Annual Report - Glenmark

Glenmark Pharmaceuticals Limited 

Annual Report 

2004 - 2005

Our Vision 

To emerge as a leading 

integrated research-based global 

pharmaceutical company

Consolidated Financial Highlights 

Year Mar-02 Mar-03 Mar-04 Mar-05 

Rs./Mn. USD/Mn. Rs./Mn. USD/Mn. Rs./Mn. USD/Mn. Rs./Mn. USD/Mn. 

Turnover 2,859.56 59.06 3,703.35 77.97 3,806.61 87.37 6,120.53 139.87 

Other Income 40.18 0.83 30.57 0.64 34.66 0.80 52.29 1.19 

PBIDT 513.09 10.60 659.34 13.88 725.73 16.66 1,609.80 36.79 

Interest 132.26 2.73 123.43 2.60 100.57 2.31 172.63 3.95 

Depreciation 89.97 1.86 106.57 2.24 110.93 2.55 164.23 3.75 

PBT 290.86 6.01 429.34 9.04 514.23 11.80 1,272.94 29.09 

Tax 58.02 1.20 103.83 2.19 100.89 2.31 201.53 4.61 

PAT 232.84 4.81 325.51 6.85 413.34 9.49 1,071.41 24.48 

Note: Rs. to USD conversion is at the rate existing at the end of the respective financial years. 

12% 

India API 

India Formulations 

50% 13% NCE 

Turnover 2004-05 

25% 

Exports Formulations & API

Contents 

2 

Global. Reaserch-focused. Integrated 

10 

Highlights, 2004-05 

11 

Objectives, 2005-2006 

12 

Interview with the CEO 

16 

Business Divisional Analysis 

18 

Domestic Formulations 

22 

Active Pharmaceutical Ingredients 

26 

International Formulations 

30 

Research and Development 

36 

Global Management Team 

37 

Management's Discussion and Analysis 

43 

Risk Management 

45 

Five-year Financial Summary 

47 

Ratios 

49 

Profile of Directors 

50 

Director's Report 

61 

Report on Corporate Governance 

71 

Auditor's Report 

74 

The Financial Statements

Global. Research-focused. Integrated.

Objective 

To position the Company 

for growth and value 

creation in the global 

pharmaceutical industry 

Annual Report 2004-2005 

3 

Tenure 

The long-term and 

post-GATT [post-2005] 

scenario 

Driver 

A global market strategy, a 

strong research focus and 

an integrated business 

model for risk-mitigating 

delivery

Global 

accounts for half the global 

pharmaceutical market, while Europe 

and Japan together make up almost 

40 percent. The emerging Asian, African 

and Latin American markets, too, 

present very bright prospects and are 

worth several billion dollars. 

Approaching the regulated markets 

by establishing a presence in the USA 

and the UK. While efforts are on to 

establish the sales and marketing frontend 

by in-licensing and acquiring 

products in the USA; the UK has been 

identified as an entry point into the 

European Union. 

Strengthening its brand portfolio 

across markets in Asia, Africa, CIS/Russia 

and more, recently, Latin America 

through its wholly-owned subsidiary in 

Brazil. 

Continuing to build front-end and 

customer-facing distribution systems in 

territories where it intends to market 

products under its own brand name. 

Out-licensing NCE compounds 

discovered by the Company's research 

team for development and 

commercialisation in the developed 

markets. The deals struck for the 

Company's lead molecule for 

asthma/COPD for the North American 

and Japanese markets are cases in 

point. 

4 

The pharmaceutical industry is 

undergoing a significant change: 

Even as the world becomes a global 

village, companies are increasingly 

adopting an international outlook and 

approach. 

With recognition of product patents 

having become a reality, India has to 

explore avenues for growth outside the 

domestic setup. 

Companies have realised that it is 

through product innovation that they 

have an opportunity to be long-term 

players in a global context. 

Sustainable growth is possible only 

through globalisation as the sizeable 

international markets are developing at 

a rapid pace. This is primarily due to the 

large number of generic molecules that 

are going off patent within the next few 

years. It is estimated that the US alone 

Indian companies stand to gain greatly 

due to their distinguishing benefits of 

low manufacturing and labour costs. 

Furthermore, not only Indian 

corporations, but global players also can 

profit from these advantages. Apart 

from exploring options like contract 

research and manufacturing with Indian 

organisations, they can also consider 

potential partners in joint IPR 

development. 

In recent years, a few leading Indian 

companies have also demonstrated the 

ability and willingness to undertake 

development of novel drugs, also called 

NCE research. As pipelines of many 

global majors have run dry and cost of 

discovering new drugs has gone up, 

these developments, if successful, can 

help Indian companies evolve to the 

next level through partnerships with 

global majors to develop original drugs. 

Glenmark's Initiatives 

Glenmark, over the years, has built a 

global business strategy to capitalise on 

these emerging opportunities through 

the initiatives outlined below: 

Glenmark's global-focused business 

model has been directed to fulfil a 

number of corporate objectives, among 

them being increasing revenue and 

enhancing profitability. As it increases 

its international presence, Glenmark's 

dependence on its revenues from an 

increasingly competitive Indian industry 

will reduce, thereby mitigating risk for its 

shareholders and stabilising cash flows.

Growing competition 

characterises the 

constantly evolving 

international 

pharmaceutical industry 


5

Research-focused 

6 

In the post-GATT era, the growing 

importance of research is reflected at 

two levels. To begin with, there is the 

need to create new revenue inflows 

through innovation and new product 

development in the generics segment. 

Furthermore, this should be 

complemented by developing 

commercially-viable, proprietary 

products so that organisations can 

enjoy their competitive benefits for a 

longer period of time. 

Responding proactively to these 

imperatives, Glenmark had drawn out a 

dynamic three-pronged R&D initiative 

that covers the following: 

New chemical entity [NCE] research: 

The Company is focused on selecting 

targets with a strong possibility of 

success and having a high commercial 

potential. It has targeted development 

of new molecules in the asthma, 

diabetes and obesity therapeutic 

segments. This approach has yielded 

exciting results with one of the drug 

candidates successfully completing 

Phase I of clinical trials and a few others 

expected to move into the clinical trial 

stage in FY 2006. 

enhancing the value of its existing 

formulation therapies by developing 

patentable drug delivery systems that 

would help create strong differentiated 

products. These research teams are 

housed across its two research facilities 

at Sinnar and Mahape. This work has led 

to a patented controlled-release 

technology through which Glenmark is 

planning to commercialise several 

products in the future. 

Strong process chemistry research: 

The third initiative of reverse 

engineering bulk drugs is a recent, but 

significant contributor to the R&D vision. 

The Company filed patents on thirty 

nine processes in FY 2005. In addition, 

the process research teams also 

contribute to the NCE activity by 

developing and scaling up APIs for 

novel drugs discovered by Glenmark. 

These R&D initiatives have already 

commenced in generating returns and 

are expected to continue to translate 

into a more valuable product basket, 

stronger revenues, enhanced margins 

and higher profits. 

Formulations and new drug delivery 

systems [NDDS]: 

In addition to creating new 

formulations, the Company is also

A committed research and 

development focus has 

emerged as a differentiator for 

success in the pharmaceutical 

industry today 


7

Integrated 

8 

Glenmark's business strategy is 

balanced by a comprehensive 

risk management approach 

that extends from the top of the 

pyramid [business blueprint] to the 

bottom [individual product baskets]. 

The model comprises a keen research 

focus, diverse geographic presence, 

wider product basket, superior 

manufacturing facilities, quicker 

regulatory approvals and an ongoing 

investment in human competencies. 

The Company's integrated business 

model, itself, exemplifies its fundamental 

risk management initiative, which has 

translated into a lower cost structure 

and a direct control over an increasing 

number of links in the value chain. 

Additionally, this approach also creates a 

revenue source from each of these links, 

viz. potential licensing opportunities for 

new drugs, a growing presence as a bulk 

supplier and formulations player in 

various markets. 

of the international markets. 

Gradual reduction in the 

dependence on the Indian formulations 

business [from almost 100 percent of 

turnover in 2000 to 50 percent in 2005]. 

Concentration on strengthening the 

Company's product basket with new 

value-added therapies and product 

introductions across more territories 

globally. 

Acceleration of product launches and 

DMF/ANDA filings through enhanced 

quality systems and a strong regulatory 

focus to drive revenues. 

Profiting from local know-how by 

recruitment of local management in 

several of its key markets. 

It is this combination of sound risk 

management and rapid revenue and 

profit growth that will help the 

Company improve value for its 

shareholders. 

This integrated method of business has 

also been enhanced by the following 

means: 

Creation of world-class 

manufacturing facilities to address 

quality demands and strict regulations

Success in a competitive global 

environment is achieved by 

anticipating the perils and meeting 

them with a risk-mitigation strategy. 


9


Consolidated revenue and PAT 

The US subsidiary, Glenmark 

10 

Revenue 2004-05 

12% 

50% 

13% 

25% 

Contribution [%] 

Business Segments 


India API 

Exports Formulations & API 

NCE 

increased by 60.79 percent and 159.21 

percent respectively. 

NCE research made substantial 

progress with the Company's lead 

molecule for asthma/COPD 

successfully completing the Phase I 

clinical trials and also being outlicensed 

for the North American and 

Japanese markets. Its lead molecule 

for diabetes is presently in the 

pre-clinical testing stage. 

The Company incorporated a 

wholly-owned subsidiary in 

Switzerland to help manage NCE 

clinical trials as well as build research 

skills that complement R&D activities 

in India. 

Domestic formulations 

demonstrated a volume growth of 7.5 

percent and value growth of 8.3 

percent respectively. [ORG IMS MAT - 

Mar 2005] 

Construction of a new plant 

Pharmaceuticals Inc, USA [GPI], 

inaugurated its sales and marketing 

front-end as well as in-licensed and 

acquired a basket of products to 

commence and accelerate its 

operations. 

Glenmark has also filed 6 ANDA 

dossiers in FY 2005. 

The Company established 

headquarters for the UK & EU in the 

Thames Valley with a wholly-owned 

subsidiary, Glenmark Pharmaceuticals 

[UK] Ltd. 

Operations of the recently 

acquired company, Klinger 

Laboratories [Brazil], were integrated 

with those of Glenmark Farmacêutica 

Ltda. [Brazil]. The Company also 

acquired a leading contraceptive 

brand in Brazil in the last quarter of FY 

2005 and added 3 more brands to its 

existing basket of 19 products. 

The newly-acquired API 

commenced at Baddi, Himachal 

Pradesh in order to meet the demands 

of the domestic formulations 

segment. 

manufacturing plant at Ankleshwar, 

Gujarat obtained US FDA approval. 

The Company filed 13 DMFs and 

Formulation exports to semiregulated 

markets recorded a robust 

growth and operations were 

expanded to cover around 70 semiregulated 

countries. 

39 process patents during the year 

and initiated API supplies to the US 

market.

headed 

for the future 

Objectives, 2005-06 

Achieve revenue growth of 

approximately 40 percent and a net 

profit growth of 100 percent over 

2004-05. 

Obtain US FDA approval for the 

newly upgraded formulations facility in 

Goa. 

Expand capacity at current API 

sites and comments construction for a 

new plant. 

Strengthen presence in the semiregulated 

markets, especially Latin 

America. 

Register 14 ANDAs and 14 DMFs. 

Successfully launch and drive the 

growth of the eight new divisions in 

the domestic business. In addition, 

continue to launch strong molecules 

in the Indian formulations business 

and strengthen flagship brands. 

Projected 2005-06 

20% 

36% 

35% 

8% 

Contribution [%] 



11 


Accelerate the development of the 

front-end sales and marketing 

networks for selling generics in 

the USA. 

Take GRC 3886, Glenmark's lead 

molecule for asthma/COPD, 

successfully into Phase II clinical trials 

along with development partners and 

initiate Phase I trials for the diabetes 

lead molecule. Also take an additional 

PDE-4 into clinical trials for other 

inflammatory conditions. 

Commission a new formulations 

manufacturing facility at Baddi. 

Explore acquisitions in Europe and 

selected, less regulated markets in 

Latin America, Africa and Asia Pacific. 

India API 

Exports Formulations & API 

NCE Research

Interview with MD & CEO 

12 

Glenn Saldanha, 

Managing Director and 

CEO reviews the year 

How would you rate the 

Company's performance in 

2004-05 

The financial year under review has 

been an eventful year for Glenmark. The 

out-licensing of GRC 3886 to Forest 

Laboratories and Teijin Pharma Ltd. has 

changed the playing field for the 

Company. Not only does the deal 

present us the necessary cash flow for 

future expansion and growth, but it also 

validates our business model, and 

demonstrates that India can indeed 

deliver on its potential of discovering 

new molecules at significantly low costs. 

Financially, the Company reported a 

consolidated revenue growth of 

60.79 percent and a net profit growth of 

159.21 percent over 2003-04. However, 

profits from the generics business 

showed a marginal growth compared to 

the previous year; the bulk of the 

increase in profits was on account of 

milestone payments from the NCE 

business segment. 

Conversely, the low growth in 

profitability in the generics business 

belies the successful initiatives 

undertaken by the Company in building 

strength and capability in several 

business segments and markets. 

Furthermore, the Company successfully 

launched its sales and marketing frontend 

targeting the US generics 

opportunity while investing in building 

its bulk and formulation product 

pipelines to address the generics 

opportunity in regulated markets. The 

operational integration of Klinger 

Laboratories, a private company 

acquired by Glenmark in April 2004, was 

completed and several new products 

were filed for approval in Brazil. The 

Company entered 9 new export 

markets across Africa and Asia and also 

registered over 200 products in around 

70 overseas markets. These efforts have 

positioned the Company well to grow 

rapidly across all its business segments 

over the next few years. 

Despite a successful effort at improving 

efficiencies in various business 

segments, these firm-building activities 

led to an increase in costs. This was 

compounded by pressures brought 

about by structural amendments in the 

Indian Pharmaceutical Industry such as 

continued price erosion due to 

competitive pressures, introduction of 

MRP-based excise duties and 

uncertainty surrounding the 

introduction of VAT [Value Added Tax] 

which, in turn, led to a drop in off-take 

by channel partners. 

What were the other achievements 

We continued investing in a number of 

initiatives to migrate up the value chain. 

For instance, we filed six ANDAs from 

our state-of-art manufacturing facility at 

Goa. We carried out various modules of 

expansion and upgrade programmes at 

our other manufacturing facilities. We 

completed filing thirteen DMFs till 

March 2005 and also commenced sales 

of some of these bulk drugs to 

customers in regulated markets during 

the year. On one hand, we introduced 

new drugs to counter declining prices in 

the Indian market with enhanced 

revenues, while on the other; we 

consolidated our domestic formulation 

business by strengthening key brands 

and deepening our product basket. In 

the API business, our Ankleshwar plant 

was inspected and approved by the US 

FDA and we also enhanced the capacity 

of our bulk drug manufacturing facility

The Company successfully launched its 

sales and marketing front-end targeting 

the US generic opportunity while investing 

in building its bulk and formulation 

product pipelines to address the generic 

opportunity in regulated markets. 


13

Our lead compound for Asthma and 

COPD, GRC 3886, commenced and 

successfully completed Phase I trials in 

the UK. The Company collaborated with 

two partners, Forest Laboratories for 

North America [September 2004] and 

Teijin Pharmaceuticals Ltd. for Japan 

[April 2005], for developing and 

commercialising the molecule. We were 

also able to build a good portfolio of 

new drug molecules in addition to GRC 

3886. Some of these programmes have 

led to drug candidates that are currently 

in pre-clinical testing and are likely to 

result in additional Phase I candidates 

during FY 2005-06 and further on. 

Strategy 

Wider and deeper global 

presence 

Strong NCE and NDDS focus 

and stronger therapeutic 

presence through new 

molecule introduction 

Backward integration into 

APIs - high DMF filings 

Better leverage of the lowcost 

India-manufacturing 

advantage 

Building capabilities for US 

FDA and other regulatory 

approvals 

How did the Management strengthen 

the Company's R&D thrust 

Glenmark continued to focus on two 

broad disease areas - inflammatory 

conditions and metabolic diseases. As 

mentioned earlier, GRC 3886 which is 

our lead PDE-4 inhibitor compound for 

Asthma and COPD successfully 

concluded Phase I human trials and has 

shown substantial therapeutic potential. 

The Diabetes programme has resulted 

in a lead DPP-IV inhibitor, GRC 8200. The 

molecule is an oral, long-acting, oncedaily-dosing 

drug that is currently in 

pre-clinical testing. We expect to take 

GRC 8200 into Phase I testing by 

August-September 2005. Even though 

the molecules will be commercialised 

only over the next five years, subject to 

their success in the subsequent phases 

of clinical trials, the Company will be 

able to out-license or co-develop them 

with global pharmaceutical majors. Such 

collaboration deals have already been 

signed for GRC 3886 for the territories of 

North America and Japan. Work on 

several new targets commenced during 

the year and the Company has also 

done significant work on additional 

indications in the inflammatory diseases 

area, viz. those targeting the central 

nervous system, topical ailments, gastrointestinal 

inflammatory disorders, RA 

[rheumatoid arthritis], etc. 

Our R&D strategy has been carefully 

designed and is re-aligned regularly to 

de-risk the organisation: we are 

concentrating on more than one 

therapeutic segment, multiple targets 

and a pipeline of drug compounds with 

a view to strengthen our success 

prospects. Dedicated teams are working 

on formulation development and API 

process research for launch across our 

various markets. Filing patents will 

constitute an integral part of our 

endeavour to differentiate our products 

across the domestic and international 

markets. Thus our research efforts span 

the entire risk-reward spectrum in the 

pharmaceutical chain and will drive 

growth as Glenmark evolves along the 

value chain. 

How did the Company respond to the 

pressures in the Indian formulations 

business 

The Indian formulations business 

continues to be under pressure from 

challenges in the environment spanning 

severe price competition, several “metoo” 

launches in each segment, and fast 

diminishing opportunities for launching 

new products as India has started 

recognising product patents since 

January 2005. In addition, during the last 

year the industry faced a challenging 

fourth quarter due to changes in the 

excise regime and the uncertainty 

surrounding the implementation of VAT. 

This can be witnessed in the meagre 

increase in volume [4.3 percent] and 

value [4.17 percent] exhibited by the 

Indian Pharmaceutical Market [IPM] 

[ORG IMS MAT, March 2005]. We expect 

this sluggish value growth to sustain for 

the next 2-3 years as companies expand 

their therapeutic segment coverage in 

response to the challenge of 2005 and 

diminishing new product options, 

thereby increasing competition. 

In 2004-05 Glenmark continued to 

follow its multi-pronged strategy to 

counter this impact. Aggressive new 

product development being one; where 

we have focused on the rapid launch of 

powerful products like Altacef OD, 

Carbonyl Iron and Mignar to replace 

older therapies. The Company also 

launched several line and brand 

extensions to bridge the therapy gaps in 

many of its segments. Finally, in a bid to 

improve focus, better manage its 

portfolio of brands and relationships 

with prescribers, the Company 

restructured its domestic sales team into 

six divisions catering to different 

specialties and prescriber bases. Two 

other divisions were launched in April 

2005 to cater to family physicians and 

government tender opportunities. We 

are confident that these initiatives will 

translate into robust growth across the 

foreseeable future and help us combat 

some of the challenges in the industry. 

How does the Company expect to 

strengthen its presence in the API 

business 

Our presence in the API business will be 

strengthened through an ongoing 

investment in our manufacturing 

facilities and research capabilities and 

expansion into newer markets. For 

instance, we are expanding and 

upgrading our API manufacturing 

plants; we are strengthening our inhouse 

research team with a view to 

accelerate the drug engineering process 

and consequently, their introduction; we


are filing DMFs in the US and EU to 

supply API to companies in these 

markets. 

At Glenmark, we view the API business 

from a two-way perspective. Firstly, API 

manufacture serves as a backward 

integration into our formulation-centric 

value chain, which helps us rationalise 

cost and get increasingly competitive. 

Secondly, API products are not intended 

for captive use alone but are marketed 

to users in India and abroad so that they 

represent a standalone business for the 

company. 

In view of this, the API division gives us a 

competitive cost foundation that 

enables our formulations to compete in 

the domestic and global markets, in 

addition to enhancing our revenues. 

What are the significant strengths of 

the Company 

Primarily, it is our responsiveness to the 

external environment. This is reflected 

in our ability to rapidly evolve from 

being an India-centric formulations 

company to one that is diversified with 

a growing presence in APIs, a focused 

and balanced R&D initiative which has 

already started paying rich dividends in 

the form of licensing deal payments, 

and a presence in over 70 countries 

across the globe including the regulated 

markets of the EU and the USA. 

Moreover, Glenmark has always believed 

in building on its strengths, which is 

reflected in the investments it has made 

in its people resulting in a strong 

management and scientific team. 

What are the significant 

opportunities ahead of the 

Company 

Going forward, the Company is now set 

to benefit significantly from efforts in 

three areas that will unfold in the short 

to medium term. 

Partnering opportunities for its 

rapidly developing NCE pipeline that 

commenced with GRC 3886 and which 

now includes a lead compound for 

diabetes, several programmes for 

identifying PDE-4 inhibitors for other 

inflammatory conditions, etc. The 

Company has set a target of having 4-6 

compounds in clinical trials within 3 

years. 

Growth in revenues from the 

regulated market generic business that 

is rapidly taking shape with the settingup 

of a commercial sales' front-end in 

the US, a subsidiary in the UK and the 

acquisition of a company in Brazil 

during the year under review. 

Acquisitions in select growth markets 

across the world to establish sales and 

marketing front-ends for generics and 

branded generics. 

In addition, the Company is also 

targeting significant growth in its 

branded generic formulations business 

in around 70 countries across the globe 

[including India] as well as in the API 

business. The latter will also benefit from 

the rapidly developing pipeline of DMFs 

starting with the 13 that have been filed 

till March 2005. 

How does the Company expect to 

significantly enhance shareholder 

value 

Glenmark is adding significant value to 

the shareholders by delivering stellar 

growth in revenues and profits year on 

year. Correspondingly, there is a strong 

commitment to mitigate risks by 

establishing a growing presence in 

several markets and business segments 

that will help improve asset productivity 

and allow quicker returns on 

investment. Our firm commitment to 

develop a pipeline of NCE compounds 

will provide significant upside to the 

shareholders in the years to come. We 

are of the opinion that the GATT 

challenge of 2005 is not going to pose a 

threat until 2008-10 by which time our 

NCE strategy will start delivering results. 

As a result, our various initiatives, 

coupled with our integration and active 

risk management, will not only help us 

multiply our revenues but also buffer 

our profits, resulting in superior returns 

to our shareholders. 

Agenda for 2005-06 

Build an ANDA pipeline of 22-24 products, 

including products developed in partnership 

Obtain regulatory approval for the Goa facility and 

commence manufacture of formulations for sale in 

regulated markets 

Identify a European partner for GRC 3886 

Take two NCE molecules into Phase I clinical trials 

and seek licensing/co-development alliances for them 

Deepen the domestic market formulation focus by 

introducing products that will replace existing 

therapies 

Strengthen systems and processes, increase 

efficiencies and reduce costs 

Look for acquisitions to accelerate growth and 

global reach 

15 

Annual Report 2004-2005

Business Divisional Analysis 

16 

India 

Formulations 

Active 

Pharmaceutical 

Ingredients 

Glenmark 

Pharmaceuticals 

Limited 

NCE Research 

International 

Formulations 


The oldest group in the Company, 

it handles all formulation sales 

within India. 

Active Pharmaceutical 

Ingredients [APIs] 

This group supplies API for the 

Company's captive consumption in 

addition to catering to varied 

requirements, both, within and outside 

India. Moreover, it co-markets valueadded 

formulations along with APIs to 

other pharmaceutical companies. 


This group, comprises subsidiaries that 

address developed markets, drives sales 

of formulations in the semi-regulated 

and regulated countries. 

NCE Research 

This segment has started yielding 

financial results only this fiscal year. It 

started off with the landmark deal for 

the Company's lead compound for 

asthma/COPD for North America and 

was followed by another agreement 

towards the beginning of FY 2006 for 

the Japanese market for the same 

molecule. 

An integrated business 

model 

Glenmark has worked towards creating 

a comprehensive and integrated 

business model. To illustrate, the model 

covers the entire gamut from drug 

discovery to the development of API to 

the marketing of formulations within, as 

well as out of, India. Furthermore, each 

element in this value pyramid is a 

revenue generator across an increasing 

number of markets, which has resulted 

in improved performances and better 

growth targets for the Company. 

Since, the Company's IPO in 1999, 

Glenmark has been able to establish its 

presence across a number of semiregulated 

markets which share its 

demographic and regulatory profile, 

namely, Africa, South and South East 

Asia, the Middle East and more recently, 

Latin America. Its Brazilian subsidiary 

has also successfully integrated the 

company it acquired a year ago and has 

added four more products to its basket. 

Glenmark's efforts to establish itself in 

the developed markets of USA and 

Europe gained momentum in FY 2005 

with the launch of its sales and 

marketing front-end in the US. 

The following section reviews the 

operations and the growth strategy of 

each of the Company's market-focussed 

divisions.

Glenmark has responded to challenges in 

the environment by segregating its 

business for better focus and impact 


17


Performance Highlights, 2004-05 

 

 

 

 

 

 

The domestic formulations group reported a value growth of 8.33 percent, 

outperforming the Indian market growth rate of 4.17 percent. [ORG IMS 

MAT, March 2005] 

Yet again, the volume growth of the formulations group was higher, but its 

impact was stunted by a sharp price decline. 

The domestic formulations business was ranked number one in its 

operating market [comprising therapeutic segments that account for 

95 percent of revenues as per ORG IMS MAT, March 2005 figures]. 

The Company consolidated its position in the pain management and antidiabetics 

segments; while gaining strength in dermatology, cardiology and 

anti-infective categories with new product launches. 

The Group strengthened its field force to around 1300 field sales officers. 

The Company also commenced construction of a plant at Baddi, Himachal 

Pradesh which will primarily cater to the Indian and select semi-regulated 

markets. 

Company's largest revenue generator, 

contributing to 50 percent of the total 

turnover, with revenues of Rs 3027.74 

million in 2004-05 [Rs 2892.00 million in 

2003-04]. Compared to the IPI's growth 

of 4.17 percent, the Company's 

domestic formulation revenues 

recorded a growth of 8.33 percent, while 

the volumes indicated a corresponding 

increase of 7.5 percent. 

Therapy Segments 

In FY 2005 the formulation business's 

three divisions, Glenmark, Gracewell and 

Healtheon helped the Company 

strengthen its focus on defined 

therapeutic segments as well as 

associated practitioners/specialists. 

18 

Introduction 

The Indian Pharmaceutical 

Industry [IPI] has witnessed rapid 

growth in the past few years. 

Presently, the Indian Pharmaceutical 

Market [IPM] constitutes around 1.5 

percent of the global pharma industry 

in terms of value and 8 percent on the 

basis of volume. Valued at 

approximately USD 5 billion, the IPM, is 

heavily fragmented, comprising over 

21,000 companies of which only 10,700 

are registered units. Thirty five per cent 

of the market is dominated by the top 

10 companies. Furthermore, the 

industry is extremely price-sensitive, 

augmented by a low consumer 

purchasing power and an underevolved 

health insurance sector. 

Traditionally, India has made a mark for 

itself in the field of reverse engineering 

and is recognised for supplying the 

market with the lowest priced drugs. 

But all that is set to change, as India 

having signed GATT, is obliged to 

recognise product patents, starting from 

2005. 

Amidst this scenario, Glenmark's 

domestic formulations business 

segment continued to be the 

Glenmark: It is the Group's oldest 

division and is focused on specialties 

like gynaecology, physicians and 

orthopaedics, handling several flagship 

brands of the Company. 

Gracewell: This division focuses on 

dermatological, pain management, 

antibiotics and respiratory therapy 

segments. 

Healtheon: A relatively new division, 

Healtheon's focus is on lifestyle-related 

products and markets anti-diabetic, 

cardiovascular and lipid-lowering drugs. 

In FY 2005, the dermatological and 

respiratory therapy segments


19 

A multi-tiered strategy for driving 

growth, sustaining organisational 

revenue and increasing profitability 

in the India Formulations Business

20 

accounted for almost 50 percent of the 

domestic revenue pie. Additionally, the 

newly introduced anti-diabetic and 

cardiovascular segments showed an 

upward movement over the previous 

years. This change can be witnessed in 

the industry as a whole, where 

traditionally, acute therapies have 

dominated the market; the trend is 

movement towards chronic 

therapies. While acute therapies still 

constitute 77 percent of the market, 

they are growing at half the pace of 

chronic therapies. [ORG IMS MAT, Nov 

2004] 

Divisional Strategy 

Glenmark's attractive growth in the 

formulations segment is a result of the 

sustained introduction of improved 

drugs and an entry into new growth 

segments. 

Expanding into newer segments: 

Glenmark appreciates that in order to 

profitably sustain growth in the 

domestic arena, it is vital to expand the 

business to cover more therapy areas. 

This diversification has taken place over 

the past five years and is yielding rich 

dividends. 

Launching new products and 

establishing first-mover advantage: 

Apart from developing an extensive 

therapeutic presence, Glenmark has also 

been the first to launch new generation 

drugs and capture a first-mover's 

advantage in these segments. The 

products launched last year under this 

category are: 

Adapalene + Clindamycin 

[Dermatological - Acne], 

Atorvastatin + Ezetimibe 

[Lipid-lowering], 

Aztreonam [Antibiotic], 

Therapeutic Segment Share in Revenues [Percentages] 

Therapeutic segments 

Dermatologicals 

Respiratory 

Pain Management 

Anti-Infectives 

Anti-Diabetics 

Gastrointestinal 

Gynaecologicals 

Cardiovascular 

Others 

Total 

Source: ORG IMS MAT[Mar 2005] 

2005 2004 2003 2002 2001 

33 34 35 36 37 

15 18 18 21 22 

13 10 7 3 4 

11 11 12 12 11 

8 7 7 4 0 

7 8 11 11 10 

5 6 6 7 9 

5 3 0 0 0 

3 4 4 5 6 

100 100 100 100 100 

Diversified Specialty Segment 

Portfolio 

Specialty 

Segments 

Gynaecology 

Respiratory 

Internal Medicine 

Dermatology 49% 

Cardiac 

Gynaecology 

Diabetes 

Pain Management 

Respiratory 

Internal Medicine 

Dermatology 

Percentage 

5% 

Source: ORG IMS MAT [Feb 1998] 

Source: ORG IMS MAT [Mar 2005] 

21% 

25% 

4% 

5% 

8% 

13% 

16% 

21% 

33% 

Carbonyl iron [Hematinics], 

Cefuroxime OD [Antibiotic], 

Esomeprazole + Domperidone 

.....[Gastrointestinal], 

Etoricoxib [Pain Management], 

Metformin SR [Anti-diabetic], 

Miglitol [Anti-diabetic] and 

Tazarotene [Dermatological - 

Psoriasis] 

Replacing older therapies: 

Glenmark has also replaced older and 

inferior molecules with newer therapies 

and combination drugs, a strategy more 

profitable than the launch of me-too 

brands. These new molecules / 

combination therapies have redefined 

the dominant therapy in their segments 

and led to an increase in sales. Once 

again, this trend has been seen in the 

domestic industry where combination 

therapies have driven the growth in the 

market [ORG IMS MAT, 2004]. Please 

refer to the new products stated earlier. 

The Company's revenues in 2004-05 

from new molecules [launched in the 

preceding two years in each case] are 

detailed in the table on the next page. 

The table illustrates, that the 

replacement of older therapies with 

new drugs as well as expansion into 

newer segments have benefited the 

bottom line. 

These new product launches have not 

only enhanced revenues, but they have 

also helped the Company reduce its 

dependence on its older brands and 

establish a broader brand basket. 

Leveraging technology assets: 

Glenmark recognises the limited run 

that even successful products enjoy and 

hence has sought to extend their 

lifecycle through novel drug delivery 

systems. 

Striving to build brands: 

Glenmark's strategy is to maximise 

revenue from formulations by focusing 

on brands. This is integral to the 

Company's growth for a number of 

reasons: robust brands enhance revenue


New products launched by Glenmark in last two years 

Brand Molecule FY 2005 Growth FY 2004 

[Rs./Mn.] [%] [Rs./Mn.] 

Kretos Etoricoxib 40.1 5786.5 0.7 

Ebov Etoricoxib 37.5 6467.7 0.6 

Tacroz Tacrolimus 35.9 63.3 22.0 

Telma H Telmisartan + Hydrochlorothiazide 25.8 528.5 4.1 

Valus XT Valdecoxib + Tizanidine 22.5 628.5 3.1 

Razel Rosuvastatin 20.9 108.0 10.0 

Deriva-C Clindamycin + Adapalene 17.8 656.1 2.4 

Zetitor Atorvastatin + Ezetimibe 13.6 - - 

Tazret Tazarotene 10.2 71.1 5.9 

Vorth XT Valdecoxib + Tizanidine 9.2 577.4 1.4 

Kefpod Suspn. Cefpodoxime Suspn. 7.4 254.0 2.1 

Valus Insta Gel Valdecoxib Gel 6.7 224.4 2.1 

Carboflot Carbonyl Iron Solid 6.0 - - 

Mucaryl-AX Cough Preparation 5.8 - - 

Esoz D Esomeprazole + Domperidone 5.0 - - 

Mignar Miglitol 4.8 - - 

Glevo [Injection] Levofloxacin 4.5 8.2 4.2 

Maclar Suspn. Clarithromycin Suspn. 4.0 13.5 3.5 

Vorth Insta Gel Valdecoxib Gel 3.0 112.2 1.4 

Altacef OD Cefuroxime 2.26 - - 

L-Cetridoc Levocetrizine 1.6 - - 

Ezzicad Ezetimibe 0.7 451.2 1.0 

Lerez AT Lercanidipine + Atenolol 0.3 374.6 0.1 

Valus Plus Valdecoxib + Paracetamol 0.2 - - 

Trezam Aztreonam 0.1 - - 

Source: ORG IMS MAT [Mar 2005] 

Revenue contribution from new products [

Active Pharmaceutical Ingredients 

22 


The Ankleshwar plant, obtained from GSK in 2003, was successfully 

inspected and approved by the US FDA for the following two 

products, Amiodarone Hydrochloride and Cilostazole. 

The Company filed 13 DMFs by March 2005. 

Sixteen new products were introduced across segments which included 

Dermatological, Cardiovascular, Pain Management and CNS therapeutic 

segments. 

Significant contributions to revenues were made by newly added 

markets in Asia Pacific, South America, Middle East and Canada. 

The Company also filed 39 process patents. 

Introduction 

The role of suppliers of active 

ingredients, often referred to as 

building blocks, in the 

pharmaceutical industry, is rapidly 

changing in response to the changing 

needs of its customers and can be 

expected to evolve even more in the 

future. The generics industry is 

expected to witness significant growth 

in the following 5-6 years and the 

derived demand for quality APIs is 

projected to grow rapidly. The share of 

regulated markets in the export 

revenues of Indian API manufacturers is 

expected to rise sharply; in FY 2005, 

Indian pharmaceutical players have filed 

more than 200 DMFs with the US FDA. 

In the fourth quarter of FY 2005 alone, 

the US FDA is reported to have received 

74 filings from Indian companies and 

this figure has been the highest 

achieved by the Asian sub-continent in 

the past 2 years. 

A number of factors contribute to India 

becoming the most sought after 

destination for the sourcing of bulk 

drugs, viz. 

Low development costs. 

Strong process chemistry capabilities 

to undertake complex synthesis. 

High quality certified manufacturing 

facilities. At present, India has over 70 

bulk drugs manufacturing units 

approved by the US FDA and several 

other regulatory agencies. Further, this 

number is likely to move up in the near 

future. 

