The Directors are pleased to present the 24th Annual Report of the
 Company together with the Audited Accounts for the financial year ended
 March 31, 2011.
 
 FINANCIAL RESULTS
 
                                                    Rs. Million
 
                                               2010-2011   2009-2010
 
 Gross Turnover                                  42299.9     33196.0
 
 Profit before Depreciation, Interest, 
 Tax and exceptional items                       10096.9      8579.4
 
 Depreciation/Amortization                        1250.4       954.6
 
 Interest (Net)                                    504.9       523.3
 
 Profit before tax                                8341.6      7101.5
 
 Provision for tax/Deferred tax                   2116.5      1865.8
 
 Profit after tax before exceptional item         6225.1      5235.7
 
 Exceptional items                                (287.1)       21.9
 
 Net Profit after exceptional items               5938.0      5257.6
 
 Balance brought forward from previous year      10900.9      6493.2
 
 Balance available for appropriation             16838.9     11750.8 
 
 Appropriations
 
 Dividend on Equity Shares                         587.2       277.4
 
 Tax on Dividend                                    96.4        46.7
 
 General Reserve                                   593.8       525.8
 
 Surplus carried to Balance Sheet                15561.5     10900.9
 
 DIVIDEND
 
 Your Directors have proposed a final dividend of 100% i.e. Rs.1 per
 equity share of Rs.1 and with the interim dividend of 100% i.e. Rs.5 per
 equity share of Rs.5, the total dividend for the financial year 2010-2011
 comes to 200% i.e. Rs.2 per share on the equity share of Rs.1 against 100%
 i.e. Rs.5 per share of Rs.5 paid in the previous year.
 
 FINANCIAL HIGHLIGHTS
 
 Members will be happy to know that your Company is in its Silver
 Jubilee year. This eventful journey has been a period of planned growth
 and success, and your Directors take this opportunity to compliment
 each one of the Members, customers, business associates and employees
 for their encouragement, support and co-operation. Your Company shall
 maintain the momentum and stands dedicated to strive for continued
 growth and thereby meet every stakeholder expectation in the future, as
 well.
 
 The year under review witnessed Aurobindo cross the one billion dollar
 revenue mark, a landmark that truly reflects the presence
 
 your Company has in the global pharmaceutical market. The challenges of
 the market were met vigorously due largely to the enormous advantage
 that your Company has built with its customer relationships, product
 basket, manufacturing capabilities and organizational strength.
 Aurobindo demonstrated great speed and flexibility in its marketing and
 manufacturing efforts and resilience while dealing with competitive
 pressures. The performance results showcase the success.
 
 The financial year 2010-2011 saw significant improvement in all
 parameters including revenues, operating income, profit before tax,
 profit after tax and earnings per share. The revenue growth of over
 27.4% at Rs.42299.9 million was a culmination of our strategic
 initiatives in widening our presence in Europe and USA, penetrating
 better with larger basket of products with existing customers and
 commercializing of new products as well as creating footprints in
 untapped markets such as Japan.
 
 Net profit after tax at Rs.5938 million was higher by 12.9% over ~
 Rs.5257.6 million in the previous year. It is a new high for your
 
 Company translating to Earnings per Share of Rs.18.56 (Face Value Rs.1) as
 compared to Rs.16.63 (adjusted for split in Face Value from Rs.5 to Rs.1).
 Effectively, your Company earned 11.6% higher earnings over the
 previous year.
 
 REVIEW OF OPERATIONS
 
 Despite the difficult economic environment, your Company delivered
 sales growth both in USA and Europe. Your Companys total volume was
 higher in each of the existing markets. More importantly, there were
 higher deliveries in all the key therapeutic segments.
 
 Your Company continues to hold an enviable basket of a large number of
 products in several therapeutic segments approved by regulatory
 authorities across the globe. The marketing efforts were galvanized to
 create demand, deliver on expectations and ensure top line growth.
 Converting approvals and quickly commercializing them remains one of
 your Companys key strengths.
 
 The newly commercialized manufacturing unit, Unit VII (SEZ) at
 Gedcherla added to the existing huge production capabilities of your
 Company to support the marketing thrust. The unit at Dayton (USA) was
 significantly scaled up to deliver high value products.
 
