The Directors have pleasure in submitting their Report for the year
 ended 31st December 2011
 
 1. Results & Dividend for the year ended 31st December 2011
 
                                        Year ended            Year ended
                                     31st December         31st December
                                              2011                  2010
                                      Rs. in Lakhs          Rs. in Lakhs
 
 SALES (Gross)                          2391,73.39            2155,08.20
 
 Less: Excise duty on Sales               53,69.99              43,43.95
 
 NET SALES                              2338,03.40            2111,64.25
 
 PROFIT BEFORE TAXATION AND
 
 EXCEPTIONAL ITEMS                       921,59.78             867,26.60
 
 Less: Provision for Taxation            290,23.79             285,88.43
 
 PROFIT
 AFTER TAXATION AND
 BEFORE EXCEPTIONAL ITEMS                631,35.99             581,38.17
 
 Exceptional Items (Net of Tax)         (200,75.57)            (17,69.36)
 
 NET PROFIT AFTER TAX                    430,60.42             563,68.81
 
 Add: Balance brought forward from
 the previous year                      1164,52.81            1049,23.41
 
 Amount available for disposal          1595,13.23            1612,92.22
 
 APPROPRIATIONS :
 
 General Reserve                          43,06.04              56,36.88
 
 Equity Dividend                         381,16.35             338,81.20
 
 Distribution Tax on Dividend             60,31.69              53,21.33
 
 Balance carried forward                1110,59.15            1164,52.81
 
 2. Dividend
 
 The Directors recommend a Dividend of Rs. 45 per Equity Share for the
 year (previous year:
 
 Rs. 40 per Equity Share). If approved by the Shareholders at the Annual
 General Meeting, the Dividend will absorb Rs. 381 crores. The Dividend
 Distribution Tax borne by the Company will amount to Rs. 60 crores.
 
 3. Management Discussion and Analysis
 
 (a) Finance and Accounts
 
 Your Company maintained its prominent position in the Pharmaceuticals
 market with Net Sales (net of Excise Duty) registering a growth of
 10.7%. Profit After Tax and Before Exceptional Items grew by 8.6%.
 Sales of the Company''s Pharmaceuticals business grew by 12.5%,
 supported by good growth in the vaccines, dermatological, hormonal
 preparations, gastro - intestinal and oncology therapeutic segments.
 Despite material cost escalations and significant expansion of the
 field force, Profit Before Investment Income and Tax amounted to 33% of
 Net Sales. Profit After Tax and Before Exceptional Items amounted to
 27% of Net Sales.
 
 Cash generation from operations was favourable, with your Company
 continuing to look for ways and means of deploying accumulated cash
 balances which remain invested largely in bank deposits.
 
 Your Company has not accepted any fixed deposits during the year. There
 was no outstanding towards unclaimed deposit payable to depositors as
 on 31st December 2011.
 
 (b) Pharmaceuticals Business performance and outlook
 
 Your Company continues to enjoy a leadership position in the categories
 in which its products are represented.
 
 The Mass Specialty business of your Company recorded double digit
 growth over the previous year. Some of the key brands grew ahead of the
 market thereby gaining Market share.
 
 The foray into branded generics market with Zobactin and Esblanem
 yielded good results during the year. Zobactin is ranked as the No. 2
 brand (Dec MAT 2011, H.S.A) in a market which has more than 56 brands
 of Piperacillin   Tazobactum. In the Meropenem market, Esblanem is ranked
 at 6th position (Dec MAT 2011, H.S.A).
 
 Mycamine an in-licensed brand from Astellas became the 2nd largest
 brand (Dec MAT 2011, SSA) in the systemic antifungal market. Calcium
 Citrate Malate [CCM], the high strength Calcium, re-launched in 2010
 has performed well in a cluttered market of more than 300 calcium oral
 solid brands and has jumped from 19th rank to the 2nd rank brand (Dec
 MAT 2011, SSA) in the calcium oral solids category during the year. In
 a market, with more than 70 generics, Ceftum continues to maintain its
 leadership position and has been awarded a Certificate of Marketing
 Excellence in Premium Brand Category by C-Marc-IPHMR in December 2011.
 
 Your Company has taken the initiative to expand its presence in the
 Specialty business to widen its footprint in India. Your Company''s
 Endeavour in Oncology to bring the latest breakthrough/ innovative
 products to enhance patient care is well acknowledged by the
 oncologists. After the successful launch of Tykerb in 2008, your
 Company has expanded its presence further by introducing two new
 segments, Kidney Cancer and Hematology with launch of Votrient™ and
 Revolade™. Votrient is indicated for the treatment of advanced renal
 cell carcinoma (RCC).  Revolade is for the treatment of
 thrombocytopenia (reduced platelet count) in adults with the blood
 disorder chronic immune (idiopathic) thrombocytopenic purpura (ITP).
 