Growing skill levels in developing 

low cost API's through non-infringing 

routes to assist in the timely launch of 

generic formulations in regulated 

markets, thereby acting as a catalyst for 

the growth of the generics industry. 

Glenmark Pharmaceuticals Ltd is an 

emerging, global pharmaceutical 

company with proven research 

capabilities. The Company's API

developing 

low cost routes to 

manufacture drugs 

going off patent to serve 

the generics industry 


23

Therapeutic segment 

contribution in FY 2005 

Anti-inflammatory 

33.62 % 

business was developed four years ago 

in keeping with its vision of emerging as 

an integrated pharmaceutical player. 

Today, the Company's manufacture of 

API not only serves its captive 

requirement but is also marketed to 

third parties within India and abroad. 

The API Advantage 

From a strategic perspective, a 

backward integration into the synthesis 

and manufacture of APIs helps 

manufacturers in three ways: 

The API skills have also contributed to 

Glenmark's pace of development of 

NCEs as Glenmark is equipped to 

develop and patent processes to 

manufacture the bulk required by its 

novel drugs. In the recently concluded 

collaboration agreements for its 

Asthma/COPD lead molecule GRC 3886 

with Forest Laboratories [North 

America] and Teijin Pharma Ltd. [Japan], 

Glenmark has committed to produce 

and meet the API needs of its partners 

during drug development and after 

commercialisation. 

Anti-diabetic 

Cholesterol and 

triglyceride reducer 

Angiotensin II antagonist 

ACE Inhibitor 

Others 

15.52 % 

8.92 % 

5.89 % 

5.47 % 

30.58 % 

The potential to augment revenues 

and profits by addressing the fastgrowing 

API demand. 

A significant cost and pricing 

advantage in the manufacture of 

formulations especially when APIs 

manufactured in-house are used. 

An ability to rapidly launch new 

formulations due to an easy access to 

the required APIs, resulting in a firstmover's 

advantage and higher-thannormal 

initial revenues. 

Lastly, API competencies will provide a 

source of partnering advantage to 

explore in-licensing opportunities for 

novel drugs under development. In 

return for rights to market the drug 

under development in less regulated 

markets including India, Glenmark can 

provide partners with a low cost 

manufacturing base and also help 

optimise the API resources.


Growth Strategy 

In the short time that Glenmark 

commenced manufacturing APIs, it has 

developed significant strengths. These 

comprise: 

1. An ability to develop low cost 

processes and manufacture quality 

generic products that are delivered on 

time and at competitive prices in target 

markets. 

2. A capacity to develop and 

manufacture complex multi-step 

molecules and build value-added 

therapies for higher and sustainable 

growth. 

3. A capability for deriving economies of 

scale. 

4. A comprehensive understanding of 

global regulatory and IPM requirements. 

Over the years, the Company has 

strengthened its API presence through a 

four-pronged strategy: 

1. Exploration of opportunities in the 

growing lifestyle segment: 

Changing lifestyles and food habits 

have given rise to a new set of ailments. 

The IPM which has until recently, 

focused on acute therapies, has started 

shifting towards the chronic segment. 

Glenmark has recognised and captured 

the growing opportunities offered by 

this lifestyle segment across its various 

business units. 

2. Rapid launch of new molecules: 

In recent times, the industry has been 

plagued by shorter product life cycles 

and declining returns. Glenmark has 

countered this by introducing new 

molecules with an increasing frequency. 

Over the years, new product launches 

have contributed to an increasing 

proportion of revenues and has also 

served to de-risk the business from 

being affected by lowering prices across 

its existing products. 

3. Building strong process research 

capabilities: 

Glenmark's research centre at Mahape 

houses six laboratories dedicated to API 

research. Manned by a qualified team of 

around 70 scientists and process 

chemists, these laboratories are 

equipped with state-of-the-art 

equipment and analytical tools. This, 

coupled with strong, dedicated process 

research capabilities, has helped reduce 

costs and product development time to 

a significant extent. 

The research strength has also been 

reinforced by a sophisticated 

information centre that provides 

relevant scientific data, guiding the 

efforts in the development of a pipeline 

of high opportunity drugs. The research 

facilities specialise in stereo chemistry, 

heterocyclic chemistry, resolution 

chemistry and carbohydrate chemistry. 

The research team is currently working 

on over 40 projects and has 

commercialised 35 products over the 

last three years. The Company has filed 

patents on processes for thirty nine 

products and has also filed thirteen 

DMFs in FY 2005. Work on its future 

pipeline is progressing at a rapid pace 

and the Company expects to file 14 

DMFs in FY 2005 and also commercialise 

over 10 products in the less regulated 

markets in the same time-frame. The 

novel drugs [NCEs] being developed by 

the Company have also drawn upon the 

process skills of the research team for 

development and scale-up. 

4. Low cost, high quality 

manufacturing: 

The division has three plants one at 

Kurkumbh, a recently acquired plant at 

Mohol [near Solapur], both in 

Maharashtra, and another at Ankleshwar 

[Gujarat]. The Ankleshwar plant was 

acquired from GlaxoSmithKline and has 

been approved by the USF DA for two 

products in FY 2005. 

Outlook 

The API division expects to drive 

revenue growth in FY 2005-06 through 

the following initiatives: 

Tie-ups and co-marketing initiatives 

to increase the target number of 

products from 50 to 65. 

Development of 14 Drug Master Files 

[DMFs] for the US market to further 

develop the API and generic 

formulation businesses. 

Focus on the US market in addition 

to those in Asia-Pacific, South America, 

Eastern Europe and parts of Western 

Europe. 

Development of commercial batches 

of DMF-grade APIs to supply customers 

in North America and Europe for 

products already filed till date. At the 

same time, develop an additional 14 

DMFs for the regulated markets. 

Capacity upgrade for the Ankleshwar 

and Kurkumbh facilities. 

Commence construction of a new 

manufacturing facility. 

End Note 

Glenmark will continue to focus on 

strengthening its API operations and 

transplanting its experience into the 

advanced generic markets of USA and 

Europe. 

25 



Performance Highlights, 2004-05 

 

 

 

 

 

 

 

The Company's international operations in the semi-regulated markets 

recorded revenues of Rs. 819.16 million in 2004-05, a growth of 74 percent 

over the previous year [Rs. 469.28 million in 2003-04]. 

Revenues from Africa and Asia grew by 61 percent and 62 percent 

respectively, while Russia and CIS demonstrated an 80 percent growth. 

Latin America, the newest market, recorded an exponential growth of 231 

percent. 

The Company's US subsidiary launched its marketing and sales' front-end 

in the last quarter with two generic products in-licensed from companies 

in the US. The Subsidiary also entered into an agreement for the joint 

development, filing and marketing of twelve generic pharmaceutical 

products with a Chennai-based company and acquired two generic 

dossiers from a subsidiary of Stada Pharmaceuticals. 

The UK subsidiary of Glenmark is in the process of establishing 

partnerships for the Company in Europe and also evaluating acquisition 

opportunities for front-ends in select markets. 

Glenmark's Brazilian subsidiary filed 3 formulation dossiers and acquired 

exclusive trademark, global manufacturing and marketing rights for a 

leading contraceptive. In addition, Klinger Laboratories, a company 

acquired in Brazil in April 2004, was successfully integrated into the 

Group's operations and closed the year with sales of USD 5.36 million and 

profits of USD 0.7 million. 

The Company expanded its operations to cover around 70 semi-regulated 

country markets by March 2005. The new countries that were added to 

the portfolio are Eritrea, Botswana, Central African Republic, Bolivia, Haiti, 

Dominican Republic, Guyana, Kazakhastan and Iraq. 

The marketing and sales network was expanded to several countries and 

the Company appointed additional country managers and sales teams 

across the semi-regulated markets to directly market the Glenmark brand 

and its formulations. 

Introduction 

T 

his is Glenmark's fastest growing 

segment and its operations are 

spread across the regulated 

markets along with the rapidly growing 

markets of Asia, Africa, Caribbean 

islands, Latin America, Russia and the CIS 

states. The business recorded a 

turnover of Rs. 819.16 million, which 

is a 74 percent growth over the 

previous year [Rs. 469.28 million]. 

Regulated Markets: The US 

Initiative 

In 2003, North America alone accounted 

for nearly half of the global 

pharmaceutical sales at USD 229.5 

billion, with a growth of 12.4 percent 

over the previous year. It is estimated 

that the US pharmaceutical market will 

continue to grow at a rate of 12 to 14 

percent after 2003. [Executive Insight, 

Global Pharmaceuticals, Nov 2004] 

The retail generics market in the USA is 

valued at USD 62 billion and accounted 

for 13.3 percent of the pharmaceutical 

market in 2003 with a corresponding 

volume share of 30 percent. This 

segment which had been growing at a 

steady rate ranging between 4-5

partnering for 

growth 


27

28 

percent evinced a growth spurt in 2003. 

This accelerated growth of nearly 9 

percent is expected to continue for a 

few more years in view of the number 

of drugs that are expected to go offpatent. 

[Executive Insight, Global 

Pharmaceuticals, Nov 2004] 

Glenmark Pharmaceuticals Inc., USA 

[GPI] was established in 2003 to utilise 

Glenmark's expertise in formulation 

development, vertical integration and 

trade relations, and leverage these core 

competencies into the North American 

market. Through a multi-pronged 

approach of in-licensing, core product 

development, and focus on niche 

opportunities, GPI is poised to become a 

significant generics company by 2007. 

In an effort to accelerate the growth of 

the US sales and marketing front-end 

and enter the US market more quickly, 

GPI has aggressively sought and found 

several opportunities to in-license and 

acquire products from other 

manufacturers around the globe. In 

August of 2004, GPI acquired two 

ANDAs from Clonmel Healthcare Ltd, a 

US subsidiary, of Stada Pharmaceuticals. 

These two products are limited-source 

generics with approximately USD 50 

million in sales. In addition, GPI has also 

in-licensed two ANDAs, Naproxen 

tablets and Nitroglycerin Sublingual 

tablets, and commenced shipping these 

products in February and May 2005, 

respectively. The products were 

collaborations with Interpharm Inc. of 

Long Island, New York [Naproxen], and 

Konec Laboratories of Tucson, Arizona 

[Nitroglycerin]. GPI has also announced 

a collaboration deal with India's Shasun 

Chemicals and Drugs Ltd [Shasun]. The 

agreement, which covers 12 generic 

products, was a landmark deal between 

two Indian pharmaceutical companies. 

In accordance with the deal, Shasun will 

develop and license to GPI twelve 

generic products that GPI would file 

with the US FDA and market under a 

Glenmark ANDA [2 of the 12 products 

would be under the Shasun label]. 

Products under the agreement are 

expected to be filed over a three year 

period, with the first filing being 

expected in FY 2006. 

Glenmark enjoys a distinct competitive 

edge that will drive its success in the US 

markets: 

Its status as a speciality company with 

deep skills in select therapeutic 

segments helping it better leverage 

opportunities in those areas, viz. 

dermatology. 

A team that has prior experience in 

establishing and running US operations 

for other Indian pharmaceutical 

companies, offering it a home-player's 

advantage. 

An ability to match competitive prices 

for its formulations due to vertical 

integration. 

Strong generic and formulation 

development competencies enabling it 

to turn out products at a quicker pace. 

Excellent trade relations into the 

chains, wholesalers and distributors in 

the US market. 

Strong IP advantage owing to a 

dedicated team. 

The Company has completed filing 7 

ANDAs to date and expects to file an 

additional 13 ANDAs by the end of FY 

2006. Its current portfolio also includes 

two ANDAs acquired in FY 2005 from 

Clonmel Healthcare. Glenmark also 

plans to commercially launch five to six 

of its products under its label by March 

2006. 

Regulated Markets: The UK 

Division 

In 2002, Europe constituted over 30 

percent of the global pharmaceutical 

market, making it the second largest 

market in the world. The European 

Union, along with the USA and Japan 

made up 85 percent of the audited 

worldwide pharmaceutical sales in 2003, 

USD 466 billion in value. [Executive 

Insight, Global Pharmaceuticals, Nov 

2004] 

Glenmark Pharmaceuticals [UK] Ltd. was 

set up in 2004 to establish and expand 

Glenmark's business in the European 

Union. The Subsidiary will spearhead 

Glenmark's activities in Europe and is 

currently working on establishing the 

Company's front-end. With UK as the 

headquarters, GP [UK] L is building 

Glenmark's product portfolio in the EU 

and is exploring opportunities for 

partnerships with various European 

companies to establish licensing and 

sales contracts. The subsidiary will also 

look for appropriate opportunities for 

inorganic growth in Europe. The team is 

being expanded this year to include 

Regulatory Affairs, IP, Business 

Development and Sales professionals. 

Regulated Markets: The 

Brazil Subsidiary 

Currently valued at USD 5.4 billion, the 

pharmaceutical industry in Brazil is 

considered the tenth largest in the 

world and the second largest in Latin 

America. With 553 companies, it 

functions as a manufacturing hub for 

South America, of which nearly 40 

percent are foreign and account for 

approximately 75 percent of the internal 

market. The country's pharmaceutical 

industry employs about 47,000 people 

directly in addition to 130 wholesalers, 

50,000 pharmacies and 280,000 active 

doctors. 

Pharmaceutical spending is a key costcontainment 

target in all seven 

countries, with a variety of strategies 

being considered, notably 

encouragement of generics. The market 

for generic drugs in Brazil was formally 

regulated in 1999 in a government 

effort to reduce prices of medicines. The


first bioequivalent generics were 

approved in 2000, and growth has 

exceeded expectations even in the retail 

market. Though prices have dropped to 

a large extent, only 25-30 percent of the 

population has regular access to 

medicines, at present. The introduction 

of generic drugs created a dynamic 

investment option in this market. While 

generics have been growing, branded 

generics have held their place in the 

market and command justifiable 

premiums in the pharmacy. This is in 

contrast to most other markets where 

the advent of generics severely 

impacted the sales of branded generics. 

This also implies that strong marketing 

led companies have a definite 

opportunity to define their place in the 

market and create brands that shall 

continue to justify the premium in the 

future as well. 

Glenmark Farmacêutica Limitada [GFL], 

a wholly owned Brazilian subsidiary of 

Glenmark Pharmaceuticals Ltd, was set 

up in Sao Paulo towards the end of 2003 

with the objective of spearheading the 

Company's entry into the Latin- 

American market. Brazil is the most 

regulated market in Latin America and 

offers immense business opportunities 

for pharmaceutical companies like 

Glenmark. 

To assist in building a strong presence in 

the Brazilian market, GFL acquired 

Laboratorios Klinger in FY 2004 for a 

consideration of USD 6.25 million. 

Klinger is a leading, privately owned 

Brazilian company with a work force of 

176 employees, including a sales force 

of 91 sales representatives. It has 21 

approved product registrations in Brazil, 

to which 3 more brands were added in 

FY 2005. Klinger also has its own 

ANVISA approved manufacturing facility 

in Greater Sao Paulo that manufactures 

oral solids [tablets, coated tablets, etc], 

semi solids [creams, gels, lotions] and 

liquids [oral suspensions, solutions, etc]. 

At the time of the acquisition, the 

company's main business was 

generated from branded generics, with 

some OTC presence in the form of 

Ceklin [vitamin C], which was one of the 

top products of the Company. 

In March 2005, GFL purchased a leading 

hormonal brand, Uno-Ciclo from 

Instituto Biochimico Indústria 

Farmacêutica Ltda. [Biochimico] for USD 

4.6 million. The brand generated sales 

of USD 3.1 million in Brazil in the 12 

months prior to the acquisition. GFL has 

acquired the trademark along with 

exclusive manufacturing and marketing 

rights globally. As part of the agreement, 

Biochimico will contract manufacture 

the product for GFL. which will initially 

market the brand in Brazil and will work 

on extending the coverage to other 

Latin American markets in the course of 

time. 

While FY 2005 was spent in integrating 

Klinger with Glenmark's operations, the 

true benefits will accrue in FY 2006. 

Apart from generating a full year's sale 

for the three brands registered in the 

fourth quarter and the contraceptive 

brand acquired, the Company is poised 

to launch an additional basket of over 6 

products in the first half of FY 2006. 

Coupled with this, the Company is 

strengthening its field sales force in 

Brazil. With these various initiatives, 

Glenmark's Brazil operation is expected 

to grow significantly starting from FY 

2006. It will also provide the company a 

strategic entry vehicle into the markets 

of Latin America. 

Semi-Regulated / 

Developing Markets 

A number of semi-regulated markets 

are extremely price-sensitive and for 

low-cost players like Glenmark, they 

offer huge generic opportunities to 

capture market share by meeting 

existing therapy inadequacies. 

Capitalising on these prospects, 

Glenmark has worked on building a 

significant presence and brand image in 

these select markets over the past few 

years. Drawing from its experiences in 

other countries, the Company has 

progressed significantly in a short span 

of time. Additionally, taking a long-term 

perspective when commencing 

operations, Glenmark has invested in 

establishing a strong brand and 

marketing presence in these key 

markets. 

The Company's international presence 

has been strengthened through a 

judicious mix of strategies, which 

include the engagement of local sales 

teams to promote its products in these 

markets. In FY 2005, Glenmark got over 

200 product approvals and achieved a 

growth of 74 percent in revenues over 

that of the previous year. It has plans to 

file between 250 and 300 more dossiers 

in FY 2006. Glenmark dominates the 

dermatological, gynaecological, 

gastrointestinal and cough & cold 

therapy segments in most of the 

markets where it is present; while also 

making a significant impact in the antiinfective 

category. It now plans to build 

its equity in the anti-diabetic area. 

In the fiscal year under review, Glenmark 

commenced operations in nine new 

markets. The Company promotes its 

brands directly to the healthcare 

fraternity, building a strong franchise 

and ensuring a steady demand; while its 

product pipeline effectively fills gaps in 

existing therapies in the markets where 

it is present. It is the Company's ability 

to adapt to varying international 

conditions that has enhanced its image 

as a customer-centric pharmaceutical 

player. 

29 



30 

JANUARY 1, 2005 was an important 

day for the Indian Pharmaceutical 

Industry for it marked the date on 

which it became mandatory for India to 

comply with the Trade Related 

Intellectual Property Rights [TRIPS] 

Patent regime by passing the third 

amendment to the Indian Patent Act. 

Under the new law, India has to comply 

with the TRIPS agreement and start 

recognising product patents, like its 

global counterparts, as opposed to 

acknowledging process patents alone. 

This hitherto existing disparity between 

Indian and global patent laws had led to 

the rise of a pharmaceutical industry 

that has highly developed 

manufacturing and reverse engineering 

capabilities. 

However, following the decision to 

respect product patents from 2005 and 

the resultant approval of the patent 

ordinance, the scenario is set to change. 

Add to that, a drying generic pipeline 

and imminent competition from multinationals, 

a number of Indian 

companies, including Glenmark, have 

invested in developing capabilities in 

original research, targeting new 

chemical entities [patentable drug 

options] and novel drug delivery 

systems. This decision has been aided 

by the significant cost and skill 

New Chemical Entities 

New Chemical Entity [NCE] research 

focuses on developing chemicals / 

molecules that can selectively address 

molecular targets of certain specific 

diseases and provide a cure with 

minimal side effects. 

NCEs offer the highest reward for 

research, with correspondingly high 

risks. A successful NCE, following the 

relevant approvals, can be marketed 

with a 12-14 year product exclusivity 

period during which it can recover its 

investment a number of times over. 

However, to tap this opportunity, 

companies are required to invest in a 

multitude of skill sets, a development 

time-frame of 6-8 years, and 

considerable risk of irrecoverable 

research costs and morale at different 

stages in development. 

As such, successful NCE research has 

almost become the prerogative of large 

and well-funded MNCs and institutions, 

supported by heavy research budgets. 

Indian firms do not invest in the target 

identification exercise; instead, they 

adopt an approach called 'analogue 

research', which entails working on 

certain pre-identified targets for specific 

diseases to develop molecules that alter 

the target's mechanism in the diseased 

person. Analogue NCE research is also 

time-consuming, risky and expensive. 

The Licensing Opportunity 

The Indian advantage is not limited to 

manufacturing; the country offers an 

arbitrage opportunity even when it 

comes to the cost of intellectual capital 

and facility overheads. The nation also 

possesses a deep inventory of requisite 

competencies required to engage in 

original research. The cost of 

developing a drug from scratch in India 

could be as low as USD 100 million 

which is estimated to be a tenth of the 

expenses that are incurred in the west. 

Hence it's not surprising that in FY 2004, 

Indian pharmaceutical companies filed 

close to 900 drug patents as opposed to 

zero, a decade ago [Indian Ministry of 

Science and Technology]. 

There has been an increase in the 

research spends by Indian companies 

which have doubled over the past five 

years, comprising 8 percent of revenues 

today. However, Indian companies face a 

resource crunch to fund even a tenth of 

the absolute original research cost of 

USD 800-1000 million. As a result, the 

Indian research industry is inadequately 

equipped to sustain the time and cost 

implications of a start-to-finish research 

model. 

In the light of the high research costs, an 

alternative collaborative route in NCE 

research is being increasingly favoured. 

In this arrangement, the lead

Research has been integral to 

Glenmark's growth strategy 


31

32 

compounds are licensed to global 

majors at an early stage of 

development. The payback in the 

licensing model is lower than a do-italone 

strategy but faster through 

milestone and royalty payments. Most 

importantly, it offers Indian players the 

opportunity to partner with a player 

with complementary skills in clinical 

development and higher risk-appetites. 

The licensing approach has been 

successfully adopted in the 1980s by 

countries like Japan, where companies 

have since graduated to taking 

molecules through development to 

market on their own. Currently several 

Indian companies, including Glenmark, 

have a stated objective of developing 

molecules to be licensed to developed 

market players. 

Glenmark's Vision 

Original research, together with process 

chemistry and reverse-engineering 

generics, plays a critical role in 

Glenmark's ongoing initiatives to 

execute its vision of being a research-led 

company. 

Glenmark recognises the value of 

investing in original research for 

generating valuable Intellectual 

Property Rights [IPR] assets that will 

sustain its revenues and earnings in a 

post-GATT regime. These IPR assets will 

also enable the Company to establish its 

brand name in regulated overseas 

markets and realise its vision of 

becoming a truly global company. 

Glenmark NCE R&D 

Highlights 

In view of the significant captive access 

cutting-edge research would assume, 

the Company made a strategic decision 

to invest in state-of-the-art R&D 

infrastructure and competencies about 

five years ago. The positive results 

attained in the short period, have more 

than justified the investments. 

Glenmark has made considerable 

progress in the discovery and 

development of a drug targeting the 

asthma/COPD segment, drugs for other 

inflammatory conditions and a drug for 

Type II Diabetes. These therapeutic 

areas for research were selected on the 

basis of distinct ground realities: 

Global growth potential: 

The incidence of asthma/COPD, 

diabetes and obesity are growing 

rapidly; collectively these segments are 

expected to generate more than USD 44 

billion by 2007. 

Potential for pioneering research: 

Since the existing therapies for these 

ailments have undesirable side effects, 

replacement opportunities can find a 

prominent therapeutic position. For 

example, steroids used currently in 

treating asthma are non-selective and 

report significant side-effects on the 

human body. 

Licensing opportunity: 

Glenmark's selected research areas are 

of interest to several international 

majors because of their high revenue 

potential, and hence they present 

significant partnership opportunities in 

licensing at the late pre-clinical or early 

clinical stages. 

Research skill-sets: 

Glenmark's senior scientists, responsible 

for directing its research programme, 

enjoy significant exposure, interest and 

experience in the selected areas for NCE 

focus. To reinforce their effort, the 

Company has appointed an advisory 

board of eminent scientists, who have 

experience in the molecular targets 

selected for research. 

Progress in NCE R&D 

Asthma/COPD 

Incidence 

Asthma, a chronic debilitating disease 

characterised by 'airway hyperactivity' 

and inflammation, has an expeditious 

growth rate worldwide with the existing 

medications unable to meet the 

increasing needs and incidence. The 

disease, affecting more than 23 million 

people in the U.S., is the sixth most 

common chronic condition overall. The 

chronic nature of the ailment requires 

therapy over a long period, sometimes 

spanning the patient's lifetime. Asthma 

is responsible for approximately 5,000 

deaths per year. The global market for 

asthma medication is estimated at USD 

8-12 billion. 

Treatment and Role of PDE-4 

Inhibitors 

Current medications include inhaled 

beta- agonists, bronchial steroids and 

anti-leukotriene antagonists. They aim 

to treat asthma by producing antiinflammatory 

and/or broncho-dialatory 

effect. However, none of them are able 

to effectively control the disease and 

some of the treatments, such as steroids, 

have potential side-effects. 

Research on PDE-4 inhibitors has been 

initiated over the last ten years. This 

research aims at developing 

compounds that selectively inhibit 

Phospodiesterase Enzyme [PDE-4], an 

enzyme that catalyses metabolism of 

cyclic-AMP [cAMP], a secondary 

messenger in cellular functions. 

Elevation of intracellular cAMP levels is 

known to have both broncho-dialatory 

and anti-inflammatory activities. Hence, 

selective PDE-4 inhibitors present an 

attractive alternative for asthma therapy. 

While several PDE-4 inhibitors have 

entered clinical trials in the past, most of 

them have exhibited dose limiting sideeffects 

that range from the most 

common issue of emesis/nausea to 

cardiac toxicity. Even the most 

advanced PDE-4 inhibitor, Roflumilast 

from Altana which is completing Phase 

III development in Europe is reported to 

have shown emetic side-effects at 

elevated dosages. Hence, though the 

drug candidate appears promising, the 

need and search for safer medication is 

far from complete. 

GRC 3886 

Glenmark has been studying PDE-4


NCE Programmes in Pre-clinical and Clinical Development 

Target Lead Therapeutic Area Status 

PDE-4 GRC 3886 Asthma / COPD Completed Phase I in UK 

Exhibited excellent safety profile 

Sep '04: Licensed to Forest Labs for North America 

Apr '05: Licensed to Teijin Pharma for Japan 

Phase II to commence in the US in early 2006. 

In process of identifying collaboration partner for Europe 

Glenmark to retain marketing rights to rest of the world 

DPP-IV GRC 8200 Diabetes In pre-clinical testing 

Long acting, oral, once-daily drug; promising results 

in pre-clinical testing 

Could be filed for Phase I in Q2 FY 2006 

PDE-4 Not disclosed CNS [Alzheimer's Disease, 

inhibitors for over three years. The 

research has delivered a very promising 

lead candidate GRC 3886, a highly 

selective PDE-4 inhibitor with no emetic 

side-effects demonstrated in animal 

models. It has excellent in-vitro and invivo 

pharmacological activity against 

the target. As per the pre-clinical 

studies conducted by Glenmark, GRC 

3886 has also shown equivalent activity 

to that of Roflumilast. Based on its high 

selectivity, low side-effect profile and 

favourable pharmaco-kinetic profile, the 

molecule was selected as a lead 

candidate for clinical development. 

The compound recently completed 

Phase I clinical trials in UK [conducted 

by Quintiles]. Early results of Phase I 

studies have demonstrated that GRC 

3886 is well tolerated with predictable 

pharmaco-kinetics in human volunteers. 

The molecule is non-emetic and does 

not display cardiovascular effects at the 

highest doses tested in the study. An 

exhibited long half-life suggests the 

possibility of a once-daily-dosing 

regimen. An ex-vivo experiment 

conducted to study LPS-induced TNFalpha 

reduction in human whole blood 

demonstrated that after dosing with 

GRC 3886, TNF-alpha levels were 

Cognitive Disorders, etc.] 

PDE-4 Not disclosed Other topical inflammatory 

indications such as Atopic 

Dermatitis and Uveitis 

In pre-clinical testing 

decreased to a significant level 

compared to subjects given placebo 

treatment. The inhibition of TNF-alpha is 

a surrogate marker indicating a high 

likelihood of efficacy in subsequent 

human trials. It also implies the 

potential use of the compound to treat 

rheumatoid arthritis [RA]. Animal 

models to test the efficacy of the 

compound for RA are currently 

underway. The compound is expected 

to enter Phase II trials in the US for 

asthma/COPD indications in the early 

part of calendar 2006. 

As per its policy of licensing out 

compounds to partners for regulated 

markets, Glenmark, through its whollyowned 

Swiss subsidiary, Glenmark 

Pharmaceutical S.A. [GPSA], has already 

concluded a deal with Forest 

Laboratories, USA for development and 

commercialisation of GRC 3886 for the 

North American market. This has been a 

landmark deal for Glenmark and India, 

involving milestone payments 

cumulating up to USD 190 million by 

the time the molecule is 

commercialised. Of this Glenmark has 

already received USD 20 mn and 

expects to receive another USD 30 

million by the time Phase II commences. 

One of these is expected to enter Phase I by end FY 2006 

Forest will be responsible for 

conducting all trials beyond Phase I 

clinical trials and for commercialising 

and marketing the compound in North 

America. 

Following this, Glenmark closed a deal 

for GRC 3886 for the Japanese territory 

with Teijin Pharma Limited in early FY 

2006 for a cumulative value of USD 53 

million. As per this agreement, Teijin has 

the exclusive right to develop, register 

and commercialise the molecule for all 

potential indications for which the 

product might receive approval in the 

Japanese market. Glenmark will receive 

milestone payments on the successful 

completion of each stage in addition to 

annual sums that are marginally higher 

than the first quartile of net sales of the 

product in Japan, towards supply of the 

Active Pharmaceutical Ingredient [API] 

and royalties. 

Glenmark intends to partner out rights 

to Europe to collaborators during the 

course of FY 2006. The Company will 

retain rights to other markets across the 

continents of Asia, Africa, CIS and Latin 

America and will commercialise the 

molecule in these markets on its own. 

33 


Diabetes/Obesity 

Incidence 

Globally, Diabetes Mellitus, or Type II 

Diabetes as it is better known, is one of 

the most common chronic diseases. The 

'Metabolic Syndrome' of the disease 

includes obesity, hypertension, hyperlipidemia 

and cardiovascular diseases. 

Presently diabetes causes significant 

morbidity and mortality due to longterm 

micro and macro vascular 

complications. At current estimates, the 

global prevalence of Type II Diabetes 

will double from 171 million patients in 

2000 to 334 million patients in 2025. 

The existing incidence of Type II 

Diabetes in US is estimated to be 7 

percent of the population. Spend on 

related treatment accounts for as much 

as 10 percent of all healthcare dollars in 

the US. Furthermore, the incidence of 

Type II Diabetes is increasing globally at 

a rapid rate especially in Africa, South 

America and Asia leading to the disease 

now being considered a worldwide 

'epidemic'. 

of Diabetes-estimates for the year 2000 

and projections for 2030; Diabetes Care; 

27:1047-1053] The country's 

environmental and genetic factors, 

influenced by the changing 

socioeconomic scenario, have made an 

increasing number of Indians 

susceptible to this deadly epidemic. 

Based on recent epidemiological data, 

the growth rate of Type II Diabetes is 

estimated to be 12-16 percent in India, 

which is much higher than the global 

rate. 

Treatment and DPP-IV 

Type II Diabetes is associated with 

insulin resistance in peripheral tissues 

such as muscles and fat, impaired 

glucose-stimulated insulin secretion 

from pancreatic beta-cells and elevated 

hepatic gluconeogenesis. Though 

certain drugs are available to treat the 

pathological conditions associated with 

Type II Diabetes, current 

pharmacotherapy does not adequately 

address the metabolic defects 

underlying this disease. 

has established proof of concept and is 

currently being pursued by various 

multinational pharmaceutical majors 

including Merck, Novartis, Glaxo and 

Bristol-Myers Squibb, which have 

compounds at different stages in clinical 

development. 

GRC 8200 

Glenmark has discovered a lead 

compound GRC 8200, a potent, specific 

and orally bio-available inhibitor of the 

human DPP-IV enzyme. The compound 

is currently undergoing pre-clinical 

studies being coordinated by 

Glenmark's wholly-owned Swiss 

subsidiary, GPSA, and has shown a 

selectivity in animal models that is many 

times greater than the comparable DPP- 

IV inhibitors in clinical development. 

Glenmark expects to commence Phase I 

studies on GRC 8200 in the second 

quarter of FY 2006. The research centre 

plans to communicate the pre-clinical 

profiles of this lead molecule at the 

following world scientific fora: 

India leads the top 10 countries 

estimated to have the highest number 

of people with diabetes in 2000 and 

2030, with China and the US following 

closely. It is predicted that the projected 

number of cases of diabetes in India will 

more than double from 31.7 million in 

2000 to 79.4 million in 2030. [Source: 

Wild S., Roglic G. et al; Global Prevalence 

Glenmark Research Centre has been 

working on the Dipeptidylpeptidase-IV 

[DPP-IV] target associated with glucosedependent 

insulin secretion and 

peripheral insulin resistance. This target 

was selected because it contributes 

alternative pharmacological approaches 

to treat the distinct deficits existing in 

the therapy of Type II Diabetes. DPP-IV 

4th International Metabolic Diseases 

Drug Discovery World Summit 

held in April 2005 at San Diego, 

California, USA 

2nd International Conference on 

Dipeptidylaminopeptidases Basic 

Science and Clinical Applications held in 

April 2005 at Magdeburg, Germany. 

65th Scientific Session of American


Diabetes Association to be held in June 

2005 at San Diego, California, USA. 

41st Annual Meeting of EASD 

[European Association for Study of 

Diabetes] to be held in September 2005 

at Athens, Greece. 

Other inflammatory 

conditions 

As mentioned earlier, Glenmark has 

been working on the PDE-4 target for 

the past three years. This has led to the 

creation of a library of compounds and 

novel structures while discovering and 

developing GRC 3886. This library of 

compounds is of immense potential 

since PDE-4 iso-enzymes are expressed 

very early in the inflammatory pathway 

in different organ systems of the human 

body. 

Glenmark has now commenced work 

on other inflammatory conditions as 

represented in the table on the previous 

page. Apart from GRC 3886 which is 

being studied for the RA indication, two 

of the programmes have molecules in 

pre-clinical studies and Glenmark is 

working to have lead compounds from 

these programmes in Phase I clinical 

trials by the end of FY 2006. 

Risk management in NCE 

research 

Risk management of the NCE research 

initiative operates at two levels within 

Glenmark. 

Firstly, the Company has selected a mix 

of targets for drug development in the 

areas of inflammation and metabolic 

disorders. The focus is on targets that 

are validated in pre-clinical and clinical 

research. This will help reduce the 

probability of failure of such leads 

compared to those developed for early 

stage targets. In addition, working on 

several targets in parallel will insulate 

the pipeline from failure in any one 

programme. 

Secondly, despite having promising lead 

compounds in any area, the Glenmark 

research team continues to identify 

backup molecules through parallel 

research initiatives. This risk-mitigating 

strategy is important till such time the 

drug candidates advance to late clinical 

trials. 

These initiatives will help the Company 

rapidly scale up the number of lead 

compounds in clinical trials in a 

relatively short period of time, allowing 

diversification of risk of failure. 

Novel Drug Delivery 

Systems [NDDS] 

NDDS products offer a technological 

advantage over simple existing 

therapeutic solutions. These products 

achieve their desired effects by altering 

the availability, release and safety 

profiles of the drug. Even though the 

risk profile and the cost of development 

are less than that of NCEs, these 

products play an important role in the 

post-GATT era as they require a new 

drug application process and are 

protected through longer patent 

exclusivity periods. NDDS provide 

pharmaceutical companies with a 

pipeline of products that can be 

marketed at a premium over simple 

therapies or generic products. 

Glenmark's NDDS R&D highlights 

Historically, Glenmark has encouraged 

developing patentable technologies, 

specifically related to drug delivery in 

the human body and adaptable to its 

oral and dermal range of products. The 

rationale being to integrate a generic 

drug with a patent-protected delivery 

system in order to counter declines in 

margins and realisations that generics 

usually face. Additionally, NDDS also 

helps in positioning the Company as a 

speciality organisation in domestic and 

international markets. 

