1.  GENERAL INFORMATION
 
 Xchanging Solutions Limited (''the Company'') (formerly known as
 Cambridge Solutions Limited), incorporated on February 1, 2002, is an
 information technology (IT) services provider with operations in India
 and an international presence established through subsidiaries in
 several countries including the USA, Singapore and the UK. During the
 previous year the Company has sold its BPO business.
 
 Pursuant to agreements, arrangements, amalgamations, etc. (with
 requisite approvals from various High Courts in India,
 whereverapplicable), the Company has, during earlieryears, acquired the
 IT services businesses (including assets and liabilities) of/ from the
 following entities:
 
 - SSI Limited (Information Technology division with operations in
 India, USA and several other countries).
 
 - Scandent Group Limited, Mauritius (with operations in USA,
 Singapore, Germany, etc.).
 
 - Matrix One India Limited (with operations in India).
 
 Pursuant to share purchase agreements between Xchanging (Mauritius)
 Limited (XML), a wholly owned subsidiary of Xchanging Plc, a listed
 company incorporated in UK, and the erstwhile principal shareholders
 ofthe Company, and consequent open offer to public, XML now owns 75.00%
 (2011: 75.62%) ofthe outstanding share capital ofthe Company. Though
 the open offer process was completed on April 9, 2009, XML obtained the
 power of operational control ofthe Company effective January 1, 2009.
 
 On May 31, 2011, Cambridge Integrated Services Group Inc, USA
 (''CISGI''), a wholly owned subsidiary of the Company, entered into
 agreements with Sedgwick Claims Management Services, Inc, USA for the
 sale of virtually its entire operations of workers'' compensation and
 third party administration. Further, on August 31, 2011, the Company
 has sold its investment in CISGI to Waltham Holdings Limited, Jersey,
 Channel Islands, a fellow subsidiary.
 
 On June 13, 2011, the Company entered into a Share Purchase Agreement
 with Xchanging Procurement Pty Limited, Australia, a fellow subsidiary,
 for sale of shares held by the Company in Cambridge Integrated Services
 Victoria Pty Ltd, Australia, a wholly owned subsidiary of the Company.
 
 On June 16, 2011, the Company entered into a Business Transfer
 Agreement with Xchanging Technology Services India Private Limited, a
 fellow subsidiary, for sale of its India BPO business including its
 investments in Xchanging Builders (India) Private Limited, a wholly
 owned subsidiary of the Company.
 
 Pursuant to the sale of the BPO businesses as explained above, the
 Company is nowfocused only on the business of IT services.
 
 Pursuant to approval ofthe shareholders in the annual general meeting
 and subsequent approval ofthe Registrar ofCompanies on June 11, 2012,
 the name ofthe Company has been changed toXchanging Solutions Limited.
 
 a) Rights, preferences and restrictions attached to shares
 
 Equity Shares: The Company has one class of equity shares having a par
 value of Rs.10 per share. Each shareholder is eligible for one vote per
 share held. In the event of liquidation, the equity shareholders are
 eligible to receive the remaining assets of the Company after
 distribution of all preferential amounts, in proportion to their
 shareholding.
 
 b) Pursuant to SSI Limited (Information Technology division) merger
 scheme, the share capital of the Company as at March 31, 2004 was
 reduced from Rs.3,284 (2011: Rs.3,284) to Rs.1,316 (2011: Rs.1,316) and
 the capital reduction of Rs.1,969 (2011: Rs.1,969) was utilised to
 adjust the debit balance of equivalent amount in the Statement of
 Profit and Loss ofthe Company as at March 31, 2004.
 
 Nature of security and terms of repayment for secured borrowings are as
 follows:
 
 a) Nature ofsecurity: Vehicles purchased on loan for employees
 
 b) Terms of Repayment: Monthly payment of equated monthly instalments
 for a period of 3-5 years
 
 c) Interest rate: 9.5% to 13.5%
 
 Note: As at December 31, 2012, the entire loans and advances balance
 (including short term loan as per Note 18) of Rs. 17,971 (2011: Rs.
 17,723) due from subsidiaries is interest free and repayable on demand.
 However, Management does not have an intention to recover these loans
 in the next 12 months and hence these have been classified under Long
 Term Loans and Advances.
 
 Notes:
 
 (i) Trade Receivable include unbilled revenue amounting Rs.401
 (2011:Rs.487) under Others which are considered good.
 
 (ii) Trade Receivable include unbilled revenue amounting to Rs.81
 (2011:Rs.81) under Outstanding for a period exceeding six months which
 are considered doubtful and has been fully provided.
 
