Financial Daily from THE HINDU group of publications
Friday, Sep 13, 2002
Corporate - Outlook
Polaris hopes to turn around loss-making arms in 3 years
Raja Simhan T.E.
CHENNAI, Sept. 12
POLARIS Software Labs expects its loss-making subsidiaries to turn around in 18-36 months.
As per the company's annual report for 2001-02, five out of the eight subsidiaries, including Polaris Retail Infotech Ltd, reported losses for the last financial year. While the Singapore, the UK and Australia subsidiaries were profitable in 2001-02, the Switzerland, Germany, Ireland, Japan subsidiaries and Polaris Retail Infotech reported losses during the year.
According to the company's Chief Financial Officer, Mr N. Vaidyanathan, the subsidiaries are front-end marketing set up for onsite and offshore project, the latter billed in India. It normally would take 18-36 months for these subsidiaries to make profits. For instance, the UK subsidiary became a self-sustained entity in two-and-a-half years.
As of year ending March 31, 2002, the Singapore subsidiary reported a net profit of Rs 49.55 lakh (Rs 7.42 lakh) on a revenue of Rs 7.29 crore (Rs 3.98 crore). For the year ended September 30, 2001, the UK subsidiary reported profit on ordinary activities after taxation of Rs 58.69 lakh, as against Rs 31.75 lakh.
The Australian subsidiary for the year ended March 31, 2002 retained earnings of Rs 3.42 lakh (Rs 1.02 lakh) on a turnover of Rs 3.09 crore (Rs 2.28 crore), says the annual report. On the other hand, the Switzerland subsidiary, for the year ended March 31, 2002 reported a net loss of Rs 7.56 lakh (Rs 15.43 lakh) on a revenue of Rs 97 lakh (Rs 7.61 lakh).
Similarly, the German subsidiary's loss for the year ended March 31, 2002 was Rs 1.36 crore (Rs 23.85 lakh) on a turnover of Rs 98.66 lakh.
According to the company's spokesperson, "It is still very nascent for these subsidiaries to be profitable." Polaris expects the German subsidiary to do better this year, following a sizeable order from one of the leading international banks there, he added.
For the seven months ended March 31, 2002, Polaris' Japanese subsidiary made a loss after tax of Rs 12.56 lakh on a revenue of Rs 9,938.
"We expect the Japanese subsidiary to do well during the current fiscal year. We have already won a contract from Shinsei Bank Ltd and the Shinsei group. This is categorised as "AA'' rating with a potential of over $5 million," he added.
According to Mr Vaidyanathan, the performance of the subsidiaries should be viewed from the group's consolidated results and not individually, since all of them are 100 per cent subsidiaries of Polaris Software Labs. For the year ending September 30, 2001, Polaris Retail Infotech Ltd (PRIL), the company's wholly-owned subsidiary, reported an operating loss of Rs 1.59 crore. The annual report says that these losses are expected to be wiped off once the new product was ready and Polaris starts gaining market share through sales.
In March, the subsidiary previewed Retail Excel, its new generation application suite for the global retail industry.
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