Glenmark

Various risks and restrictions associated with our debt financing may cause liquidity problems for us.
The agreements in respect of some of our debt contain certain covenants including compliance reporting
requirements and other restrictions which may limit our ability to borrow additional money, make capital
expenditure and investments, declare dividends, merge or incur additional liens. We may similarly need to
obtain the consent of some or all of our lenders to undertake some or all of these activities. Some of our
lenders have a right to convert the loans into our equity upon the occurrence of an event of default. In
addition, we are subject to a number of risks associated with debt financing, including the risk that cash
flow from operations will be insufficient to meet required payments of principal and interest; the risk that
the payment of interest on and the repayment of our foreign currency loans may be adversely affected if the
rupee depreciates; the risk that, to the extent that we maintain floating rate indebtedness, interest rates will
fluctuate; and the risk that it may not be possible to obtain refinancing on favourable terms when required.
In particular, we have a number of working capital financings and other short-term debt facilities which
have been extended to us by various banks on a yearly basis. While we have in the past been successful in
negotiating with banks to roll-over or refinance our short-term debt instruments and obtain sufficient credit,
we cannot assure you that we will be able to continue to do so in the future, which may result in liquidity
problems for us and we will need to find alternate sources of funding. Although we anticipate that we will
be able to repay or refinance existing debt (including certain loans with proceeds from this offering), and
any other indebtedness when it matures, there can be no assurance that we will be able to do so.
Our working capital requirements are higher than the industry average.
Our relatively high working capital cycle is a function of the growth and geographic spread of our
businesses across India, United States, Western Europe, Central and Eastern Europe, Africa, Asia,
Russia/CIS and Latin America. The credit terms offered to our trading partners, i.e., the distributors vary
by geography depending upon the local country norms as well as the company's position in the country visà-vis
that of the distributor. In the last few quarters, we saw an increase in our working capital cycle on
account of an absence of credit with the distributor that was brought about by the global recession.
Going forward, we may not be in a position to recover some of these dues and could face a risk of bad
debts as well as further lengthening of the working capital cycle. Our inability to fund further increases in
working capital may have an impact on our growth rates for the future.
Exchange rate fluctuations may affect our business.
Our financial statements are prepared in Indian rupees. A substantial portion of our net revenue and most
of our imports are incurred in foreign currencies and in particular U.S. dollars. Although our exposure to
exchange rate fluctuations is in part naturally hedged in terms of our exports and imports and although we
hedge a portion of the resulting net foreign exchange position through the use of forward exchange
contracts or derivatives, we are still affected by fluctuations in exchange rates among the U.S. dollar, the
Indian rupee and other currencies. We are particularly affected by fluctuations in the exchange rate
between the U.S. dollar and the Indian rupee. Any significant fluctuation in exchange rates may affect our
profitability. In addition, our operations in emerging economies result in us being susceptible to high
currency volatility in those economies.
As at March 31, 2009, we had foreign currency borrowings, of Rs.8,222.00 million denominated
principally in U.S. dollars. Since January 1, 2007 the value of the U.S. dollar against the Rupee has
declined by 15.55%. There is no guarantee the value of the U.S. dollar will not continue to decline.
Depreciation of the Indian rupee against the U.S. dollar increases the Indian rupee cost to us of servicing
and repaying our foreign currency borrowings and other financing arrangements.
Any disruption in global or domestic logistics could affect our operations.
As a manufacturing business our success depends on the smooth supply and transportation of various
materials and inputs from different domestic and global sources to our plants, and of the products from our
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