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Glenmark

Glenmark Glenmark

glenmarkpharma.com
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perception that investing in India-based companies involves a great degree of risk, which could have an adverse effect on our business, future financial performance and price of the Equity Shares. India has, from time to time, also experienced social and civil unrest and hostilities, including riots, regional conflicts and other acts of violence. The occurrence of any of the foregoing could create a greater perception that investment in Indian companies involves a higher degree of risk and could adversely affect our financial performance or the market price of the Equity Shares, even if unrelated to our business. Political instability and significant changes in the Government's policy could impact economic conditions in India generally, and our financial results and prospects in particular. The Government of India has traditionally exercised, and continues to exercise, a significant influence over many aspects of the economy. Our business, and the market price and liquidity of our Equity Shares, may be affected by interest rates, changes in government policy, taxation, social and civil unrest and other political, economic or social developments in or affecting India. Since 1991, successive Indian governments have pursued policies of economic liberalisation and financial sector reforms. The current coalition Government came into power in May 2009. The Government has announced its general intention to continue India’s current economic liberalization and deregulation policies. However, the rate of economic liberalization could change and there can be no assurance that such policies will be continued. A change in the Government or in the Government’s future policies could affect business and economic conditions in India and could also adversely affect our business, prospects, financial condition and results of operations. The occurrence of natural and man-made disasters, including hurricanes, floods, earthquakes, tornadoes, fires, explosions and pandemic disease, in Asia or elsewhere could have an adverse effect on our business and results of operations. India has experienced natural calamities such as earthquakes, floods, drought and a tsunami in recent years. The extent and severity of these natural disasters determine their impact on the Indian economy and our business and financial condition. The outbreak of an infectious disease or any other serious public health concerns in Asia or elsewhere could have a negative impact on the economies, financial markets and business activities in the countries in which our end markets are located, which could have an adverse effect on our business. The outbreak in 2003 of Severe Acute Respiratory Syndrome in Asia, the outbreak of avian influenza, or bird flu, across Asia and Europe and the outbreak of H1N1 in many countries around the world have adversely affected a number of countries. We can give no assurance that a future outbreak of an infectious disease or any other serious public health concerns will not have an adverse effect on our business. Any downgrading of India's debt rating by an international rating agency may adversely affect our ability to raise financing. Any adverse revision to India's credit rating for domestic and international debt by international rating agencies may adversely impact our ability to raise additional financing and the interest rates and their commercial terms at which such additional financing is available. This could have an adverse effect on our financial performance and our ability to obtain financing to fund our growth on favourable terms or at all. A decline in India's foreign exchange reserves may affect liquidity and interest rates in the Indian economy, which could adversely impact our financial condition. According to a report released by the Reserve Bank of India, India's foreign exchange reserves totalled US$252 billion as at March 31, 2009. A decline in this reserve could impact the valuation of the local currency and could result in reduced liquidity and higher interest rates which could adversely affect our future financial performance and the market price of our Equity Shares. 19

It may not be possible for you to enforce any judgment obtained outside India against us, our management or any of our respective affiliates in India, except by way of a suit in India on such judgment. We are incorporated under the laws of India and majority of our Directors and executive officers reside in India. A substantial majority of our assets, and the assets of our Directors and officers, are also located in India. As a result, you may be unable to: (i) (ii) effect service of process outside of India upon us and such other persons or entities; or enforce in courts outside of India judgments obtained in such courts against us and such other persons or entities. See “Enforcement of Civil Liabilities”. A general backlash against outsourcing, as well as a climate of political protectionism in the United States, may adversely impact our business. Some organizations have expressed publicly their concerns about a perceived association between offshore outsourcing to India and the loss of jobs in the United States. For example, since January 2003, legislation has been introduced in more than 20 states as well as by the U.S. federal government that would restrict government agencies from outsourcing the manufacture of products or the provision of services (with particular emphasis on information technology, or IT, services) to companies located outside the United States, or would cut state subsidies to private companies which engage in such outsourcing. Any changes to existing laws or the enactment of new legislation restricting offshore outsourcing may adversely impact the ability to do business in the United States, particularly if these changes are widespread. Our business and activities will be regulated by the Competition Act, 2002 as and when it is notified. The Parliament has enacted the Competition Act, 2002 (the “Act”) for the purpose of preventing practices having an adverse effect on competition under the auspices of the Competition Commission of India. Although enacted, the Act has not yet fully come into force (although certain limited provisions of the Act have been notified). Under the Act, any arrangement, understanding or action whether or not formal or informal which causes or is likely to cause an appreciable adverse effect on competition is void and attracts substantial penalties. Any agreement, inter alia, which directly or indirectly determines purchase or sale prices, limits or controls production, or shares the market by way of geographical area or number of customers in the market is presumed to have an appreciable adverse effect on competition. It is unclear as to how the Act and the Competition Commission of India will affect industries in India. If inflation rises in India or the price of oil rises, we may not be able to increase the prices of our product in order to pass our increased costs along to our customers, and our profits would decline. For the week ended August 22, 2009, the wholesale price index, India's main gauge of inflationary trends, was at 240.7, 0.21% lower than the equivalent week in the previous year. The international price of crude oil on September 2, 2009 was US$67 per barrel. If domestic inflation and the international price of oil rise, there could be a consequential increase in the cost of our inputs. We may not be able to pass these added costs to our customers by increasing the prices of our products which could affect our profits. A third party could be prevented from acquiring control of us because of the anti-takeover provisions under Indian law. There are provisions in Indian law that may discourage a third party from attempting to take control over us, even if a change of control would result in the purchase of your Equity Shares at a premium to the market price or would otherwise be beneficial to you. Under Indian takeover regulations, an acquirer has been defined as any person who, directly or indirectly, acquires or agrees to acquire shares and voting 20

