DRAFT RED HERRING PROSPECTUS Dated March 18, 2008

Please read section 60B of the Companies Act, 1956 (The Draft Red Herring Prospectus will be updated upon filing with the RoC)

100% Book Building Issue

APOLLO HEALTH STREET LIMITED

(Our Company was originally incorporated on October 8, 1999 as Apollo Health Street Limited in Tamil Nadu with its registered office at No. 19, Bishop Gardens, Raja Annamalaipuram, Chennai 600 028, Tamil Nadu, India and received its certificate of commencement of business on December 13, 1999. Pursuant to a special resolution of the members passed at an EGM held on April 21, 2005 and the consequent approval from the Central Government dated May 26, 2005, the Company was converted to a private limited company with effect from May 26, 2005 pursuant to Section 31 of the Companies Act and consequently the name of the Company was changed to Apollo Health Street Private Limited. Further, pursuant to a special resolution of the members passed at an EGM held on January 13, 2007 and the consequent approval from the Central Government dated January 25, 2007, the Company was converted to a public limited company with effect from January 25, 2007 pursuant to Section 44 of the Companies Act and consequently the name of the Company was changed to Apollo Health Street Limited.)

Registered Office: No. 19, Bishop Gardens, Raja Annamalaipuram, Chennai 600 028, Tamil Nadu, India; Tel: (91 44) 2493 7720; Fax: (91 44) 2829 2104. Corporate Office: Life Sciences Building, Apollo Hospitals Complex, Jubilee Hills, Hyderabad 500 033, Andhra Pradesh, India; Tel: (9140) 4000 3892, Fax: (9140) 2355 4353

Company Secretary and Compliance Officer: Mr. Y. Uday Chandra, Life Sciences Building, Apollo Hospitals Complex, Jubilee Hills, Hyderabad 500 033, Andhra Pradesh, India Tel: (9140) 4000 3892, Fax: (9140) 2355 4353, E-mail: investors@apollohealthstreet.com; Website: www.apollohealthstreet.com

PUBLIC ISSUE OF 6,500,000 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PRICE OF RS [] PER EQUITY SHARE INCLUDING A SHARE PREMIUM OF RS. [] PER EQUITY SHARE (THE ISSUE) BY APOLLO HEALTH STREET LIMITED (THE COMPANY OR THE ISSUER), AGGREGATING RS. [] MILLION. THE ISSUE COMPRISES A NET ISSUE OF 6,300,000 EQUITY SHARES OF RS. 10 EACH (THE NET ISSUE) AND A RESERVATION OF UP TO 200,000 EQUITY SHARES OF RS. 10 EACH FOR OUR ELIGIBLE EMPLOYEES (THE EMPLOYEE RESERVATION PORTION). THE ISSUE LESS THE EMPLOYEE RESERVATION PORTION IS REFERRED TO AS THE NET ISSUE. THE ISSUE WOULD CONSTITUTE 20.63% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY. THE NET ISSUE WILL CONSTITUTE 19.99% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY. * The Company is considering a Pre-IPO placement with certain investors (Pre-IPO Placement). The Pre-IPO Placement is at the discretion of the Company. The Company will

complete the issuance, if any, of such Equity Shares prior to the filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size offered to the public will be reduced to the extent of such Pre-IPO Placement, subject to a minimum Issue size of 10% of the post Issue capital being offered to the public.

PRICE BAND: RS. [y] TO RS. [y] PER EQUITY SHARE OF FACE VALUE OF RS. 10. THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 AND THE FLOOR PRICE IS [] TIMES OF THE FACE VALUE AND THE CAP

PRICE IS [] TIMES OF THE FACE VALUE In case of revision in the Price Band, the Bidding Period/Issue Period shall be extended for three additional days after such revision, subject to the Bidding/Issue Period not exceeding ten working days. Any revision in the Price Band, and the revised Bidding Period/ Issue Period, if applicable, shall be widely disseminated by notification to the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE), by issuing a press release and by indicating the change on the web sites of the Book Running Lead Managers and the terminals of the Syndicate. In terms of Rule 19(2)(b) of the Securities Contract Regulation Rules, 1957 (SCRR), this being an Issue for less than 25% of the postIssue capital, the Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue will be allocated on a proportionate basis to Qualified Institutional Buyers (QIBs), out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to all QIBs including Mutual Funds, subject to valid bids being received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the Net Issue will be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a proportionate basis to Eligible Employees, subject to valid Bids being received at or above the Issue Price.

RISK IN RELATION TO THE FIRST ISSUE This being the first public issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares is Rs. 10 per Equity Share and the Issue Price is [] times of the face value. The Issue Price (as determined by the Company, in consultation with the Book Running Lead Managers, on the basis of assessment of market demand for the Equity Shares offered by way of book building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of the Company or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKS Investment in equity and equity related securities involves a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue, including the risks involved. The Equity Shares have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of investors is invited to the section titled Risk Factors beginning on page X.

IPO GRADING The Issue has been rated [] by [](pronounced []) indicating [].For details see the section titled General Information beginning on page 14.

ISSUERS ABSOLUTE RESPONSIBILITY The Issuer having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in the Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING The Equity Shares are proposed to be listed on the BSE and the NSE and the Company has received in-principle approvals from these Stock Exchanges for the listing of its Equity Shares pursuant to letters dated [] and [] respectively. For purposes of this Issue, the Designated Stock Exchange is [].

BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE

ICICI Securities Limited ICICI Centre, HT Parekh Marg Churchgate Mumbai 400 020 India Tel: (91 22) 2288 2460 Fax: (91 22) 2282 6580 Email: ahsl_ipo@isecltd.com Investor Grievance Email: customercare@isecltd.com Website: www.icicisecurities.com Contact Person: Mr. Sumanth Rao SEBI Registration No.: INM000011179

Edelweiss Capital Limited 14th floor, Express Towers Nariman Point Mumbai 400 021, India Tel: (91 22) 4086 3535 Fax: (91 22) 2288 2119 E-mail: ahsl.ipo@edelcap.com Investor Grievance Email: ahsl.investorgrievance@edelcap.com Website: www.edelcap.com Contact Person: Mr. Jibi Jacob SEBI Registration No.: INM000010650

Karvy Computershare Private Limited Karvy House, 46 Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034, India Tel: (91 40) 2342 0832 Fax: (91 40) 2342 0833 E-mail: ahsl.ipo@karvy.com Website: www.karvy.com Contact Person: Mr. S. Ganapathy Subramanian

BID ISSUE PROGRAM BID/ISSUE OPENS ON [], 2008 BID/ISSUE CLOSES ON [], 2008

TABLE OF CONTENTS

SECTION I GENERAL .................................................................................................................................................................................... I DEFINITIONS AND ABBREVIATIONS................................................................................................................................................................. I CERTAIN CONVENTIONS; USE OF MARKET DATA......................................................................................................................................VII FORWARD-LOOKING STATEMENTS................................................................................................................................................................IX SECTION II RISK FACTORS........................................................................................................................................................................X

