MIRA INFORM REPORT

Report Date :

21.05.2011

IDENTIFICATION DETAILS

Name :	SUN PHARMACEUTICAL INDUSTRIES LIMITED

Registered Office :	Sun Pharma Advance Research Centre (SPARC), Tandalja, Akota Road, Vadodara – 390 020, Gujarat

Country :	India

Financials (as on) :	31.03.2010

Date of Incorporation :	01.03.1993

Com. Reg. No.:	04-19050

Capital Investment / Paid-up Capital :	Rs.1035.600 Millions

CIN No.: [Company Identification No.]	L24230GJ1993PLC019050

TAN No.: [Tax Deduction & Collection Account No.]	BRDS02426E

PAN No.: [Permanent Account No.]	AADCS3124K

Legal Form :	Public Limited Liability Company. The Company's Shares are Listed on the Stock Exchanges.

Line of Business :	Manufacturers of Tablets, Capsules, Parenterals, Ointments, Bulk Drugs, Chemicals and Liquids.

No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

A (69)

RATING

STATUS

PROPOSED CREDIT LINE

56-70

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

Fairly Large

Maximum Credit Limit :	USD 228719000

Status :	Good

Payment Behaviour :	Regular

Litigation :	Clear

Comments :	Subject is a well-established and reputed pharmaceutical company having fine track. Available information indicates high financial responsibility of the company. Business is active. Payments are usually correct and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – April 1, 2010

Country Name

Previous Rating

(31.12.2009)

Current Rating

(01.04.2010)

India

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

LOCATIONS

Registered Office :	Sun Pharma Advance Research Centre (SPARC), Tandalja, Akota Road, Vadodara – 390020, Gujarat, India
Tel. No.:	91-265-2340001 / 282111822 / 1842 / 1917 / 1951 / 195 / 5515500 / 600 / 700
Fax No.:	91-265-2339103 / 28212010 / 2354897/ 2332664
E-Mail :	corpcomm@sunpharma.com helpdesk@sunpharma.com secretarial@sunpharma.com ashok.bhuta@sunpharma.com
Website :	http://www.sunpharma.com

Corporate Office :	Acme Plaza, Andheri – Kurla Road, Andheri (East), Mumbai – 400059, Maharashtra, India
Tel. No.:	91-22-28211822 / 1842 / 1917 / 1951 / 1953
Fax No.:	91-22-28212010
E-Mail :	corpcomm@sunpharma.com

Research Centre :	· Sun Pharma Advanced Research Centre (SPARC), Akota Padra Road, Vadodara – 390 027, Gujarat, India · F.P 27, Part Survey No. 27, C. S. No. 1050, T. RS. Village, Tandalja, District Vadodara - 390 020, Gujarat, India · 17-B, Mahal Industrial Estate, Mahakali Caves Road, Andheri (East), Mumbai - 400059, Maharashtra, India

Plant 1:	C1/2710, GIDC, Phase III, Vapi – 396 195, Gujarat, India

Plant 2:	Plot No. 214 and 20, Government Industrial Area, Phase II, Piparia, Silvassa – 396 230, Union Territory, Gujarat, India

Plant 3:	Halol-Baroda Highway, Halol, Gujarat – 390350, India

Plant 4:	Sun Pharma Industries* 6-9, Export Promotion, Industrial Park (EPIP), Kartholi, Bari Brahmana, Jammu-181 133 (\| and K) Kartholi, Jammu, JK.

Plant 5:	Plot No. 25and 24/2, GIDC, Phase IV, Panoli – 395 116, Gujarat, India

Plant 6:	A-7 and A-8 MIDC Industrial Area, Ahmednagar – 414 111, Maharashtra, India.

Plant 7:	Sathammai Village, Karunkuzhi Post, Maburanthakam, T. K., Kanchipuram District, Tamilnadu, India

Plant 8:	Plot No. 4708, GIDC, Ankleshwar - 393 002, Gujarat, India

Plant 9:	Plot No. 817/A, Karkhadi, Taluka: Padra, District Vadodara – 391450, Gujarat, India

Plant 10:	Plot No. 223, Span Industrial Complex, Dadra – 396 191 (Union Territory)

Plant 11:	Sun Pharma Industries* Survey No. 259/15, Dadra-396 191 (U.T.Of D.and NH)

Plant 12:	Sun Pharma Sikkim* Plot No. 754, Nandok Block, Setpipool, Gangtok, Sikkim-737135, India

Plant 13:	Sun Pharmaceutical Industries* 6-9 Export Promotion Industrial Park (EPIP), Kartholi, Ban Brahmana, Jammu-181133, India

Plant 14:	Sun Pharmaceutical Industries Inc, 705 E, Mulberry Street, Bryan, Ohio-43506, USA

Plant 15:	Sun Pharmaceutical Industries Inc, 270, Prospect Plains Road, Cranbury, New Jersey -08512, USA

Plant 16:	Caraco Pharmaceutical Laboratories Limited 1150 Elijah McCoy Drive, Detroit-48202, Michigan, USA

Plant 17:	Sun Pharmaceutical (Bangalore) Limited Chandana, Joydevpur, Gazipur, Bangladesh

Plant 18:	Alkoloida Chemical Company Exclusive Group Limited H-4440 Tiszavasvan, Kabay, Janos 4.29, Hungary

Plant 19:	TKS Farmaceutica Rodovia GO-080, Km 02, Jardim, Pomperia-Goiania/ GO, Brazil CEP 74690-170

Plant 20:	Sun Pharma De Mexico S.A. de C.V Av. Rio Churubusco No. 658, Col El Sifon, Del, Iztapalapa, C.P 09400 Mexico, District Federal

Plant 21:	Chattem Chemicals Inc, 3708 St. Elmo Avenue, Chattanooga TN 37409, USA

Overseas Offices:	Located at: · The Netherlands · UK · Italy · Spain · Germany · France

DIRECTORS

As on 31.03.2010

Name :	Mr. Dilip S. Shanghvi
Designation :	Chairman and Managing Director
Qualification :	B. Com.
Date of Appointment :	01.04.1993
Previous Employment :	Sun Pharmaceutical Industries – Partner

Name :	Mr. Sudhir V. Valia
Designation :	Whole Time Director
Qualification :	FCA
Date of Appointment :	01.04.1994
Previous Employment :	Practising Chartered Accountant

Name :	Mr. Sailesh T. Desai
Designation :	Whole Time Director

Name :	Mr. S. Mohanchand Dadha
Designation :	Director

Name :	Mr. Hasmukh S. Shah
Designation :	Director

Name :	Mr. Ashwin Dani
Designation :	Director

Name :	Mr. Kemi M. Mistry
Designation :	Additional Director

Name :	Mr. S. Kalyanasundaram
Designation :	Chief Executive Officer and Whole-time Director

KEY EXECUTIVES

Name :	Mr. Kamlesh H. Shah
Designation :	Company Secretary
E mail:	seceretarial@sunpharma.com

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2011

Category of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	152676100	14.74
Bodies Corporate	506512000	48.91
Any Others (Specify)	640100	0.06
Trusts	640100	0.06
Sub Total	659828200	63.72
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	659828200	63.72
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	29492245	2.85
Financial Institutions / Banks	43558538	4.21
Central Government / State Government(s)	39460	-
Foreign Institutional Investors	190403388	18.39
Sub Total	263493631	25.44
(2) Non-Institutions
Bodies Corporate	52888652	5.11
Individuals
Individual shareholders holding nominal share capital up to Rs. 1 lakh	39961848	3.86
Individual shareholders holding nominal share capital in excess of Rs. 1 lakh	17091488	1.65
Any Others (Specify)	2318136	0.22
Non Resident Indians	768755	0.07
Clearing Members	490292	0.05
Trusts	412639	0.04
Foreign Corporate Bodies	646450	0.06
Sub Total	112260124	10.84
Total Public shareholding (B)	375753755	36.28
Total (A)+(B)	1035581955	100.00

BUSINESS DETAILS

Line of Business :

Manufacturers of Tablets, Capsules, Parenterals, Ointments, Bulk Drugs, Chemicals and Liquids.

Products :

ITC Code	Product Description
30049038	Pantaprazole Sodium
30033900	Losartan Potassium
30049065	Metformin Hydrochloride
29420090	Pentoxifyline

Mesalamine (5 ASA)
Acamprosate Calcium
Alendronate Sodium
Amifostine
Bupropion HCL
Carboplatin
Carvedilol
Cisplatin
Cisplatin
Citalopram Hydrobromide
Clomipramine HCL
Clonazepeam
Clopidogrel Bisulfate
Desloratidine
Desmopressin
Divalproex Sodium
Dobutamine HCL
Dothiepin HCL
Erythromycin Estolate
Erythromycin Propionate
Erythromycin Stearate
Esomeprazole Magnesium
Flurbiprofen
Flurbiprofen Sodium
Fluticasone Propionate
Fluvoxamine Maleate
Gabapentine
Glimepiride
Isradipline
Lercanidipine HCL
Letrozole
Losartan Potassium
Loteprednol Etabonate
Meloxicam
Metaxalone
Metformin HCL
Methylphenidate HCL
Metoprolol Tartrate Succinate
Mirtazapine
Mitoxxantrone HCL
Naltrexone HCL
Octreotide
Olanzapine
Ondansetron HCL
Oxaliplatin
Oxcarbazepine
Oxerthazaine
Pamidronate Disodium
Pentoxifyline
Piroxicam Beta-Cyclodextrin
Prednicarbate
Quetiapine Fumarate
Repaglinide
Riluzole Glutamate
Rivastigmine Tartrate
Ropinirole
Rosiglitazone Maleate
Sodium Valporate
Tizanidine HCL
Topiramate
Tramadol HCL
Valproic Acid
Venlafaxine HCL
Ziprasidone HCL

Exports :

Countries :

Asia Pacific
CIS Countries
Europe
South East Asia
U.S.A.

