The Polaris - Orbitech Merger


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Case Details:

Case Code : FINC030
Case Length : 13 Pages
Period : 2002 - 2004
Pub. Date : 2004
Teaching Note : Available
Organization : Polaris Software Labs, Orbitech Solutions
Industry : Software, IT, Finance
Countries : USA, India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Benefits of the Merger

Analysts felt that the merged entity was better positioned to capitalize on new opportunities by acquiring new customers and enhancing existing relationships.

The merger provided OrbiTech with a better platform to deliver its products in the market; it gave OrbiTech access to 96 new clients and operational geographies, access to a strong sales and distribution network, and exposure to areas other than banking. On the other hand, Polaris got access to 57 IPRs of OrbiTech corresponding to 10 product lines, with a couple of new products in each product line. Each product line had an estimated potential of building a $20 mn business over a five-year period. Thus, a $200 mn increase in revenues was expected from this source. The merger strengthened Polaris' position in the BFSI software segment, giving it higher profit margins and reduced sales cycle time...

The Journey Ahead

Like any other merger, the Polaris-Orbitech merger also had to overcome the initial integration hurdles and had to focus on leveraging its strengths.

One significant advantage of the merger for Polaris was the increase in size. The company emerged one of the fastest growing companies in the Indian software industry with revenues from its top-line products increasing from Rs 150 mn in 1996 to over Rs 6 bn in 2003.

After the merger, the company also focused on increasing its presence in the BFSI products market. It had split the BFSI segment into six spaces - wholesale banking, retail banking, investment banking, brokerage, securities and insurance and focused on each of these segments to increase revenues.

The company also hoped to increase profit margins by reducing costs...

Exhibits

Exhibit I: Orbitech's Major Products
Exhibit II: Shareholding Pattern (March 31, 2002)
Exhibit III: Balance Sheet of Polaris
Exhibit IV: Profit and Loss Statement of Polaris
Exhibit V: Polaris - Stock Price/ Volume Details
Exhibit VI: Polaris - Financial Performance

 

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