SECTION III INTRODUCTION.....................................................................................................................................................................1 SUMMARY OF OUR BUSINESS, STRENGTHS AND STRATEGY ......................................................................................................................1 SUMMARY FINANCIAL INFORMATION.............................................................................................................................................................7 THE ISSUE............................................................................................................................................................................................................13 GENERAL INFORMATION .................................................................................................................................................................................14 CAPITAL STRUCTURE........................................................................................................................................................................................23 OBJECTS OF THE ISSUE....................................................................................................................................................................................45 BASIS FOR ISSUE PRICE....................................................................................................................................................................................50 STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS.............................................52 SECTION IV ABOUT US...............................................................................................................................................................................60 INDUSTRY ............................................................................................................................................................................................................60 OUR BUSINESS....................................................................................................................................................................................................63 REGULATIONS AND POLICIES.........................................................................................................................................................................81 HISTORY AND CORPORATE STRUCTURE ......................................................................................................................................................85 OUR MANAGEMENT.........................................................................................................................................................................................101 OUR PROMOTERS ............................................................................................................................................................................................115 RELATED PARTY TRANSACTIONS..................................................................................................................................................................184 DIVIDEND POLICY ...........................................................................................................................................................................................185 SECTION V FINANCIAL INFORMATION .............................................................................................................................................186 FINANCIAL STATEMENTS ...............................................................................................................................................................................186 SELECTED HISTORICAL FINANCIAL DATA OF ZAVATA, INC...................................................................................................................338 OUR SELECTED HISTORICAL FINANCIAL DATA ........................................................................................................................................341 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...............................346 SECTION VI LEGAL AND REGULATORY INFORMATION ............................................................................................................365 OUTSTANDING LITIGATION AND DEFAULTS .............................................................................................................................................365 GOVERNMENT LICENSES AND APPROVALS ...............................................................................................................................................420 OTHER REGULATORY AND STATUTORY INFORMATION..........................................................................................................................425 SECTION VII ISSUE RELATED INFORMATION.................................................................................................................................435 TERMS OF THE ISSUE......................................................................................................................................................................................435 ISSUE STRUCTURE...........................................................................................................................................................................................438 ISSUE PROCEDURE..........................................................................................................................................................................................441 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES......................................................................................................466 SECTION VIII - MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION................................................................................467

SECTION IX OTHER INFORMATION....................................................................................................................................................511 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION................................................................................................................511 DECLARATION ................................................................................................................................................................................................513

- I -

SECTION I GENERAL

DEFINITIONS AND ABBREVIATIONS

Term Description the Company or our Company or AHSL or the Issuer

Unless the context otherwise requires, refers to Apollo Health Street Limited, a companyincorporated under the Companies Act and having its registered office at No. 19, BishopGardens, Raja Annamalaipuram, Chennai 600 028, Tamil Nadu, India

we or us or our Unless the context otherwise requires, refers to the Company and its Subsidiaries

Company related terms

Term Description ABMCL AB Medical Centres Limited, a company incorporated under the Companies Act and

having its registered office at No. 154, Poonamallee High Road, Kilpauk, Chennai 600 010

AFSI Armanti Financial Services, Inc., a company incorporated under the laws of Delaware, United States and having its registered office at 2711, Centerville road, Suite 400,Wilmington, County of New Castle, State of Delaware, 19808

AGHL Apollo Gleneagles Hospital Limited, a company incorporated under the Companies Act and having its registered office at 58, Canal Circular Road, Kolkata 700 054, West Bengal, India

AGPPL Apollo Gleneagles PET-CT Private Limited, a company incorporated under the Companies Act and having its registered office at No. 19, Bishop Gardens, Raja Annamalaipuram, Chennai 600 028, Tamil Nadu, India

AHEL Apollo Hospitals Enterprise Limited, a company incorporated under the Companies Actand having its registered office at No. 19, Bishop Gardens, Raja Annamalaipuram, Chennai 600 028, Tamil Nadu, India

AHIL Apollo Hospitals International Limited, a company incorporated under the Companies Actand having its registered office at No. 19, Bishop Gardens, Raja Annamalaipuram, Chennai 600 028, Tamil Nadu, India

AHSI Apollo Health Street, Inc., a company incorporated under the laws of Delaware, UnitedStates and having its registered office at 15, East North Street, Dover, Kent, Delaware19901

Apollo Group Unless the context otherwise requires, refers to the Company, its Subsidiaries and the entities forming part of the Promoter Group

Apollo Hospital Apollo Hospital, a corporate hospital under the administration of AHEL and located at 21,Greams Lane, Off Greams road, Chennai 600 006, Tamil Nadu, India

Apollo Mumbai Apollo Mumbai Hospital Limited, a company incorporated under the Companies Act andhaving its registered office at No. 19, Bishop Gardens, Raja Annamalaipuram, Chennai 600 028, Tamil Nadu, India

Apollo Sindoori Hotels Apollo Sindoori Hotels Limited, a company incorporated under the Companies Act and having its registered office at 19-B, Anugraha Apartments, 41, Uthamar Gandhi Salai, Nungambakkam, Chennai 600 034, Tamil Nadu, India

Apollo Speciality Hospital Apollo Speciality Hospital, a corporate hospital under the administration of AHEL and located at 320, Anna Salai Nandanam, Chennai 600 035, Tamil Nadu, India

Armanti Financial Armanti Financial Services, LLC., a company incorporated under the laws of Delaware,United States and having its registered office at 2 Broad Street, Bloomfield, New Jersey 07003

Articles/ Articles of Association Articles of Association of AHSL, as amended from time to time ASCIL Apollo Sindhoori Capital Investments Limited, a company incorporated under the

Companies Act and having its registered office at 55, Ali Towers, Greams Road, Chennai 600 006

Board of Directors/ Board The Board of Directors of AHSL or a committee thereof CCPS The 2,661,242 convertible cumulative redeemable preference shares of Rs. 60 each that

were issued to Maxwell and Eliza Holdings and other investors pursuant to the subscription and shareholders agreement dated April 14, 2005 (as amended from time to time), asdetailed in the section titled History and Corporate Structure - Shareholders and Joint Venture Agreements - Restated Shareholders agreement dated January 8, 2007 betweenMaxwell, Eliza Holdings, the Company and AHEL on page 90

Class A Shares The 14,535,800 shares of the Company being a separate class of redeemable and convertible preference shares of the Company having a face value of Rs. 10 each that wereissued to Maxwell and Eliza Holdings and other investors pursuant to the subscription and shareholders agreement dated April 14, 2005 (as amended from time to time), as detailedin the section titled History and Corporate Structure - Shareholders and Joint Venture

- II -

Term Description Agreements - Restated Shareholders agreement dated January 8, 2007 between Maxwell,Eliza Holdings, the Company and AHEL on page 90

Compensation and Remuneration Committee

The committee of our Board comprising of Mr. NJ Yasaswy (Chairman), Mr. Nasser Munjee and Mr. R. Ramaraj that was constituted by our Directors to administer our ESOPs

Directors The directors of AHSL, as they may change from time to time Eliza Holdings Eliza Holdings, a company incorporated under the laws of Mauritius and having its

registered office at International Management (Mauritius) Limited, 4th floor, Les Cascades building, Edith Cavell street, Port Louis, Republic of Mauritius

Emedlife Emedlife Insurance Broking Services Limited, a company incorporated under the Companies Act and having its registered office No.610/611, Asoka State Building, Bharakamba Road, Conn Place, New Delhi 110 001, India

Equity Shares Equity shares of the Company of face value of Rs. 10 each, unless otherwise specified in the context thereof

ESOP 1 The employee stock option scheme of the Company titled Apollo ESOP 2005 underwhich the Company has issued 414,000 options

ESOP 2 The employee stock option scheme of the Company titled Apollo ESOP 2006 under which the Company has issued 1,100,850 options

ESOP 3 The employee stock option scheme of the Company titled Apollo ESOP 2006-II under which the Company has issued 97,350 options

ESOP 4 The employee stock option scheme of the Company titled Apollo Employees Accelerated Stock Option Plan under which the Company has issued 325,000 options

ESOP 5 The employee stock option scheme of the Company titled Apollo ESOP 2007 under which the Company has issued 297,000 options

ESOPs Collectively ESOP 1, ESOP 2, ESOP 3, ESOP 4 and ESOP 5 FHPL Family Health Plan Limited, a company incorporated under the Companies Act and having

its registered office at 1st Floor, Ali Towers, 55, Greams Road, Chennai 600 006, TamilNadu, India

Financial year/fiscal/FY The twelve months ended March 31 of a particular year GDPL Gleneagles Development Pte. Limited, a company incorporated under the laws of

Singapore and having its registered office at No.1, Grange Road, #11-01 Orchard Building, Singapore 239 693

Heritage Websolutions Heritage Websolutions Private Limited, a company incorporated under the Companies Actand having its registered office at DITP-5B, 5th Floor, Delhi IT Park, Shastri Park, New Delhi 110 053, India

