The Directors are pleased to present 16 th Annual Report and the
 audited accounts for the financial year ended on 31 st March 2011.
 
 Financial Results:
 
 The financial performance of the Company, for the year ended on 31 st
 March, 2011 is summarised below :
 
                                     For the     For the  
 Particulars                          Year        Year       Growth
                                      ended       ended        (%)
                                    31st March   31st March  
                                       2011        2010
 
 Sales and Other Income               29780       24684        20.6
 
 Profit before Interest, 
 Finance Charges, Depreciation,        7659        6534        17.2
 
 Amortisation and Impairment and 
 Tax (PBIDT)                           6690        5634        18.7
 
 Less: Depreciation, 
 Amortisation and Impairment            969         900         7.7
 
 Profit Before Interest and Finance 
 charges and Tax (PBIT)                6690        5634        18.7
 
 Less: Interest and Finance charges     318         431       (26.2)
 
 Profit Before Tax                     6372        5203        22.5
 
 Less: Provision for Tax                268         170        57.6
 
 Profit After Tax                      6104        5033        21.3
 
 Add: Profit brought forward from 
 the previous year                     3323        2030
 
 Profit available for appropriation, 
 which is appropriated as follows:     9427        7063
 
 Proposed Dividend                     1280        1024
 
 Corporate Dividend Tax on Proposed 
 Dividend [Net of CDT Credit]           146         116
 
 Transferred to Debenture Redemption 
 Reserve                                100         100
 
 Transferred to General Reserve        1226        2500
 
 Balance carried to Balance Sheet      6675        3323
 
 Total                                 9427        7063
 
 Earnings per share [EPS] [Face Value 
 of shares Rs.5/-] [in Rupees]         29.81      24.58*       
 
 * After considering bonus equity shares issued after 31st March, 2010.
 
 Results of operations:
 
 During the year under review, the Company has scaled new heights and
 achieved milestone total revenues of one billion dollar mark on
 consolidated basis. The consolidated sales grew by 25 % during the
 year. On standalone basis, the Company has achieved sales of Rs. 22,113
 mn, showing a growth of 19.2 % compared to the previous year. The PBIDT
 increased by 17.2 % to Rs. 7,659 mn. The Profit before Tax was higher
 by 22.5 % to Rs. 6,372 mn. The Profit after Tax increased to Rs. 6,104
 mn up by 21.3 % compared to Rs. 5,033 mn in 2009-10. The Company
 achieved EPS of Rs. 29.81 compared to Rs.24.58 in 2009-10, calculated
 on the enhanced capital after the issue of Bonus Equity Shares. A
 detailed analysis of performance for the year has been included in the
 Management Discussion and Analysis, which forms part of the Annual
 Report.
 
 Bonus Equity Shares and Listing:
 
 On 9 th April, 2010, the Company has allotted 68,249,507 bonus equity
 shares in the ratio of 1:2 [one bonus equity share for every two equity
 shares] to the members, whose names appeared on the Register of Members
 on the Record Date fixed for the purpose. Bonus shares were listed on
 the Stock Exchanges, where the existing equity shares are listed.
 
 Dividend:
 
 In celebration of joining the billion dollar league of Indian Pharma
 Companies, your Directors are pleased to recommend a dividend of Rs.
 6.25 [previous year Rs.5.00] per equity share on 204,748,520 equity
 shares of Rs. 5/- each fully paid-up for the financial year ended 31 st
 March, 2011.  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 on 19 th July,
 2011. The Dividend Payout ratio for the current year (inclusive of
 corporate tax on dividend distribution) is 23.36 percent.
 
 Management Discussion and Analysis (MDA):
 
 MDA, as required under the Listing Agreements with the Stock Exchanges
 is given as a separate statement, which forms part of this Annual
 Report.
 
 Subsidiary Companies and Consolidated Financial Statements:
 
 During the year, the Company has formed following two wholly owned
 subsidiaries to enter in the Mexican Pharma market;
 
 (1) Zydus Pharmaceuticals Mexico S.A. de C.V., Mexico and
 
 (2) Zydus Pharmaceuticals Mexico Service Company S.A. de C.V., Mexico.
 
 As required under the Listing Agreements with the Stock Exchanges,
 Consolidated Financial Statements of the Company and all its
 subsidiaries are attached. The Consolidated Financial Statements have
 been prepared in accordance with Accounting Standards 21 and 23 issued
 by the Institute of Chartered Accountants of India and 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.
 
 Ministry of Corporate Affairs, Government of India has granted general
 exemption for the requirements to attach various documents in respect
 of subsidiary Companies vide circular No. 2/2011 vide its letter No.
 51/12/2007-CL-III dated 8th February, 2011. Details of major
 subsidiaries of the Company are covered in Managements Discussion and
 Analysis Report forming part of the Annual Report.
 
 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. Nitin Raojibhai Desai was appointed as an Additional Director
 effective from 6 th May, 2011. In terms of section 260 of the Companies
 Act, 1956, he shall hold office only upto the date of the ensuing
 Annual General Meeting. The Company has received a notice in writing
 under section 257 of the Companies Act, 1956 from a member proposing
 his candidature along with deposit of Rs. 500/- for the office of
 Director liable to retire by rotation.
 
 Your Directors express their profound grief on the sad demise of Mr.
 Pranlal Bhogilal. The Board places on record its deep sense of
 appreciation for the valuable contributions made by late Mr. Pranlal
 Bhogilal during his tenure as a Director of the Company.
 
 Mr. Humayun Dhanrajgir, Director of the Company retires by rotation at
 the ensuing Annual General Meeting and being eligible, has offered
 himself for re-appointment. The Board of Directors recommends the
 re-appointment of Mr. Humayun Dhanrajgir.
 
 The Board of Directors of the Company has, subject to approval of the
 shareholders at the ensuing Annual General Meeting re-appointed Mr.
 Pankaj R. Patel as 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 appointed / re-appointed
 as required under clause 49 of the Listing Agreement are annexed to the
 notice convening 16 th 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 31 st March, 2011 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 31 st March, 2011 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 Auditors Report on the
 Accounts. The observations and comments, appearing in the Auditors
 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 had 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 31 st March, 2011, the Central Government has
 approved the appointment of M/s A. G. Dalwadi & Co., Cost Accountants
 as Cost Auditors. The Cost Auditor has filed the cost audit report on
 16 th September, 2010 as against the last date of filing it of 30 th
 September, 2010.
 
 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 there under
 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
 Earnings 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
 Companys 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 Companys 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 : 6th May, 2011                                          Chairman