Imports :

Countries :

Europe
U.S.A.

PRODUCTION STATUS

As on 31.03.2010

Particulars

Installed Capacity

Actual Production

Tablets/ Capsules/ Parenterals / Ointments

7216.3

No. in Millions

2544.4

No. in Millions

Bulk Drugs/ Chemicals

1093.6

[In Kilo Litres]

2227.2

[In ’00 Kgs]

GENERAL INFORMATION

Bankers :

Bank of Baroda
State Bank of India
Standard Chartered Grindlays Bank Limited
ICICI Bank Limited
Bank of Nova Scotia
Citibank N. A.
Kotak Mahindra Bank Limited

Facilities :

Secured Loan	As on 31.03.2010 (Rs. in Millions)
Short Term Loan and Banks
(Secured by hypothecation of inventories and book debts.)	294.900
Total	294.900


Banking Relations :	---

Auditors :
Name :	Deloitte Haskins and Sells Chartered Accountants,
Address :	Mumbai, Maharashtra, India

Memberships :	Confederation of Indian Industry

Control Entity:	Sun Pharma Exports Sun Pharmaceutical Industries Sun Pharma Sikkim Universal Enterprise Private Limited

Subsidiaries :	Sun Pharma Global Inc. BVI. Sun Pharma Global - FZE Sun Pharmaceutical (Bangladesh) Limited Sun Pharma De Mexico S.A. DE C.V. SPIL De Mexico S.A. DE C.V. Sun Pharmaceutical Peru S.A.C. Sun Farmaceutica Ltda - Brazil Sun Pharmaceutical Industries Inc, USA Sun Pharmaceuticals UK Limited ALKALOIDA Chemical Company Zrt (formerly known as Alkaloida Chemical Company Exclusive Group Limited) Chattem Chemical Inc. Zao Sun Pharma Industries Limited Russia Sun Pharmaceutical Ind (Australia) PTY Limited Aditya Acquisition Company Limited - Israel Sun Development Corporation I Sun Pharmaceutical Ind. Europe BV OOO “Sun Pharmaceutical Industries” Limited Sun Pharmaceuticals France Sun Pharmaceuticals Germany GmbH Sun Pharmaceuticals Italia S.R.L. Sun Pharmaceutical Spain, SL. Sun Pharmaceuticals (SA) (Pty) Limited-South Africa Caraco Pharmaceutical Laboratories Limited - U.S.A TKS Farmaceutica Ltda. Sun Global Canada Pty. Limited Caraco Pharma Inc.

CAPITAL STRUCTURE

AS ON 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
300000000	Equity Share	Rs.5/- each	Rs.1500.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
207116391	Equity Share	Rs.5/- each	Rs.1035.600 Millions

NOTE:

Of the above:-

1) 161630010 Equity Shares were allotted as fully paid Bonus Shares by capitalisation of Securities Premium Account, Profit and Loss Account, Amalgamation Reserve and Capital Redemption Reserve Account.

2) 413633; 208000; 477581; 11438; 18519 and 19771 Equity Shares of Rs.10 and 4274 Equity Shares of Rs. 5 each fully paid, were allotted to the shareholders of erstwhile Tamilnadu Dadha Pharmaceuticals Limited, Milmet Laboratories Private Limited, Gujarat Lyka Organics Limited, Sun Pharmaceutical Exports Limited, Pradeep Drug Company Limited, M.J. Pharmaceuticals Limited and Phlox Pharmaceuticals Limited respectively, pursuant to Schemes of Amalgamations, without payment being received in cash.

3) 6% Cumulative Redeemable Preference Shares of Re.1 each are redeemable at par at any time at the option of the Shareholder. 187177232 6% Cumulative Redeemable Preference Shares of Re.1 each were allotted as fully paid bonus shares, to the equity shareholders, by capitalisation of Capital Redemption Reserve. During the year 137400304 Preference Shares were redeemed at par.

4) 21600761 Equity Shares of Rs. 5 each were allotted to the holders of Zero Coupon Foreign Currency Convertible Bond on exercise of conversion option.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		1035.600	1035.600	1035.600
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		56144.200	50478.600	41040.600
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		57179.800	51514.200	42076.200
LOAN FUNDS
1] Secured Loans		294.900	236.000	228.800
2] Unsecured Loans		0.000	0.000	796.400
TOTAL BORROWING		294.900	236.000	1025.200
DEFERRED TAX LIABILITIES		1153.300	1174.200	1129.400

TOTAL		58628.000	52924.400	44230.800

APPLICATION OF FUNDS

FIXED ASSETS [Net Block]		7405.200	6992.600	6300.400
Capital work-in-progress		921.500	759.500	334.300

INVESTMENT		39516.900	26945.900	18435.700
DEFERREX TAX ASSETS		0.000	0.000	0.000

CURRENT ASSETS, LOANS & ADVANCES
	Inventories	5701.400	4867.400	3896.300
	Sundry Debtors	5532.900	6800.300	10554.400
	Cash & Bank Balances	1872.700	12654.700	10724.200
	Other Current Assets	73.900	381.300	257.800
	Loans & Advances	3661.300	2674.600	3618.700
Total Current Assets		16842.200	27378.300	29051.400
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	1482.500	4777.900	7263.100
	Other Current Liabilities	1150.500	953.000
	Provisions	3424.800	3421.000	2627.900
Total Current Liabilities		6057.800	9151.900	9891.000
Net Current Assets		10784.400	18226.400	19160.400

MISCELLANEOUS EXPENSES		0.000	0.000	0.000

TOTAL		58628.000	52924.400	44230.800

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	18461.300	27697.500	23656.400
		Other Operating Income	6776.600	10918.000	7834.100
		Other Income	1229.300	1821.200	1276.200
		TOTAL	26467.200	40436.700	32766.700

Less	EXPENSES
		Cost of Goods Sold	8152.900	19098.800	15267.400
		Indirect Taxes	382.800	817.200	648.700
		Personnel Cost	1747.100	1483.100	1202.000
		Operating Expenses	4720.400	4205.600	3255.100
		Research and Development Expenditure	1277.700	1289.300	1310.400
		TOTAL	16280.900	29894.000	21683.600

Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION		10186.300	10542.700	11083.100

Less	DEPRECIATION/ AMORTISATION		694.700	588.600	561.100

	PROFIT BEFORE TAX		9491.600	12954.100	10522.000

Less	TAX		505.100	301.200	381.600

	PROFIT AFTER TAX		8986.500	12652.900	10140.400

Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		16225.900	11287.900	NA

Less	APPROPRIATIONS
		Proposed Dividend on Equity Share	2847.900	2847.900	NA
		Corporate Dividend Tax	473.000	484.000	NA
		Proposed Dividend and Dividend distribution tax written back	0.000	(117.000)	NA
		Transfer to General Reserve	3000.000	4500.000	NA

	BALANCE CARRIED TO THE B/S		18891.500	16225.900	10140.400

	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	8389.500	8137.700	8064.500

	TOTAL EARNINGS		8389.500	8137.700	8064.500

	IMPORTS
		Raw Materials	3003.900	2299.600	2329.300
		Packaging Material	242.600	272.800	135.100
		Capital Goods	242.000	367.700	194.400
		Stores and Spares	26.400	20.200	22.000
	TOTAL IMPORTS		3514.900	2960.300	2680.800

	Earnings Per Share (Rs.)		43.4	61.1	--

QUARTERLY RESULTS

PARTICULARS	30.06.2010 (1^st Quarter)	30.09.2010 (2^nd Quarter)	31.12.2010 (3^rd Quarter)
Net Sales	7586.900	8080.500	7605.700
Total Expenditure	4478.500	4707.200	4370.500
PBIDT (Excl OI)	3108.400	3373.300	3235.200
Other Income	496.400	431.100	490.900
Operating Profit	3604.800	3804.400	3726.100
Interest	0.000	0.000	0.000
Exceptional Items	0.000	0.000	0.000
PBDT	3604.800	3804.400	3726.100
Depreciation	178.200	123.800	182.000
Profit Before Tax	3426.600	3680.600	3544.100
Tax	200.300	223.400	117.400
Provisions and contingencies	0.000	0.000	0.000
Profit After Tax	3226.300	3457.200	3426.700
Extraordinary Items	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000
Net Profit	3226.300	3457.200	3426.700

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	33.95	31.30	30.95

Net Profit Margin (PBT/Sales)	(%)	51.41	46.77	44.48

Return on Total Assets (PBT/Total Assets}	(%)	39.14	37.69	29.76

Return on Investment (ROI) (PBT/Networth)		0.17	0.25	0.25

Debt Equity Ratio (Total Liability/Networth)		0.11	0.18	0.26

Current Ratio (Current Asset/Current Liability)		2.78	2.99	2.94

LOCAL AGENCY FURTHER INFORMATION

FINANCE

CRISIL continued to reaffirm its highest rating of "AAA/ Stable" and “P1+”, for the Company’s Banking Facilities throughout the year enabling the Company to avail facilities from banks at attractive rates. The Company does not offer any Fixed Deposit scheme.

MANAGEMENT DISCUSSION AND ANALYSIS

Operational review

Annual consolidated sales were Rs. 39,040 millions. International branded generic sales across 40 markets grew 29% to Rs. 4,883 millions, one of the fastest growing business areas.

