“Pharma Solutions Update – April 2009 Conference … Call/100302_20090430.pdfPage 1 of 30...

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“Pharma Solutions Update – April 2009 Conference Call”

MODERATORS: MR. AJAY PIRAMAL, CHAIRMAN – PIRAMAL HEALTHCARE

MS. NANDINI PIRAMAL, EXECUTIVE DIRECTOR – PIRAMAL HEALTHCARE MR. MURARI RAJAN, EXECUTIVE DIRECTOR – PIRAMAL ENTERPRISES LTD. DR. R. ANANTHANARAYANAN, DIRECTOR AND HEAD – PHARMA SOLUTIONS BUSINESS,

PIRAMAL HEALTHCARE MR. RAJESH LADDHA, CFO – PIRAMAL HEALTHCARE MR. SAGAR GOKANI, INVESTOR RELATIONS TEAM – PIRAMAL HEALTHCARE MR. PRASAD MHATRE, INVESTOR RELATIONS TEAM – PIRAMAL HEALTHCARE

http://www.npilpharma.com/index.html


Piramal Healthcare Ltd. April 01, 2009

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Moderator Ladies and gentlemen, good evening and welcome to Piramal Healthcare Ltd.

conference call to discuss recent developments and the future outlook of the Custom

Manufacturing Business. As a reminder, for the duration of this conference call, all

participant lines are in the listen-only mode and there will be an opportunity for you to

ask questions at the end of today’s presentation. If you should need assistance during

this conference call, please signal an operator by pressing * and then 0 on your

touchtone telephone. Please note that this conference is being recorded. At this time, I

would now like to hand the conference over to Mr. Sagar Gokani, Manager-Investor

Relations of Piramal Healthcare Ltd. Thank you, and over to you, Mr. Gokani.

Sagar Gokani Good evening to all of you. Welcome to Piramal Healthcare Ltd. conference call to

discuss the recent developments and future outlook of Pharma Solutions Business,

that is the Custom Manufacturing Business. Today’s discussion will be focused only

on the Custom Manufacturing Business. We will be discussing about other

businesses when we meet after the announcement of our Q4FY09 results on 24th

April, 2009. Joining me on the call are Mr. Ajay Piramal – Chairman, Ms. Nandini

Piramal – Executive Director, Mr. Murari Rajan – Executive Director, Piramal

Enterprises Ltd., Dr. R. Ananthanarayanan – Director and Head of Pharma Solutions

Business, Mr. Rajesh Laddha – Chief Financial Officer, and Prasad Mhatre from our

Investor Relations team. We will be sending out a brief presentation about the

discussions that we are going to have on this call. It will also be posted on our

website www.piramalhealthcare.com on the investor section. The duration of this call

is 60 minutes. If there are any questions that remain unanswered during the call,

please feel free to reach myself or Prasad. Dr. R. Ananthanarayanan will now talk

about the Pharma Solutions Business and then we can set the floor open for Q&A.

R. Ananthanarayanan Thank you, Sagar. Good evening to all of you. As we present the business update on

the Pharma Solutions, I’ll just run all of us through a bit of the last 4-5 years in our

presence in the Custom Manufacturing area. We started the Custom Manufacturing

Business and set it up from India in 2003 predominantly with large-scale API

manufacturing capability out of our assets in Digwal and Ennore, and large-scale

formulations manufacturing capability at our site in Pithampur.

December 2005, we had the acquisition of Avecia which was the sites in

Huddersfield, Grangemouth, and the Torcan Assets in Canada, clearly building

complimentary technology capabilities, with strong chiral synthesis capabilities,

catalytic hydrogenation and borohydride reactions out of Huddersfield and Torcan,

high potency substances out of Grangemouth. We then entered by virtue of this

http://www.piramalhealthcare.com/



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acquisition into early phase API development services through Huddersfield and

Torcan. We had access to new customer relationships that we didn’t have before, and

we started providing services for customers from the European and North American

geography. We followed this up in June 2006 with the acquisition of Morpeth facility

from Pfizer which brought to us formulations capability in Europe and a very strong

Pfizer relationship.

We also added up an additional overseas capability in terms of sourcing and

strengthen our sourcing team in June 2007 by setting up a sourcing office in China

that helped us provide competitive and reliable sourcing of key intermediates from

China. When we acquired Avecia, we had very strong rationale for the acquisition.

Clearly, we wanted to be present in niche technology capabilities especially in the

growth areas and with the acquisition, we had a strong presence not just in the chiral

area but also the strong presence in early phase development services. We entered

into containment capability for APIs, cytotoxic small molecules as well as

monoclonal antibody conjugates with a strong quality of people in this specialization

in Grangemouth. We also had advantage to get into a number of relationships with

big pharma as well as emerging pharma that were prior not customers of Piramal

Healthcare but were strong customers at Avecia and Torcan and track record that

Avecia had helped us build these relationships for Piramal Healthcare as well.

We also use the site at Huddersfield to get projects for initial campaigns, stabilize

those initial campaigns and then move those campaigns over to India for a longer

time thereby offering a win-win solution to both Piramal Healthcare in terms of

newer opportunities and better long-term price advantage to the customer. We had

the advantage of backward integrating some of the high-cost raw materials in

intermediates and thereby resulting an improvement of overall margins and the

ability to reduce cost for R&D with back-ending some of the process chemistry from

India.

Our acquisition of Morpeth in 2006 gave us not only significant manufacturing for

Pfizer but also access of Morpeth site to access Pfizer’s other Custom Manufacturing

Businesses and it also added up technical capabilities in terms of handling products

for finished dose form with containment suite products that were like prostaglandins

and female health care products and also give us access to packaging and distribution

capabilities.

To give you all a bit of an overview on the benefits from our overseas acquisitions,

from Huddersfield specifically, with the chiral technology capabilities, it has resulted



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in several new project wins for us in India from the Indian assets. We had successful

transition of projects to India after the initial stabilization and thereby the ability to

improve an increased number of projects from our Indian assets. Some of the early

phase projects that were earlier done in Huddersfield have now been transferred to

Digwal and are under validation, so we have been able to move some of them to

India. And as the validation gets completed during the course of the coming year, we

would then be able to start commercial manufacturing as well.

From Torcan, the acquisition gave us access to customers in North America due to

geographical proximity. We were able to use the skills and the experience of Torcan

in setting up early phase development capability at our Ennore site in India. On the

other side, we also made Torcan more cost efficient by providing support and R&D

capabilities from India as well, thereby making Torcan more cost competitive.

