Aurobindo Pharma

Dear Friends,
 
 In 2007-2008, Aurobindo gained good visibility and a strong order book
 position throughout the year. Our profitability improved largely due to
 volume growth together with continued strict cost control and programs
 to enhance our operational excellence.
 
 We have been seeing momentum in the market place with favorable demand
 for our formulations and active ingredients. As in the past, we pursued
 profitable growth in the established markets. The success of the
 transformation into a more global company is in our ability to meet the
 needs of the market, while enhancing our competitiveness.
 
 During the year, despite challenging conditions, Aurobindo recorded
 satisfactory results. Revenues were higher by 18.76%, net income rose
 by 26.93% and the EPS climbed to Rs.43.07 from Rs.34.51 in the previous
 year. This performance was achieved with larger basket of approved
 products and thrust into European markets of both formulations and
 active ingredients. We shortened the time to market and could convert
 regulatory approvals into revenue streams.
 
 We improved revenues by 51% in the U.S. market and by 56% in Europe.
 Several products gained market share and despite competitive pressures,
 we succeeded in increasing operating margins. Aurobindo is able to
 manage the pressures better primarily because of its vertically
 integrated operations and cost effective manufacturing capabilities.
 
 We shall consolidate these gains by adding products to existing markets
 and grow by widening the market reach. We see considerable traction in
 the market for our products, and while we shall retain the momentum of
 growth, care is being taken to derisk our business.
 
 On our growth trajectory, we shall revisit our assumptions and
 strategies, examine the progress and build a platform for a higher
 level of growth. For instance, we will reassess the potential in our
 raw material strategy and strengthen our sourcing; we shall develop and
 be present in every market that offers higher value; we would sweat all
 our assets before we invest further in capital expenditure; we would
 augment our cash flow even as we improve our bottom line; and overall,
 we shall grow at a faster clip than the industry.
 
 We are well positioned for the future. We expect to see a further
 improvement in the ratios in 2008-2009. We are driving ahead to strong
 global presence, supported by larger product portfolio,
 state-of-the-art-technology and dedicated human energy. We will
 continue our operational excellence programs in areas such as quality,
 productivity, sourcing, supply chain optimization and marketing
 management.
 
 As Members are aware, we have always done what we set out to do. We
 scaled up the Company on several fronts. From a domestic player we
 converted ourselves into a quality conscious source for the established
 markets; from a large active ingredient manufacturer, we have become a
 sizeable generic player in the formulations sector; from an
 anti-infectives supplier to life style drug manufacturer; from a Para
 I, II and III ANDA applicant with US FDA to Para IV filer after careful
 analysis of the Orange Book and as allowed by the Hatch Waxman Act. We
 have built global asset base, with world class manufacturing
 facilities, effective marketing infrastructure and proven intellectual
 property resources.
 
 We have come a long way. Yet, I believe there is a large market out
 there and there is considerable headroom to grow. We will use our past
 success as a platform for future growth. In fact, our past is an
 inspiration for us to do better. We will make the right moves and
 strive for sustainable growth with the best interests of all our
 stakeholders.
 
 At every stage, so far, we have kept to our commitments, worked with
 the market players and taken care not to compete with our customers in
 the same product range. We have respected the market, competitors,
 vendors and indeed, all stakeholders. This shall remain our mantra as
 we consolidate and grow the business.  We shall ensure that the
 foundation is strong and build ahead on the central pillars of ethics,
 accountability, trust and high values.
 
 The challenges we face are great and we believe we are well prepared.
 Our efforts will continue to benefit both our customers and investors
 alike. We are confident that Aurobindo will continue to transform its
 special strengths into success and meet all stakeholder expectations.
 
 We are fortunate and deem it a privilege to have an eminent Board,
 supportive customers, dependable vendors and prudent financial
 associates encouraging us to perform better. Evidently our shareholders
 can count on me and my global team of 6,300+ strong dedicated employees
 at Aurobindo to meet their expectations as we keep raising the bar.
 
                                               Warm regards 
 
                                          P. V. Ramprasad Reddy