 Notes:
 
 (a) The above contingent liabilities are possible obligation or present
 obligation that may (but probably will not) require an outflow of
 resources.
 
 (b) Relates to transfer pricing adjustment for arm''s length price by
 the assessing officer and other adjustments which are disputed by the
 Company, and the matter is lying under appeal with the Commissioner of
 Income-tax (Appeals), Bangalore. An amount of Rs.42 (2011:Rs.28) has
 been paid under protest against the demand.
 
 (c) Relates to transfer pricing adjustment for arm''s length price by
 the assessing officer and other adjustments which are disputed by the
 Company. The matter is lying under appeal with the Commissioner of
 Income-tax (Appeals), Bangalore. An amount of Rs.921 (2011:Rs.821) has
 been paid under protest against the demand.
 
 (d) Relates to certain tax adjustments arrived at by the assessing
 officer, which is disputed by the Company. An amount of Rs.113 (2011:
 Rs.75) has been paid under protest against the demand. The Company has
 filed an appeal with the Income Tax Appellate Tribunal, Bangalore in
 this regard.
 
 (e) The assessing officer has made certain transfer pricing and other
 adjustments and accordingly raised a demand of Rs.72. Subsequently the
 assessing officer corrected the arithmetic errors in the order and
 reduced the demand to Nil. However, the Company disputes the income
 adjustments and has filed an appeal with the Income Tax Appellate
 Tribunal, Bangalore in this regard.
 
 (f) Relates to withholding tax adjustments amounting to Rs.359 (2011:
 359) arrived at by the assessing officer which is disputed by the
 Company, and the matter is lying under appeal with the Commissioner of
 Income-tax (Appeals), Bangalore. The Commissioner of Income- tax
 (Appeals) allowed the appeal during the year and referred the case back
 to the assessing officer. The final order from the assessing officer is
 awaited.
 
 (g) The assessing officer has made certain transfer pricing adjustments
 of Rs.471. The adjustments have been set off against the brought
 forward losses resulting in demand of Nil (2011:Nil). However, the
 adjustments are disputed by the Company and an appeal has been filed
 with the Income Tax Appellate Tribunal, Bangalore in this regard.
 
 (h) The Transfer Pricing Officer (TPO) has made, subsequent to the year
 end, certain transfer pricing adjustments of Rs.1,045. The final order
 is awaited from the assessing officer. The Company will file an appeal
 once the final assessement order is received.
 
 (i) Relates to withholding tax adjustments amounting to Rs.85 (2011:
 85) arrived at by the assessing officer which is disputed by the
 Company, and the matter is lying under appeal with the Commissioner of
 Income-tax (Appeals), Bangalore. The Commissioner of Income- tax
 (Appeals) allowed the appeal during the year and referred the case back
 to the assessing officer. The final order from the assessing officer is
 awaited.
 
 (j) Relates to withholding tax adjustments arrived at by the assessing
 officer. The Company is in the process of rectifying the returns in
 order to nullify the demand.
 
 (k) Represents service tax amount on select categories of transactions
 relating to financial years 2007-08 to 2011- 12 set out in a show cause
 notice issued by the Commission of Service Tax, Bangalore, which is
 disputed by the Company, and a formal reply to the show cause notice,
 based on consultation with legal counsel, is in the process of being
 filed.
 
 (a) Defined Contribution Plans
 
 Provident Fund: During the year, the Company has recognised Rs.253
 (2011: Rs.441) in the Statement of Profit and Loss relating to defined
 contribution plans, which are included in the Contribution to Provident
 and otherfunds
 
 (b) Defined Benefit Plan
 
 Gratuity: The Company provides for gratuity, a defined benefit plan
 (the gratuity plan) to its employees in India. The gratuity plan
 provides a lump sum payment to vested employees at retirement or
 termination of employment based on the respective employee''s last drawn
 salary and years of employment with the Company.
 
 The following tables summarise the components of net benefit expense
 recognised in the Statement of Profit and Loss and amounts recognised
 in the balance sheet for the gratuity plan.
 
 Notes:
 
 (i) The estimates of future increase in salary, considered in the
 actuarial valuation, have been taken on account of inflation,
 seniority, promotion and other relevant factors such as supply and
 demand in the employment market.
 
 (ii) The discount rate is based on the prevailing market yields of
 Indian government securities as at the Balance Sheet date for the
 estimated term of the obligation.
 
 (iii) The long term estimate ofthe expected rate of return on plan
 assets has been arrived at based on prevailing yields on those assets.
 Assumed rate of return on assets is expected to vary from year to year
 reflecting the returns on matching government bonds.
 