In terms of our Grangemouth facility, it gave us a strong presence in high-potency

APIs which is a very, very high-growth area, and that has helped us give a lot of

opportunities to be present in the cytotoxic space.

As regards to Morpeth, clearly, the relationship with Pfizer was extremely important

which helped us build that and increased profitability due to integration with the

Indian assets. We were able to make an entry into clinical packaging business

leveraging the strengths that Morpeth had of several years of handling launch of

blockbuster molecules from that site, and that gave us the capability to start and set

up clinical packaging business from Morpeth.

Thereby now, Pharma Solutions now is a full service CMO across the drug life-cycle

present now across the early phase right from pre-clinical through to Phase-I, Phase-

II, Phase-III and launch going straight up to post-launch and end of life support to

customers as well. And our assets are now stacked up in terms of being able to

provide that support separately to early phase as well as late phase and launched

products. So, our sites in Torcan in Canada as well as in UK and in India from

Ennore provide the early phase capability for APIs, Morpeth UK site and our

Ahmedabad site in India provide capability for early phase formulation. Our sites in

Torcan, sites in Morpeth, Huddersfield, and in India provide large-scale

intermediates manufacturing as well as API manufacturing capability. And likewise,

sites from Morpeth and sites from Pithampur provide capability for commercial

manufacturing of finish dose formulations which now gives us the ability to be a

clear full service CMO across the drug life-cycle.



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We now been looking at our asset network and Pharma Solution is looking to

reconfigure our asset network. Clearly, our focus in FY09 has been towards creation

of early phase API development capabilities both in Morpeth and in Ennore. And all

those early phase capabilities are now being created which then provides us a very

high flexibility to provide those services to customers. We are looking at

consolidating our manufacturing presence in UK. Customers who a couple of years

back were keen to give the initial manufacturing campaigns first to Europe in UK and

then transition back to India after a couple of years have now in the changed

environment started relooking at their strategy, and most customers are now very

keen to move manufacturing directly to Piramal assets in India without necessarily

having to go through an initial launch from our European sites. And as the

environment continues to be so, we look at more and more opportunities for

customers being more comfortable a] because of our delivery and delivery

credentials that we have established with customers as well as our relationships and

hence getting opportunities for our assets in India is becoming increasingly evident.

Over the last few quarters as well as as we go forward, some of the big pharma have

change their inventory holding pattern and stocking position and are reducing that

significantly. All of this has resulted us to have a relook at our asset network and

make the reassessment of the asset network in the UK. The management has now

decided at Piramal Healthcare to discontinue operations in Huddersfield. Piramal

Healthcare UK currently has three facilities in the UK and we plan to consolidate the

operations of Huddersfield with other sites. The facility at Morpeth and Grangemouth

would continue to provide service to customers from UK. With the consolidation

now and relooking at the two key assets that would remain in UK namely Morpeth

and Grangemouth. When we acquired Morpeth, at that point of time, the services that

it offered was manufacturing of commercial APIs and intermediates and

manufacturing of finished dose formulations. Today, as we have built in several

capabilities and new service offerings, we have enhanced the offerings from Morpeth

to include early phase API development capability, early phase finished formulation

capability and clinical trial packaging capability as well. Grangemouth will continue

to cater to early phase high potency and cytotoxic small molecule APIs. Both these

sites will continue to provide services from the European geography. Pharma

Solutions business expects significant growth from both these sites in the next two to

three years.

The update on Pfizer contract to provide you, one contract which was up for renewal

in November 2008 has already been renewed and other contracts which are in the

process are closed to finalization. There are five projects that are closed to



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finalization. And the contract for both the sets, the set that was in 2008 and the

additional ones that are under finalization have now been looked at for an additional

five-year period by Pfizer. Since we would now be looking at shutting down

Huddersfield, we just want to run you through the cost of shutdown. Cash cost of

shutting down Huddersfield site is expected to be about £10.1 million which is about

Rs. 71 Crores consisting of redundancy payments, pension top-ups, contract

termination cost and others including professional fees, contingency payments, etc.

In terms of impact of the closure on Pharma Solutions business, the FY09 revenue

from Huddersfield was about £19 million. Piramal Healthcare’s focus in FY10 is to

significantly improve profitability of Pharma Solutions business. That’s one of the

key aspects, key drivers that we will look for in FY10. We clearly see a strong

improvement in our operating margins. The EBITDA margins for Pharma Solutions

business is expected to improve by 6% to 8% in FY10 both with the combination of

the closure of Huddersfield site plus new business that’s coming into India which is a

mix of products that has higher gross margins. So we clearly expect the EBITDA

margins for Pharma Solutions business to improve by 6% to 8% in the FY10 year.

We have some key initiatives for FY10 to drive this profitable growth. Three of them

are very important, that’s scale-up of early phase intermediates and API capability at

Ennore, early phase formulation development from our Ahmadabad site, clinical trial

packaging from Morpeth, and we have also done a significant amount of investment

in our business development efforts to expand the business development team both in

US as well as in Europe. Thank you. That was the update on Pharma Solutions.

Moderator May we begin the question-and-answer session now, sir?

Sagar Gokani Yeah, sure.

Moderator Ladies and gentlemen, we will now begin the question-and-answer session. At this

time, participants who have question may press * followed by 1 on their touchtone

telephone. If you decide to withdraw a question from the queue, you may press *

followed by 2. You are requested to use only handsets while asking a question.

Participants with questions may press * and 1 at this time. Our first question is from

the line of Shiladitya Das Gupta from ICICI Prudential Life Insurance. Please go

ahead.

Shiladitya Das Gupta Good evening everyone. Sir, I just wanted to get a sense of this revenue our loss of

£19 million, will it be made up by business being shifted to other facilities or this will

be a direct loss? And the second thing is that this redundancy cost of Rs.71 Crore,



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will it be recognized in this year itself or it will be phased over a number of say two-

three years?

Ajay Piramal The sales what we expect when we look at projections for the year and beginning on

1st of April today, the sales for the Pharma Solutions business on its own will be

about 5% lower consolidated sales compared to the previous year. So, part of it will

be made up. And this Rs. 71 Crores will be a onetime charge which we will take in

the last year that is the year ending March 2009.

Shiladitya Das Gupta We’ll take it in the fourth quarter numbers?

Ajay Piramal Yes.

Shiladitya Das Gupta Okay, thank you so much.

Moderator Thank you. Our next question is from the line of Ranjit Kapadia, Individual Investor.

Please go ahead.