 In the cardiovascular business, your Company continues to maintain the
 leadership with Lanoxin and strengthened the position with an
 in-licensed product, Benitec from Daiichi, Japan. After entering the
 fast growing Statin market, Rosutec slotted as the 4th best new
 introduction from a Multinational Company in the cardiology space,
 moved up 10 ranks to the 15th position (Dec MAT 2011, SSA). In the
 endeavour to consolidate the cardiovascular portfolio, your Company has
 launched Angiotec, Ranolazine one of the emerging chronic angina
 targets in India. In the Diabetes segment, your Company is in the
 process of strengthening its presence by the introduction of branded
 generics as volume builders like METLEAD (Metformin) and new launches
 of Metformin   Glimiperide (METLEAD G).
 
 The Dermatology business of your Company continues to maintain the
 leadership position with 15% market share (Dec MAT 2011, SSA). The
 topical steroid portfolio of the Dermatology business is growing ahead
 of the market. Topical antibiotics, Anti-fungal and Anti-viral
 portfolio too have grown in double digits. The initiative to expand its
 presence in cosmetic dermatology through the Stiefel brand promoted by
 your Company has reflected in this year''s performance by significant
 gain in market share. The three represented segments of cosmetic
 dermatology, acne, dry skin and sun protection are supporting this
 growth. Dermocalm, the 19th brand of calamine launched in 2009,
 attained 1st rank in 2011 (Dec MAT 2011, SSA).
 
 Mass market activity brands comprising of acute care classic brands had
 crossed many landmarks in terms of turnover of brands. Calpol, which is
 ranked as No. 1 prescribed product in Indian Pharmaceutical Market as
 per (Dec MAT 2011, IMS Rx audit) and Zinetac have crossed Rs. 100
 crores. Neosporin maintained its lead in the topical antibiotic market.
 Cobadex CZS remained as a leader in the segment. Calpol T, the new
 introduction in pain segment, overtook 75 brands and became No. 3 in
 Paracetamol   Tramadol market (Dec mat 2011, SSA).
 
 Your Company''s Rural Marketing initiative continued the excellent
 pace of growth and rapidly expanded to many new villages. The growing
 equity in these markets was clearly reflective in double digit growth
 across the spectrum of brands.
 
 Your Company''s Vaccines business grew significantly higher than the
 overall vaccines market growth. The key drivers of growth were brands
 Havrix, Varilrix and Rotarix. The vaccines field force has doubled over
 the past two years thereby enabling better reach and coverage of
 pediatricians and non-paed specialties across the country. The year
 also saw the launch of Synflorix - a vaccine against invasive
 pneumococcal disease - the leading cause of childhood mortality in
 India. This vaccine will help reduce the burden of pneumococcal disease
 in India thereby help in achieving the United Nations Millennium
 Development Goals. Your Company continues to remain the leading company
 in the Indian vaccines market.
 
 Your company continued the search for new Business Development
 opportunities in high growth therapeutic areas.
 
 Exports recorded a sales turnover of Rs. 36.51 crores comprising both
 Bulk Drugs and Formulations. Exports of bulk drugs were to major
 markets like Japan, France, Indonesia, Jordan, U. K. and Germany.
 
 (c) Opportunities, risks, concerns and threats
 
 The industry growth is largely driven by chronic disease segments viz.
 cardiovascular, diabetes, asthma, cancer, and largely influenced by
 changing lifestyles. There are signs that health awareness has
 increased due to higher disposable incomes, urbanization and greater
 health insurance coverage, which could improve further with
 acceleration in Government spend on healthcare infrastructure. The
 adoption of intellectual property rights has encouraged innovation.
 The industry continues to remain under price control; the scope and
 coverage of the Government''s new pharmaceuticals policy cannot be
 ascertained, since it is pending review by the Government and remains
 an area of uncertainty for the pharmaceutical industry. It is hoped
 that the Government will consider several representations made by
 industry associations in finalizing the policy. Data Exclusivity / Data
 Protection remain a concern area for the industry.
 
 (d) Research & Development and Regulatory Matters
 
 Your Company has received approval for 10 new products and 2 INDs from
 CDSCO, which will enable timely access to new and innovative
 therapeutic options to patients in our country.  Additionally, to
 support the R&D efforts of GlaxoSmithKline, your Company submitted 7
 global Clinical Trial applications to CDSCO, and have been granted
 approval to conduct 4 studies in the Indian population through the
 Clinical Operations team in India.
 
