CBay Systems, Ltd. Secures $ 4 Million in Third Round Financing.
Annapolis, MD - March 27, 2002

CBay Systems, Ltd, the healthcare business process outsourcing company, today announced it has closed a third round of venture capital financing by Kingdon Capital, TDA Capital Partners and Godrej Industries Ltd.

"We have succeeded in a tough investment environment primarily because of our well-planned and sustained business development initiatives combined with our strong offshore delivery model, which helped us achieve profitability last year, said CBay's Chairman, V. Raman Kumar.

Kingdon Capital led this round with a $2.5 million investment in the company. Preceding Kingdon was a $1.5 million investment by other existing prominent investors like TDA Capital Partners (through the India Technology Fund) and Godrej Industries Ltd.

With this deal, CBay Systems, Ltd has raised over $11.5 million in equity financing. The company has embarked on an aggressive growth plan. It has signed a definitive agreement to take a sizable equity stake in an Internet based dictation, transcription and document management solution provider. With this investment, CBay is the first company to offer a HIPAA compliant, end-to-end technology and services platform to its clients. CBay is also expected to make sizeable profits in this year. "It is exceptionally rare for a company in this business to break even and make profits in so short a time period of 3 years. Other companies with similar business models have taken over 7 to 8 years to break even, with quadruple the equity investment required," Mr. Kumar said.

"CBay has built great momentum in the last six months. Now our mission is to grow rapidly, both organically and through acquisitions. CBay will utilize the funds to expand its business activities, acquire new technologies and fund business acquisitions," added Mr. Donald L. Conover, President of CBay.

Girish Kulkarni, Managing Director of TDA Capital Partners, said, "We are pleased to expand our commitment to CBay. Since our early association, we have seen the Company validate the merits of its technology-enabled, offshore BPO services model and provide strong value creation opportunities for its customers and stakeholders."

FURTHER DETAILS AVAILABLE:

In the United States, further details about these transactions can be acquired from KPMG Corporate Finance Group, headquartered in Baltimore, Maryland. (Tel.: 410-949-8519)

In India, further details about these transactions can be acquired from CBay Systems (India) Pvt. Ltd. headquartered in Mumbai, India. (Tel.: 022-237-0027~0028)

About Kingdon Capital

Kingdon Capital LLC is a New York based firm that manages funds in excess of $5 billion. It has a track record of outstanding returns on its investments and has consistently out performed the S&P 500 since 1988.

About TDA Capital Partners, Inc

TDA Capital is a specialized manager of private equity and venture capital investments in the emerging world. TDA Capital currently manages total assets in excess of $ 250 million in Central & Eastern Europe, India and Israel. Investors in TDA funds are typically world-class institutional investors, including pension funds, insurance companies and high net worth individuals. TDA Capital is the investment manager for the India Technology Fund, which targets investments in companies providing IT and BPO services to a global clientele, using the India offshore delivery advantage.

About Godrej Industries Ltd.

Godrej Industries is a $700 million Indian company with over a century of rich heritage to its credit. Godrej has allied with CBay to set up a back office processing center in Mumbai. Godrej's strong human resource pool, together with its financial and business initiatives, make it a reliable.