The Directors have pleasure in presenting the Audited Accounts of your
 Company for the Fifty-fifth financial year ended 31 st December 2010.
 
 FINANCIAL RESULTS
 
                                                  Rs. in Million
  
                                             2010             2009
 
 Net Sales                                  10,849.5        9,744.0
 
 Other Income                                1,134.8        1,111.0
 
 Profit before Tax and Exceptional Items     2,340.0        2,414.6
 
 Provision forTaxation                         789.9          840.5
 
 Net Profit before Exceptional Items         1,550.1        1,574.1 
 Exceptional Items
 (Net of Tax)                                  757.4            -
 
 Net Profit after Exceptional Items          2,307.5        1,574.1
 
 Balance brought forward from previous year  6,983.4        6,105.5
 
 Available for appropriation                 9,290.9        7,679.6
 
 Which your Directors have appropriated 
 as follows:
 
 Interim Dividend (paid in August 2010)         92.1           80.6
 
 Provision for Final Dividend                  529.7          380.0
 
 Provision for Special One-time Dividend       644.9            -
 
 Taxon Interim, proposed Final Dividend
 and Special One-time Dividend                 208.9           78.2
 
 Transferto General Reserve                    230.8          157.4
 
 Balance carried to Balance Sheet            7,584.5        6,983.4
 
 During the year under review your Company sold its shareholding in the
 joint venture company, Chiron Behring Vaccines Private Limited (CBVPL)
 for a sale consideration of US $ 22.399 million (equivalent to Rs.
 1,007.5 million). Your Company earned a Net Profit of Rs. 757.4 million
 from the sale of the said shares.
 
 Dividend
 
 An Interim Dividend of Rs. 4 per Equity Share of Rs. 10 was declared by
 the Board of Directors and was paid in August 2010.
 
 Your Directors recommend payment of Final Dividend of Rs. 23 per Equity
 Share of Rs. 10. If declared by the Shareholders at the Annual General
 Meeting to be held on 26th April 2011, the Dividend (including Interim
 Dividend) will absorb Rs. 621.83 million representing distribution
 of40.11%ofthe Net Profit of the Company before Exceptional items.
 
 Having regard to the cash generation during the year from the sale of
 the shares held in CBVPL, your Directors recommend a Special One- time
 Dividend of Rs. 28 per Equity Share of Rs. 10. If declared by the
 Shareholders at the Annual General Meeting, the Special One-time
 Dividend will absorb Rs. 644.86 million.
 
 The proposed Final Dividend and the Special One-time Dividend will be
 paid to:
 
 i) those Members whose names appear on the Register of Members of the
 Company on 26th April 2011; and
 
 ii) those whose names appear as beneficial owners as at the close of
 business on 5th April 2011, as per details to be furnished by the
 National Securities Depository Limited and Central Depository Services
 (India) Limited.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 As required by Clause 49 of the Listing Agreement with the Stock
 Exchanges, a Management Discussion and Analysis Report is appended.
 
 DIRECTORATE
 
 In accordance with the Articles of Association of the Company, Mr.
 S.R.Gupte retires by rotation and is due for election.
 
 The Board of Directors has re-appointed Dr. S. Ayyangar as Managing
 Director of the Company for a period of five years from 25th October
 2010, subject to the approval of the Shareholders in General Meeting.
 
 Mr. J. M. Georges and Mr. F. X. Duhalde were appointed as Additional
 Directors of the Company with effect from 29th July 2010. They hold
 office till the Annual General Meeting and are eligible for election.
 
 Mr. M. Dargentolle who was Alternate to Mr. O. Charmeil has been
 appointed a Non-Retiring Director of the Company with effect from 19th
 July 2010.
 
 Mr. M. G. Rao was appointed as Alternate to Mr. J. M. Georges from 25th
 October 2010. Mr. Rao, being an employee of the Company, has been
 appointed as Wholetime Director for the period from 25th October 2010
 to 5th September 2011, subject to the approval of the Shareholders in
 General Meeting.
 
 Mr. S. C. Ghoge was appointed as Alternate to Mr. F.X. Duhalde with
 effect from 25th October 2010.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 Information pursuant to 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 the Annexe to this Report.
 
 PARTICULARS OF EMPLOYEES
 
 As required by the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 the names and other particulars of employees are set out in the annexe
 to the Directors Report.
 
 Your Directors place on record their appreciation of the valuable
 contribution made by the employees of your Company.
 
 CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS
 
 As required by Clause 32 of the Listing Agreement, a Cash Flow
 Statement is appended.
 
 As the Company does not have any subsidiaries, it is not required to
 publish Consolidated Financial Statements.
 
 CORPORATE GOVERNANCE
 
 As required by Clause 49 of the Listing Agreement, a Report on
 Corporate Governance is appended along with a Certificate of Compliance
 from the Auditors.
 
 DIRECTORSRESPONSIBILITY STATEMENT
 
 As required by Section 217(2AA) of the Companies Act, 1956, your
 Directors certify as follows:
 
 1.  The annexed accounts for the financial year ended 31 st December
 2010 have been prepared on a going concern basis.
 
 2.  In preparation of the said Accounts all the applicable accounting
 standards have been duly followed and complied with and which fact has
 been confirmed by the Auditors of the Company in their Report on these
 Accounts.
 
 3.  Your Directors have selected such accounting policies and applied
 them consistently along with proper explanation relating to departures,
 if any and made judgements and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company at the end of the financial year ended 31 st December 2010
 and of the profit of the Company for that year.
 
 4.  Your Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act for safeguarding the assets of the
 Company and for preventing and detecting fraud and other
 irregularities.
 
 AUDITORS
 
 M/s.S. R. Batliboi & Co., your Companys Auditors, are eligible for
 re-appointment and it is necessary to fixtheir remuneration.
 
 By Authority of the Board
 
 DR.VIJAYMALLYA
 
 CHAIRMAN
 Mumbai, 16th February 2011