 Some of the novel innovator products approved by the regulatory agency
 in India during the year under review, include a 10-valent pneumococcal
 vaccine (Synflorix) for immunisation of infants and children against
 sepsis, meningitis, pneumonia, bacteraemia and acute otitis media;
 topotecan capsules (Hycamtin), an oral oncology drug for the treatment
 of patients with relapsed small cell lung cancer. In addition, new
 indications approved for existing products, viz., micafungin (Mycamine)
 for use in patients with aspergillosis and albendazole (Zentel) for
 treatment of systemic helminth infections such as neurocysticercosis
 will be beneficial to Indian patients.
 
 GlaxoSmithKline continues to be committed to Research and Development
 of medicines that will improve the quality of life of people around the
 world and truly make a difference to patients. Your company is one of
 the few with passion for research and with exemplary skills for turning
 that research into medicines, keeping a patient first attitude in
 everything that it does. Your Company''s scientists work hard to
 discover new medicines that prevent, treat or cure diseases. The R&D
 effort of GlaxoSmithKline is supported by the Clinical Operations team,
 which conducts clinical studies across a number of disease areas
 ranging from breast cancer, head & neck cancer, lung cancer, gastric
 cancer, leukemia, malaria, influenza, osteoporosis and complicated
 urinary tract and intra-abdominal infections.
 
 The R&D effort of GlaxoSmithKline Vaccines is also being supported by
 the Clinical Operations team in India by undertaking clinical studies
 for the vaccine initiatives, key among these are; TB vaccine (Phase II
 A), Conjugated Meningococcal vaccine, Herpes Zoster vaccine study
 (Phase III) and Epidemiology study to understand prevalence of
 Streptococcus pneumoniae serotypes in India.
 
 Your company initiated 6 new clinical studies during the year, most of
 which were in oncology.  A total of 85 patients participated in these
 studies. Your company has trained 36 new investigators on GCP and
 protocol related science at approximately 32 clinical trial sites
 across India.  Quality continues to be a priority as demonstrated by a
 number of internal compliance audits with no critical/major findings.
 
 The Medical Affairs team plays a pivotal role in communicating cutting
 edge scientific information to internal and external stakeholders. This
 team drives all the scientific engagement activities with external
 experts across all therapy areas and also ensures that GSK''s
 promotional activities are in line with the existing guidelines and
 standard operating practices.
 
 (e) Internal Control Framework
 
 Your Company conducts its business with integrity and high standards of
 ethical behavior, and in compliance with the laws and regulations that
 govern its business. Your Company has a well established framework of
 internal controls in operation, supported by standard operating
 procedures, policies and guidelines, including suitable monitoring
 procedures and self- assessment exercises. In addition to external
 audit, the financial and operating controls of your Company at various
 locations are reviewed by the Internal Auditors, who report significant
 findings to the Audit Committee of the Board. Compliance with laws and
 regulations is also monitored.
 
 Your Company''s Code of Conduct sets out the fundamental standards to
 be followed by employees in their everyday actions. In accordance with
 the Code of Conduct, and Standards associated with the Code of Conduct,
 employees are required to become familiar with the legal requirements,
 policies and procedures applicable to their areas of operation, avoid
 conflicts of interest and are tasked with upward reporting of all
 unethical and illegal conduct. All employees are committed to the
 principle of performance with integrity and ensuring that activities
 comply with all applicable laws.
 
 Additionally, Managers are required to certify on an annual basis
 whether there have been any transactions which are fraudulent, illegal
 or violative of the Code of Conduct. Strong oversight and self
 monitoring policies and procedures demonstrate your Company''s
 commitment to the highest standards of integrity.
 
 (f) Human Resources
 
 In the Human Resources domain your Company continued to focus on the
 three strategic pillars of Capability Building, Talent Management and
 Employee Engagement.
 
 Talent Management has focused on taking a structured approach
 emphasising on creating a talent pipeline at the leadership, the middle
 management and at the fresh management graduate intake level. Each
 function has been encouraged to identify key talent with a view to
 retain, grow and develop them. A few employees have also been moved to
 international markets as part of our planned development moves.
 
 A carefully planned Learning and Development calendar was created and
 implemented to provide the necessary leadership and skill building
 capability to our employees. Under the Employee Assistance Programme -
 Wellness and Wellbeing Services were provided to those employees who
 needed it. HR surveys were conducted this year to gauge service levels
 and bring in better customer service to our employees. The survey
 findings indicate that your Company has scored well over the global
 average.
 
 On the Industrial Relations front your Company''s Unions have extended
 its support and cooperation in attaining your Company''s business
 objectives.
 
 On the sales training front over 44,000 man days of classroom training
 have been invested to enhance the Disease - Product Knowledge - Selling
 Skills. Additionally, internet based learning solutions was widely
 adopted to promote continuous distance learning.
 
