Cipla products are bought by over 180 countries located in the following regions:

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Chastity York
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Date: 16/12/2010 CORPORATE INFORMATION: During the fiscal year ended March 31, 2010, the Company introduced a number of new drugs and formulations, such as Advent Forte (amoxicillin and clavulanic

1 Date: 16/12/2010 CORPORATE INFORMATION: During the fiscal year ended March 31, 2010, the Company introduced a number of new drugs and formulations, such as Advent Forte (amoxicillin and clavulanic acid syrup), a combination antibiotic for infections; Antiflu (oseltamivir capsules and syrup), an oral drug for bird flu; Bosentas (bosentan tablets), a therapy for pulmonary arterial hypertension; Cinmove (cinitapride tablets), an anti-motility drug for gastrointestinal disorders; Clearnoz NS (sodium chloride nasal spray), a saline spray for dry nose, and Foratec (arformoterol tartrate respules), nebulized bronchodilator. In May 2010, it set up a wholly owned subsidiary, Cipla Singapore Pte. Ltd. In April 2010, it commenced commercial production of pharmaceutical formulations at its Special Economic Zone project at Indore, Madhya Pradesh. It includes facilities for the manufacture of aerosols, liquid orals, pre-filled syringes, nasal sprays, eye drops, tablets and capsules. GLOBAL PRESENCE Cipla exports raw materials, intermediates, prescription drugs, OTC products and veterinary products. Cipla also offers technology for products and processes. Cipla's manufacturing facilities have been approved by the following regulatory authorities: 1. Food and Drug Administration (FDA), USA 2. Medicines and Healthcare products Regulatory Agency (MHRA) 3. Therapeutic Goods Administration (TGA), Australia 4. Medicines Control Council (MCC), South Africa 5. National Institute of Pharmacy (NIP), Hungary 6. Pharmaceutical Inspection Convention (PIC), Germany 7. World Health Organisation (WHO) Department of Health, Canada 8. State Institute for the Control of Drugs, Slovak Republic ANVISA, Brazil Cipla products are bought by over 180 countries located in the following regions:

2 SHAREHOLDING PATTERN Shareholding Pattern Description Percentage Promoters 36.8 Public & Others 21.8 Foreign 19.3 Institutions 18.3 Corporate Holdings 3.9 RECENT FINANCIAL PERFORMANCE The second quarter performance has been better-than-expected, with the company posting a 20 per cent growth in domestic operations (Y-O-Y). The segment had reported a Y-O-Y growth of less than 4 per cent in the June quarter. Its export formulations business posted a growth of about 14 per cent, while API exports declined by 1 per cent. The company has managed this growth despite rupee appreciation. The high-margin technology fees, however, fell to about Rs 12 crore from Rs 51 crore recorded last year (one time fee recorded last year). The operating profit margins for the quarter, therefore, fell by about 3.6 percentage points to about 22.6 per cent. Increased factory overheads at its Indore SEZ and rupee appreciation too led to margin contraction. Profits dipped by about 4.6 per cent. The management has guided for 8-10 per cent growth in revenue for the year. It expects to sustain the growth momentum in the domestic business and has given a10-12 per cent growth guidance for its export business. Technical fee contribution, however, might taper to Rs crore.

3 ANNUAL PERFORMANCE Description No. of Months Net Sales Growth% Total Income Total Expenditure PBIDT Growth% PBIT PBT PAT Growth% Cash Profit SECOND-QUARTER REVIEW Quarterly Analysis QoQ YoY Net Sales Total Expenditure PBIDT (Excl OI) PAT PBIDTM% (Excl OI) PBIDTM% PATM% EPS (INR)

4 INVESTMENT RATIONALE LONG-TERM TRIGGERS Cipla is presently developing eight CFC-free inhalers that would cater to the US and European markets. The management has indicated the likely launch of its eight inhalers in Europe in the next three-four years (pending regulatory approvals). With only a handful of players in each product category, Cipla maybe well-positioned to enjoy high margins here. It is noteworthy that of the eight inhalers, six have been submitted for registration. The company expects most of these registrations and compliances to be completed in two years. Cipla has already launched some of its inhalers (Salbutamol and Budesonide) in the UK, Spain and Portugal and has received approval for Seroflo inhalers (estimated to be about $10-15 million market) in South Africa and Russia. Though a big opportunity, it may take at least a year and half before it begins to enjoy the revenues from it. Its new SEZ facility at Indore, Madhya Pradesh, too would help fuel the company's exports in the long-term. The facility has significant capacity to manufacture products ranging from aerosols, nasal sprays, eye drops to tablets and capsules. While it has already started production for non-regulatory markets from this facility, it is awaiting approvals from developed markets regulators such as UK MHRA and US FDA. The management expects these regulatory approvals to come in a couple of years, in time to align with the timeline expected to get approvals for the eight HFA (nonchlorofluorocarbons) inhalers. Cipla also plans to shift the manufacturing of some of its existing products to this facility. CAPEX PLANS The company plans to invest about Rs 1,300 crore over the next few years towards upgrading and expanding existing facilities as well as setting up new ones. It is setting up API facility in Bengaluru (for anti-cancer products). In April 2010, the Company commenced commercial production of pharmaceutical formulations at its Special Economic Zone (SEZ) project, at Indore, Madhya Pradesh. This project includes facilities for the manufacture of aerosols, repulse, liquid orals, pre-filled syringes (PFS), nasal sprays, large volume parenterals (LVP), eye drops, tablets and capsules. The Company is investing about Rs.250 crore in a new R&D and administration facility at Vikhroli, Mumbai. Cipla is setting up API facilities at Bengaluru for anti-cancer products. The Company is upgrading its API facilities at Patalganga to scale-up