 (c) In accordance with Accounting Standard 15 Employee Benefits,
 the Company has been providing for compensated absences/ leave
 encashment based on valuation performed by an independent actuary. The
 Company has amended its leave policy that impacts the carry forward
 leave balance of employees, and carried out an actuarial valuation
 based on the amended leave policy, which has resulted in the reduction
 of provision by Rs. 206. This reduction has been treated as reversal of
 the provision on account of amendment to the leave policy and has been
 included under Other income.
 
 2 The Company has strategic gross investment amounting to Rs.11,225
 (2011:Rs.11,225) in Xchanging Solutions (USA) Inc.,USA (formerly
 Cambridge Solutions & Services Inc.,USA) its wholly owned subsidiary.
 Further, the Company has granted loans and advances aggregating to
 Rs.17,283 (2011:Rs.17,283) and also has receivables (net of payables
 and provision) from the subsidiary amounting to Rs.2,198
 (2011:Rs.2,729). Based on assessment of diminution in the value of
 investments and evaluation of recoverability of other balances, the
 Company, has made a provision of Rs.1,588 in the prior year against the
 investments towards diminution in value considering it to be a
 decline other than temporary and Rs.17,283 in the prior year against
 the loans and advances considering it to be doubtful of recovery. The
 Company has also tested the investment for impairment using cash flow
 forecasts based on approved budgets and using a discounted cash flow
 method. As at the year end, the Company considers Xchanging Solutions
 (USA) Inc. a strategic long term investment and based on future growth
 projections, in the opinion of the management, the remaining value of
 the investments is not impaired.  Further, based on the aforesaid
 evaluation of recoverability, the entire receivables is considered good
 and recoverable.
 
 3 The Company has strategic gross investments amounting to Rs.2,222
 (2011:Rs.2,222) in Xchanging Solution Europe Limited (formerly
 Cambridge Solutions Europe Limited, UK), its wholly owned subsidiary.
 Based on assessment of diminution in the value of investments, the
 Company, has made a provision of Rs.1,534 in the prior year considering
 it to be a decline other than temporary. The Company tested the
 investment for impairment using cash flow forecasts based on approved
 budgets and using a discounted cash flow method. As at the year end,
 the Company considers CSEL a strategic long term investment and based
 on future growth projections, in the opinion of the management, the
 remaining value ofthe investments is not impaired.
 
 4 On August 1, 2002, the Company issued 1,500,000, 11% debentures of
 face value of Rs.100 each. The debentures were repayable at par at the
 end of five years from the date of issuance. Based on the orders ofthe
 Debt Recovery Tribunal, the Company had issued duplicate debenture
 certificates for 625,000 debentures (which form a part of the said
 1,500,000 debentures) in favour of a Bank in June 2007. These
 debentures were redeemed in June 2007 and the same was disclosed in the
 annual report for the year ending March 2007. In August 2007, a civil
 suit was filed against the Company before the Hon''ble Madras High Court
 by another company (Third Party), claiming rights over the said
 625,000 debentures. Decision on this suit is still pending before
 Hon''ble Madras High Court. On the basis of an interim application filed
 by the Third Party, the Hon''ble High Court passed an Interim Order in
 September 2007 restraining the Company from reflecting the redemption
 of debentures and directing the Company to continue to show it as due
 and payable. The said Order was made absolute in December 2010. The
 Company, in consultation with a senior legal counsel, has filed an
 appeal against the interim order of the Hon''ble High Court contending
 that it is not possible to show the debentures as due and payable as
 the debentures have already been redeemed and also reflected as
 redeemed in the Company''s accounts prior to passing of interim order.
 The Company is awaiting the decision ofthe Hon''ble High Court in the
 Company''s appeal, pending which; no adjustment has been made in the
 accounts.
 
 5 The Company incurred losses in the prior year primarily on account
 of strategic initiatives including the sale of all its BPO businesses.
 The strategy led to significant, non-recurring and exceptional nature
 of items being recorded in the Statement of Profit and Loss in the
 previous year. Though the losses have been set off against free
 reserves, there is still a partial erosion of the net worth of the
 Company. However, considering the positive cash flow from operating
 activities along with negligible external debt and significant amount
 of cash on hand, and taking into consideration the approved budgets for
 the next twelve months, the Management and Board of Directors are of
 the opinion that it is appropriate to present these financial
 statements on a going concern basis.
 
 6 Segment Reporting
 
 The primary segment reporting of the Company is on the basis of
 business segments. Till the previous year the Company was organised
 into two business segments, viz., Information Technology and related
 services (''IT'') and Business Process Outsourcing (''BPO'').
 During the previous year, the Company has sold its BPO business. During
 the current year, the Company has only one business segment viz., IT.
 The segments have been identified and reported considering industry
 segments of customers, risks and returns, organisation structure and
 inter- nal financial reporting systems. Management views the entire IT
 business as one business segment.
 