Glenmark continues to develop 

patentable technologies and its efforts 

have resulted in several patents 

spanning areas such as controlled 

release and matrix technologies. It now 

plans to advance six sustained release 

products in the near future. 

Infrastructure and Skill 

Assets 

The Glenmark Research Centre employs 

315 scientific staff engaged in drug 

discovery, drug delivery systems, process 

development and analytical research. 

This team of talented and dedicated 

scientists includes 35 PhDs, several of 

them with post-doctoral experience 

from universities in the US and Europe. 

The individual research divisions are 

headed by people with rich experience 

in their respective research areas. 

Glenmark has made adequate 

investments in equipping its research 

team with requisite modern scientific 

equipment, which is at par with any 

international research facility, to carry 

out drug discovery and development as 

per national / international standards 

and regulations, which include: 

 

 

 

 

 

 

 

Liquid Chromatography / Mass 

Spectrometer [LC / MS] 

Nuclear Magnetic Resonance 

Spectrometer [NMR] 

43 HPLCs equipped with variety of 

detection systems 

Fluid Bed Dryer-GLATT 

Formulation equipment for lab-scale 

development 

Gas Chromatographs and other 

analytical equipment 

X-ray Diffractometer, FTIR, Elemental 

Analyzer and DSC 

These scientists also represent Glenmark 

Research Centre in various national / 

international seminars and meetings to 

present the results of their in-house 

research efforts [please refer to the 

section on 'Progress in NCE R&D]. 

Moreover, results of their research 

activities are also published in peerreviewed 

international journals on a 

continuous basis. 

35 


Global Management Team 

Name 

Glenn Saldanha 

Responsibility 

Managing Director & CEO 

A. S. Mohanty Director - Domestic Formulations 

Rajesh Desai 

Cheryl Pinto 

Dr. V. Swaroop 

Terrance Coughlin 

Ailton Wiliczinski 

Director - Finance, IT & Legal 

Director - Corporate Affairs 

Head - New Drug Discovery 

President - US Operations & Head - API Sales 

CEO - Brazil Subsidiary 

36 

K. Anand Sr. Vice President - Regulatory Affairs & QA 

Avadhut Sukhtankar 

Sr. Vice President - Operations 

Vithal Dhamankar 

Arun Narayan 

Dr. Vijay Soni 

Alind Sharma 

Vice President - Semi Regulated Markets [Formulations] 

Executive Vice President - EU Business 

Global Head - IPM 

Vice President - Human Resources

Management's Discussion and Analysis 

Industry Structure 

Presently, the IPM's contribution to 

the global drug industry is 

sizeable in terms of volume [8 

percent]; yet its corresponding value 

share is very restricted at 1percent. 

However, with the advent of the GATT 

regime and the new Indian Patents Act 

coming into force, the outlook for 

growth is optimistic. In view of the 

current trends, it is predicted that the 

market will grow at a constant CARG of 

8 to 10 percent, taking the IPM from 

USD 4.6 billion in 2004 to USD 7.8 billion 

in 2008. 

The IPM has also been characterised by: 

A need for product patent 

recognition, which served as an entry 

impediment for large global players. 

Domination by local companies [77 

percent] which have shown twice as 

much growth as that of their global 

counterparts in the country. 

High price-sensitivity with the 

government playing a role of 

moderator. 

Fragmented market-place, which has 

moved towards consolidation especially 

in light of the new patent act. 

A nascent health insurance sector 

where an overwhelming majority of 

people cannot afford insurance. 

Shift in the growth of therapy areas. 

While acute illnesses still dominate, the 

growth rate of chronic illnesses has 

more than doubled in comparison. 

Within the chronic category, 

cardiovascular and diabetes segments 

have demonstrated the fastest growth. 

The upcoming implementation of the 

VAT has raised issues of apprehension 

amongst stockists and wholesalers, 

signalling a possible negative impact in 

the initial stages. 

Operational Overview 

Glenmark constantly reviews its 

product-market portfolio with a view to 

strengthen sustainable growth. To drive 

fiscal growth, the Company continued 

to focus on the following areas 

internally: 

Investing in revenue generating 

assets 

Building a stronger manufacturing 

and supply chain management 

Creating a superior system to improve 

the information quality available to the 

management 

In the five years leading to the post- 

GATT era, Glenmark has worked towards 

strengthening its competitive status by 

investing in long-term value assets. 

Work on the formulations plant in Goa, 

which was commissioned last year, was 

completed while construction on the 

plant in Baddi, Himachal Pradesh 

commenced this year. While Goa has 

been built according to US FDA 

specifications to service the regulated 

markets, Baddi will primarily cater to the 

demands of the domestic formulations 

market as well as select semi-regulated 

markets. 

Likewise, research continues to remain 

an area of focus and the beneficiary of 

substantial investments. Similarly, 

manufacturing facilities across the 

country have been upgraded or 

expanded to efficiently meet the 

anticipated demands. Vendor 

management is another area that 

receives continual attention to garner 

enhanced service and economical costs. 

To ensure superior control of operations, 

the Company has instituted a topquality 

managerial and executive 

information system, which has started 

delivering the desired results and 

consequently, the Company has been 

able to better monitor its operations 

and costs. 

The above initiatives have resulted in 

greater operating margins in 2004-05 

[21.10 percent] over 2003-04 [18.52 

percent]. 

37 


38 

Revenues 

Glenmark's turnover for 2004-05 for its 

India operations was Rs. 5364.31 million 

compared to Rs. 3806.61 million in 2003- 

04, resulting in an increase of 40.92 

percent, with each of its business 

segments making their contribution. 


Despite stiff competition and realisation 

declines, this business segment 

remained a strong contributor and 

added Rs. 3027.74 million in 2004-05, 

4.69 percent over that in 2003-04 [Rs. 

2892.00 million]. This was largely aided 

by strong performances by flagship 

brands, new product introductions and 

effective marketing activities. 

Exports 

Revenue from the export of branded 

formulations, API, sale of molecules, etc. 

to overseas markets added Rs. 1623.08 

million to the revenues in 2004-05 [Rs. 

469.28 million in 2003-04]. 

International Subsidiaries 

Klinger Laboratories, a wholly-owned 

subsidiary of Glenmark in Brazil, has 

achieved in its first year of operation 

sales revenue of Rs. 236.76 million and 

has also filed 3 formulation dossiers for 

ANVISA approval. This was 

supplemented by the purchase of a 

leading contraceptive brand, Uno-Ciclo, 

from Instituto Biochimico for USD 4.6 

million for the Brazilian market. 

The wholly-owned subsidiary, Glenmark 

Philippines, has achieved revenues of Rs. 

8.25 million in its first year of operations. 

Glenmark Pharmaceuticals SA 

[Switzerland], a wholly-owned 

subsidiary of Glenmark incorporated 

during the year, has earned revenues of 

Rs. 899.95 million for out-licensing the 

Company's lead molecule, GRC 3886 to 

Forest Laboratories, Inc. USA. 

The Company also inaugurated its 

marketing and sales' front-end in North 

America by entering into two inlicensing 

agreements with US 

manufacturing companies, thereby 

achieving small revenues of Rs. 13.08 

million. At the same time, efforts to set 

up the front-end for the UK subsidiary 

continued; this Subsidiary will function 

as a hub for Company's activities in the 

UK and the European Union. 

India API and Co-Marketing 

The API and co-marketing division 

showed an increase of 60.22 percent by 

recording revenues of Rs. 713.49 million 

in 2004-05 from sales to customers in 

India, compared to Rs. 445.32 million in 

2003-04. This was in addition to 

providing for a part of the captive 

requirement for bulk actives from the 

Company's formulation division. 

Cost of Sales 

The cost of sales showed a marginal 

increase from 47.11percent in 2003-04 

to 48.80 percent in 2004-05 mainly on 

account of a general decline in the 

realisations of bulk actives and 

increased competition in the domestic 

market. 

Selling and Operating 

Expenses 

Selling and operating expenses were Rs. 

1289.27 million in 2004-05, an increase 

of 21.60 percent against Rs. 1060.26 

million in 2003-04. Selling and 

operating expenses as a percentage of 

sales in 2004-05 were 24.03 percent 

compared with 27.85 percent in 2003- 

04, a decline of 3.82 percent. 

Promotional costs, including incentives 

and commission, increased by 29.12 

percent compared to the previous year 

mainly towards achieving the targeted 

revenue growth. 

Salary, travelling and welfare expenses 

increased by 25.01 percent compared to 

the previous year on account of 

recruitments and revisions to support 

expansion in the manufacturing and 

marketing activities. 

Freight and distribution costs increased 

by 39.01 percent compared to the 

previous year due to an increase in sales 

by 40.92 percent. 

The other expenses including 

administrative costs like telephone, rates 

and taxes, insurance, etc. have shown a 

marginal increase of 5.59 percent due to 

a rise in the overall activities. 

Depreciation 

The provision for depreciation was Rs. 

149.84 million in 2004-05 compared 

with Rs. 108.89 million in 2003-04. This 

rise is mainly due to the increase in fixed 

assets of the Company. 

Interest 

The expenditure on account of interest 

was Rs. 167.31 million in 2004-05 

compared with Rs. 100.58 million in 

2003-04. The interest expenditure 

increased due to increase in the 

borrowing during the year whilst 

implementing various capital-intensive 

projects as well as increase in the 

working capital requirements for the 

business.


Figures in Rs. /Mn. 

Head 2004-05 2003-04 2002-03 2001-02 2000-01 

Interest 167.31 100.58 106.88 129.13 83.23 

EBITDA 1186.50 734.89 645.43 502.13 320.33 

Interest cover [times] 7.09 7.31 6.04 3.89 3.85 


Expenses 

The Research and Development 

expenditure was Rs. 325.82 million in 

2004-05 compared with Rs. 248.07 

million in 2003-04, a rise of 31.34 

percent. The R&D revenue expenditure 

was 6.07 percent of the turnover in 

2004-05 compared with 6.52% in 2003- 

04. The increase was in line with the 

growth of the R&D staff strength and 

increase in research activity. The 

detailed break up of the R&D 

expenditure is as below: 


Head March 2005 March 2004 

Salaries and other benefits 124.77 78.48 

Chemicals and consumables 85.64 80.56 

Other expenses 115.41 89.03 

325.82 248.07 

Provision for Taxation 

The taxation charge for the financial 

year 2004-05 was Rs. 143.28 million 

compared with Rs. 90.30 million in 2003- 

04. 

Provision for Deferred 

Taxation 

A provision for deferred tax of Rs. 91.27 

million was made as per Accounting 

Standard 22 'Accounting for Taxes on 

Income' issued by the Institute of 

Chartered Accountants of India. The 

deferred tax provision for the future tax 

consequences was attributable to 

timing differences between the financial 

statement, determination of income, 

and its recognition for tax purposes. 

Dividend 

The Company paid an interim dividend 

of 35 percent on the enhanced equity 

capital after issue of bonus shares of 1:1 

for 2004-05 and a dividend of 7 percent 

on preference shares. 

Equity Capital 

The equity capital has been increased 

from Rs.118.49 million in 2003-04 to Rs. 

237.24 million in FY 2004-05 due to 

allotment of 59,310,570 equity shares of 

Rs. 2.00 each by way of bonus shares 

and conversion of 65,000 stock options 

into equity shares of Rs. 2.00 each. 

Preference Shares 

The Company has redeemed 1,000,000 

preference shares of Rs. 100.00 each 

issued to UTI Bank Ltd. and issued 

2,000,000, 7 percent preference shares 

of Rs. 100.00 each to IDBI Bank. 

Securities Premium Account 

Securities premium account has been 

decreased to Rs. 758.69 million from Rs. 

991.97 million mainly due to debit of 

the FCCB issue expenses and 

redemption premium of Rs. 116.92 

million and issue of bonus shares of Rs. 

118.62 million. 

General Reserves 

The general reserves increased from Rs. 

610.77 million to Rs. 705.69 million due 

to transfer of Rs. 65 million from the 

Profit & Loss Account and Rs. 29.92 

million from Debenture Redemption 

Reserves Account. 

Profit and Loss Account 

The balance of Profit and Loss Account 

has been increased from Rs. 496.94 

million to Rs. 964.08 million on account 

of the profit earned during the year. 

39 


40 

Secured Loans 

Secured loans increased to Rs. 1293.03 

million in 2004-05 compared with Rs. 

1029.43 million in 2003-04. The other 

major component of the secured loan 

was the Term Loans from State Bank of 

India, State Bank of Patiala and IDBI 

Bank, which were secured by 

mortgaging the land, building, 

equipment and machinery at 

Ankleshwar, Mahape and Goa. 

Unsecured Loans 

Unsecured loans increased to Rs. 

3080.58 million in 2004-05 compared 

with Rs. 119.31 million in 2003-04 due 

to the issue of: 

i) 20,000 Zero Coupon Foreign 

Currency Convertible Bonds of USD 

1,000 each [Rs. 873.20 million at issue] 

convertible at the option of the 

bondholder at any time on or after 28th 

March 2005 but prior to the close of 

business on 2nd January 2010 at a fixed 

exchange rate of Rs. 43.66 per 1 USD 

and price of Rs. 862.394 per share of par 

value of Rs. 2.00 per share subject to 

adjustment in certain events, i.e. issue of 

bonus shares, division, consolidation, 

reclassification of shares etc. and 

redeemable on maturity date on 16th 

February 2010 at 133.74 percent of its 

principal amount if not redeemed or 

converted earlier. The redemption 

premium of 33.74 percent payable on 

maturity of the bond, if there is no 

conversion of the bond, to be debited to 

Securities Premium account evenly over 

the period of 5 years from the date of 

issue of bonds and 

ii) 50,000 Zero Coupon Foreign Currency 

Convertible Bonds of USD 1,000 each 

[Rs. 2183.00 million at issue] convertible 

at the option of the bondholder at any 

time on or after 15th November 2006 

but prior to the close of business on 2nd 

January 2010 at a fixed exchange rate of 

Rs. 43.66 per 1 USD and the price 

greater of 35 percent of the average of 

the order book volume-weightedaverage-price 

of a share on each Trading 

Day during the period commencing on 

15th September and ending on 14th 

November 2006 and the Floor Price [Rs. 

500.00] of par value of Rs. 2.00 per share, 

and redeemable in whole but not in 

part at the option of the company on or 

after 15th February 2009, if closing price 

of the share for each of the 25 

consecutive trading days immediately 

prior to the date upon which notice of 

such redemption is given was at least 

130 percent of the applicable Early 

Redemption Amount divided by the 

conversion ratio and redeemable on 

maturity date on 16th February 2010 at 

134.07 percent of its principal amount if 

not redeemed or converted earlier. The 

redemption premium of 34.07 percent 

payable on maturity of the bond, if there 

is no conversion of the bond, to be 

debited to Securities Premium account 

evenly over the period of 5 years from 

the date of issue of bonds. 

Fixed Assets 

The Company's gross asset block 

increased from Rs. 1723.53 million as at 

31st March 2004 to Rs. 2586.23 million 

as at 31st March 2005 on account of 

modernisation of the plants at Nasik, 

Kurkumbh, Mohol and Ankleshwar, 

capitalisation of the Goa plant and 

additions made in the R&D division. 

Capital work-in-progress and capital 

advances worth Rs. 129.05 million were 

made towards the Baddi, Mohol and 

Goa plants. 

Investment 

Investments declined from Rs. 299.37 

million in 2003-04 to Rs. 264.56 million 

in 2004-05. The Company's investment 

in its wholly-owned subsidiaries, 

Glenmark Pharmaceuticals Inc., USA and 

Glenmark Farmacêutica Ltda., Brazil 

have been transferred to Glenmark 

Pharmaceuticals SA, Switzerland a 

wholly-owned subsidiary of the 

Company. 

Inventory 

Materials inventory increased from Rs. 

310.10 million in 2003-04 to Rs. 360.36 

million in 2004-05, mainly to service a 

larger product basket for the domestic, 

export and API businesses. Finished 

goods and work-in-process inventory 

increased from Rs. 508.93 million in 

2003-04 to Rs. 746.56 million in 2004-05 

largely due to changes in the indirect 

taxation, i.e. MRP-based Excise and VAT 

implementation. 

Receivables 

Receivables increased from Rs. 1304.81 

million in 2003-04 to Rs. 1821.05 million 

in 2004-05. 

Loans and Advances 

Loans and advances increased from Rs. 

392.54 million in 2003-04 to Rs. 1871.87 

million in 2004-05 primarily on account 

of advances of Rs. 1324.05 million to the 

wholly-owned subsidiary, Glenmark 

Pharmaceuticals SA, Switzerland. 

Cash and Bank Balance 

Cash and bank balance increased to Rs. 

1092.79 million from Rs. 67.69 million 

mainly due to short term deposits of the 

FCCB issue proceeds. 

Current Liabilities 

Current liabilities and provisions 

increased from Rs. 745.12 million in 

2003-04 to Rs. 781.43 million in 2004-05.



Head March 2005 March 2004 

Creditors 556.23 464.60 

Other Liabilities 130.52 192.29 

Dividend and Dividend Tax 94.68 88.23 

781.43 745.12 

Net Working Capital 

The net working capital has increased 

from Rs. 1841.53 million to Rs. 5114.87 

million due to an increase in the 

receivables by Rs. 516.23 million, cash 

and bank balance by Rs. 1025.10 million, 

and loans and advances by Rs. 1479.33 

million. 

Opportunities 

Low per capita expenditure on 

pharmaceuticals 

India has one of the lowest per capita 

health care expenditures in the world, 

which is likely to correct over the 

coming years. For instance, India's per 

capita expenditure on pharmaceuticals 

is only USD 4, well below USA [USD 

1992], Canada [USD 1483], Germany 

[USD 1819] and United Kingdom [USD 

1415]. 

Privatisation of insurance 

Presently, only two million Indians - 0.2 

percent of the population - are 

medically insured even as a recent study 

indicates that 75 percent are potentially 

insurable. Insurance companies have 

estimated that household healthcare 

spending will rise from 2 per cent to 6 

percent in the coming years, translating 

into attractive growth for India's 

pharmaceutical industry. 

Rising income levels 

Rising incomes and an increase in the 

geriatric population, sustained by 

advances in hygiene and medicine, are 

driving a shift in the market away from 

vitamins, anti-infectives and 

gastrointestinal treatments towards 

products that treat cardiovascular 

problems, central nervous system 

disorders, diabetes and other complex 

ailments. By 2010, cardiovascular and 

central nervous system treatments will 

account for a higher share of remedies 

provided. This is expected to result in a 

faster growth for companies like 

Glenmark that specialise in related 

niches. 

Rural opportunity 

Presently, 76 percent of the Indian 

pharmaceutical off-take transpires in 

urban centres. The four metros namely 

Delhi, Mumbai, Kolkata and Chennai 

account for about a fourth of the entire 

IPM. Within rural India, the market is 

concentrated in areas where the level of 

infrastructure development is relatively 

high. According to the World 

Development Report 2000, only 50 

percent of the population in India has 

access to healthcare facilities. In rural 

areas, this percentage is lower. As 

penetration levels improve, a broader 

growth for India's pharmaceutical 

industry is expected. 

Generics opportunity 

This has been discussed in detail earlier. 

Threats 

The implementation of GATT from 2005 

represents the biggest threat facing the 

IPI. India will recognise product patents, 

thus reducing process reverse 

engineering opportunities. Indian 

companies that have not prepared for 

this reality will face intense competition 

and perhaps even de-grow over the 

coming years. 

Outlook 

Glenmark's short-term and long-term 

outlook appears encouraging for the 

following reasons: 

An integrated approach with a 

presence in R&D, bulk actives and 

formulations along with an increasing 

coverage of markets with its own sales 

force. 

A strong focus on establishing each 

element in its integrated chain as a 

revenue generator. 

A commitment to expand to new 

global markets with customised 

strategies. 

A horizontal and vertical expansion in 

therapeutic segments in all target 

markets. 

A reputation for being a first-mover in 

target markets and launching drugs in 

different therapeutic segments with low 

cycle times. 

An aggressive and adaptable 

marketing approach to widen its doctor 

reach, e.g. creation of 8 new divisions, 

each having its own marketing focus. 

A variety of investments ranging from 

upgrading manufacturing capabilities, 

understanding regulatory requirements, 

alliances, and building IPR assets, like 

new drugs and delivery systems for the 

future. 

Human Resources 

Development 

The successes and rate of expansion 

seen by Glenmark have raised unique 

challenges for the human resources (HR) 

function. The main among these are: 

Management of sourcing processes in 

countries of operation and the 

assimilation of the diverse work-force 

into a Glenmark work ethic. Additionally, 

the development of processes and 

systems that cater to a global audience. 

Continually adding to the skill 

inventory of the organization to help 

fuel its growth and value addition to 

41 


existing employees to keep them in 

tune with the increasing complexity of 

their job and ahead of competition. 

Identification, recruitment and 

retention of the best scientific talent to 

keep Glenmark at the cutting-edge of 

innovation. 

During the year under review, the 

Company embarked on several 

initiatives to ensure it kept pace with 

the demand on its people systems. A 

constant endeavour of the HR team was 

to partner with business by clearly 

understanding the business 

environment and company strategy. 

Bringing systemic maturity to the 

performance management system and 

the compensation process, 

development of need-based 

programmes for germination of leaders, 

broad-basing the reach of training and 

development processes, a well defined, 

data-backed process for talent 

acquisition, devising employee-friendly 

policies and ensuring compliance across 

all areas of operation were the main 

focus for the team during this year. 

Notable achievements include 

successful partnering with premier 

business schools across the country, 

strategic recruitment of key talent, 

optimal management of the Brazilian 

recruitment and facilitating a business 

focussed structure for the organisation. 

Regulatory Compliance 

Systems 

Since pharmaceutical products affect 

human lives directly, the corresponding 

raw material quality is stringently 

regulated by the health authorities of 

the various countries. These authorities 

govern each aspect of bringing a drug 

to the market; moreover, these 

regulatory agencies keep raising their 

quality benchmarks in response to 

consumer concerns. In view of this, a 

manufacturer seeking to serve these 

countries requires to invest in, closely 

track and comply with this evolving 

regulatory environment. Any delay in 

compliance could potentially lead to a 

staggered market entry and lost 

business opportunities. 

Over the years, Glenmark has built a 

dedicated Regulatory Affairs team 

engaged in tracking and building 

protocols to comply with the stringent 

regulatory requirements across 

geographies. It has also extended this 

ability into a confidence-building 

documentation system, which proves 

the quality of the Company's products 

as safe for consumption and customised 

to the precise requirements of these 

geographies. Recent sales to regulated 

markets like Canada as well as the rapid 

development of product dossiers for 

registration in the European Union and 

US are examples of how the Company 

has translated its capability into a 

growing market presence. 

The Company has also initiated several 

steps to make its plants ready for global 

inspections and certification by USF DA, 

MHRA [UK], MCC [South Africa], ANVISA 

[Brazil], etc. 

Internal Control and 

Systems 

Glenmark's adequate controls cover a 

comprehensive definition of individual 

roles and responsibilities, an effective 

feedback flow to facilitate effective 

monitoring and a responsible internal 

audit process. 

Segmental Analysis 

Glenmark has only one segment, 

pharmaceuticals. 

Cautionary Statement 

Statements in the Management's 

Discussion and Analysis Report 

describing the Company's objective, 

projections and estimates are forwardlooking 

statements and progressive 

within the meaning of applicable 

Security Laws and Regulations. Actual 

results may vary from those expressed 

or implied depending upon economic 

conditions, government policies and 

other incidental factors.

Risk Management 

Strategy Risk 

Astrategy that is not thought out 

in its entirety could result in 

serious losses for the Company. 

Risk management 

The senior management team driving 

Glenmark's growth and development is 

backed by a rich industry experience. It 

is confident that its strategy, which has 

been tailored to cater to the new 

pharmaceutical era, will enable the 

Company to enhance shareholder value 

on a sustainable basis through a 

number of initiatives, viz. 

Emerge as a cost-effective, integrated 

manufacturer of products directed at 

the advanced markets in growing 

therapeutic areas. 

Carefully research its target markets 

and provide adequate support through 

significant alliances and acquisitions 

and a go-getting marketing team. 

Commission state-of-the-art plants 

that are built to meet important 

international regulatory approvals. 

License successful NCE products 

following early clinical trials, which result 

in a faster inflow of revenues. 

Expand the basket of NCEs in clinical 

trials. 

Business Portfolio Risk 

There is a risk of having too many 

business interests than what can be 

competently managed. 


Glenmark's business mix has been 

judiciously selected keeping in mind the 

increasing pressures its domestic 

business currently faces, and is likely to 

encounter in the future. To respond to 

this impending impact, the Company 

has proactively strengthened and 

established leadership in key segments 

like dermatology and entered 

new/growing segments. 

Moreover, the decline in domestic 

revenues has been offset by the 

Company's growing presence in 

international markets. There, the 

Company has invested in forming 

competent local management teams 

43 


44 

who are geared to respond to and 

tackle their respective market 

requirements. Since these markets are a 

focus for development, they are backed 

by strong internal systems as well as 

adequate resources. 

Research Risk 

Original research is characterised by 

huge investments of time and money 

and compounded by an uncertainty of 

realisations. However, in the present 

scenario that respects product patents; 

original drug research assumes critical 

importance. 


Glenmark is balancing the risk involved 

in its drug discovery programme by 

taking a prudent approach: 

Selecting target segments after 

exhaustive research across the following 

parameters, viz. the existing and 

projected size of the therapeutic 

segment, prospective competition in an 

unprotected patent environment, the 

size of the potential demand as well as 

the scope latent in the products for 

attractive value-addition. Presently, 

Glenmark is conducting work in the 

asthma/COPD and diabetes/obesity 

segments. 

Working on parallel targets to 

maximise success prospects. The efforts 

of its talented NCE research team have 

delivered promising results in a short 

period with its lead molecule for asthma 

/COPD having successfully cleared the 

Phase I clinical trials and & a few others 

expected to move into the clinical trial 

stage in FY 2006. Another outcome of 

the Company's R&D initiative has been 

the development of several patentprotected 

platform technologies for 

Drug Delivery Systems, which will 

contribute strongly to future growth. 

Competition Risk 

Performing in a highly competitive 

arena like the Indian Pharmaceutical 

Market has its share of perils that could 

impact the Company's revenues and 

profits. 


Notwithstanding price fluctuations, the 

IPM holds tremendous potential in the 

long term. Here is why: 

Even though India has one of the 

lowest health spends in the world, with 

the imminent changes in urban 

lifestyles and increased spending power, 

it is expected that the Indian 

Pharmaceutical Industry's CAGR will also 

shift into a higher gear. 

With a rich human resource pool of 

technically qualified graduates, high 

skills in synthetic chemistry, expertise in 

product engineering and a low-cost 

manufacturing base, on one hand and 

with billions of dollars worth of 

products going off patent from 2005 on 

the other, India is poised to grow 

internationally as well. 

Glenmark will benefit by leveraging its 

local advantage and competing in the 

global generics markets, and thereby 

make up for any revenue dips in India. 

Currency Risk 

The Company hazards suffering losses 

arising from currency fluctuations. 


Glenmark has selectively circumvented 

its forex positions in order to limit the 

impact due to volatile forex movements 

and has supported it by instituting a 

competent forex management system. 

Environment Risk 

Effluents released by pharmaceutical 

companies could harm the environment 

if adequate pollution control measures 

are not observed. 


Glenmark is committed to managing its 

waste in a sound and responsible 

manner and adhering to norms 

stipulated by the regulatory authorities. 

This is reflected in its investments in 

world-class pollution-mitigating plants 

and practices, which have helped treat 

its solid, liquid and gaseous waste 

effectively.

Four year financial summary 

Balance Sheet (Rs. in ‘000) 

2001-02 2002-03 2003-04 2004-05 

Share Capital 

Equity capital 101,404 101,811 118,546 237,286 

Preference Capital 100,000 100,000 100,000 200,000 

Share Capital 201,404 201,811 218,546 437,286 

Total Reserve 1,081,872 1,323,944 2,132,109 2,429,774 

Capital & Reserve 1,283,276 1,525,755 2,350,655 2,867,060 

Secured Loans 697,711 1,193,564 1,029,429 1,293,032 

Unsecured Loans 73,385 53,864 119,314 3,080,580 

Total Loans 771,096 1,247,428 1,148,743 4,373,612 

Deferred Tax Liability 204,873 269,856 293,181 386,111 

Total 2,259,245 3,043,039 3,792,579 7,626,783 

Gross Block 1,416,755 1,246,518 1,723,534 2,586,231 

Less: Depreciation 175,581 243,340 346,864 493,221 

Net Block 1,241,174 1,003,178 1,376,670 2,093,010 

Capital work-in-progress 61,784 232,471 244,966 129,050 

Investments 26,158 161,126 299,647 264,564 

Current Assets 

Inventories 322,280 444,371 821,601 1,110,593 

Sundry Debtors 742,102 1,236,691 1,304,813 1,821,047 

Cash & Bank 45,342 40,518 67,694 1,092,793 

loans & Advances 246,545 502,704 392,263 1,871,872 

Total Current Assets 1,356,269 2,224,284 2,586,371 5,896,305 

Current Liabilities 

Sundry Creditors 191,620 325,585 371,758 485,817 

provisions 64,872 11,717 39,772 2,420 

Others 228,657 280,177 333,591 293,196 

Total Current Liabilities 485,149 617,479 745,121 781,433 

Net Current Assets (Working Capital) 871,120 1,606,805 1,841,250 5,114,872 

Misc. Expenses 59,009 24,076 6,419 – 

Deferred Tax Assets – 15,383 23,627 25,287 

Total 2,259,245 3,043,039 3,792,579 7,626,783 

45

Profit & loss Account (Rs. in ‘000) 

46 

2001-02 2002-03 2003-04 2004-05 

Turnover 2,607,555 3,336,365 3,806,606 5,364,310 

less: Sales Tax 177,928 251,600 255,771 288,020 

Less: Excise Duty paid 250,824 327,169 308,398 426,865 

Net Sales 2,178,803 2,757,596 3,242,437 4,649,425 

Other Income 60,695 42,823 34,573 54,856 

Total Income 2,239,498 2,800,419 3,277,010 4,704,281 

Salary, Wages & Labour charges 51,808 90,698 120,547 182,604 

Consumption of raw materials 605,091 712,886 966,088 1,447,949 

Purchase of trading goods 224,898 306,895 286,013 322,761 

Power & Fuel 6,059 7,462 31,365 74,059 

(Increase)/Decrease in Inventory 64,757 (77,942) (218,758) (237,632) 

Others 20,435 25,312 43,767 112,954 

Cost of sales 973,048 1,065,311 1,229,022 1,902,695 

Employee Cost 214,195 269,585 349,932 411,332 

Promotion Expenses 112,714 184,292 184,386 245,247 

Other Selling & Operating Exps 359,303 488,540 530,708 632,691 

Total selling & operating exps 686,212 942,417 1,065,026 1,289,270 

Research & Development 78,110 147,257 248,073 325,819 

Total Expenses 1,737,370 2,154,985 2,542,121 3,517,784 

EBIDT 502,128 645,434 734,889 1,186,497 

Interest 129,134 106,884 100,578 167,308 

EBDT 372,994 538,550 634,311 1,019,189 

Depreciation 88,226 103,326 108,891 149,836 

PBT 284,768 435,224 525,420 869,353 

Current Tax 22,607 35,300 90,298 143,275 

Deferred Tax 34,396 49,600 15,081 91,271 

PAT before extraordinary items 227,765 350,324 420,041 634,807 

Prior period and Extraordinary items – 18,429 – – 

PAT 227,765 331,895 420,041 634,807

Financial Ratios 

1.8 

1.2 

0.6 

0.77 

0.96 

Debt Equity 

0.56 

1.64 

160 

140 

120 

100 

80 

60 

40 

103.88 

Debtors cycle (Turnover) 

135.29 

125.11 123.91 

20 

0 

2001-02 2002-03 2003-04 2004-05 

0 

2001-02 2002-03 2003-04 2004-05 

47 

Balance Sheet 

2001-02 2002-03 2003-04 2004-05 

Return on net worth 20.26 23.68 18.72 23.80 

Return on Capital Employed (avg. cap. Emp.) 24.67 26.74 23.43 22.09 

Debt Equity 0.77 0.96 0.56 1.64 

Debtors Cycle (turnover) 103.88 135.29 125.11 123.91 

Creditors Cycle (cost of goods sold) 71.88 111.55 110.41 93.20 

Inventory Cycle (Net Sale) 53.99 58.82 92.49 87.19 

Inventory Turnover (net turnover) 6.76 6.21 3.95 4.19 

Gross Turnover/Capital employed 1.27 1.20 1.09 0.74 

Gross Turnover/Gross Block(in %) 184.05 267.65 220.86 207.42 

Net Block/Cap Emp. (in %) 60.42 36.17 39.34 28.91 

W.cap/Cap Emp. 42.40 57.94 52.62 70.64

PAT Margin 

Research and development/Net sales 

16 

14 

12 

10 

10.45 

12.04 

12.95 

13.65 

8.00 

6.25 

5.34 

7.65 

7.01 

8 

6 

4.50 

3.58 

4 

2.75 

2 

0 

2001-02 2002-03 2003-04 2004-05 

1.00 

2001-02 2002-03 2003-04 2004-05 

Profit & loss Account 

48 

2001-02 2002-03 2003-04 2004-05 

Revenue 

Domestic Sales / Turnover (%) 95.76 94.62 87.22 69.74 

Export Sales / Turnover (%) 4.24 5.38 12.78 30.26 

Excise / Turnover (%) 9.62 9.81 8.10 7.96 

Margin (Basis - Turnover ) 

EBDIT Margin 23.05 23.41 22.66 25.52 

Cash profit margin 14.50 15.77 16.30 16.88 

Pretax profit margin 13.07 15.78 16.20 18.70 

PAT Margin 10.45 12.04 12.95 13.65 

Expenses 

Cost of sales /Total expenses 56.01 49.43 48.35 54.09 

Selling & Operating expenses / Total expenses. (%) 39.50 43.73 41.90 36.65 

R&D expenses/ Total expenses.(%) 4.50 6.83 9.76 9.26 

Cost of sales /Net Sales 44.66 38.63 37.90 40.92 

Selling & Operating expenses / Net sales (%) 31.49 34.18 32.85 27.73 

R&D expenses./ Net sales(%) 3.58 5.34 7.65 7.01 

Interest cover 3.89 6.04 7.31 7.09 

Cost of debt (%) 16.75 8.57 8.76 3.83 

Shareholder value * ** 

EPS (FV Rs.10/-) 22.46 34.41 7.09 5.29 

EPS ( Net of extraordinary income) 22.46 32.60 7.09 5.29 

CEPS (FV Rs.10/-) 31.16 42.75 8.92 6.62 

CEPS ( Net of extraordinary income) 31.16 40.94 8.92 6.62 

Book value 110.87 137.67 37.86 22.48 

* Notes : During the financial year 2003-04, each paid up share of Rs.10 has been sub-divided into a paid up share of Rs.2 each. 

** During the financial year 2004-05,Company has allotted bonus shares in the ratio of 1:1 for each paid up share of Rs.2 each.

Profiles of the Directors 

Mr. Gracias Saldanha (Chairman) 

Mr. Gracias Saldhana, 68, is the founder of the company. He has 

over 35 years experience in the industry. His educational 

qualifications includes an M.Sc. from Bombay University with a 

Diploma in Management studies from Jamnalal Bajaj Institute of 

Management Studies, Mumbai. He has worked with leading 

pharmaceutical companies like Abbott Laboratories and E. 

Merck. 

