MD’s Address

From the desk of Managing Director

Our Vision- Creating a responsible enterprise that delivers VALUE

Dear Shareholders,

At the outset, I would thank you for being with us and reposing your confidence on the management. The company has consolidated its position during the last financial year and has set drivers in place for laying a strong foundation for the future. I do believe strongly that the strategic decisions taken by management over the last couple of years will yield positive results in the coming year. The year 2011-12 has been a tough one in the face of the tightened liquidity scenario, high interest rates, the euro zone debt crisis and the depreciation of Indian currency. Despite the fiscal challenges affecting the operating environment, the company has achieved a gross turnover of INR 10123 million for the year 2011-12. This represents a growth of 50% over the last year. Net Profits came in at INR 512 million.

Amongst the operational achievements and developments, at the Derabassi site, your company has successfully commissioned the Multi-Purpose Block that augments the amorphous capacities. In the sterile space, with the commissioning of new sterile block, the company has doubled its capacity to 20 tons per annum for the manufacturing of the sterile range of products. With the expansion the stage is set for the company to build on its accomplishments during the coming year. The current fiscal was also significant as the company diversified horizontally to minimize its dependence on a single segment for growth. From being a standalone antibiotic manufacturer, your company is becoming a differentiated antibiotic and non-antibiotic API manufacturer. The company has activated production for the life style drugs from its new facility in Lalru. The company has been working in over 10 different therapies covering cardiovascular, hypertensive, diabetes, oncology, osteoporosis and central nervous system. The company looks to build revenues and growth on the new range of products that would not only bolster the top-line, but more importantly, concentrate on expanding margins. With infrastructural expansions in place, right set of skills and capabilities in research and chemistry, a diversified basket of products, your company has all the drivers in place for the next level of growth – the growth that drives the value for each of the stakeholders.

Our objective towards creating a responsible enterprise will be led by the following actions:-

Taking your company to newer geographies

Your company has a considerable presence in over 50 countries. Historically, our growth in these markets has come through the antibiotics orals. With the expansion of sterile basket, addition of new verticals and products, your company looks to strengthen its presence across the globe, especially the regulated markets. The Regulated markets will also add a thrust to the margins and profitability

Achieving highest International quality standards

Your company hasa distinctive recognition of being one of the few pharmaceutical companies certified by the European GMP. With the audit approvals of over 40 pharmaceutical companies, your company foresees the regulatory approvals through other international agencies including the Japanese PMDA and the USFDA

Growth through developments in research and development

The research team at Parabolic continues to drive the business by creating a grid of niche molecules and working on the next generation of products. Going forward, the in-house R&D team would continue to drive process research and find innovative ways to reduce cost and build competitiveness.

Headway in the Contract manufacturing Space

Leveraging on the world class infrastructure with large capacities, a cost arbitrage in respect to competition, your company is geared to provide integrated solutions from route selection, process development, and optimization to different innovators and generic companies of the globe. It will continue to develop the competitive advantage it already possesses in the area of contract manufacturing and research to be able to grow and add scale to this segment of business.

Horizontal growth through the diversified basket

Our foray into the non-antibiotic space places us in an unique position to be one of the largest API companies with a multiple range of products across varied therapies. The transition towards becoming a multi-specialty API manufacturer is going to de-risk the company’s sizable reliance on antibiotics, where a couple of products have got commoditized and margins have been affected by competition. We believe that the new life style drugs will drive margins and hence profitability.

Vertical integration for value maximization

The company moved up the value chain by launching its finished dosage business. The company successfully created a basket of over 150 products across multiple therapeutic classes in different dosage forms. The dosage business will substantially add to the value of the company in the forthcoming years. The thrust for the formulations business would be through two verticals- the domestic formulations through our division ‘Nucleus’ and the International Formulations division.

Business Outlook

Parabolic Drugs will strive to continue the consistent growth that it has displayed over the last couple of years with increased commitment and focus on the bottom line. The company will achieve to realize this through operational efficiencies, improvements and innovation across production, marketing, research and other capabilities. The rationale is just not to create an organization of growth and profits, but to create a responsible organization which drives its business with excellence and sustainability.

The key focus areas for the management in the coming year would be to:

-Focus on Regulated Markets of US, European Union, Canada, Japan, and Australia- filing of drug master files, certificate of suitability, and dossiers.

-Product basket- Launch of new molecules in the non-antibiotic space and diversify the product basket for a risk free sustainable growth

-Diversification into new business verticals- Integration into Finished Dosage formulations, entering into manufacturing alliances for inorganic growth

-Investment in R&D- development of new products , improving efficiencies in the existing range, filing of patents and building IPR wealth

-High GMP Standards- maintaining high GMP standards for seeking regulatory approvals from USFDA, PMDA, TGA amongst others.

-Safety, Health & Environment- safety of our human resource, our manufacturing facilities and our environment, conservation of resources and to be a responsible social citizen for a greener tomorrow

-Development of Human Resource- foster the skills, talent and efficiency of the human minds

I thank you for the faith and conviction you have placed in us and I do believe that the company is poised for greater laurels in the future with your continued support, motivation and guidance.

Pranav Gupta