The pharmaceutical industry continues to grow at a rapid pace and is
 likely to grow at more hectic pace. Health awareness, ably supported by
 different governmental health schemes, World Bank aids and the media
 interest in health will drive this growth of the Pharma industry in the
 next several years. Opening up of the Insurance sector to private
 players is another significant factor spelling an explosive growth.
 The continued growth of the health industry very much depends upon the
 facilitating government policies. It is gratifying to note that there
 would be no going back on economic reforms. Naturally, there is bound
 to be fierce competition to take bigger share of the pie. In addition
 there is bond to be a greater expectation from both the physician and
 the patient for better safer and cheaper products from the industry. It
 is our fundamental duty to measure up to these expectations. Now let me
 dwell at length your companies progress in three key result areas: a)
 Innovative R&D; b) Committed high-quality manufacturing at competitive
 cost and c) Aggressive marketing. The current scenario in the Pharma
 industry has proved that the current size of a particular player is not
 of much concern.  What matters is only the capability of the company to
 make use of the niche opportunities to grow at a hectic pace. That is
 the reason why medium-sized companies have been more successful in
 posting enormous growth compared to behemoths.
 
 We had predicted that the policy announcements as part of economic
 restructuring by the government, particularly the gradual disbanding of
 price regulations regime, would create a conducive atmosphere for
 companies like ours to spur investment in manufacturing and R&D
 activities, This has proved right. Continued growth of the healthcare
 industry very much depends upon the stability of governmental policies
 and impetus the government provides to the economy, to attract more and
 more investment by creating a hassle-free environment. It is gratifying
 to note that ill-informed critics and vested interests have been
 silenced and there would be no going back on economic reforms. The
 opportunities that are presented to us are naturally balanced by fierce
 competition. Not only the patients but also the medical fraternity
 expects a lot from Drug companies. With the advancement of IT sector,
 it is our fundamental duty to provide them with the necessary support
 with novel drugs and formulations of the highest quality. Now, let me
 dwell on the performance achieved by the company in the three key
 result areas:
 
 Research & Development:
 
 We can be proud of our committed R&D professionals drawn from the
 fields of medicine both from allopathy and ayurveda, research
 scientists and formulation development specialists.
 
 Our Arvind Research Centre (ARC) is acknowledged as one of the most
 up-to-date R&D Laboratories, well-equipped with state-of-art
 technologies and machines. Focus areas are new formulations combining
 modern process-development capabilities used in developing allopathic
 drugs with indigenious drug-delivery systems known traditionally in
 Ayurveda system. The Centre lays particular emphasis in developing
 different dosage delivery systems suited to deliver the medication
 effectively. The research and development team has successfully brought
 PANKARE - The anti diabetic with a difference, and SOREXIL, - The
 treatment of skin ulcers with a unique base - the inhouse R&D outcome in
 Ayurveda. Further, HARTKARE - the cardiotonic drug and NEPHROKARE the
 one that cares for the failing kidneys are under different stages of
 development. After clinical evaluation the products will be launched to
 the medical profession In fact your company is laying tot of emphasis
 in ayurveda research particularly to manage chronic diseases. This
 deliberate attempt is to provide effective treatments also capable of
 taking care of the consequences of theses diseases in the long term.
 Besides, such treatments are safe in the long term treatment - a
 particular concern in chronic ailments.This strategy is bond to help
 your company to have competitive edge in the post GATT period. To
 further strengthen the R &D we have made a provision of Rs.10 crores as
 an investment over the next three years edge in the post GATT period.
 
 Manufacturing:
 
 We made a conscious decision in investing in a modem manufacturing
 facility in kakkalur and commenced its operation in 1998.  This
 facility conforms fully to the WHO GMP standards.
 
 Marketing:
 
 We have identified the niche segments and categorized our
 products to define appropriate product-market mix and optimize
 profitability. We continue to lay emphasis on ethical branded specialties
 and the strategy for reaching them to medical fraternity. At the same time
 we have realized the enormous potential of Institutional sector in a country
 like India.
 
 Institutional Business:
 
 The institutional marketing finds an enviable position in the Pharma
 map of our country over the last one decade in view of the fact that
 the overall budget exceeds Rs 4000 crore all governments whether State
 or Central give top priority for the healthcare by availing of their
 local budgets as well as using various World Bank project aids to cater
 to the needs of the poorest of the poor living even in the micro
 interior places of this country. As a result they go for procuring
 quality drugs in bulk quantities adapting various systems. The
 advancement of information technology, which adds glory to the ongoing
 Public Health Awareness Programs, thus rectifying the neglect shown in
 various areas like purchase and distribution, leads to more transparent
 system. This transparence paves way for more scientific way of doing
 business.  Nowadays, most of the institutions take expert committee
 opinion before finalizing the drug, schedule so as to include latest
 molecules. Every year the inclusion of at least 20 to 25 new drugs in
 their list of antibiotics, cardiovascular drugs, anti-diabetic drugs,
 anti-tuberculosis drugs etc. find a-niche in the hearts of many. Hence
 it is imperative on our part to strengthen the institutional department
 to grab more market share.  Keeping these factors in mind, we have
 strengthened the Institutional Marketing to ensure that the benefit
 must reach the poor and the needy while bringing substantial profits to
 company's coffers. The potentiality of Institutional Trade calls for
 recruitment of more Field Managers in all states to cover all
 Government Institutions including Railways, ESI and other public sector
 undertakings. While appointing more field force all over the country,
 we have strengthened our distribution network at all levels throughout
 the country. Out of a firm commitment to excel previous sales records,
 we have decided to participate in all tenders floated by all
 institutional buyers, thus taking this company to great heights.
 
 Brand Equity:
 
 Our strategy for institutional business includes stress on branded
 formulations and generic products for supply to various State
 governments, and Central government institutions. This will greatly
 enhance our efforts to secure a sizable share of Over-the-Counter
 market of branded products through publicity. Another sector is that of
 branded and unbranded generics sold directly to Chemists.
 
 International Business:
 
 The growing internationalization of Indian business has thrown open
 high growth opportunities for Indian firms to export their products.
 Your company has set up a facility conforming to international
 standards and our manufacturing Facility conforms to WHO'S GMP, which
 will enable it to produce products of international quality. Export
 opens up large possibilities of revenue generation, since most of the
 products presently available in the world are coming out of patent by
 the year 2005.  Initiation of exports requires registration of the
 company's products in most of the countries together with approval of
 the company's Facilities.  Your company is proceeding as per plans in
 securing registration of products in countries like Malaysia, Tanzania,
 Srilanka, Ukraine, Nigeria, Nepal. Steps will be taken to extend the
 coverage to other countries over a period of time. Exports of branded
 formulations and generic products to countries in Africa and the
 Commonwealth of Independent States (former USSR) and Asia are poised to
 commence in a significant way as soon as a high level of visibility is
 achieved in the domestic market. This business is bound to grow by
 leaps and bounds in the years to come. In conclusion, we see tremendous
 opportunities in the horizon. The company has earned and continues to
 enjoy the confidence and goodwill of all the stakeholders through its
 commitment to professional values to all stakeholders. There appears to
 be no reason why the vision statement of the company should not come
 true sooner rather than later: Arvind Remedies to be Global Player in
 the, Pharmaceutical Industry by manufacturing and marketing quality
 medicinal products both in Allopathy and Ayurveda.
 
 With warms regards,
 
 Arvind Shah
 
 Managing Director & CEO