Xchanging Solutions Ltd Management Discussions

OVERVIEW

Xchanging Solutions Limited (the “Company”) was incorporated on February 1, 2002, is an Inforamtion Technology (IT) service provides with operations in India and an international presence established through subsidiaries in several countries.

DXC Technology Company, ultimate holding company, is listed on New York Stock Exchange, and through its indirect subsidiaries Xchanging (Mauritius) Limited, Xchanging Technology Services India Private Limited & DXC Technology India Private Limited, owns 75% of the outstanding share capital of the Company.

INDUSTRY STRUCTURE, OUTLOOK AND DEVELOPMENTS

According to IDC, global technology industry witnessed significant growth with the global tech spending growing 10.8% primarily driven by strong hardware and software spending, while IT services growth remained flat at 4.7%.

Global Economic Growth Stabilizing real GDP growth rate, Advanced economies to drive growth i.e. US growth forecast resilient at 2.7% despite higherf or- longer interest rates due to rare wage rate vs. labor participation balance coupled with pro-America policy tailwinds. UK expects faster interest rate cuts and private and public spending boost from earnings/ tax collections.

Indian tech sector is on its way to become the global technology and innovation hub, which is reflected in the increasing share of MNCs and GCCs which today account for nearly 50% of the total tech sector revenues in the country. Over the last five years the number of GCCs in the country have increased from 1285+ in FY19 to 1750+ GCCs in FY25 employing over 1.9 million professionals. Indias innovation prowess is reflected in the fact that most of the MNCs and GCCs today house their largest engineering teams in India which are supporting the nextgen technology innovation. This maturity in capability is also reflected in Indias technology revenue which is expected to grow 5.1% in FY25 - from $268.8 Bn in FY24 to $282.6 Bn (including IT services, BPM, Software products, ER&D, and Hardware).

OPPORTUNITIES

Nasscom Annual Enterprise CXO Survey 2025 indicates stronger growth momentum for CY25 with higher technology spend, particularly AI-led digital spend, enterprises are likely to invest in convergence of tech spend into high-impact use cases that could provide the foundation for the next five years of technological leaps. 82% of the CXOs expect to increase digital spend by 5%+ compared to CY24.

For technology providers, FY26 is expected to see greater technology spending with 77% of the providers in the Nasscom Annual Tech Services CXO Survey 2025 expecting a higher business growth compared to last year driven by growing foundational digital scope, emerging markets, and strategic AI-led demand. Hiring growth expectations are also modest with 45% of the providers expecting increased hiring compared to FY25. However, providers remain cautious of challenges emerging from

AI-led services transformation, skills/labour shortage, cyber risks, and margin pressures. On the external side, macroeconomic and geopolitical upheavals and widening trade tariffs remain major challenges.

(SOURCE: Nasscom Strategic review 2025)

THREATS:

We see intense competition in traditional services, a rapidly changing marketplace and the emergence of new players in niche technology areas.

A global economic slowdown or recession could lead to reduced IT budgets among clients, directly impacting revenues. This is particularly significant given the industrys reliance on external markets.

With increasing reliance on cloud computing and digital platforms, the threat of cyberattacks and data breaches has intensified. Companies must invest heavily in cybersecurity to protect client data, which can increase operational costs.

RISKS AND CONCERNS

The Company analyse the nature and extent of risks and consider their likelihood of occurrence and impact; both on an inherent and residual basis, after taking into account mitigating and compensating controls. This allows us to determine how we should manage each risk in order to achieve our strategic objectives.

HOW WE MANAGE RISK

In managing risk, we analyse the nature and extent of risks and consider their likelihood and impact, both on an inherent and a residual basis, after taking account of mitigating controls. This allows us to determine how we should manage each risk in order to achieve our strategic objectives.

• Strategic risks reflect the potential for a signicant strategic action or a failure to react to developing trends in the market, to have a Financial on the economic value of our business.

• Commercial risks reflects the potential to enter into a critical contract or commercial arrangement which may have an adverse impact on the business.

• Operational risks reglects the potential for the failure of a critical process or procedure to have an adverse impact on the business.

OVERVIEW OF RISK MANAGEMENT PROCESS

STRATEGIC RISKS
Risk	Mitigating Actions
Failure to utilise and exploit technology enablement for growth	The rapidly changing nature and impact of technology means that we need to respond to technology trends. Injecting technology enablement into our services and products is core to our growth strategy as we continue to:
	• Develop innovative value adding customer solutions.
	• Utilise our skilled knowledgeable resources.
	• Review our existing services and products to ensure that they meet our customers requirements.
Failure to secure new business from both new and existing customers	There are number of signicant changes in the sectors we operate in and the current economic environment results in pressure on our customers. Failure to secure new business could slow down the growth of the business. Successfully winning new business is managed by:
	• Ensuring utilisation of our technology capabilities and competitive low-cost offshore services.
	• Clearly dened offerings and sales strategies that help us to attract customers.
	• Continual development of the unied sales strategy which enables selling across business sectors.
	• Effective performance of sales team.
COMMERCIAL RISKS
Risk	Mitigating Actions
We have a concentration of material contracts with customers in key markets, which may have a signicant impact on the Groups performance.	Our commercial risks continue to be well managed through legal review, delegated authorities and contract monitoring processes.
	We have a structured service management programme, with dedicated account managers who work closely with our customers utilising performance metrics in order to identify issues early and trigger corrective actions.