IHRCL Imperial Hospital and Research Centre Limited, a company incorporated under theCompanies Act and having its registered office at 154/11, Opposite IIMB, BannergattaRoad, Bangalore 560 076, Karnataka, India

IMCL Indraprastha Medical Corporation Limited, a company incorporated under the Companies Act and having its registered office at Hospital Complex, Sarita Vihar, Delhi-Mathura Road, New Delhi 110 076, New Delhi, India

Indraprastha Apollo Hospital Indraprastha Apollo Hospital, a corporate hospital under the administration of IMCL and located at Sarita Vihar, Delhi Mathura road, New Delhi 110 044, India

Maxwell Maxwell (Mauritius) Pte Limited, a company incorporated under the laws of Mauritius andhaving its registered office at 3rd floor, TM Building, Pope Hennessy Street, Port Louis, Republic of Mauritius

Medvarsity Medvarsity Online Limited, a company incorporated under the Companies Act and havingits registered office at Life Sciences Building, Apollo Hospitals Complex, Jubilee Hills,Hyderabad 500 033, Andhra Pradesh, India

Memorandum/ Memorandum of Association

The Memorandum of Association of AHSL, as amended from time to time

PCR Investments PCR Investments Limited, a company incorporated under the Companies Act and havingits registered office at 19, Temple Trees, Bishop Gardens, Raja Annamalaipuram, Chennai 600028

Samudra Healthcare Samudra Healthcare Enterprise Limited, a company incorporated under the Companies Actand having its registered office at Apollo Hospitals Complex, Jubilee Hills, Hyderabad 500 033, Andhra Pradesh, India

Series B Preference Shares The 1,766,963 compulsorily convertible, cumulative Series B Preference Shares of Rs. 158allotted to Eliza Holdings and other investors pursuant to the subscription and shareholders agreement dated April 14, 2005 (as amended from time to time), as detailed in the sectiontitled History and Corporate Structure - Shareholders and Joint Venture Agreements -Restated Shareholders agreement dated January 8, 2007 between Maxwell, Eliza Holdings, the Company and AHEL on page 90

Statutory Auditors Statutory auditors of the Company, being M/s S.R. Batliboi & Associates, Hyderabad, Chartered Accountants

Subsidiaries (i) Accordis, Inc.; (ii) Accordis Holding Corporation; (iii) AFSI; (iv) AHSI; (v) Armanti

- III -

Term Description Financial; (vi) Health Receivables Management, Inc.; (vii) Heritage Websolutions; (viii) HPS Paradigm, Inc.; (ix) Global STI Mauritius Limited; (x) STI Processmind, Inc.; (xi) Symphony Data Corporation; (xii) Zavata, Inc.; (xiii) Zavata Acquisition Corporation; and (xiv) Zavata India Private Limited

UHHL Unique Home Healthcare Limited, a company incorporated under the Companies Act andhaving its registered office at 19, Bishop Gardens, Raja Annamalaipuram, Chennai 600 028, Tamil Nadu, India

Zavata, Inc. Zavata, Inc., a company incorporated under the laws of Delaware, United States andhaving its principal office at 400 Perimeter Center Terrace, Suite 249, Atlanta, Georgia30346

Zavata Merger Agreement The Agreement and Plan of Merger dated August 29, 2007 between AHSI, AFSI, ZavataAcquisition Corporation, Mr. Satish Sanan and Zavata, Inc. in relation to the acquisition of Zavata, Inc. For further details, please refer to the section titled History and Corporate Structure- Shareholders and Joint Venture Agreements - Agreement and Plan of Merger dated August 29, 2007 between AHSI, AFSI, Zavata Acquisition Corporation, Mr. SatishSanan and Zavata, Inc. on page 88

Issue Related Terms

Term Description Allotment Unless the context otherwise requires, the issue or transfer of Equity Shares, pursuant to

the Issue to the successful Bidders Allottee The successful Bidder to whom the Equity Shares are/ have been issued or transferred Allocation Amount The amount payable by a Bidder on or prior to the Pay-in Date after deducting any Bid

Amounts that may already have been paid by such Bidder Banker(s) to the Issue [] Bid An indication to make an offer during the Bidding Period by a prospective investor to

subscribe to the Equity Shares of the Company at a price within the Price Band, includingall revisions and modifications thereto

Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Form and payable by the Bidder on submission of the Bid in the Issue

Bid/Issue Closing Date The date after which the Syndicate will not accept any Bids for the Issue, which shall benotified in two widely circulated newspapers (one each in English and Hindi) and a Tamilnewspaper

Bid/Issue Opening Date The date on which the Syndicate shall start accepting Bids for the Issue, which shall be thedate notified in two widely circulated newspapers (one each in English and Hindi) and aTamil newspaper

Bid cum Application Form The form in terms of which the Bidder shall make an offer to purchase Equity Shares ofour Company in terms of the Red Herring Prospectus

Bid Price In respect of each successful Bidder, the Issue Price multiplied by the number of EquityShares allocated to a successful Bidder

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red HerringProspectus and the Bid cum Application Form

Bidding Period/ Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date (inclusive of both days) and during which prospective Bidders can submit their Bids

Book Building Process/ Method Book building process as provided in Chapter XI of the SEBI Guidelines, in terms ofwhich this Issue is being made

BRLMs Book Running Lead Manager to the Issue, in this case being ICICI Securities and Edelweiss

CAN/ Confirmation of Allocation Note

Means the note or advice or intimation of allocation of Equity Shares sent to the Bidderswho have been allocated Equity Shares after discovery of the Issue Price in accordance with the Book Building Process

Cap Price The higher end of the Price Band, above which the Issue Price will not be finalized andabove which no Bids will be accepted

Companies Act / Act The Companies Act, 1956, as amended from time to time Cut-off Price The Issue Price finalised by the Company in consultation with the BRLMs. Only Retail

Individual Bidders are entitled to bid at the Cut-off Price, for a Bid Amount not exceeding Rs. 100,000. QIBs and Non-Institutional Bidders are not entitled to bid at the Cut-off Price

Depositories Act The Depositories Act, 1996, as amended from time to time Depository A depository registered with SEBI under the SEBI (Depositories and Participant)

Regulations, 1996, as amended from time to time Depository Participant A depository participant as defined under the Depositories Act Designated Date The date on which funds are transferred from the Escrow Account to the Public Issue

Account after the Prospectus is filed with the RoC, following which the Board of Directors

- IV -

Term Description shall allot Equity Shares to the successful Bidders

Designated Stock Exchange [] Draft Red Herring Prospectus/DRHP

The Draft Red Herring Prospectus issued in accordance with Section 60B of theCompanies Act, which does not have complete particulars on the price at which the EquityShares are offered and size of the Issue

Edelweiss Edelweiss Capital Limited, a company incorporated under the Companies Act and havingits registered office at 14th Floor, Express Towers, Nariman Point, Mumbai 400 021, India

Edelweiss Securities Edelweiss Securities Limited, a company incorporated under the Companies Act andhaving its registered office at 14th floor, Express Towers, Nariman Point, Mumbai 400 021, India

Eligible Employees Permanent employees of the Company and the Subsidiaries including the directors thereofwho are Indian nationals based in India and are present in India on the date of submissionof the Bid cum Application Form. However, the Directors who are the Promoters of the Company shall not be considered to be Eligible Employees

Eligible NRI An NRI from such jurisdiction outside India where it is not unlawful to make an offer orinvitation under the Issue and in relation to whom the Red Herring Prospectus constitutes an invitation to subscribe or purchase the Equity Shares offered thereby

Employee Reservation Portion The portion of the Issue being up to 200,000 Equity Shares available for allocation toEligible Employees

Escrow Agreement Agreement entered into by the Company, the Registrar, the BRLMs, the SyndicateMember and the Escrow Collection Bank(s) for collection of the Bid Amounts and whereapplicable refunds of the amounts collected to the Bidders

Escrow Collection Account Account opened with the Escrow Collection Bank(s) for the Issue and in whose favour the Bidder will issue cheques or drafts in respect of the Bid Amount when submitting a Bidand the Allocation Amount paid thereafter

