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Polaris Software net dips on higher taxes; raises outlook

Polaris Software net dips on higher taxes; raises outlook
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First Published: Wed, Jul 20 2011. 01 54 PM IST
Updated: Wed, Jul 20 2011. 01 54 PM IST
Mumbai: Banking and insurance software provider Polaris Software Lab Ltd reported a 4.5% dip in consolidated in April-June net profit, hurt by higher taxes and total expenditure.
The Chennai-based company, however, posted a 25% jump in revenue, largely buoyed by a rise in sales from its ‘Intellect´ suite of products, and raised revenue outlook for FY12 to $430-$440 million from the earlier $425-$435 million.
Polaris provides its ‘Intellect´ products for consumer finance, cash and liquidity, securities services, and risk and treasury, among others.
‘Intellect´ won 11 deals in the quarter, with sales accounting for 23% of the quarterly revenue.
“After the success of Intellect in Europe and the Americas, our focused efforts in Asia resulted in the lighthouse RBI win and the joint venture with the largest bank in Bangladesh,” chairman and Cchief executive Arun Jain said in a statement.
“These are defining wins for Intellect in the region and with the healthy trend of the deal sizes increasing consistently, we can predit better margins in product deals.”
Polaris signed its largest deal with the Reserve Bank of India for its Intellect Core Banking System to help integrate and automate banking operations in all the regional offices of the central bank. The contract is worth $55 million.
Earlier this week, the company entered into a joint venture with Sonali Bank of Bangladesh and Bangladesh Commerce Bank.
Polaris reported a consolidated net profit of 445.6 million rupees compared with 466 million rupees a year ago.
Revenue rose 25% to Rs 450 crore from Rs 360 crore a year ago.
Profit was depressed as tax expenses more-than-doubled to Rs 169.2 million, while total expenditure -- towards software development, selling and marketing, and general and administrative -- jumped 25.6% to Rs 392 crore.
Most mid-tier IT companies are facing a profit squeeze due to the expiry of the Software Technology Parks of India (STPI) scheme in March this year.
The STPI scheme, which expired in March this year, was started in 1991 to boost software exports. Among other benefits, it provided a 10-year income tax exemption for units situated in software technology parks.
Small and mid-cap IT firms are lagging larger peers in moving to special economic zones (SEZ), where some tax benefits accrue. Moving to a SEZ will help companies mitigate the impact of the expiry of the STPI scheme to some extent.
Shares of the company, which the market values at $386.5 million, were nearly flat at Rs 172 in a weak Mumbai market.
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First Published: Wed, Jul 20 2011. 01 54 PM IST