Ranjit Kapadia This is regarding the shutdown cost of 10.1 million, I would like to know, how many

people are working in Huddersfield and what is the payment term for pensions?

R. ananthanarayanan It’s about 93 people in Huddersfield.

Ranjit Kapadia 93 people, and how much you are paying for each approximately?

Ajay Piramal Well, really it will vary depending on months of service. There are some people who

are on defined benefits, there are others who are on defined contribution on pension.

So it’s difficult to estimate.

Ranjit Kapadia Shutdown cost of 10.1, how much will be the pension cost, if you can throw some

light on that?

Ajay Piramal So, most of this is towards redundancy and pension, of this Rs. 70 Crores, the rest is

not significant.

Ranjit Kapadia Okay, thank you very much.

Moderator Thank you. Our next question is from the line of Monica Joshi of Avendus Capital.

Please go ahead.



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Monica Joshi Hi good evening gentlemen. Thank you for taking my question. I think I just missed

one number, you said Huddersfield revenue for FY09 was £10 million or £19

million?

Rajesh Laddha £19 million.

Monica Joshi Okay. Can you just run through the figures of Avecia as a complete business unit

with the three UK sites and Torcan, just rough number on what was the revenues

from Avecia in ’09? And thus Huddersfield becomes as a percentage of Avecia

revenues, how much would be the contribution?

Rajesh Laddha So, the remaining volumes for UK sites as well as for Torcan which is a Canadian

site would be approximately about US$100 million. (Editor’s Comment: For the sake

of clarification the sales would be around Rs. 600-620 crores.)

Monica Joshi US$100 million, is your total Avecia revenue?

Rajesh Laddha No, this will be the revenue for the remaining business excluding Huddersfield.

Monica Joshi Okay, so US$100 million and £19 million is the complete Avecia revenue?

Ajay Piramal No. Huddersfield has £19 million, Huddersfield. Now, without Huddersfield, the rest

of the businesses will have $100 million.

Monica Joshi Ok, secondly, on a broader, not about this but on a broader issue, if you could give us

some scene on how CMO projects globally are now behaving because obviously

there was inventory destocking and a bit of a slowdown. Do you think things are

coming back on track? And number 2, are we seeing renegotiation in earlier signed

contracts for probably lower margins or lower rates?

R. Ananthanarayanan Let me answer both the questions separately. One, we are not seeing any

renegotiations from customers on existing contracts. Clearly, that’s something none

of the customers are doing. In terms of de-stocking , this is a transient phase. It’s

more of a onetime correction that some of them are going through so it’s a very

transitionary process. There are some small biotechs specifically virtual biotechs

some of them who are certainly facing issues in terms of timelines for completing

clinical trials, getting their funds for some of the projects. And the smaller biotechs

are the ones that are facing through a slowdown. However, on the other side from the

big pharma perspective, we are seeing a very increased trend in outsourcing towards

Asia, particularly India. So that’s how we see the scenario breaking out.



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Monica Joshi That’s great. Just to follow up on this with the recent whatever has happened with

Pfizer and Wyeth and all such things, do you really see that outsourcing would gather

more momentum as we go along or would they really look at doing something more

out of their consolidated asset.

R. Ananthanarayanan We absolutely see opportunities for outsourcing growing more and more clearly

because in spite of all the acquisitions. First of all, things like Pfizer and Wyeth

acquisitions are still too early in terms of any impact. I think they are still not really

completed the merger, so it’s too early still to have the impact. However, all of the

pharmas looking at acquisitions very strongly, I think there is going to be a lot of

opportunity in terms of increased early phase outsourcing as well which was earlier

not happening to a great level to India, which is now beginning to pick up

significantly, because most of these customers now want more with less. So, with

their budgets being under pressure, they still want to retain a high level of R&D

pipeline and hence which is one of the reasons why we were mentioning earlier that

rather than go through Europe first and then come to India, they are actually looking

more and more to come to India directly.

Monica Joshi Good, that’s very encouraging. Just a follow up on Huddersfield, if I can ask this,

when Avecia was bought in December 2005, obviously the revenues from

Huddersfield have grown. I mean £19 million is number which has grown over the

last three years. My question is how much has been transferred or is in the process of

being transferred from Digwal? You mentioned the 5% kind of a degrowth, but how

much of it would be taken care by Digwal in FY10?

R. Ananthanarayanan We’ve got quite a number of projects that are transitioned into, it’s actually not just

Digwal, so let me break it down into three parts. One, is early phase projects which

were being done in Huddersfield are being transitioned out to make additional

campaigns now at Ennore site. So there is a shift to Ennore in terms of some of the

Phase-III and Phase-IIb projects that we had in Huddersfield. Two, transition of some

of the early phase projects to Morpeth, so there is also some transition that’s

happening there. And lastly, there are commercial projects that are getting

transitioned to Digwal. However, as this transition happens and you will appreciate

that it first needs validation, so the first phase of it coming going forward in this year

is going to be validation of those projects in Digwal and then we would have the

realization of revenues and that’s one of the reasons why we have that degrowth as

well.



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Monica Joshi Okay, and over the last say a year or two, you must have definitely gone in for some

site transfer or project transfer. So, how much of that has really materialized?

R. Ananthanarayanan Well, we have not done, in the last two years, significant site transfers. What we

focused on significantly was on backward integration of expensive intermediates and

transitioning those and that has taken place over the last two years. I think we have

started really the transition of some of the projects over the later part of this financial

year and more importantly a significant portion will happen during next year because

we also needed to get through customer audits and customer clearances on the site

and all of that took some of those times as well.

Monica Joshi Do you think that the three facilities now which Huddersfield would be send out to,

the validation process would get over in the coming financial year?

R. Ananthanarayanan Yes, absolutely yes.

Monica Joshi Right, so FY11 should be a better year.

R. Ananthanarayanan Yes, certainly.

Monica Joshi Thank you so much.

Moderator Thank you, Ms. Joshi. Our next question is from the line of Bhavita Nangrani of

Mehta Partner. Please go ahead.

Nimish Mehta Hi, this is Nimish Mehta. I had a question. First of all, can you tell us what is

profitability that you derived out of your Huddersfield facility you are likely to shut

down and I understand €19 million is the sales?

Rajesh Laddha We have been saying that Huddersfield was making moderate kind of EBITDA

margins until now. But by shutting it down and consolidating our business into

Morpeth and India and also by changing the mix etc. we are saying that the overall

margins for our Custom Manufacturing Business would improve by about 6% to 8%

from the current level of margins.

Nimish Mehta Okay, do I consider that the EBITDA margin is below the average EBITDA margin

of Piramal Healthcare as of now?

