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My Dear Shareholders,
As always, it is both a privilege & pleasure
to welcome you at the AGM of the company. I thank
all of you for attending this meeting.
The Annual Report has been with you for some
time now & it discusses in great detail the
performance & financial position of the company.
With your permission, I take the Directors' Report
and Audited Accounts for the year ended 31st March
2003 as read. I am happy that in the midst of
global uncertainties and changing domestic environment,
your company has been able to achieve an increase
in profits for the year 2002-03, while continuing
to make the necessary investments for future growth.
I will take this opportunity to highlight some
key features of your company's performance &
thereafter provide outlook for the future.
Performance
:
The sales growth for 2002-03 was subdued due
to reasons already elaborated in the Annual Report.
However the company still managed to increase
its net profit before exceptional items from Rs.44.50
crores to Rs.51.77 crores i.e. 16%. This was due
to significant & sustainable cost efficiency
measures in all areas of operations. The reasons
for poor sales growth are purely temporary &
for the year 2003-04 your company is looking at
aggressive growth in all segments of business.
A dividend of 80% is proposed for this year,
which apparently is the same as last year. However
due to change in tax laws, you will now receive
the dividends tax-free, as the company will pay
tax on dividend distributed. Therefore on a comparable
basis, the dividend for this year is about 90%
against 80% of previous year.
Another significant feature of your company's
performance has been the success in discovery
research area. As you are aware, your company
is one of the few Indian pharmaceutical companies
that have invested in an aggressive discovery
research program, in a serious manner. Your company
achieved international recognition for its discovery
research efforts, when it entered into an option
agreement with Novartis Pharma AG, Switzerland
for the AGE Breaker Program. The R&D team
is making satisfactory progress on the project,
and is hopeful of presenting the same to Novartis
for evaluation of its option. If the option is
exercised, the company will receive a milestone
payment of USD 3 million (approx. Rs.14 crores).
The project will thereafter go into human clinical
trials.
Your company has identified international generic
product opportunity as one of the main growth
drivers in the future. This will mean considerable
upfront investment in product development, marketing
& new manufacturing facilities. The revenues
will come in with a time lag, as identified products
move out of patent protection in key markets.
However the opportunity is big & success can
bring in huge profits to the company.
I would also like to emphasise the strong financial
position of your company, as evident from a debt-free
status & liquid assets of approx. Rs.65 crores,
as on date. This is very important, as it helps
the company to pursue its global ambitions by
making necessary investments in product development
& manufacturing facilities. Your company is
well poised to take advantage of acquisition opportunities
that may arise in the Indian pharma sector.
I am confident that the above aspects of your
company's performance will demonstrate that we
are making the right moves, for the post-2005
patent regime!
Outlook :
I will now briefly dwell on the outlook for the
business in the coming year.
Your company has a strong pipeline of new products
for the domestic market - an important driver
of growth. This along with increasing doctor-coverage
and expansion into new therapeutic areas will
enable the company to pursue an organic growth
higher than the industry growth. Improvements
in the quality of marketing & distribution
systems and field force will help in building
long term sustainable brands. The sales growth
for the first quarter is impressive at 19%. This
includes approximately 8% growth due to favourable
spillover effect arising from VAT related uncertainties.
The overall outlook for the year is encouraging,
inspite of a low industry growth forecast.
As indicated earlier, international operations
have a time gestation arising from patent protection
& product development time. As in last year,
the current year will also see continued investments
in building pipeline of products for developed
markets of Europe. Efforts to expand into the
large & lucrative US generic markets will
also begin during the current year.
As the complexities of the business increase,
the need for world class systems & business
processes cannot be over emphasised. This cannot
be done without a high quality information technology
backbone. Recognising this, your company has planned
large investments in upgrading its information
technology backbone in next couple of years. Based
on this an Enterprise Resources Planning (ERP)
System & Customer Relationship Management
(CRM) System will be built. On implementation,
these are expected to significantly improve the
competitive capabilities of your company.
To Conclude :
To conclude, let me assure you that your company
amply comprehends & recognises the changing
business environment and has well-defined strategies
- more particularly, in the areas of research,
domestic market, international generic operations
- to seize the emerging growth opportunities in
the domestic and foreign markets.
Before closing, I will dwell briefly on 2 issues
close to my heart - corporate governance &
transparent financial reporting. Regulatory authorities
around the world are going overboard in trying
to fix rules of corporate governance. India is
no exception & is vainly trying to copy, often
out of context, such rules from Western countries
while missing out on the essence. I firmly believe
that corporate governance is not an issue that
can be entirely legislated. It is also a state
of the mind & partly comes from the desire
of the management to adopt the principles of trusteeship
while fulfilling its responsibilities. Hand in
hand goes an honest & transparent financial
reporting system. You may have noticed that your
company has made tangible moves in both areas
- it has increased & strengthened the forum
of independent directors as well as displayed
a commitment for prudent, honest & transparent
periodical financial reports to the shareholders.
I am confident these qualities will be important
factors influencing the future growth of the company.
Appreciation :
Like any other company, your company too has
seen tumultuous times. But it has not only overcome
all odds but has also laid a solid foundation
and set out a path for future growth. The credit
for this definitely goes to the employees, who
through their commitment and motivation, made
this gigantic task possible.
I, on behalf of the company, take this opportunity
to extend our gratitude to the Medical fraternity
and all our customers for their faith & support.
I also thank the Central and State Governments,
related authorities, financial institutions, banks
and above all, the shareholders of the Company
for their continued support.
I thank you all for making it convenient to attend
today's meeting and giving your whole-hearted
encouragement.
Thank You
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This does not purport to be a report on the Proceedings
of the 30th Annual General meeting of Torrent
Pharmaceuticals Limited
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