Microescala: Neurobiología

Currently, we have 410 seats located in Pune and the US. The details of these locations are:

Location Area in Sq. Ft. Total number

of seats

Pune, Headquarter 12,695 120

Pune, Centre 2* 10,000 100

San Jose 18,600 50

Antioch 15,863 140

* location sub-leased by HOV Services Limited to Bay Area Credit Service (I) Pvt. Limited

For more details, please refer to the section entitled “Business – Employees and Facilities” on page 50 of this Red Herring Prospectus.

We intend to set up and fill the 750 seats in the new facilities by March 31, 2007 in 3 phases to meet our planned business requirements.

Item Phase 1 Phase 2 Phase 3

Number of Seats 250 400 100

Leasing of Facilities 1.2 0 0.2

Interior work 22.2 32.0 8.0

Installed Equipment 27.2 41.0 7.0

Other Capital Expenditure NA 72.0 NA

Proposed Expenditure (Rs. in Million) 50.6 145.0 15.2

The specifications of the new facilities are given below: Phase 1 - Pune Headquarter expansion

We have obtained quotations in relation to certain capital expenditure items from suppliers. The details of the same are as follows:

Item Units Supplier/Model Date of available Amount

quotations/ agreements

Area Square Feet 11,598

Number of seats Number 140

Interior Furnishing, Furniture and Fixtures Rs. Million Della Tecnica December 22, 2005 11.2 (including modular furniture and seating

systems, interior designing, project

management, air conditioning works, flooring, electrical works, etc.)

Item Units Supplier/Model Date of available Amount quotations/

agreements

Equipment and software Rs. Million 14.0

a. Office Computer Equipment Rs. Million IT House/ Intel March 6, 2006 2.2 b. IT Computing Hardware Rs. Million Dell/AS PE 2850 SAN March 14, 2006 5.1 c. IT Computing Software Rs. Million Dell/Microsoft Office May 3, 2006 1.0 d. Networking and Security Equipment Rs. Million Verizon / Cisco 3845 May 16, 2006 5.0

e. UPS Rs. Million CDW/APC Symmetra May 14, 2006 0.7

Total Rs. Million 26.4

Phase 1 - Dallas facility

We have obtained quotations from various vendors for the planned 110 seat facility in Dallas. The details of the same are as follows:

Item Units Supplier/Model Date of available Amount

quotations/ agreements

Area Square Feet 10,000

Number of seats Number 110

Interior Furnishing and Furniture and Fixtures Rs. Million D Young, Inc. October 7, 2005 11.0

Equipment and software Rs. Million 13.2

a. Office Computer Equipment Rs. Million DW/ Thin Client December 21, 2005 1.7 b. IT Computing Hardware Rs. Million Dell/Poweredge March 14, 2006 1.3

2800

c. IT Computing Software Rs. Million Dell/ Office May 3, 2006 1.6

d. Networking and Security Equipment Rs. Million ATT(SBC)/Nortel December 27, 2005 8.1

e. UPS Rs. Million CDW/APC May 14, 2006 0.5

Symmetra

Total Rs. Million 24.2

Phase 2 and Phase 3

We have not placed orders in relation to the equipment for Phase 2 and Phase 3. Our internal estimates and the quotations received for Phase 1 in Pune and Dallas form the basis for estimating our planned expenditure for the expansion of our facilities in Pune during Phase 2 and in Dallas during Phase 3.

Phase 2 - Additional new Pune facility and Other Capital expenditure

Item Units

Area Square Feet 40,000

Number of seats Number 400

Interior and Furnishing cost Rs. Million 32.0

Equipment and software Rs. Million 41.0

Capital Expenditure Rs. Million 72.0*

Total Rs. Million 145.0

* This expenditure has been estimated based on an option the Company had to purchase the land located at Sharda Arcade facility up to December 1, 2005 which was at a rate of Rs. 2,100 per sq. ft. The Company’s current estimate has been made at a rate of Rs. 1,800 per sq. ft.

Phase 3 - Expansion of Dallas facility

Item Units

Area Square Feet 10,000

Number of seats Number 100

Interior and Furnishing cost Rs. Million 8.0

Lease Deposit Rs. Million 0.2

Equipment and software Rs. Million 7.0

Total Rs. Million 15.2

Capacity Utilization

The installed and utilization capacity is provided below:

(Number of seats)

Location Installed Utilized

Pune Headquarter 120 120

Pune Centre 2 100 100

San Jose 50 50

Antioch 140 120

Accordingly, we intend to use a part of the proceeds received by us from the Issue for investment in the above manner by setting up the new facilities.

To infuse funds into our subsidiary HOV Services, LLC for repayment of Class B Units issued as consideration for acquisition of Subsidiaries

Our subsidiary, HOV Services, LLC has issued 8,504,045 non interests bearing redeemable Class B Units of USD 1.7, each fully paid up aggregating to USD 14.45 million (approximately Rs. 655 million at an exchange rate of Rs. 45.33 per USD) on January 1, 2006 to HOF 2, LLC one of our Promoters and HOF 3, LLC, an entity that is either controlled or managed by amongst others our Promoters.

Class B Units means units of ownership interest in the company without voting rights. Additionally, these Class B Units are fully paid and are non-interest bearing same are redeemable at par at any time for a period of one year from the date of the issue. The units were issued as consideration for the transfer of shares of DBW, BACS, CPAC and ICS from HOF 2, LLC and HOF 3, LLC to HOV Services, LLC which was a part of the restructuring of our business. For more details on the restructuring please see “ History and Certain Corporate Matters” on page 57 of this Red Herring Prospectus.

We intend to infuse Rs. 655.3 million as capital into HOV Services, LLC so that it may redeem the Class B Units issued to HOF 2, LLC and HOF 3, LLC. The capital infused in HOV Services, LLC would be in the form of subscription to its Class A Units. Class A units are ownership interest in the company with voting rights. Dividends from the investment may not be assured. We shall invest the funds in HOV Services, LLC in compliance with the requirements for overseas direct investment as prescribed by the RBI.

Acquisitions

The net proceeds from the issue are proposed to be utilised first towards meeting the planned capital expenditure and then towards redemption of Class B Units of HOV Services LLC. Surplus, if any, shall be utilised for acquisitions. We have in the past, grown our business and operations through both organic and inorganic routes. Going forward, we believe that strategic investments and acquisitions may continue to act as an enabler to growing our business. While this is a component of our strategy, presently we do not have any legally binding commitments to enter into any such arrangements.

Issue Expenses

The expenses of this Issue include, among others, underwriting and management fees, printing and distribution expenses, legal fees, advertisement expenses and listing fees. The estimated Issue expenses are as follows:

Activity Expense (in Rs. million)

Lead management fee and underwriting commissions* [●]

Advertising and Marketing expenses [●]

Printing and stationery [●]

Others (Registrars fee, legal fee, etc.) [●]

Total estimated Issue expenses [●●●●●]

* will be incorporated after finalisation of Issue Price

The lead management fees and the underwriting commissions shall be paid by the Company. In addition to the above, listing fees will be paid by the Company.