Banking & Financial Segment: Products on a High

Software services to the banking and financial services (BFS)

sector is one of the largest verticals that is being offered by most Indian

software services companies. The vertical is not only one of the fastest

growing, but also it is the one where the product side of the business is large

as well as one of the first global successes from i-flex. We believe that the

story of BFS products from India has just begun and more successes from some of

the Indian companies are just around the corner.

There are only a few listed companies that are totally dedicated

to the BFS sector. The major ones include Nucleus Software, Polaris and

Financial Technologies covered here. The other one, i-flex, is in the process of

being 100% acquired by Oracle and hence it has been omitted.

Nucleus Software Exports



Nucleus Software Exports provides software solutions to the banking

and financial services industry.

During the financial year ending March 31, 2006, its revenues

stood at Rs 148.05 crore an increase of 44% as compared to Rs 103.14 crore in

the last fiscal year. Net profit reached Rs 37.08 crore, an increase of 79% as

compared to Rs 20.75 crore in the same period last year.During the year, the

company made significant progress in new partnerships and client signups. Its

revenues increased by 54.22% to Rs 55.09 crore from Rs 35.72 crore in the same

period last year. Net profit stood at Rs13.86 crore an increase of 57.86% as

compared to Rs 8.78 crore in the same period last year.

During the quarter ended September 30, 2006, Nucleus Software's

flagship solution, FinnOne CAS, was selected by First Bank of Nigeria (FBN).

During the quarter, the company unfolded plans to invest Rs 20 crore for

expanding its R&D in Noida. Nucleus also entered into a contract with Lippo

Bank Indonesia. Shares of Nucleus currently trade at Rs 687.

Polaris Software Lab



Polaris Software Lab (Polaris), headquartered in Chennai provides

software solutions and products primarily in the area of banking and financial

services. During the financial year ended March 31, 2006, its consolidated

revenue was Rs 825.07 crore. Net profit stood at Rs 21.30 crore, a down by 63%

from Rs 58.04 crore in the same period last year.

During the year Polaris setup a Banking & Financial

Application Certification Center in Belfast, Northern Ireland. Polaris has also

entered into a strategic partnership with Mercury and is jointly developing

testing tools specifically for the BFS sector. The company also partnered with

Webify to provide solutions in the service-oriented architectures (SOAs) and web

services.

During the second quarter ending September 30, 2006, Polaris's

revenue grew to Rs 255.57 crore-an increase of 19.67% from Rs 213.56 crore on

a y-o-y basis and a growth of 10.14% from Rs 232.05 crore on a q-o-q basis. Net

profit has grown by 33.68% from Rs 20.27 crore to Rs 27.10 crore on a q-o-q

basis and by 104.37% from Rs 13.26 crore on a y-o-y basis. IP related business

grew by 23.07% on a sequential q-o-q basis and contributed 16.65% of overall

revenues this quarter, indicating its continuing interests in IP related

business. Shares of Polaris change hands at Rs 160.

Financial Technologies



Financial Technologies (India) is a straight-through-processing (STP)

service provider. Its solutions comprise domain consulting, technology licensing

and development outsourcing. The company's network consulting group services

perform information system audit and assurance services focusing on BFS and

insurance sector.

During the financial year ending March 31, 2006, its revenue

stood at Rs 181.98 crore, an increase of 217% from Rs 57.43 crore in the same

period last year. Net profit also increased by 217% from Rs 22.58 crore during

the financial year ending March 2005 to Rs 85.52 crore in the financial year

ending March 2006. Financial Technologies got listed in the NSE in 2006. Its

subsidiary, Multi Commodity Exchange of India (MCX) signed a MoU with the Bursa

Malaysia Derivatives Berhad (BMD).

During the quarter ending September 30, 2006, its revenue

increased to Rs 66.22 crore, an increase of 49.11% from Rs 44.41 in the same

period last year. Net profit stood at Rs 21.78 crore, an increase of 12.22% from

Rs 19.41 crore in the same period last year. During the quarter, the company

entered into a joint venture with Mother Dairy Foods Processing, a group company

of NDDB (National Dairy Development Board) and MCX to establish the SAFAL

National Exchange of India (SNX). Headquartered at the SAFAL market in Bangalore,

SNX would be a subsidiary company of Mother Dairy Foods Processing, with 51%

shareholding. MCX and Financial Technologies would jointly hold 49%. MCX and the

Zhengzhou Commodity Exchange (ZCE) have signed a MoU. Shares of Financial

Technologies currently trade at Rs 1782.

Sushanto Mitra



The author is the director, Techcap India



sushanto@techcapIndia.com



The views reflected here are of the author and not of this publication. No
liability is accepted for losses based on the information presented here