Vice-Chairman cum MD''s overview
 
 ISLL has been on a strong growth trajectory over the past five years
 benefitting from healthy growth in its key molecule - clarithromycin,
 ramp-up in the sales from new molecules and new client addition.  This
 momentum is expected to continue on the back of planned new launches in
 regulated markets and tie-ups with generic companies.
 
 The Indian pharmaceutical market has seen a CAGR of about 14% in the
 last five years.
 
 It continues to be highly fragmented and dominated by Indian companies.
 The domestic pharmaceutical industry grew by 18% in March 2010 versus
 10% in March 2009. Acute therapy dominates, with a share of over 75% of
 the total market value.
 
 The chronic segment has registered a growth of 21%, versus 16% in the
 acute segment. Anti-infectives grew by 14%, respiratory and dermatology
 by 21%, cardiac by 21% and CNS by 20%.
 
 In terms of scale, the India pharmaceutical market is ranked 14th in
 the world. By 2015, it will rank among the top 10 in the world,
 overtaking Brazil, Mexico, South Korea and Turkey.
 
 More importantly, the incremental market growth of  billion over the
 next decade, is likely to be the third largest among all markets.
 
 The US and China are expected to add 0 billion and  billion
 respectively. India, Japan, Canada and the UK are expected to be the
 next in line with growth expectations in the range of -14 billion
 during this time frame.
 
 In keeping with this optimistic industry scenario, ISLL has been in the
 investment phase over the past 2-3 years with focus on developing APIs
 for products that are expected to go off-patent in regulated markets
 and for filings DMFs. The company has increased the capacities for its
 major products this year.  The new facilities will augment the
 company''s efforts to tap the regulated markets and strengthen its
 presence in new markets, which is expected to account for hefty
 increase in its bottomline over the next four years. While doing so,
 ISLL has also conscientiously focused on process efficiencies, thereby
 increasing the production capacities without involving much of the
 investment.
 
 ISLL received the Japanese government approval, which will facilitate
 company''s presence in the Japanese market. In line with its strategy to
 strengthen its presence in the US market, the company has started
 supplying APIs in development quantities to generic companies for
 molecules that are expected to go off-patent post 2012 onwards.
 
 As ISLL plans to target patent expiries in regulated markets, the
 company is in the process of expanding its product profile with major
 focus on chronic lifestyle related therapy areas such as Anti-Cancer,
 Anti-Diabetic and Anti-Psychotic.
 
 ISLL has been on a strong growth trajectory over the past five years
 benefitting from healthy growth in its key molecule - clarithromycin,
 ramp-up in the sales from new molecules and new client addition
 predominantly in semi-regulated markets.  This momentum is expected to
 continue on the back of planned new launches in regulated markets and
 tie-ups with generic companies. Further, the scale-up in menthol
 business is also likely to support growth going forward.
 
 Over the next five years, ISLL plans to expand its product profile from
 40 (at present) to 80 with focus on products that are expected to go
 off-patent between FY 2012-20. The steady growth in company''s key
 molecules, introduction of new APIs, foray in newer markets and client
 addition are continuous processes. The growth has been particularly
 strong over the past two years driven by launch of several molecules,
 both in the domestic and exports markets. The Company has grown at a
 CAGR of 28% in terms of revenue and 40% in terms of post-tax profit in
 the last ten years.
 
 The Company has earmarked a comprehensive business strategy to achieve
 US$ 500 mn by 2015:
 
 Building up product pipeline with focus on regulated markets to drive
 growth: In line with its strategy to transform its business with focus
 on regulated markets, ISLL is in the process of developing products
 that are expected to off-patent in the US and European markets post
 2012 onwards.
 
 Expanding presence in fast-growing chronic therapeutic segments:
 Traditionally, the product mix of ISLL has been concentrated on therapy
 segments such as antibiotics, CVS and anti-histamine. As it plans to
 target patent expiries in regulated markets, the company is in the
 process of expanding its product profile with major focus on chronic
 lifestyle related therapy areas such as Anti-Cancer, Anti-Diabetic and
 Anti- Psychotic.
 
 Establish a presence with leading generic players in Europe: In
 European markets, ISLL has a fairly well established presence with
 leading generic players in Central and Eastern European countries and
 hopes to further consolidate this alliance.
 
 Working on a two-pronged growth strategy for the European markets: In
 addition to supplying bulk drugs to generic companies, as part of its
 strategy for European markets, the Ind-Swift group also aims to enter
 into the formulations segment through its formulations company -
 Ind-Swift Limited.  ISLL will supply the APIs to ISL, which will
 in-turn file dossiers/enter into a marketing tie-up (with companies
 holding product registrations in Europe) and manufacture formulations.
 
 Alliance with generic majors and new product launches to expand
 presence in the U.S. market: The company''s strategy for the US market
 is slightly different from that for European markets as it intends to
 position itself only as a standalone API player by tying up with
 leading generic players for products that are expected to go off-patent
 over the next 2-3 years.
 
 Taking all these views into consideration, it is evident that the
 company is in a healthy growth phase and stakeholders have myriad
 reasons of optimism across the foreseeable future.
 
 Signed
 
 N R Munjal