 Consolidation of facilities helped add newer products in all other
 facilities. Across all facilities, production was optimized and
 utilization was stepped up. Overall, capacity utilization was higher
 month after month from June 2010.
 
 Large state-of-the-art manufacturing facilities have created headroom
 for growth for your Company to meet market expectations. Rising volume
 deliveries and new product launches during 2010-2011 are a testimony to
 your Companys improving competitiveness.
 
 OUTLOOK
 
 Aurobindos business strategies and financial position are on solid
 footing even as the dynamics of the global market are challenging and
 changing increasingly towards cost effective generic formulations. This
 change is accelerating and driving the need for Aurobindo to
 continuously renew and upgrade its operations. Your Company is equal to
 the challenges and expected results are being achieved by the dedicated
 teamwork on the manufacturing side as well as by aligning with the
 needs of the customers.
 
 Today, greater traction is visible in formulation sales in USA, Europe
 and the emerging markets. Working closely with MNCs has enabled
 Aurobindo to become a preferred choice supplier.
 
 During 2011-2012, your Company is striving towards commercializing 12
 new generics, with 4 of them expected to be on a first-to-launch basis.
 Higher volumes, higher utilization and improvements in productivity
 would improve visibility of revenues, margins and earnings.
 
 Your Companys clear focus on quality, product development,
 manufacturing efficiencies, productivity improvements and quicker reach
 to market will drive the future success. This focus will enable
 Aurobindo to enter the financial year 2011-2012 with optimism and keep
 the Company on track to deliver revenue of USD 2 billion in 2013-2014.
 
 In order to further strengthen and provide focus to the growing volume
 of APIs and formulation business, the Board has constituted a
 Restructuring Committee to explore and evaluate possible growth linked
 restructuring options, inter alia, including spin-off or demerger or
 any other suitable form, with the ultimate objective of enhancing
 shareholders value and customer satisfaction. The Restructuring
 Committee, consisting of Directors including independent directors,
 will take all necessary steps and recommend the best options to the
 Board for consideration.
 
 RESEARCH & DEVELOPMENT
 
 The Company has maintained its momentum to enlarge the product
 pipeline. Given the nature of the pharmaceutical industry, all
 activities translate into results after considerable investment of
 inputs, necessary process validations, stringent quality assurances and
 uncompromising compliance needs. Therefore, there is a time lag in
 achieving results and/or commercializing new products.
 
 Your Company has invested in a large pool of skilled talents to
 actively create newer products. Their accomplishments have been in
 areas as varied as product development, quality enhancement, process
 development, customer support and knowledge sharing.
 
 During the year under review, the R&D team has entered into newer
 therapeutic areas such as ophthalmic products and contraceptives.
 Validation batches are planned to be taken in 2011-2012. The R&D team
 in USA have commercialized and launched new products and many more are
 expected in the forthcoming financial year.
 
 Overall, your Company filed 46 new patent applications taking the total
 applications filed to 464. During the year under review, Aurobindo
 filed 380 DMFs taking the aggregate of DMFs filed in different
 countries to 1,937. At the same time, 98 formulation dossiers were
 filed taking the aggregate of formulation dossiers filed in different
 countries to 588. As at March 31, 2011 your Company holds 133 FDA
 approved/tentatively approved ANDAs, and 156 formulation dossier
 approvals from other regulatory authorities.
 
 Every R&D effort is focused on enhancing the competitiveness and long
 term sustainability of your Company.
 
 QUALITY MANTRA
 
 Your Company is pledged to supplying highest quality medicines to
 customers founded on the belief that Aurobindo is committed to
 healthier life. This presupposes that your Company at all times is
 regulatory compliant, meets stringent requirements of customers and
 that the drugs sold shall provide health care and wellness for the
 consumers.
 
 While your Company has put in place the necessary systems, regularly
 all the systems, procedures and controls are continuously fine-tuned.
 As a consequence, the quality systems have been revisited to strengthen
 them while training inputs have been stepped up to elevate the level of
 awareness, supervision and controllership.
 
