Cambridge Solutions

The directors are pleased to present the Seventh Annual Report and the
 Audited Statement of Accounts of the Company for the financial year
 ended March 31, 2008.
 
 Financial Results
 
 The performance of the Company for the financial year ended March 31,
 2008 is summarized below:
 
                                                   March        March
                                                31, 2008     31, 2007
 Particulars                                     (Rs. in      (Rs. in
                                                 Million)     Million)
 
 Consolidated Revenues                         12,363.09    14,698.14
 
 Sales & Other Income                           1,806.34     1,726.96
 
 Total Expenditure                              1,544.70     1,580.54
 
 Profit before Interest,                          261.63       146.42
 
 Depreciation and Tax
 
 Finance Costs                                    143.40       197.95
 
 Depreciation & Amortisation                       36.35        45.94
 
 Profit before Tax                                 81.88       -97.47
 
                                                   38.71        13.84
 
 (including deferred tax)
 
 Profit after Tax                                  43.17      -111.31
 
 EPS(Rs)                                            0.40        -1.06
 
 Review of Operations
 
 During the financial year 2007-08, the consolidated revenue of your
 company were Rs.12363/- million as against Rs14698/- million during the
 previous year. Thus, there is a reduction in growth by 15.89%. At a
 stand alone level the total revenue of the Company amounted to
 Rs.1782/- million as against Rs.1709/- million in the previous year.
 During the year the Company has earned profit before interest,
 depreciation and tax of Rs.261.63/- million as against Rs146.42/-
 million in the previous year. The Company has earned a net profit of
 Rs43.17/- million as against a net loss of Rs111/- million in the
 previous year.
 
 Outlook
 
 The Management has outlined growth strategies both of its ITO and BPO
 segments for the year ahead. Your company continues to wins new
 engagements while increasing the scope of its existing relationships in
 ITO and BPO segments.
 
 In terms of revenue, the USA continued to be the largest market and
 contributed 70% of the consolidated revenues followed by Australia at
 17% and the balance 13 % from Europe and Asia. On a line of business
 basis, the BPO segment contributed 72.8% to consolidated revenues while
 the ITO business contributed 27.2%.
 
 The BPO segment grew by 1.3% while the ITO segment grew by 12% YOY (US
 Dollar terms) net of discontinued operations.
 
 In line with the growing need of business and our expansion plan, the
 company has started Business Process Outsourcing operations in Shimoga,
 Karnataka. Your company is facing lesser pressure on currency and wage
 front. The company continues to strengthen its leadership teams and
 build on its delivery capabilities and strong HR processes.
 
 Dividend
 
 Your Company is not proposing to declare any dividend this year.
 
 Increase in Paid up Share Capital
 
 Your Company has issued equity shares of Rs. 10/- each fully paid 12017
 equity shares of Rs. 10/- each fully paid , 15,903 equity shares of Rs.
 10/- each fully paid and 24000 equity shares of Rs.10/- each fully
 paid, to employees pursuant to Scandent Employee Stock Option Plan
 2004, and Scandent Employee Stock Option Plan 2005 (Program 1),
 Cambridge Employee Stock Option Plan 2006 (Program 1). Further,
 61,58,986 equity shares were allotted pursuant to conversion of
 Convertible Bonds worth Rs. 133,65,00,000/- to Indopark Holdings
 Limited and the paid up capital has increased to Rs. 111,34,13,830/-
 comprising of 11,13,41,383 equity shares of the face value of Rs. 10/-
 each fully paid-up from Rs. 105,13,05,770/- comprising of 10,51,30,577
 equity shares of the face value of Rs. 10/- each fully paid-up.
 
 Scheme of Amalgamation and arrangement
 
 Your Company concluded the Scheme of Amalgamation and arrangement with
 Cambridge Integrated Services India Private Limited (Transferor No. 1)
 and Matrixone India Limited (Transferor No. 2) with your Company
 (Transferee Company), approved by Honble Karnataka High Court vide
 their order dated March 20, 2008 and the salient features of the Scheme
 are as follows:
 
 (a) The Scheme will be effective from the Appointed Date of April 1,
 2008, in so far as the merger of the Transferor Company No. 1 into the
 Transferee Company is concerned and from Appointed Date of April 1,
 2007 in so far as the merger of the Transferor Company No. 2 into the
 Transferee Company is concerned.
 
