From CMD's Desk :

Dear Stakeholders, I am glad to report yet another year of gratifying performance by your Company. The strategic restructuring implemented in the recent past has delivered more than satisfactory results. We have further improved on revenue streams and streamlined operations besides optimizing resources and increasing productivity across the organisation. This has also demonstrated the robustness of our business model. Analysts have predicted that the Global Pharma market is expected to grow between 5-7% for the year to approximately US $ 880 billion. During the next five years, it is expected that the pharmaceutical industry will witness major imbalance between new product introductions and patent expiries. The trend in the emerging markets has however been encouraging. It is expected that the emerging markets will continue their rapid expansion in the next four to five years. The growth potential is on account of rising income levels and higher healthcare spend due to increasing awareness. IMS Health has predicted that major developed markets will grow between 4-6% through 2014 and the pharma emerging markets will grow between 14-17% through 2014. At Indoco, the performance of International business has been very encouraging with a growth rate of 32% at Rs. 1565 million compared to Rs. 1188 million last year. The formulation exports achieved a growth of 30% at Rs. 1416 million compared to Rs. 1090 million last year. The performance of emerging markets was excellent with a growth of 60% at Rs. 305 million from Rs. 191 million last year. Our tie-ups with international players such as Watson Pharmaceuticals, Inc. (3rd largest generic company in USA) and Aspen Pharmacare Limited (a global pharmaceutical company based in South Africa) are growing stronger and during the year, Indoco saw major extensions to their product portfolio through these tie-ups. Indoco will further aim at strengthening its presence in other geographies in regulated as well as emerging markets. On the domestic business front, the formulation business achieved a growth of 14% at Rs. 3073 million compared to Rs. 2707 million last year. We believe that the future outlook for Indian domestic pharma business during the next decade looks highly optimistic. The growth will mainly be driven by a growing middle class population, increasing income levels, rapid urbanization, demand for quality healthcare services and changing lifestyle, among other factors. We shall also focus our attention on marketing our products in high potential territories such as tier-III towns and rural areas, strategise product introduction in newer segments expanding at double-digit growth rates and finally, speedup the launch of new products in various therapies. During the last fiscal year, the economy grew at 8.6% as against 8.8% which was predicted by the Economic Survey Report (ESR). This fiscal year the ESR has predicted that the Indian economy will grow by 9%. The main concerns in the ESR report are deceleration in the industrial output, rising inflation and oil prices which pose a threat to both the domestic as well as the global economy. The report has mentioned that maintaining growth with control on food inflation would be one of the main challenges going forward. The Earnings before Interest, Depreciation, and Tax & Amortization (EBIDTA) as on 31st March 2011 is 17% of net sales. The Profit before Tax (PBT) for the year at Rs. 566 million as against Rs. 431 million last year shows a growth of 31% and the Profit after Tax (PAT) at Rs. 511 million as against Rs. 421 million last year shows a growth of 21%. I am proud to inform that our API division had initiated a project proposal for a pilot plant facility with The Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology, Govt. of India. DSIR has sanctioned partial funding of Rs. 110 million under the prestigious scheme named “Technology Development and Demonstration Program (TDDP)”. Indoco plans to develop commercially viable API processes pertaining to certain niche molecules going off patent in the next 5 to 7 years. This scheme will also support duty free import of analytical instrumentation. The project is expected to produce commercial APIs by March 2016. We are at the threshold of a new decade and find ourselves amidst exciting prospects for the Pharma Industry. We shall continue to improve our performance on the Domestic as well as the International front and endeavour to take Indoco to newer heights. We re-affirm our assurance to all our shareholders of adhering to our core values which are in line with Indoco’s vision and mission. As part of corporate social responsibility, Indoco has always been on the forefront in meeting its obligations towards the betterment of society. I would like to express my gratitude to all our stakeholders including shareholders, customers, bankers, vendors and the medical fraternity for their unstinted support. I thank all Indocoites for their contribution towards building a great organization. SURESH G KARE Chairman and Managing Director