Glenmark

RISK FACTORS
An investment in equity shares involves a high degree of risk. You should carefully consider all the
information in this Preliminary Placement Document, including the risks and uncertainties described
below and under “Forward Looking Statements” before making an investment in the Equity Shares. If the
following risks actually occur, our business, results of operations and financial condition could suffer, and
the price of the Equity Shares and the value of your investment in the Equity Shares could decline.
Additional risks not described below or not currently known to us or that we currently deem immaterial
may also adversely affect the market price of our Equity Shares.
Risks relating to our business
We are not in compliance with certain financial covenants in some loan agreements entered into by our
subsidiary, which could result in the acceleration of the payment obligations on some or all of our
outstanding indebtedness including our outstanding convertible bonds and other loans.
We are currently not in compliance with certain financial covenants in some loan agreements entered into
by our subsidiary, Glenmark Holdings SA, Switzerland with Citicorp International Limited in its capacity
as the agent of certain lenders for a loan facility of USD 100 million and with ICICI Bank Limited in its
capacity as the agent of certain lenders for a loan facility of USD 13 million. Such non-compliance with the
financial covenants constitutes an event of default under the respective loan agreements. The Company is a
guarantor under each of the aforesaid facilities. The various remedies available to lenders, as a consequence
of the aforesaid breaches, include, inter alia, cancellation of total commitments and acceleration of
repayment of amounts outstanding under the finance documents. Whilst we have initiated steps to obtain
waivers from the lenders, have not, until the date of this Preliminary Placement Document, obtained
waivers under, or made amendments to, the relevant financing agreements. For details of the financial
covenants in respect of which we are non-compliant, please see “Management’s Discussion and Analysis of
Financial Condition and Results of Operations”.
These defaults under the financing documents mentioned above have also triggered cross-default
provisions under some of the other financing documents, including the outstanding zero coupon resettable
onward starting equity linked securities due in 2010, the outstanding zero coupon resettable onward starting
equity linked securities due in 2011 and certain other loans of the Company. Further, the non compliance
with the financial covenants in the abovementioned financing documents being an event of default, are also
events of default under the other facilities and entitle the respective lenders to enforce remedies under the
terms of the financing documents. We have not obtained waivers under, or made amendments to, the
relevant financing agreements. Further, there can be no assurance that all our lenders will agree to waivers
or amendments on acceptable terms and the timelines for obtaining any such waivers or amendments are
uncertain. As of the date of this Preliminary Placement Document, the Company has not initiated steps to
seek waivers of the defaults from the trustee or the holders of the outstanding zero coupon resettable
onward starting equity-linked securities due in 2010 or the outstanding zero coupon resettable onward
starting equity-linked securities due in 2011.
If the obligations under any of our financing documents are accelerated, our financial condition and
operations could be materially and adversely affected. In such event, we may have to dedicate a substantial
portion of our cash flow from operations to make payments under the financing documents, thereby
reducing the availability of our cash flow to fund capital expenditures, meet working capital requirements
and use for other general corporate purposes. If the obligations under any of our financing documents are
accelerated it may also result in a decline in the trading price of the Equity Shares and you may lose all or
part of your investment. If the lenders of a material amount of the outstanding loans declare an event of
default simultaneously, we may be unable to pay our debts as they fall due. For details of our total
outstanding loans, please see “Management’s Discussion and Analysis of Financial Condition and Results
of Operations”.
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