Dear Shareholders,
 
 The past year has been at best a mixture of random good news
 consistently overshadowed by a host of disturbing news on the global
 economic front. When normalcy was limping back in the markets of the
 western hemisphere the threat of nations like Greece, Portugal and
 Spain defaulting on their sovereign debt loomed large in triggering
 another domino effect of economic downturn. Sailing amidst the choppy
 waters of economic upheaval is not remotely easy. Back home, in India
 we were witness to the trickling effects of the robust growth we saw in
 the early years of the present century. We have just completed the
 first decade of the twenty first century and it has been definitely a
 formidable growth period. From a nation that has been a toddler in
 reforms during the nineties to a nation that is robustly shaping up as
 a global economic player at present, the journey to put it humbly has
 just begun.
 
 Amidst the cacophony of liberalisation, policy norms being rewritten,
 business rules looked at, sectors being opened up for global players,
 we have just completed the second decade of reforms. The learning
 experience has been manifold compared to what we have witnessed in the
 first decade. Kudos to the Indian economy where we have managed to not
 only integrate with global best practices of running an economy but
 have also simultaneously kept ourselves insulated enough to prevent
 catastrophic consequences of unregulated reforms like those faced by
 the extremely liberal western economies in the past two years. On
 hindsight, our regulators have done a great job in walking the
 tightrope of cautious reforming and growth. The most visible evidence
 has been of the financial meltdown of the US and European markets that
 have hardly had much effect on our domestic finance sector in the past
 three years. Though I must add there has been a weakening of our
 domestic stock markets in the same period given the dominant role of
 international investors over these years.
 
 The Indian agrarian sector in the past decade has witnessed a positive
 change in terms of consumption where we see a purposeful increase in
 consumption levels of food, clothes and services over these years. For
 example, the telecom revolution has penetrated the last mile of the
 most remote of villages. In addition, giant government projects like
 the National Employment Guarantee Program are gradually playing a game
 changer in terms of alternating the social and economic fabric of our
 villages.  In a similar manner, we all are also looking forward to the
 food security bill, another first of its kind in the world that if
 executed in a right manner would pave the way for a new rural India.
 
 On the macro economic front, the domestic economy however had some
 concerns in terms of growth and inflation. The high level of prices
 would definitely throw open a new debate in terms of whether a growing
 economy should settle and accept a high level of inflation. Moreover,
 for the millions of poor this definitely is not an economic argument
 they would be satisfied with.  With jobs to cater and mouths to feed,
 for a government it''s a twin edged sword of balancing between growth or
 inflation.  Besides, with a slow but sure global meltdown taking place
 all economic policies should be skewed towards creation of domestic
 demand rather than banking on foreign investments or international
 markets.
 
 In the present fiscal of 2011-12, India would miss its growth and other
 fiscal deficit targets as has been accepted by the government. The
 growth target has now been revised at around 7.5 percent levels from
 the budgeted estimates of 9 percent.  Despite India''s vulnerability to
 global recession being limited, any recession in Europe may further
 hamper domestic markets as well as production. With high rates of
 borrowing existing with high prices, it is definitely a major hindrance
 for industries across the Diaspora to keep up a momentum in terms of
 revenues and earnings. The sugar industry also would have a direct
 impact in terms of managing costs with rising interest rates.
 
 For years we have strongly advocated the idea of complete decontrol of
 the sugar industry that would enable not only a healthy environment of
 productivity but also lead to a win-win situation for the sugarcane
 farmers, the sugar consumers and the sugar producers. India is no
 stranger to the benefits of complete decontrol in other sectors, and
 the same would be replicated in the sugar industry as well.
 
 Globally, there has been an upsurge in terms of sugar stock and present
 trends are expected to persist even in the next year also.  Given such
 a scenario there is not much increase expected in the global prices of
 sugar, a decisive shift from the extreme volatility witnessed a few
 months ago. On the domestic front, a jump in sugar production from 19
 million tonnes in 2009-10 to 24.5 million tonnes in 2010-11 has led to
 easing of prices. Such a trend would remain for the next fiscal also in
 terms of domestic production. Given the thorough regulation of the
 sugar industry,
 
 sugar producers with abundant stock and facing a weakening of domestic
 prices are keenly looking forward for permission from the government
 for allowing a sizeable volume of exports. This would help them in
 taking advantage of the price differential and also generate better
 margins due to a weakening of the rupee against the dollar. Once again
 this brings to the fore a strong case for decontrol of sugar which if
 existed would have benefited the sugar producers in leveraging and
 distributing their revenue margins based on global and domestic price
 dynamics, simultaneously fulfilling the need of the domestic market.
 
 Being the leader in the sugar industry, for us it is not just a
 position of numbers but an opportunity for fulfilling a responsibility
 towards both the industry at large as well as our key partners, the
 extensive farming community. Our firm intent in supporting reforms and
 decontrol will remain of paramount importance. As a corporate citizen,
 it has always been our endeavour to be a contributory partner to
 India''s growth story.  We will continue to strive to grow in a manner
 that would effectively and convincingly reflect the true determination
 and spirit of our large family of employees, shareholders and other
 stakeholders including our millions of farmers who toil effortlessly to
 produce the sugarcane that finally sweetens our taste buds. I proudly
 look forward in sharing and participating in this process of India''s
 march into the third decade of reforms.
 
                                                           Warm regards,
 
                                                           Shishir Bajaj
 
                                            Chairman & Managing Director