2009-10 was an unusual year in that for the time in the listed history there was a decline in sales - 9%. Profit before interest and tax reduced 29% and profit after tax stood at Rs. 13,511 millions compared with Rs. 18,177 millions in 2008-09.

As they had previously indicated, the primary reason for this shortfall was that Caraco, the 75% US-based subsidiary, stopped manufacturing operations from June 2009, resulting in a sales decline to US$ 22 million compared to US$ 112 million from manufactured products in the previous full year of operations.

The ex-US business segments continued to perform well, delivering strong sales and profit growth, while increasing their market share across geographies. Excluding Caraco, the 2009-10 sales were Rs. 27,978 millions with a growth of 3% over the previous year.

Key performance indicators for 2009-10

· Annual consolidated sales for 2009-10 of Rs. 39,040 million, a decline of 9% over the previous year

· Sales in India were Rs. 19,334 million, down 6%.

· International branded generic sales across 40 markets grew 29% to Rs. 4,883 million. This remains one of the fastest growing parts of the business.

· Sales at Caraco were down 31% to US$ 234 million.

· They continue to hold reserves in excess of Rs. 77,200 million, earmarked for suitable acquisition opportunities.

· The R and D expense was Rs. 2,242 million, taking the cumulative R and D expense to Rs. 18,073 million.

· Between Sun Pharma and Caraco, 84 ANDAs are approved and 123 await approval by the USFDA. Fifteen more ANDAs received approval this year.

· Branded generic registrations received crossed 1,500.

· 246 patents were filed so far, of which 81 were received based on the work by the research team

BUSINESS OVERVIEW:

Indian Branded Generics continued to be the largest contributor to the revenue, at 45%, followed by US Generics (28%) and International Branded Generics (13%). API sales contributed 14%, a larger number than in the previous years, largely on account of APIs that would usually be consumed by Caraco but are now available for sale.

The international business contributed 52% of the total turnover. By the year-end, the total ANDA approvals stood at 84 with 123 more filings pending approval with the US FDA. During the year, they invested Rs. 2,242 millions in R and D.

The investments in capital expenditure were at Rs. 2,956 million, including the Sikkim formulations plant, which was commissioned during the year.

INDUSTRY OUTLOOK

IMS Health estimates the global pharmaceutical market in 2010 at over US$ 825 billion, expected to grow 4-6%. Emerging markets, which accounted for US$ 84 billion in 2008, are estimated to reach US$ 155-185 billion in 2013, with a CAGR of 13-15% (IMS Health and Morgan Stanley estimates). In 2009, the US generics market was valued by IMS at US$ 31 billion. BCC Research estimates the US generics market in 2009 at US$ 34 billion. All

the business areas that they are present in offer attractive opportunities, and they are well positioned to maximise sales and profit growth that these opportunities offer.

India

The Indian pharmaceutical market continued to register a healthy growth of 18% during 2009-10 to Rs. 417 billion (IMS MAT March 2010). While acute care still dominates the market with over 60% share, chronic care continues to outgrow the acute care segment and gain market share. Prescriptions written by General Practitioners (GPs) account for 40% of the overall Rx and are growing at 2%. In contrast, specialist Rx are growing at more than 5-6% per annum (Source: Morgan Stanley).

It is anticipated that India’s specialty and super specialty therapies are likely to account for 45% of the market by 2015 (36% in 2006) (Source: India Pharma 2015, McKinsey). Socio-economic factors such as rising incomes, increasing affordability of quality health care, steady increase in health insurance penetration and a continued rise in chronic diseases will drive the growth of the pharmaceutical market in India. IMS forecasts suggest that the Indian pharmaceutical market will continue to register double-digit growth and has high potential to double its size

in five years.

In addition, the government’s emphasis on providing healthcare for the under privileged with initiatives like the health insurance policy for the poor, the Rashtriya Swasthya Bima Yojana and emphasis on improving the delivery mechanism is expected to result in better volumes across the industry.

The Indian pharmaceutical industry continues to witness a consolidation, with MNCs continuing to acquire some Indian companies to benefit from the attractive growth that this market offers. On the other end of the scale, some of the regional companies are also gaining share, albeit from a low base. Together with attractive market opportunities, competitive intensity will increase.

Companies with capabilities to launch innovative medicines at affordable prices, build strong brands, offer high quality medical information to doctors and assist patients to manage their conditions better, will continue to perform well.

While product patent protection offers newer opportunities to innovator pharmaceutical companies, the Indian pharmaceutical market will continue to be substantially dominated by branded generics across the foreseeable future.

The US

Total market: At an estimated US$ 300 billion dollars in size (January 2010 MAT), the US pharmaceutical market remains the world’s largest, though it registered only 6% growth. U.S. market growth in 2010 is expected to be 3-5 %. With US$ 74 billion worth products (sales) forecast to go off-patent between 2009 and 2012, the US pharmaceutical market is likely to remain sluggish across the foreseeable future.

Generics market: With an estimated size of US$ 34 billion, the US generics market is one of the largest in the world. In terms of prescription share, generics continued to increase their share and accounted for 72% at the end of 2009 (from 55% in 2004).

The growing preference for generics is also reflected in the increase in generic drug penetration in the US from 47% in 1999 to 72% in 2009. However, generics still only account for 17% of total sales by value.

In 2009, the US government implemented policy changes that extended cost-effective healthcare coverage and are expected to be pro-generic. More affordable insurance will reduce premium costs and enable more than 31 millions previously uninsured Americans to afford healthcare. In addition, the new competitive health insurance market will provide Americans a wider insurance choice. Greater healthcare accountability is expected to keep the premia down.

EMERGING MARKETS

The estimated size of the pharmaceutical market in emerging markets (excluding USA, Canada, EU, Japan and Australasia) is over US$ 90 billion, registering double-digit growth and accounting for a majority of the global pharmaceutical market growth in 2009. China stands out with a size of US$ 32 billion and forecasted growth of 20-23%. All these markets are expected to sustain a double digit-growth across the foreseeable future on the back of a strong economic growth, rising population and an increasing affordability for quality healthcare in these countries. IMS forecasts suggest that the pharmaceutical market in emerging market countries will be US$ 155-185 billion in 2013 (CSFB, Morgan Stanley and IMS data).

Japan: Japan’s stringent quality standards tend to deter global entrants. On the other hand, it is a fast-emerging generic market at US$ 3.5 billion, with generic penetration at 15% by volume and likely to rise to 30% by volume by 2012 (CSFB Pharma far marts, March 2010).

Europe: The European market for generics in 2009 was US$ 33 billion (IMS data). Although generic medicines now fulfill over 50% of the demand for medicines in Europe, they still only represent 18% of the total medicine bill.

APIs

India is a significant player in the global active pharmaceutical ingredient (API) market, being one of the world’s largest API manufacturers. It ranks fourth by volume and thirteenth by value. It is expected to generate sales worth US$ 6 billion in 2010, growing around 19%. A bulk of the API production is exported to Europe (Source: Pharmabiz). India is also recognised as one the world’s lowestcost producers of small molecule APIs.

With an increasing pressure on global economies, especially advanced nations, to reduce healthcare costs, India is set to play a significant role in this space.

Business Performance:

Indian branded generics

Overview

Sun Pharma is India’s sixth largest branded generics player, with a product basket comprising 537 formulations and covering chronic therapy segments. Several of the products are technically complex products with relatively lower competition. They commanded a market share of 3.7% in 2009-10.

In 1995, they pioneered a therapyfocused marketing strategy where products from different therapeutic segments were marketed by separate divisions. Currently they market products through 18 divisions, facilitated by a strong field force of more than 2,500 members covering more than 130,000 specialist doctors.

Almost 50% of the brands feature among the top three brands in their specific spaces in India. The top 10 brands contributed 20% to domestic revenues while the top 50 brands contributed 53% in 2009-10, de-risking the growth from an excessive dependence on a handful of blockbuster products. Besides, the growth was balanced between

established products launched before 2006 accounting for 67% of the growth, and a continued launch of differentiated products in the therapy areas of the focus.

BUSINESS REALITIES IN 2009-10

· The domestic business revenues decreased 7% from Rs. 19,597 millions in 2008-09 to Rs. 18,301 million.

· According to IMS, they were ranked sixth with a 3.7% market share and 18% GR.

· According to AWACS, a market audit firm at the wholesaler level, they ranked fifth with a 4.3% market share and 15% GR.

· A total of 48 new products were introduced across various divisions. Technically complex products like Exapride (exenatide injection) and Cardivas CR (carvedilol phosphate extended release) that differentiated the product offering were launched during the year, as also Lambin (liposomal amphotericin).

· Major brands like Pantocid, Glucored, Susten, Aztor, Strocit and Gemer registered double-digit growth in a competitive market, strengthening the topline.

· Pantocid, an antiulcerant along with combinations, emerged as the largest selling product group in India from the portfolio.

· They continued efforts in prescription generation for existing products, and introduced new products.

· They intensified the focus on building brands based on complex technologies.

· In therapeutic segments, where they are a significant player, they strengthened the leadership with strong execution and strategies. Similarly, in other segments where they are late entrants, they continued to build the prescription share.

· They enriched doctor relationships and built trust through the scientific promotions like PG CME meets and symposia where world-class speakers were invited to share experiences with Indian doctors, etc.

· They launched the antidiabetic injectable Exapride (Exenatide), a 39 amino acid-based peptide in a patient-friendly delivery system device. The product can handle multiple doses and be reused, reducing the patient’s spend on the repeated purchase of the device.

