From CMD's Desk :

Dear Shareholders, As I review the year gone by, we find ourselves in the midst of another financial crisis now engulfing the Euro zone. This has erupted just when things seemed to be settling down and a financial recovery seemed imminent. Economists & opinion leaders have cautioned that the recovery may be uneven, conditions for sustained growth may remain weak and the global imbalances may widen again. Until there is a complete recovery in the economic situation, the immediate challenge for policy makers will be to continue the fiscal stimulus. It is envisaged, that a strong growth will be observed in developing countries, especially in Asia and the output growth in these countries will reach 5.3 per cent this year from 1.9 per cent last year. As far as the advanced countries are concerned, growth is predicted to remain stunted. The US economy is expected to grow by 2.1 per cent and both the European Union and Japan are expected to grow at a much slower rate. With this pace of recovery, the major developed economies are not expected to provide a strong impulse to global growth in the near-term outlook. The Indian Economy will therefore face one of the most challenging times in its endeavor towards higher growth. Economic Survey Report (ESR) has predicted the Indian economy to grow at 8.25 - 8.5 per cent in the year 2010-11 and at 9.00 per cent in the year 2011-12. The GDP growth projected will largely be led by the manufacturing sector which is likely to grow at 8.9 per cent. The educated and young middle class population with high aspirations will drive the consumption boom within India. This will infuse substantial investments particularly in the industrial sector. India would thus bounce back to become one of the world's fastest growing economies in the next five years. Though the ESR has projected a highly optimistic picture for growth, price inflation remains a major cause of concern. The need of the hour for regulators is therefore to take strong measures to check the rising inflation to make the growth inclusive for all sections of the society. The Indian Pharmaceutical Industry has already been placed among the top four emerging markets according to the research report published by IMS Health Inc. The spending on healthcare by an average Indian household is expected to grow from 7 per cent in 2005 to 13 per cent in 2025. As a highly organized sector, the domestic India pharma market is likely to reach US$ 20 billion by 2015. Indian domestic pharmaceutical market has grown at a CAGR of about 13 per cent in the last five years. Around 67 million Indians are expected to reach the age of 67 years by 2011-12. Statistics provide enough evidence about the geriatric population spending large amount on healthcare. This is one of the parameters on which Pharma Analysts have based their projections about substantial growth in the domestic pharmaceutical market. As Indoco looks into the future, there is a sense of contentment that all the strategic restructuring carried out during the year gone by has brought the desired results. Indoco achieved total revenues of Rs. 4023.6 million and PAT of Rs. 420.9 million as against total revenues of Rs. 3552.6 million and PAT of Rs. 314.4 million last year. I am happy that Indoco has emerged successful amidst the economic slowdown last year. On the domestic business front, we have launched two new divisions, Xtend to focus on the extra urban population and Eterna to target Consulting Physicians. As far as international markets are concerned, alliances with Watson Pharmaceuticals, Inc. (3rd largest generic company in USA) and Aspen Pharmacare Limited (South Africa’s largest pharmaceutical company) have placed Indoco on a firm footing to launch an aggressive growth agenda in the international business. This has strengthened Indoco’s credentials further as a reliable service provider for development and manufacturing of APIs and Finished Dosage Forms. Finally, I take this opportunity to express my gratitude to all our stakeholders including shareholders, customers, bankers, medical fraternity and vendors for their continued support. I thank all Indocoites for their untiring efforts and whole hearted co-operation. As always, Indoco team will endeavor to continue to progress in building a healthier world. SURESH G KARE Chairman and Managing Director