The Directors are pleased to present the 25th Annual Report of the
 Company together with the Audited Accounts for the financial year ended
 March 31, 2012.
 
 FINANCIAL RESULTS
 
 Standalone financials                                       Rs.Million
 
                                                   2011-12      2010-11
 
 Gross Turnover                                    43787.3      42299.9
 
 Profit before depreciation, finance 
 costs, tax and exceptional items                   5925.6      10142.2
 
 Depreciation/Amortization                          1429.4       1250.4
 
 Finance costs                                       931.1        550.2
 
 Exchange difference adjusted to 
 borrowing cost (revised Schedule-VI)               1744.7         -
 
 Profit before tax                                  1820.4       8341.6
 
 Provision for tax/Deferred tax                     (952.1)      2116.5
 
 Profit after tax before exceptional item           2772.5       6225.1
 
 Less: Exceptional items                            3198.6        287.1
 
 Net Profit/(Loss) after 
 exceptional items                                  (426.1)      5938.0
 
 Balance brought forward from 
 previous year                                     15561.5      10900.9
 
 Balance available for appropriation               15135.4      16838.9 
 Appropriations
 
 Dividend on Equity Shares                           291.1        587.2
 
 Tax on Dividend                                      47.2         96.4
 
 General Reserve                                       -          593.8
 
 Surplus carried to Balance Sheet                  14797.1      15561.5
 
 DIVIDEND
 
 Your Directors have recommended a dividend of 100% i.e. Rs1 per equity
 share of Rs1 against the dividend of Rs2 per share on the equity share of
 Rs1 paid in the previous year.
 
 In view of the loss for the financial year ended March 31, 2012 the
 dividend is proposed to be paid out of accumulated profits of the
 Company.
 
 FINANCIAL HIGHLIGHTS
 
 Your Company''s performance must be viewed against an extremely
 challenging year for the western economies and a highly volatile
 currency with a tendency to turn weak. Several of the advanced markets
 that we deal with experienced weak growth, while the emerging markets
 were implementing policies to dampen inflation. While these undermined
 business confidence, the volatile rupee biased towards a weakening
 trend added to the pressure throughout the financial year.
 
 The first half of the current fiscal was challenging on account of
 lower formulation sales, full impact of the USFDA alert on Unit VI
 Cephalosporin manufacturing facility, subdued demand environment in
 Europe, disruption in operations due to regional unrest and exchange
 loss on repayment of foreign currency borrowings.
 
 The fact that we achieved remarkable presence in each of our markets,
 improved our volume sales and earned steadily growing margins,
 underlines the robust business that Aurobindo has created and the
 benefit of the actions your Company has taken to optimize operations
 and hold costs on a sustainable basis.
 
 However, there was a decline in dossier income by Rs1958 million on
 year-on-year basis. Dossier income is non-recurring and subject to
 periodic variability. The US formulation sales was shaded to the extent
 of a potential USD 36 million as a full-year impact due to import
 alert.
 
 Despite constraints, consolidated net operating income was Rs46274
 million showing a growth of 5.6% over the previous year. Gross sales
 from formulations have been at Rs26020 million, which is 7.4% higher on
 year-on-year basis.
 
 The ARV sales have grown by 13.4% to Rs7866 million during the year
 under review. Europe and the rest of the world geographies recorded a
 sale of Rs6315 million, thereby growing at 17% over the financial year
 2010-11. Gross sales from API have been at Rs20634 million which is
 14.5% higher over the corresponding previous fiscal while the SSP sales
 grew by 11.4%.  There is a decline in Cephalosporin sales to the extent
 11.8%.  However, non-betalactam (non-penicillin and non-cephalosporin)
 product sales has seen a rapid growth at 76% at Rs6870 million during
 the year over Rs3901 million last year.
 
 Profit from operations before other income, finance costs, foreign
 exchange gain/loss, exceptional items, depreciation/ amortization and
 tax for the year was Rs6101 million which is 13.2% of net operating
 income, declined as compared to the previous year by 36.7%.
 
 As already referred, EBITDA was impacted due to lower dossier income by
 Rs1958 million. Loss of margin is mainly due to full year sales impact
 on USFDA alert on Unit-VI, material consumption to net sales higher by
 2.5% on account of change in sales mix, increase in staff cost by 1.4%
 mainly due to the new hiring in Europe and USA, increase in other
 expenses such as power, fuels, consumables and freight by 1.2%.
 Further, your Company booked redemption premium of Rs3198.6 million
 while the outstanding FCCBs were redeemed on due date in the first
 quarter of the financial year.
 