Escrow Collection Bank(s) The banks, which are clearing members and registered with SEBI as Bankers to the Issue with whom the Escrow Collection Account will be opened

First Bidder The Bidder whose name appears first in the Bid cum Application Form or Revision Form Floor Price The lower end of the Price Band, below which the Issue Price will not be finalized and

below which no Bids will be accepted ICICI Securities ICICI Securities Limited, a company incorporated under the Companies Act and having its

registered office at ICICI Centre, HT Parekh Marg, Churchgate, Mumbai 400 020, India IPO Initial Public Offering Issue Public issue of 6,500,000 Equity Shares by the Company at the Issue Price Issue Price The final price at which Equity Shares will be allotted in terms of the Prospectus, as

determined by the Company in consultation with the BRLMs on the Pricing Date Margin Amount The amount paid by a Bidder at the time of submission of the Bid, which may range

between 10% to 100% of the Bid Amount Mutual Funds Mutual funds registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996, as

amended from time to time Mutual Fund Portion 5% of the QIB Portion or 189,000 Equity Shares available for allocation to Mutual Funds

only, out of the QIB Portion Net Issue The Issue less the Employee Reservation Portion being 6,300,000 Equity Shares Non-Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have Bid for Equity

Shares for an amount more than Rs. 100,000 Non-Institutional Portion The portion of the Net Issue being up to 630,000 Equity Shares available for allocation to

Non Institutional Bidders Pay-in-Date Bid Closing Date or the last date specified in the CAN sent to Bidders, as applicable Pay-in-Period (i) With respect to Bidders whose Margin Amount is 100% of the Bid Amount, the period

commencing on the Bid Opening Date and extending until the Bid Closing Date, and (ii)with respect to Bidders whose Margin Amount is less than 100% of the Bid Amount, theperiod commencing on the Bid Opening Date and extending up to the closure of Pay-in Date

Price Band The price band with a minimum price (Floor Price) of Rs. [] and the maximum price (Cap Price) of Rs. [], including any revisions thereof

Pricing Date The date on which the Company in consultation with the BRLMs finalizes the Issue Price Promoter Group Unless the context otherwise requires, refers to those individuals and those entities

mentioned in the section titled Our Promoter - Promoter Group on page 120 Promoters Our promoters, being AHEL, Dr. Prathap C. Reddy and Mrs. Sangita Reddy Prospectus The Prospectus, to be filed with the RoC containing, inter alia, the Issue Price that is

determined at the end of the Book Building Process, the size of the Issue and certain otherinformation

Public Issue Account Account opened with the Banker(s) to the Issue to receive monies from the Escrow

- V -

Term Description Accounts for the Issue on the Designated Date

QIB Margin Amount An amount representing at least 10% of the Bid Amount QIB Portion The portion of the Net Issue to public being not less than 3,780,000 Equity Shares at the

Issue Price, available for allocation to QIBs on a proportionate basis Qualified Institutional Buyers or QIBs

Public financial institutions as defined in Section 4A of the Companies Act, FIIs,scheduled commercial banks, mutual funds registered with SEBI, venture capital fundsregistered with SEBI, multilateral and bilateral development financial institutions, foreign venture capital investors registered with SEBI, State industrial development corporations,insurance companies registered with the Insurance Regulatory and Development Authority,provident funds with a minimum corpus of Rs. 250 million, pension funds with a minimumcorpus of Rs. 250 million, and multilateral and bilateral development financial institutions

Refund Account The account opened with the Escrow Collection Bank(s), from which refunds, if any, of thewhole or part of the Bid Amount shall be made

Refund Banker [] Registrar /Registrar to the Issue Registrar to the Issue, in this case being Karvy Computershare Private Limited, a company

incorporated under the Companies Act and having its registered office as indicated on thecover page.

Retail Individual Bidders Individual Bidders (including HUFs) who have Bid for Equity Shares for an amount less than or equal to Rs. 100,000, in any of the bidding options in the Issue

Retail Portion The portion of the Net Issue to the public being up to 1,890,000 Equity Shares available forallocation to Retail Individual Bidder(s) on a proportionate basis

Revision Form The form used by the Bidders to modify the quantity of Equity Shares or the Bid Price inany of their Bid cum Application Form s or any previous Revision Form(s)

RHP or Red Herring Prospectus Means the document issued in accordance with the SEBI Guidelines, which does not have complete particulars on the price at which the Equity Shares are offered and the size of theIssue. The Red Herring Prospectus will be filed with the RoC in terms of section 60B ofthe Companies Act, at least 3 days before the Bid Opening Date and will become a Prospectus after filing with the RoC after pricing and allocation

RoC The Registrar of Companies, Tamil Nadu at Chennai Stock Exchanges NSE and BSE Syndicate The BRLMs and the Syndicate Member Syndicate Agreement The agreement to be entered into among the Company and the Syndicate in relation to the

collection of Bids in this Issue Syndicate Member Edelweiss Securities TRS or Transaction Registration Slip

The slip or document issued by the Syndicate Member to a Bidder as proof of registration of the Bid

Underwriters The BRLMs and the Syndicate Member Underwriting Agreement The agreement among the Underwriters and the Company to be entered into on or after the

Pricing Date Venture Capital Funds Venture capital funds as defined and registered with SEBI under the Securities and

Exchange Board of India (Venture Capital Fund) Regulations, 1996, as amended from timeto time

Company/ Industry related terms

Term Description AAPC American Academy of Professional Coding BPO Business Process Outsourcing FBO Full Business Office FDCPA The United States Fair Debt Collection Practices Act Government/GoI Government of India HIPAA United States Health Insurance Portability and Accountability Act of 1996 IT Information Technology ITES Information Technology Enabled Services PPO Preferred Provider Organisation RCM Revenue Cycle Management STPI Software Technology Parks of India Conventional/ General Terms/ Abbreviations

Term Description AGM Annual General Meeting AS Accounting Standards as issued by the Institute of Chartered Accountants of India

- VI -

Term Description BSE Bombay Stock Exchange Limited CDSL Central Depository Services (India) Limited ECS Electronic Clearing Service EGM Extraordinary General Meeting of shareholders Electronic Transfer of Funds Refunds through ECS, Direct Credit or RTGS, as applicable EPS Earnings per share FDI Foreign direct investment FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the

regulations framed there under FII Foreign Institutional Investor (as defined under Foreign Exchange Management (Transfer

or Issue of Security by a Person Resident outside India) Regulations, 2000) registered with SEBI under applicable laws in India

FIPB Foreign Investment Promotion Board, Government of India FVCI Foreign Venture Capital Investor registered under the Securities and Exchange Board of

India (Foreign Venture Capital Investor) Regulations, 2000 HUF Hindu Undivided Family I.T. Act/ IT Act The Income Tax Act, 1961, as amended from time to time Indian GAAP Generally accepted accounting principles of India IPC Indian Penal Code, 1860 LIBOR London Interbank Offered Rate N.A/NA Not applicable NAV Net asset value NEFT National Electronic Fund Transfer Non Residents/ NR Non Resident is a Person resident outside India, as defined under FEMA and includes a

Non Resident Indian NRE Account Non Resident External Account NRI/Non Resident Indian Non Resident Indian is a Person resident outside India, who is a citizen of India or a

Person of Indian origin and shall have the same meaning as ascribed to such term in the Foreign Exchange Management (Deposit) Regulations, 2000

NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OCB/ Overseas Corporate Body A company, partnership, society or other corporate body owned directly or indirectly to

the extent of at least 60% by NRIs, including overseas trusts in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under Foreign Exchange Management (Deposit) Regulations, 2000. OCBs are not allowed to invest in this Issue

p.a. / P.A. Per annum P/E Ratio Price/Earnings Ratio PAN Permanent Account Number Person/Persons Any individual, sole proprietorship, unincorporated association, unincorporated

organization, body corporate, corporation, company, partnership, limited liability company, joint venture, or trust or any other entity or organization validly constituted and/or incorporated in the jurisdiction in which it exists and operates, as the context requires