Mrs. B. E. Saldanha (Director – Exports) 

Mrs. B. E. Saldanha, 65, has done her B.Sc., B.Ed. from Bombay 

University and has been Working Director since 1982. She has 

taken keen interest in developing the Company’s export 

business. 

Mr. Glenn Saldanha (Managing Director & CEO) 

Mr. Glenn Saldanha, 35, is a B.Pharma from Bombay University 

and was awarded the Watumall Foundation Award for overall 

excellence. His other educational qualifications include an MBA 

from New York University’s Leonard N. School of Business (US). He 

has worked for Eli Lilly in the US and was a Management 

Consultant with Price Waterhouse Coopers. His Services have 

been used by Smthkline Beecham, Rhorer, Astra, Merck and 

Johnson and Johnson, among others. 

Mrs. Cheryl Pinto (Director – Corporate Affairs) 

Mrs. Cheryl Pinto, 38, is a graduate in Pharmacy from the 

University of Bombay. She has over 12 years experience in the 

pharmaceuticals business. 

Mr. A. S. Mohanty (Director–Domestic 

Formulations) 

Mr. A. S. Mohanty, 51, is an M.Sc. in-charge of domestic 

Formulations, he has over 28 years experience in 

pharmaceutical sales and marketing as well as healthcare 

sectors. 

Mr. R. V. Desai (Director – Finance/IT/Legal) 

Mr. R. V. Desai, 47, is a Science Graduate and a Chartered 

Accountant, in-charge of Finance/IT/Legal, he has over 23 years 

experience. 

Mr. Julio F. Ribeiro (Non-Executive) 

Mr. Julio Ribeiro, 75, is a retired government official and has 

served the country under various assignments. Amongst the 

major positions held, he has been the Ex-commissioner of Police, 

Mumbai, Former Special Secretary to Government of India, 

Ministry of Home Affairs, former Director General of Police, 

Punjab, Ex-adviser to the Governor of Punjab, Ex-Ambassador of 

India to Romania and is currently a Director in IIT Corporate 

Services Ltd. 

Dr. Prasanna R. Gore (Non-Executive) 

Dr. Prasanna R. Gore, 40, is a Ph.D and M.S. in Pharmaceutical 

Marketing from University of West Virginia, Morgantown, WV 

and a B.Sc. from University of Bombay, India. He has over 

12 years experience in the pharmaceutical and healthcare 

sectors ranging from pharmaceutical sales, academic faculty 

and strategic consulting. He was elected Vice-Chairman of 

the American Association of Pharmaceutical Scientists – 

Economic, Management and Marketing section for the year 

2000. 

Mr. Sridhar Gorthi (Non-Executive Director) 

Mr. Sridhar Gorthi, 32 is a B.A., LL.B., (Hons.) from the National 

Law School of India University. Mr. Sridhar Gorthi is presently 

a partner in Trilegal and has worked with Arthur Anderson 

and Lax Inde, Mumbai. He was involved in legal advisory 

services to various multinational and domestic corporations 

on restructuring, debt finance, joint ventures,acquisition/ 

mergers etc. 

Mr. Natvarlal B. Desai (Non-Executive) 

Mr. Natvarlal B. Desai, 78, is a retired General Manager of Bank 

of Baroda. He has over 45 years experience in the Banking 

Sector. He has worked in India and overseas. He was Chairman 

of Bank of Baroda Uganda Ltd. He was the founder and 

Managing Director of Equitorial Bank PLC, UK from which he 

retired in 1992. 

Mr. M. Gopal Krishnan (Non-Executive) 

Mr. M. Gopal Krishnan, 70, worked with Bank of India for over 25 

years, most of which were spent overseas in Kenya and UK. 

Thereafter, he worked with Equitorial Bank PLC, UK as Founder 

Director until he retired. 

49

Directors’ Report 

Your Directors have pleasure in presenting their 27th Annual Report and Audited Accounts 

of the Company for the year ended March 31, 2005. 

FINANCIAL RESULTS 

Rs. in million 

2004-2005 2003-2004 

Profit before Interest, Depreciation & Tax 1186.50 734.89 

Less: Interest 167.31 100.58 

Less: Depreciation 149.84 108.89 

Less: Tax (Current Year & Deferred Tax) 234.55 105.38 

Profit after Tax 634.80 420.04 

Surplus brought forward from earlier years 496.94 235.88 

Profit available for appropriations 1131.74 655.92 

APPROPRIATIONS 

Interim Dividend on Preference Shares 7.06 10.50 

Interim Dividend on Equity Shares 83.03 77.02 

Dividend Tax 12.57 11.21 

Transfer to Debenture Redemption Reserve – 0.25 

Transfer to General Reserves 65.00 60.00 

Balance carried to Balance Sheet 964.08 496.94 

1131.74 655.92 

50 

DIVIDEND 

Your Company has paid interim dividend @ 35 per cent (65%) on 

the increased paid-up Equity Share Capital of the Company after 

issue of Bonus Shares in the ratio of 1:1 and @ 7 per cent (10.5%) 

on the paid up Preference Share Capital of the Company. The 

total outflow on account of Dividend inclusive of Dividend Tax, is 

Rs. 102.66 million (Rs. 98.73 million). Your Directors recommend 

that the interim dividend already paid be confirmed as final 

dividend for the year ended 31st March, 2005. 

RESULTS OF OPERATIONS 

Your Directors are pleased to report satisfactory performance 

for the year under review. The Company achieved gross 

revenue of Rs. 5419.17 million (Rs. 3836.41 million), 

registering an increase of 41.26 per cent over the previous 

year. The increase in revenue is due to the launching of new 

products, growth in the existing products and expansion in 

new markets. 

PROFITS 

The operating profit before interest, depreciation and tax 

increased to Rs. 1186.50 million from Rs. 734.89 million, an 

increase of 61.45 per cent over the previous year.

OPERATIONS: 

PHARMA DIVISION 

Domestic sales at Rs. 3027.74 million (Rs. 2892 million) 

registered an increase of 4.69 per cent over the previous year. 

The growth in the domestic segment during the period was 

affected mainly due to the introduction of VAT in the last 

quarter of the financial year. As per ORG report, your Company’s 

ranking has improved to 23 among the top 50 pharmaceutical 

companies. Your Company introduced new brands, which were 

well received in the market. 

Your Company is setting up a manufacturing facility at Baddi, 

Himachal Pradesh for manufacturing solid oral, liquid oral and 

semi-solids facilities, which is expected to be commissioned by 

August 2005. It will largely focus on meeting the Company’s 

growth requirements for formulation production to cater to the 

domestic market. 

INTERNATIONAL BUSINESS: 

Revenue from the export of branded formulation, active 

pharmaceutical ingredients (API) and sale of molecules etc. to 

overseas markets increased to Rs. 1623.08 million in FY 2005 from 

Rs. 469.28 million for the corresponding period of the previous 

year, recording a growth of 245.86%. 

Your Company has obtained registration for over 200 

formulation products and also filed over 100 additional 

registrations in several of its export markets. Your Company also 

commenced new business operations in the Central African 

Republic, Eritrea, Guyana, Peru, Dominican Republic, Botswana & 

Congo. 

A portfolio of over 45 active pharmaceutical ingredients was sold 

across 40 markets, this included sales of validation quantities of 

APIs in the regulated markets of USA and Europe 

• USA / North America: 

Glenmark Pharmaceuticals Inc., USA [GPI], the wholly 

owned subsidiary of Glenmark Pharmaceuticals SA 

[GPSA], launched its commercial sales front end for the 

US market in January 2005 with the signing of two 

partnership agreements with US based companies, 

Interpharm and Konec for Naproxen and Nitroglycerin, 

respectively. The Company has started supplies of 

Naproxen in the US market. 

Your company has also entered into a collaboration 

agreement for the joint development, filing and marketing 

of twelve generic pharmaceutical products with a Chennaibased 

company, Shasun Chemicals and Drugs Ltd. The 

product list includes a mixture of off-patent and patentprotected 

molecules with cumulative annual sales in the 

US of about USD 8 bn. Your Company also completed filing 6 

ANDAs with three more dossiers in advanced stages of 

completion for filing by 2006. 

• Latin America / Brazil: 

Laboratories Klinger Do Brasil Ltda, [Klinger] a wholly owned 

Brazilian subsidiary of Glenmark Farmaceutica Ltda, filed 3 

formulation dossiers for ANVISA approval for Mupirocin, 

Adapalene and Mometasone. 

In March 2005, Klinger purchased a leading oral contraceptive 

brand, Uno-Ciclo from Instituto Biochimico Indústria 

Farmacêutica Ltda. [Biochimico] for USD 4.6 million. The 

Company has acquired the trademark along with exclusive 

global manufacturing and marketing rights. This brand is 

expected to yield significant revenues and income for the 

business in the next financial year. 

• Switzerland: 

Glenmark Pharmaceuticals SA [GPSA], a wholly owned Swiss 

subsidiary of your company, successfully completed Phase 1 

single and multiple dosing studies on its novel oral PDE4 

inhibitor GRC 3886 for the indications of asthma and COPD. 

During the year, GPSA has licensed NCE GRC-3886 to Forest 

Laboratories Inc and received the upfront and milestone 

payment of USD 20 million from Forest Labs following the 

completion of Phase I studies. GPSA has also signed an 

agreement with Teijin Pharma of Japan for licensing its 

rights in Japan for which it has received an upfront 

down payment of US$ 6 million in the current financial 

year. 

DOMESTIC API AND CO-MARKETING 

Revenues from the Domestic API and Co-marketing business in 

FY05 grew to Rs. 713.49 million against Rs. 445.32 million for 

the corresponding period of the previous year recording a 

growth of 60.22%. 

Your Company has already filed DMFs for Amiodarone 

Hydrochloride, Cilostazol, Fluconazole, Glimepiride, Perindopril 

Erbumine, Topiramate, Simvastatin, Zonisamide, Itraconazole, 

Zolpidem tartrate, Terbinafine hydrochloride, Buproprion HCI 

and Trandolapril taking the count of total DMFs filed to 13 as of 

31st March, 2005. 

EMPLOYEE STOCK OPTION SCHEME 

During the year, Stock Options have been issued to the employees 

51

52 

of the Company. On exercising the convertible options so granted, 

the paid-up equity share capital of the company will increase by a 

like number of shares. 

The details of stock options granted by the Company are disclosed 

in compliance with clause 12 of the Securities Exchange Board of 

India (Employee Stock Options Scheme and Employee Stock 

Purchase Scheme), 1999 and set out in the Annexure to this 

Report. 

SUBSIDIARY COMPANIES 

During the year, your Company has incorporated wholly owned 

subsidiaries in Switzerland and Glenmark Organics Ltd. became a 

wholly owned Subsidiary of the Company. During the year 

Glenmark Pharmaceuticals Inc, USA and Glenmark Farmaceutica 

Ltda, Brazil became wholly owned subsidiaries of Glenmark 

Pharmaceuticals SA, Switzerland consequent to restructuring of 

the Company’s business. Further, Glenmark Farmaceutica Ltda, Brazil 

merged with Laboratoris Klinger Do Brazil Ltda to form a single 

entity to oversee operations in Brazil. 

Pursuant to the provision of Section 212 (8) of the Companies 

Act, 1956, the Company has obtained exemption from 

Department of Company Affairs, New Delhi, to attach Audited 

Accounts of its subsidiaries together with Directors' Report and 

Auditor's Report. The Audited Accounts of the subsidiaries 

together with its Directors' Report and Auditor's Report are 

available for inspection of members on any working day at 

the Registered Office of the Company between 10 am to 

12 noon. 

FINANCE 

Your Company issued Foreign Currency Convertible Bonds of US 

$ 70 million to foreign investors during the year. The Company 

intends to use the proceeds to fund acquisitions overseas, direct 

investment in subsidiaries, new projects and modernization and 

expansion of existing projects. 

• Bonus Shares 

During the year, your Company issued Bonus Shares in the 

ratio of 1:1 by capitalizing its Share Premium account. The 

share capital after issue of bonus shares now stands at 

Rs. 237.24 million. 

• Preference Shares 

During the year, your Company issued 200,000 7% 

Redeemable Cumulative Preference Shares of Rs.100/- 

each aggregating to Rs. 20 Crores to Industrial 

Development Bank of India on private placement and 

redeemed 10.5% Redeemable Cumulative Preference 

Shares of Rs.100/- each issued to UTI Bank Ltd. 

DIRECTORS 

Mr. Gracias Saldanha, Mrs. B. E. Saldanha, Mr. R. V. Desai and Mr. A. S. 

Mohanty retire by rotation at the ensuing Annual General 

Meeting being eligible offer themselves for re-appointment. 

Mr. Sridhar Gorthi who was acting as Alternate Director to 

Dr. Prasanna Gore was appointed as Additional Director of the 

Company on 26th April, 2005. Mr. Gorthi holds office upto the 

date of the ensuing Annual General Meeting. The Company has 

received a notice in writing pursuant to the provisions of 

Section 257 of the Act from a member of the Company 

proposing his appointment as Director of the Company. 

During the year, Mr. J. M. Trivedi and Mr. Steven Bates resigned 

from the Board of the Company with effect from 26th April, 

2005 and 29th July, 2005 respectively. Your Directors wish to 

place on record their appreciation of the valuable services 

rendered by them during their tenure as Directors on the 

Board. 

CORPORATE GOVERNANCE 

The Corporate Governance and Management’s Discussion and 

Analysis Report form an integral part of this Report and are set out 

as separate Annexures to this Report. The Certificate of the 

Auditors of the Company certifying compliance with the 

conditions of Corporate Governance as stipulated in clause 49 

of the Listing Agreement with Stock Exchanges is annexed with 

the report on Corporate Governance. 

AUDITORS 

M/s Price Waterhouse, Chartered Accountants, Auditors of the 

Company, retire at the conclusion of the ensuing Annual 

General Meeting and being eligible, offer themselves for 

re-appointment. 

HUMAN RESOURCES 

Industrial relations continued to be cordial. Information as per 

Section 217(2A) of the Companies Act, 1956, read with the 

Company’s (Particulars of Employees, Rules, 1975) forms part of this 


COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF 

THE BOARD OF DIRECTORS) RULES 1988. 

The particulars as prescribed under the Rules appear in the 

Annexures forming part of the Directors Report.

DIRECTORS’ RESPONSIBILITY STATEMENT 

The Directors confirm that – 

(i) 

(ii) 

in the preparation of the annual accounts, the applicable 

accounting standards have been followed along with 

proper explanation relating to material departures; 

appropriate accounting policies have been selected 

and applied consistently and have made judgements 

and estimates that are reasonable and prudent so as to 

give a true and fair view of the state of affairs of the 

Company as at 31st March, 2005 and of the profit of the 

Company for the year ended 31st March, 2005; 

APPRECIATION 

Your Directors express their gratitude to the Company’s 

customers, shareholders, business partners viz. distributors and 

suppliers for their understanding and support. 

Your Directors record their appreciation and gratitude to the 

financial institutions and banks for their continued and timely 

assistance in meeting the Company’s resource requirement. 

Finally your Directors acknowledge the dedicated services 

rendered by all the employees of the Company. 

(iii) proper and sufficient care has been taken for 

maintenance of adequate accounting records in 

accordance with the provisions of the Companies Act, 

1956 for safeguarding the assets of the Company and 

for preventing and detecting fraud and other 

irregularities; 

(iv) 

the annual accounts have been prepared on a going 

concern basis. 

Mumbai. 

29th July, 2005. 

For and on behalf of the Board of Directors 

G. Saldanha 

Chairman 

53

Annexure to the 

Directors’ Report 

ANNEXURE-A 

Information under Section 217(1)(e) of the CompaniesAct,1956 read with Companies (Disclosure of 

Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ 


A. CONSERVATION OF ENERGY 

Energy Generation Measures Taken 

A. Power and Fuel Consumption 2004-05 2003-04 

1. Electricity 

(a) Purchased 

Unit (in‘000 Kwhrs) 9782.91 4947.07 

Total Amount (Rs. in ‘000’s) 47611.84 25510.30 

Rate/Unit (Rs.) 4.87 4.65 

(b) 

Own Generation 

(i) Through Diesel Generator 

Unit (in‘000 Kwhrs) 2639.75 136.28 

Units per Ltr. of Diesel Oil 3.70 3.19 

Cost/Unit (Rs.) 7.99 7.05 

(ii) Through Steam Turbine/Generator Nil Nil 

2. Coal Nil Nil 

Qty. 

Total Cost 

Avg. Rate 

54 

3. Furnace Oil 

Qty. (K. Ltr.) 167.89 183.20 

Total Amount (Rs. in ‘000’s) 3022.02 3297.60 

Avg. Rate (Rs. /K. Ltr.) 18.00 18.00 

4. i. Internal generation 

Light Diesel Oil/ 

Qty. (In Ltr. ‘000’s) 251.58 101.41 

Total Cost (Rs. in ‘000’s) 6072.44 2218.80 

Rate/Unit (Rs.) 24.14 21.88 

ii. Natural Gas 

Qty. (M 3 ‘000’s) 1063.25 476.79 

Total Cost (Rs. in ‘000’s) 9653.33 4767.87 

Rate/Unit (Rs.) 9.07 10.00 

B. Consumption 

The Company manufactures several Drug Formulations in different pack sizes. In view of this, it is impracticable to apportion the 

consumption and cost of utilities to each Product/Formulation.

B. TECHNOLOGY ABSORPTION, RESEARCH & 

DEVELOPMENT (R&D) 

1. Specific areas in which R & D is carried out by the 

Company 

a) Pharmaceutical Formulation Development: Formulation of 

various pharmaceutical dosage forms and processes for new 

& existing molecules. Development of formulations as 

immediate release, delayed release, sustain release and 

various platform technologies. This includes literature 

survey, preformulation studies, formulation and 

standardisation of dosage forms for selected drug 

molecules on laboratory scale. 

b) Drug Discovery: Efforts have been continued in the area of 

Asthma, COPD and diabetes. Ten patents in all with 

provisional specifications and three patents with complete 

specifications have been filed. One NCE, GRC 3886 has 

completed advanced toxicological investigations as 

well as Phase–I clinical trials in UK. Lead identification 

in the diabetes project has also been accomplished. 

c) Development of technology based products like 

Cefuroxime Axetil ER Tablets, Levocetirizine 

Dihydrochloride (Effermelt) Tablets, Aztreonam For 

injection, Meropenem For Injection, Metoprolol Succinate 

ER Tablets. 

d) Development of ANDA for the US markets: Your Company 

has filed six ANDAs on its own label during this financial 

year. Company also has three more ANDA dossiers which 

are under an advanced stage of development. 

e) Formulation Development for Brazil Market. It includes– 

Development of various types of dosage forms, its 

standardization and execution at production site, 

evaluation of these batches against Brazil reference 

samples for pharmaceutical and bio-equivalence. 

2. Analytical Method Development: 

a) Development of new analytical test processes and their 

evaluation for dosage forms. This includes stability indicating 

methods, validation and standardisation of analytical processes. 

Accelerated and time lapse stability studies of Research and 

Development formulations under various climatic 

conditions. 

b) Development of technology based patentable platform 

technology. Filing of patents in the US and PCT for various 

dosage form including oral controlled release and topical 

products. 

3. Packaging Material Development: 

Development of packaging forms and their improvements for 

new as well as existing products. 

4. Technology Transfer: 

The products like Simvastatin, Fluvastatin, Atorvastatin Calcium 

were transferred to Ankleshwar plant for commercial production. 

5. Benefits derived as a result of the above R&D: 

R&D has developed the new formulations for new & existing 

molecules & drug combinations. 

i. Developed technology is transferred to commercial 

production for following products; 

Glenmark Gracewell Healtheon 

Cefuroxime Axetil ER Tablets 500 mg Levocetirizine Miglitol Tablets 

(Altacef OD) Dihydrochloride (Effermelt) (Mignar) 

Tablets 5 mg - ( L-Cetridoc) 

Valdecoxib plus Paracetamol Tablets Imiquimod Cream 5% w/w Atorvastatin plus Ezetimibe Capsules 

(20 mg + 500 mg) (Imiquad) (Zetitor) 

(Valus Plus 20) 

Protomeg Soft Gelatin Capsules Kojic Acid Dipalmitate + Glycolic Acid + Telmisartan Tablets 80 mg 

Arbutin Cream 

(Demelan Cream) 

Aloe Extract + Vitamin E Acetate Lotion 

(Elovera Lotion) 

Ambroxol Hydrochloride + 

Terbutaline Sulphate + 

Guaifenesin + Ammonium Chloride 

+ Menthol Expectorant 

(Mucaryl AX Expectorant) 

55 

ii. Development of technology based products like Aztreonam 

injection and also combination product such as Ezetimibe 

and Atorvastatin were developed for the launch in 

Domestic Segment. 

iii. In total 13 DMFs were filed for US Market. 

iv. 

GRC 3886 has been successfully licensed to 

Forest Laboratories of USA and Tejin Pharma of Japan. 

GRC 8200, the lead identified in the diabetes project 

has been studied for safety and toxicological 

properties.

v. The products launched and sold in the domestic and exports 

markets would earn revenues for your Company. The IPR 

generated can lead to profitable licensing opportunities. 

6. Future plan of action: 

R&D is working on new molecules in the following segment; 

- Antihypertensive molecules 

- Antifungal molecules 

- Antibacterial molecules 

- Antiasthmatic molecules 

- Antidiabetic products 

- Anti-aging products 

- Sunscreens Products 

- Technology – such as microspheres & aerosols. 

- Technology – to replace solvents used in film coating by water. 

- Development of formulations for Semi regulatory market. 

- Development of formulations for Latin American market. 

Your Company is targeting development and technology 

transfer and ANDA filing for 10-12 products for the coming year. 

7. Expenditure on R&D: 

(Rs. in’ Million) 

2004-05 2003-04 

a) Capital Expenditure 161.00 123.55 

b) Revenue Expenditure 325.82 248.07 

c) Total 489.64 371.62 

d) R & D Expenditure as a 

percentage of total turnover 9.04% 9.67 % 

TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION: 

1. Efforts in brief towards technology absorption, adoption 

and innovation. 

Most of our efforts in the area of technology absorption, 

adoption and innovation are based on our own efforts in R & D. 

They include improvement in yield and quality, improvement 

of processes and development of new processes with validation 

studies. 

2. Benefits derived : 

Benefits derived are enhanced production of our products, 

improvement in the yield and quality of products and 

introduction of new products, cost reduction of products and 

processes without affecting the quality of the products and 

process efficacy. 

Our R&D Centre is recognised by D.S.I.R., Ministry of Science 

and Technology, Government of India. 

3. Information regarding technology imported during the last 

five years – Nil. 

A. FOREIGN EXCHANGE EARNINGS AND OUTGO 

Total foreign exchange earned was Rs. 1301.34 Million and outflow 

was Rs. 732.56 Million. 

Mumbai 

29th July, 2005. 


G. Saldanha 

Chairman 

56

ANNEXURE-B 

Information of employees under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975. 

Particulars of employees 

Sl Name Age Designation Remuneration Qualification Experience Date of Last 

No Yrs Received (Rs.) Yrs Commencement Employment 

of Employment 

1 K. Anand 49 Sr.V.P.– QA & 2,458,992 M.Sc. 28 17/10/2003 Nicholas Piramal India. Ltd 

Regulatory Affairs 

2 Shekhar B. Bhirud (Dr.) 43 Head – API 3,884,066 M.Sc, Ph.D (Org. Chem) 17 14/12/2000 Dai-Ichi Karkaria Ltd., 

Hyderabad 

3 R. V. Desai 47 Director–Finance, 2,811,492 B. Sc. , C.A 23 25/03/1983 Progressive Consultants 

IT& Legal 

Limited 

4 B. Gopalan (Dr.) 57 Sr. VP – Chemical Research 5,137,657 M.Sc, Ph.D 23 01/12/1999 Merck Development Centre 

(I) Ltd. 

5 Mubeen Ahmed Khan (Dr.) 40 Vice President- 2,569,798 M.Sc, M.Phil, Ph.D 17 04/09/2000 Cadila Pharma Ltd., 

Analytical (Analytical Chemistry) Ahmedabad 

6. A. S. Mohanty 51 Director–Formulations 4,204,950 M.Sc. 28 02/01/1984 Alembic Limited 

7 Cheryl Pinto 38 Director–Corporate Affairs 5,324,661 B.Pharm 12 01/08/2000 Cheryl Laboratories (Pvt.) 

Limited 

8 B. E. Saldanha 65 Director–Exports 8,078,954 B.Sc, B.Ed., 34 01/01/1982 Walsingham House School 

9 Glenn Saldanha 35 Managing Director & 20,571,888 B.Pharm, 11 01/08/1998 Price Waterhouse 

Chief Executive Officer MBA (USA) Coopers, USA 

10 Vilas Satpute* 51 VP – Manufacturing 2,297,264 B.Tech 20 07/04/2004 Lupin Laboratories Ltd. 

11 Krishna R. Solanki* (Dr.) 58 VP – QA 1,843,488 M.Sc, Ph.D 29 01/05/2003 Wockhardt Ltd. 

12 C.V. Srinivasan* (Dr.) 51 Principal Scientist 2,314,756 Ph.D 20 09/07/2001 Cadila Pharmaceuticals Ltd. 

(Synthetic Organic Chemistry) 

13 Swaroop Kumar (Dr.) 40 Head – Drug Discovery & 5,283,762 M. Pharm, Ph.D 11 18/02/2003 Sun Pharma Advanced 

Clinical Development 

Research Centre, Baroda. 

*Employed for part of the year. 

Notes: 

i) Remuneration includes Salary, Allowances, Bonus, Company’s Contribution to Provident Fund and Superannuation Fund, Medical Benefits, LTA, Commission and 

perquisites as per Income Tax Act, 1961. 

ii) Mrs. B. E. Saldanha, Mr. Glenn Saldanha and Ms. Cheryl Pinto are related to each other as defined under Section 6 of the Companies Act, 1956. 

iii) The nature of employment in all cases is contractual. 


Mumbai. 

29th July, 2005. 

G. Saldanha 

Chairman 

57

Disclosure pursuant to the provisions of Securities and Exchange Board of India (Employee Stock Option Scheme 

and Employee Stock Purchase Scheme) Guidelines, 1999. 

A. Glenmark Employee Stock Option Scheme 1999 

a Options Issued 875,000 

b The Pricing Formula • Book value as on 31st march 1999 in respect of 

450,000 options 

• Market price as on 1st January, 2001 in respect of 

425,000 options 

c Options Vested 650,000 

d Options Exercised 650,000 

e The total number of shares arising as a result of exercise of option 650,000 

f Options Cancelled / Forfeited 215,000 

g Variation of terms of options NIL 

h Money realised by exercise of option Rs. 14,449,100/- 

i Total number of options in force as on 31st March 2005 10,000 

j Employee wise details of options granted during the year to: 

i) Senior Managerial Person NIL 

ii) Any other employee who receives a grant in any one year of option 

amount to 5% or more of options granted during the year 

NIL 

iii) Identified employees who were granted option during any one year, 

equal to or exceeding 1% of the issued capital (excluding 

outstanding warrants and conversions) of the company at the time 

of grant 

NIL 

k Diluted Earnings Per Share (EPS) pursuant to issue of shares on 

exercise of option calculated in accordance with International 

Accounting Standard (IAS) 33 Rs. 4.81 

58 

B. Glenmark Employee Stock Option Scheme 2003 

a Options Issued 1,217,225 

b The Pricing Formula Market price of the equity shares (market price shall 

be as defined in the SEBI (ESOS and ESPS) 

Guidelines, 1999, from time to time) 

c Options Vested NIL 

d Options Exercised NIL 

e The total number of shares arising as a result of exercise of option NIL 

f Options Cancelled / Forfeited 152,050 

g Variation of terms of options NIL 

h Money realized by exercise of option NIL 

i Total number of options in force as on 31st March 2005 1,065,175 

j Employee wise details of options granted to: 

i) Senior Managerial Person 1. Dr. Vijay Soni 

2. Mr. Sanjeev Krishnan 

3. Mr. Terrance Coughlin 

4. Mr. Arun Narayan 

5. Mr. Jeff Glazer 

6. Mr. P.V. Upadhye 

7. Mr. Jim Brown

ii) Any other employee who receives a grant in any one year of option 

amount to 5% or more of options granted during the year 

NIL 

iii) Identified employees who were granted option during any one year, 

equal to or exceeding 1% of the issued capital (excluding outstanding 

warrants and conversions) of the company at the time of grant 

NIL 

k Diluted Earnings Per Share (EPS) pursuant to issue of shares on 

exercise of option calculated in accordance with International 

Accounting Standard (IAS) 33 Rs. 4.81 

l Method of calculation of employees compensation cost The Company has calculated the employee 

compensation cost using the intrinsic value of the 

stock options. 

m Difference between the employee compensation cost so computed at 

l) above and the employee compensation cost that shall have been 

recognized if it had used the fair value of the options. 

NIL 

The impact at this difference on profits and on EPS of the company 

Amt(Rs in lakhs) 

Profit After Tax (PAT) 6348.07 

Less: Additional employee 

Compensation cost based 

on fair value 

NIL 

Adjusted PAT 6348.07 

Adjusted EPS: Basic Rs. 5.29 

Diluted Rs. 4.81 

n Weighted average exercise price and fair value of Stock options 

granted: 

Stock options Weighted average Weighted average Closing market price 

granted on exercise price (in Rs.) Fair value (in Rs.) at NSE on preceding 

Face Value Rs. 2 

date of grant (in Rs.) 

05/07/2004 136.23 59.26 136.23* 

22/09/2004 183.75 72.58 183.75 

25/01/2005 464.15 196.33 464.15 

17/02/2005 511.10 201.35 511.10 

59 

o Description of the method and significant assumptions used during the The Black Scholes option pricing model was 

year to estimate the fair value of the options, including the following 

developed for estimating fair value of traded options. 

weighted average information: 

Since option pricing model requires use of 

substantive assumptions, changes therein can 

materially affect Fair Value of options. The option 

pricing models do not necessarily provide a reliable 

measure of fair value of options. 

* Two weeks high and low price of the share preceding the date of grant of option. 

The main assumptions used in the Black-Scholes option pricing model during the year were as follows: 

1. Risk free interest rate 6% 

2. Expected life of options from the date of grant 6 Years 

3. Expected Volatility 25% 

4. Dividend yield 1.24%

Report on 

Corporate Governance 

Pursuant to Clause 49 of the Listing Agreement, a Report on Corporate Governance is given below. 

1. The Company’s philosophy on Code of Governance is aimed at assisting the top management of the Company in the efficient 

conduct of its business and in meeting its obligations to shareholders. The Company has adopted a codified Corporate 

Governance Charter, inter-alia, to fulfill its corporate responsibilities and achieve its financial objectives. 

The Company believes in and has consistently practiced good corporate governance. The Company creates an environment for 

the efficient conduct of the business and to enable management to meet its obligations to all its stakeholders, including amongst 

others, shareholders, customers, employees and the community in which the Company operates. 

Given below is a Report on Corporate Governance of your Company. 

2. Board of Directors: 

A. Composition: 

The Board comprises of 12 Directors, of whom, five are executive, and seven are non-executive Directors. The Chairman of the 

Board is a non-executive Director. 

The non-executive Directors are professionals with experience in management, pharmaceutical industry, legal, finance, marketing 

and general administration who bring in a wide range of skills and experience to the Board. 

a) Details of the Board of Directors 

Name of the Director Status No. of Board No. of other No. of Committee 

Meetings attended Directorship held # Membership (s) 

Chairman Member 

Gracias Saldanha Non-Executive - 

- Chairman Promoter Group 7 4 – – 

B. E. Saldanha Executive - 6 4 – – 

Promoter Group 

Glenn Saldanha Executive - 

Managing Director & CEO Promoter Group 8 2 – 2 

60 

Cheryl Pinto Executive - 

Promoter Group 8 – – – 

J. F. Ribeiro Non-Executive - 

Independent 8 2 4 – 

R.V .Desai Executive 10 – – 1 

A. S. Mohanty Executive 9 – – – 

Prasanna Gore 

Non-Executive- 

Independent – – – 1

Name of the Director Status No. of Board No. of other No. of Committee 

Meetings attended Directorship held # Membership (s) 

Chairman Member 

N.B Desai Non-Executive - 

Independent 8 – – 3 

M. Gopal Non-Executive - 

Krishnan Independent 5 – – 1 

J. M. Trivedi Non-Executive - 

Independent 4 1 – – 

Sridhar Gorthi 

(Till 26/04/2005 alternate 

to Mr. Prasanna Gore and 

appointed as additional Non-Executive - 

director on 26/04/2005). Independent 6 1 – 1 

Steven Bates 

Non-Executive 

Independent 2 – – – 

# Includes Directorship(s) in Indian Companies. 

b) During the Financial Year ended March 31, 2005 ten board meetings were held on the following dates: 

22nd April, 2004; 5th July, 2004; 12th July, 2004; 22nd July, 2004; 29th September, 2004; 25th October, 2004; 

11th December, 2004; 6th January, 2005; 27th January, 2005 and 18th March, 2005. 

B. None of the non-executive Directors of the Company, have any pecuniary relationship or transactions with the Company other 

than sitting fees paid for attending board meeting/committee meetings and those already disclosed in the note 4 of schedule 22 

to the Financial Statement in the Annual Report. 

C. Mr. J. F. Ribeiro, Mrs. B .E. Saldanha, Mr. Glenn Saldanha, Mr. R.V. Desai, Mr. A. S. Mohanty & Mr. N.B Desai attended the last Annual 

General Meeting of the Company held on 24th September, 2004. 

61 

3. Audit Committee: 

Your Company has a qualified and independent Audit Committee. During the Financial Year ended March 31, 2005, the 

committee met five times on 22nd April, 2004; 5th July, 2004; 22nd July, 2004; 22nd October, 2004 and 27th January, 2005. 

Name No. of meetings attended Remarks 

1. J. F. Ribeiro 5 Chairman 

2. Prasanna Gore – Member 

3. Sridhar Gorthi - Alternate to Mr. Prasanna Gore 4 Member 

4. N. B. Desai 4 Member 

5. M. Gopal Krishnan 3 Member 

Mr. Glenn Saldanha, Managing Director & CEO, Mr. R. V. Desai, Director-Finance, IT & Legal and Mr. Prakash Sevekari, Cost Auditor are 

invitees to the Meeting of the Audit Committee; Mr. M. J. Mendonza, Vice President-Legal and Company Secretary is the Secretary to 

the Committee. The terms of reference of this committee are wide enough covering matters specified in the Companies Act, 1956 

read together with Clause 49 of the Listing Agreement of the Stock Exchange. The current Charter of the Audit Committee is in line 

with international best practices and the regulatory changes formulated by SEBI and the listing agreements with the stock exchanges 

on which your company is listed. 

4. Remuneration of Directors: 

A. The remuneration of the executive and non-executive Directors of your Company is decided by the Board of Directors.

B. Given below are the details of remuneration / fees / commission paid to Directors during the financial year ended March 31, 

2005: 

Name of Director Salaries & Perquisites Commission Sitting Fees TOTAL 

1 Gracias Saldanha - 9,341,726 35,000 9,376,726 

2 B. E. Saldanha 7,088,954 990,000 – 8,078,954 

3 Glenn Saldanha 8,233,287 12,338,601 – 20,571,888 

4 Cheryl Pinto 2,157,754 3,166,908 – 5,324,661 

5 R. V. Desai 2,524,392 287,100 – 2,811,492 

6 A. S. Mohanty 3,917,850 287,100 – 4,204,950 

7 J. M. Trivedi – – 20,000 20,000 

8 J. F. Ribeiro – – 65,000 65,000 

9 M. Gopal Krishnan – – 40,000 40,000 

10 N. B. Desai – – 60,000 60,000 

11 Steve Bates – – 9,986 10,000 

12 Sridhar Gorthi – – 50,000 50,000 

23,922,236 26,411,435 279,986 50,613,657 

Notes: 

1. The Executive Directors have been appointed/ reappointed on May 16, 2002 for the term of five years. The service contract can 

be terminated with a notice of six months. 