 (b) The entire assets and liabilities of the Transferor Company No. 1
 and Transferor Company No. 2 will be taken over by the Transferee
 Company from the respective Appointed Dates.
 
 (c) Transferor Company No.1 and Transferor Company No. 2 are wholly
 owned subsidiaries of the Transferee Company, upon the Scheme being
 sanctioned by the Honble High Court of Karnataka at Bangalore and the
 transfers having been effected as provided hereinabove both Companies
 will be dissolved without winding-up. Accordingly there will be no
 issue and allotment of shares of Cambridge Solutions Limited to the
 shareholders of Transferor Company No. 1 and Transferor Company No. 2
 upon this Scheme becoming effective.
 
 (d) The Scheme will be effective from Appointed Date of April 1, 2007
 and October 1, 2007 in so far as the reduction of share capital of
 Transferee Company is concerned whereby the Miscellaneous Expenditure
 will be written off and the investments in Cambridge Integrated
 Services Group Inc, USA will be written down respectively in order to
 reflect true valuation and operational results of the Transferee
 Company and to enhance and unlock the shareholders value of the
 Transferee Company.
 
 (e) The Scheme further provides for reorganization of reserves of the
 Applicant/ Transferee Company by revaluation of all or such of its
 existing investments, as it considers relevant and appropriate, at
 their respective fair values as on March 31, 2008 or the Effective Date
 of the Scheme, whichever is earlier.
 
 (f) All past, present and future costs, charges levies, duties and
 expenses in relation to or in connection with or incidental to the
 Scheme or the implementation thereof shall be borne by the Transferee
 Company. Such costs incurred by the Transferee Company will be adjusted
 against General Reserves, if any, or balance of Profit and Loss Account
 in the books of accounts of the Transferee Company upon the Scheme
 becoming effective.
 
 Human Resources
 
 1.  Hiring Campaign
 
 This year your company has revamped hiring strategy taking a cue from
 the long term associations and introduced 2 new hiring campaigns -
 Cambridge Calling. These referral based programmes proved to be highly
 successful, both in terms of attracting the right candidates and
 rewarding the ones with a token of appreciation, both monetary and
 non-monetary, from the Organization. Over 70% of talent acquisitions
 were in 6 specific technology groups, as a result of focused growth as
 a company.
 
 As your Company continue to maintain PCMM Level 3 standards, the
 process maturity observed in 2007-08 has led to establish a new target
 of achieving Level 4 for 2008-09.
 
 2.  Career Management
 
 To support a diversified workforce and dynamic external factors, the
 human resources team has re-organized themselves to focus on business
 unit specific needs and functional specific needs. As an endeavor to
 help people in realizing their career aspirations, your Company
 established a dedicated Resource Management Team which caters to
 resource utilization and deployment.
 
 In association with the Training & Development Team, addresses career
 management goals. In 2007-08, trained and sponsored 100+ campus hires
 for SCJP, Microsoft .NET and Oracle Certifications. The fresh graduates
 achieved a 100% pass out, with an average of 90% score. Your Company
 also sponsored Insurance Domain, MatrixOne and Six Sigma Green Belt
 Certifications to various teams.
 
 Also identified managerial potential in some of the key managers and
 sponsored them for executive MBA programs from leading Indian
 Institutes.
 
 3.  Total Rewards Management
 
 2007-08 saw its highest Rewards and Recognitions, both internal and
 external. While the top management recognized over 200 talents with
 awards such as Pat on the Back, Process Champ and Customer Centricity,
 clientele across the world showered deserving team members with
 accolades and appreciations.
 
 4.  Social Initiatives
 
 Like every year, your Company, irrespective of color, caste, creed,
 gender and race, came together to help those in need. Moving beyond the
 boundary wall, your Company extended support to various child care
 causes. And this year your Company found itself to be a true family,
 when people all around the world stepped forward to help a family of a
 fellow colleague. The response was awe-inspiring.
 