PIO/ Person of Indian Origin Shall have the same meaning as is ascribed to such term in the Foreign Exchange Management (Deposit) Regulations, 2000

RBI The Reserve Bank of India Re. One Indian Rupee RoNW Return on Net Worth Rs. Indian Rupees RTGS Real Time Gross Settlement Process SCRR Securities Contract Regulation Rules, 1957, as amended SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992 SEBI ESOP Guidelines Securities and Exchange Board of India (Employees Stock Option Scheme and Employee

Stock Purchase Scheme) Guidelines, 1999 SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January

27, 2000, as amended, including instructions and clarifications issued by SEBI from time to time

SEBI Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended from time to time

SICA Sick Industrial Companies (Special Provisions) Act, 1995 SPV Special Purpose Vehicle United States or U.S. or USA United States of America U.S. GAAP Generally accepted accounting principles of the United States of America

- VII -

CERTAIN CONVENTIONS; USE OF MARKET DATA Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our unconsolidated and our consolidated financial statements prepared in accordance with Indian GAAP and restated in accordance with the SEBI Guidelines, beginning on page 186. Our fiscal year commences on April 1 and ends on March 31. In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. There are significant differences between Indian GAAP and U.S. GAAP; accordingly, the degree to which the Indian GAAP financial statements included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the readers level of familiarity with Indian accounting practices. Any reliance by Persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited and we urge you to consult your own advisors regarding such differences and their impact on our financial data. All references to Rupees or Rs. are to Indian Rupees, the official currency of the Republic of India. All references to US$ or US Dollars or USD are to United States Dollars, the official currency of the United States of America. For additional definitions, please refer to the section titled Definitions and Abbreviations beginning on page I. Market and industry data used throughout this Draft Red Herring Prospectus has been obtained from publications available in the public domain. These publications generally state that the information contained therein has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe that the industry data used in this Draft Red Herring Prospectus is reliable, it has not been independently verified. This Draft Red Herring Prospectus contains translations of some Rupee amounts into US Dollars which should not be construed as a representation that those Rupee or US Dollar amounts could have been, or could be, converted into US Dollars or Indian Rupees, as the case may be, at any particular rate, the rates stated below, or at all. The following table sets forth, for each period indicated, information concerning the number of Rupees for which one US Dollar could be exchanged at the noon buying rate given by the Federal Reserve Bank of New York. The rows titled average, low and high in the table below represent the average, the low and the high of the daily noon buying rate during the fiscal indicated or any part period thereof. Except as otherwise stated in this Draft Red Herring Prospectus, US Dollar amounts have been translated into Rupees for each period, and presented solely to comply with the requirements of the Clause 6.9.7.1 of the SEBI Guidelines. Investors are cautioned not to rely on such translated amounts.

Fiscal 2007 Fiscal 2006 Fiscal 2005 Period End 43.10 44.48 43.62

Average 45.12 44.17 44.86 Low 42.78 43.05 43.27 High 46.83 46.26 46.45

On March 14, 2008, the noon-buying rate was Rs. 40.40 per one US Dollar.

We acquired Zavata, Inc in August 2007. The consolidated financial statements of Zavata, Inc. have been prepared and presented in accordance with US GAAP in USD with a convenience translation into Indian Rupees using the Reserve Bank of India exchange rate as of March, 2007. Our financial statements are prepared in conformity with Indian GAAP, which differs in certain significant respects from US GAAP; accordingly, the degree to which the US GAAP financial statements of Zavata, Inc. included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the readers level of familiarity with US GAAP. Any reliance by persons not familiar with US GAAP on the financial disclosures regarding Zavata, Inc. presented in this Draft Red Herring Prospectus should accordingly be limited. The Company has not attempted to quantify those differences or their impact on the financial data included herein, and you should consult your own advisors regarding such differences and their impact on our financial data.

- VIII -

All amounts disclosed in this Draft Red Herring Prospectus are in millions, except as disclosed in the section titled Main Provisions of the Articles of Association on page 467. For the sake of clarity, one million is equivalent to ten lakhs and ten million is equivalent to one crore.

- IX -

FORWARD-LOOKING STATEMENTS

This Draft Red Herring Prospectus contains certain forward-looking statements. These forward looking statements can generally be identified by words or phrases such as aim, anticipate, believe, expect, estimate, intend, may, objective, plan, project, shall, will, will continue, will pursue or other words or phrases of similar import. Similarly, statements that describe our objectives, plans or goals are also forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others:

Inability to manage our growth effectively which could have an adverse effect on our business, results of

operations or financial condition. An adverse change in our relationship or in the performance or financial position of a few of our clients on

whom we rely for a significant portion of our income. Decrease in demand for RCM services, IT services or enterprise solution services in the healthcare industry

could reduce our income and adversely affect our business. Loss of our management team and other key personnel who are critical to our continued success. Withdrawal or reduction of tax exemptions or benefits and other incentives currently provided by the GoI to

companies within our industry. Inability to keep pace with changing technology, evolving industry standards and new product

introductions. Any changes in United States laws governing the healthcare or BPO industries which may have an adverse

effect on our results of operations. Failure to realize the anticipated benefits from our acquisitions could effect our results of operations

adversely. Long selling cycle for our outsourcing services that requires significant funds and management resources

and a long implementation cycle that requires significant resource commitments. Failure to estimate the resources and time required for our contracts may negatively affect our profitability. For a further discussion of factors that could cause our actual results to differ, please refer to the section titled Risk Factors beginning on page X. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither we, our Directors, any member of the Syndicate nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the BRLMs and the Company will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges.

- X -

SECTION II RISK FACTORS An investment in our Equity Shares involves a high degree of risk. You should carefully consider all information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making any investment in the Equity Shares. If any of the following risks or any of the other risks and uncertainties discussed in this Draft Red Herring Prospectus occur, our business, results of operations and financial condition could suffer, the trading price of our Equity Shares could decline, and you may lose all or part of your investment. This Draft Red Herring Prospectus also contains forward-looking statements that involve risks and uncertainties. Our results could differ materially from those anticipated in these forward looking statements as a result of certain factors, including the considerations described below, under Forward-looking Statements beginning on page IX and elsewhere in this Draft Red Herring Prospectus. Risks Associated with Our Business 1. There are a number of legal proceedings by and against us, our Directors, Promoters and Promoter

Group companies. We, our Directors, Promoters and certain of our Promoter Group companies are involved in a number of legal proceedings and claims in relation to certain civil and criminal matters. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. Any adverse decision in one or more of these proceedings may have a significant effect on our business and results of operations. The following are the details of such litigation: The Company has filed 17 cases and one notice has been issued to it; Our Subsidiaries are involved in six cases and eight notices have been issued to or by them that may

lead to potential litigation; Our Promoters are involved in 180 cases. Our Promoter Group is involved in 179 cases. For further details, please see Outstanding Litigation and Material Developments beginning on page 365. 2. We may be unable to manage our growth effectively which could have an adverse effect on our

business, results of operations or financial condition. We have grown our business through a combination of organic and inorganic route, including the recent acquisition of Zavata, Inc. in the United States. We also acquired Armanti Financial in the United States and Heritage Websolutions in India in 2006. We are currently in the process of expanding our delivery location in Hyderabad and we are establishing a new delivery location in Chennai. In order to manage our growth effectively, we must implement and improve our operational systems and procedures and internal controls on a timely basis. If we fail to do so, we may not be able to service our clients needs, pursue new business opportunities, complete future acquisitions or operate our business effectively. Failure to effectively transfer new client business to our service delivery locations, accurately estimate transfer and operational costs associated with new contracts, hire and retain new employees or other factors, could result in delays in executing client contracts, trigger service level penalties, give the client the right to terminate the contract for breach, or cause our profit margins not to meet our expectations or our historical profit margins. Our inability to execute our growth strategy to ensure the continued adequacy of our current systems or to manage our expansion effectively could have an adverse effect on our business, prospects, results of operations and financial condition. 3. We rely on a limited number of clients for a significant portion of our income. An adverse change in

a client relationship or in a clients performance or financial position could adversely affect our business and financial condition.