2. Sitting fees in respect of Mr. J. M. Trivedi have been paid to Actis Advisors Pvt. Ltd (formerly CDC Advisors Pvt. Ltd)., of which he is a 

nominee. 

3. Sitting fees in respect of Mr. Steve Bates have been paid in GBP. 

4. During the Year, the following Directors acquired Shares of Company under ESOS 99:- 

i) A. S. Mohanty 5,000 Equity Shares of Rs. 2/- each. 

ii) R. V. Desai 5,000 Equity Shares of Rs. 2/- each. 

The options had a vesting period of three years and were issued at a premium of Rs. 12.34 per equity share. 

5. SHARE TRANSFER AND SHAREHOLDERS’ / INVESTORS’ GRIEVANCES COMMITTEE: 

The following Committees reviews shareholders’ complaints and resolution thereof. 

Name of committee Members No. of meetings held Attendance at the 

meeting 

Share Transfer/ 1) J. F. Ribeiro – Chairman 26 

Shareholders’ and 2) Glenn Saldanha – Member 30 24 

Investors’ Grievance 3) N. B. Desai - Member 25 

Committee. 4) R.V. Desai – Member 29 

62 

Share Transfer Committee 1) R. V. Desai 15 15 

2) M. J. Mendonza 15 

Shareholders’ and Investors’ 1. J. F. Ribeiro – Chairman 6 

Grievance Committee. 2. Glenn Saldanha – Member 6 5 

3. N. B. Desai - Member 6 

4. R.V. Desai – Member 6 

During the year, the Share Transfer/ Shareholders’ and Investors’ Grievance Committee was re-constituted into two different 

committees viz. a) Share Transfer Committee b) Shareholders’ and Investors’ Grievance Committee.

Compliance Officer: Mr. M.J. Mendonza-Vice President-Legal & Company Secretary is the Compliance Officer of the 

Company. 

• Details of investor’s complaints received during the year ended March 31, 2005: 

No. of complaints 2004-2005 2003-2004 

Received 76 172 

Disposed 76 172 

Pending Nil Nil 

· • The Company’s Registrars, Karvy Computershare Private Ltd, had received letters / complaints during the financial year, all of 

which were replied / resolved to the satisfaction of the shareholders. 

6. Compensation Committee: 

i) The Compensation Committee comprises of following members of the Board: 

1. J. F. Ribeiro - Chairman 

2. Glenn Saldanha - Member 

3. N. B. Desai - Member 

ii) 

During the year ended March 31, 2005, seven meetings of Compensation Committee were held on 22nd April, 2004; 5th July, 

2004; 17th September 2004; 16th November, 2004; 6th January, 2005; 25th January, 2005 and 17th February, 2005. All 

members were present in these meetings. 

iii) Broad terms of reference of the Compensation Committee: 

· To recommend and review remuneration package of Executive / Non-Executive Directors. 

· To present report to the Board on remuneration package of Directors and others. 

To approve issue of stock options to the employees. 

iv) 

Compensation Policy: 

The Company follows a market linked remuneration policy, which is aimed at enabling the Company to attract and retain the 

best talent. Compensation is also linked to individual and team performance as they support the achievement of Corporate 

Goals. The Company has formulated an Employee Stock Option Scheme for rewarding & retaining performers. 

63 

7. Disclosures by Management : 

a) No material, financial and commercial transactions were reported by the management to the Board, in which the 

management had personal interest having a potential conflict with the interest of the company at large. 

b) There are no transactions with the Director or Management, their associates or their relatives etc. that may have potential 

conflict with the interest of the Company at large. 

c) There was no non-compliance during the last three years by the Company on any matter related to capital market. 

Consequently, there were neither any penalties imposed nor strictures passed on the Company by Stock Exchanges, SEBI or 

any statutory authority. 

8. Shareholders information: 

a) The relevant information relating to the Directors appointed after last Annual General Meeting of the Company and to be 

re-appointed at the ensuing Annual General Meeting to be held on 27th September, 2005 are given below: 

i. Mr. Sridhar Gorthi, 32, is a BA. LLB (Hons) from the National Law School of India University. Mr. Sridhar Gorthi is presently a 

partner in Trilegal and has worked with Arthur Andersen and Lex Inde, Mumbai. He was involved in legal advisory 

services to various multinational and domestic corporations on restructuring, debt finance, joint ventures, acquisition/ 

mergers etc. Mr. Sridhar Gorthi was acting as Alternate Director to Dr. Prasanna Gore. It is now proposed to appoint him 

as Director of the Company.

He is also a Director of following Companies/Body Corporates :- 

Sl. Name of Company Position 

No. 

1 Triconsult India Pvt. Ltd. Director 

Mr. Sridhar Gorthi is also member of Audit Committee of your company. 

ii. 

Mr. Gracias Saldanha – 68, is the founder of the Company. He has over 35 years of experience in the industry. His 

educational qualification includes M.Sc. from Mumbai University with a Diploma in Management from Jamnalal Bajaj 

Institute of Management Studies, Mumbai. He has worked with leading pharmaceutical companies like Abbott 

Laboratories and E. Merck. 

He is also director of following Companies/Body Corporates:- 

Sl. Name of Company Position Held 

No. 

1 Glenmark Exports Ltd. Director 

2 Glenmark Organics Ltd. Director 

3 GM Pharma Ltd. Director 

4 Garcia Wines Pvt. Ltd. Director 

iii. 

Ms. B. E. Saldanha - 65, is the promoter director. She has done her B.Sc., B.Ed. from Mumbai University and has been a 

working director since 1982. She has been the force behind achieving company’s export targets. 

She is also director of following Companies/Body Corporates:- 


No. 

1 Glenmark Exports Ltd. Chairperson 

2 Glenmark Organics Ltd. Chairperson 

3 GM Pharma Ltd. Director 

4 Garcia Wines Pvt. Ltd. Director 

iv. 

Mr. R. V. Desai – 47, is a Science Graduate and a Chartered Accountant. He is In-charge of Finance/Income Tax/Legal and 

has over 23 years of experience of Finance, Accounts & Taxation. 

He is also director of following Companies/Body Corporates:- 

64 

vi. 


No. 

1 Glenmark Farmaceutica Ltda, Brazil Director 

2 Glenmark Dominicana SA, Dominican 

Republic 

Director 

He is also member of Operations Committee, Share Transfer Committee and Investor Grievance Committee. 

Mr. Abhinna Sundar Mohanty – 51, has done Masters in Science. In-charge of Domestic Formulations, he has over 28 years 

of experience in pharmaceutical sales and marketing as well as healthcare sectors. 

He is also member of Operations Committee. 

b) Share Transfer Process: The shares are sent /received for physical transfer at R& T’s office and all valid transfer requests are 

processed and returned within a period of 30 days from the date of receipt. The Share transfers are approved on weekly basis 

by the Share Transfer Committee. 

c) Dematerialisation of shares: As of March 31, 2005, 97.93 % of shares have been dematerialised and held in electronic form 

through NSDL and CDSL. The shares of your company are permitted to be traded only in dematerialised form.

d) Share Holding Pattern as at March 31, 2005: 

Sl. Description No. of No. of Shares Shares % 

No. Holders held 

1 Promoters 20 65045902 54.84 

2 Resident Individuals 34082 21030854 17.73 

3 Foreign Institutional Investor 19 16793114 14.16 

4 Bodies Corporate 973 9808710 8.27 

5 Indian Financial Institutions/Banks 5 2486754 2.10 

6 Others 

Non Resident Indians/OCBs 386 1187922 1.00 

Trusts 12 16144 0.01 

Mutual Funds 14 1393448 1.17 

Employees 299 357350 0.30 

Clearing Members 2 109448 0.09 

H U F 370 289794 0.24 

Directors & Relatives 5 101700 0.09 

Total: 36187 118621140 100.00 

e) General Body Meetings: The last three Annual General Meetings of the Company were held at the venue and time as 

under:- 

AGM No. Date Time Venue 

24 September 27, 2002 11.00 a.m Sunville Banquet & Conference Hall, 

3rd floor, Dr. Annie Besant Road, 

Worli, Mumbai-400 018. 

25 September 26,2003 11.00a.m Sunville Banquet & Conference Hall 



65 

26 September 24, 2004 11.00a.m Sunville Banquet & Conference Hall 



All resolutions moved at the last Annual General Meeting were passed by a show of hands by requisite majority of members 

attended the meeting. 

Resolutions with requisite majority were passed through Postal Ballot on 21st January 2005 for 1) Issue of Foreign Currency 

Convertible Bonds, 2) Authorizing the Board to borrow in excess of paid up share capital and free reserves. 

The Chairman then announced the following results of the Postal Ballot as per report of Mr. Surjan Singh Rauthan, the 

Scrutineer. 

Particulars Resolution No. 1 Resolution No. 2 

Total number of Postal Ballot Papers received 1430 1430 

Number of invalid Postal Ballot Papers received 104 589 

Number of valid Postal Ballot Papers received 1326 841 

Votes in favour of the Resolution 39052894 38059665 

Votes against the Resolution 16488 3667 

Resolution passed by % of valid votes received 99.96% 99.99%

Further resolutions with requisite majority were passed through Postal Ballot on 17th February, 2005 for 1) Reclassification 

of unclassified share capital 2) Amendment of Clause V of Authorised Capital 3) Amendment of Article 4 of Articles of 

Association 4) Issue of Bonus Shares. 

The Chairman then announced the following results of the Postal Ballot as per report of Mr. Surjan Singh Rauthan, the 

Scrutineer. 

Particulars Resolution Resolution Resolution Resolution 

No. 1 No. 2 No. 3 No. 4 

Total number of Postal Ballot Papers received 2018 2018 2018 2018 

Number of invalid Postal Ballot Papers received 148 213 217 152 

Number of valid Postal Ballot Papers received 1870 1805 1801 1866 

Votes in favour of the Resolution 35173146 35160843 35160157 35171894 

Votes against the Resolution 2304 2284 1934 305 

Resolution passed by % of valid votes received 99.99 99.99 99.99 99.99 

f) Date Time and Venue of the Ensuing Annual General Meeting: - 

Annual General Meeting shall be held on 27th September, 2005 at 11.00 a.m. at Sunville Banquet Hall, Dr. Annie Besant Road, 

Mumbai – 400 018 

g) Record Date/ Book Closure: - 

· – 2nd May 2005 was fixed as record date for making payment of Interim dividend on Equity share capital of the 

company. 

· – 8th March 2005 to 11th March, 2005 (both days inclusive) was declared for the purpose of determining the members 

who would be entitled to receive Bonus Shares. 

· – Book Closure: Monday, 26th September, 2005 to Tuesday, 27th September, 2005. (both days inclusive). 

h) Date of declaration of interim dividend: 

Equity Shares: 26th April 2005 

Preference Shares: 28th March 2005 

i) Financial Calendar (Tentative and Subject to change) 

Financial reporting for the first quarter ending June 30, 2005. July 2005 

Financial reporting for the second quarter ending September 30, 2005. October 2005 

Financial reporting for the third quarter ending December 31, 2005. January 2006 

Financial results for the year ending March 31, 2006. May 2006 

j) Members can avail of nomination facility by filing Form 2B with the Company. Blank forms can be downloaded from the 

website of the Company. 

66 

k) Members may kindly note that consequent to split in the face value of equity shares of the company, the shares in 

the face value of Rs. 10/- have ceased to be valid for any purpose whatsoever. Members who are holding shares of the 

face value of Rs. 10/- each are requested to kindly send their respective share certificates to the R&T Agents for 

receiving five equity shares of face value of Rs. 2/- each in exchange of one equity share of face value of Rs. 10/- 

each. 

l) Pursuant to the provisions of Section 205A (5) of the Companies Act, 1956, dividend for the financial year ended March 31, 

2000 and thereafter, which remain unclaimed for a period of seven years will be transferred by the Company to the Investor 

Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Companies 

Act, 1956.

Information in respect of such unclaimed dividend when due for transfer to the said Fund is given below: 

Financial Year Date of Date of transfer to Last date for Due date for 

Ended declaration unpaid/ unclaimed claiming unpaid transfer to 

of Dividend dividend account Dividend IEP Fund 

31.03.2000 10.03.2000 22.04.2000 21.04.2007 22.04.2007 

31.03.2001 28.09.2001 28.10.2001 27.10.2008 28.10.2008 

31.03.2002 27.09.2002 27.10.2002 26.10.2009 27.10.2009 

31.03.2003 15.05.2003 15.06.2003 14.06.2010 15.06.2010 

31.03.2004 29.03.2004 29.04.2004 28.04.2011 29.04.2011 

Shareholders who have not so far encashed their dividend warrant(s) are requested to seek issue of duplicate warrant(s) by 

writing to the Company’s Registrar and Transfer Agents, M/s. Karvy Computershare Pvt. Ltd. immediately. Shareholders are 

requested to note that no claims shall lie against the Company or the said Fund in respect of any amounts which were 

unclaimed and unpaid for a period of seven years from the dates that they first became due for payment and no payment 

shall be made in respect of any such claims. 

m) Means of Communication: 

a. Quarterly/Half Yearly and Annual Financial Results of the Company are published in the Financial Express and 

Punyanagri newspapers. 

b. Your Company’s results & official news releases are displayed on the company’s website. 

c. All items required to be covered in the Management Discussion & Analysis are included in the Directors’ Report to 

Members. 

67 

d. Company has its own web site and all the vital information relating to the company and its products is displayed on its 

web site; www.glenmarkpharma.com. 

Your Company also regularly provides information to the stock exchanges as per the requirements of the Listing 

Agreements. The Company’s website is updated periodically to include information on new developments and business 

opportunities of your Company. 

9. Company’s Scrip Information: 

· Listing on stock exchanges: The shares of the Company are listed on The Stock Exchange, Mumbai & The National Stock Exchange 

of India Ltd. 

o Listing fees for the year 2005-06 have been paid to the Stock Exchanges. 

· Stock Code: 532296 on the BSE 

o 

Electronic Form No.INE935A01027 

o Scrip Name GLENMARK PHA- BSE; GLENMARK - NSE 

Market Price Data: High, low during each month in last financial year. Performance in comparison to broad based indices namely 

BSE Sensex.

(All figures in Indian Rupees) 

Month High Low Close BSE 

Sensex 

Apr 04 162.75 145.00 149.50 5,655.09 

May 04 155.90 128.00 141.70 4,759.62 

Jun 04 146.00 129.40 135.90 4,795.46 

Jul 04 167.90 133.00 158.65 5,170.32 

Aug 04 194.65 151.00 182.95 5,192.08 

Sep 04 342.50 179.70 319.30 5,583.61 

Oct 04 325.00 286.10 302.80 5,672.27 

Nov 04 371.00 300.00 344.35 6,234.29 

GLENMARK 

600 

500 

400 

300 

200 

100 

0 

GLENMARK Vs. BSE 

10000.00 

9000.00 

8000.00 

7000.00 

6000.00 

5000.00 

4000.00 

3000.00 

2000.00 

1000.00 

0.00 

BSE SENSEX 

Dec 04 484.40 333.00 484.40 6,602.69 

Jan 05 563.90 455.50 504.45 6,555.94 

Feb 05 555.00 442.00 532.40 6,713.86 

Mar 05 613.00* 271.25** 282.25** 6,492.82 

Apr-04 

May-04 

Jun-04 

Jul-04 

Aug-04 

Sep-04 

Oct-04 

MONTHS 

Nov-04 

Dec-04 

Jan-04 

Feb-04 

Mar-04 

Glanmark 

BSE 

* Cum-Bonus Price** Ex-Bonus Price 

10. Plant Locations: 

The Company’s plants are located at: 

i) E-37, MIDC Industrial Area, D Road, Satpur, Nasik-422007, Maharashtra 

ii) 3109-C, GIDC Industrial Estate, Ankleshwar – 393 002 Dist. Bharuch. 

iii) Plot no. 7, Colvale Industrial Estate, Bardez, Goa. 

iv) Plot no. A- 80, MIDC Area, Kurkumbh, Daund, Pune – 413 802 Maharashtra. 

v) Plot No. 163- 165 & 170 – 172, Chandramouli Industrial Estate, Mohol, 

Sholapur, Maharashtra – 413213. 

11. Outstanding GDR’s/ADR’s/Warrants or any Convertible instruments exercised, date and likely impact on equity : 

A) The Company had issued 5,16,500 new options under Employees Stock Option Scheme viz. ESOS’ 2003. During the Financial 

Year 2004-2005, 10,000 & 1,52,050 options were cancelled under ESOS’ 1999 & ESOS’ 2003 respectively. As of 31st March 

2005, 10,000 and 10,65,175 options were outstanding under ESOS’ 1999 and ESOS’ 2003 respectively and are due for 

exercise on the following dates: 

ESOS’ 1999 ESOS’ 2003 

Date Number of Options Date Number of Options 

July 01,2005 5,000 October 22, 2005 60,018 

January 01, 2006 5,000 July 5, 2006 47,650 

68 

September 17, 2006 14,350 

October 22, 2006 120,035 

January 25, 2007 13,500 

February 17, 2007 1,600 

July 5, 2007 27,300 

September 17, 2007 28,700 

October 22, 2007 180,053

ESOS’ 1999 ESOS’ 2003 

Date Number of Options Date Number of Options 

January 25, 2008 27,000 

February 17, 2008 3,200 

July 5, 2008 40,950 

September 17, 2008 43,050 

October 22, 2008 240,069 

January 25, 2009 40,500 

February 17, 2009 4,800 

July 5, 2009 54,600 

September 17, 2009 57,400 

January 25, 2010 54,000 

February 17, 2010 6,400 

On exercising the convertible options so granted under the ESOS of the Company, the paid-up equity share capital of the 

company will increase by a like number of shares. 

B) The company had issued 20,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each. 

i. Convertible at the option of the bondholder at any time on or after 28th March, 2005 but prior to the close of business 

on 2nd January, 2010 at a fixed exchange rate of Rs.43.66 per 1 USD and price of Rs.862.394 per share of par value of Rs.2 

per share subject to adjustment in certain events i.e. issue of bonus shares, division, consolidation, reclassification of 

shares etc. 

ii. 

Redeemable in whole but not in part at the option of the company on or after 15th February, 2008 if closing price of the 

share for each of the 25 consecutive trading days immediately prior to the date upon which notice of such redemption 

is given was at least 130% of the applicable Early Redemption Amount divided by the conversion ratio. 

69 

iii. 

Redeemable on maturity date on 16th February, 2010 at 133.74% of its principal amount if not redeemed or converted 

earlier. The redemption premium of 33.74%payable on maturity of the bond if there is no conversion of the bond to be 

debited to Share Premium account evenly over the period of 5 years from the date of issue of bonds. 

C) The company had issued 50,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each. 

i. Convertible at the option of the bondholder at any time on or after 15th November, 2006 but prior to the close of 

business on 2nd January 2010 at a fixed exchange rate of Rs.43.66 per 1 USD and the price greater of 35% of the average 

of the order book volume–weighted-average-price of a share on each Trading Day during the period commencing on 

15th September and ending on 14th November, 2006 and the Floor Price (Rs.500) of par value of Rs.2 per share. 

ii. 

iii. 

Redeemable in whole but not in part at the option of the company on or after 15th February, 2009 if closing price of the 

share for each of the 25 consecutive trading days immediately prior to the date upon which notice of such redemption 

is given was at least 130% of the applicable Early Redemption Amount divided by the conversion ratio. 

Redeemable on maturity date on 16th February, 2010 at 134.07% of its principal amount if not redeemed or converted 

earlier. The redemption premium of 34.07%payable on maturity of the bond if there is no conversion of the bond to be 

debited to Share Premium account evenly over the period of 5 years from the date of issue of bonds. 

12. Electronic Clearing System (ECS): 

Shareholders are advised to opt for payment of dividend through ECS. The salient benefits of receiving dividend payment through 

ECS amongst others may be listed as below: 

a) There are no clearing charges in the hands of the investor/ recipient, the same are borne by the company;

) Risk as to fraudulent encashment of the dividend warrants, loss / interception of dividend warrants in transit, are eliminated; 

c) The facility ensures instant credit of the dividend amount in the desired account which to the recipient, means effortless 

and speedier transaction and hassles as to revalidation etc are done away with; 

d) Once the payment is made through ECS company issues intimation letters to the investors as to credit / payment of dividend, 

providing therein the details of the account and amount. Investors may download the ECS Mandate Form from the company’s 

website and send the same duly filed in to registrars for updation of records. 

13. Investor Helpdesk: for clarifications / assistance, if any, please contact;- 

Registered Office 

Registrars & Transfer Agents 

Persons to contact Mr. S. R. Turalkar M. S. Madhusudhan 

Add: Glenmark Pharmaceuticals Ltd Karvy Computershare P. Ltd 

B/2, Mahalaxmi Chambers “Karvy House”,46,Avenue 4, 

22, Bhulabhai Desai Road, Street No.1, Banjara Hills, 

Mumbai-400 026. 

Hyderabad-500034. 

Telephone (022) 56549999 (040) 23312454/23320751 

Fax No. (022) 23512531 (040) 23311968 

Email shrikantt@glenmarkpharma.com madhusudhan@karvy.com 

Website: www.glenmarkpharma.com www.karvy.com 

To the Members of 


Certificate on 

Corporate Governance 

We have reviewed the implementation of Corporate Governance procedures by Glenmark Pharmaceuticals Limited during the year 

ended March 31, 2005, with the relevant records and documents maintained by the Company, furnished to us for our review and the 

report on Corporate Governance as approved by the Board of Directors. 

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to a 

review of procedures and implementation thereof, adopted by the Company for ensuring the compliances of the conditions of 

Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. 

In our opinion and to the best of our information and explanations given to us, we certify that the Company has complied with the 

conditions of Corporate Governance as stipulated in the Listing Agreement, subject to - Internal Auditors is not an invitee of the 

meetings of the Audit committee required under sub-clause II (A) of Clause 49 of the Listing Agreement. 

We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or 

effectiveness with which the management has conducted the affairs of the Company. 

70 

On the basis of our review and according to the information and explanations given to us, the conditions of Corporate Governance as 

stipulated in Clause 49 of the Listing Agreement(s) with the stock exchanges have been complied with in all material respect by the 

Company and that no investor grievance is pending for a period exceeding one month against the Company as per the records 

maintained by the Shareholders/Investors Grievance Committee. 

For and on behalf of 

Price Waterhouse 

Chartered Accountants 

Mumbai, July 29, 2005. 

Partha Gosh 

Partner 

Membership No. – F 55913

Auditors’ Report 

To the members of 

GLENMARK PHARMACEUTICALS LIMITED 

1. We have audited the attached Balance Sheet of Glenmark Pharmaceuticals Limited as at March 31, 2005 and the related Profit 

and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under 

reference to this report. These financial statements are the responsibility of the company’s management. Our responsibility is 

to express an opinion on these financial statements based on our audit. 

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan 

and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An 

audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also 

includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall 

financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment) Order, 

2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of ‘The Companies Act, 1956’ of India (the 

‘Act’) and on the basis of such checks of the books and records of the company as we considered appropriate and according to the 

information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the 

said Order. 

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: 

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 

purposes of our audit; 

(b) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination 

of those books; 

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of 

account; 

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the 

accounting standards referred to in sub-section (3C) of Section 211 of the Act; 

(e) On the basis of written representations received from the directors, as on March 31, 2005 and taken on record by the Board of 

Directors, none of the directors is disqualified as on March 31, 2005 from being appointed as a director in terms of clause (g) of subsection 

(1) of Section 274 of the Act; 

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements 

together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and 

give a true and fair view in conformity with the accounting principles generally accepted in India: 

(i) in the case of the Balance Sheet, of the state of affairs of the company as at March 31, 2005; 

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and 

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. 

71 

Partha Ghosh 

Partner 

Membership Number F-055913 

For and on behalf of Price Waterhouse 


Mumbai, 

Dated: April 27, 2005

ANNEXURE TO AUDITORS’ REPORT 

Refereed to in paragraph 3 of the Auditors’ Report of even date to the members of Glenmark Pharmaceuticals Limited on the financial 

statements for the year ended March 31, 2005 

1. (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed 

assets. 

(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over 

a period of three years, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. 

Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no 

material discrepancies between the book records and the physical inventory have been noticed. 

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been 

disposed of by the company during the year. 

2. (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year. In respect of 

inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification 

is reasonable. 

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in 

relation to the size of the company and the nature of its business. 

(c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. 

The discrepancies noticed on physical verification of inventory as compared to book records were not material. 

3. The company has not granted nor taken any loans, secured or unsecured, to companies, firms or other parties covered in the register 

maintained under Section 301 of the Act. Consequently clauses (b), (c), (d), (f) and (g) of paragraph 4 of the Order are not applicable to 

the Company. 

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items 

purchased and sold are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, 

there is an adequate internal control system commensurate with the size of the company and the nature of its business for the 

purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and 

records of the company, and according to the information and explanations given to us, we have neither come across nor have been 

informed of any continuing failure to correct major weaknesses in the aforesaid internal control system. 

5. (a) According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 

301 of the Act during the year to be entered in the register required to be maintained under that Section. Accordingly, commenting 

on transactions made in pursuance of such contracts or arrangements does not arise. 

(b) In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance to such 

contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year, which have been 

made at prices which are not reasonable having regard to the prevailing market prices at the relevant time. 

6. The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules 

framed there under. 

72 

7. In our opinion, the company has an internal audit system commensurate with its size and nature of its business. 

8. We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant to the Rules made 

by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 

209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have 

not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. 

9. (a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the 

company is regular in depositing undisputed statutory dues including investor education and protection fund, employees’ state 

insurance, income-tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues as applicable, with the 

appropriate authorities except dues in respect of sales tax. The extent of the arrears of statutory dues outstanding as at March 31, 

2005, for a period of more than six months from the date they became payable, are as follows–

Name of the statute Nature of dues Amount Period to which Due date Date of Payment 

(Rs.) 

the amount relates 

Central Sales Tax Sales Tax Rs.7.07 lakhs 2004 Various dates Still due 

and Local Sales Tax Act 

(b) According to the information and explanations given to us and the records of the company examined by us, the particulars of 

dues of income-tax, sales-tax, wealth tax, service tax, customs duty excise duty and cess as at March 31, 2005 which have not been 

deposited on account of a dispute, are as follows - 

Name of the statute Nature of dues Amount Period to which the Forum where the 

(Rs.) amount relates dispute is pending 

The Income Tax Act, Income Tax Rs 34.34 lakhs A.Y 02-03 CIT (Appeals) 

1961 

10. The company has no accumulated losses as at March 31, 2005 and it has not incurred any cash losses in the financial year ended on 

that date or in the immediately preceding financial year. 

11. According to the records of the company examined by us and the information and explanation given to us, the company has not 

defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date. 

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other 

securities. 

13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicable to the 

company. 

14. In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments. 

15. In our opinion and according to the information and explanations given to us, the company has not given any guarantee for loans 

taken by others from banks of financial institutions during the year. 

16. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been 

applied for the purposes for which they were obtained. 

73 

17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and 

explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investment. 

18. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained 

under Section 301 of the Act during the year. 

19. The company has not issued any debenture during the year accordingly, no securities have been created. 

20. The company has not raised any money by public issues during the year. 

21. During the course of our examination of the books and records of the company, carried out in accordance with the generally 

accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across 

any instance of material fraud on or by the company, noticed or reported during the year, nor have we been informed of such case 

by the management. 

Mumbai, 

Dated: April 27, 2005 

Partha Ghosh 

Partner 



Chartered Accountants

Balance Sheet 

Rs. In (’000s) 

As at 31st March, Schedules 2005 2004 

I. SOURCES OF FUNDS 

1. Shareholders’ Funds 

a) Share Capital 1 437,286 218,546 

b) Reserves and Surplus 2 2,429,774 2,132,109 

2,867,060 2,350,655 

2. Loan Funds 

a) Secured Loans 3 1,293,032 1,029,429 

b) Unsecured Loans 4 3,080,580 119,314 

4,373,612 1,148,743 

II. 

3. Deferred Tax Liability 5 386,111 293,181 

Less: Deferred Tax Assets 6 25,287 23,627 

360,824 269,554 

TOTAL 7,601,496 3,768,952 

APPLICATION OF FUNDS 

1. Fixed Assets 7 

a) Gross Block 2,586,231 1,723,534 

b) Less : Depreciation 493,221 346,864 

c) Net Block 2,093,010 1,376,670 

d) Capital Work-in-progress 129,050 244,966 

2,222,060 1,621,636 

2. Investments 8 264,564 299,372 

3. Current Assets, Loans And Advances 

a) Inventories 9 1,110,593 821,601 

b) Sundry Debtors 10 1,821,047 1,304,813 

c) Cash and Bank Balances 11 1,092,793 67,694 

d) Loans and Advances 12 1,871,872 392,538 

5,896,305 2,586,646 

Less : Current Liabilities And Provisions 

a) Current Liabilities 13 779,013 705,349 

b) Provisions 14 2,420 39,772 

781,433 745,121 

Net Current Assets 5,114,872 1,841,525 

4. Miscellaneous Expenditure 15 – 6,419 

(to the extent not written off or adjusted) 

TOTAL 7,601,496 3,768,952 

Notes To The Financial Statements 22 

Schedules referred to above and notes attached there to form an 

integral part of the Balance Sheet. 

74 

This is the Balance Sheet referred to in our report of even date. 





Partha Ghosh M. J. Mendonza Glenn Saldanha Rajesh Desai 

Partner Vice President - Legal & Managing Director & CEO Director - Finance 

Membership Number - F 055913 

Company Secretary 

Mumbai, April 27, 2005

Profit and Loss Accounts 

Rs. In (’000s) 

For the year ended 31st March, Schedules 2005 2004 

INCOME 

Sales & Operating Income 16 5,364,310 3,806,606 

Other Income 17 54,856 29,803 

5,419,166 3,836,409 

EXPENDITURE 

Cost of Sales 18 2,617,580 1,793,191 

Selling and Operating Expenses 19 1,289,270 1,060,256 

Depreciation/Amortisation 7 149,836 108,891 

Interest 20 167,308 100,578 

Research and Development Expenses 21 325,819 248,073 

4,549,813 3,310,989 

Profit Before Tax 869,353 525,420 


– Current Year [includes wealth tax provision Rs. 275 (2004-Rs. 300)] 143,275 90,298 

– Deferred Tax 91,271 15,081 

Net Profit After Tax 634,807 420,041 

Balance Profit Brought Forward 496,938 235,883 

Net Profit Available For Appropriation 1,131,745 655,924 

Interim Dividend paid on Preference Shares 7,058 10,500 

Tax on Dividend paid on Preference Shares 922 1,345 

Interim Dividend on Equity Shares 83,035 77,020 

Tax on Interim Dividend paid on Equity Shares 11,646 9,868 

Transfer to Debenture Redemption Reserve – 253 

Transfer to General Reserve 65,000 60,000 

Balance Carried To Balance Sheet 964,084 496,938 

Earnings Per Share (Rs.) 22(2) 

Basic 5.29 3.57 

Diluted 4.81 3.55 

Face Value of Shares 2.00 2.00 


Schedules referred to above and notes attached there to form an 

integral part of the Profit and Loss Account. 

75 

This is the Profit and Loss Account referred to in our report of even date. 










Cash Flow Statement 

Rs. In (’000s) 

Year ended 31st March, 2005 2004 

A. Cash Flow from Operating Activities: 

Net Profit Before Tax 869,353 525,420 

Adjustments for: 

Depreciation 149,836 108,891 

Interest Expense 166,285 98,677 

Interest Expense - Finance Lease 1,023 1,901 

Interest Income (11,815) (2,333) 

Income from Investment - Dividends (1,220) (1,245) 

(Profit)/Loss on Fixed Assets Sold (394) 720 

Deferred Revenue Expenditure Written off 6,419 17,657 

Provision for Bad & Doubtful Debts 14,600 11,800 

Provision for Gratuity & Leave Encashment 145 500 

Unrealised Foreign Exchange (Gain) /Loss 19,504 (9,102) 

Employee Stock Option Plan (1,202) (4,593) 

Operating Profit Before Working Capital Changes 1,212,534 748,293 

Adjustments for Changes in Working Capital : 

– (Increase)/Decrease in Sundry Debtors (542,410) (71,640) 

– (Increase)/Decrease in Other Receivables (108,655) (125,189) 

– (Increase)/Decrease in Inventories (288,992) (377,230) 

– Increase/(Decrease) in Trade and Other Payables 42,960 126,466 

Cash Generated from Operations 315,437 300,700 

– Taxes (Paid) / Received (Net of Tax deducted at source) (214,326) (62,343) 

Net Cash from Operating Activities 101,111 238,357 

76 

B. Cash Flow from Investing Activities: 

Purchase of Fixed Assets (866,978) (522,806) 

Capital Work in Progress 115,916 (12,495) 

Proceeds from Sale of Fixed Assets 21,747 250,000 

Proceeds from Sale of Investments 980,257 – 

Purchase of Investments (969,153) (138,246) 

Share Application Money for Subsidiary Companies. (11,685) (275) 

Loan to Subsidiary Company (1,310,486) – 

Finance Lease Rent Payment Against Principal Amount (6,345) (6,974) 

Interest Received 6,825 3,613 

Dividend Received 1,220 1,245 

Net Cash used in Investing Activities (2,038,682) (425,938)

Cash Flow Statement 

Rs. In (’000s) 

Year ended 31st March, 2005 2004 

C. Cash Flow from Financing Activities: 

Proceeds from Fresh Issue of 

Share Capital (Including Securities Premium ) 102,380 508,185 

Issue Expenses of FCCB (94,553) – 

Proceeds / (Repayment ) of Long Term Borrowings 519,668 (340,079) 

Proceeds /(Repayment) of Short Term Borrowings 2,953,566 65,450 

Proceeds from Cash Credits (NET) (249,719) 182,918 

Finance Lease Rent (Interest Part only) (1,023) (1,901) 

Interest Paid (172,067) (115,121) 

Dividend Paid (83,446) (76,224) 

Dividend Tax Paid (12,136) (8,471) 

Net Cash used in Financing Activities 2,962,670 214,757 

Net Increase/(Decrease) in Cash & Cash Equivalents 1,025,099 27,176 

Cash and Cash Equivalents as at 31.03.2004 67,694 40,518 

Cash and Cash Equivalents as at 31.03.2005 1,092,793 67,694 

Cash and Cash Equivalents Comprise 

Cash 1,317 836 

Deposits with Scheduled Banks 46,151 46,411 

Deposits with Non-scheduled Banks 1,006,890 – 

Balance with Scheduled Banks 35,336 20,171 

Balance with Non-scheduled Banks 3,099 276 

1,092,793 67,694 

77 

Notes : 

1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in 

Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered 

Accountants of India. 

2. Cash and cash equivalents includes Rs. 2,996 which are not available for use by 

the Company. (Refer schedule 13 to the financial statements) 

3. Figures in bracket indicate Cash outgo. 

This is the Cash Flow Statement referred to in our report of even date 










Schedules forming part of the Balance Sheet 

Rs. In (’000s) 

As at 31st March, 2005 2004 

1 Share Capital Note 

Authorised 

150,000,000 (2004 – 125,000,000) Equity Shares of Rs 2 each 6 300,000 250,000 

4,000,000 (2004 – 4,000,000) Cumulative Redeemable Non-convertible 

Preference Shares of Rs 100 each 400,000 400,000 

Unclassified Capital 50,000 100,000 

Issued, Subscribed and Paid-up 


Less: Calls in Arrears 1 3 

237,241 118,488 

10.5%, Nil (2004 – 1,000,000) Redeemable Cumulative Non-convertible – 100,000 

Preference Shares of Rs. 100 each (Redeemed on April 1, 2004 at par) 

7%, 2,000,000 (2004 – Nil) Redeemable Cumulative Non-convertible 

Preference Shares of Rs. 100 each 200,000 – 

(Redeemable at the end of 36 months from 29th September,2004 

with put/call option at the end of 12th month and 24th 

month from the date of allotment by giving minimum of 30 days notice.] 

