FEROZSONS LABORATORIES LIMITED

MARCH 31, 2004

We are pleased to present your company's consolidated and individual un-audited accounts for the Quarter as well as the 9 months ended March 31, 2004 .

Consolidated Net Sales for the Quarter ended March 31 stood at Rs. 166.648 Million, an improvement of 47.62% over Rs. 112.892 Million achieved in the corresponding quarter of last year. Consolidated Net Sales for the nine-month period grew by 38.62% to Rs. 477.400 Million, compared to Rs. 344.395 Million achieved during the corresponding period of last year.

Gross Profit (GP) of your company for the Quarter rose to Rs. 78.823 Million from Rs. 55.456 Million, an improvement of 42.14%. For the nine months under review, the GP stood at Rs. 230.660 Million, an increase of 32.67% over the GP of Rs. 173.856 Million achieved during the same period of last year.

Overall operating expenses increased by 13.29%, from Rs. 33.443 Million during Quarter III 2003, to Rs. 37.887 Million during the Quarter under review. Operating Expenses for the 9 Months were Rs. 128.546 Million, an increase of 29% over the figure of Rs. 99.640 Million incurred during the same period of the previous year.

Net Profit from Operation for the Quarter correspondingly increased by 85.96 % to Rs. 40.936 Million, from Rs. 22.013 Million achieved during the same Quarter of last year. For the 9-month period, the Net Profit increased by 37.59% to Rs. 102.115 Million (2003: Rs. 74.217 Million).

The management has also taken drastic measures during the Quarter to ensure a turnaround at Farmacia, which sustained losses of Rs. 4.790 Million for the 9-month period. These measures included shutting down two of its loss-making branches, right-sizing staff and reducing excess inventories. We are certain that with the tough measures taken, these losses will Inshallah be reversed in the Quarters to come.

After a provision for taxation and other levies of Rs. 39.039 Million (2003: Rs 25.409 Million), the Net Profit of your company for the 9-month period under review stands at Rs. 69.055 Million, an improvement of 32.47% over the Net Profit of Rs. 52.129 Million achieved during the same period of the previous year.

The Basic Earnings per Share (EPS) of your Company for the Quarter ended March 31, 2004, on its increased paid-up capital stand at Rs. 4.69 per share (2003: Rs. 2.79). The 9-monthly EPS stands at Rs. 12.51 per share, compared to Rs. 9.45 achieved during the same period last year.

As mentioned in the previous report, improved relations with India and the SAFTA agreement in particular, are of great significance to the future of the Pakistani Pharmaceutical Industry. If the Government wishes Pakistan to succeed in a free trade environment with its much larger neighbor, it must make a rapid and earnest attempt to remove these differences to level the playing field for its domestic industry.

While in India the pharmaceutical sector enjoys a great degree of price liberalization, in Pakistan, pricing is still fully regulated, despite the fact that there are over 400 players in the Pakistani industry and no semblance of a cartel exists. If the Pakistani Pharma sector is not deregulated on an immediate basis to the same degree as India's, we will enter the South Asian Free Trade Area with our hands tied, and will take an uphill task in benefiting from what could otherwise be an excellent opportunity to grow and prosper in a market of almost 1.5 billion consumers.