- XI -

We currently derive a significant portion of our income from a limited number of clients. For the six months ended September 30, 2007, we had one client who contributed to over 10.0% of our income from operations. This client accounted for 14.5% of our income from operations for the six months ended September 30, 2007. Our top five clients in the hospital and physician services, payer services and IT and enterprise solution services contributed 32%, 12% and 11%, respectively of our income from operations for the six months ended September 30, 2007. Our top five clients in the hospital and physician services, payer services and IT and enterprise solution services contributed 38%, 22% and 9%, respectively of our income from operations for the fiscal year ended March 31, 2007. We expect that a significant portion of our income will continue to be attributable to a limited number of clients in the near future. In addition, most of our clients have not committed to provide us with a minimum volume of work or to exclusively use us for their outsourcing needs. Some of these clients could stop outsourcing work to us by terminating our contract with little or no notice, or by electing not to renew the contract after expiration of its initial term. Our clients have in the past and may in the future demand price reductions, develop and implement newer technologies, automate some or all of their processes or change their outsourcing strategy by moving more work in-house or to other service providers, which could reduce our profitability. Our business could be adversely affected in case our clients terminate their relationships with us due to a change in vendor preference or any other reason. If we were to lose one or more of our major clients or if any one of our large clients significantly reduces its business with us or became financially troubled, our business, prospects, financial condition and results of operations would be adversely affected. 4. Our business is dependent upon the healthcare industry and any decrease in demand for revenue

cycle management services, IT services or enterprise solution services in the healthcare industry could reduce our income and adversely affect our business.

Our business and growth largely depend on the continued demand for our services from clients in the healthcare industry, as well as on trends in the healthcare industry to outsource business processes and IT, especially in the United States. For the year ended March 31, 2007 and the six months ended September 30, 2007, 98.15% and 99.97%, respectively, of our income from operations was derived from outside India. Hence, any slow down in the United States economy, change in the United States healthcare industry, a slowdown or reversal of the trend to outsource business processes and IT or the introduction of regulation which restricts or discourages companies from outsourcing could result in a decrease in the demand for our services and adversely affect our results of operations and financial condition. Certain other developments may also lead to a decline in the demand for our services. For example, consolidation in the healthcare industry or acquisitions, particularly involving our clients, may decrease the potential number of buyers of our services. Any significant reduction in or the elimination of the use of the services we provide within the healthcare industry would result in reduced income and may adversely affect our business. Our clients may also experience rapid changes in their prospects, price competition and pressure on their profitability. Although such pressures may encourage clients to increase outsourcing of services, they may also require us to lower our prices, which could adversely affect our business, prospects, results of operations and financial condition. 5. We may fail to attract and retain trained employees to support our operations, as competition for

highly skilled personnel is intense and we experience significant employee attrition. Our operations are labour intensive and our success depends to a significant extent on our ability to attract, hire, train and retain employees with skills to operate our business. In the past, our industry, including our company, has experienced high employee attrition. For the nine months ended December 31, 2007 and the fiscal year 2007, our overall attrition rate for all employees was approximately 18.4% and 30.5%, respectively. Our attrition rate is based on employees working with us for more than six months. We believe that the attrition rate is much higher in the first six to twelve months of joining and progressively reduces thereafter. We face a shortage of skilled resources in our market and our ability to cross-utilize our existing resources among different revenue streams is limited due to the specialized nature of our work. There is intense competition for skilled professionals in India and the United States to perform the services we offer to our clients. Increased competition for these professionals could increase our employee attrition rate and have an adverse effect on our operations. A significant increase in the attrition rate among our employees, particularly among the highly skilled workforce needed to provide RCM services, IT services and enterprise solution services, could also increase our recruiting and training costs and decrease our operating efficiency, productivity and profit margins.

- XII -

A shortage of sufficiently qualified personnel could also inhibit our ability to establish operations in new markets and our efforts to expand geographically. In addition, high attrition rates among our key employees could also result in a loss of domain and process knowledge, which could result in poor service quality. Our failure to attract, train and retain skilled personnel with the qualifications necessary to fulfill the needs of our existing and future clients could have an adverse effect on our business, prospects, results of operations and financial condition. 6. Our management team and other key personnel are critical to our continued success and the loss of

any such personnel could harm our business. Our future success substantially depends on the continued service and performance of the members of our management team and other key personnel. These personnel possess technical and business capabilities that are difficult to replace. If we lose the services of any of these or other key personnel, we may be unable to replace them in a timely manner or at all, which may affect our ability to continue to manage and expand our business. Members of our management team are employed pursuant to customary employment agreements, which may not provide adequate incentive for them to remain with us or adequately protect us in the event of their departure or otherwise. In addition, certain of those agreements contain non-compete and other provisions that may not be enforceable. Furthermore, we do not maintain any key man insurance for our key personnel. The loss of key members of our management team or other key personnel could have an adverse effect on our business, prospects, results of operations and financial condition. 7. Salary increases in India may prevent us from sustaining our competitive advantage and may reduce

our profit margins. Salaries and related benefits of our staff and other employees constitute a significant portion of our expenses. Salary costs in India have historically been significantly lower than salary costs in the United States and Europe for comparably skilled professionals, which has been one of our key competitive advantages. However, because of rapid economic growth in India and increased competition for skilled employees in India, salaries for comparably skilled employees in India is increasing at a rate faster than in the United States, which is reducing this competitive advantage. We also face increased competition and cost pressures from BPO companies in developing countries. Salary increases may reduce our profit margins and could have an adverse effect on our business, prospects, results of operations and financial condition. 8. Our failure to estimate the resources and time required for our contracts may negatively affect our

profitability. Our periodic fee escalations are based upon United States consumer price index, which is not indicative of our cost increases and this may adversely affect our profit margins.

In many of our contracts, we commit to long-term pricing with our clients and therefore we may not be able to pass cost overruns, completion delays and salary inflation. If we fail to accurately estimate the costs, resources and time required for a contract, future salary inflation rates or currency exchange rates, or if we fail to complete our contractual obligations within the contracted timeframe, our income, margins and profitability may be negatively affected. Some of our contracts have periodic fee escalation clauses that are linked to the United States consumer price index. Since most of our costs are incurred in India, our cost increases could be higher than the United States consumer price index increases and this may cause our profit margins not to meet our expectations or our historical profit margins. 9. Some of our clients may terminate contracts without cause and with little or no notice or penalty

before completion or may choose not to renew contracts, which could reduce our income and adversely affect our business.

Our client contracts range from three to five years, while certain others are rolling one-year short-term contracts. Typically, our contracts can be terminated by our clients without cause by giving little or no notice and without any termination related penalties. The length of notice required to terminate without cause varies between six months or immediate termination upon giving notice. These clients could stop outsourcing work to us by terminating or not renewing their contract. In addition, most of our clients have not committed to provide us with a minimum volume of work or to exclusively use us for their outsourcing needs. There are a number of factors that are outside our control, which might result in the termination of a contract or the loss of a client, including financial difficulties, bankruptcy, mergers and acquisitions, change of management and change in outsourcing strategy. A contract termination or significant reduction in work assigned to us by a key client or a number of smaller clients could cause us to experience a higher than expected number of unassigned employees

- XIII -

and unutilized infrastructure dedicated to those clients, which would increase our expenditure as a percentage of income until we are able to reduce or reallocate our resources and could have an adverse affect on our business, prospects, results of operations and financial condition. 10. If we fail to meet the standards set forth in our contracts, our clients may have claims for damages

against us. We are also exposed to uncapped liabilities and consequential and indirect damages in certain cases.