· Octride, the peptide-based treatment for variceal bleeding, became one of the largest GI products.

· Technically complex drugs like Gliotem (Temozolamide) and Gemtaz (Gemcitabine) helped them differentiate

· and earn the trust of oncologists.

· They launched Lambin (Liposomal amphetericin), a targeted treatment for systemic fungal infections in immunocompromised patients.

US operations

Overview

The presence in the US generic market accounts for around 28% of the total sales, with formulation manufacturing facilities spread across ix locations, including several sites in India. This combination of manufacturing sites with facilities – on mainland US and offshore – gives them the flexibility to manufacture where it is most economical.

The product basket comprises a prudent mix of generics and complex or limited competition products. They have the flexibility to manufacture all dosage forms ranging from tablets to injectables, eye drops and sprays. A large number of products that they make are integrated into APIs and offer them an effective control on costs.

They introduced products such as Amifostine, Lupreolide, Octreotide and Vecuronium, which are technically complex, face a lower competitive intensity and offer reasonable profitability.

BUSINESS REALITIES, 2009-10

Despite the halting of production at Caraco, they reported a good growth of distributed products.

· Began to build sales of the first few controlled substance ANDAs from the Cranbury facility.

· Entered the oncology therapeutic segment; launched 10 products; built a strong CNS product range (29 products) and CVS range (13 products).

· Received exclusivity for generic Eloxatin; continued to sell generic Protonix at risk (they discontinued sales of both products in the first quarter of 2010-11).

· Received a settlement fee from Forest Labs and Lundbeck for the Lexapro patent dispute, with likely milestones should the process be used by them.

· Built credibility with customers by continually communicating developments on the FDA issue with Caraco. The team convinced customers that the issue was ringfenced only around Caraco, even as the other operations for the US remained dependable and compliant.

The US generic market continues to be demanding, with extensive competition from equivalently placed companies now extending to products even in the exclusivity period. The FDA has been raising the bar on regulations, and at times there have been significant delays for generic approvals at the FDA. The FTC has also been keeping a close watch on generic-innovator deals as a part of its mandate.

At Caraco, as required by the USFDA, the team is working closely with cGMP consultants to identify and implement corrections to comply with FDA requirements. Caraco has taken FDA approval on its work plan, and is now working to put these corrections in place. Caraco has created a partial reserve of US$ 15.9 million to account for losses due to inventory seizure worth US$ 24 million by US FDA. It has drawn up a roadmap for transferring some products to alternative manufacturing sites and has also begun to market several products from Forest’s Inwood business, as part of an agreement.

REST OF THE WORLD

Overview

The global footprint now spans 40. pharmaceutical markets across four continents, some 1,578 products already registered and nearly 900 products in the regulatory pipeline in these countries. The emerging markets part of the business grew by over 40% over the last seven years and they expect the momentum to continue. The key high-potential markets are Russia, China, Brazil, Mexico, ex-CIS nations and South Africa. Considering the size, the

potential opportunities and to strengthen the competitive capabilities, they established manufacturing operations in Mexico and Brazil. The regulatory filing of products from these facilities has commenced.

Regulatory demands are becoming progressively stringent, increasing the cost and timelines to register the products in a number of emerging markets. In the last few years, some emerging markets amended their regulatory requirements to match those of regulated markets with the need to have detailed plant inspections and local bio-studies.

These developments have a potential to stagger the new product registrations in these countries. However, they will aim to increase the footprint and augment the product offerings across emerging market regions in a phased manner.

API business overview

The backward integration into speciality APIs for key products strengthens the position against competing global pressures. Several of the eight world-class facilities are ISO 14001 and ISO 9002-approved. Many of the plants hold approvals from the US FDA as well as regulatory authorities of various developed countries

The API basket currently comprises 170 products, of which a vast majority are complex APIs. A large proportion of APIs manufactured are consumed in-house.

They have standalone facilities in Panoli and Ahmednagar for peptides, anti-cancers, steroids and sex hormones. The Hungary unit manufactures controlled substances from the basic stages, while the manufacturing facilities can handle multiple products. The Tennessee plant holds quotas for controlled substance API manufacture in the US. They add more than 25 API processes annually, enriching the product basket.

In 2009-10, the API business grew 13% from Rs. 4,846 millions in 2008-09 to Rs. 5,491 millions in 2009-10 and registered a 19% CAGR (last five years leading to 2009-10). The API revenues accrue from a global footprint covering 56 countries. In the regulated markets, the business is largely conducted with end-users. For a large number of products like Pentoxifylline, Clomipramine and Mesalazine, they are a dominant, if not the leading, international producer.

· Received approvals for eight APIs from various regulatory authorities; this took the total regulated market-approved APIs to 89 out of 155 filings made for DMF and CEP

· Enhanced the equipment productivity by reducing process steps, improving chemistry and optimising manufacturing costs through value engineering

They intend to strengthen the presence in Japan and China, as also in the API hubs of Germany and Italy.

RESEARCH AND DEVELOPMENT

Research and development lies at the heart of the success. Research is undertaken at various R and D centres including two state-of-the-art centres, accommodating 600 qualified scientists. Over the years, they developed sound capabilities ranging from complex APIs to formulating complex, technologyintensive products. The research initiatives offer complex products to the customers and patients.

The Baroda research centre develops complex APIs and dosage forms for India, US and Europe. The Mumbai research centre focuses on the development of differentiated dosage forms and generics for developed markets like the US and Europe. The work at these research centres ensures that they have a robust pipeline to feed all the markets that they operate in.

The state-of-the-art research laboratories are equipped with extensive facilities for pharmacokinetics, formulation

development, organic synthesis, clinical research and analytical development.

INTELLECTUAL PROPERTY

They possess a rich patent library. The cumulative filings stood at 246 filings, of which 81 were approved. They filed 13 new patent applications in 2009-10.

Regulatory Affairs

Every step in the pharmaceutical value chain – product development, manufacture and marketing – is marked by an adherence to regulatory compliance. The regulatory norms vary widely across countries and are periodically

upgraded to meet increasing quality expectations.

The result is that with competition increasing, it is not merely enough to meet regulatory compliance; it is now imperative to do so with speed and emerge as a first-mover in a particular product or geography.

The regulatory compliance is a competitive advantage that has enabled them to establish a global footprint across 40 countries. The regulatory team helps strengthen (through increased product filings) and expand (by meeting regulatory requirements of new geographies) this global presence.

Over the years, the team reduced the time for filing regulatory documents despite growing regulatory complexities.

Highlights, 2009-10

· Filed 14 DMFs in the US; received six DMF approvals during the year. They emerged among the few Indian pharmaceutical companies with the maximum DMF filings in the US – 99 (with 43 approvals) as on March 31, 2010.

· Filed seven Certificate of Suitability with the European Pharmacopoeia (CEP) for strengthening the European

· presence; this took the total CEP filings to 28, with 21 approvals in all.

· Filed 30 ANDAs for approval with US regulatory authorities; received approval for 15 ANDAs; the total tally of ANDAs stood at 207 filed and 84 approved as on March 31, 2010.

· Filed dossiers in 40 countries, including Taiwan, Japan, Canada, Australia and China.

· Received approval for Sumatriptan prefilled injections from UK MHRA, the Company’s first device approval

Business Overview:

Sun Pharma's product portfolio consists of 4 main categories of products:

1. India Branded Generics

2. US Generics

3. International Branded Generics

4. Active Pharmaceutical Ingredients (API)

YEAR IN REVIEW

Sun Pharma's annual sales for 2008-09 was Rs. 42,723 million, a growth of 27% over the previous year.

This year, Sun's R and D expenditure was Rs. 3,320 million. The Company’s cumulative spend on R and D over the years now amounts to Rs. 15 billion.

In line with their intent of becoming an international generic pharma company, sales from international markets grew to 53% of their total turnover.

Sales at Caraco were down 4% to USD 337 million.

Between Sun Pharma and Caraco, a total of 69 ANDAs are now approved and 107 more await approval with the US FDA.

patents were filed and 76 granted based on research at their R and D centre.

Indian Pharmaceutical Market:

India is the world's fourth largest pharmaceutical market in terms of volume and the 15th largest in terms of value (USD 8 billion) (Source: ORG IMS). It is primarily a retail-based branded generic market with 80% dispensed through pharmaceutical outlets. As in most emerging economies, acute therapies dominate and account for close to 75% of the market.

The Indian pharmaceutical industry has recorded a CAGR of 13.5% over the past five years. However, over the past two years, growth slowed a bit to 12.6%. Chronic therapies, such as diabetes, cardiovascular, and products used to treat central nervous system ailments, are growing faster than acute therapy. While there was a slight decline in revenue growth in the first nine months of FY09, this probably was largely driven by a cut in excise duty from 8% to 4% that was passed through.

A draft of a new/revised drug price policy was being previously examined by the group of Cabinet Ministers in the country. The draft proposal seeks to expand the number of drugs significantly, to 354 molecules including those

used to treat lifestyle ailments, under the purview of a pricing control regime. They continue to monitor the developments and will be able to assess their situation with respect to the policy only when the final policy is out. With a new government in place, this could likely be reviewed afresh.

