| From CMD's Desk :
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Dear Shareholders,
The past year was an extremely turbulent one for the world economy.
The year witnessed one of the worst global financial crisis. The
sequence of crisis began with the sub-prime mortgage transactions
in the US which led to serious difficulties in a host of financial
institutions. The economies of almost all the countries in the
world were seriously affected. The general consumer demand in both
the US and other developed economies dropped. As a consequence,
emerging economies saw export markets contract. The financial
credit literally dried up thereby considerably lowering the
economic activity. The year also witnessed the crude oil prices
soar to $150 per barrel and then drop down to less than $40 per
barrel. Expert reports emanating from knowledgeable sources suggest
that the recessionary trend might prevail until at least the end of
2009 and the recovery might commence in the first quarter of 2010.
The developments in the international financial markets have had an
impact on the pace of economic activity the worldover, and India
was no exception. Owing to the impact of global financial crisis,
Indian GDP growth rate fell to 6.7 per cent during 2008-09, after
posting 9 per cent in three consecutive earlier years. One notable
positive feature of the Indian economy is that inspite of the
crisis the banking system remained strong as compared to many other
countries. The Indian Banking system is better prepared to deal
with crisis today, than at any time before.
The Economic Survey Report (ESR) for 2008-09 is optimistic about
the future. The ESR estimates strong recovery through the second
half of 2009-10. The possibility of 7.50 per cent GDP growth in
2009-10 is much higher than the 6.25 per cent projected earlier.
The ESR projection is also shared by the World Bank which too
expects India to hit 8 per cent growth in 2009-10.
To achieve this growth rate, there are some underlying assumptions
that the US economy must bottom out by the fourth quarter of 2009,
the monsoon in India must be reasonable and private consumption
must surge. Besides, the government spending on infrastructure
projects needs dramatic acceleration. The mood going into 2009-10
is one of slightly heightened optimism.
As far as the Pharma sector is concerned the Economic Survey has
recommended that the government should control prices of essential
drugs that have limited number of manufacturers and decontrol all
other medicines. To quote the Survey Report – “Drug price control
should be limited to essential drugs in which there are less than
five producers. All other drugs should be decontrolled”. Since the
Economic Survey recommendations are based on reality, it is hoped
that the Government heeds the Survey Report and notifies a policy
that is in the best interest of all concerned. This would
definitely trigger substantial investment in world class
manufacturing facilities in specifically high-tech areas such as
vaccines and injectables, besides encouraging innovation and
increased spend on R & D in the Indian Pharmaceutical Industry. The
Industry could then consolidate its status as a force to reckon
with on the Global pharma scenario.
On the export front, INDOCO achieved yet another significant
milestone crossing Rs.100 crores for the year. During the year
Indoco was awarded the prestigious AOK Tender for Metformin Tablets
through its agents in Germany. The total value of USD 10 million
would accrue against supplies for 2 years. Our Baddi facility has
been approved by the UK-MHRA. This will definitely boost the supply
chain for regulated markets. The International Business now
contributes over 26% of our total revenue. With the initiatives
planned on new geographies and the resounding opportunities from
our existing customers mainly in Europe, we are confident of the
International Business contributing over 40% of the revenue in the
next 2 to 3 years.
The domestic sales during the year registered a degrowth because of
the tight credit control policy implemented by the company. It has
significantly reduced the company’s outstandings thereby improving
the liquidity position and reducing the working capital debt by
half.
At Indoco we put in our best efforts to develop our Human Resource.
My sincere thanks to all Indocoites for their unstinted support and
co-operation during one of the most challenging times. I would also
like to express my gratitude to our customers, bankers, vendors and
above all our shareholders for reposing their faith in us.
SURESH G. KARE
Chairman & Managing Director
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