 In 2008-09, your Company venture into newer geographies and complex
 project assignments. Human resource philosophy focuses on constant
 process improvement to meet newer expectations and strive to balance
 between changing workforce demands and volatile economic conditions,
 while your Company positioning itself to deliver excellence to all the
 existing and prospective customers.
 
 Subsidiary Companies
 
 Your Company has 19 subsidiary companies Scandent Group GmbH, Germany,
 Cambridge Solutions Europe Limited, UK (Formerly Scandent Network
 Europe Ltd., UK), Cambridge Solutions PTE Ltd. Singapore (Formerly
 Scandent Group Pte Ltd, Singapore), Scandent Group Sdn, BHD, Malaysia,
 Indigo Markets Ltd, Bermuda, Indigo Markets Europe Ltd, UK, Indigo
 Markets (Singapore) Pte Ltd, BWH SARL, France, Cambridge Integrated
 Services Australia Pty Ltd.  , Australia, Cambridge Integrated Services
 Victoria PTY LTD, Australia, Cambridge Solutions PTY LTD. Australia,
 Scandent Group Inc., USA, Cambridge Integrated Services Group Inc.,
 USA, Cambridge Galaher Settlements & Insurance Services, USA,
 ProcessMind Services Inc., USA, Ecomm Solutions Corp., USA, ProcessMind
 Holdings Mauritius Limited, Mauritius, Nexplicit Infotech India Private
 Limited, Cambridge Integrated Services India Private Limited.
 
 Matrixone India Limited has been merged with your Company effective
 from April 1, 2007 vide Honble Karnataka High Court order dated March
 20, 2008, hence the same has not been shown as subsidiary of your
 Company.
 
 As per Section 212 of the Companies Act 1956, your Company is required
 to attach Directors Report, Balance Sheet and Profit & Loss Account of
 these subsidiaries. Your Company had got approval from the Government
 of India for an exemption from such attachment as it presents the
 audited consolidated financial statements of the Company and its
 subsidiaries in the annual report. Your Company believes that the
 consolidated accounts present a full and fair picture of the state of
 affairs and the financial condition as is done globally. Accordingly,
 the Annual Report does not contain the financial statements of these
 subsidiaries, but contains the audited consolidated financial
 statements of the Company and its subsidiaries. The accounts of these
 subsidiary Companies along with related information, is available for
 inspection during business hours at your Companys Registered Office.
 
 Employee Stock Option Plans
 
 Cambridge Solutions Corporation Limited Employee Stock Option Plan
 2006.
 
 Your Company had announced an Employee Stock Option Plan (ESOP), i.e.,
 Cambridge Solutions Limited Employee Stock Option Plan (ESOP), 2006
 (hereinafter referred to as ESOP 2006), in due compliance with SEBI
 (ESOS & ESPS) Guidelines, 1999 and any amendment thereto, which was
 approved by the shareholders.
 
 Scandent Employee Stock Option Plan 2005:
 
 Your Company had announced an Employee Stock Option Plan (ESOP), i.e.,
 Scandent Solutions Corporation Limited Employee Stock Option Plan
 (ESOP), 2005 (hereinafter referred to as ESOP 2005), in due
 compliance with SEBI (ESOS & ESPS) Guidelines,
 
 1999 and any amendment thereto, which was approved by the shareholders
 by way of postal ballot.
 
 Scandent Solutions Corporation Limited Employee Stock Option Plan 2004
 :
 
 Your Company had announced an Employee Stock Option Plan (ESOP), i.e.,
 Scandent Solutions Corporation Limited Employee Stock Option Plan
 (ESOP), 2004 (hereinafter referred to as ESOP 2004), in due
 compliance with SEBI (ESOS & ESPS) Guidelines, 1999 and any amendment
 thereto, which was approved by the shareholders by way of postal
 ballot.
 
 Scandent SSI IT Services Employee Stock Option Plan 2004:
 
 In pursuance of the Scheme of Arrangement for demerger of the IT
 Services Business of SSI Limited and the Company, your Company has
 introduced the Scandent SSI IT Services - Employee Stock Option Plan
 2004, in due compliance with SEBI (Employee Stock Option Scheme &
 Employee Stock Purchase Scheme) Guidelines, 1999 and any amendment
 thereto, which was approved by the shareholders by way of postal
 ballot.
 
