The Directors are pleased to present 17th Annual Report and the
 audited accounts for the financial year ended on March 31, 2012.
 
 Financial Results:
 
 The financial performance of the Company, for the year ended on March
 31, 2012 is summarized below:
 
                                                    (INR-Millions)
  
                                    For the year    For the year 
 Particulars                                                       Growth
                                       ended on     ended on       (%)
                                    March 31, 2012  March 31, 2011
 
 Sales and Other Income              33,899          29,784        13.82
 
 Profit before Interest, Finance 
 Charges, Depreciation,               9,069           7,659        18.41
 
 Amortisation and Impairment and 
 Tax (PBIDT)
 
 Less: Depreciation, Amortisation 
 and Impairment                       1,082             969        11.66
 
 Profit Before Interest and Finance 
 charges and Tax (PBIT)               7,987           6,690        19.39
 
 Less: Interest and Finance charges   1,283             318       303.46
 
 Profit Before Tax                    6,704           6,372         5.21
 
 Less: Provision for Tax                129             268       (51.87)
 
 Profit After Tax                     6,575           6,104         7.72
 
 Add: Profit brought forward from 
 the previous year                    6,675           3,323
 
 Profit available for appropriation, 
 which is appropriated as follows:   13,250           9,427
 
 Proposed Dividend                    1,536           1,280
 
 Corporate Dividend Tax on Proposed 
 Dividend [Net of CDT Credit]           170             146
 
 Transferred to Debenture Redemption 
 Reserve                                450             100
 
 Transferred to General Reserve       1,000           1,226
 
 Balance carried to Balance Sheet    10,094           6,675
 
 Total                               13,250           9,427
 
 Earnings per share [EPS] [Face 
 Value of shares Rs.5/-] [in Rupees]  32.11           29.81
 
 Results of operations:
 
 During the year under review, the consolidated sales grew by 14.59 %.
 On standalone basis, the Company has achieved sales of Rs. 24,565
 millions, showing a growth of 11.09 % compared to the previous year.
 The PBIDT increased by 18.41 % to Rs. 9,069 millions. The Profit before
 Tax was higher by 5.21 % to Rs. 6,704 millions. The Profit after Tax
 increased to Rs. 6,575 millions up by 7.72% compared to Rs. 6,104
 millions in 2010-11. The Company achieved EPS of Rs. 32.11 compared to
 Rs. 29.81 in 2010-11. A detailed analysis of performance for the year
 has been included in the Management Discussion and Analysis, which
 forms part of the Annual Report.
 
 Dividend:
 
 Your Directors have recommended a dividend of Rs. 7.50 per Equity Share
 [last year Rs. 6.25 per Equity Share] on 204,748,520 equity shares of
 Rs.5/- each fully paid-up for the financial year ended March 31, 2012,
 amounting to Rs. 1,706 millions [inclusive of tax of Rs. 170 millions].
 The dividend, if declared by the shareholders at the ensuing Annual
 General Meeting, will be paid to those shareholders, whose names stand
 registered in the Register of Members as on August 6, 2012. In respect
 of shares held in dematerialized form, it will be paid to the members
 whose names are furnished by National Securities Depository Limited and
 Central Depository Services [India] Limited, as beneficial owners. The
 Dividend Payout ratio for the current year (inclusive of corporate tax
 on dividend distribution) is 25.95 percent.
 
 Management Discussion and Analysis [MDA]:
 
 MDA, for the year under review, as stipulated under clause 49 of the
 Listing Agreements with the Stock Exchanges is presented in a separate
 section, which forms part of the Annual Report.
 
 Consolidated Financial Statements:
 
 In accordance with the Accounting Standard AS-21 on Consolidated
 Financial Statements read with Accounting Standard AS-23 on Accounting
 for Investments in Associates and AS-27 on Financial Reporting of
 Interest in Joint Ventures and as provided under the Listing Agreement
 with the Stock Exchanges, the audited Consolidated Financial Statements
 are provided in the Annual Report, which show the financial resources,
 assets, liabilities, income, profits and other details of the Company,
 its associates companies and its subsidiaries after elimination of
 minority interest, as a single entity.
 
 Subsidiary Companies:
 
 During the year, Quimica E Pharmaceutica Nikkho Do Brazil Ltda., Brazil
 was merged with Zydus Healthcare Brazil Ltda, Brazil with effect from
 April 1, 2011. After the merger, the name of the Company was changed to
 Zydus Nikkho Pharmaceutica Ltda, Brazil.
 
 In accordance with the general circular issued by the Ministry of
 Corporate Affairs, Government of India, the Balance Sheet, Statement of
 Profit and Loss and other documents of the subsidiary companies are not
 being attached with the Balance Sheet of the Company. As required under
 the circular, the Board of Directors at its meeting held on May 10,
 2012 passed a resolution giving consent for not attaching these
 documents with the Balance Sheet of the Company.
 
 The Company will make available the Annual Accounts of the subsidiary
 companies and the related detailed information to any member of the
 Company who may be interested in obtaining the same. The annual
 accounts of the subsidiary companies will also be kept open for
 inspection at the Registered Office of the Company and that of the
 respective subsidiary companies. The Consolidated Financial Statements
 presented by the Company include financial results of its subsidiary
 companies.
 