Rajesh Laddha Yeah, that’s right.

Nimish Mehta And this improvement in margin by 6% to 8% will happen from FY10 onwards?



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Rajesh Laddha That’s right.

Nimish Mehta Second, about you know you said that you will be shutting down this facility but will

you be gaining anything out of the real estate that you will be owning there at

Huddersfield or how do you see that situation?

Rajesh Laddha I don’t think, the real estate is kind of a lease arrangement right now, so there will be

no gain as far as real estate is concerned on the site.

Nimish Mehta Okay. My question is on Morpeth. You mentioned about one contract getting

renewed. Can you tell us how big is this contract and also about when is the next

contract coming up for renewal?

R. Ananthanarayanan It was one contract that has already got renewed that was worth about £10.5 million

worth of contract that has already got renewed. And the remaining would get

renewed pretty soon.

Nimish Mehta But is it basically, I mean how many contracts do you have in Morpeth? I was under

the impression that you would be having

Rajesh Laddha Out of the Pfizer contracts, the total value, about 25% of the value has been renewed

already for the next five years. The rest 75% of the value is under finalization now.

Nimish Mehta Okay. And what is the time when basically the old contract is getting terminated?

R. Ananthanarayanan As per the original contract, part of it was to get, the contract would end in 2010 and

the last part in 2011. However, as I said, we are already in the stages of finalization,

so Pfizer does not want to wait until then, we would be able to close off on the

contract renewal much earlier and secure those contracts for a longer period of time,

five-years-plus.

Nimish Mehta Okay. and lastly, one strategic question for my understanding, you mentioned about a

shift, a PDS shift towards the Asia, especially India, for contract manufacturing

business. In light of that, how do you see all of the other facilities that you have in

UK, including Morpeth? Don’t you see that even that facility will kind of face some

trouble in getting new contracts because the cost will be associated with that

geography?

R. Ananthanarayanan Not at all, in fact, we see a strong reason for growth in Morpeth in the offerings that

we have now set up for several reasons. One, Morpeth clearly is set up for significant



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early phase finished dose formulation capability. In terms of finished dosage

formulations, clearly, customers still want it out of a geography that can provide

them QP release for Europe and that’s a very very key aspect that they look at.

Second, we have specific technology capability in Morpeth in female health care and

hormonal area which is not easy available in many facilities across in India or in

other parts of the globe, not too many facilities available that provide those services,

that’s the second area that we see growth. The third, as I said, is prostaglandin

handling capability that’s again a specialized technology that not many sites have.

And most importantly, clinical trial packaging, clinical trial packaging with QP

release for European clinical trials is another area that we have set up the offering. So

clearly, Morpeth is sort of focusing on a different customer segment and different

offering that clearly, clearly will continue to grow that’s in Morpeth. Grangemouth as

another site is again a unique offering, which is for cytotoxic small molecules which

is a very high-growth area as well as monoclonal antibody conjugates but there are

not again many sites who can offer monoclonal antibody conjugates or small

molecule cytotoxics. So clearly caters to a specific segment and Torcan that provides

close proximity to the emerging pharma customers in North America where they

want very close to geography presence, they want the ability for their chemist to do a

very quick availability to move to the site, understand what is happening. So, we

clearly now see sites having their own niche presence own offering that is going to be

strong and hence as we said over the next two to three years we see a strong growth

for Pharma Solutions coming in from these consolidated assets.

Nimesh Mehta Okay thanks a lot.

Moderator Thank you. Our next question is from the line of Nitin Agarwal of IDFC SSKI.

Please go ahead.

Nitin Agarwal Hi thanks for taking my question. Just a I mean a bit on the guidance on the revenue

growth guidance talked about. You said because the Huddersfield closure will have

something like a 5% decline in the Pharma Solutions revenue in FY10. Did I get that

right?

Rajesh Laddha Yes that is correct.

Nitin Agarwal Sir I mean if I were to look at it kind of take off about 150 odd Crores or you know

whatever or thereabouts from the current year number and they are using the base

business that will really grow in FY10. We are not talking of very large growth

numbers there?



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Rajesh Laddha Yeah because we also have as we tell a transient de-stocking and inventory change as

well with some of our customers.

Nitin Agarwal So this is about 10% to 12% kind of a growth you are talking about for next year?

Rajesh Laddha About 15%.

Nitin Agarwal Okay. So you know this de-stocking you think is going to play out well into the first

half.

Rajesh Laddha Yes certainly.

Nitin Agarwal Okay and you know last time we had discussed the details on the phases of different

projects. You were talking about a couple of a few Phase-III molecules. Is there any

more updates on the progress of these molecules?

R. Ananthanarayanan Not this not really on the update of those molecules still because they are still under

the study so there has been no major update in a month’s time. However on the other

side we have actually got additional projects into the pipeline Phase-III as well. So

our Phase-III in the process of the last two months have actually increased by another

couple of projects.

Nitin Agarwal So how many products do we have in Phase-III right now?

R. Ananthanarayanan Right now it has gone into the double digits from the single digit.

Nitin Agarwal Okay fine thanks.

Moderator Thank you. Our next question is from the line of Sriram Rathi of Centrum. Please go

ahead.

Sriram Rathi Yeah thanks for taking my question. My question is you have said that around US

$100 million of revenue excluding Huddersfield facility from UK site so I mean this

excluding Morpeth?

Rajesh Laddha This includes Morpeth and Torcan.

Sriram Rathi This includes Morpeth and Torcan these two sites because I believe from Morpeth

alone you had revenue from $75 to $80 million. This is annual revenue you are

talking of FY09?



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Ajay Piarmal I think let us just reconcile the exact figure. I will give it you a little later. We will

give that exact number.

Sriram Rathi Okay sure thanks and the second thing you were talking about 6% to 8% kind of

EBITDA margin expansion so this will happen from FY10. Correct?

Rajesh Laddha Sorry could you repeat that Sriram?

Sriram Rathi This EBITDA margin expansion of 6% to 8% this is because I believe the current

EBITDA margin are in the range of 12% to 13% per Pharma Solution business total.

Rajesh Laddha We have not shared that number but yeah the improvement will be by about 6% to

8% which is significant enough to…

Sriram Rathi For Pharma Solution business.

Rajesh Laddha Yeah.

Sriram Rathi Okay and another thing, this 5% decline guidance that you are giving this is for

Pharma Solution outside India or consolidated Pharma Solutions?

Ajay Piramal Total consolidated Pharma Solutions.