 As far as foreign exchange is concerned, the closing rupee- dollar rate
 was Rs50.875 on March 31, 2012 while it was Rs44.595 on March 31, 2011.
 The rupee has been highly volatile and depreciated by 14.1% during the
 financial year. This has resulted in a net exchange loss of Rs2232.9
 million during the year includes an amount of Rs1744.7 millions on
 borrowings adjusted to finance charges as per revised Schedule VI. It
 has also increased your Company''s borrowings by approximately Rs3500
 million as on March 31, 2012 on account of restatement.
 
 REVIEW OF OPERATIONS
 
 Your Company consolidated its business during the year and climbed the
 value chain by focusing on quality of its processes and products,
 controlling the variable costs, building on its relationship with its
 customers and enhancing the commitment towards environment, health and
 safety.
 
 On the product and process front, your Company worked on time cycle
 reductions by practicing lean manufacturing concepts to improve
 productivity. Similarly, process stabilization efforts increased
 yields, while newer methods of recycling of solvents added to
 by-product recoveries. Energy costs account for approximately 5.75% of
 total revenue and the organization was audited and sensitized to make
 judicious and effective use of energy to minimize costs, strive for
 saving potential of 12% and enhance competitive position.
 
 Several scale up efforts were attempted successfully which helped
 launch new products. A new API plant was commissioned to cater
 exclusively to the quality conscious Japanese market.
 
 Members would be gratified to note that your Company has been launching
 one new product in major markets, every month.
 
 Despite increasing the product base and stepping up volume deliveries,
 the capacity utilization is at around 50% in formulation facilities and
 about 70% in the API units. The investments made in the past in
 vertically integrated mega manufacturing facilities have provided
 headroom for growth and enabled your Company to compete better for
 several more quarters. The built-in manufacturing flexibility offers
 Aurobindo the opportunity to optimize its product mix, reduce the time-
 to-launch new products after regulatory approvals and provide customers
 a single-window approach to draw from the large basket of approved
 products from Aurobindo.
 
 OUTLOOK
 
 Aurobindo''s growth strategy will be to work towards profitable growth,
 focus on high value products, ramp up its operations, with higher
 utilization of capacities for top ten products both in APIs and
 formulations and deliver larger volume of existing products and by
 commercializing newer products that have received regulatory approvals.
 Your Company has a basket of largest number of approved products. For
 instance, the regulatory approvals for generics (ANDAs) as at March 31,
 2011 were 133 which stood increased to 145 as at March 31, 2012.
 
 The Company''s manufacturing facilities are approved by several leading
 regulatory agencies like US FDA, UK MHRA, WHO, Health Canada, MCC
 (South Africa) and ANVISA (Brazil). The Company''s robust product
 portfolio is spread over 6 major therapeutic/ product areas
 encompassing antibiotics, anti-retroviral, CVS, CNS,
 gastroenterological, and anti-allergic, supported by an outstanding
 R&D set-up. The Company is marketing these products globally, in over
 125 countries. The intellectual property and a well-organized
 manufacturing and marketing team will continue to add traction to the
 growth trajectory.
 
 The Company has benefited from several learning opportunities to
 improve its processes with specific emphasis on quality and regulatory
 requirements. At the same time, Aurobindo believes that improvements
 need to be closely monitored internally as a dynamic day-to-day
 exercise and every effort made to meet/ exceed expectations. The level
 of vigilance has been raised to offer excellence through proactive
 initiatives to carve out more focus and add impetus to the quality
 culture in the production process. The accountability levels stand
 enhanced with responsibility for vendor quality, adherence to quality
 management systems and post-marketing surveillance.
 
 Your Company has a mutually advantageous relationship with some of the
 best pharma companies globally, who have shown enormous trust in
 Aurobindo meeting their market needs. Your Company will continue to
 strive building a strong relationship and be a dependable resource for
 all of them. Their feedback has been positive in areas such as
 collaboration, order handling and product quality which helped your
 Company to further hone its systems and processes. Systematic
 monitoring and management of customer relationships, reliable processes
 and enhanced product quality has enabled Aurobindo to understand and
 meet their needs and expectations.
 
 Internally, several cost control measures have been put in place by
 strengthening the budgeting process and carefully controlling cost of
 operations and reducing overhead and capital expenditure. Production
 unit-wise focus on bottom line improvement, alignment of input: output
 ratios, productivity improvements and inventory management to lower the
 holding costs are some of the aggressive efforts made to implement a
 unified policy to enhance margins.
 
 RECOGNITION
 
 The export promotion council for EOUs and SEZ under Ministry of
 Commerce & Industry, Government of India has selected your Company for
 our outstanding export performance in 2009-10.  Mr. Jyotiraditya M.
 Scindia, Hon''ble Minister for State for Commerce & Industries handed
 over the award on May 17, 2012.
 