With the domestic economy slowing, there have been well founded fears of slowing growth in the pharma market. However, in the estimate, the impact may be much lower and perhaps also be slower in comparison to the well-known cyclicals due to the strength in the longer-term growth story and the structural underpinnings of the market that remain intact:

Changing demographics (including population growth) and rising disposable income due to which spend on healthcare is increasing

Early and improving diagnosis

Scope to increase penetration in the country -less than 40% of population is estimated to have access to modern medicines

General increase in health awareness due to deep penetration of the electronic media

Improving therapy/prescription compliance

Improving health infrastructure with support from government's incentives

According to ORG IMS, other trends which continue to be witnessed by the industry include:

· Therapeutic profile of the Indian pharma market is changing from acute illnesses to chronic ailments. While prescriptions written by General Practitioners (GPs) are estimated to be growing at 2%, growth in specialist prescriptions is estimated at more than 5-6% p.a.

· In order to gain penetration, companies are increasing their reach to Class II-VI towns and rural areas. However, access to the market (i.e. connectivity and infrastructure), limited availability of doctors and dispensaries, lack of awareness and low inclination to pay are key hurdles.

· The hospital market is expected to become a meaningful opportunity. Pharma sales to hospitals are estimated to be at Rs. 25 billion. Currently, around 250 companies are participating in this market.

According to ORG IMS Research, long term prospects of India's domestic market remain solid with the USD 8 billion market in 2008, expected to rise to USD 30 billion in 2020, implying a CAGR of 11.6%.

India Branded Generics

Domestic formulations or India Branded Generics has shown rapid growth, contributing 45% to their total revenue during 2008-09. Their market share has grown from 2.6% in March 2001 to 3.5% during March 2009. The top 10 brands of the Company now contribute 21 % of the sales in this segment. (Source: IMS - ORG Stockist Data)

During 2008-09, they demonstrated a 32% growth, with chronic therapy largely driving the growth. Fast-growing chronic therapies like Psychiatry, Neurology, Gastroenterology, Cardiology constitute more than 70% of their portfolio. They continue to demonstrate market leadership in the chronic segments. They rank amongst the top 3 in more than 50% of the brands from a portfolio of over 500 brands. A2,500- representative strong field force across 18 marketing divisions helps build strong brand loyalty.

Highlights of the year

42 products have been brought to the market in India in FY09, across 18 marketing divisions. 9 products used a technology-based differentiation or were complex, 12 were integrated to API.

Pantocid group, Aztor, Strocit and Gemer continue to grow at double-digit growth rates in extremely competitive markets.

They brought to the market hi-tech Octride Depot 20 mg and 10 mg once a month injections, a one-of-its-kind product for the treatment of serious and difficult to treat indications such as Neuroendocrine Tumors (NETs) and Acromegaly. They introduced a number of complex products such as Tamlet (modified release Tamsulosin Hydrochloride and Extended Release Tolterodine Tartarate Capsules), Tyrogef (Gertifinib), Cernos Depot (Testosterone Undecanoate).

OUTLOOK

Sun Pharma ranks as the leader in several therapies including Psychiatry, Neurology, Cardiology, Diabetology, Ophthalmology and Orthopedics. Their goal is to strengthen their leadership position. To this end, they continue to concentrate on their strategy to focus on chronic therapies to create a sustainable revenue stream from the Indian market. They intend to retain and strengthen their position in these therapies as well as attain the first position in other therapies where they currently have a lower rank, thus increasing their market share and keeping consumer focus.

They bhave worked steadily to make Sun Pharma a company that can deliver sustained, high-quality growth. They continue to help patients by bringing to the market technically complex products supported by their very able sales and marketing force and a productive Research and Development (R and D) cell.

From an operations perspective, they continue to focus on minimizing the time taken to launch the products in the market and optimize operational costs through vertical integration.

MARKET SCENARIO

The generics market remains a major growth area in the global healthcare arena. It continues to grow at a faster pace than the global pharma market, largely due to regular patent expirations of blockbuster drugs. Rising healthcare expenditure also contributes to industry expansion, with governments seeking cost-containment in several national healthcare sectors, by promoting the use of generic products over higher-priced originator products.

However, the year 2008 witnessed significant reduction in sales growth, despite robust volume increases. This was largely on account of manufacturers increasingly competing in price battles within most of the world's major markets.

Global generic products generated USD 78 billion in audited sales in the twelve months through September. The top eight global markets - the US, Germany, France, the UK, Canada, Italy, Spain and Japan -today account for 840/0 of total generics sales. (Source: IMS 2008 Global Pharmaceutical Market and Therapy Forecast)

US, the world's largest generics market with 42% of global sales, experienced a 2.7% sales decline in the twelve months ending September 2008 while volume increased 5.4% during the same period. The market is currently valued at USD 33 billion, compared with USD 34 billion last year, reflecting declining prices and fewer blockbusters losing patent protection in 2008. (Source: IMS 2008 Global Pharmaceutical Market and Therapy Forecast) Generic products now account for 71.5% of the total US pharmaceutical market volume, however accounting for only 21.6% of all dollars spent on prescription. (Source: Generic Pharmaceutical Association 2009 Report)

The return of Democrats to power in the White House and US Congress should further improve the prospects of generic companies in the US pharmaceutical market. In all likelihood, the new Democrat regime in the US will be additionally pro-generic, given the significant cost benefits associated with generics. According to the Generic Pharmaceutical Association (GPhA), while brand prescription drug prices rose by nearly 9%, generic drug prices decreased by an average of 10.6% in 2008.

The new administration also has the eminent task of a comprehensive health care reform to rein in the skyrocketing health care costs that are driving Medicare closer to the financial brink. According to the Trustees' 2009 report on Medicare, the program will be insolvent by 2017, two years sooner than projected in last year's report.

Perhaps the most important stimulus to the generics market will come from implementation of health insurance coverage for all Americans. This would mean that about 47 million Americans that are currently out of any health insurance will come under coverage, expanding the market for cost-effective therapeutics, including generics. Initial reports indicate that President Obama has already begun to take steps in this direction. In his first budget, he is expected to seek USD 634 billion over 10 years as a down payment on health care reforms- more than half of the estimated total cost of bringing 47 million Americans under coverage.

The US generics market continues to be their highest Tpriority market, with more than 35% of their total sales coming from this segment. With integrated manufacturing capability and the flexibility to manufacture onshore/ offshore, they expect strong momentum in this segment going forward.

The year was marked with a number of ANDA approvals from the US FDA including the first controlled substance approval.

During the year, they received ANDA approvals for 18 products, including the following significant approvals:

* Carboplatin inj.

* Divalproex Sodium DRtabs

* Pamidronate inj.

* Leuprolide inj.

* Hydrocodone with Acetaminophen

As of March 2009, ANDAs for 107 products await approval (including 7 tentative), of this, 82 products are from Sun Pharma (3 tentative), and 25 from Caraco, (4 tentative).

Controlled Substances

During the year, their subsidiary acquired 100% ownership of Chattem Chemicals, Inc. (Chattem) in Chattanooga, Tennessee, USA from Elcat, Inc. Chattem is a narcotic raw material importer, registered to import and manufacture controlled substances. The Company also manufactures a variety of APIs with a focus on controlled substances. With this acquisition, they have increased the presence in the controlled substances market and the pain management segment in the US. their Cranbury, US facility also received ANDA approval for the production of Generic Hydrocodone bitartate with acetaminophen (APAP) tablets. This is their first approval for products based on controlled substances.

Generic Effexor XR(R)

In November 2008, the US FDA granted Osmotica's Citizen Petition regarding Venlafaxine extended release tablets. In this petition, US FDA was requested to refrain from approving any pending ANDA for such tablets that cited Wyeth's Effexor XR(R). capsules as the reference drug. The FDA also asked Sun Pharma to resubmit the ANDA if they wanted an approval.

They have not been sued in terms of the subsequent filing but the generic approval will take its own course.

OUTLOOK

Today, there are nearly 9,000 generic drugs available for nearly 11,500 products approved in the US. The stream of brand product patent expirations will continue to drive growth in the generic industry over the next several years. Industry analysts estimate that brand products with approximately USD 60 billion in annual sales will lose market protection by 2011 further expanding patient options and savings. (Source: Generic Pharmaceutical Association 2009 Report)

With more and more number of entrants wanting a pie of the US generics market, there has been a sharp increase in the number of AND Applications.

International Branded Generics

MARKET SCENARIO

Arecent study of the global pharma market by region clearly indicates the growing importance of the international (Non-US/North America) markets in the industry. Out of the approximately USD 773 billion global market in 2008, around USD 461 billion of sales came from the non-North America regions. The global market is expected to grow at a CAGR of 3-6% over 2008-2013 and North America is expected to experience negative growth or a maximum of 2% growth. It is regions like Asia, Africa, Australia and Latin America which are expected to grow at a CAGR of 11-14% in this period. (Source: IMS Health Market Prognosis, March 2009)

International Branded Generics constitute 9% of the total sales of the Company, growing at a 3-year CAGR of 41 %. their reach extends to over 30 countries with a combined local sales force of over 400 people.

During the year, they had over 300 new registrations. In all, they have registered close to 1,600 products and another 1,000 are awaiting registration. Their growth in this segment has not only come from the introduction of new products but also from increased sales on existing products.

Their reach extends to countries in Asia, Africa and Latin America. They entered two new markets this year viz. Algeria and Venezuela. Pantoprazole, Encorate chrono, Aztor, Citopam, Zosert and Dazolic were amongst the largest brands they marketed internationally.

Russia is moving from a government and hospital-based system to a prescription pull-based market. With a large number of products awaiting registration in several therapies, Russia promises significant growth potential in the coming years.

Rules for product registration have become more stringent in China. Registration now requires Bioequivalence or Clinical trials which increases the time and costs significantly. On a positive note, they continue to perform well in Mexico. The market here is innovation molecule driven but they have been able to gain the most from their close generics. They are also increasing their product basket.