 All the above schemes are administered by the Remuneration Committee,
 constituted as per SEBI Regulations. Pursuant to Clause 12.1 of SEBI
 (Employee Stock Option Scheme & Employee Stock Purchase Scheme)
 Guidelines 1999, the details of options granted under the above schemes
 are given in Annexure 1.
 
 Corporate Governance Report
 
 The importance of Corporate Governance Report has always been
 recognized by your Company and in order to enhance customer
 satisfaction and stakeholder value, the Company continues to benchmark
 its corporate governance practices with the best in the industry, in
 line with international norms.
 
 Your Company is following the Corporate Governance like optimum
 combination of Executive and Non-Executive Directors, Independent
 Directors, throughout the year and your company is ensuring full
 compliance with regard to constitution of Committees like Audit
 Committee, Investor Grievance Committee, etc .
 
 A detailed Corporate Governance Report in line with the requirements of
 Clause 49 of the listing agreement regarding the Corporate Governance
 practices followed by the Company and the Practicing Company
 Secretarys Certificate indicating compliance of mandatory requirements
 along with Management Discussion and Analysis Report are given as part
 of the Annual Report.
 
 Directors
 
 David Greenberg and Eugene Beard retire by rotation and being eligible
 offer themselves for re-appointment.
 
 Directors Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect
 to Directors Responsibility Statement, the Directors, based on the
 representation received from the Operating Management, hereby confirm
 that:
 
 1.  in the preparation of the annual accounts, the accounting standards
 have been followed and that there are no material departures;
 
 2.  they have, in selection of accounting policies consulted the
 Statutory Auditors and have applied them consistently and made
 judgments and estimates that are reasonable and prudent so as to give a
 true and fair view of the state of affairs of the Company as at March
 31, 2008 and of the profit or loss of the Company for the year ended on
 that date;
 
 3.  they have taken proper and sufficient care, to their best of
 knowledge and ability, for the maintenance of adequate accounting
 records in accordance with the provisions of the Companies Act, 1956,
 for safeguarding the assets of the Company and for preventing and
 detecting frauds and other irregularities;
 
 4.  they have prepared the annual accounts of the Company on a going
 concern basis;
 
 Auditors
 
 M/s. S. R. Batliboi & Co., Chartered Accountants, Statutory Auditors of
 the Company, retires at the conclusion of the ensuing Annual General
 Meeting and have confirmed their eligibility and willingness to accept
 office, if reappointed.
 
 Conservation of energy, research and development, technology
 absorption, foreign exchange earnings and outgo
 
 Information as per Section 217(1 )(e) of the Companies Act, 1956, read
 with Companies (Disclosure of particulars in Report of the Board of
 Directors) Rules, 1988, is given in the Annexure 2 included in this
 report.
 
 Particulars of employees
 
 Particulars of employees as required under the provisions of Section
 217(2A) of the Companies Act, 1956, read with the Companies
 (Particulars of Employees) Rules, 1975, as amended, forms part of this
 report. However, in pursuance to Section 219(1 )(b)(iv) of the
 Companies Act, 1956, this report is being sent to all the members of
 the Company excluding the aforesaid information and the said
 particulars are made available at the Registered Office of the Company.
 
 Fixed Deposits
 
 Your Company has not accepted any fixed deposits under Section 58A of
 the Companies Act, 1956 and as such no amount of principal or interest
 was outstanding as of the balance sheet date.
 
 Acknowledgements
 
 Your Directors thank the Companys clients, vendors, investors and
 bankers for their support during the year. Your Directors place on
 record their appreciation of the contribution made by employees at all
 levels.
 
 Your Directors thank the Government of India particularly the Ministry
 of Communication and Information Technology, the Customs and Excise
 Departments, the Software Technology Parks - Bangalore and Chennai, the
 Reserve Bank of India, the State Governments, and other Government
 Agencies for their support, and look forward to their continued support
 in the future.
 
                         For and on behalf of the Board of Directors,
                                                            Chairman
 Date  :   June 17, 2008
 Place :   Bangalore