Sriram Rathi Okay and current year guidance for 370 Crores still hold for Indian assets.

Rajesh Laddha Current year still holds yeah.

Sriram Rathi Current year still holds. So total Pharma Solution business will decline by 5% in

FY10 because of this.

Ajay Piramal Yeah.

Sriram Rathi Okay thanks a lot. That is all from my side.

Moderator Thank you. Our next question is from the line of Manoj Garg of Emkay Global.

Please go ahead.

Manoj Garg I think my questions have been answered. Thank you very much.

Moderator Thank you. Our next question is from the line of Nimish Desai of Motilal Oswal

Securities Limited. Please go ahead.



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Nimish Desai Yeah good evening everybody. A few questions just to make this clear. Could you

explicitly tell us the growth that you would be expecting in FY10 from your India

based CRAMS business?

Rajesh Laddha It will be about 15%.

Nimish Desai That will grow by 15%.

Rajesh Laddha Yeah.

Nimish Desai Okay and secondly what we wanted to know was what kind of currency assumptions

are you assuming for this 15% growth because some of the contracts would be dollar

denominated?

Rajesh Laddha We had taken dollar at the moment about 47 or 48 levels.

Nimish Desai 47 or 48.

Rajesh Laddha Average that is an assumption.

Nimish Desai Yeah okay so if rupee dollar were to remain at current levels this 15% number would

move up significantly or we should not expect any major movement because we do

not know the split between dollar denominated contracts and may be Euro or GBP

denominated contracts out of India. So what is the sensitivity out there?

Rajesh Laddha It is primarily will be dollar driven next year but it is very difficult to predict at this

stage about how it is going to behave. So if it goes down to 45 and we have a risk as

well.

Nimish Desai Yes understood but it were to remain at current levels which is round about 50 to 51.

Rajesh Laddha That we will gain to the extent of our imports. We also have dollar denominated

imports. So net of imports will gain something on exports.

Nimish Desai Okay I understood. Secondly, I wanted to know for the facility that you are closing

down have all the customers agreed to get this work shifted to the other facilities or

are you losing out on any customers or contracts.

R. Ananthanarayanan We are not losing out on any customers or contract. We clearly had a very high level

of engagement with customers. The customers have been taken through the entire

process and they are comfortable about the movement that we have to other assets



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and that is why we are able to actually say which projects are going to move to which

assets.

Nimish Desai Okay fine and thirdly also wanted to know if you can just throw more color on how

you will achieve this 6% to 8% jump in EBITDA margins for this business as a

whole. I assume that you were talking for the business as a whole the entire Pharma

Solutions business.

R. Ananthanarayanan Yeah.

Nimish Desai Probably if you can throw more color as to what will be key areas where you will

save cost of course people cost is one thing which is very clear but will that lead to

such a significant jump in EBITDA margins?

R. Ananthanarayanan It is a combination of few factors then I will sort of certainly give you a bit more

color on to that. One of course we have the shut down of Huddersfield will have an

impact too positively. The second is we have a number of projects that are mix of

high gross margin project so as we said earlier we have lot of thrust now on early

phase business. Our pipeline in early phase business both in the API and finish those

formulations increasing significantly. That is one area that is going to contribute

towards higher margin and in our commercial manufacture as well we have products

and contracts both in validation as well as new projects that are high gross margin

projects and Morpeth where we have clinical trial packaging projects as well that we

have started off as an offering so combination of all of this would result in the

increase by 6% to 8%.

Nimish Desai Okay and this increase should we assume that it will be visible as an increase may be

slightly backended towards the second half or would we be seeing this improvement

right from Q1.

R. Ananthanarayanan Actually sorry just add one more. We also sort of have a significant amount of cost

improvement in Morpeth as well that will add to it and to answer your question back

again we will see it right through the year.

Nimish Desai Right through the year.

R. Ananthanarayanan Yes

Nimish Desai Okay but I think one of the reasons you were giving us is that a lot of early phasework

being done which obviously enjoys higher margins but the way we are given to



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understand this business and you can correct me if I am wrong is that these are small

volume high margin businesses.

R. Ananthanarayanan Individual projects are small volume but when you get a large number of projects the

total amount does contribute to a significant extent.

Nimish Desai So then I mean since you are expecting a margin improvement from that kind of an

activity are we to understand that your early phase pipeline has become fairly strong

in terms of the number of projects that you are working on.

R. Ananthanarayanan Yes our pipeline has become significantly strong in terms of number of projects that

we are working on but just to reiterate as we said among all the key factors that I

listed earlier that contributes to the 6% to 8% margin growth early phase is one of

those.

Nimish Desai Okay understood. The maximum or which one would you feel would be the largest

contributor to this 6% to 8% improvement in margin if I were to tell you to identify

just one thing the key contributor.

R. Ananthanarayanan I would actually put four of them not just one to be very candid because actually it is

a combination of the commercial projects into our Digwal site with higher gross

margin, the closure of Huddersfield, early phase business and the clinical trial

packaging. I would put in all of them contributing. It is not really one that just stands

out.

Nimish Desai But shifting of commercial contracts from Huddersfield to Digwal it will entail a site

change kind of a filing. Is that correct?

R. Ananthanarayanan Some of them yes. Some of them no because some of them are registered

intermediates, some of them are APIs. So not for all of them.

Nimish Desai So for intermediates you can straight away shift and start supplying is it?

R. Ananthanarayanan We still need to do validation and stability but it does not undergo a regulatory

change. So you still need to do validation and stability and provide that data for the

customer to do their manufacture and stability.

Nimish Desai Okay and how much time generally do this validation and stability how much time

does it take?



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R. Ananthanarayanan About six to eight months.

Nimish Desai Six to eight months okay. Okay fine thank you. I am done with my questions.

Moderator Thank you Mr. Desai. Our next question is from the line of Rahul Baijal of Voyager

Capital. Please go ahead.

Rahul Baijal Yeah I had a few questions. Firstly just to re-clarify I think it has been clarified again

and again but one more last time for me. In terms of the Pharma Solution guidance in

terms of sales and profitability what I understand is that if Pharma Solutions were

contributing around $100 to sales in FY09, the sales outlook goes to $95 and if they

were making x% EBITDA margin say 10% in FY09 that goes up to 16% to 18%. Is

that understanding correct?

R. Ananthanarayanan That is correct.

Rahul Baijal Okay. Secondly in terms of the capacity utilization in this plant what kind of

utilization levels were we running at this plant? Can you share that with us?