OUTLOOK

They continue to rely upon the strengths viz. wide porffolio of specialty prescription products and strong product promotion skills to execute the international plans while they slowly gain expertise on handling tender/government business in each of the countries they are present in. Going forward, they will strongly focus on China, South-East Asia, South Africa, Brazil, Mexico and the CIS region for this segment of their business. By rapidly expanding the product offering and building a sizeable sales force, they intend to significantly improve their prescription/market share in these countries.

Europe

Europe is a region where they intend to increase their generic focus in the years to come. According to European Generic medicines Association's (EGA) Market Review 2007, the EU generic medicines market was about 31 billion. They continue with their efforts to enter key markets with a limited number of complex generic products viz. injectables initially. They will then offer more products and selectively build up a portfolio in this market.

APL

India is on its way to become a global leader in API production The Indian API manufacturing industry is projected to make sales of USD 4.8 billion by 2010, exhibiting an average yearly growth rate of over 19%. Though, there was a global slowdown in the API market in 2008 due to the recession, long term prospects continue to be promising. With their rational costs, rapid speed to market and strong regulatory capability (133 DMF/CEP have been approved or are awaiting approval), Sun Pharma is well placed to capitalize on this opportunity.

Around 160 specialty APIs are produced across 8 world-class locations, all of which are ISO 14001 and ISO 9002 approved, besides being approved by the respective foreign regulatory authorities. 6 of these are in India while they have one plant each in Hungary and USA for the manufacture of APIs for controlled substances. They also have standalone units in the plants in India for the manufacture of peptides, anticancers, steroids and sex hormones.

A large part of their API capacity is used for in-house consumption. During 2008-09, their API sales grew to Rs. 4,846 million, contributing 11% to the total turnover. This segment has been growing at a 3 year CAGR of 21%.

78% of API sales come from international markets. The European market has performed well for them this year with older products like 5 ASA, Pentoxifylline and Clomipramine in which they have good market shares.

Their integration into API manufacturing is an important part of their business. It strengthens their Indian and developing markets business, and their ability to take on challenges in the US generic market.

This year, they scaled up 30 APIs. This brings their total regulated market approved API to 81 of 133 filings made for DMF and CEP.

Subsidiaries

The Ministry of Corporate Affairs, Government of India, vide order No. 47/447/2009-CL-III dated June 18, 2009 has granted approval that the requirement to attach various documents in respect of subsidiary companies, as set out in subsection (1) of Section 212 of the Companies Act, 1956, shall not apply to the Company. Accordingly, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. Financial information of the subsidiary companies, as required by the said order, is disclosed in the Annual Report. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company and its subsidiaries who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection by any investor at the Registered Office and Corporate / Head Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

Finance

The banks in consortium continue to offer their highest rating to the company enabling it to source funds from banks at attractive rates of interest. CRISIL continued to reaffirm their highest rating of 'P1+', for the Company's Short Term Borrowing Programme throughout the year. The Company does not offer any Fixed Deposit scheme.

UNAUDIATED FINANCIAL RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2010.

(Rs. In Millions)

Particulars	Quarter Ended 30.09.2010 (Unaudited)	Half Year Ended 30.09.2010 (Unaudited)
Income
Net Sales/ Income from Operations	5121.600	10110.400
Other Operating Income	2958.900	5557.000
Total Income	8080.500	15667.400
Expenditure
Increase/ Decrease in Stock in trade and Work in progress	110.300	129.000
Consumption of Materials	1815.800	3821.400
Purchase of Traded Goods	462.000	870.300
Employee’s cost	658.000	1275.400
Other Indirect Taxes	118.300	239.300
Depreciation / Amortisation	123.800	302.000
Other Expenditure	1542.800	2850.300
Total Expenditure	4831.000	9487.700
Profit From Operations before other Income, Interest and Tax	3248.600	6179.700
Other Income	113.000	443.700
Profit Before Interest and Tax	3362.500	6622.900
Net Interest Income	318.100	484.300
Profit After Interest but Before Tax	3680.600	7107.200
Tax Expenses	223.400	423.700
Net Profit for the period from ordinary activities after tax	3457.200	6683.600
Paid-up Equity Share Capital
Equity Share – Face Value Rs. 5 each	1035.600	1035.600
Reserve Excluding Revaluation Reserve (As per last Audited Balance Sheet)
Earning per Share – (Basic and Diluted)	16.7	32.3
Public Shareholding
No. of Equity Shares of Rs. 5 each	75150151	75150150
Percentage of Shareholding	36.28	36.28
Promoters and promoter Group Shareholding
a) Pledged/ Encumbered
No. of Equity Shares of Rs. 5 each	475000	475000
Percentage of Equity Shares (as a % of the total share holding of promoter and promoter group)	0.36	0.36
Percentage of Equity Share (as a % of the total Share Capital of the company)	0.23	0.23
b) Non – Encumbered
No. of Equity Shares of Rs. 5 each	131491240	131491240
Percentage of Equity Shares (as a % of the total share holding of promoter and promoter group)	99.64	99.64
Percentage of Equity Share (as a % of the total Share Capital of the company)	63.49	63.49
Research and Development Expenses incurred (included above)	421.100	814.300

SEGMENT OF ASSETS AND LIABILITIES

(Rs. In Millions)

Particulars	As at 30.09.2010 (Unaudited)
SHAREHOLDERS’ FUND
a) Capital	1035.600
b) Reserve and Surplus	62827.700
	63863.300
LOAN FUNDS	340.600
Deferred Tax Liability (NET)	1256.800
Total	65460.700
Fixed Assets	9024.300
Investments	29399.900
Current Assets, Loans and Advances
a) Inventories	5540.100
b) Sundry Debtors	5428.400
c) Cash and Bank Balances	16435.800
d) Other Current Assets	396.100
e) Loans and Advances	2905.400
	30705.800
Less: Current Liabilities and Provisions
a) Liabilities	3084.600
b) Provisions	584.700
	3669.300
	27036.500
Total	65460.700

Note:

· The above financial results of the company have been reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on October 30, 2010 and have been subjected to a Limited Review by the Statutory Auditors of the company.

· The Board of Directors of their meeting held on September 24, 2010 have approved the split of one Equity Share of Rs. 5 each into five Equity Shares of Rs. 1 each which is subject to approval by the shareholders of the company and necessary regulatory companies.

· During the quarter, the Supreme Court of Israel has given its verdict in favour of the company and its subsidiaries (the group) on the pending litigations matter between the Groupd and Taro Pharmaceutical Industries Limited (Taro), a pharmaceutical company, incorporated in Israel, and its erstwhile management consequently, on September 20, 2010. Taro became a subsidiary of the group by virture of management control. The group presently holds 53%d economic interest in Taro.

· Other Operating Income represents share of Income form Partnership Firms

· The company has only one reportable business segment namely “pharmaceuticals”.

· Tax Expenses includes current tax Deferred Tax and Fringe Benefit Tax wherever applicable

· Status of investor complaints (in nos) during the quarter, pursuant to clause 41 of the listing agreement Opening (0), Received (7), Resolved (7), Closing (0).

· Figures for the previous period/ year have been regrouped/ reclassified, wherever considered necessary.

Contingent Liabilities

Particulars	Rs. In Millions (As On 31.03.2010)
Guarantees Given by the bankers on behalf of the Company	274.100
Letters of Credit for Imports	515.000
Liabilities Disputed -Appeals filed with respect to :
Income Tax on account of Disallowances I Additions	4167.600
Sales Tax on account of Rebate I Classifications	11.400
Excise Duty on account of Valuation I Cenvat Credit	316.600
ESIC Contribution on account of applicability	0.200
Drug Price Equalisation Account [DPEA] on account of demand towards unintended benefit, including interest there on, enjoyed by the Company	14.000
Demand by JDGFT import duty with respect to import alleged to be in excess of entitlement as per the Advanced Licence'Scheme	11.100
Other Claims against the Company not acknowledged as debts	6.700
Estimated amount of contracts remaining to be executed on capital account [ net of advances ].	1118.700

FIXED ASSETS:

Freehold Land
Leasehold Land
Buildings
Plant and Machinery
Vehicles
Furniture and Fixtures
Trademarks Designs and other Intangible Assets

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PROFILE:

They make speciality pharmaceuticals and active pharmaceutical ingredients. Their brands are prescribed in chronic therapy areas like cardiology, psychiatry, neurology, gastroenterology, diabetology and respiratory.

They have the same drive for growth that marked the early days. Sun Pharma came into existence as a startup with just 5 products in 1983. In the time since, they have crossed several milestones to emerge as a leading pharma company in India, a rank that we have now been at for more than 5 years. (IMS-ORG Retail Store Audit, March 2006)

They have reached leadership in each of the therapy areas that they operate in, and are rated among the leading companies by key customers. Strengthening market share and keeping this customer focus remains a high priority area for the company.

In the post 1996 years, they have used a combination of internal growth and acquisitions to drive growth; important mergers were those of the US, Detroit based Caraco Pharm Labs and that of the plant at Halol which is now UKMHRA and USFDA approved.

Under a recent corporate development, the areas related to new molecular entities and drug delivery systems are proposed to be demerged into a separate company.

HISTORY

Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments. Sales were initially limited to 2 states - West Bengal and Bihar. Sales were rolled out nationally in 1985. Products that are used in cardiology were introduced in 1987, and Monotrate, one of the first products launched at that time has since become one of their largest selling products. Important products in Cardiology were then added; several of these were introduced for the first time in India.

Realizing the fact that research is a critical growth driver, they established their research center SPARC in 1993 and this created a base of strong product and process development skills.