 RESEARCH & DEVELOPMENT
 
 The year under review has been one of the formidable years for the API
 R&D team in terms of the technology transfer dossiers (TTD)
 submissions, patent filings and regulatory agency submissions. In
 addition to working on close to 30 new products, the team also worked
 on the various improvement initiatives on the commercialized products.
 
 The R&D function has 68 projects under various stages of development
 including 5 products with first-to-file (FTF) opportunities, 7
 processes for patent applications, and 10 recipients. Several other
 products are under active development in therapeutic areas such as
 ophthalmic, inhalation and injectables and a few more have been taken
 up for cost optimization.
 
 During the year, the API R&D Center has been shifted from Bachupally to
 Pashamylaram in a seamless manner and is fully operational. The new
 Center is dedicated to API research (synthetic and analytical) along
 with creating relevant intellectual property rights and is duly
 supported by a strong regulatory affairs team.
 
 ENVIRONMENT, HEALTH & SAFETY
 
 Your Company is committed to ensuring ecological balance and protecting
 the health and safety of its employees and neighborhood. In the long
 run, environmentally conscious process design and development are
 central ways to reduce harmful ecological impact. Therefore, the
 Company has taken up initiatives to optimize energy efficiency,
 minimize substances harmful to the environment and people, and recycle
 materials and resources as far as practicable.
 
 A few of the initiatives undertaken in 2011-12 include, introduction of
 activity based risk assessment for non-process activities, enhancement
 of the safety culture and work ethics on the shop floor and empowerment
 of the safety committees charged with the task of improving the
 well-being of the people and the neighborhood. More specifically, some
 of the safety initiatives undertaken include:
 
 - Process risk analysis in all the API units;
 
 - A hazard and operability study (HAZOP) i.e. a structured and
 systematic examination of existing process/operations were undertaken
 to review all processes in API units in order to identify and evaluate
 problems that may represent risks to personnel or equipment and steps
 taken to prevent them;
 
 - Activity based risk assessment for non-process activities
 (warehouse, engineering, QC) in both API and formulation units;
 
 - Devised specific handling procedures for hazardous chemicals and
 training personnel on those procedures;
 
 - Process safety testing - Determination of thermal conductivity of
 all powders, flammability of powders which are non-conductive in
 character; and,
 
 - Review of layouts and product improvement and development by the
 EHS team, before finalization of new projects.
 
 Several initiatives were also made in the area of environmental
 management. A few of them are listed below:
 
 - Achieved zero process liquid discharge status at two API Units
 (Units VIII and IX);
 
 - Installed on-line stack monitoring equipment for boiler stacks at
 Units I, V and VI;
 
 - Installed and commissioned stripper, multiple-effect evaporator
 (MEE) and agitated thin film drier (ATFD) at Unit XI;
 
 - Installation of stand-by wastewater treatment systems at Units V
 and IX (MEE and ATFD) for business continuity;
 
 - Entered in to agreements with cement units for disposal of liquid
 organic wastes at ''zero'' handling and disposal costs;
 
 - Sewage treatment plant at Unit I;
 
 - Initiation for installation of continuous ambient air quality
 monitoring station at Unit XI; and,
 
 - Accredited to ISO:14001 certification for Units VI (A&B).
 
 During the year under review, your Company was proud to receive the
 National Award for Energy Excellence & Energy Management
 
 - 2010 conferred by the Confederation of Indian Industry (CII) for Unit
 I.
 
 FOREIGN CURRENCY CONVERTIBLE BONDS
 
 During 2006-07, your Company had issued 150,000 Zero Coupon Foreign
 Currency Convertible Bonds of USD 1,000 each due in 2011 (Tranche A
 Bonds) and 50,000 Forward Conversion Convertible Bonds of USD 1,000
 also due in 2011 (Tranche B Bonds). After repurchase and cancellation
 (43,750 of Tranche A bonds and 17,050 of Tranche B bonds), the
 outstanding 106,250 of Tranche A bonds and 32,950 of Tranche B bonds
 were repaid on due date in May, 2011 at 146.285% and 146.991%
 respectively to the principal amount.
 
 The redemption premium (Yield to Maturity) has been charged to the
 Statement of Profit and Loss and is disclosed as an exceptional item in
 the financial results. By virtue of such redemption, all outstanding
 FCCBs have been fully redeemed and extinguished.
 