R. Ananthanarayanan It is was running probably closer to around 35% to 40%.

Rahul Baijal Okay and when we acquired this plant what kind of utilization levels were there? I

am just trying to get a sense on how much transition we have made you know over

the years to other plants from this plant?

R. Ananthanarayanan Sorry could you repeat the second part. I am sorry I missed that.

Rahul Baijal Yeah I am just trying to get a sense in terms of the transition from you know transfer

of production from this plant to Morpeth and to India how much or how long has this

been going on?

R. Ananthanarayanan It is just happening now.

Rahul Baijal This plant has always operated at a much low utilization level.

R. Ananthanarayanan Yes.

Rahul Baijal And we are saying that most of the clients in terms of this particular plant we have

retained and in terms of the 19 million pounds in terms of revenue potential.

R. Ananthanarayanan Yes that is correct.



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Rahul Baijal And thirdly in terms of you know your business in Canada I mean I believe a

significant chunk of that comes from Biotech Companies. So are you seeing pressure

coming from there as well and is it manageable or is it worsening in terms of

contract.

R. Ananthanarayanan As we said earlier I think the pressure that comes in is only from the very small

Biotechs or the virtual ones which are really you know the PE funded firms but

broadly we do not see too much of concern that for our Torcan site.

Ajay Piramal And depreciation, one other advantage this year which made the Torcan site more

competitive is that the Canadian dollar depreciated by about 20% and since most of

the almost all the customers are in the US it has now become a more competitive

offering than it was in the previous year.

Rahul Baijal Okay and lastly in terms of you know there has been an increased level of scrutiny by

FDA in terms of you know in general across the plant. So in terms of our plants

across the world I mean have you seen any change in the activity level in terms of

and how comfortable are you on the regulatory?

R. Ananthanarayanan Actually we are pretty comfortable in fact all our sites have undergone FDA

inspections with no 483s. We do have a strong track record there. In fact as we are

speaking we just completed a MHRA audit for one of our site today and have gone

through with absolutely flying colors there and they have approved so I mean all our

sites have gone through stringent regulatory audits and has come out extremely well.

Ajay Piramal Actually the issue with us is that our standard of quality are generally higher than

what FDA or MHRA want because the customers continuously audit us. So in fact

we must be having an audit in some plant or the other on a weekly basis and

therefore the standards are pretty high already.

Rahul Baijal All right sir thank you very much for taking my question.

Moderator Thank you. Our next question is from the line of Ranjit Kapadia in Individual

Investor. Please go ahead.

Ranjit Kapadia Hi.

Ajay Piramal You have become Individual Ranjit.

Ranjit Kapadia Yeah sir I have left Prabhudas Liladhar.



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Ajay Piramal Okay.

Ranjit Kapadia Sir this is regarding Huddersfield just wanted to know how many contracts were

there and the second question is in Morpeth have you got any other contract except

Pfizer.

R. Ananthanarayanan Yeah certainly we have got contracts other than Pfizer and our efforts are

continuously in terms of getting new business other than Pfizer into the site as well

and we are certainly looking to build more and more new business in addition to the

Pfizer business at Morpeth.

Ranjit Kapadia And how many additional contracts are there from other companies?

R. Ananthanarayanan In Pfizer, In Morpeth?

Ranjit Kapadia Yeah in Morpeth.

R. Ananthanarayanan In Morpeth we would have mix of about at this point of time close to about six to

seven customers.

Ranjit Kapadia Okay and in Huddersfield how many customers were there? Or how many contracts

were there?

R. Ananthanarayanan Because again in Huddersfield because it has combination of early phase than

commercial difficult to really quantify in terms of contract. So I would say we had

about four-key customers.

Ranjit Kapadia Four-key customers. So that been transferred to other side.


Ranjit Kapadia Okay thank you very much and all the best.

Moderator Thank you. Our next question is from the line of Anubhav Aggarwal of Credit

Suisse. Please go ahead.

Anubhav Aggarwal Yes sir there is one question about this validation phase. So would it not have been

better if you would have closed down the facility later and you know shifted parallely

run the validation phase with Digwal.



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R. Ananthanarayanan No, the validation process in Digwal will already be ongoing now. So I think the

timeline here is more dependent on the customers’ clearance and customers’

approvals. So to that extent it is more dependent from their perspective.

Anubhav Aggarwal But you are losing revenue out because of this.

R. Ananthanarayanan No we are not because even we had done it parallel the customer only give as much

quantity that they need in terms of the order. So they would not give you additional

quantity for validation.

Anubhav Aggarwal Oh you are saying that because of the delay of validation you are not losing any

revenue from those customers.

R. Ananthanarayanan Not really.

Anubhav Aggarwal Okay and in terms of profitability is this I missed that part so Huddersfield is

EBITDA positive right?

Rajesh Laddha Yeah moderately EBITDA positive.

Anubhav Aggarwal And same is for the other side Grangemouth?

R. Ananthanarayanan Grangemouth is now much better.

Anubhav Aggarwal Much better okay thanks.

Moderator Thank you. Our next question is from the line of Sonal Gupta of UBS Securities.

Please go ahead.

Sonal Gupta Hi good evening everyone. Couple of questions from my side. One was from what

we are understanding that is I mean there is no loss in terms of customers or revenues

from shifting out of this site so I just want to understand how this guidance of 5%

lower growth how do you come about is that I mean what is really not happening. I

mean is it because of your declining orders you are expecting because of he inventory

de-stocking you are talking about.

R. Ananthanarayanan Yeah I think one is the inventory de-stocking correction that will happen which

would be a transient process but does impact the FY10 and also because some of the

products that we have from Huddersfield that will move on to Morpeth and our other

sites will undergo validation process. So the commercial revenues would only come

the year later.



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Soanal Gupta Okay and also could you sort of talk about what is the I mean outlook for the India

from custom manufacturing business because FY10 you are saying are on the 15%

growth which seems to like a significant loss of momentum. So could you just I mean

what is really happening if you could just shed some light on that.

R. Ananthanarayanan No it is actually not a loss of momentum again because this 15% is considering the

fact that the de-stocking and inventory change is happening. So inspite of that there is

a 15% growth but clearly the trend that we see in terms of looking forward we see a

significant growth going forward over the next two to three years from India. In fact

we do see bigger momentum coming in for lot of opportunities from India.

Soanal Gupta Okay and could you just talk about what is the sort of capacity utilization at Morpeth

right now taking in the account of projects that you have.

R. Ananthanarayanan It is about 50% to 60%.

Soanal Gupta And at your India facility.