Sun Pharma was listed on the main stock exchanges in India in 1994; and the Rs. 550 millions issue of a Rs. 10 face value equity share at a premium of Rs. 140/- was oversubscribed 55 times. The minimum 25% that was required under the regulations then for listing was offered to the public, the owner family continues to hold a majority stake in Sun Pharma. They used this money to build a greenfield site for API manufacture, as well as for acquisitions. For the acquisitions, typically companies or assets that could be turned around and brought on track were identified.

Their first API manufacturing plant was built in Panoli in 1995, for access to high quality actives ahead of competition, and to tap the vast international opportunity for speciality APIs.

Another API plant, their Ahmednagar plant, was acquired from the multinational Knoll Pharmaceuticals in 1996, and upgraded for approvals from regulated markets, with substantial capacity addition over the years. This was the first of several sensibly priced acquisitions, each of which would bring important parts to the long-term strategy.

By 1997, their headquarters were shifted to Mumbai, the commercial capital of the country. They began on the first of their international acquisitions with an initial $7.5 million investment in Caraco Pharm Labs, Detroit. By 2000, they had completed 8 acquisitions, each such move adding new therapy areas or offering an entry to important international markets. A new research center was set up in Mumbai for generic product development for the US market. In India, as new therapy areas were entered into post acquisition; customer attention, product selection and focused marketing helped them gain a foothold in areas like orthopedics, gynecology, oncology, etc. From a ranking at 38^th in 1994, by 2000 they were ranked 5^th with a leadership in 8 of the 11 therapy areas that they are present in. The year 2000 was the year of turnaround at the US subsidiary, Caraco, as it began to receive approvals after successful inspection by the USFDA. In December 2004, a research center spread over 16 acres was inaugurated by the President of India, with special lab space for drug discovery and innovation. The post 2005 years have witnessed important acquisitions to strengthen the US business- the purchase of manufacturing assets for controlled substances in Cranbury,NJ; that of a site to make creams and lotions in Bryan, that of Alkaloida, a Hungary based API and dosage form manufacturer , and recently, Chattem Limited, a Tennessee-based controlled substance API manufacturer.

GROUP COMPANIES

Caraco Pharmaceutical Laboratories

Based in Detroit, Michigan, Caraco develops, manufactures, market and distributes generic and private label pharmaceuticals* and markets them throughout the United States. The corporation's present portfolio consists of a number of products in various strengths and package sizes, across a variety of therapeutic segments, including epilepsy and hypertension. For the most recent year ending March 2009, Caraco had sales of over $337 mill.

Caraco's manufacturing facility and executive offices were constructed in 1991, after a $9.1 million loan from the Economic Development Corporation of the city of Detroit. Since August 1997, capital infusions and loans have primarily come from Sun Pharma.

Sun Pharma's investment in and support of Caraco has resulted in, since the second quarter of 2002, Caraco achieving the sales to support its operations. As on March 2009, Sun Pharma owns approx 76% on a diluted basis of the outstanding common shares of Caraco. Sun Pharma has two R and D centers in Baroda and Mumbai, where development work for generics is done.

Sun Pharmaceutical Industries Inc. (SPI)

Sun Pharmaceutical Industries Inc is a Michigan Corporation and a wholly owned subsidiary of Sun Pharmaceutical Industries Limited, India.

In the second half of 2004, Sun Pharma acquired the trademarks, manufacturing know-how and other intellectual property of certain pharmaceutical products from Women's First Healthcare, Inc, which was under bankruptcy proceedings. On completion of the acquisition in December 2004, these products were assigned to Sun Pharma Inc.

In December 2005, Sun Pharma Inc completed the purchase of dosage form manufacturing operations of Able Labs in the US for USD 23.15 million from the US Bankruptcy Court of the District of New Jersey, Trenton. A plant spread over 35,000 sq ft, in Bryan, Ohio, manufactures liquids, creams, and ointments. This plant was purchased from Valeant Pharma.

The Ohio plant is now approved by the USFDA and the Cranbury plant expects to receive approval shortly.

In January 2005, the company entered into a distribution and sale agreement with Caraco. Under the agreement, Caraco distributes and sells SPI’s products using its business organization, management personnel, and distribution set up.

Sun Pharmaceutical (Bangladesh)

Sun Pharmaceutical (Bangladesh) is a private limited company incorporated in March 2001 under the Companies Act 1994. This company was formed jointly with Sun Pharma, City Overseas Limited, a company incorporated in Bangladesh and Sun Pharma Global Inc, a company incorporated under the laws of the British Virgin Islands. The company began commercial operations in October 2004. The company owns and operates a pharmaceutical factory and makes pharmaceutical products that are sold in the local market. It currently markets 58 products and had reported a turnover of Rs.222 millions with a profit of Rs.49 millions for the year ending March 09.

Alkaloida Chemical Company Exclusive Group Limited

ICN Hungary, purchased from Valeant Pharmaceuticals in 2005, is one of the few units worldwide, authorized to make controlled substances. ICN Hungary has now been renamed Alkaloida Chemical Company. This 170 acre site has facilities spread over 1,75,000 sq ft for the manufacture of bulk actives, with 500 KL capacity and designated areas to make controlled substances. It has a 150,000 sq ft facility for different dosage forms such as film coated and effervescent tablets, capsules, etc. A large 65,000 sq ft research center has labs across synthetic chemistry, instrumentation analytical and structural elucidation. The site is operational with 450 people and additional recruitments are planned over time.

MILESTONES

1983

Sun Pharma begins operations in Kolkata with 5 psychiatry - based products, first with 2 people and then with a 10 - employee team. Year 1 turnover - Rs. 1 million. Within a year, the marketing effort is expanded to cover all eastern states. A compact manufacturing facility for tablets/capsules is set up at Vapi.

1986

Administrative office is set up in Mumbai. Customer coverage extends to select cities in Western India.

1987

Marketing operations are rolled out nation-wide.

1988

With the launch of the brands Monotrate and Angizem, the first few cardiology products are launched. They feature for the first time in a market audit by the prescription tracking company, ORG* at rank 107^th with 0.1% market share.

1989

The corporate office is shifted to Baroda, in the western state of Gujarat. Products used in gastroenterology are introduced. Exports to neighbouring countries begin.

1991

Construction begins at the first research center SPARC (Sun Pharma Advanced Research center), with 46,000 sq ft of research space, and investments of almost the size of that year's profits. The company's turnover is Rs. 97.4 millions , and market rank is 70^th.

1993

SPARC, the first research center, is inaugurated by His Excellency Shri K. R. Narayanan, the Vice President of India. An office is begun in Moscow. Products are now registered across 10 markets.

1994

After an IPO in October, they are listed on the major stock exchanges in India. The offering is oversubscribed 55 times. A dosage form plant at Silvassa starts production. Major expansion at the plant in Vapi is completed. For the first time, a brand from the company, Monotrate, features among the top 250 pharma brands in the Indian market. Experimenting with a focused marketing approach, a separate division, Synergy, is carved out to market Psychiatry/ Neurology products.

1995

Their first API plant at Panoli starts production.

A new division, Aztec, now renamed Azura, is begun for cardiology products, with a further reallocation of products across divisions. Inca, a new division to market critical care medication to intensive care units begins operations. International marketing is strengthened with offices in Ukraine and Belarus.

1996

An API-manufacturing unit at Ahmednagar, the first of the their acquisitions, is bought from Knoll Pharma. An equity stake is also picked up in Gujarat Lyka Organics Limited , a manufacturer of Cephalexin Active with a USFDA approval for the intermediate, 7ADCA. At the close of the year, they rank 27^th with 2 products among the country's top selling 300 pharma brands. Product registrations are now in place across 24 countries.

1997

They begin the first of their international acquisitions. As part of a technology-for-equity agreement, a stake is acquired in a generic dosage form manufacturer; the Detroit-based Caraco Pharm Labs. An equity stake is taken in MJ Pharma, a manufacturer of several dosage form lines with UK MHRA approval for Cephalexin capsules.

TDPL, a company with an extensive product offering (oncology, fertility, anesthesiology, pain management) is merged with Sun Pharma. Non profitable/small generic lines and several smaller brands are dropped to rationalize the product mix. TDPL's products offer a ready entry with known brands and customer equity into new high growth therapy areas like oncology and gynecology. Marketing is reorganized once again, this time into 6 speciality-focused divisions. A research and development facility over 6,000 sq ft in Mumbai, the second research site, is established. This center is equipped to make dosage forms and create supporting technical documentation for the generic markets in North America and Europe.

1998

A basket of brands, which include several in the respiratory/asthma area, are acquired from Natco Pharma. Their new formulation plant at Silvassa commences operations.

1999

Rank moves within the top 10 in the domestic market. For a quick entry in ophthalmology, Milmet Labs is merged into Sun Pharma. The Cephalexin API manufacturer Gujarat Lyka Organics is merged with Sun Pharma. 6 brands now feature among the leading 300 prescription pharma brands in India.

2000

Ranked 5^th among all companies in the domestic market on a monthly basis. Pradeep Drug company, a Chennai based API manufacturer is merged with Sun Pharma.

Plans are shared to set up a new research campus in Chennai, which is later dropped as a suitable site is found in Baroda where they have an existing base.

2001

A new formulation plant is built in Dadra. This new plant is spread over a 5-acre site with built up area of 120,000-sq. ft. and has been designed and built to comply with international regulatory requirements, such as the UKMHRA and USFDA.

The erstwhile TDPL division is renamed Spectra. A new division, Arian, targeting cardiologists/physicians and diabetologists, is launched.