5 production. The total investment for these two projects is estimated to be about Rs.200 crore. CIPLA ACQUIRED 25% IN SOUTH AFRICA UNIT CIPLA MEDPRO The company recently acquired a small-sized domestic pharma company, Meditab (earlier owned by promoters), for about Rs 133 crore. Meditab has formulations manufacturing facilities at multiple locations (China and Uganda) and R&D Centres in India and Malaysia. The acquisition promises to give Cipla better control over operations and costs even as it would help expand its API and intermediates international business into the Chinese and African markets. The acquisition would help Cipla Medpro in achieving additional volumes and assistance in achieving World Health Organisation and US FDA manufacturing approvals, thereby resulting in increased orders and business. Cipla Medpro has 3 business segments in pharmaceuticals: Manufacturing, animal health and agricare. Moreover it is the only local company who offers a full basket of diabetes products such as insulin, oral medications over the counter and diagnostics. OPTIMISTIC ABOUT ITS VENTURE INTO BIOTECHNOLOGY AND IS DEVELOPING PRODUCTS Cipla also made a recent entry into the biotechnology space; it invested about $65 million (staggered over three years and funded through internal accruals) in two ventures (in India and China) with China's Desano Group. Cipla will hold 40 per cent stake in the Indian joint venture and 25 per cent stake in the Chinese venture. This again presents the company with a long-term growth opportunity, as it plans to make about products in therapeutic segments such as oncology and rheumatoid arthritis (outside the ambit of Intellectual Property). The management expects the first product to hit the Indian market by late 2011 or early While Cipla would be the international partner to distribute products made by the two ventures, it would also be able to import products made by the Chinese venture. NEW GROWTH DRIVERS Anti-retroviral and anti-asthma drugs contribute significantly to Cipla s top-line. The outlook for growth remains buoyant with Cipla s unique positioning world-class products at low cost. As for anti-retrovirals, considering the devastating impact of AIDS in Africa, the company has tied up with local governments, WHO, UNICEF and NGOs. This has enabled patients to procure medicines at discount to that of innovators leading to higher sales volumes for Cipla s products providing an impetus to its top-line. On the anti-asthma front, the company is slowly and steadily replicating its domestic success

6 model in the emerging and European markets. In Europe, its inhalers have been approved in Germany, Portugal and Denmark. CIPLA INDICATED IT WAS NEGOTIATING WITH MNCS LIKE PFIZER, GSK AND BOEHRINGER FOR LONG-TERM SUPPLY AGREEMENTS Cipla indicated it was negotiating with MNCs like Pfizer, GSK and Boehringer for long term supply agreements. Generally, such deals span many products and multiple markets. The potential contracts are likely to raise FY12 earnings. Cipla is strongly positioned to emerge as a key supplier of generic products to MNCs due to its large manufacturing infrastructure, strong chemistry skills and large capacity for inhaler production. RECOMMENDATION: BUY & HOLD CIPLA Investments with at least a two-three year perspective can be considered in Cipla. The company s strong generic pipeline, entry into biosimilars and the likely commercialization of CFS-free inhalers offer it a significant long-term growth. Potential Investors can hold Cipla Ltd. Stock as the company is fundamentally strong and one of the best bets in Pharmaceuticals segment. The company s investment in SEZ will prove to be one of its biggest strength and a substantial rise in its Turnover could be expected as the there seems to be an emerging opportunities in CRAMS in India in the coming years. Moreover, the commencement of API supply to Teva for Zyprexa's 180-day exclusivity too would provide it a significant revenue earning opportunity (slated for expiration in April 2011). Besides, the management has indicated that it is negotiating with MNC pharma majors (likes of Pfizer and GSK) for long-term supply agreements. Closure of such a deal too would present a significant growth opportunity for the company. Hence, we maintain BUY rating, for every dip in the share price from current levels of Rs 350. Disclaimer: The research reports provided is for the personal information for the authorized recipient and is not for public distribution and should not be reproduced or redistributed without prior permission. The information provided in the research documents is from publicly available data and other sources, which we believe, are reliable. Efforts are made to try and ensure accuracy of data. Investors should not solely rely on the information contained in the research documents and must make investment decisions based on their own investment objectives, risk profile and financial position. CFS FINANCIAL SERVICES RESEARCH DESK

Atul s manufacturing facilities are present in Gujarat (Valsad and Ankleshwar) and Maharashtra (Tarapur).

Atul s manufacturing facilities are present in Gujarat (Valsad and Ankleshwar) and Maharashtra (Tarapur). ATUL LTD. CMP Rs.190 TARGET PRICE Rs.250-280 INVESTMENT HORIZON 8-12 Months RECOMMENDATION Buy DATE 06/01/2011 COMPANY DESCRIPTION Incorporated in 1947, Atul Ltd is a member of Lalbhai Group, one of the