 SUBSIDIARIES/JOINT VENTURES
 
 The reports and accounts of the subsidiary companies are not annexed to
 this Report. The Board of Directors of the Company have approved and
 passed a resolution in this regard.  A statement pursuant to the
 provisions of Section 212 of the Companies Act, 1956 is annexed.
 
 Annual accounts of the subsidiary companies are kept for inspection by
 any Member at the Registered Office of the Company as well as at the
 Registered Office of the respective subsidiary companies. Any Member
 interested in a copy of the accounts of the subsidiaries may write to
 the Company Secretary.
 
 HUMAN RESOURCES
 
 Your Company has been ably managed and competitively better positioned
 by the commitment demonstrated by all the 8,635 employees in their
 effort generate sustainably profitable growth.  They are the key
 building block for implementing the Company''s strategy and the
 financial year 2011-12 saw them respond flexibly to the dynamic changes
 in a highly challenging globalized market.
 
 Several business excellence initiatives started in 2010-11 under the
 program Aurobindo Achieving Competitive Edge (A CE) has been further
 strengthened during the year under review with the involvement of more
 teams at shop floor level. Significant number of project proposals on
 yield improvement, quality enhancement, waste reduction and
 productivity upscale are implemented at both formulation and API units.
 A cross
 
 functional team has been formed to validate the results and share the
 critical learning across the organization. A CE platform has given
 significant opportunity to the people at all levels to exercise their
 creative talents and channelize their potential to impact the company''s
 performance in a positive manner.
 
 DIRECTORS
 
 Dr. K. Ramachandran ceased to be Director due to his resignation from
 the Board with effect from May 3, 2011. The Board places on record its
 appreciation for the services rendered by him as a Director during his
 association with the Company.
 
 Dr. C. Channa Reddy has been appointed as an Additional Director of
 your Company with effect from January 18, 2012 and pursuant to Section
 260 of the Companies Act, 1956 and Article 37 of the Articles of
 Association of the Company, he holds office up to the date of the
 ensuing Annual General Meeting and being eligible, offers himself for
 appointment.
 
 In accordance with the provisions of the Companies Act, 1956 read with
 the Articles of Association of the Company, Mr. M. Sitarama Murthy, Dr.
 D. Rajagopala Reddy and Dr. P.L. Sanjeev Reddy retire by rotation at
 the ensuing Annual General Meeting. All of them being eligible, offer
 themselves and seek re-appointment except Dr. Sanjeev Reddy.
 
 Dr. P.L. Sanjeev Reddy expressed his intention not to seek
 re-reappointment. The members of the Board place on record the deep
 sense of appreciation for the services rendered by Dr. Sanjeev Reddy
 during his tenure as a member of the Board.
 
 The re-appointment of Dr. M. Sivakumaran, and Mr. M. Madan Mohan Reddy,
 Wholetime Directors are being proposed at the ensuing Annual General
 Meeting.
 
 Mr. K. Nithyananda Reddy seeks to relinquish his responsibilities as
 Managing Director of the Company and the Board has appointed him as
 Wholetime Director of your Company designated as Vice Chairman with
 effect from June 1, 2012 subject to approval of the Members at the
 ensuing Annual General Meeting.
 
 Mr. N. Govindarajan has been appointed as a Director of the Company
 with effect from June 1, 2012 and pursuant to Section 260 of the
 Companies Act, 1956 and Article 37 of the Articles of Association of
 the Company, he holds office up to the date of the ensuing Annual
 General Meeting and being eligible, offers himself for appointment.
 Further, Mr. Govindarajan has been appointed as Managing Director of
 the Company with effect from June 1, 2012 subject to approval of the
 Members at the ensuing Annual General Meeting.
 
 Mr. Ravindra Y. Shenoy has been appointed as a Director of the Company
 with effect from June 1, 2012 and pursuant to Section 260 of the
 Companies Act, 1956 and Article 37 of the Articles of Association of
 the Company, he holds office up to the date of the ensuing Annual
 General Meeting and being eligible, offers himself for appointment.
 Further, Mr. Shenoy has been appointed as Joint Managing Director of
 the Company with effect from June 1, 2012 subject to approval of the
 Members at the ensuing Annual General Meeting.
 
 Mr. P.V. Ramprasad Reddy seeks to relinquish his responsibilities as
 Executive Chairman of the Company with effect from June 1, 2012 and
 continues to be on the Board as a Whole time Director.
 
 Mr. K. Ragunathan, an Independent Director, has been appointed as
 Non-Executive Chairman of the Board with effect from June 1, 2012.
 
