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December 31, 1997

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Polaris to divest 20 per cent equity

The Madras-based Polaris Software Lab Limited has decided to divest around 20 per cent of its equity in favour of an US-based venture capital fund.

This will help finance the company's expansion plans and product marketing. Polaris is setting up a software development centre near Navallur, Tamil Nadu, over an area of 100,000 square feet.

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It already has two such centres, one here and one in NOIDA near New Delhi.

The first phase of building up half the area will call for an investment of over Rs 150 million and is expected to be operational by September 1998.

The second phase will be completed 18 months hence. "We will be using the centre mainly for pursuing our Entity business model apart from the development work that has to be done for our other projects and products," said Arun Jain, chairman and managing director, Polaris.

"Through the Entity model, we are looking out for long-term relationships with customers to whom we provide solutions. We are essentially looking at an 80-20 relationship where 80 per cent of the work will be done here and the rest at the client's site,'' he said.

The company has such a relationship with Citibank, for which it has been developing solutions since its inception through Nucleas Software Workshop (P) Limited.

Now Polaris has taken over almost all Nucleas projects. "Nucleas Workshop is a shell company now,'' said Jain.

The funds from the divestment will also be used for marketing the company's banking and retail automation products such as CALM, Super Store 2000, Nterprise and Parsley. The company's main markets are the US and the Gulf countries.

In 1996-97, 45 per cent of the company's revenues came from the US and Singapore, 35 per cent from the Gulf countries and 20 per cent from the domestic market. This year, it expects to get 55 per cent of its revenues from the US and Singapore and the rest equally split among the Gulf countries and the domestic market.

Polaris has a current employee strength of 600, which it plans to increase to 1,000 by the end of 1998. It has two wholly owned subsidiaries, in the US and Singapore.

On the anvil are plans to get listed on NASDAQ and introduce employee stock options.

Polaris changed over from a private limited company to a closely held public limited company in June 1996. It has an authorised capital of Rs 50 million from issuance of 5,000,000 shares at Rs 10.

Its paid-up capital as in March 1997 is about Rs 8.8 million. This, along with its reserves and surplus, amounts to around Rs 78 million. As against this it has taken loans to the tune of Rs 10 million.

The company registered a turnover of about Rs 150 million in 1996- 97. It has posted about the same amount for the first half of the current financial year. By the end of the financial year it expects to make over Rs 350 million.

- Compiled from the Indian media

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