Equity Share Warrants 

225,000 (2004 – 290,000) Equity Share Warrants of Rs. 0.20 each 45 58 

Total 437,286 218,546 

Notes : 

1. The Company has allotted bonus of 59,310,570 Equity Shares of Rs.2 each at the Board Meeting held on March 18,2005. 

2. In terms of Employee Stock Option Plan approved by the members, 225,000 (2004 – 290,000) convertible warrants are outstanding with 

Glenmark Pharmaceuticals Limited Employees Welfare Trust. Each Warrant carries an option and is convertible to one Equity Share of Rs. 2. 

During the year, 65,000 (2004 – 200,000) Warrants were converted into Equity Shares at an exercise price of Rs. 14.34 per Share. 

3. During the year ended March 31, 2005 the Company has cancelled 10,000 options pursuant to Employee Stock Option Plan 1999 and 

152,050 options pursuant to Employee Stock Option Scheme 2003 and granted 5,16,500 (2004 - 700,725 ) options pursuant to Employee 

Stock Option Scheme 2003 at a market price as defined in SEBI (ESOS) guidlines.As at March 31, 2005, 10,65,175 Stock Options were 

outstanding under Employee Stock Option Scheme 2003.On exercise of the options so granted under Employee Stock Option Scheme 

2003 the paid up Equity Share Capital of the Company will increase by a like number of Shares. 

4. As of March 31, 2005, 10,000 (2004 – 85,000) Warrants Issued to the employees of the Company, which are outstanding under Employee 

Stock Option Plan 1999. The options have been granted at an exercise price of Rs 14.34 per Share in respect of 10,000 Shares. 

5. Of the above Equity Shares, 79,185,570 (2004 -19,875,000) Shares of Rs 2 each are allotted as fully paid-up Bonus Shares by Capitalisation of 

Reserves. 

6. At the Extraordinary General Meeting held on February 17,2005, the Company has altered its Authorised Share Capital by classifying out of 

the unclassified Share Capital of Rs.100,000, unclassified Share Capital of Rs. 50,000 into 25,000,000 Equity Shares of Rs. 2 each. 

78


Rs. In (’000s) 

As at 31st March, 2005 2004 

2 Reserves and Surplus 

Note 


Balance at the beginning of the year 991,968 500,518 

Add: Issue of Shares/Conversion of ESOP 2,279 491,502 


Less : Issue cost of FCCB 94,553 – 

Less: Issue of Bonus Shares 118,621 – 

Less : Redemption Premium of FCCB 22,365 – 

Closing Balance 758,689 991,968 

General Reserve 


Add : Transferred from Profit & Loss Account 65,000 60,000 

Add : Transferred from Debenture Redemption Reserve Account 1 29,917 – 


Debenture Redemption Reserve 


Addition during the year – 253 

Less: Transfer to General Reserve Account 1 (29,917) – 

Closing Balance – 29,917 

Capital Reserve 


Addition during the year – – 


Employee Stock Option 

Employee Stock Options outstanding 2,052 8,219 

Less : Conversion of Option 1,425 5,283 

Less : Cancellation of Option 257 884 

A 370 2,052 

Deferred Employee Stock Compensation 539 2,113 

Less : Amortisation of ESOP expense. 448 1,436 


B 59 539 

Net Employee Stock Option A - B 311 1,513 

Profit and Loss Account 

Balance 964,084 496,938 

Total 2,429,774 2,132,109 

79 

Note : 

1. Balance in Debenture Redemption Reserve Account transferred to General Reserve Account on Redemption of Non-convertible 

Debentures ‘NCD’ comprising of 10.05% NCD - A series aggregating Rs. 50 million and 10.35% NCD - B series aggregating 

Rs 90 million. 

3 Secured Loans 

Note 

Term Loan 1 1,000,000 350,000 

Non Convertible Debentures 2 – 140,000 

Loan from Banks for Working Capital 3 278,695 528,414 

Other Loans 4 14,337 11,015 

Total 1,293,032 1,029,429 

Notes : 

1. Term Loan is Secured by the Mortgage of Fixed Assets of the Company as a Security.


2. Non-convertible Debentures ‘NCD’ comprising of 10.05% NCD - A series aggregating Rs. 50 million and 10.35% NCD - B series aggregating 

Rs 90 million are redeemed during the year. 

3. Working Capital Loan from Banks are Secured by Hypothecation of Stocks of Raw Materials, Packing Materials, Finished Goods, work in 

progress, receivables etc. They are additionally secured by way of personal guarantees of some of the Directors and Equitable Mortgage on 

Fixed Assets at the manufacturing facility at Nasik and Research and Development Centre at Sinnar, Nasik. 

4. Other Loans are Secured by way of Hypothecation of Vehicles. 

Rs. In (’000s) 

As at 31st March, 2005 2004 

4 Unsecured Loans 

Note 

Short Term Loan – 105,117 

Foreign Currency Convertable Bonds 1 3,063,900 – 

Security Deposit 6,235 3,752 

Deferred Sales Tax Loan 2 10,445 10,445 

Total 3,080,580 119,314 

80 

Notes : 

1. During the year 

A) The Company had Issued 20,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each (Rs.8,73,200 at Issue) 

(i) Convertible at the option of the bondholder at any time on or after 28th March, 2005 but prior to the close of business 

on 2nd January, 2010 at a fixed exchange rate of Rs.43.66 per 1 USD and price of Rs.862.394 per share of par value of Rs. 2 

per share subject to adjustment in certain events i.e. Issue of Bonus Shares, Division, Consolidation, Reclassification of 

Shares etc. 

(ii) Redeemable in whole but not in part at the option of the Company on or after 15th February, 2008 if closing price of the Share 

for each of the 25 consecutive trading days immediately prior to the date upon which notice of such Redemption is given was at 

least 130% of the applicable Early Redemption Amount divided by the Conversion Ratio. 

(iii) Redeemable on maturity date on 16th February, 2010 at 133.74% of its Principal Amount if not Redeemed or Converted earlier. 

The Redemption Premium of 33.74% payable on maturity of the bond if there is no Conversion of the Bond to be debited to 

Securities Premium Account evenly over the period of 5 years from the date of Issue of Bonds. 

B) The Company had Issued 50,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each (Rs.21,83,000 at Issue) 

(i) 

(ii) 

(iii) 

Convertible at the option of the bond holder at any time on or after 15th November, 2006 but prior to the close of business on 

2nd January 2010 at a fixed exchange rate of Rs.43.66 per 1 USD and the price greater of 35% of the average of the order book 

volume–weighted-average-price of a Share on each Trading Day during the period commencing on 15th September and 

ending on 14th November, 2006 and the Floor Price (Rs.500) of par value of Rs.2 per share. 

Redeemable in whole but not in part at the option of the Company on or after 15th February, 2009 if closing price of the Share 

for each of the 25 consecutive trading days immediately prior to the date upon which notice of such redemption is given was at 

least 130% of the applicable Early Redemption Amount divided by the Conversion Ratio. 

Redeemable on maturity date on 16th February, 2010 at 134.07% of its Principal Amount if not redeemed or converted earlier. 

The Redemption Premium of 34.07% payable on maturity of the bond if there is no conversion of the bond to be debited to 

Securities Premium Account evenly over the period of 5 years from the date of Issue of Bonds. 

2. The Company has availed of an interest free Sales Tax Deferral Loan under Part I of the 1983 and 1988 Package Schemes of the Government 

of Maharashtra, repayable after twelve years in six half-yearly installments. 

5 Deferred Tax Liability [Refer Note (1)(ix) of Schedule 22] 

Liabilities 


Others – 1,890 

Total 386,111 293,181


Rs. In (’000s) 

As at 31st March, 2005 2004 

6 DEFERRED TAX ASSET [Refer Note (1)(ix) of Schedule 22] 

Assets 

Provision for Bad Debts and Doubtful Advances 23,457 23,102 

Others 1,830 525 

Total 25,287 23,627 

7 FIXED ASSETS [Refer note (1)(ii) and (6) of Schedule 22] 

GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK 

As on Additions Sales/ As on As on For the Sales/ As on As on As on 

1st Apr, during Disposals 31st Mar, 1st Apr, year Disposals 31st Mar, 31st Mar, 31st Mar, 

2004 the year during 2005 2004 of Assets 2005 2005 2004 

the year 

Tangible assets 

Freehold Land 5,710 – – 5,710 – – – – 5,710 5,710 

Leasehold Land 57,039 28,861 – 85,900 1,280 730 – 2,010 83,890 55,759 

Factory Buildings 159,287 186,904 - 346,191 22,706 7,907 – 30,613 315,578 136,581 

Other Buildings & 

Premises 267,410 26,871 975 293,306 16,045 4,513 175 20,383 272,923 251,365 

Plant and Machinery 187,119 201,703 2,232 386,590 21,242 16,652 200 37,694 348,896 165,877 

Furniture and Fixtures 128,942 59,978 – 188,920 35,332 20,248 – 55,580 133,340 93,610 

Equipments 518,880 343,059 1,273 860,666 105,337 57,067 158 162,246 698,420 413,543 

Vehicles 32,024 16,843 4,434 44,433 13,322 5,875 2,946 16,251 28,182 18,702 

Intangible assets 

– Computer Software 17,054 7,392 – 24,446 3,241 1,837 – 5,078 19,368 13,813 

– Brands 350,069 – – 350,069 128,359 35,007 – 163,366 186,703 221,710 

Total 1,723,534 871,611 8,914 2,586,231 346,864 149,836 3,479 493,221 2,093,010 1,376,670 

Previous Year 1,246,518 500,668 23,652 1,723,534 243,340 108,891 5,367 346,864 1,376,670 1,003,178 

81 

Capital Work-in-process including Capital Advances. 129,050 244,966 

Notes : 

1. Equipment and Vehicles include Assets aggregating Rs.19,559 (2004 – Rs.19,308) [net book value as at March 31, 2005 – Rs. 12,152 (2004 – Rs.14,338)] and 

Rs. 4,098 (2004 – Rs. 5,536) [net book value as at March 31, 2005 – Rs.2,087 (2004 – Rs. 3,708)], respectively, which have been acquired on finance lease. 

2. Additions to Assets include Rs. 12,423 (2004 – Rs.4,488) being borrowing costs. 

3. Estimated amount of contracts remaining to be executed on Capital Account, net of Advances, not provided for as at March 31, 2005 aggregate Rs.170,526 

(2004 – Rs.59,039) 

4. Capital Work in Progress includes : 

2005 2004 

At Ankleshwar Plant – 68,157 

At Mohol Plant 4,040 – 

At Baddi Plant 2,212 – 

At Goa Plant 11,768 57,145 

Capital Advances 104,791 109,854 

Other Work-in-processes 6,239 9,810


Rs. In (’000s) 

As at 31st March, 2005 2004 

8 INVESTMENTS [Refer Note (1)(iv) of Schedule 22] 

82 

Long Term Investments 

Quoted - Traded 

Equity Shares 

9,000 (2004 – 9,000) Bank of India of Rs.10 each [Market Value Rs. 931 (2004 – Rs. 530)] 405 405 

1,718 (2004 – 1,718) IDBI Bank Limited of Rs. 10 each [Market Value Rs.109 (2004 – Rs. 85)] 34 34 

439 439 

Unquoted - non trade 

National Savings Certificate -Sixth Issue 12 48 

1 (2004 – 1) Time Share of Dalmia Resorts Limited 20 20 

1 (2004 – 1) Equity Share of Esquados 340,000 of Glenmark 

Pharmaceutica Limitada, Lisbon (Portugal) 48 48 

1,93,665 (2004 - 193665) Shares of Bharuch Eco-Aqua 

Infrastructure Limited of Rs. 10each, fully paid up. 1,937 1,937 

100,000 12% Cumulative Preference Shares of Rs 100 each fully paid up of 

Cheryl Laboratories (P) Limited 10,000 10,000 

1,350,000 7% Cumulative Preference Shares of Rs 100 each fully paid up of 

Marksans Pharma Ltd 135,000 135,000 

Investments in Subsidiary Companies 

a) 100,020 (2004 — 100,020) Equity Shares of Rs 10 each fully paid up of 

Glenmark Exports Limited 1,000 1,000 

b) 100,000 (2004 — 100,000) Equity Shares of Rs 10 each fully paid up of 

GM Pharma Limited 1,000 1,000 

c) Investment in Equity and Chartered of Glenmark Impex LLC, 12,812 12,812 

Russia [Roubles 8,235,958 (2004 - 8,235,958)] 

d) Glenmark Pharmaceuticals Inc.USA {Refer Note} – 110,492 

[NIL Shares (2004 - 2400000 Shares of USD 1 each)] 

e) Glenmark Farmaceutica Ltda, Brazil { Refer Note} [Reals NIL (2004 - Reals 1118857)] – 17,526 

f) Glenmark Philippines Inc., Philippines 9,050 9,050 

[56,000 Shares of Pesos 200 each (2004 - Share Capital -Pesos 11200000)] 

g) Glenmark Pharmaceuticals S.A.Switzerland 58,525 – 

[100,000 Shares of CHF 1 each fully paid up, 2,900,000 Shares of 

CHF 0.511 partly paid up] 

h) Glenmark Pharmaceuticals (U K) Ltd 32,640 – 

[389,000 Shares of Pound 1 each] 

i) Glenmark Pharmaceuticals Nigeria Ltd 1,581 – 

[4,605,096 Shares of Naira 1 each.] 

j) Glenmark Pharmaceuticals (Malaysia ) SDN.BHD * – – 

[2 Shares of RM 1 each.] 

k) Glenmark Organics Ltd 500 – 

[50,000 Shares of Rs.10 each] 

l ) Glenmark Dominican SA [50 Shares of RD 1000 each] – – 

m) Glenmark Chemicals Inc. USA [1000 Shares of USD 1 each] – – 

264,125 298,933 

Total 264,564 299,372 

*denotes amount less than Rs. 1 (‘000) 

Note During the year ended March 31, 2005 the Company had sold its entire shareholding in Glenmark Pharmaceuticals Inc., USA and 

Glenmark Farmaceutica Ltda, Brazil to its wholly owned subsidiary Glenmark Pharmaceuticals S.A. at the original cost in Indian 

rupees based on the valuation carried out by the independent valuers.


Rs. In (’000s) 

As at 31st March, 2005 2004 

9 Inventories [Refer Note (1)(v) of Schedule 22] 

(As certified by the Management) 

Raw Materials 327,752 280,413 

Packing Material 32,610 29,685 

Work-in-process 267,667 223,462 

Stores and Spares 3,670 2,574 

Finished Goods 478,894 285,467 

Total 1,110,593 821,601 

10 Sundry Debtors 

Outstanding for more than six months 

Secured, considered good – – 

Unsecured, considered good 328,033 147,936 

Unsecured, considered doubtful 53,598 38,998 

381,631 186,934 

Less: Provision for doubtful debts 53,598 38,998 

328,033 147,936 

Other debts – 


Unsecured, considered good 1,493,014 1,156,877 

1,493,014 1,156,877 

Total 1,821,047 1,304,813 

Debts due from Subsidiary Companies, 

Glenmark Exports Ltd. Rs. 393,435 (2004 – Rs. 218,617), 

Glenmark Pharmaceuticals Inc., USA Rs. 637 (2004 - Rs.Nil), 

Glenmark Pharmaceuticals S.A. Rs. 3,877 (2004 - Nil), 

Glenmark Pharmaceuticals Inc., Philippines Rs.23,691(2004 – Nil). 

83 

11 Cash and Bank Balances 

Cash in hand 1,317 836 

Balances with Scheduled Banks 

– Current Accounts 26,755 17,967 

– Margin Money Account 41,646 42,092 

– EEFC Account 8,581 2,203 

– Deposit Accounts 4,505 4,319 

Balances with Non Scheduled Banks 

– Current Accounts 3,099 276 

– Deposit Accounts 1,006,890 – 

Total 1,092,793 67,694 

The balances in the margin money accounts are given as security against guarantees issued by banks on behalf of the 

Company.


Rs. In (’000s) 

As at 31st March, 2005 2004 

12 Loans and Advances (unsecured, considered good) 

Advances to Subsidiaries 

Glenmark Pharmaceuticals Inc., U.S.A. [Maximum during the year 31,653 – 

Rs.1,868 ( 2004 – Rs. 7,944)] 

Glenmark Pharmaceuticals (UK) Ltd. [Maximum during the year 2,104 – 

Rs. 2,104 (2004 – Rs. NIL)] 

Glenmark Pharmaceuticals S A, Switzerland. [Maximum during the year 1,324,053 – 

Rs. 1,339,219 (2004 – Rs. NIL)] 

Glenmark Exports Limited [Maximum during the year Rs. 24,619 (2004 – Rs. 13,673)] 24,619 13,673 

Glenmark Farmaceutica Ltda, Brazil [Maximum during the year 1,139 1,139 

Rs. 11,364 ( 2004 – Rs.1,139)] 

Glenmark Pharmaceuticals Nigeria Ltd., Lagos. [Maximum during . 1,271 – 

the year Rs. 1,271 (2004 – Rs. NIL)] 

Glenmark Philippines Inc.Manilla [ Maximum during the year Rs. 48 (2004 – Rs. NIL)] 48 – 

GM Pharma Ltd [ Maximum during the year Rs. 1,137 (2004 – Rs. NIL)] 1,137 – 

Share Application money - pending allotment 

– Glenmark Philippines Inc., Philippines 11,584 275 

[Pesos 14,324,800 (2004 - Pesos 340,260) ] 

– Glenmark Pharmaceuticals (Malaysia) SDN.BHD [RM 31,803] 377 – 

Advance to Vendors 147,070 130,275 

Advances recoverable in cash or kind or for value to be received 181,331 167,666 

Advance tax (net of provision) [Refer Note (1) (ix) of Schedule 22] 34,022 – 

Balance with Excise Authorities 59,669 19,620 

Deposits 51,795 59,890 

Total 1,871,872 392,538 

13 Current Liabilities 

Acceptances 70,416 92,842 

Sundry creditors - Small scale industrial undertakings [Refer note (5) of Schedule 22] 16,527 20,867 

- Others 469,290 350,891 

Investor Education and Protection Fund shall be credited by 

– Unclaimed Dividend 2,996 2,364 

[There are no amounts due and outstanding to be credited to Investor Education 

and Protection Fund.] 

Advances from Customers 1,899 3,049 

Payable to Subsidiaries 

– Glenmark Pharmaceuticals Inc., U.S.A. – 199 

Other Liabilities 98,379 138,662 

Interest accrued but not due 24,825 8,242 


Tax on Interim Dividend 11,646 9,868 

Tax on Preference Dividend – 1,345 

Total 779,013 705,349 

84 

14 Provisions 

Wealth Tax 275 300 

Income-Tax (Net of Advance Tax) [ Refer Note (1) (ix) of Schedule 22] – 37,472 

Provision for Gratuity and Leave encashment 2,145 2,000 

Total 2,420 39,772 

15 Miscellaneous Expenditure [Refer Note (1) (xi) of Schedule 22] 


Implementation expenses of ERP system – 1,147 

Product launch, investigation and registration expenses – 5,272 

Total – 6,419

Schedules to the Profit & Loss Account 

Rs. In (’000s) 

For the year ended 31st March, 2005 2004 

16 Sales and Operating Income [refer Note (1) (vii) of Schedule 22] 

Sale of goods and I P assets* 5,354,417 3,796,569 

Income from services 9,893 10,037 

Total 5,364,310 3,806,606 

* includes sales tax and excise duty aggregating Rs 288,020 (2004 — Rs 255,771) and 

Rs 434,423 (2004 — Rs 340,561) respectively. 

17 Other Income 

Lease Rent [tax deducted at source Rs.403 (2004 — Rs. 403)] 1,920 1,920 

Interest Income [tax deducted at source Rs.468 (2004 — Rs. 400)] 11,815 2,333 

Dividend received 1,220 1,245 

Export Incentive 17,019 7,613 

Profit on sale of fixed assets 394 – 

Miscellaneous income 22,488 16,692 

Total 54,856 29,803 

85 

18 Cost of Sales 

Salary, wages and allowances 83,580 38,320 

Labour charges 99,024 82,227 

Consumption of raw & packing materials 1,447,949 966,088 

Purchase of Trading goods 322,761 286,013 

Excise duty paid 426,865 308,398 

Sales tax 288,020 255,771 

Power, fuel and water charges 74,059 31,365 

Consumable stores 45,076 24,583 

Repairs and maintenance - plant and machinery 50,120 17,066 

Rent, rates and taxes 759 1,578 

Other manufacturing expenses 16,999 540 

(Increase)/decrease in inventory (237,632) (218,758) 

Total 2,617,580 1,793,191

Schedules to the Profit & Loss Account 

Rs. In (’000s) 

For the year ended 31st March, 2005 2004 

19 Selling and Operating Expenses 

Salary and allowances 309,963 256,391 

Staff welfare 12,894 7,801 

Directors’ salaries and allowances 50,201 44,762 

Incentive and commission 38,274 40,978 

Sales promotion expenses 245,247 184,386 

Export Commission 17,710 7,935 

Commission on sales 8,027 4,154 

Travelling expenses 202,716 151,626 

Freight outward 97,621 71,847 

Telephone expenses 20,955 19,431 

Rates and taxes 17,166 14,040 

Provision for doubtful debts 14,600 11,800 

Insurance premium 13,357 9,173 

Electricity charges 9,552 7,258 

Rent 18,471 12,975 

Repairs & Maintenance 49,365 39,135 

Auditors’ remuneration - 

Audit fees 1,250 1,100 

Other matters 1,250 1,020 

Out of pocket expenses 32 30 

Loss on sale of assets – 720 

Other operating expenses 160,619 173,694 

Total 1,289,270 1,060,256 

20 Interest Expense 

On loans from banks 83,943 35,777 

Other interest 83,365 64,801 

Total 167,308 100,578 

21 Research and Development Expenses [refer Note (1) (viii)of Schedule 22] 

86 

Salary and other allowances 115,423 71,328 

Staff welfare expenses 8,103 4,633 

Directors’ Remuneration 1,242 2,517 

Consumable & Chemicals 85,637 80,560 


Repairs and maintenance 18,375 12,192 

Insurance premium 540 283 

Other expenses 77,805 63,783 

Total 325,819 248,073

Schedules forming part of the Financial Statements 

For the year ended 31st March, 2005 

22 Notes to the Financial Statements 

1) SIGNIFICANT ACCOUNTING POLICIES 

i) Basis of Accounting 

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting, in conformity with 

accounting principles generally accepted in India. 

ii) 

iii) 

iv) 

Fixed assets and depreciation 

Fixed assets are stated at cost less accumulated depreciation. The Company capitalises all costs relating to the acquisition and 

installation of fixed assets. Expenditure of revenue nature, incurred in setting up of new projects, is capitalised as an indir ect cost 

towards construction of the fixed assets. Exchange differences relating to the acquisition of fixed assets are adjusted in the cost of the 

assets. 

Depreciation is provided using the straight line method, pro-rata to the period of use of assets, based on the useful lives of fixed assets 

as estimated by management, or at the rates specified in Schedule XIV of the Companies Act, 1956, whichever is higher. 

Fixed assets having aggregate cost of Rs 5,000 or less are depreciated fully in the year of acquisition. 

The company has estimated the useful life of its assets as follows: 

Category 

Estimated useful life 

(in years) 

Plant and machinery 8 - 20 

Vehicles 5 - 6 

Equipments and air conditioners 4 - 20 

Furniture and fixtures 10 

Brands 10 

Leasehold land is amortised over the period of lease. 

Foreign currency transactions 

Foreign currency transactions during the year are recorded at the rates of exchange prevailing on the date of the transaction. 

Foreign currency assets and liabilities are translated into rupees at the exchange rates prevailing on the date of the balance sheet. 

All exchange differences are dealt with in the statement of profit and loss, except those relating to the acquisition of fixed assets, 

which are adjusted in the cost of the respective fixed assets. 

Investments 

Long term investments are stated at cost. Provision, where necessary, is made to recognize a decline, other than temporary, in the 

value of the investments. 

87 

v) Inventories 

Inventories of raw materials, packing materials, work-in-process and finished goods are valued at cost or net realisable value, 

whichever is lower. Cost of raw materials and packing materials is ascertained on a first-in-first out basis. Cost of work-in- process and 

finished goods includes the cost of materials consumed, labour and manufacturing overheads. Excise and customs duty accrued on 

production or import of goods, as applicable, is included in the valuation of inventories. 

vi) 

Employee Benefits 

Retirement benefits to employees comprise payments towards gratuity, superannuation and provident fund under the schemes of 

the Company and encashment of leave. Annual contributions to the superannuation and provident funds are charged to the 

statement of profit and loss. 

The employee leave encashment and gratuity schemes are administered through the Life Insurance Corporation of India. Annual 

contributions as determined by the LIC are charged to the statement of profit and loss. 

In respect of stock options granted to employees under the Company’s Employee Stock Option Plan (‘ESOP’), the excess of the market 

price of the share at the date of grant of the option over its exercise price is treated as a form of employee compensation in the 

financial statements of the company. This amount is amortised on a straight-line basis over the vesting period. The unamortised 

portion is carried forward as deferred employee compensation.



22 Notes to the Financial Statements (Contd.) 

vii) Revenue recognition 

The company recognizes revenue on dispatch of goods to customers. Revenues from services are recognized on completion of such 

services. Revenue from IP asset/Marketing rights is recognized on transfer of ownership/right to use in accordance with the terms of 

relevant agreements. Revenue from contract research being in the nature of product development activities is recognized as per 

the terms of the agreement. Revenues are recorded at invoice value, inclusive of excise duty and sales-tax, but net of returns and 

trade discounts. 

viii) Research and development 

Capital expenditure on research and development (R&D) is capitalised as fixed assets.Development cost relating to the new and 

improved product and/or process development is recognised as an intangible asset to the extent that it is expected that such asset 

will generate future economical benefits. Other research and development costs is expensed as incurred. 

ix) 

Income-tax 

Provision for current income-taxes is made on the assessable income at the tax rate applicable to the relevant assessment year. 

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial 

statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities because of 

a change in tax rates is recognised in statement of profit and loss using the tax rates and tax laws that have been enacted or substantively 

enacted by the balance sheet date. 

Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future 

taxable income will be available against which such deferred tax assets can be realised. 

Prior / Earlier year’s income tax is charged to the Profit and Loss account on payment and the same is disclosed separately. 

x) Leases 

Finance leases 

Assets acquired under finance lease are recognised as assets with corresponding liabilities in the balance sheet at the 

inception of the lease at amounts equal to the fair value of the leased asset or, if lower, at the present value of the minimum 

lease payments. These leased assets are depreciated in line with the Company’s policy on depreciation of fixed assets. The 

interest is allocated to periods during the lease term so as to produce a constant periodic rate of interest on the remaining 

balance of the liability for each period. 

Operating leases 

Lease payments for operating leases are recognised as expense on a straight-line basis over the lease term. 

Lease income from operating leases is recognised as income on a straight-line basis over the lease term. Initial direct costs are 

recognised immediately as an expense. 

88 

xi) 

Miscellaneous expenditure 

Product launch expenditure 

Earlier years’ expenditure on launch of new products and their sales promotion is being amortised over a period of three years. 

Implementation expenses of Enterprise Resource Planning system. 

Earlier year’s expenditure incurred on payments for infrastructure facilities and expenditure incurred on user license fees for an 

Enterprise Resource Planning system is being amortised over a period of thirty-six months. 

xii) Borrowing costs 

Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalised as a part of the cost of 

the asset.Other borrowing costs are recognised as an expense in the year in which they are incurred. 

xiii) Impairment of Assets 

The Company assesses at each balancesheet date whether there is any indication that an asset may be impaired.If any such indication 

exist , the Company estimates the recoverable amount of the asset . If such recoverable amount of the asset or the recoverable 

amount of the cash generating unit to which the asset belongs is less than its carring amount ,the carrying amount is reduced to its 

recoverable amount.The reduction is treated as an impairment loss and is recognised in the profit and loss account.If at the




balancesheet date there is an indication that if a previously assessed impairment loss no longer exist, the recoverable amount is 

reassessed and the asset is reflected at the recoverable amount. 

xiv) Provisions and Contingent Liabilities 

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an 

outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent 

liability is made when there is a possible obligation or a present obligation that may, but probably will not , require an 

outflow of resources.Where there is a possible obligation or a present obligation that the likelihood of outflow of resources 

is remote, no provision or disclosure is made. 

2) EARNINGS PER SHARE 

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders (net profit for the year 

less dividends on preference shares) by the weighted average number of equity shares outstanding during the year. 

For the purpose of calculating diluted earnings per share, the net profit attributable to equity shareholders and the weighted 

average number of shares outstanding are adjusted for the effects of all dilutive potential equity shares from the exercise of 

options on unissued share capital. The number of equity shares is the aggregate of the weighted average number of equity shares 

and the weighted average number of equity shares, which would be issued on the conversion of all the dilutive potential equity 

shares into equity shares. Options on unissued equity share capital are deemed to have been converted into equity shares on the 

date when the options are exercised. 

The calculations of earnings per share (basic and diluted) are based on the earnings and number of shares as computed below. 

Rs. In (’000s) 

Reconciliation of earnings 31st March, 31st March, 

2005 2004 

Profit after tax for the financial year 634,807 420,041 

Less: 

Preference dividends 7,058 10,500 

Dividend tax on preference shares 922 1,345 

Net profit attributable to equity shareholders for calculation of Basic EPS 626,827 408,196 

Reconciliation of number of shares 

Shares 

Shares 

Weighted average number of shares: 

For basic earnings per share 118,581 114,357 

Add: 

Deemed exercise of options on unissued equity share capital 1,062 548 

Conversion of FCC Bonds 10,757 – 

For diluted earnings per share 130,400 114,905 

Earnings per share (nominal value Rs. 2 each) Rs. Rs. 

Basic 5.29 3.57 

Diluted 4.81 3.55 

EPS for previous year have been recomputed considering Bonus issue. 

89 

3) SEGMENT INFORMATION 

Business segments 

The Company is primarily engaged in a single segment business of manufacturing and marketing of pharmaceuticals formulations and 

active ingredients and is managed as one entity, for its various activities and is governed by a similar set of risks and returns. 

Geographical segments 

The operations of the Company are largely confined to India, with exports contributing to 30.26% of its annual sales. Hence, in the view of 

the management, the Indian and export markets represent geographical segments.




Sales by market – The following is the distribution of the Company’s sale by geographical market: 

2005 2004 

Geographical segment Rs. In ‘000s Rs. In ‘000s 

India 3,741,223 3,152,961 

Other than India* 1,623,087 653,645 

Total 5,364,310 3,806,606 

* includes deemed exports aggregating Rs 292,359 (2004 – Rs. 152,642) 

Assets and additions to fixed assets by geographical area – The following table shows the carrying amount of segment assets and additions 

to fixed assets by geographical area in which the assets are located: 

India Others* India Others* 

2005 2005 2004 2004 

Rs. In ‘000s Rs. In ‘000s Rs. In ‘000s Rs. In ‘000s 

Carrying amount of segment assets 6,391,149 1,833,930 3,773,369 459,143 

Additions to tangible assets 871,611 – 500,669 – 

* Others represent receivables from debtors located outside India including those related to deemed exports and cash and bank balances 

outside india. 

90 

4) RELATED PARTY DISCLOSURES 

a) Parties where control exists 

Wholly owned subsidiary companies 

Glenmark Dominicana S.A. 

Glenmark Impex LLC , Russia 

Glenmark Philippines Inc., Philippines 

Laboratorios Klinger Do Brazil Ltda 

Glenmark Farmaceutica Ltda, Brazil 

Glenmark Organics Ltd. 

Glenmark Exports Ltd. 

GM Pharma Ltd 

Glenmark Pharmaceuticals Inc,USA. 

Glenmark Pharmaceuticals (U.K.) Ltd , U.K. 

Glenmark Pharmaceuticals Nigeria Ltd. 

Glenmark Pharmaceuticals SDN.BHD. 

Glenmark Pharmaceuticals S.A. 

Glenmark Chemicals Inc. 

b) Related party relationships where transactions have taken place during the year 

Subsidiary Companies 

Glenmark Exports Limited 

Glenmark Pharmaceuticals Inc., USA 

Glenmark Farmaceutica Ltda, Brazil 

Glenmark Philippines Inc., Philippines 

Glenmark Pharmaceuticals (U.K.) Ltd , U.K. 

Glenmark Pharmaceuticals Nigeria Ltd. 

Glenmark Pharmaceuticals S.A. 

Glenmark Pharmaceuticals SDN.BHD. 

Glenmark Organics Ltd. 

GM Pharma Ltd




c) Key management personnel (includes directors of the Company) 

Mr. Gracias Saldanha 

Mrs. B.E. Saldanha 

Mr. Glenn Saldanha 

Mrs. Cheryl Pinto 

Mr. R.V. Desai 

Mr. A.S. Mohanty 

d) Transactions with related parties during the year Rs. In (‘000s) 

31st March, 

31st March, 

2005 2004 

Subsidiary company 

Sale of finished products 694,174 150,750 


Glenmark Pharmaceuticals Inc., USA 1,014 1,741 

Glenmark Pharmaceuticals S.A. 370,987 – 

Glenmark Pharmaceuticals Inc., Philippines 29,814 – 

Sale of Investment 1,004,522 – 

Glenmark Pharmaceuticals S.A. 1,004,522 

Advance received 17,480 – 

Glenmark Pharmaceuticals S.A. 17,480 

Advances given 41,042 2,223 

Glenmark Pharmaceuticals Inc., USA 476 1,084 

Glenmark Farmaceutica Ltda, Brazil – 1,139 

Glenmark Philippines Inc., Philippines 48 – 


Glenmark Pharmaceuticals (U.K.) Ltd , U.K. 2,104 – 

Glenmark Pharmaceuticals Nigeria Ltd. 1,271 – 

GM Pharma Ltd 1,137 – 

Glenmark Exports Limited 24,619 – 

Loan given to 1,320,712 – 

Glenmark Farmaceutica Ltda, Brazil 10,226 

Glenmark Pharmaceuticals S.A. 1,310,486 

Loan repaid by 9,628 – 

Glenmark Pharmaceuticals S.A. 9,628 

Product Development Expenses incurred on behalf of 204,985 – 

Glenmark Pharmaceuticals Inc., USA 204,985 

Purchase of finished goods from Glenmark 

Pharmaceuticals Inc., USA – 3,025 

Purchase of service from Glenmark Pharmaceuticals (U.K.) 

Ltd 266 – 

Reimbursement of expenses to Glenmark Exports Limited 55,037 26,740 

91




d) Transactions with related parties during the year (Contd.) 

31st March, 

31st March, 

2005 2004 

Investment in Share Capital 980,806 129,399 

Glenmark Pharmaceuticals Inc., USA 305,146 102,548 

Glenmark Farmaceutica Ltda, Brazil 570,762 17,526 

Glenmark Philippines Inc., Philippines 11,309 9,325 



Glenmark Pharmaceuticals SDN.BHD. 377 – 


Glenmark Organics Ltd. 465 – 

Key management personnel 

Remuneration paid to these personnel have been disclosed 

in note 10 of Schedule 22. 