 The secondary segment reporting is performed on the basis of the
 geographical location of customers. The management views the USA,
 Europe (comprising France and UK) and rest ofthe world (comprising
 India, Australia and Singapore) as distinct geographical segments.
 
 In 2011, Corporate activities such as treasury and taxation have been
 considered as unallocated items.
 
 7 Leases
 
 Operating lease
 
 As lessee:
 
 In case of assets taken on lease:
 
 The Company has operating lease arrangements for its office premises,
 guest houses and certain equipment.  The lease arrangements for
 premises and guest houses have been entered up to a maximum of six
 years from the respective dates of inception. Some of these lease
 arrangements have price escalation clauses. Rent and hire charges for
 such operating leases recognised in the Statement of Profit and Loss
 for the year ended December 31, 2012 amounts to Rs. 432 (2011: Rs.
 1,032).
 
 Notes:
 
 (i) Provision for onerous lease contracts relates to losses recognised
 on contracts to the extent that unavoidable cost of meeting the
 obligations under the contract exceeds the economic benefits expected
 to be received under it. The cash outflows are expected to occur over a
 period of eight years.
 
 (ii) Provision for litigations relates to a litigation matter. Due to
 the very nature of such costs, it is not possible to estimate the
 timing/ uncertainties relating to their outflows.
 
 (iii) Prior year numbers are disclosed within brackets.
 
 8 Dues to micro medium and small enterprises (MSMED)
 
 The Company has initiated the process of identifying micro, small and
 medium enterprises as defined under the Micro, Small and Medium
 Enterprises DevelopmentAct, 2006 (''MSMED''), by requesting vendor
 confirmations, and as at the year end, the Company is still in the
 process of compiling the complete and relevant information.  However,
 based on the information available to date, the Company has identified
 no vendors that qualify under the requirements of MSMED and
 accordingly, the below disclosures have been given considering vendor
 identification carried out as at the year end:
 
 Notes:
 
 (1) The Company has not accrued for interest on the unpaid principal
 amount as no claim has been raised by the concerned vendors.
 
 (2) The above information has been determined to the extent such
 parties have been identified by the Company, which has been relied upon
 by the auditors.
 
 9 Taxation Current Tax:
 
 Current tax charge reflects provision for income tax based on the
 taxable income of the Company after considering taxable income as per
 the local tax laws applicable in India. While ascertaining the taxable
 income for the current year, the broughtforward losses ifany, have also
 been considered.
 
 In India, the Company operates out of various facilities. Many of these
 facilities were eligible to claim tax holiday under Section 10A ofthe
 Income-tax Act, 1961,of India up to the tax fiscal year ended March
 31,2011.
 
 The current tax charge for the Company includes minimum alternative tax
 (MAT) determined under Section 115JB ofthe Income Tax Act, 1961, of
 India.
 
 MAT Credit Entitlement:
 
 Based on assessment of future taxable income and sunset of tax holiday
 period, the management is ofthe opinion that there is convincing
 evidence that the Company will pay normal income tax within the
 specified period during which MAT credit is available for set off.
 Loans and Advances includes MAT Credit Entitlement asset of Rs.1,260
 (2011:Rs.1,260). MAT Credit Entitlement asset will be reviewed at each
 balance sheet date forwrite-down, if any.
 
 Deferred tax:
 
 In terms of the provisions of the AS-22 Accounting for Taxes on
 Income, considering the accumulated business losses and unabsorbed
 depreciation, no deferred tax asset has been recognised in these
 financial statements by virtue of there being no virtual certainty
 supported by convincing evidence of future taxable income. However,
 this position will be reassessed at every year end.
 
 Transfer Pricing:
 
 The Company has significant intra group transactions pertaining to
 revenue and expense cross charges.  The management is in the process of
 updating the transfer pricing study for such transactions entered into
 during the year ended December 31, 2012, and does not anticipate any
 adjustments with regard to the transactions involved.
 
 10 Previous Year Figures
 
 The financial statements for the year ended December 31, 2011 had been
 prepared as per the then applicable, pre-revised Schedule VI to the
 Companies Act, 1956. Consequent to the notification of Revised Schedule
 VI under the Companies Act, 1956, the financial statements for the year
 ended December 31, 2012 are prepared as per Revised Schedule VI.
 Accordingly, the previous year figures have also been reclassified to
 conform to this year''s classification. The adoption of Revised Schedule
 VI for previous year figures does not impact recognition and
 measurement principles followed for preparation offinancial statements.