the support of 725 volunteers we touched 1.67 lakhs students

Ullas - Chennai

Ullas Trust celebrated its 15th Annual workshop on Sep 1st, 2012 in Music Academy where over 1200 Ullas achievers from IX participated in the " Can DO" workshop and were awarded Ullas Young Achievers Scholarships. Continuing its unrelenting endeavor of recognizing academic excellence in students from Corporation, Government and Government aided schools, the Ullas Trust awarded scholarships to students across from 218 schools in Chennai. As part of the Touch the Soil initiative, volunteer teams went to 441 schools from all 32 districts headquarters of Tamil Nadu to conduct the ''Can Do'' workshops in these schools thus covering approx 82386 children. In addition to that, 208 students were awarded Higher Education Scholarships for the pursuing professional courses. Ullas also sponsored easy learning of English (ELE) classes for the 6th to 8th STD children in 32 schools of five districts in Tamil Nadu covered 4800 students through collaboration with a local NGO-Vidyarambam. These classes were also conducted at our Social Engineering hub at Killai, in the Government school premises.

Ullas - Mumbai

Around 857 students from 23 municipal schools were awarded scholarships in the Mumbai workshop held on December 29th , 2012. The Dairy of Dreams session was very interactive making the students participate by penning down their dreams. The teamwork of around 50 associates who volunteered to travel to different zones in Mumbai, kick started the SUMMIT classes with a methodology of going to schools and conducting the classes there during the weekends. As part of the Touch the Soil initiative, volunteer teams went to 62 schools from all 16 districts headquarters of Maharashtra to conduct the ''Can Do'' workshops in these schools thus covering approx 8209 children.

Ullas - Hyderabad

In Hyderabad, 409 students eagerly participated in the Hyderabad Annual Workshop on March 16th ,2012 which was held at Vasavi Auditorium, Lakdi-ka-pul. The Young Achievers entertained everyone with a few cultural performances. The Dairy of Dreams workshop was very interactive and enabled students to share their dreams. SUMMIT classes were a great hit at Hyderabad which saw the participation of not only the Ullas children but also their friends who attended the classes in order to improve their communication skills. As part of the Touch the Soil initiative, volunteer teams went to 833 schools from all 17 districts headquarters of Andhra Pradesh to conduct the ''Can Do'' workshops in these schools thus covering approx 73929 children.

Ullas - Delhi

The Delhi Chapter of Ullas conducted their Annual Workshop on November 3rd , 2012 where 322 Young Achievers participated from NCR. The Dairy of Dreams Workshop conducted went down very well with children interacting cheerfully with the Ullas Volunteers. In Delhi the volunteers also travelled to schools to take the SUMMIT classes in the schools. As part of the Touch the Soil initiative, volunteer teams went to 58 schools from all 11 districts headquarters of NCR to conduct the ''Can Do'' workshops in these schools thus covering approx 3047 children.

Mother Teresa Special award for Corporate Citizenship was conferred on ULLAS by Loyola Institute Of Business Administration, Chennai World HRD congress recognised ULLAS for its contribution to cause of education SAMPADA

SAMPADA - Special Appreciation and Mentoring Program Acknowledging Differently Abled is an inclusion program at Polaris where our SAMPADA colleagues are referred to as "Distinctly abled" rather than differently abled. Around 18% of associates at the Intellect Products Group business solution centre are SAMPADA colleagues. This unit designs and implements high performance banking solutions to over 52 banks across globe and offers the best Price to performance ratio for the solutions. As part of the rural out-reach program, around 300 beneficiaries in remote districts of Tamil Nadu received orthotic supports under a collaboration model with a local NGO-Freedom Trust.

17. Acknowledgement

Your Directors take this opportunity to express the gratitude to all investors, clients, vendors, bankers, Regulatory and Government authorities, Stock Exchanges and business associates for their cooperation, encouragement and continued support extended to the Company. Your Directors also wish to place on record their appreciation to the Associates for their continuing support and unstinting efforts in ensuring an excellent all round operational performances at all levels.

By Order of the Board

For Polaris Financial Technology Limited

Place: Chennai Arun Jain

Date : April 27, 2013 Chairman & Managing Director

 
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