2002

Forbes Global ranks Sun Pharma in the list of best small 200 companies for 2002 (turnover less than $500 million).

Sun Pharma is selected as the best company by Express Pharma Pulse, for overall performance for 2002 (in the category A - market share over 2.5%).

4 manufacturing sites win the prestigious IDMA awards.

Work commences on a new, state-of-the-art drug discovery campus in Baroda; this 16-acre site, with space for 400+ scientists on completion, will be commissioned over the next two years.

Work begins on a new R and D center in Mumbai, with 50,000 sq. ft. floor area for projects aimed at the North American and European markets.

2003

Forbes Global ranks Sun Pharma in the list of the best small 200 companies for 2003 (turnover less than $500million).

Sun Pharma is rated amongst the best-managed companies for 2003 across all sectors. (Business Today-AT Kearney study of best-managed companies)

2004

Sun Pharma acquires common stock and options from 2 large shareholders of Caraco, increasing stake to over 60% from 44% at a total outlay of about $42 million. By 2007, this stake has reached 75% on a diluted basis.

The formulation site in Halol, India (the erstwhile MJ Pharma site) receives approval from USFDA, UK MHRA, South African MCC, Brazilian ANVISA and Columbian INVIMA.

The BT Stern Stewart survey places Sun Pharma among the top 20 wealth creators in India and among the top 3 wealth creators in the pharma sector.

Construction at a formulation manufacturing site at Jammu is completed.

Their first joint venture manufacturing unit, in Dhaka, Bangladesh is commissioned. This modern site is spread over 25,000 sq. ft.

Two of Sun Pharma's API factories receive USFDA approval, taking the total number of US FDA approved sites to three.

Sun Pharma acquires a Cephalosporin Actives manufacturer, Phlox Pharma, with European approval for cefuroxime axetil amorphous. By 2007, a formulations facility to make sterile and non sterile formulations have been built, and the API and non-sterile sections have been approved by the USFDA.

Niche brands are bought from the San Diego, US based Women's First Healthcare. (WFHC, not listed). These brands are the gynecological Ortho-Est® (estropipate), and the antimigraine preparation Midrin®.

Forbes Global ranks Sun Pharma in the list of most valuable companies for 2004 (turnover less than $2bill).

2005

Sun Pharma buys a plant in Bryan, Ohio, US and the business of ICN, Hungary from Valeant Pharma.

Sun Pharma acquires the intellectual property and assets of Able Labs from the US District Bankruptcy court in New Jersey in December 2005.

Dilip Shanghvi, the CMD, receives the EandY Entrepreneur of the Year award in healthcare and life sciences for 2005.

Sun Pharma is selected by Forbes amongst the best 200 companies (sales less than USD 1 billion) in Asia. This is the fourth time in 5 years that the company has been selected.

2006

Announced the demerger of innovative business with pipelines, people, equipment and funding, into a new company.

2007

Completed the demerger of the innovative business, with requisite legal and regulatory approvals. SPARC limited, the new company, is listed on the stock exchanges in India, the first pure research company to be so listed.

In May 2007, they, along with the subsidiaries, signed definitive agreements to acquire Taro Pharmaceutical Industries Limited, (TAROF, Pink Sheets), a multinational generic manufacturer with established subsidiaries, manufacturing and products across the U.S., Israel, Canada for $454 mill. This all-cash deal is subject to Taro shareholder approval and requisite regulatory clearances

2008

Chattem Limited

In November 2008, they along with the subsidiaries, acquired 100% ownership of Chattem Chemicals, Inc.,a narcotic raw material importer and manufacturer of controlled substances with a approved facility in Tennessee. This will offer vertical integration for the controlled substance dosage form business in the US.

(*ORG - Operations Research Group Audit of Retail Chemist Sales, later renamed the IMS - ORG Retail Store Audit. Both ORG and IMS are the trademarks of their registered owners)

BOARD OF DIRECTORS

Their overall management and supervision is undertaken by the Board. The day-to-day management is the responsibility of the Managing Director who is assisted by two Wholetime Directors under the supervision, direction and control of the Board. A team of professionals forms the next level of management with responsibility for the divisions or functional areas that they lead.

The Board is composed of the following members

Dilip S. Shanghvi

Chairman and Managing Director

Dilip S. Shanghvi is a graduate in commerce from Kolkata University. He founded their company in 1982 and has extensive industrial experience in the pharmaceutical industry. Mr. Shanghvi is actively involved in international pharmaceutical markets and research and development functions in the company and is also the Chairman of the primary subsidiary, Caraco, in Detroit, U.S.A.

Sudhir V. Valia

Executive Director

Sudhir V. Valia is a fellow Member of Institute of Chartered Accountants of India and carries more than two decades of taxation and finance experience. He joined the company in 1994, prior to which he was in private taxation practice. In addition to being on the Board of Directors of a number of companies in their group, he is also on the Board of Directors of Caraco.

Sailesh T. Desai

Executive Director

Sailesh T. Desai is a science graduate from Kolkata University, with more than 28 years of industrial experience, 18 of which have been in the pharmaceutical industry. Mr. Desai has had comprehensive corporate affairs experience, being involved in the turnaround at Milmet prior to the acquisition of it, as well as in the early stages of the company's growth.

Hasmukh S. Shah

Non-Executive Independent Director

Hasmukh S. Shah has four decades of experience in senior management, and was formerly the Chairman and Managing Director of Indian Petrochemical Corporation Limited, as well as the Vice Chairman of GE Capital and advisor to GE in India. He has had wide experience in various government departments, including as Joint Secretary to the Prime Minister, as Secretary, Post and Telegraph and as Chairman, National Institute of Design, as well as the Institute of Rural Management, Anand and the Gujarat Council of Science and Technology.

Keki M. Mistry

Non-Executive Independent Director

Keki M. Mistry is a Fellow Member of the Institute of Chartered Accountants of India and a Member of the Michigan Association of Certified Public Accountants, USA. He is the Managing Director of the Housing Development Finance Corporation Limited, widely considered to be India's leading housing finance company. He has worked as a consultant to the Commonwealth Development Corporation in various emerging markets as well as to the Asian Development Bank. He holds a number of directorships and is a member of the management committee of the Bombay Chamber of Commerce and Industry.

Ashwin Dani

Non-Executive Independent Director

Ashwin Dani is a science graduate from the Institute of Science, University of Mumbai and U.D.C.T., University of Mumbai. He also holds a Masters Degree in polymer science from University of Akron, Ohio, USA and Diploma in colour science from Rensellaer Polytechnic, Troy, New York. He is Vice Chairman and Managing Director of Asian Paints (India) Limited, one of India's leading paint companies. He also holds a number of directorships and has been nominated by the government as a Trustee on the Central Board of Trustees of the Employees Provident Fund. He is also a member of the executive committee of the Federation of Indian Chambers of Commerce and industry.

S. Mohandchand Dadha

Non-Executive Independent Director

S. Mohandchand Dadha has approximately four decades of experience in the pharmaceutical industry. Mr. Dadha was Managing Director and Promoter of Tamilnadu Dadha Pharmaceuticals Limited, which merged with Sun Pharma in April 1997.

PRESS RELEASES:

SUN PHARMA TO ANNOUNCE Q3 RESULTS ON JANUARY 31, 2011

January 18, 2011, Mumbai: On January 31 2011, Sun Pharma will announce results for the third quarter ending

December 31, 2010. These results will also be available on the Company website, www.sunpharma.com.

Earnings call (10.00 am IST, February 01, 2011)

The Company will conduct an hour long call at 10 am IST on February 01, 2011 where senior management will discuss the Company’s performance and answer questions from participants. To participate in this conference call, please dial the numbers provided below five to ten minutes ahead of the scheduled start time. The operator will provide instructions on asking questions before the call. You can also hear the call via an audio webcast, details of which will be announced later on the Company website, www.sunpharma.com. A transcript of this conference call will also be available on the website.

Summary of events

Event	Date and time	Telephone number/ website
Earnings release	January 31, 2011	www.sunpharma.com
Earnings conference call	10.00 am IST, February 01, 2011	Primary Number : +91 22 3065 0088 Secondary Number : +91 22 6629 0088 Via audio webcast, details of which will be made available on www.sunpharma.com
Replay of conference call	February 01, 2011 to February 8, 2011	India: +91 22 3065 1212. ID: #786742 Via audio webcast playback, details of which will be made available on www.sunpharma.com

About Sun Pharmaceutical Industries Limited

Established in 1983, listed since 1994 and headquartered in India, Sun Pharmaceutical Industries Limited (Reuters: SUN.BO, Bloomberg: SUNP IN, NSE: SUNPHARMA, BSE: 524715) is an international, integrated, speciality pharmaceutical company. It manufactures and markets a large basket of pharmaceutical formulations as branded generics as well as generics in India, US and several other markets across the world. In India, the company is a leader in niche therapy areas of psychiatry, neurology, cardiology, diabetology, gastroenterology, ophthalmologists and orthopedics. The company has strong skills in product development, process chemistry, and manufacturing of complex API, as well as dosage forms.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.93
UK Pound	1	Rs.72.91
Euro	1	Rs.64.34

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		69

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.

MIRA INFORM REPORT

5701.400

4867.400

5532.900

6800.300

1872.700

12654.700

73.900

381.300

3661.300

2674.600

16842.200

27378.300

1482.500

4777.900

1150.500

953.000

3424.800

3421.000

6057.800

9151.900

10784.400

18226.400

33.95

31.30

51.41

46.77

39.14

37.69

0.17

0.25

0.11

0.18

2.78

2.99

Unit