 Aurobindo is striving to ensure that it is benchmarked as the
 best-in-class and thereby provide reassurance to all stakeholders.
 Every effort is hence being made to ensure that there is no compromise
 on quality of products and processes.
 
 ENVIRONMENT, HEALTH & SAFETY
 
 At Aurobindo, in every activity, your Company safeguards its employees,
 facilities and the environment, conserves natural resources and
 promotes environmental awareness. In the pursuit of the corporate goal
 as a responsible corporate, your Company has initiated several
 activities and adopted best practices such as:
 
 / Stepped up investments on wastewater treatment systems across all
 facilities;
 
 . Installed stripper system, multiple effect evaporation, agitated thin
 film drier systems and reverse osmosis systems established across API
 Units;
 
 . Established multiple effect evaporation systems in three formulation
 units;
 
 . Significantly reduced wastewater disposal to common effluent
 treatment facility;
 
 . Explored avenues for disposal of hazardous wastes through alternate
 destruction and reuse technologies; and,
 
 . Instituted continuous on-line monitoring systems for treated
 wastewater and on-line emission of suspended particulate matter.
 Safety and health of all the employees continues to be of paramount
 importance. Considerable work has gone into making our operations safer
 by implementation of Standard Operating procedures, ergonomics
 initiatives, regular safety audits etc.  Among the focus area during
 the year under review were as follows:
 
 . Introduction of risk assessments to identify all risks in the work
 area and devise and implement proper controls to mitigate the risk;
 
 / Training to all new employees and contract workmen;
 
 / Identification of process hazards at lab stage itself and usage of
 calorimetric reaction.
 
 Your Company stayed on track to get accreditation to ISO 14001:2004, a
 key objective of the year. One of the API units achieved ISO 14001:2004
 certification while three formulation units are on the verge of being
 certified.
 
 FOREIGN CURRENCY CONVERTIBLE BONDS
 
 As Members are aware, in 2005, your Company had issued 60,000 Foreign
 Currency Convertible Bonds of USD 1,000 each due in 2010. After
 conversion into equity shares, repurchase and cancellation, the
 outstanding bonds aggregating to face value of USD 2.118 million were
 repaid on due date in August, 2010.
 
 During 2006, 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).
 
 The outstanding FCCBs as at March 31, 2011 is 139,200 bonds and are due
 for repayment as per the terms of the Offering Circular. Your Company
 is confident of discharging its commitment.
 
 EQUITY SHARE CAPITAL
 
 The Board of Directors of your Company at their meeting held on
 November 3, 2010, approved the sub-division of equity shares of the
 face value of Rs.5 each in the Company into equity shares with the face
 value of Rs.1 each. With approval of the Members at the Extraordinary
 General Meeting of the Company held on December 23, 2010, the
 sub-divided shares were issued to Members as on February 11, 2011 (the
 Record Date).
 
 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 Section
 212(8) of the Companies Act, 1956 is annexed.
 
 Annual accounts of the subsidiary companies are kept for inspection by
 any investor at the Registered Office of the Company as well as at the
 Registered Office of the respective subsidiary companies. Any investor
 interested in a copy of the accounts of the subsidiaries may write to
 the Company Secretary at the Registered Office of the Company.
 
 HUMAN RESOURCES
 
 Aurobindo is well known for its execution capabilities, manufacturing
 strengths, product quality, ability to keep to its commitments and be a
 reliable partner for its customers. Over the years, organizational
 strengths have enabled your Company to grow faster than the industry
 average in each of the past decade.
 
 The momentum continued during the year under review with a new high in
 volume sold, highest ever revenues and profit after tax. Your Company
 has been well served by all the employees, Aurobindos valuable
 resources.
 
 As at March 31, 2011 employees on roll constituted 8,317, higher by 3%
 over 8,066 as on the same date a year ago.
 
 DIRECTORS
 
 In accordance with the provisions of the Companies Act, 1956, read with
 the Articles of Association of the Company, Mr. K. Ragunathan, Dr. M.
 Sivakumaran and Mr. M. Madan Mohan Reddy, Directors retire at the
 ensuing Annual General Meeting and being eligible offer themselves for
 re-appointment.
 