Personal guarantees given by directors have been 

disclosed in Schedule 3. 

e) Related party balances 

Receivable from wholly owned subsidiary companies 1,807,664 233,429 


G.M. Pharma Ltd 1,137 – 

Glenmark Farmaceutica Ltda, Brazil 1,139 1,139 

Glenmark Pharmaceuticals Inc., USA 32,290 – 

Glenmark Philippines Inc., Philippines 23,738 – 

Glenmark Pharmaceuticals S.A. 1,327,931 – 



Payable to subsidiary company 

Glenmark Pharmaceuticals Inc., USA – 199 

92 

5) OUTSTANDING DUES TO SMALL SCALE INDUSTRIAL UNDERTAKINGS 

The small scale industrial undertakings to whom amounts are outstanding for more than 30 days are: 

Rs. In (’000s) 

31st March, 

31st March, 

2005 2004 

Alcap Containers Pvt Ltd 273 456 

Blown Enterprise 452 76 

Corneilo Packaging 275 59 

Joy Enterprise 3 3 

K K Alu Foil 237 706 

K Laminates 185 249 

Manju Industrial Ancillaries 38 126 

Print Paks (India) 26 26 

Rajlaxmi Plastics 78 330 

Super Label Mfg Co. 15 14 

Varsha Plast 2 2 

Waxoils Pvt Ltd 351 126 

Speciality Caps 56 –




Rs. In (’000s) 

31st March, 31st March, 

2005 2004 

Aviditya Chem. Corpn. – 36 

Plascap Industries – 162 

Mahesh Industry 1,364 3,306 

Kraft-Pack Containers 89 94 

Autofits 863 13 

Crown Closures Pvt Ltd 756 186 

D M Printers 3 32 

Servewell Printers 1,087 1,086 

Pharma Plastics 254 254 

Desicca Chemicals – 1 

Renuka Industries – 73 

Standard Packprints Pvt Ltd 157 207 

Eskay Packaging – 107 

Mahalsa Chemicals 64 – 

Bina Packaging & Printers Pvt Ltd 3,680 413 

Supreme Alutainers p. ltd – 91 

Agarwal ISPAT Udyog 44 – 

Akshar Ent. – 4 

Glindia Chemicals 96 – 

Lifeline Drugs & Intermeduates Pvt. Ltd. 728 – 

Dayaram Chemicals – 128 

Plastic pigments p. ltd – 8 

Synthochem Pvt. Ltd. – 59 

11,176 8,433 

Amount outstanding for less than 30 days 5,351 12,434 

Total 16,527 20,867 

93 

6) LEASES 

a) The Company has entered into operating and finance lease agreements for the rental 

of property, vehicles,computers, equipment and other assets. Typically, lease 

agreements are for a period of three to five years. 

At March 31 2005, the Company had commitments under non-cancellable finance 

leases as follows: 

Minimum lease payments 

Due within one year 4,146 7,368 

Due later than one year and not later than five years – 4,146 

Total 4,146 11,514 

Present value of minimum lease payments 



Total 2,728 8,256 

b) The Company has leased out its manufacturing facility at Panoli, Gujarat and the same has been 

capitalised in the books of account in accordance with Accounting Standard 19 - “Leases” 

issued by The Institute of Chartered Accountants of India in this regard.



94 


Rs. In (’000s) 


2005 2004 

Depreciation has been provided based on the estimated useful life of the asset. 

(i) Details in respect of assets given on operating Lease 

Gross Block 

Leasehold Land 4,259 4,259 

Factory Buildings 22,065 22,065 

Plant and Machinery 5,838 5,838 

Equipments 3,764 3,764 

Furniture and Fixtures 165 165 

36,091 36,091 

Accumulated depreciation 

Leasehold Land 215 172 





7,291 5,916 


(ii) The lease income of Rs.1,920 (2004 — Rs. 1,920) has been accrued on the basis of the 

lease agreement executed with the lessees. This lease is cancellable by notice of 30 days 

on either side. 

c) The Company has taken godowns/residential & office premises at various locations in the 

country. 

i) The Company’s significant leasing arrangements are in respect of the above plant, 

godowns & premises (Including furniture and fittings therein, as applicable). The 

aggregate lease rentals payable are charged to Profit and Loss Account as Rent in 

Schedule 18 ,19 & 21. 

ii) The Leasing arrangements which are cancellable range between 11 months and 3 years. 

They are usually renewable by mutual consent on mutually agreeable terms. Under 

these arrangements, generally refundable interest free deposits have been given. An 

amount of Rs. 16,088 towards deposit and unadjusted advance rent is recoverable from 

the lessor. 

7) The Company has entered into an arrangement with it’s wholly owned subsidiary (WOS) for 

undertaking product development work and to provide complete information concerning the 

product formulation. As per the arrangement, the WOS shall pay fees for such services on an arm’s 

length basis on completion of formulation development and pivotal bio-studies and on submission 

of product dossier for the regulatory filings. However no fees have been recognized during 

the year, as the above-mentioned activities have not been completed till the year-end. 

8) The Finance Act,2001 has introduced, with effect from Assessment Year 2002-03 (effective April 

1,2001 ), detailed Transfer Pricing regulations for computing the taxable income and expenditure 

from ‘International transaction ‘ between ‘Associated enterprises’ on an ‘ arm’s length ‘ basis.These 

regulations ,inter alia , also require the maintenance of prescribed documents and information 

including furnishing a report from an Accountant on or before October 31, 2005. 

For the year ended March 31,2004,the Company had undertaken a transfer pricing study and 

obtained the prescribed certificate of the Accountant to comply with the said transfer pricing 

regulations which did not envisage any tax liability. 

For the tax year ended March 31, 2005 the Company had carried out a study to comply with the 

said transfer pricing regulations.




Rs. In (’000s) 


2005 2004 

9) CONTINGENT LIABILITIES NOT PROVIDED FOR 

Bank guarantees 11,649 9,981 

Corporate guarantee – 50,000 

Disputed taxes/duties 3,434 – 

Labour / Industrial disputes 1,141 1,120 

Open letters of credit 94,945 83,350 

Sundry debtors factored with recourse option 100,000 91,677 

Channel financing with recourse option 24,231 14,159 

Call money payable to Glenmark Pharmaceuticals S.A. (@ 0.4889 CHF per equity share ) 51,754 – 

10) COMPUTATION OF NET PROFITS IN ACCORDANCE WITH 

SECTION 349 AND SECTION 309(5) OF THE COMPANIES ACT, 1956 

Profit before taxation as per statement of profit and loss 869,353 525,420 

Add: Depreciation as per statement of profit and loss 149,836 108,891 

Provision for Doubtful Debts & Advances 14,600 11,800 

Loss on sale of assets as per statement of profit and loss – 848 

1,033,789 646,959 

Less: Depreciation calculated under section 350 of the 

Companies Act, 1956 149,836 108,891 

Profit on sale of assets as per statement of profit and loss 394 128 

Net profit in accordance with Section 349 883,559 537,940 

Add: Managerial remuneration paid/payable to directors 50,614 48,850 

Net profit in accordance with Section 309(3) of the 934,173 586,790 

Companies Act, 1956 

Maximum managerial remuneration allowed under Section 198 of the 

Companies Act, 1956, 11 per cent of the above 102,759 64,547 

Managerial remuneration paid/payable to directors 

Salaries,perquisites & Other benefits 21,421 19,609 

Commission 26,412 26,806 

Sitting Fees 280 201 

Contribution to PF & Superannuation Fund 2,501 2,234 

50,614 48,850 

95 

Name of Directors 2005 2004 

1. Mr. Gracias Saldanha 9,377 10,104 

2. Mrs. B. E. Saldanha 8,079 7,177 

3. Mr. Glenn Saldanha 20,572 14,560 

4. Mrs. Cheryl Pinto 5,325 7,411 

5. Other Directors 7,261 9,598




11) CAPACITY, PRODUCTION, SALES AND STOCKS 

(a) Capacities and actual production (includes samples) Rs. In (’000s) 

Class of goods Installed capacity Actual production 

UoM 2005 2004 2005 2004 

Injectibles Ltrs – – 113,700 75,646 

Liquid orals Ltrs 2,475,000 2,475,000 2,053,821 1,860,730 

Lotions and externals Ltrs 450,000 450,000 431,037 385,689 

Ointments and creams Kgs 780,000 780,000 429,602 408,965 

Solids and powders Kgs 105,000 105,000 122,715 198,151 

Tablets and capsules Nos 570,000,000 240,000,000 505,600,000 385,100,000 

Bulk drugs Kgs 300,000 60,000 47,815 18,832 

Notes: 

(i) The products of the Company are exempt from licencing procedures. 

(ii) Installed capacity, being a technical matter, has not been verified by the auditors. However, the management has certified the 

same. 

(iii) Actual production includes goods manufactured at third party manufacturing facilities on loan licence basis and at leased 

facilities. 

(iv) Installed capacity of Tablets and capsules has been increased due to production started at Goa plant. 

(b) Sales Rs. In (’000s) 

Product 2005 2004 

UoM Qty Value Qty Value 

Injectibles Ltrs 114,275 154,878 76,211 139,548 

Liquid orals Ltrs 2,383,306 731,468 2,298,267 676,726 



Solids and powders Kgs 107,523 46,715 186,404 68,423 

Tablets and capsules Nos 692,842,900 2,077,286 441,025,700 1,433,031 

Bulk drugs 27,023 719,847 295,681 

Cardiac diagnostic services 9,893 10,037 

Others 376,889 24,027 

Total 5,364,310 3,806,606 

1. Sales are net of sales returns. 

2. Sales quantities does not include free issues, samples and breakages. 

(c) Finished goods purchased (includes samples) Rs. In (’000s) 

96 

Product 2005 2004 

UoM Qty Value Qty Value 

Injectibles Ltrs 1,657 23,796 1,293 1,699 

Liquid orals Ltrs 404,692 58,491 445,181 80,331 



Tablets and capsules Nos 194,721,000 193,572 65,887,200 132,944 

Solids & Powders Kgs 300 108 - - 

Bulk Drugs Kgs 1,682 9,919 2,797 17,527 

Total 322,761 286,013




(d) Raw and packing materials consumed (quantities in kgs) Rs. In (’000s) 

Products 2005 2004 

Qty Value Qty Value 

Valdecoxib 1,760 35,505 2,698 60,191 

Etoricoxib 9,148 343,411 840 59,742 

Rosuvastatin Calcium 99 41,803 92 48,175 

Linezolid 1,229 32,251 702 21,852 

Linezolid purified IV grade – – 242 6,946 

Telmisartan 1,113 62,619 408 27,438 

Mupirocin 143 21,078 148 24,853 

Cefuroxime sodium sterile BP / USP 466 11,143 678 19,843 

Cefdinir 249 10,153 445 18,914 

Propylene Glycol I.P./ B.P. 264,356 21,118 264,335 17,337 

Tacrolimus 2,209 18,322 1,587 16,373 

Acarbose 578 22,058 355 15,356 

Glycerine Refined IP/BP 245,728 11,778 219,247 11,985 

Sugar - S/30 952,009 14,997 888,662 11,806 

Itraconazole Pellets 1,336 11,856 1,072 9,514 

Pregelatinised starch BP/USP 2,503 1,300 4,188 9,134 

Sorbitol Soln 70% IP 503,923 9,961 448,457 9,099 

Beclomethasone Dipropionate IP/BP 52,533 8,516 47 8,918 

Cefuroxime Axetil 100% Amorophous 787 13,083 431 8,652 

Esomeprazole Mag Trihydrate 916 9,843 838 8,558 

Ketoconazole IP/BP 1,452 7,043 1,214 8,432 

Cilastazol 412 7,736 378 8,033 

Nateglinide – – 279 7,774 

5-CHLRO-6-METHYL-3-(4-METHYL 

SULFONYL) 3,800 122,891 1,201 50,718 

METHYL 6-METHYLNICOTINATE 15,517 43,493 – – 

Tetra Hydro Furan(THF) 322,608 36,261 148,351 13,606 

Others 529,730 462,839 

Total 1,447,949 966,088 

97 

(e) Break-up of Materials and Consumable stores consumed Rs. In (’000s) 

2005 2004 

Value % Value % 

Materials 

Imported materials 360,987 24.93 282,466 29.24 

Indigenously procured 1,086,961 75.07 683,622 70.76 

Total 1,447,948 100.00 966,088 100.00 

Consumable stores 

Imported – – – – 

Indigenously procured 45,076 100.00 24,583 100.00 

Total 45,076 100.00 24,583 100.00




(f) Inventories of finished goods (includes samples) Rs. In (’000s) 

Opening Stock 

Closing Stock 

2005 2004 2005 2004 

Products UoM Qty Value Qty Value Qty Value Qty Value 

Injectibles Ltrs 20,004 19,330 16,597 29,066 23,679 23,151 20,004 19,330 

Liquid orals Ltrs 148,822 29,755 201,403 34,683 276,991 46,922 148,822 29,755 

Lotions and externals Ltrs 63,206 21,578 40,772 14,959 70,839 25,049 63,206 21,578 

Ointments and creams Kgs 53,169 41,851 39,019 26,088 58,478 50,761 53,169 41,851 

Solids and powders Kgs 15,680 2,874 5,876 1,228 34,062 4,777 15,680 2,874 

Tablets and capsules Nos 67,633,200 157,822 70,909,000 132,247 132,013,000 313,563 67,633,200 157,822 

Others 8,806 51 3,352 8,806 

Bulk Drugs 3,451 305 11,319 3,451 

Total 285,467 238,322 478,894 285,467 

12) VALUE OF IMPORTS ON CIF BASIS ( on payment basis ) 

Rs. In (’000s) 

31st March, 

31st March, 

2005 2004 

Capital Goods 89,646 76,821 

Raw Materials 347,359 219,869 

Total 437,005 296,690 

13) EARNINGS IN FOREIGN CURRENCY ( on accrual basis ) 

Export of goods 1,291,578 486,384 

Others 9,777 3,155 

Total 1,301,355 489,539 

14) EXPENDITURE IN FOREIGN CURRENCY ( on payment basis ) 


Professional & Consultancy charges 100,040 34,847 

Others 186,043 116,312 

Total 295,185 155,727 

98 

15) DIVIDEND REMITTANCE IN FOREIGN CURRENCY 

Number of Non-resident Shareholders 12 12 

Number of Equity Shares held by them 284,750 290,250 

Amount of dividend paid (Gross), TDS Rs Nil (2004 – Rs Nil) 370,175 377,325 

Year to which dividend relates 2003-04 2002-03 

16) PRIOR YEAR COMPARATIVES 

Prior year’s figures have been regrouped wherever necessary.

Balance Sheet Abstract & Company’s General Business Profile 

(Amount in Rs. ‘000s) 

(a) Registration Details 

Registration No. 1 9 9 8 2 State Code 1 1 

Balance Sheet Date 3 1 0 3 2 0 0 5 

Date Month Year 

(b) 

(c) 

(d) 

Capital raised during the year 

Public issue 

Rights issue 

N I L N I L 

Bonus issue 

Private Placement 

1 1 8 6 2 1 N I L 

Preferential offer of shares under Employee stock option scheme 

2 3 5 7 

Position of mobilisation and deployment of funds 

Total liabilities including shareholders funds 

Total assets 

8 4 0 8 2 1 6 8 4 0 8 2 1 6 

SOURCES OF FUNDS 

Paid-up capital 

Reserves and surplus 

4 3 7 2 8 6 2 4 2 9 7 7 4 

Secured loans 

Unsecured loans 

1 2 9 3 0 3 2 3 0 8 0 5 8 0 


Net fixed assets 

Investments 

2 2 2 2 0 6 0 2 6 4 5 6 4 

Net current assets 

Miscellaneous expenditure 

5 1 1 4 8 7 2 N I L 

Accumulated losses 

N I L 

Performance of the Company 

Turnover ( Total Income ) 

Total expenditure 

5 4 1 9 1 6 6 4 5 4 9 8 1 3 

Profit/(loss) before tax 

Profit/(loss) after tax 

8 6 9 3 5 3 6 3 4 8 0 7 

Basic Earnings per share in Rs. 

Diluted Earnings per share in Rs. 

5 . 2 9 4 . 8 1 

Dividend rate 

35% 

99 

Signatures to Schedules 1 to 22 










100 

SECTION 212 

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO COMPANY’S INTEREST IN SUBSIDIARY COMPANIES: 

No. Name of the Company Glenmark GM Glenmark Glenmark Glenmark Labora- Glenmark Glenmark Glenmark Glenmark Glenmark Glenmark Glenmark Glenmark 

Exports Pharma Organics Impex Farma- toris Pharma- Philip- Pharma- Chemicals Pharma- Dominican Pharma- Pharma- 

Ltd. Ltd. Ltd. L.L.C. ceutica Klinger Do ceuticals pines ceuticals, Inc.,USA ceuticals S.A. ceuticals ceuticals 

ltda. Brazil Ltda (U.K.)Ltd. Inc., Inc., USA (Nigeria) (Malaysia) S.A., 

Ltd. SDN BHD Switzerland 

1 The financial year of the 31-Mar-05 31-Mar-05 31-Mar-05 31-Dec-04 31-Dec-04 31-Dec-04 31-Mar-05 31-Mar-05 31-Dec-04 31-Dec-04 31-Dec-04 31-Dec-04 31-Dec-04 31-Dec-04 

Subsidiary Companies 

ended 

2 Date from which they 10-Sep-96 5-Oct-99 15-Sep-04 7-May-01 Not Not 10-Feb-04 28-Jan-04 Not 29-Mar-04 28-Apr-04 1-Jun-04 22-Jul-04 2-Jul-04 

became subsidiary Applicable. Applicable. Applicable. 

(Wholly (Wholly (Wholly 

owned owned owned 

subsidary subsidary subsidary 

of of of 

Glenmark Glenmark Glenmark 

Pharma- Farma- Pharmaceuticals 

ceutica ceuticals 

S.A., Itda. Brazil) S.A., 

Switzerland) Switzerland) 

3. a. Number of shares held by 1,00,020 1,00,000 50,000 1 share Not Not 389,000 56000 Not 1,000 4,605,096 50 2 shares 100,000 

Glenmark Pharmaceuticals Equity Equity shares Roubles Applicable Applicable shares shares Applicable shares shares shares of RM shares of 

Ltd. in the subsidiary Shares of Shares of Rs.10/- 8,235,958 (36,809,476 (26,362,000 of £ 1 of 200 (7,900,000 of US $ 1 of N 1.00 of RD 1/- each CHF 1 each 

companies at the end of Rs.10/- of Rs.10/- each. Equity Equity each. Pesos shares each. each 1,000 fully paid 

financial year of Subsidiary each fully each Shares Shares each of US$ 1 each. 2,90,000 

Companies paid up fully of BRL of BRL each) shares of 

paid up 1/- each held 1/- each held CHF 0.511 

by Glenmark by Glenmark partly paid 

Pharma- Farmaceauticals 

SA, ceutica Ltd., 

Switzerland) Brazil) 

3. b. Extent of interest of 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

holding Company at the 

end of the financial year 

of the subsidiary companies 

4 The net aggregate amount of 

the subsidiary companies’ 

Profit/ (Loss) so far as it 

concerns the members of the 

holding company: 


M. J. Mendonza Glenn Saldanha Rajesh Desai 

Mumbai, Vice President - Legal & Managing Director & CEO Director - Finance 

April 27, 2005 


4.a. Not dealt within the holding 

company’s accounts: 

4.a.1. For the financial year ended 

31st March, 2005 Nil (5,400) (45,019) (2,262,790) (2,273,517) 30,158,465 (24,290,790) (5,538,590) (16,711,458) Nil (2,436,840) Nil (389,130) 824,619,690 

4.a.2. For the previous financial years 

(excluding current year) of 

the Subsidiary Companies 

since they became the holding 

company’s subsidiaries 7,378,445 (7,420) Nil Nil Nil Nil Nil Nil (6,636,191) Nil Nil Nil Nil Nil 

4.b. Dealt within the holding 

company’s accounts: 

4.b.1. For the financial year ended 

31st March, 2005 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 

4.b.2. For the previous financial years 

of the subsidiary companies 

since they became the holding 

company’s subsidiaries Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Consolidated Auditors’ Report 

Auditors’ report to the Board of Directors of Glenmark Pharmaceuticals Limited on the Consolidated Financial Statements of 

GLENMARK PHARMACEUTICALS LIMITED AND ITS SUBSIDIARIES. 

1. We have audited (refer para 3) the attached consolidated Balance Sheet of Glenmark Pharmaceuticals Limited and its subsidiaries (the 

Group) as at March 31, 2005 and also the consolidated Profit and Loss Account and the consolidated Cash Flow Statement for the year 

ended on that date annexed thereto. These consolidated financial statements are the responsibility of the Glenmark Pharmaceuticals 

Limited’s management and have been prepared by the management on the basis of separate financial statements and other financial 

information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit. 

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and 

perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit 

includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 

assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial 

statement presentation. We believe that our audit provides a reasonable basis for our opinion. 

3. We did not audit the financial statements of subsidiaries, Glenmark Dominicana SA, Glenmark Impex LLC, Glenmark Philippines Inc, 

Laboratorios Klinger Do Brazil Ltda, Glenmark Farmaceutica Ltda, Glenmark Organics Ltd, Glenmark Exports Ltd, GM Pharma Ltd, Glenmark 

Pharmaceuticals Inc USA, Glenmark Pharmaceuticals (UK) Ltd, Glenmark Pharmaceuticals Nigeria Ltd, Glenmark Pharmaceuticals SDN.BHD, 

Glenmark Pharmaceuticals SA and Glenmark Chemicals Inc whose financial statements reflect the Group’s share of total assets of 

Rs. 26,714.38 lakhs as at March 31, 2005 and the Group’s share of total revenues of Rs.10,485.81 lakhs and net cash inflows amou nting to 

Rs. 1,747.35 lakhs for the year ended on that date as considered in the consolidated financial statements. These financial statements and 

other information of the subsidiaries have been audited by other auditors/ special auditors whose reports have been furnished to us, and 

our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on the report of other auditors. 

4. We report that the consolidated financial statements have been prepared by the Glenmark Pharmaceuticals Limited’s management in 

accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements issued by the Institute of Chartered 

Accountants of India. 

5. Based on our audit and on consideration of the reports of other auditors on separate financial statements and on the other 

financial information of the components, in our opinion and to the best of our information and according to the explanations 

given to us, the attached consolidated financial statements give a true and fair view in conformity with the accounting principles 

generally accepted in India: 

a) in the case of the consolidated Balance Sheet, of the state of affairs of Glenmark Pharmaceuticals Limited Group as at March 31, 

2005; 

101 

b) in the case of the consolidated Profit and Loss Account, of the profit of Glenmark Pharmaceuticals Limited Group for the year 

ended on that date; and 

c) in the case of the consolidated Cash Flow Statement, of the cash flows of Glenmark Pharmaceuticals Limited Group for the year 

ended on that date. 


Mumbai, 

Dated: July 29, 2005 

Partha Ghosh 

Partner 


Chartered Accountants

Consolidated Balance Sheet 

Rs. In (’000s) 

As at 31st March, Schedules 2005 2004 

I. SOURCES OF FUNDS 

1. Shareholders’ Funds 

a) Share Capital 1 437,286 218,546 

b) Reserves and Surplus 2 2,852,333 2,125,091 

3,289,619 2,343,637 

2. Minority Interest - Share Capital – 4,365 

3. Loan Funds 

a) Secured Loans 3 1,294,192 1,029,429 

b) Unsecured Loans 4 3,080,580 119,314 

4,374,772 1,148,743 

4. Deferred Tax Liability 5 386,111 293,181 

Less: Deferred Tax Assets 6 76,978 28,153 

309,133 265,028 

Total 7,973,524 3,761,773 

II. 


1. Fixed Assets 7 

a) Gross Block 3,890,385 1,838,830 

b) Less : Depreciation 518,175 349,176 

c) Net Block 3,372,210 1,489,654 

d) Capital Work-in-Progress 130,625 251,853 

3,502,835 1,741,507 

2. Investments 8 152,117 147,492 

3. Current Assets, Loans and Advances 

a) Inventories 9 1,194,215 821,601 

b) Sundry Debtors 10 2,375,584 1,304,813 

c) Cash and Bank Balances 11 1,272,755 81,255 

d) Loans and Advances 12 578,660 402,470 

5,421,214 2,610,139 

Less : Current Liabilities and Provisions 

a) Current Liabilities 13 1,119,783 727,726 

b) Provisions 14 2,420 39,702 

1,122,203 767,428 

Net Current Assets 4,299,011 1,842,711 

4. Miscellaneous Expenditure 15 19,561 30,063 


Total 7,973,524 3,761,773 


Schedules referred to above and notes attached there to form an integral part of the Balance Sheet. 

102 

This is the Balance Sheet referred to in our report of even date. 





Partha Ghosh M. J. Mendonza G. Saldanha Rajesh Desai 

Partner Vice President - Legal & Chairman Director - Finance 



Mumbai, July 29, 2005

Consolidated Profit And Loss Account 

Rs. In (’000s) 

For the year ended 31st March, Schedules 2005 2004 

INCOME 

Sales & Operating Income 16 6,120,532 3,806,606 

Other Income 17 52,285 34,662 

6,172,817 3,841,268 

EXPENDITURE 

Cost of Sales 18 2,714,675 1,793,191 

Selling and Operating Expenses 19 1,521,825 1,074,266 

Depreciation/Amortisation 7 164,232 110,930 

Interest 20 172,631 100,578 

Research and Development Expenses 21 326,512 248,073 

4,899,875 3,327,038 

Profit Before Tax 1,272,942 514,230 


– Current Year [includes wealth tax provision Rs. 275(2004-Rs. 300)] 156,542 90,334 

– Deferred tax 44,989 10,555 

Net Profit After Tax before Minority Interest 1,071,411 413,341 

Share of loss transfer to Minority – 265 

Net Profit After Tax & Minority Interest 1,071,411 413,606 

Balance Profit brought forward 497,882 243,262 

Share of loss acquired from Minority (Refer note 11 of Schedule 22) 265 – 

Net Profit Available for Appropriation 1,569,028 656,868 

Interim Dividend paid on Preference Shares 7,058 10,500 

Tax on Dividend paid on Preference Shares 922 1,345 


Tax on Interim Dividend paid on Equity Shares 11,646 9,868 

Transfer to Debenture Redemption Reserve – 253 

Transfer to General Reserve 65,000 60,000 

Balance Carried to Balance Sheet 1,401,367 497,882 

Earnings Per Share (Rs.) 22(4) 

Basic 8.97 3.51 

Diluted 8.16 3.50 

Face Value of Shares 2.00 2.00 

Notes to the Financial Statements 22 

Schedules referred to above and notes attached there to form an integral part of the Profit and Loss Account. 

103 

This is the Profit and Loss Account referred to in our report of even date. 










Consolidated Cash Flow Statement 

Rs. In (’000s) 

Year ended 31st March 2005 2004 

A. Cash flow from Operating Activities: 

Net Profit before Tax 1,272,942 514,230 

Adjustments for: 


Interest Expense 171,608 98,677 

Interest Expense - Finance Lease 1,023 1,901 

Interest Income (8,419) (2,422) 

Income from Investment - Dividends (1,220) (1,245) 

(Profit)/Loss on Fixed Assets sold (394) 720 

Deferred Revenue Expenditure 10,502 6,285 

Provision for Bad & Doubtful Debts 14,600 11,800 

Provision for Gratuity & Leave Encashment 145 500 

Unrealised Foreign Exchange (gain) /loss 14,118 (9,102) 

Employee Stock Option Plan (1,202) (4,593) 

Operating Profit before Working Capital changes 1,637,935 727,681 

Adjustments for changes in Working Capital : 

– (increase)/decrease in Sundry Debtors (1,096,948) (75,705) 

– (increase)/decrease in Other Receivables (171,181) (125,596) 

– (increase)/decrease in Inventories (372,614) (377,230) 

– increase/(decrease) in Trade and Other Payables 361,353 146,856 

Cash generated from Operations 358,545 296,006 

– Taxes (paid) / received (Net of Tax Deducted at Source) (214,474) (62,379) 

Net Cash from Operating Activities 144,071 233,627 

B. Cash flow from Investing Activities: 

Purchase of Fixed Assets (1,865,009) (637,192) 

Acquisition of Fixed Assets (183,027) – 

Capital Work in Progress 121,229 (19,382) 

Proceeds from Sale of Fixed Assets 22,489 250,000 

Proceeds from Sale of Investments 36 – 

Purchase of Investments (4,661) (1,178) 

Finance Lease Rent payment against Principal amount (6,345) (6,974) 

Interest Received 7,862 3,701 

Dividend Received 1,220 1,245 

Capital Reserve on acquisition of Glenmark Organics Ltd. 127 – 

Acquisition of Minority Interest (4,365) 4,365 

Net Cash used in Investing Activities (1,910,444) (405,415) 

104

Consolidated Cash Flow Statement 

Rs. In (’000s) 

Year ended 31st March 2005 2004 

C. Cash flow from Financing Activities: 

Proceeds from Fresh Issue of 

Share Capital (including Securities Premium ) 102,380 508,185 

Issue Expenses of FCCB (94,553) – 

Proceeds / (Repayment ) of Long Term Borrowings 520,828 (340,079) 

Receipt /(Repayment) of Short Term Borrowings 2,961,266 65,450 

Proceeds from Cash Credits (Net) (249,719) 182,918 

Finance Lease Rent (Interest Part only) (1,023) (1,901) 

Interest Paid (177,390) (115,121) 

Dividend Paid (83,446) (76,224) 

Dividend Tax Paid (12,136) (8,471) 

Net Cash used in Financing Activities 2,966,207 214,757 

Net Increase/(Decrease) in Cash & Cash Equivalents 1,199,834 42,969 

Cash and Cash Equivalents as at 31.03.2004 81,255 45,699 

Consolidation Adjustment (8,334) (7,413) 

Cash and Cash Equivalents as at 31.03.2005 1,272,755 81,255 

Cash and Cash Equivalents comprise 

Cash 1,537 897 

Deposits with Scheduled Banks 49,195 4,319 

Deposits with Non-Scheduled Banks 1,006,890 – 

Balance with Scheduled Banks 43,009 75,763 

Balance with Non-Scheduled Banks 172,124 276 

1,272,755 81,255 

Notes : 

1 The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting Standard - 3 on Cash Flow 

Statements issued by the Institute of Chartered Accountants of India. 

2 Cash and Cash Equivalents includes Rs. 2,996 which are not available for use by the Company. (Refer schedule 13 to the Financial 

Statements) 

3 Figures in bracket indicate Cash Outgo. 

105 

This is the Cash Flow Statement referred to in our report of even date 










Schedules forming part of the Consolidated Balance Sheet 

Rs. In (’000s) 

As at 31st March, 2005 2004 

1. Share Capital Note 

Authorised 


4,000,000 (2004 – 4,000,000) Cumulative Redeemable 

Non Convertible Preference Shares of Rs. 100 each 400,000 400,000 

Unclassified Capital 50,000 100,000 

Issued, Subscribed and Paid-up 

118,621,140 (2004 – 59,255,570) Equity Shares of Rs. 2 each 1 237,242 118,491 


237,241 118,488 

10.5%, Nil (2004 – 1,000,000) Redeemable Cumulative Non-Convertible 

Preference Shares of Rs. 100 each (Redeemed on April 1, 2004 at par) – 100,000 

7%, 2,000,000 (2004 — NIL) Redeemable Cumulative Non-Convertible Preference Shares 

of Rs. 100 each (Redeemable at the end of 36 months from 29th September, 2004 

with put/call option at the end of the 12th month and 24th month from 

the date of alottment by giving minimum of 30 days notice) 200,000 – 

Equity Share Warrants 

225,000 (2004 – 290,000) Equity Share Warrants of Rs. 0.20 each 45 58 

Total 437,286 218,546 

Notes : 

1. The Company has allotted Bonus of 59,310,570 Equity Shares of Rs. 2 each at the Board Meeting held on March 18,2005. 

2. In terms of Employee Stock Option Plan approved by the members,225,000 (2004 – 290,000) convertible warrants are outstanding 

with Glenmark Pharmaceuticals Limited Employees Welfare Trust. Each warrant carries an option and is convertible to one Equity 

Share of Rs 2. During the year, 65,000 (2004 – 200,000) warrants were converted into Equity Shares at an exercise price of Rs. 14.34 

per share. 

3. During the year ended March 31, 2005 the Company has cancelled 10,000 options pursuant to Employee Stock Option Plan 1999 and 

152,050 options pursuant to Employee Stock Option Scheme 2003 and granted 516,500 (2004 - 700,725 ) options pursuant to Employee 

Stock Option Scheme 2003 at a market price as defined in SEBI (ESOS) guidlines.As at March 31, 2005 1,065,175 stock options were outstanding 

under Employee Stock Option Scheme 2003.On exercise of the options so granted under Employee Stock Option Scheme 2003 the paid 

up Equity Share Capital of the Company will increase by a like number of Shares. 

4. As of March 31, 2005, 10,000 (2004 — 85,000) warrants issued to the Employees of the Company, which are outstanding under 

Employee Stock Option Plan 1999. The options have been granted at an exercise price of Rs. 14.34 per share in respect of 10,000 

shares. 

5. Of the above Equity Shares,79,185,570 (2004 -19,875,000) shares of Rs 2 each are allotted as fully paid-up Bonus Shares by capitalisation of 

reserves. 

6. At the Extraordinary General Meeting held on February 17,2005, the Company has altered its Authorised Share Capital by 

classifying out of the unclassified Share Capital of Rs.100,000,unclassified Share Capital of Rs.50,000 into 25,000,000 Equity 

Shares of Rs.2 each. 

106


Rs. In (’000s) 

As at 31st March, 2005 2004 

2. Reserves and Surplus Note 



Add: Issue of Shares/Conversion of ESOP 2,279 491,502 

Less: Calls in arrears 19 52 

Less : Issue cost & Redemption premium of FCCB 94,553 – 

Less: Issue of Bonus Shares 118,621 – 

Less : Redemption premium of FCCB 22,365 – 

Closing balance 758,689 991,968 

General reserve 


Add : Transferred from Profit & Loss account 65,000 60,000 

Add: Share of loss acquired from Minority (Refer note 11 of Schedule 22) 265 – 

Less: Loss pertains to Minority Interest – 265 

Add : Transferred from Debenture Redemption Reserve account 1 29,917 – 


Debenture Redemption Reserve 


Addition during the year – 253 

Less: Transfer to General Reserve account 1 (29,917) – 

Closing balance – 29,917 

Capital Reserve 


Addition during the year on acquisition of Glenmark Organics Ltd. 127 – 


Exchange Fluctuation Reserves (14,851) (7,697) 

Employee Stock option 

Employee Stock Options outstanding 2,052 8,219 

Less : Conversion of Option 1,425 5,283 


A 370 2,052 

Deferred Employee Stock Compensation 539 2,113 

Less : Amortisation of ESOP expense. 448 1,436 


B 59 539 

Net Employee Stock Option A-B 311 1,513 

107 

Profit and Loss Account Balance 1,401,367 497,882 

Total 2,852,333 2,125,091 

Note : 

1. Balance in Debenture Redemption Reserve account transferred to General Reserve account on Redemption of Non Convertible 

Debentures ‘NCD’ comprising of 10.05% NCD - A series aggregating Rs. 50 million and 10.35% NCD - B series aggregating Rs 90 

million .


Rs. In (’000s) 

As at 31st March, 2005 2004 

3. Secured Loans Note 

Term Loan 1 1,000,000 350,000 

Non Convertible Debentures 2 – 140,000 

Working Capital Facilities 3 278,695 528,414 

Other Loans 4 15,497 11,015 

Total 1,294,192 1,029,429 

Notes : 

1. Term Loan is secured by the mortgage of Fixed Assets of the Company as a security. 

2. Non Convertible Debentures ‘NCD’ comprising of 10.05% NCD - A series aggregating Rs. 50 million and 10.35% NCD - B series 

aggregating Rs 90 million are redeemed during the year. 