R. Ananthanarayanan Would be likewise around the 55ish range.

Soanal Gupta Okay and any additional CAPEX you have to incur because of the site transfer.

R. Ananthanarayanan No.

Soanal Gupta So any sort of CAPEX for the PMS Business.

R. Ananthanarayanan No we do not foresee any CAPEX because as we said we earlier have done creation

of capabilities and hence we have not lost out on capabilities with this closure. We

have already had created capabilities in Ennore, Digwal and Morpeth sites. So we do

not envision any CAPEX.

Soanal Gupta Okay great thank you so much.

Moderator Thank you. Our next question is from the line of Amit Shah of Brics Securities.

Please go ahead.

Amit Shah Yeah hello good evening sir. Sir my question is related to a broad industry. Since we

know that Asian countries like India are cost competitive in terms of manufacturing

that is why many Western companies are giving us contract manufacturing project

but sir how do you see the threat of competition coming from other contract

manufacturing players specifically from Europe like Lonza setting up their



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manufacturing facility in India and offering the products to innovator companies

from their Indian facilities. So in that case even they would be equally cost

competent.

R. Ananthanarayanan Yeah answer that in two ways. One is the very fact that people like Lonza are looking

to set up in India and Asia clearly shows the trend that customers are moving to India

which is an healthy sign from our perspective and hence opportunity for us to get

more and more business in India. There is actually a very positive sign in that

direction. The second is that yes they have set of facilities in China but they are still

not in India. They could probably set up but people like Lonza do have the ability to

provide API services. They do not have formulation services. So one of the

capabilities that at Piramal we are offering is actually an integrated offering of API

through to finish those formulation which is a unique capability that we offer. It is

not very easy for them to replicate at one time putting API and formulation out of

India.

Soanal Gupta Okay thanks a lot sir.

Moderator Thank you. Our next question is from the line of Prashant Nair of Citigroup. Please

go ahead.

Prasad Nair Yeah my questions have been answered thanks.

Moderator Thank you. Our next question is from N. Ganesh of PTI. Please go ahead.

N. Ganesh Sir thanks for taking my question. I just have two doubts. I mean what is the reason

for you shutting down the Huddersfield Plant sir?

Ajay Piramal Well we realized that within our system we could shift whatever production we are

manufacturing at Huddersfield to the other location and thereby save a considerable

amount of cost. That is one of the reason why margins are going up between 6% to

8%. And we saw that in the long term now customers were comfortable with other

sites in India as well as Morpeth. So the future business they will happy to do it here

which we would be more cost competitive.

R. Ananthanarayanan With the asset re-configuration there was no reason for us to add duplication of

assets.

N. Ganesh Okay you see over duplication also?



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R. Ananthanarayanan Because we have created those capabilities in Digwal and Ennore.

N. Ganesh Okay and sir you said that the scaling of operations in Ennore, Ahmedabad and in

Morpeth. Can you just explain it further like what exactly you are planning there and

what is the investment going to be like this in Ennore, Ahmedabad and in Morpeth.

R. Ananthanarayanan As I said there is no CAPEX involved in the coming year we have already incurred

it during FY09. We have done a ramp up of in terms of number of chemist/number of

scientist. We have almost 80 plus in Chennai, we have 80 plus in Ahmedabad. So

significant amount of chemists and scientific talent that is available. What we are

saying in terms of ramp up is actually business ramp up.

N. Ganesh Okay and in all three facilities Ennore, Ahmedabad and in Morpeth. In Morpeth also?

R. Ananthanarayanan Yes in clinical trial packaging as well.

N. Ganesh Okay thank you.

Moderator Thank you our next question is from the line of Nitin Agarwal of IDFC SSKI. Please

go ahead.

Nitin Agarwal Are you guys sharing the current profitability for the Pharma Solution business?

Rajesh Laddha Sorry.

Nitin Agarwal The current profitability profile for the Pharma Solution business overall the way it is

in FY09.

Ajay Piramal No we will talk a little more about it then we give our guidance in the after the annual

accounts.

Nitin Agarwal Okay secondly you know in terms of the absolute EBITDA for the Pharma Solutions,

is that going to grow in absolute terms and to what extent is this possible I mean we

have given a sense of this improvement in terms of margin terms for in terms of

absolute numbers will be to see a growth considering a 5% decline is going to be

there in the top line?

Ajay Piramal Yeah it has been a significant growth.



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Nitin Agarwal Okay and largely on this you know two early phase facilities that we have in Ennore

and Ahmedabad is there any material difference between the two you know facilities

in the kind of services they are really geared to provide.

R. Ananthanarayanan Yes the Ennore site is for the chemistry and chemical synthesis whereas the

Ahmedabad site is for solid dose finish formulations.

Nitin Agarwal Oh it is largely formulation.

R. Ananthanarayanan Yeah it is only a formulation specifically to cater to solid dose from Ahmedabad.

Nitin Agarwal Okay fine thank you very much.

Moderator Thank you Mr. Agarwal Our next question is from the line of Saion Mukherjee of

Nomura Securities. Please go ahead.

Saion Mukherjee Yeah my question is you know related to your top line growth of Pharma Solutions. I

mean we are seeing single digit kind of growth. So when you say we will see

substantial improvement beyond FY10 can you just throw some light I mean what is

the kind of growth over medium term in revenue that you would see?

R. Ananthanarayanan In terms of specific numbers a bit difficult to talk about FY11. What we see is over

the next sort of two to three years, we certainly see our India sites so as in three

years’ time should grow and sort of almost sort of double from our India sites and the

overseas site should grow at least by about 10%.

Saion Mukherjee For India site you are saying would double by what time?

R. Ananthanarayanan Over the time of three years.

Saion Mukherjee From the current level of around 370 Crores that you are having.


Saion Mukherjee Okay and in terms of you know you mentioned has been 15% growth for next year as

the Indian asset growth is it 15% growth over 09?


Saion Mukherjee Okay and that is the significant slowdown compared to previous years. So is that

only because of the inventory de-stocking?



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Saion Mukherjee And in terms of profitability when you achieve the 6% to 8% improvement will be

closer to the steady-state profit margins or there is scope for further improvement

going ahead?

Rajesh Laddha There will be business mix change is going forward there is further scope of

improvement.

Saion Mukherjee What is the kind of EBITDA margin on Pharma Solution on the steady-state basis

that you are looking at?

R. Ananthanarayanan Around 25%.

Saion Mukherjee Okay thanks for that.

Moderator Thank you our next question is from the line of Alok Dalal of MF Global. Please go

ahead.