 The re-appointment of Mr. P.V. Ramprasad Reddy, Chairman and Mr. K.
 Nithyananda Reddy, Managing Director is being proposed at the ensuing
 Annual General Meeting.
 
 A brief profile of Mr. K. Ragunathan, Dr. M. Sivakumaran, Mr. M. Madan
 Mohan Reddy, Mr. P.V. Ramprasad Reddy and Mr. K. Nithyananda Reddy are
 provided in the Report on Corporate Governance.
 
 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 Profit and Loss Account for the year ended March 31,
 2011 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 profits 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.
 
 GROUP
 
 Pursuant to an intimation from the promoters, the names of the
 promoters and entities comprising group as defined under the
 Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 are
 disclosed in the Annual Report for the purpose of the SEBI (Substantial
 Acquisition of Shares and Takeovers) Regulations, 1997.
 
 CORPORATE GOVERNANCE
 
 The certificate of the Practicing Company Secretary Mr. S. Chidambaram
 confirming compliance of conditions of Corporate Governance as
 stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges in India is annexed.
 
 AUDITORS
 
 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 2011-2012.
 
 COST AUDITORS
 
 M/s. Sagar & Associates, Cost Accountants, have been re- appointed as
 Cost Auditors of the Company with the consent of the Central Government
 of India to conduct cost audit of both the bulk drug and formulations
 divisions of the Company for the year 2010-2011. The due date for
 filing Cost Audit Report Reports of the Company for 2009-10 was
 September 30, 2010 and the same was filed with the Ministry of
 Corporate Affairs on September 18, 2010.
 
 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 (l)(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
 (ES0P 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 (ES0P 2006) for the eligible employees and Directors of
 the Company and its subsidiaries.
 
 During the year no options were granted under ESOP-2004 and ESOP-2006.
 29,707 equity shares of Rs.5 each were issued and allotted under the
 ESOP-2004 Scheme.
 
 Details of the options granted up to March 31, 2011 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 Directors place on record their sincere appreciation for the
 dedication and commitment of the employees at all levels and their
 significant contribution to your Companys growth. Your Company is
 grateful to the customers and business associates for their support and
 encouragement. Your Directors thank the banks, financial institutions,
 government departments and shareholders and look forward to having the
 same support in all our future endeavors
 
 Annexure-I to the Directors Report
 
 RESEARCH AND DEVELOPMENT
 
 Specific areas in which Research and Development carried out by the
 Company
 
 The Company carried out process development and commercialized various
 products in cephalosporin antibiotics and antiviral compounds. Further,
 it continued process research for maximizing the yield with improved
 quality.
 
 Benefits derived as a result of the above R&D
 
 The Companys continuing efforts to become a strong knowledge based and
 technology oriented R&D driven health care Company have yielded results
 by way of improved processes in the commercial production.
 
 Newer products and processes have facilitated Aurobindo to expand its
 market.
 
 Future plan of action
 
 Your Company has ambitious plans to invest further for enhancing its
 R&D capabilities.
 
 Expenditure on Research and Development               , Million
 
                                             2010-2011      2009-2010
 
 Capital                                         338.4           42.1
 
 Recurring                                     1,394.0          972.7
 
 Total R&D expenditure                         1,732.4         1014.8
 
 as a percentage of total turnover                4.10           3.06
 
 TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
 
 Efforts, in brief, made towards technology absorption, adaptation and
 innovation:
 
 Technology absorption is not involved as the process for manufacture of
 bulk drug is being developed in-house by the Company.
 
 Benefits derived as a result of the above efforts, e.g., product
 improvement, cost reduction, import substitution etc.
 
 The processes were simplified and thereby achieving reduction in cost
 and improvement in products.
 
 Particulars of imported technology: Nil
 
 Foreign Exchange Earning & Outgo
 
 Activities relating to exports, initiatives taken to increase exports.
 Registration of more product dossiers with global authorities, setting
 up of foreign subsidiaries and commencement of activities at
 subsidiaries and joint ventures.
 
                                        For and on behalf of the Board
 
                                                P. V. RAM PRASAD REDDY
 
                                                              Chairman
 Hyderabad,
 
 May 9, 2011.