3 Working Capital Loan from banks are secured by hypothecation of stocks of raw materials, packing materials, finished goods, 

work in progress, receivables etc. They are additionally secured by way of personal guarantees of some of the directors and 

equitable mortgage on fixed assets at the manufacturing facility at Nasik and Research and Development Centre at Sinnar, Nasik. 

4 Other loans are secured by way of hypothecation of vehicles. 

As at 31st March, 2005 2004 

4. Unsecured Loans Note 

Short term Loan – 105,117 

Foreign Currency Convertable Bonds 1 3,063,900 – 

Security Deposit 6,235 3,752 

Deferred Sales Tax Loan 2 10,445 10,445 

Total 3,080,580 119,314 

108 

Notes : 

1. During the year 

A) The company had issued 20,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each (Rs. 873,200 at issue) 

(i) Convertible at the option of the bondholder at any time on or after 28th March, 2005 but prior to the close of business 

on 2nd January, 2010 at a fixed exchange rate of Rs.43.66 per 1 USD and price of Rs.862.394 per share of par value of Rs.2 

per share subject to adjustment in certain events i.e. issue of bonus shares, division, consolidation,reclassification of 

shares etc. 

(ii) Redeemable in whole but not in part at the option of the company on or after 15th February, 2008 if closing price of the share for 

each of the 25 consecutive trading days immediately prior to the date upon which notice of such redemption is given was at least 

130% of the applicable Early Redemption Amount divided by the conversion ratio. 

(iii) Redeemable on maturity date on 16th February, 2010 at 133.74% of its principal amount if not redeemed or converted earlier. 

The redemption premium of 33.74%payable on maturity of the bond if there is no conversion of the bond to be debited to 

Securities Premium account evenly over the period of 5 years from the date of issue of bonds. 

B) The company had issued 50,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each (Rs. 2,183,000 at issue) 

(i) Convertible at the option of the bondholder at any time on or after 15th November, 2006 but prior to the close of business 

on 2nd January 2010 at a fixed exchange rate of Rs. 43.66 per 1 USD and the price greater of 35% of the average of the order book 

volume–weighted-average-price of a share on each trading day during the period commencing on 15th September and ending 

on 14th November, 2006 and the Floor Price (Rs. 500) of par value of Rs.2 per share. 

(ii) Redeemable in whole but not in part at the option of the company on or after 15th February, 2009 if closing price of the share for 

each of the 25 consecutive trading days immediately prior to the date upon which notice of such redemption is given was at least 

130% of the applicable Early Redemption Amount divided by the conversion ratio. 

(iii) Redeemable on maturity date on 16th February, 2010 at 134.07% of its principal amount if not redeemed or converted earlier. 

The redemption premium of 34.07%payable on maturity of the bond if there is no conversion of the bond to be debited to 

Securities Premium account evenly over the period of 5 years from the date of issue of bonds. 

2. The Company has availed of an interest free sales tax deferral loan under Part I of the 1983 and 1988 Package Schemes of the 

Government of Maharashtra, repayable after twelve years in six half-yearly installments.


Rs. In (’000s) 

As at 31st March, 2005 2004 

5. Deferred Tax Liability [Refer Note (2)(ix) of Schedule 22] 

Liabilities 


Others – 1,890 

Total 386,111 293,181 

6. Deferred Tax Asset [ Refer Note (2)(ix) of Schedule 22] 

Assets 

Provision for Bad Debts and Doubtful Advances 23,457 23,102 

Unabsorbed Losses and Depreciation 51,691 4,526 

Others 1,830 525 

Total 76,978 28,153 

7 Fixed Assets [Refer note (2)(ii) and (7) of Schedule 22] 

GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK 

As on Acqui- Additions Consoli- Sales/ As on As on Acqui- For the Consoli- Sales/ As on As on As on 

1st Apr, sition during the dation Disposals 31st Mar. 1st Apr. sition year dation Disposals 31st Mar. 31st Mar. 31st Mar. 

2004 during the year Adjust- during the 2005 2004 Adjust- of Assets 2005 2005 2004 

year ment year ment 

Tangible assets 

Freehold Land 5,710 – – – – 5,710 – – – – – – 5,710 5,710 

Leasehold Land 57,039 – 28,861 – – 85,900 1,280 – 730 – – 2,010 83,890 55,759 

Factory Buildings 159,287 2,144 198,488 – – 359,919 22,705 1,179 8,022 5 – 31,911 328,009 136,582 

Other Buildings & 

Premises 267,410 – 26,871 – 975 293,306 16,045 – 4,513 – 175 20,383 272,923 251,365 

Plant and Machinery 187,119 – 201,703 – 2,232 386,590 21,242 – 16,652 – 200 37,694 348,896 165,877 

Furniture and 

Fixtures 130,612 18,966 73,625 5 – 223,208 35,660 6,202 23,976 78 – 65,916 157,292 94,952 

Equipments 522,969 1,674 360,120 12 1,273 883,502 106,140 734 60,671 15 158 167,402 716,100 416,829 

Vehicles 32,490 946 34,129 – 5,306 62,259 13,588 192 9,362 78 3,077 20,143 42,116 18,902 

Intangible assets 

– Goodwill – 167,604 – – – 167,604 – – – – – – 167,604 – 

– Computer software 21,637 – 19,663 14 – 41,313 4,157 – 5,299 (42) – 9,414 31,899 17,480 

– Brands 454,557 – 926,181 335 – 1,381,073 128,359 – 35,007 (64) – 163,302 1,217,771 326,198 

Total 1,838,830 191,334 1,869,641 366 9,786 3,890,385 349,176 8,307 164,232 70 3,610 518,175 3,372,210 1,489,654 

Previous Year 1,247,428 – 615,054 – 23,652 1,838,830 243,613 – 110,930 – 5,367 349,176 1,489,654 1,003,815 

Capital Work-in-progress including Capital advances. 130,625 251,853 

Notes : 

1. Equipment and vehicles include assets aggregating Rs.19,559 (2004 -- Rs.19,308) [net book value as at March 31, 2005 -- Rs. 12,152 (2004 -- Rs.14,338)] 

and Rs. 4,098 (2004 -- Rs. 5,536) [net book value as at March 31, 2005 -- Rs.2,087 (2004 -- Rs. 3,708)], respectively, which have been acquired on finance 

lease. 

2. Additions to assets include Rs. 12,423 (2004 -- Rs.4,488) being borrowing costs. 

3. Estimated amount of contracts remaining to be executed on capital account, net of advances, not provided for as at March 31, 2005 aggregate Rs.170,526 

(2004 -- Rs.59,039) 

4. Capital Work-in-progress includes : 

2005 2004 

At Ankleshwar Plant - 68,157 

At Mohol Plant 4,040 - 

At Baddi Plant 2,212 - 

At Goa Plant 11,768 57,145 

Capital Advances 104,791 109,854 

Other work-in-processes 6,239 9,810 

At Brazil 1,574 6,282 

At Philippines - 605 

5. Additions for Glenmark Pharmaceuticals Inc, USA ,Glenmark Pharmaceuticals S.A., Glenmark Philippines Inc., Philippines includes 

Product development process , Patents and Trademarks.However pending completion of the development process and registration of 

Products and Trademarks ,no amortisation of Intangible assets has been provided for during the year. 

6. Acquisition during the year represent the assets of Laboratorios Klinger Do Brazil Ltda acquired by Glenmark Farmaceutica Ltda, Brazil. 

109


Rs. In (’000s) 

As at 31st March, 2005 2004 

8. Investments [Refer Note (2)(iv) of Schedule 22] 

Long Term Investments 

Quoted - traded 

Equity Shares 

9,000 (2004 — 9,000) Bank of India of Rs.10 each [Market Value Rs. 931 (2004 — Rs. 530)] 405 405 

1,718 (2004 — 1,718) IDBI Bank Limited of Rs. 10 each [Market Value Rs.109 (2004 — Rs. 85)] 34 34 

439 439 

Unquoted - non trade 

National Savings Certificate -Sixth Issue 12 48 

1 (2004 — 1) Time Share of Dalmia Resorts Limited 20 20 

1 (2004 — 1) Equity Share of Esquados 340,000 of Glenmark 

Pharmaceutica Limitada, Lisbon (Portugal) 48 48 

193,665 ( 2004 - 193,665 ) Shares of Bharuch Eco-Aqua Infrastructure Limited of Rs. 10 

each, fully paid up . 1,937 1,937 

100,000 12% Cumulative Preference Shares of Rs 100 each fully 

paid up of Cheryl Laboratories (P) Limited 10,000 10,000 

1,350,000 7% Cumulative Preference Shares of Rs 100 each fully 

paid up of Marksans Pharma Ltd 135,000 135,000 

1 (2004 - Nil) Bond of Titulos Divida Publica, Brazil 2,205 – 

1 (2004 - Nil) Bond of Creditos Judiciarios da Uniao, Brazil 2,456 – 

151,678 147,053 

Total 152,117 147,492 

110 

9. Inventories [Refer Note (2)(v) of Schedule 22] 

(As certified by the management) 

Raw & Packing Materials 380,408 310,098 

Work-in-Process 278,666 223,462 

Stores and Spares 3,670 2,574 

Finished Goods* 531,471 285,467 

Total 1,194,215 821,601 

* Includes stock in transit Rs. 11,032 (2004 - Rs.Nil) 

10. Sundry Debtors 

Outstanding for more than six months 


Unsecured, considered good 490,638 147,936 

Unsecured, considered doubtful 57,661 43,061 

548,299 190,997 

Less: Provision for Doubtful Debts 57,661 43,061 

490,638 147,936 

Other Debts- 


Unsecured, considered good 1,884,946 1,156,877 

Total 2,375,584 1,304,813 

11. Cash And Bank Balances 

Cash in hand 1,537 897 

Balances with Scheduled Banks 

– Current Accounts 34,428 31,468 

– Margin Money 41,672 42,092 

– EEFC Account 8,581 2,203 

– Deposit Accounts 7,523 4,319 

Balances with Non-Scheduled Banks 

– Current Accounts 172,124 276 

– Deposit Accounts 1,006,890 – 

Total 1,272,755 81,255 

The balances in the Margin money accounts are given as security against guarantees issued by banks on behalf of the Company


Rs. In (’000s) 

As at 31st March, 2005 2004 

12. Loans And Advances (unsecured, considered good) 

Advance to Vendors 149,957 130,275 

Advances Recoverable in cash or kind or for value to be received 293,234 192,685 

Advance Tax (net of provision) [Refer Note (2) (ix) of Schedule 22] 20,973 – 

Balance with Excise Authorities 59,669 19,620 

Deposits 54,827 59,890 

Total 578,660 402,470 

13. Current Liabilities 

Acceptances 70,416 92,842 

Sundry Creditors - Small scale industrial undertakings 16,527 20,867 

– Others 662,746 372,691 

Investor Education and Protection Fund shall be credited by 

– Unclaimed Dividend 2,996 2,364 

[There are no amounts due and outstanding to be credited to Investor 

Education and Protection Fund.] 

Advances from Customers 1,899 3,049 

Other Liabilities 245,693 139,438 

Interest Accrued but not due 24,825 8,242 


Tax on Interim Dividend 11,646 9,868 

Tax on Preference Dividend – 1,345 

Total 1,119,783 727,726 

111 

14. Provisions 

Wealth Tax 275 300 

Income-Tax (net of advance tax) [ Refer Note (2) (ix) of Schedule 22] – 37,402 

Provision for Gratuity and Leave Encashment 2,145 2,000 

Total 2,420 39,702 

15. Miscellaneous Expenditure [Refer Note (2) (xi) & 10 of Schedule 22] 


Implementation Expenses of ERP system – 1,147 

Product launch, investigation and registration expenses – 5,272 

Pre-operative / Preliminary expenses 19,561 23,644 

Total 19,561 30,063

Schedules forming part of the Consolidated Profit and Loss Account 

As at 31st March, 2005 2004Rs. In (’000s) 

As at 31st March, 2005 2004 

16. Sales [refer note (2) (vii) of Schedule 22] 

Sale of goods and I P assets* 6,110,639 3,796,569 

Income from services 9,893 10,037 

Total 6,120,532 3,806,606 

* includes sales tax and excise duty aggregating Rs 288,020 (2004 — Rs 255,771) and Rs 434,423 (2004 — Rs 340,561) 

respectively. 

17. Other Income 

Lease Rent [tax deducted at source Rs. 403 (2004 — Rs.403 )] 2,381 1,920 

Interest Income [tax deducted at source Rs. 468 (2004 — Rs.400 )] 8,419 2,422 

Dividend received 1,220 1,245 

Exchange Gain 260 4,642 

Export Incentive 17,019 7,613 

Profit on sale of Fixed Assets 394 128 

Miscellaneous Income 22,592 16,692 

Total 52,285 34,662 

112 

18. Cost of Sales 

Salary, Wages and Allowances 83,580 38,320 

Labour charges 99,024 82,227 

Consumption of raw & packing materials 1,542,462 966,088 

Purchase of Trading goods 388,919 286,013 

Excise Duty paid 426,865 308,398 

Sales Tax 288,020 255,771 

Power, fuel and water charges 74,059 31,365 

Consumable stores 45,076 24,583 

Repairs and maintenance - plant and machinery 50,120 17,066 

Rent, rates and taxes 759 1,578 

Other manufacturing expenses 16,999 540 

(Increase)/decrease in inventory (301,208) (218,758) 

Total 2,714,675 1,793,191

Schedules forming part of the Consolidated Profit and Loss Account 

Rs. In (’000s) 

As at 31st March, 2005 2004 

19. Selling And Operating Expenses 

Salary and Allowances 346,207 256,391 

Staff Welfare 13,006 7,801 

Directors’ Salaries and Allowances 50,450 44,762 

Incentive and Commission 38,274 40,978 

Sales Promotion expenses 249,296 184,386 

Export Commission 17,710 7,935 

Commission on Sales 7,760 4,154 


Freight outward 97,621 71,847 

Telephone expenses 24,808 19,431 

Rates and Taxes 18,319 14,040 

Provision for doubtful debts 14,600 11,800 

Insurance premium 13,407 9,173 


Rent 28,409 15,885 

Repairs & Maintenance 50,183 39,135 

Auditors’ remuneration 

Audit fees 1,271 1,322 

Other matters 1,250 1,020 

Out of pocket expenses 32 30 

Loss on sale of assets – 848 

Amortisation 34,134 376 

Other Operating expenses 302,326 184,068 

Total 1,521,825 1,074,266 

113 

20. Interest Expense 

On Loans from Banks 84,012 35,777 

Other Interest 88,619 64,801 

Total 172,631 100,578 

21 Research And Development Expenses [refer note (2) (viii)of Schedule 22] 

Salary and other Allowances 115,423 71,328 

Staff Welfare expenses 8,103 4,633 

Directors’ Remuneration 1,242 2,517 

Consumable & Chemicals 85,637 80,560 


Repairs and maintenance 18,375 12,192 

Insurance premium 540 283 

Other expenses 78,498 63,783 

Total 326,512 248,073

114 

Notes to the Consolidated Accounts 


22 Notes to the Financial Statement 

1) Principles Of Consolidation 

(a) 

The consolidated financial statements of the Group have been prepared in accordance with Accounting Standard (AS-21) - “Consolidated 

Financial Statements” issued by the Institute of Chartered Accountants of India. 

(b) Glenmark Pharmaceuticals, the holding company, had controlling interest in the following entities as at 31st March, 2005: 

Name of the Subsidiary Country of Incorporation Percentage of ownership 

Glenmark Dominicana S.A. Dominicana Republic 100% 

Glenmark Impex LLC Russia 100% 

Glenmark Philippines Inc. Philippines 100% 

Laboratorios Klinger Do Brazil Ltda (Subsidiary of Glenmark Farmaceutica Ltda Brazil) Brazil 100% 

Glenmark Farmaceutica Ltda, Brazil (Subsidiary of Glenmark Pharmaceuticals S.A.) Brazil 100% 

Glenmark Organics Ltd. India 100% 

Glenmark Exports Ltd. India 100% 

GM Pharma Ltd India 100% 

Glenmark Pharmaceuticals Inc,USA. (Subsidiary of Glenmark Pharmaceuticals S.A.) USA 100% 

Glenmark Pharmaceuticals (U.K.) Ltd , U.K. UK 100% 

Glenmark Pharmaceuticals Nigeria Ltd. Nigeria 100% 

Glenmark Pharmaceuticals SDN.BHD. Malaysia 100% 

Glenmark Pharmaceuticals S.A. Switzerland 100% 

Glenmark Chemicals Inc. USA 100% 

(c) Assets and liabilities of foreign subsidiaries are translated into Indian rupees at the rate of exchange prevailing as at the Balance Sheet 

date. Revenues and expenses are translated into Indian rupees at yearly average exchange rates prevailing during the year and the 

resulting net translation adjustment has been adjusted to Reserves. 

2) SIGNIFICANT ACCOUNTING POLICIES 

i) Basis of Accounting 

The Financial Statements are prepared under the historical cost convention, on the accrual basis of accounting, in conformity 

with accounting principles generally accepted in India. These consolidated financial statements have been prepared to meet the 

requirements of clause 32 of the listing agreement with the stock exchanges. 

ii) Fixed Assets and Depreciation 

Fixed Assets are stated at cost less accumulated depreciation. The Company capitalises all costs relating to the acquisition 

and installation of fixed assets. Expenditure of revenue nature, incurred in setting up of new projects, is capitalised as an indirect cost 

towards construction of the fixed assets. Exchange differences relating to the acquisition of fixed assets are adjusted in the cost of the 

assets. 

Depreciation is provided using the straight line method, pro-rata to the period of use of assets, based on the useful lives of fixed assets as 

estimated by management, or at the rates specified in Schedule XIV of the Companies Act, 1956, whichever is higher. 

Fixed Assets having aggregate cost of Rs. 5,000 or less are depreciated fully in the year of acquisition. 

The Company has estimated the useful life of its assets as follows: 

Category 

Estimated useful life 

(in years) 

Plant and Machinery 8 - 20 

Vehicles 5 - 6 

Equipments and air conditioners 4 - 20 

Furniture and fixtures 5 - 10 

Brands 5 - 10 

Leasehold land is amortised over the period of lease. 

iii) Foreign currency transactions 

Foreign currency transactions during the year are recorded at the rates of exchange prevailing on the date of the transaction. Foreign 

currency assets and liabilities are translated into rupees at the exchange rates prevailing on the date of the balance sheet. All exchange 

differences are dealt with in the statement of profit and loss, except those relating to the acquisition of fixed assets, which are adjusted 

in the cost of the respective fixed assets. 

iv) Investments 

Long term investments are stated at cost. Provision, where necessary, is made to recognize a decline, other than temporary, in the value 

of the investments. 

v) Inventories 

Inventories of raw materials, packing materials, work-in-process and finished goods are valued at cost or net realisable value, 

whichever is lower. Cost of raw materials and packing materials is ascertained on a first-in-first out basis. Cost of work-in-process and 

finished goods includes the cost of materials consumed, labour and manufacturing overheads. Excise and customs duty accrued on 

production or import of goods, as applicable, is included in the valuation of inventories. 

vi) Employee Benefits 

Retirement benefits to employees comprise payments towards gratuity, superannuation and provident fund under the schemes of 

the Company and encashment of leave. Annual contributions to the superannuation and provident funds are charged to the 

statement of profit and loss.



22 Notes to the Financial Statement (Contd.) 

The employee leave encashment and gratuity schemes are administered through the Life Insurance Corporation of India. Annual 

contributions as determined by the LIC are charged to the statement of profit and loss. 

In respect of stock options granted to employees under the Company’s Employee Stock Option Plan (‘ESOP’), the excess of the market 

price of the share at the date of grant of the option over its exercise price is treated as a form of employee compensation in the 

financial statements of the Company. This amount is amortised on a straight-line basis over the vesting period. The unamortised 

portion is carried forward as deferred employee compensation. 

vii) Revenue Recognition 

The Company recognizes revenue on dispatch of goods to customers. Revenues from services are recognized on completion of such 

services. Revenue from IP asset/Marketing rights is recognized on transfer of ownership/right to use in accordance with the terms of 

relevant agreements. Revenue from contract research being in the nature of product development activities is recognized as per 

the terms of the agreement. Revenues are recorded at invoice value, inclusive of excise duty and sales-tax, but net of returns and 

trade discounts. 

viii) Research and Development 

Capital expenditure on research and development (R&D) is capitalised as fixed assets.Development cost relating to the new and 

improved product and/or process development is recognised as an intangible asset to the extent that it is expected that such asset 

will generate future economical benefits. Other research and development costs is expensed as incurred. 

ix) Income-Tax 

Provision for current income-taxes is made on the assessable income at the tax rate applicable to the relevant assessment year. 

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial 

statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities 

because of a change in tax rates is recognised in statement of profit and loss using the tax rates and tax laws that have been 

enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised and carried forward only to the 

extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax 

assets can be realised. Prior / Earlier year’s income tax is charged to the Profit and Loss account on payment and the same is 

disclosed separately. 

x) Leases 

Finance Leases 

Assets acquired under finance lease are recognised as assets with corresponding liabilities in the balance sheet at the inception of 

the lease at amounts equal to the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. These 

leased assets are depreciated in line with the Company’s policy on depreciation of fixed assets. The interest is allocated to periods 

during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. 

Operating Leases 

Lease payments for operating leases are recognised as expense on a straight-line basis over the lease term. 

Lease income from operating leases is recognised as income on a straight-line basis over the lease term. Initial direct costs are 

recognised immediately as an expense. 

xi) Miscellaneous Expenditure 

Product Launch Expenditure 

Earlier years’ expenditure on launch of new products and their sales promotion is being amortised over a period of three years. 

Implementation expenses of Enterprise Resource Planning system. 

Earlier year’s expenditure incurred on payments for infrastructure facilities and expenditure incurred on user license fees for an 

Enterprise Resource Planning system is being amortised over a period of thirty-six months. 

Preliminary Expenses / Pre-Operative Expenses 

The opening balance are amortised over the originating period of five years. 

xii) Borrowing Costs 

Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalised as a part of the cost of 

the asset.Other borrowing costs are recognised as an expense in the year in which they are incurred 

xiii) Impairment of Assets 

The Company assesses at each balancesheet date whether there is any indication that an asset may be impaired.If any such indication 

exist , the Company estimates the recoverable amount of the asset . If such recoverable amount of the asset or the recoverable 

amount of the cash generating unit to which the asset belongs is less than its carring amount ,the carrying amount is reduced to its 

recoverable amount.The reduction is treated as an impairment loss and is recognised in the profit and loss account.If at the 

balancesheet date there is an indication that if a previously assessed impairment loss no longer exist, the recoverable amount is 

reassessed and the asset is reflected at the recoverable amount. 

xiv) Provisions and Contingent Liabilities 

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an 

outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is 

made when there is a possible obligation or a present obligation that may, but probably will not , require an outflow of 

resources.Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no 

provision or disclosure is made. 

115




Rs. In (‘000s) 

31st March, 2005 31st March, 2004 

3) Contingent liabilities not provided for 

Bank Guarantees 11,649 9,981 

Corporate Guarantee - 50,000 

Disputed Taxes/Duties 3,434 - 

Labour / Industrial Disputes 1,141 1,120 

Open Letters of Credit 94,945 83,350 

Sundry Debtors factored with recourse option 100,000 91,677 

Channel Financing with Recourse Option 24,231 14,159 

4) Earnings per Share 

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders (net profit for the year 

less dividends on preference shares) by the weighted average number of equity shares outstanding during the year. 

For the purpose of calculating diluted earnings per share, the net profit attributable to equity shareholders and the weighted average 

number of shares outstanding are adjusted for the effects of all dilutive potential equity shares from the exercise of options on 

unissued share capital. The number of equity shares is the aggregate of the weighted average number of equity shares and the 

weighted average number of equity shares, which would be issued on the conversion of all the dilutive potential equity shares into 

equity shares. Options on unissued equity share capital are deemed to have been converted into equity shares on the date when the 

options are exercised. 

The calculations of earnings per share (basic and diluted) are based on the earnings and number of shares as computed below. 

Rs. In (‘000s) 

Reconciliation of Earnings 31st March, 2005 31st March, 2004 

Profit after tax for the financial year 1,071,411 413,606 

Less: 

Preference Dividends 7,058 10,500 

Dividend Tax on Preference Shares 922 1,345 

Net profit attributable to Equity Shareholders for calculation of Basic EPS 1,063,431 401,761 

Reconciliation of number of Shares Shares Shares 

in ‘000s in ‘000s 

Weighted average number of Shares: 

For basic earnings per share 118,581 114,357 

Add: 

Deemed exercise of options on unissued equity share capital 1,062 548 

Conversion of FCC Bonds 10,757 – 

For Diluted Earnings Per Share 130,400 114,905 

Earnings Per Share (nominal value Rs 2 each) Rs Rs 

Basic 8.97 3.51 

Diluted 8.16 3.50 

EPS for previous year have been recomputed considering Bonus issue. 

116 

5) SEGMENT INFORMATION 


The Company is primarily engaged in a single segment business of manufacturing and marketing of pharmaceuticals formulations and 

active ingredients and is managed as one entity, for its various activities and is governed by a similar set of risks and returns. 

Geographical Segments 

The operations of the Company are largely confined to India, with exports contributing to 38.87% of its annual sales. Hence, in the view 

of the management, the Indian and export markets represent geographical segments. 

Sales by market — The following is the distribution of the Company’s sale by geographical market: 

Rs. In (‘000s) 

Geographical Segment 31st March, 2005 31st March, 2004 

India 3,741,223 3,154,903 

Other than India 2,379,309 651,703 

Total 6,120,532 3,806,606




Assets and additions to fixed assets by geographical area – The following table shows the carrying amount of segment assets 

and additions to fixed assets by geographical area in which the assets are located: 

Rs. In (‘000s) 

2005 2005 2004 2004 

India Others* India Others* 

Carrying amount of segment assets 4,988,828 3,927,913 3,633,914 583,192 

Additions to tangible assets 871,611 75,934 615,053 – 

* Others represent receivables from debtors located outside India including those related to deemed exports and cash and bank 

balances outside india. 

6) Related Party Disclosures 

a) Related Party relationships where transactions have taken place during the year 

Key management personnel (includes directors of the Company and its Subsidiaries) 


Mrs B.E. Saldanha 

Mr Glenn Saldanha 

Mrs Cheryl Pinto 

Mr. R.V. Desai 

Mr. A.S. Mohanty 

Mr. Aliton Wiliczinski 

Mr. Sangeet Mehrotra 

Mr. Terrence Coughlin 

Mr. Assagabriel Olusola 

Mr. Surdass Vipinkumar 

Mr. Paramasivam A/L Govindasamy 

Mr. Anil Muddanna 

Mr. Jeffrey Weiss (Resigned in Oct’04) 

b) Transactions with related parties during the year Rs. In (’000) 

Managerial Remuneration 2005 2004 

Name of Directors 

1. Mr. Gracias Saldanha 9,377 10,104 

2. Mrs. B. E. Saldanha 8,079 7,177 

3. Mr. Glenn Saldanha 20,572 14,560 

4. Mrs. Cheryl Pinto 5,325 7,411 

117 

7) Leases 

a) The Company has entered into operating and finance lease agreements for the rental of property, vehicles,computers, equipment 

and other assets. Typically, lease agreements are for a period of three to five years. At March 31, 2005, the Company had 

commitments under non-cancellable finance leases as follows: 

Rs. In (‘000s ) 


Minimum lease payments 



Total 4,146 11,514 

Present value of minimum lease payments 



Total 2,728 8,256 

b) The Company has leased out its manufacturing facility at Panoli, Gujarat and the same has been capitalised in the books of account 

in accordance with Accounting Standard 19 -“Leases” issued by The Institute of Chartered Accountants of India in this regard. 

Depreciation has been provided based on the estimated useful life of the asset.

118 




(i) Details in respect of assets given on operating Lease 

Rs. In (‘000s ) 


Gross Block 

Leasehold Land 4,259 4,259 





36,091 36,091 

Accumulated Depreciation 

Leasehold Land 215 172 





7,291 5,916 


(ii) The lease income of Rs. 1,920 (2004 — Rs. 1,920) has been accrued on the basis of the lease agreement executed with the lessees. 

This lease is cancellable by notice of 30 days on either side. 

c) The Company has taken godowns/residential & office premises at various locations in the country. 

i) The Company’s significant leasing arrangements are in respect of the above plant, godowns & premises (Including furniture and 

fittings therein, as applicable ). The aggregate lease rentals payable are charged to Profit and Loss Account as Rent in Schedule 18 

,19 & 21 . 

ii) The Leasing arrangements which are cancellable range between 11 months and 3 years. They are usually renewable by mutual 

consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. An 

amount of Rs. 16,088 towards deposit and unadjusted advance rent is recoverable from the lessor. 

8) The Company has entered into an arrangement with it’s wholly owned subsidiary (WOS) for undertaking product development work 

and to provide complete information concerning the product formulation. As per the arrangement, the WOS shall pay fees for such 

services on an arm’s length basis on completion of formulation development and pivotal bio-studies and on submission of product 

dossier for the regulatory filings. However no fees have been recognized during the year, as the above-mentioned activities have 

not been completed till the year-end. 

9) The Finance Act,2001 has introduced, with effect from Assessment Year 2002-03 (effective April 1,2001 ), detailed Transfer 

Pricing regulations for computing the taxable income and expenditure from ‘International transaction ‘ between ‘Associated 

enterprises’ on an ‘ arm’s length ‘ basis.These regulations ,inter alia , also require the maintenance of prescribed documents and 

information including furnishing a report from an Accountant on or before October 31, 2005. 

For the year ended March 31, 2004, the Holding company had undertaken a transfer pricing study and obtained the prescribed 

certificate of the Accountant to comply with the said transfer pricing regulations which did not envisage any tax liability. For the tax 

year ended March 31, 2005 the Holding company had carried out a study to comply with the said transfer pricing regulations. 

10) In accordance with Accounting standard 26 ‘’Intangible Assets’’ preliminary expenses / pre-operative expenses incurred during the year 

are charged off unlike in earlier years where these were deferred over a period of five financial years. 

11) During the year, Company had acquired four percent minority interest of Glenmark Pharmaceuticals Inc, USA. Share of loss Rs.265 

pertaining to Minority interest is adjusted against General reserve and Profit and Loss account. 

12) Prior year comparatives 

Prior year’s figures have been regrouped wherever necessary. 

Signatures to the Schedules 1 to 22 which form an integral part of the Consolidated Financial Statements. 










Corporate Information 

Chairman [Non-Executive] 


Managing Director & CEO 

Mr. Glenn Saldanha 

Directors 

Ms. B. E. Saldanha 

Ms. Cheryl Pinto 

Mr. J. F. Riberio 

Dr. Prasanna Gore 

Mr. R. V. Desai 

Mr. A. S. Mohanty 

Mr. Sridhar Gorthi 

Mr. M. Gopal Krishnan 

Mr. Natvarlal B. Desai 

Mr. J. M. Trivedi [Up to 26.04.2005] 

Mr. Steven Bates [Up to 29.07.2005] 


Mr. Marshall Mendonza 

Registered Office 

B/2, Mahalaxmi Chambers 

22, Bhulabhai Desai Road, 

Mumbai 400026, Maharashtra 

Tel: [+91 22] 56549999 

Fax: [+91 22] 23512531 / 23519652 

Website: 

http://www.glenmarkpharma.com 

E-mail: 

webmaster@glenmarkpharma.com 

Manufacturing Facilities 

E-37, MIDC Industrial Area, D-Road, 

Satpur, Nasik 422007, Maharashtra 

3109-C, GIDC Industrial Estate, 

Ankleshwar, Dist. Bharuch, 

Gujarat 393002 

Plot No. 163-165/170-172, 

Chandramouli Industrial Estate, 

Mohol, Mohal Bazarpeth, Solapur, 

Maharashtra 413213 

Plot No. A-80, MIDC Area, 

Kurkumbh, Daund, 

Pune 413802, Maharashtra 

Plot No. 7, Colvale Industrial Estate, 

Bardez, Goa 

Village: Kishanpura, 

Baddi Nalagarh Road, 

Tehsil: Nalagarh, Dist: Solan, 

Himachal Pradesh 174101, Baddi 

Rua Assahi, 33-1 Andar 

CEP 09633-010, Rudge Ramos 

Sao Bernado Do Campo 

Sao Paulo, Brazil 

R&D Centres 

Plot No. A-607, TTC Industrial Area, 

MIDC, Mahape, Vashi, 

Navi Mumbai 400705, Maharashtra 

Plot No. C-152, MIDC Sinnar 

Industrial Area, Malegaon, 

Nasik District 422113, 

Maharashtra 

Clinical Research Centre 

Plot No. D-508, TTC Industrial Area, 

MIDC, Turbhe, 

Navi Mumbai 400705, 

Maharashtra 

Auditors 

Pricewaterhouse 


Mumbai 

Cost Auditors 

Sevekari Khare & Associates 

Solicitor 

Kanga & Co., Mumbai, 

Trilegal, Mumbai 

Registrar and Transfer Agents 

Karvy Computershare Pvt. Limited 

“Karvy House”, 46 Avenue 4, 

Street No. 1, Banjara Hills, 

Hyderabad 500034 

Tel: [+91 40] 23312454 / 23320751 

Fax: [+91 40] 23311968 

Bankers 

Bank of India 

Mahalaxmi Branch, Mumbai 400026

14 

13 

12 

43 

19 

71 

49 

10 

5 

20 

62 

3 30 

29 41 36 35 63 

18 

68 

72 

31 

22 

1 

59 

40 

47 

24 

21 

4 

67 

39 16 

69 

54 

73 

64 

26 32 

25 

8 

70 33 

6 

28 56 58 

57 

45 

17 74 65 

75 

52 23 50 

44 48 

53 

46 61 

15 

66 37 

51 

42 

7 2 

38 

60 

9 

55 

27 

11 

34 

MANUFACTURING SITES 

India 

Brazil 

REGIONAL / 

REPRESENTATIVE 

OFFICES 

1. Brazil 

2. Cambodia 

3. Dominican Republic 

4. Ghana 

5. Kazakhstan 

6. Kenya 

7. Malaysia 

8. Nigeria 

9. Philippines 

10. Russia 

11. South Africa 

12. Switzerland 

13. UK 

14. USA 

15. Vietnam 

INTERNATIONAL OPERATION 

16. Afghanistan 

17. Angola 

18. Barbados 

19. Belarus 

20. Belize 

21. Benin 

22. Bolivia 

23. Botswana 

24. Burkina Faso 

25. Central African 

Republic 

26. Chad 

27. Chile 

28. Congo Brazzaville 

29. Costa Rica 

30. Dominica 

31. Ecuador 

32. Eritrea 

33. Ethiopia 

34. Fiji 

35. Grenada 

36. Haiti 

37. Hong Kong 

38. Indonesia 

39. Iraq 

40. Ivory Coast 

41. Jamaica 

42. Laos 

43. Latvia 

44. Madagascar 

45. Malawi 

46. Maldives 

47. Mali 

48. Mauritius 

49. Moldova 

50. Mozambique 

51. Myanmar 

52. Namibia 

53. Nepal 

54. Oman 

55. Papua New Guinea 

56. Peru 

57. R D Congo 

58. Rwanda 

59. Senegal 

60. Singapore 

61. Sri Lanka 

62. St. Kitts 

63. St. Lucia 

64. Sudan 

65. Tanzania 

66. Thailand 

67. Togo 

68. Trinidad & Tobago 

69. UAE 

70. Uganda 

71. Ukraine 

72. Venezuela 

73. Yemen 

74. Zambia 

75. Zimbabwe 

www.glenmarkpharma.com

Annual Report - Glenmark

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