Most of our contracts with clients contain service level or performance requirements. Failure to consistently meet service requirements of a client or errors made by our personnel in the course of providing services to our clients could disrupt the clients business and result in a reduction of income or a claim for damages against us. In addition, a failure or inability to meet contractual requirements could adversely affect our goodwill and our ability to attract new clients. Our liability for breach of our obligations under client contracts is typically limited to actual damages incurred by the client is capped at a portion of the fees paid or payable under the relevant contract. However, to the extent that our contracts contain limitations of liability, such limitations may be unenforceable or otherwise may not protect us from liability for damages. In addition, typically there is no limitation of liability in relation to certain liabilities, such as, indemnification obligations for third party claims or breaches of confidentiality obligations. Further, some of our contracts do not have limitation of liability provisions, which exposes us to unlimited liabilities and to consequential and indirect damages. The assertion of one or more large claims against us could have an adverse effect on our goodwill, business, prospects, results of operations and financial condition. 11. Our pricing for certain collections-linked services is based on a contingency fee model. An adverse

change in our success rate for collections may have a negative affect on our business. Most of our provider work for collections-linked services is based on a contingency fee model. The success rate on actual collections of the receivables depends upon several factors, some of which are not under our control, such as the type of client, the duration of time for which the receivables have been due and outstanding and our level of involvement. Although this fee structure is consistent with the industry norm, an adverse change in our success rate for collections may require us to pay fines or penalties, purchase underlying receivables or trigger a termination of the contract. Any such action could adversely affect our business. For instance, in fiscal 2007, we were unable to meet the milestone for receivable collections under a client contract and consequently, we had to purchase the underlying receivables for approximately US$ 6.0 million, which is recoverable on realization of client receivables by us. In addition, Zavata, Inc. did not achieve the milestones set out in a client contract and was required to pay a penalty of approximately US$ 5,000. 12. We are liable to our clients for damages caused by unauthorized disclosure of sensitive and

confidential information, whether through a breach of our systems, through employees or otherwise. We are required to manage, utilize and store sensitive or confidential client data in connection with the services we provide and to protect our clients intellectual property rights. Under the terms of our client contracts, we are required to keep such information strictly confidential. The collection, use and processing of personal data is heavily regulated in the United States and the United Kingdom and the transfer of personal data to an outsourcing company in a jurisdiction with a less robust data protection regime could be an issue that may cause concern for clients. Consequently, our contracts with clients typically contain provisions relating to confidentiality and data protection. Our client contracts generally do not include a limitation on our liability to them with respect to breaches of our obligation to maintain the confidentiality of the information and some of our client contracts can be terminated immediately in the event of a breach of the data protection or confidentiality provisions. We seek to implement measures to protect sensitive and confidential client data and to protect our clients intellectual property, but notwithstanding these measures, if any person, including any of our employees, penetrates our network security or otherwise mismanages or misappropriates sensitive or confidential client data or clients intellectual property rights, we could be subject to liability and lawsuits from regulatory authorities, our clients or their customers for breaching contractual confidentiality or data protection provisions or privacy laws. The occurrence of such events could have an adverse effect on our goodwill, business, prospects, results of operations and financial condition. 13. We have a long selling cycle for our outsourcing services that requires significant funds and

management resources and a long implementation cycle that requires significant resource commitments.

- XIV -

We have a long selling cycle for our outsourcing services, which requires significant investment of capital, resources and time. Before committing to use our services, potential clients generally require us to expend substantial time and resources presenting to them the value of our services and assessing the feasibility of integrating our systems and processes with theirs. From time to time, we also provide services, free of cost, or at subsidized prices, to enable our prospective clients to test our service quality and business capability. Our clients typically evaluate our services before deciding whether to use them. Therefore, our selling cycle is subject to many risks and delays over which we have little or no control, including our clients decision to choose alternatives to our services, such as, other providers or in-house resources, and the timing of our clients budget cycles and approval processes. In addition, we may not be able to successfully conclude a contract after the selling cycle is complete. Implementing our services also involves a significant commitment of resources over an extended period of time from our clients and us. Our clients may also experience delays in obtaining internal approvals or delays associated with technology or system implementations, thereby further delaying our implementation process. Our clients may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with clients to which we have devoted significant time and resources, which could have an adverse effect on our business, prospects, results of operations and financial condition. 14. We face competition from onshore and offshore revenue cycle management solutions providers. Our

clients may also choose to run their business processes themselves or through captive units located offshore.

The market for outsourcing services is extremely competitive and we expect competition to intensify and increase in the future. We face competition from a number of onshore and offshore revenue cycle management solutions providers as well as from our clients own in-house groups, including, in some cases, in-house departments operating offshore, or captive units. See Our Business - Competition beginning on page 75 for a description of our primary competitors. Clients who currently outsource a significant proportion of their revenue cycle services to service providers in India may, for various reasons, including in order to diversify geographic risk, seek to reduce their dependence on Indian service providers. In addition, the trend towards offshore outsourcing, international expansion by foreign and domestic competitors and continuing technological changes may result in new competitors entering our markets. A number of our international competitors are setting up operations in India. Further, many of our other international competitors with existing operations in India are expanding their operations. Some of the existing competitors have greater financial, human and other resources, longer operating histories and more established relationships in the healthcare industry as compared to us. In addition, some of our competitors may enter into strategic or commercial relationships among themselves or with larger, more established companies, in order to increase their ability to address client needs or enter into similar arrangements with potential clients. In addition to our direct competitors, we also face competition from certain companies that choose to perform some or all of their revenue cycle services internally. Increased competition, our inability to compete successfully against competitors, pricing pressures or loss of market share could result in reduced operating margins and could adversely affect our business, prospects, results of operations and financial condition. 15. Our historical financial results may not be accurate indicators of our future performance due to

recent acquisitions and disposition as well as our operating results differing from period to period. Our consolidated financial statements included in this Draft Red Herring Prospectus include the financial results of Heritage Websolutions Private Limited since September 1, 2006, Armanti Financial since August 1, 2006, and Zavata, Inc. since August 29, 2007, the respective dates of their acquisitions by us. Our consolidated financial statements included in this Draft Red Herring Prospectus, also include the financial results of Medvarsity Online Limited, which we sold on January 1, 2007 to an affiliate. As a result of these acquisitions and disposition, our historical financial results may not be an accurate indicator of our future performance. In addition, our operating results may differ significantly from period to period due to factors such as client losses, variations in the volume of business from clients resulting from changes in our clients operations, the business decisions of our clients regarding the use of our services, delays or difficulties in expanding our operational facilities and infrastructure, changes to our pricing structure or that of our competitors, inaccurate estimates of resources and time required to complete ongoing contracts and currency fluctuations. In addition, the long sales cycle for our services and the internal budget and approval processes of our prospective clients

- XV -

makes it difficult to predict the timing of new client engagements. Due to the above factors, our historical financial results may not be accurate indicators of our future performance. 16. If we fail to realize the anticipated benefits from our acquisitions, our results of operations may be

adversely affected. The success of our acquisitions will depend, in part, on our ability to realize the anticipated synergies from our acquired businesses. The integration of our business operations is a challenging task that may result in unforeseen operating difficulties, absorb significant senior management attention or require additional financial resources. In particular, the challenges involved include:

recruiting, training and retaining sufficient skilled management, employees and marketing personnel; obtaining any consents or authorizations that may be required in respect of our integrated operations; adhering to quality and process execution standards that meet customer expectations; developing and preserving a uniform culture, values and work environment in our operations; and developing and improving our internal administrative infrastructure, including our financial,

operational, communications and other internal systems. If we fail to realize the anticipated benefits from our acquisition, our results of operations may be adversely affected. 17. We have incurred losses in the prior periods. We incurred losses in the fiscal years 2005, 2003 and in the six months ended September 2007. We expect our expenditures to continue to increase in future periods and as such, if our income does not grow at a rate faster than these expected increases in our expenses, or if our operating expenses are higher than we anticipate, we may not be profitable in the future and we may incur additional losses. In addition, we have a limited operating history and may not be able to secure additional business or retain current business or add or maintain a sufficient level of new clients in the future. 18. The allocation of Equity Shares pursuant to our ESOP may result in a charge to our income

statement and may adversely impact our net income. We have adopted certain ESOPs for our employees and for further details, see Note 21 to the section titled Capital Structure Notes to Capital Structure on page 38. Under these ESOPs, we are permitted to grant options at an exercise price that may be lower than the fair market value of the options on the date of the grant. Under Indian GAAP, the grant of these stock options will result in a charge to our profit and loss account based on the difference between the exercise price determined at the date of the grant of options and the fair market value of the options. This expense will be amortised over the vesting period of the options. As a purchaser of Equity Shares in this Issue, you may experience dilution of your shareholding to the extent that we issue Equity Shares pursuant to any stock options issued under ESOP. 19. Certain of our Promoter Group companies have incurred losses in recent fiscal periods. Certain of our Promoter Group companies have incurred losses in recent fiscal periods, as set forth in the table below:

Name of Promoter Group Entity Loss for fiscal year (Rs. in Millions)

2007 2006 2005

Apollo DKV Insurance Company Limited (2.47) - -

AGHL (14.41) (88.11) (160.49)

AGPPL (12.86) (11.83) -

Apollo Sindoori Hotels - - (10.97)

AHIL (119.09) (103.10) (55.32)

- XVI -

Name of Promoter Group Entity Loss for fiscal year (Rs. in Millions)

2007 2006 2005

Apollo Health and Lifestyle Limited - - (0.66)

Apollo Health Resources Limited (9.48) - -

Apollo Mumbai - (0.29) (0.35) Apollo Sindhoori Commodities Trading Limited (10.93) - -

Samudra Healthcare (6.20) (25.07) (39.14)

UHHL (12.69) - -

Medvarsity - - (5.17)

Citadel Research and Solutions Limited (1.66) - - Stephan Medizintechnik (India) Limited (0.06) - - Sindya Infrastructure Development Company Private Limited

(16.87) - -

Kalpatharu Infrastructure Development Company Private Limited

(0.06) (0.05) (0.08)

Preetha Investments Private Limited - - (12.47)

Altosys Software Technologies Limited - - (6.12)

PPN Holdings Private Limited (28.62) (13.33) (11.37)

Apollo Infrastructure Projects Finance Company Private Limited

- - (27.92)

Aurama Solutions Private Limited (1.92) (1.66) (0.75)

Kiddy Concepts Private Limited (0.21) (0.13) (0.20)

Prime Time Recreations Private Limited (0.31) (0.36) (0.21)

Kamineni Builders Private Limited (0.01) (0.01) (0.01)

KEI Rajamahendri Resorts Private Limited (6.74) (1.53) (0.08)

Sindya Aqua Minerale Private Limited (3.83) (8.79) -

Pinakini Hospitals Limited (9.20) (0.04) (0.18) Lifetime Wellness Rx International Limited (6.83) (0.07) (0.24) Apollo Telemedicine Networking Foundation (A non-profit company under Section 25 of the Companies Act) (0.05) (0.81) (0.02)

Apex Agencies (Hyderabad) (0.39) (0.38) (0.44)

M/S Vaishnavi Constructions (0.02) (0.02) - 20. We are expanding our capacity without client agreements in place to utilize this capacity. We are in the process of expanding our Hyderabad facility to increase our capacity without having signed any contracts to provide new services and will continue to expand capacity in the future in preparation for anticipated business growth. We may have excess capacity available upon completion of the Hyderabad facility expansion and other expansions, if any, and if we are unsuccessful in increasing the demand for our services to match our increased capacity in a timely manner, we may not be able to fully recover the costs of our investment in the expansions, which may adversely affect our business, prospects, results of operations and financial condition. 21. Failure to adhere to regulations that govern our clients businesses could result in breaches of

contract with our clients and expose us to liability. Our clients business operations are subject to certain rules and regulations in various jurisdictions, such as the United States Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA). Our clients

- XVII -

require that we perform our services in a manner that would enable them to comply with such rules and regulations and any failure to perform services in such a manner could result in breaches of contract with our clients and, in some circumstances, fines and criminal penalties against us. In addition, we are required under various Indian and United States laws to obtain and maintain regulatory approvals, registrations, permits and licenses for the conduct of our business. Some of our approvals, registrations, permits or licenses may have expired. See Government Licenses and Approvals on page 420.We have applied for, or from time to time apply for, the renewal of such approvals, registrations, permits and licenses, however, we cannot assure you that we will receive the renewals on a timely basis or at all. We may also become subject to new regulatory regimes with our planned expansion into new geographies. If we do not maintain our approvals, registrations, permits or licenses, we may not be able to provide services to existing clients or be able to attract new clients, which would have an adverse effect on our business, prospects, results of operations and financial condition. 22. Most of our income is generated from operations in the United States. We must comply with

applicable laws in the United States healthcare industry, which is highly regulated. Any changes in United States laws governing the healthcare or BPO industries may have an adverse effect on our results of operations.

For the year ended March 31, 2007 and six months ended September 30, 2007, 98.15% and 99.97%, respectively, of our total income was derived from outside India, especially in the United States. The United States healthcare industry is highly regulated. Under the HIPAA, certain rules have been published regarding standards for electronic transactions as well as standards for privacy and security of individually identifiable health information. The HIPAA rules set high standards for the healthcare industry in handling healthcare transactions and information, with penalties for non compliance. We have incurred, and will continue to incur, costs to comply with these rules, including training our employees to process electronic medical claims in a HIPAA-compliant format. Although we believe that future compliance costs will not have an adverse affect on our results of operations, compliance with these rules may prove to be more costly than anticipated. This may adversely affect our profit margins if we are unable to pass on such additional costs to our clients. We expect the United States federal and state governments to continue to pass new laws and regulations addressing healthcare issues. We cannot predict whether these laws would be enacted by the government, or, if enacted, to what extent they will affect our business. Healthcare industry participants may respond by reducing their investments or postponing investment decisions, including investments in our services, which may have an adverse effect on our income and financial condition. Our failure to comply with HIPAA or any other applicable laws and regulations could result in restrictions on our ability to provide services and may also result in imposition of fines or penalties, which could have an adverse affect on our business, results of operations and financial condition. 23. We could lose rights to use the brand name Apollo, which may adversely affect our ability to

market, our services.

The Apollo brand name is owned by our Promoter and shareholder, AHEL and until such time that AHEL continues to hold at least 15% of our share capital, on a fully diluted basis, we have a license to use the brand in connection with our business and operations. As a license holder, we do not enjoy the statutory protections accorded to a registered trademark and are subject to the risk of non-performance of obligation to maintain the trademark registration by the brand owner. Further, we have applied for the registration of our logo, as a trademark on December 16, 2005 under the Trademarks Act, 1999 in respect of healthcare related IT and IT enabled services. The application is pending. Until such registration is granted, we may not be able to prohibit other persons from using the logo. 24. We have in the past entered into related party transactions and may continue to do so in the future.

Some of these transactions could be subject to transfer pricing regulations and if the applicable income tax authorities determine that the transfer price we applied was not appropriate, we may incur increased tax liability, including accrued interest and penalties.

We have entered into transactions with our Promoters and with certain Subsidiaries and their respective affiliates. See Related Party Transactions beginning on page 184. For example, in fiscal year 2007 and for six months ended September 30, 2007 we made trade advances of Rs. 1.81 million and Rs. 0.33 million,

- XVIII -

respectively to our shareholder, AHEL, and rented our offices in Hyderabad from them for Rs. 18,928,794 per annum for the fiscal year 2007 and Rs. 10,065,499 for the six months ended September 30, 2007. In addition, we sold our ownership interest in Medvarsity on January 1, 2007 to an affiliate, Citadel Research and Solutions Limited, for a cash consideration of Rs. 36.55 million. We have also entered into a transfer pricing agreement dated April 1, 2005 with our subsidiary, AHSI, to provide healthcare outsourcing services to its clients in the United States. Our total income from AHSI in fiscal year 2007 and for six months ended September 30, 2007 pursuant to this services agreement was Rs. 65.08 million and Rs. 27.84 million, respectively. While we believe that all such transactions have been conducted on an arms length basis, there can be no assurance that we could not have achieved more favourable terms had such transactions not been entered into with