perception that investing in India-based companies involves a great degree of risk, which could have an<br />

adverse effect on our business, future financial performance and price of the Equity Shares.<br />

India has, from time to time, also experienced social and civil unrest and hostilities, including riots,<br />

regional conflicts and other acts of violence. The occurrence of any of the foregoing could create a greater<br />

perception that investment in Indian companies involves a higher degree of risk and could adversely affect<br />

our financial performance or the market price of the Equity Shares, even if unrelated to our business.<br />

Political instability and significant changes in the Government's policy could impact economic<br />

conditions in India generally, and our financial results and prospects in particular.<br />

The Government of India has traditionally exercised, and continues to exercise, a significant influence over<br />

many aspects of the economy. Our business, and the market price and liquidity of our Equity Shares, may<br />

be affected by interest rates, changes in government policy, taxation, social and civil unrest and other<br />

political, economic or social developments in or affecting India.<br />

Since 1991, successive Indian governments have pursued policies of economic liberalisation and financial<br />

sector reforms. The current coalition Government came into power in May 2009. The Government has<br />

announced its general intention to continue India’s current economic liberalization and deregulation<br />

policies. However, the rate of economic liberalization could change and there can be no assurance that such<br />

policies will be continued. A change in the Government or in the Government’s future policies could affect<br />

business and economic conditions in India and could also adversely affect our business, prospects, financial<br />

condition and results of operations.<br />

The occurrence of natural and man-made disasters, including hurricanes, floods, earthquakes,<br />

tornadoes, fires, explosions and pandemic disease, in Asia or elsewhere could have an adverse effect on<br />

our business and results of operations.<br />

India has experienced natural calamities such as earthquakes, floods, drought and a tsunami in recent years.<br />

The extent and severity of these natural disasters determine their impact on the Indian economy and our<br />

business and financial condition.<br />

The outbreak of an infectious disease or any other serious public health concerns in Asia or elsewhere<br />

could have a negative impact on the economies, financial markets and business activities in the countries in<br />

which our end markets are located, which could have an adverse effect on our business. The outbreak in<br />

2003 of Severe Acute Respiratory Syndrome in Asia, the outbreak of avian influenza, or bird flu, across<br />

Asia and Europe and the outbreak of H1N1 in many countries around the world have adversely affected a<br />

number of countries. We can give no assurance that a future outbreak of an infectious disease or any other<br />

serious public health concerns will not have an adverse effect on our business.<br />

Any downgrading of India's debt rating by an international rating agency may adversely affect our<br />

ability to raise financing.<br />

Any adverse revision to India's credit rating for domestic and international debt by international rating<br />

agencies may adversely impact our ability to raise additional financing and the interest rates and their<br />

commercial terms at which such additional financing is available. This could have an adverse effect on our<br />

financial performance and our ability to obtain financing to fund our growth on favourable terms or at all.<br />

A decline in India's foreign exchange reserves may affect liquidity and interest rates in the Indian<br />

economy, which could adversely impact our financial condition.<br />

According to a report released by the Reserve Bank of India, India's foreign exchange reserves totalled<br />

US$252 billion as at March 31, 2009. A decline in this reserve could impact the valuation of the local<br />

currency and could result in reduced liquidity and higher interest rates which could adversely affect our<br />

future financial performance and the market price of our Equity Shares.<br />

19

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