Dear Shareholders,
 
 After two consecutive years of gloom, some cheer returned to the global
 economy in 2010-11, though not enough to qualify as a sustained
 recovery yet. India was shielded against the worst economic headwinds,
 and our GDP responded with a robust growth performance. This stability
 is expected to continue, with GDP growtf estimates ranging from 8.2% to
 8.6%. Notwithstanding the optimism, inflationary pressures, a policy
 initiative slowdown, as well as an overheated commodity price ecosystem
 are matters of considerable concern.
 
 This sets the context for the performance of the global pharmaceutical
 industry, which grew by 4.1% to USD 856 billion, and is expected to
 touch USD 880 billion in 2011, growing from 5% to 7%. The global pharma
 market is expected to cross the trillion dollar milestone by 2014,
 reflecting a significant market expansion.  A substantial part of this
 growth will be contributed by generics at a product level, and by the
 ''pharmerging'' markets like China, Brazil, Turkey, Mexico, Russia etc.
 at a geography level.
 
 These economies are expected to double their spending on medicines by
 2015 - to almost USD 300 billion, contributing 28% of the global pharma
 market. India will be an important participant in this growth. Not only
 will there be a significant growth in chronic therapies, such as
 diabetes and hypertension, but also a high degree of government
 expenditure (approximately 1.5% of GDP) is expected.
 
 Today, Elder Pharmaceuticals ranks among the top five fastest growing
 pharmaceutical companies in India by virtue of strategic alliances,
 synergetic acquisitions, globally accredited manufacturing facilities,
 and above all an extensive marketing and distribution network. We
 concluded the 100% acquisition in the UK-based Nutraceutical major
 NeutraHealth PLC in November 2010.  NeutraHealth offers advanced
 Vitamins and Mineral Supplements (VMS) and Probiotics. On the one hand,
 Neutrahealth will provide raw materials for certain Elder brands, while
 Elder will provide the API to them on the other. We have also enhanced
 our stake in Biomeda Bulgaria. Elder currently holds 92.2% stake in
 Elder Biomeda. It is primarily involved in two sets of businesses that
 include distribution and products manufacturing. We are building an
 enormous plant in Bulgaria which will act as a large manufacturing
 base.
 
 Our financial performance reflects our growing strength. The
 organization registered a topline growth of 33% from Rs. 7,208.98 million
 to Rs. 9,592.03 million.  This growth can be primarily attributed to
 revenue generation from our own brands, such as Shelcal, Chymoral,
 Formic and Eldervit, among others.  These brands delivered robust
 growth. Operating in a highly inflationary regime the bottomtine growth
 was 11% from Rs. 553.92 million to Rs. 616.76 million.  We also witnessed
 attractive growth across all divisions. We intend to double the
 turnover within the next two-and-a-half years. Our subsidiaries
 overseas will contribute significantly in revenue generation in the
 years to come.
 
 Elder''s business strategy is simple: we believe in innovation and
 introduction of new concepts, rather than competing in an already
 fiercely competitive market.  This strategy of building a niche for our
 brands is challenging, but in the long run it generates enhanced
 revenues and drives higher market recall than operating in a ''me-too''
 market. Since inception, we have always followed this principle, which
 helped carve a niche for our products. Over the preceding two decades,
 Elder has created an extensive intellectual asset base and a powerful
 research and development division. Intellectual capital represents our
 principal asset, which creates and sustains our brand leadership in the
 markets of our presence.
 
 Elder''s domestic operations are growing significantly. In the domestic
 market, the Women''s Healthcare division is performing exceedingly well.
 Going forward, our objective is to foray into the segment of women''s
 hygiene as well. In addition to urban markets, Elder is also focusing
 on growth opportunities in the rural and semi-urban markets through its
 rural marketing team ELVISTA. We also launched the Mass Market
 Initiative-Adventus. Besides, there will be a greater thrust on exports
 in future. We received accreditation from Ministry of Health-Japan for
 our Active Pharmaceutical Ingredients (API) plant at Patalganga,
 Maharashtra, opening up the fast growing Japanese markets for the
 company''s products, which is a positive step towards strengthening the
 organization''s position as a supplier of APIs and intermediates in the
 Japanese market.
 
 I am confident that despite all our past achievements and milestones,
 our best is still to come. Our vision is to enhance the quality of life
 of patients by focusing on better health outcomes through our products.
 With our motivated employees, we will keep raising the standards of our
 performance in all spheres of activities so as to generate more value
 for all the stakeholders.
 
 I take this opportunity to convey my sincere gratitude and thanks to
 all the lenders, vendors, the doctor fraternity and service providers
 for their continuous patronage and faith in the company.
 
 Thanks for your enduring faith in our efforts. That''s our biggest
 motivation.  
 
 Warm Regards,
 
 Jagdish Saxena Chairman