 A brief profile of Dr. C. Channa Reddy, Mr. M. Sitarama Murthy, Dr. D.
 Rajagopala Reddy, Mr. K. Nithyananda Reddy, Dr. M. Sivakumaran, Mr. M.
 Madan Mohan Reddy, Mr. N. Govindarajan and Mr. Ravindra Y. Shenoy are
 provided in the Report on Corporate Governance forming part of the
 Annual Report.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Section 217 (2AA) of the Companies Act,
 1956 as amended, the Board of Directors confirms that in the
 preparation of the Statement of Profit and Loss for the year ended
 March 31, 2012 and the Balance Sheet as at that date:
 
 i.  the applicable accounting standards have been followed:
 
 ii.  had selected such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company as at the end of the financial year and of the loss of the
 Company for the year;
 
 iii. proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities; and,
 
 iv.  the annual accounts have been prepared on a going concern basis.
 
 CORPORATE GOVERNANCE
 
 The certificate of the Practicing Company Secretary Mr. S.  Chidambaram
 with regard to compliance of conditions of corporate governance as
 stipulated under Clause 49 of the Listing Agreement with the stock
 exchanges in India is annexed.
 
 AUDITORS & AUDITORS'' REPORT
 
 M/s. S.R. Batliboi & Associates, Chartered Accountants retire at the
 ensuing Annual General Meeting and being eligible, offer themselves for
 re-appointment as Statutory Auditors of the Company for the financial
 year 2012-13.
 
 The notes on financial statements referred to in the Auditors'' Report
 are self explanatory and do not call for any further comments.
 
 COST AUDITORS
 
 M/s. Sagar & Associates, Cost Accountants, have been reappointed as
 Cost Auditors of the Company with the consent of the Government of
 India to conduct cost audit of both the bulk drug and formulations
 divisions of the Company for the year 2011-12. The due date for filing
 cost audit report reports of the Company for 2010-11 was September 30,
 2011 and the same was filed with the Ministry of Corporate Affairs on
 September 26, 2011.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC.
 
 Information in accordance with the provisions of Section 217 (1) (e) of
 the Companies Act, 1956 read with the Companies (Disclosure of
 Particulars in the Report of Board of Directors) Rules, 1988 is given
 in Annexure I forming part of this Report.
 
 FIXED DEPOSITS
 
 Your Company has not accepted any fixed deposits during the year under
 review. As such no amount of principal or interest was outstanding on
 the date of the Balance Sheet.
 
 INDUSTRIAL RELATIONS
 
 As in the earlier years, your Company had cordial relations with its
 employees at all levels. There is a continuous effort to step up
 leadership and technical skills that has helped them function better,
 stay focused on systems and best practices and in the process, build a
 robust Aurobindo with capabilities to face emergent challenges.
 
 PARTICULARS OF EMPLOYEES
 
 The particulars of employees as required to be disclosed in accordance
 with the provisions of Section 217 (2A) of the Companies Act, 1956 and
 the Companies (Particulars of Employees) Rules, 1975 as amended are
 annexed to the Directors'' Report. However, as per the provisions of
 Section 219 (1)(b)(iv) of the Companies Act, 1956 the Report and
 Accounts are being sent to all the Members of the Company excluding the
 aforesaid information. Any Member interested in obtaining such
 particulars may write to the Company Secretary.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 At the Annual General Meeting of the Company held on July 31, 2004 the
 Members approved formulation of Employee Stock Option Scheme - 2004
 (ESOP 2004) for the eligible employees and Directors of the Company and
 its subsidiaries.
 
 Further, the Members at the Annual General Meeting of the Company held
 on September 18, 2006 approved formulation of Employee Stock Option
 Scheme - 2006 (ESOP 2006) for the eligible employees and Directors of
 the Company and its subsidiaries.
 
 During the year 1,205,000 options were granted under ESOP- 2006.
 Further, no options were exercised and no shares were allotted under
 the ESOP Schemes.
 
 Details of the options granted up to March 31, 2012 are set out in the
 annexure to this Report, as required under Clause 12 of the Securities
 and Exchange Board of India (Employee Stock Options Scheme and Employee
 Stock Purchase Scheme) Guidelines, 1999.
 
 ACKNOWLEDGEMENTS
 
 Your Board is grateful for the passion, dedication and commitment
 demonstrated on the job by all employees and is confident that they
 shall continue to underwrite the Company''s growth. Your Company as in
 the past, looks forward to the support and encouragement from the
 customers and business associates.  Your Directors thank the banks,
 financial institutions, government departments and shareholders and
 seeks their continuing guidance and assistance in all our future
 endeavors.
 
                                      For and on behalf of the Board
 
 Hyderabad                                     P. V. RAMPRASAD REDDY
 
 May 29, 2012                                               Chairman