 The statement containing the list of subsidiaries along with brief
 financial details of the subsidiaries is given in this Annual Report
 separately.
 
 Directors:
 
 Mr. Apurva S. Diwanji, Director of the Company retires by rotation at
 the ensuing Annual General Meeting and being eligible, has offered
 himself for reappointment. The Board of Directors recommends the
 reappointment of Mr. Apurva S. Diwanji.
 
 The Board of Directors of the Company has, subject to approval of the
 shareholders at the ensuing Annual General Meeting reappointed Dr.
 Sharvil P. Patel as Deputy Managing Director of the Company. An
 abstract of the terms and conditions of his appointment and memorandum
 of interest under section 302 of the Act have been sent to the members
 of the Company.
 
 Brief profiles of the Directors proposed to be reappointed as required
 under clause 49 of the Listing Agreement are annexed to the notice
 convening 17th Annual General Meeting forming part of this Annual
 Report.
 
 Directors'' Responsibility Statement:
 
 Pursuant to the requirements under section 217 (2AA) of the Companies
 Act, 1956 and to the best of their knowledge and belief, and according
 to the information and explanations provided to them, your Directors
 hereby state that:
 
 (a) the Annual Accounts for the year ended March 31, 2012 are prepared
 on going concern basis;
 
 (b) in preparation of the Annual Accounts, all the applicable
 accounting standards have been followed. Necessary explanations are
 given for material departures, if any;
 
 (c) sound accounting policies have been selected and applied
 consistently and judgments and estimates made that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company as on March 31, 2012 and of the profit of the Company for
 the year ended on that date and
 
 (d) proper and sufficient care has been taken for maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the company and for
 prevention and detection of fraud and other irregularities
 
 Corporate Governance:
 
 A detailed report on the Corporate Governance together with a
 certificate from the statutory auditors, confirming the compliance of
 conditions of Corporate Governance stipulated under clause 49 of the
 Listing Agreements with the Stock Exchanges forms part of the Annual
 Report.
 
 Auditors:
 
 M/s. Mukesh M. Shah & Co., Chartered Accountants, (Firm Registration
 No. 106625W) Statutory Auditors of the Company hold office until the
 conclusion of the ensuing Annual General Meeting and are eligible for
 reappointment.
 
 The Company has received a letter from them to the effect that their
 reappointment, if made, would be within the prescribed limits under
 section 224 (1B) of the Companies Act, 1956 and that they are not
 disqualified for reappointment within the meaning of section 226 of the
 said Act.
 
 Auditors'' Report and Notes on Accounts:
 
 The Board has duly reviewed the Statutory Auditor''s Report on the
 Accounts. The observations and comments, appearing in the Auditor''s
 Report are self-explanatory and do not call for any further explanation
 / clarification by the Board of Directors under section 217[3] of the
 Companies Act, 1956.
 
 Cost Auditors:
 
 The Central Government has directed an audit of the cost accounts
 maintained by the Company in respect of formulations and bulk drugs
 businesses. For conducting the cost audit for these activities for the
 financial year ended March 31, 2012, based on the recommendation of
 Audit Committee, the Board has appointed M/s A. G. Dalwadi & Co., Cost
 Accountants and made an application to the Central Government in
 accordance with MCA Circular dated April 11, 2011. The Cost Auditor has
 filed the cost audit reports for the financial year ended on March 31,
 2011 for formulations and bulk drugs businesses within the due date on
 September 17, 2011. The due date of filing the cost audit report was
 September 30, 2011.
 
 Particulars of Employees:
 
 The names and other particulars of the employees as set out under
 section 217(2A) of the Companies Act, 1956 and rules made thereunder is
 provided in Annexure forming part of the Report. In terms of section
 219(1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are
 being sent to the shareholders excluding the aforesaid Annexure. Any
 shareholder interested in obtaining a copy of the same may write to the
 Company Secretary. None of the employees listed in the said Annexure is
 related to any Director of the Company.
 
 Energy Conservation, Technology Absorption and Foreign Exchange Earning
 and Outgo:
 
 The particulars relating to energy conservation, technology absorption,
 foreign exchange earnings and outgo, as required to be disclosed under
 section 217(1)(e) of the Companies Act, 1956 read with the Companies
 (Disclosure of particulars in the Report of Directors) Rules, 1988, are
 provided in the Annexure - A to this Report.
 
 Acknowledgment:
 
 Your Directors place on record their sincere appreciation for the
 continued co-operation extended to the Company by the Consortium Banks
 and Financial Institutions. Your Directors also thank the Medical
 Profession, the Trade and Consumers for their patronage of the
 Company''s products. Your Directors also place on record sincere
 appreciation of the continued hard work put in by the employees at all
 levels. The Directors also thank the Company''s vendors, investors,
 business associates, Government of India, State Government and various
 departments and agencies for their support and co-operation.
 
                                  By Order of the Board of Directors
 
 Place : Ahmedabad                                   Pankaj R. Patel
 
 Date : May 10, 2012                                        Chairman