Management Discussion and Analysis

OPERATIONAL RISKS

Risk	Mitigating Actions
Our reputation and ultimately our profitability are reliant on successful implementation and delivery of new contracts.	We ensure successful implementation in the following ways:
	• Detailed implementation and delivery plans with strong management control and oversight.
	• Use of experienced employees with strong project, change and people management skills in order to ensure successful implementation.
	• Standardised procedures in use for the implementation and delivery of new contracts.
Our customers demand efficient processing and high levels of service to help them achieve their objectives and protect their reputation.	Failure to meet our customers expectations and contractual commitments would have a signicant impact upon our reputation and protability and could result in unexpected and costly litigation.
	We consistently work towards ensuring that our service levels are on target ensuring that we meet our customer requirements. Mitigating actions include:
	• Consistently ensuring that our service levels are on target.
	• Optimising our cost of delivery through standardisation and simplification.
	• Ongoing contract management.
	• Building on existing customer relations.
Continuing to retain our key personnel and recruit new talented individuals are fundamental to our success. Our intellectual property is one of our key assets.	• We have an established structure for employee performance and development monitoring.
	• A clear recruitment strategy and graduate recruitment and development programme attracts high-potential employees.
	• Signicant investment in leadership training programmes underpins our succession plans and develops our employees.

FINANCIAL RISKS

Risk	Mitigating Actions
The Groups Financial results may be subject to volatility arising from movements in interest rates, foreign exchange rates, liquidity and changes in taxation legislation, policy or tax rates	We continue to manage our financial risks through our established budgeting, forecasting and working capital and treasury controls. This reduces the volatility of our Financial results, giving the Board greater medium-term visibility.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Compliance Certification from CEO and CFO provided in Annual Report confirms the adequacy of our internal control system and procedures.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

A. OVERVIEW

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) and comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014.

B. RESULTS OF OPERATIONS

1. Review of Operations

During the financial year ended March 31,2025, the consolidated revenue of the Company was Rs 18,518 lakhs against Rs 17,442 Lakhs during the previous year ended March 31,2024. Other income of the Company for the current year was Rs 1,701 Lakhs against Rs 2,183 Lakhs in the previous year.

The Company has only one primary segment viz, Information Technology (IT) services and accordingly the financials relate to this segment.

2. Performance

The table below summarizes the consolidated financial performance during the year:

(Rs. in lakhs)

Particulars	For the Financial year ended March 31, 2025	For the Financial year ended March 31,2024
Total Income	20,191	19,625
Total Expenditure	13,850	13,007
Profit before Finance Costs, Depreciation and Tax	7,006	6,859
Depreciation & Amortization	29	54
Finance Costs	636	187
Profit / (Loss) before Tax	6,341	6,618
Income Tax (including deferred tax)	1,383	5,248
Net Profit / (Loss) after Tax	4,958	1,370
Other Comprehensive Income/(Expenditure)	-29	-177
Total Comprehensive Income/(Expenditure)	4,929	1,193
Earnings / (Loss) per share Rs.	4.45	1.23

3. Geographic Profile

(Rs. in lakhs)

Geography	March 31,2025		March 31,2024
	Revenue	%	Revenue	%
Europe	305	2%	287	1%
USA	15,324	83%	14,053	81%
India	1,194	6%	1,209	7%
Singapore	1,588	8%	1,786	10%
Rest of the World	107	1%	107	1%
Total	18,518	100%	17,442	100%

4. Key Financial Ratios

The following are analytical ratios for the year ended March 31,2025 and March 31,2024

Particulars	March 31, 2025	March 31, 2024	Variance	Reason for variation beyond 25%
Debtor Turnover Ratio	6.96	8.96	-22%	NA
Inventory turnover ratio	NA	NA	NA	NA
Interest Coverage Ratio	591	4071	-85%	Mainly due to higher earnings before interest & tax in previous year due to exceptional items Rs. 30,965 and dividend income from subsidiary Rs. 6,868
Current ratio	7.54	7.48	1%	NA
Debt-equity ratio	-	0.00	-100%	Mainly due to derecognition of lease liability in current year
Operating Profit margin (%)	19%	24%	-20%	NA
Net Profit margin (%)	51%	995%	-95%	Mainly due to higher profit in previous year due to exceptional items net of tax of Rs. 27,522, dividend income from subsidiary of Rs. 6,868 and increase in revenue in current year

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND EMPLOYEE RELATIONS Developing Talent

Managing human resources effectively and efficiently plays a critical role in ensuring that a satisfied, motivated work force delivers quality services. It also plays an important role in increasing staff performance and productivity, enhancing an organizations competitive advantage, and contributing directly to the organizational goals. Satisfied, highly-motivated and loyal employees represent the basis of competitive company. The growth of satisfaction is to be reflected in the increase of productivity, improvement of the products quality or rendered services and higher number of innovations.

The Company is highly employee oriented, and the focus is on the development of employees.

Employee Diversity

The Company believes in promoting and nurturing work environment which is conducive to the development and growth of an individual employee, by employing the best HR practices such as performance management, reward and recognition policy, leadership development program, open work culture and effective employee communication.

We are committed to embedding a culture of diversity and inclusion across our Group. This includes ensuring opportunity for all and embraces the positive effect that our diverse workforce brings.

We do not tolerate any form of discrimination, and our employment policies and practices focus on ensuring that all our employment processes are free from unlawful discrimination on any grounds.

Xchanging Solutions Limited has a total of 95 employees on its rolls as of March 31,2025.