Alok Dalal Yeah thank you. Sir can you throw some light on CAPEX for FY10?

R. Ananthanarayanan We are not looking at any significant CAPEX.

Ajay Piramal For the overall for the company we will talk about it when we give the guidance for

the year.

Alok Dalal Okay but should be around 150 Crores as you have done in 09.

Ajay Piramal Let us see. We will give you the numbers at that time.

Alok Dalal Okay sir thank you.

Moderator Thank you. Our next question is from the line of Rohita Sharma of Enam Securities.

Please go ahead.

Rohita Sharma Hi all my questions have been answered thank you.

Moderator Thank you. Our next question is from the line of Krishna Kiran of Capital Markets.

Please go ahead.



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Krishna Kiran Sir just I want to confirm with you that sir regarding earlier phase of API is

transferred to Ennore and formulation is Ahmedabad and what about Morpeth sir

which one you are transferring to Morpeth?

R. Ananthanarayanan The ones that are transferred to Morpeth are the API because Huddersfield was an

API site. because some API projects that go because again some of the customers still

need it from a European geography. So those projects are moving to Morpeth the

others move to India.

Krishna Kiran Okay formulation is only Ahmedabad.

R. Ananthanarayanan Yeah but formulations is not a transfer from Huddersfield.

Krishna Kiran Pardon.

R. Ananthanarayanan Huddersfield was never in formulation. That is additional new business opportunity.

Krishna Kiran Okay in new business opportunity.

R. Ananthanarayanan Yeah.

Krishna Kiran Okay sir other than these two renewals three more contracts are to be finalized right.

R. Ananthanarayanan In Morpeth.

Krishna Kiran Yeah you told that with one Pfizer contract has been renewed and one will be in the

final stage.

R. Ananthanarayanan No. what we said was the Pfizer contract by itself one part of our offering was

expiring in 2008 November. The other two has expiries in 2010 and 2011. So the one

that was expiring in 2008 we have already renewed. The other two that were expiring

in 2010 and 2011 are under finalization.

Krishna Kiran Sir but you told that total five products to be…..

R. Ananthanarayanan No five years they will get renewed.

Krishna Kiran Okay five years okay sir. Thanks a lot. That is all.

Moderator Thank you. Our next question is from the line of Sachin Kasera of Lucky securities.

Please go ahead.



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Ashish Kacholia Sir this is Ashish Kacholia here. I just wanted to know if the severe currency

depreciation in the Eastern European countries is leading to any pricing pressure for

us?

R. Ananthanarayanan No.

Ashish Kacholia I mean do we directly compete from manufacturing sites in those or we really do not

compete with those countries in terms of…..

R. Ananthanarayanan Actually we do not have any CMOs really that operate out of those countries.

Ashish Kacholia I see okay. Is there any visibility on whether we have to support Piramal Life

Sciences going forward?

Ajay Piramal No there is no support.

Ashish Kacholia Okay either in terms of loans or whatever we are not going to take any further

exposure on that?

Ajay Piramal No.

Ashish Kacholia Okay and any other exceptional items that you can foresee for the coming couple of

quarter?

Rajesh Laddha No because there is no exceptional. This entire thing will get booked during FY09

March 09.

Ashish Kacholia Right sir. Thank you very much. All the very best.

Moderator Thank your. Our next question is from the line of Prashant Nair of Citigroup. Please

go ahead.

Prashant Nair Yeah this is just a clarification that I need. This 6% to 8% margin improvement that

you are talking about is something which you will, is an end of the year run rate or is

it something you will achieve for the year as a whole?

Rajesh Laddha This is for the year as a whole.

Prashant Nair Okay and the second question related to this one-time charge that you will take will

you be able to get any tax credit on that at all or will it just be a normal state charge?



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Rajesh Laddha We will get the tax credit in UK.

Prashant Nair Okay great thanks.

Moderator Thank you. Our last question is from the line of Bhavin Shah of Dolat Capital. Please

go ahead.

Bhavin Shah Good evening sir. I just wanted a clarity on I mean given the state of affairs that the

capacity utilization you spoke about in Morpeth and the Indian facilities. Post

integration where do we stand that when have been finalized to the entire

Huddersfield shift both in Morpeth and Indian facilities.

Ajay Piramal We will have adequate capacity and we found that now the way we are configured

with marginal CAPEX we can continue to grow this business significantly. So I do

not see any major CAPEX for Pharma Solutions either in 2010 nor in 2011.

Bhavin Shah Right so just get a sense of idea as you know in Morpeth if you are doing non-Pfizer

contracts going forward do we have adequate space for that?

Ajay Piramal Yeah.

Bhavin Shah All right.

Ajay Piramal Marginal investments were done to create a clinical trial supply capacity which we

have done in 2009.

Bhavin Shah Right from which we got the UK approval.

Ajay Piramal Yeah.

Bhavin Shah Ok right and the Indian growth sir just to come back to that you have given 15%

growth guidance. Do you think this is really being on a conservative basis or you can

there will be further room for growth this month.

Ajay Piramal No this is what it is for the next year.

Bhavin Shah All right sir. Thank you so much.

Moderator Thank you. We have one more question from the line of Tom Brakel of Federated

Investors. Please go ahead.



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Tom Brakel Just one question. What is the evidence that you have that makes you comfortable

that this momentum that you see over the next two to three years actually will

increase and will grow what can you point at that would make us comfortable that

this momentum is actually there?

R. Ananthanarayanan Clearly on the basis of the number of enquiries that we have the order book in hand

and the validations that we are currently doing underway.

Ajay Piramal And also if you look at the environment you find that lot of Pharma companies are

looking at now cost saving and clearly India has been established as a base for lower

cost and higher quality products. And the other thing is that there is a lot of

investment going on in early phase R&D as well so more molecules are trying to

being pushed into the clinic which means that the early phase business also will

continue to grow.

Tom Brakel Can you give us a little bit clarity on that the order book or the inquires that you

receive relative to the past?

R. Ananthanarayanan Yes we see an increased trend there.

Tom Brakel Okay very good thanks a lot.

Moderator Thank you. Ladies and gentlemen that was the last question. I would now like to

hand the conference over to Mr. Sagar Gokani and the management for closing

comments.

Sagar Gokani Thank you for attending the conference call. We will be happy to answer any

unanswered question. Thank you bye.

Moderator Thank you Mr. Gokani. Thank you gentlemen of the management. Ladies and

gentlemen on behalf of Piramal Healthcare Limited that concludes this evening’s

conference call. Thank you for joining us and you may now disconnect your lines.

Thank you.


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