 Given the robust growth plans of your Company, ramp-up of sales
 personnel continued with over 600 new front-line sales personnel being
 inducted into the workforce last year. As a result, your Company had a
 staff strength of 5055 employees as on 31st December 2011, compared to
 4338 employees at the end of 2010.
 
 (g) Procurement
 
 The year saw many uncontrollable factors affecting outlook adversely
 namely global and local economic downturn, high inflation and
 depreciating Indian Rupee - these posed risks in supply continuity
 coupled with increasing cost. However, a combination of strategic
 commodity management and integration with the global and regional
 management structure helped your Company in mitigating these price
 pressures to a great extent. A global program of ensuring 100% vendors
 being audited for global level quality compliance got completed which
 would assure RM/PM quality all the time and is a big step to ensure
 vendors becoming true partners for reliable supply, service and quality
 and with lowest possible total cost to your Company.
 
 (h) Manufacturing
 
 Your Company continues to invest in manufacturing capabilities and the
 supply network to support growth at optimum product cost. Nashik site
 continues to deliver Albendazole tablets to WHO as a part of the
 Lymphatic Filriasis eradication programme. Nashik manufacturing site
 continue to focus on waste reduction opportunities through optimising
 material usage and pack rationalization. There was considerable focus
 on improving Environment, Health and Safety and GMP compliance at both
 Nashik and Thane sites during the year.
 
 The Nashik site has embarked upon major investment programmes to
 augment the capacity of various dose forms in line with the latest GMP
 requirements and the growing market volumes.
 
 Manufacturing Excellence
 
 Nashik site continues to support sales growth through significant
 volume contribution by creating supply capabilities through adding best
 in class manufacturing equipments. During the year Nashik site supplied
 Rs 7.2 Bn dose forms. There was focus on improving the Environment,
 Health and Safety at site through living safety training, Zero access
 machine guarding, and LOTO programme implementation. Nashik site has
 also received the WHO GMP certificate.
 
 (i) Supply Chain
 
 The positive trend of improvement in Supply performance was
 consolidated during the year.  A key achievement was the stabilization
 of the vaccine portfolio through maintaining a consistent supply
 position for all brands. This improvement has also helped support the
 larger business performance trend. The emphasis on Good Warehousing
 practices and process control related to the reverse supply chain
 continued. Your Company''s buildup to a post-GST optimized model
 continues through working on preparedness for regional consolidation
 timed with the eventual rollout of GST.
 
 (j) Corporate Social Responsibility
 
 During the year, your Company continued its commitment towards social
 development by supporting long term ongoing projects while undertaking
 many new initiatives.
 
 Your Company implements rural development initiatives through Gramin
 Arogya Vikas Sanstha (GAVS), a registered public trust promoted by the
 Company and operates predominantly in remote areas of tribal villages
 in Peth district near Nashik. Through GAVS, your Company in
 collaboration with Nirmaya Health Foundation is running a Tribal health
 care project in 115 villages covering a population of over 1 lakh for
 preventive and curative health care. GAVS in partnership with Kherwadi
 Social Welfare Association (KSWA) has also provided vocational training
 to 875 tribal youths in this underserved district for sustainable
 livelihoods.
 
 Your Company continued its support to Institute for Indian Mother and
 Child (IIMC), a non - government organization and reached more than
 1.30 lakh patients including pregnant, lactating, weaning mothers and
 malnourished children for health and nutrition in Kolkata. Another
 health care project which your Company is supporting through Nirmaya
 Health Foundation is in the slum areas of the dumping grounds in
 Deonar, Mumbai. This project caters to the health and educational needs
 of over 6000 rag picker children and their families.
 
 During the year, your Company proactively supported four voluntary
 organizations for cancer care. This included screening camps to
 facilitate early detection, treatment, rehabilitation and palliative
 care of cancer affected patients from underserved community. Sri
 Chaitanya Seva Trust was supported for Cancer screening camps and over
 85 camps were conducted, thereafter 139 patients who were detected with
 cancer have been treated. New initiatives were also taken to provide
 complete assistance to cancer patients and their families. A
 Mammography machine was donated to Cancer Patients Aid Association,
 while Indian Cancer Society was supported for rehabilitation of cancer
 patients through vocational training, employment and nutritious diet.
 The Bangalore Hospice Trust, Karunashraya was supported with donation
 of medicines for care of critically ill cancer patients.
 
 In collaboration with Pratham, an NGO, your Company runs shelter homes
 in Behraich (U.P.) and Jodhpur (Rajasthan) for 92 underprivileged and
 vulnerable children who were earlier exploited as child laborers. In
 these shelter homes, besides education and health, the focus is on
 holistic development. Your Company also supported 1000 underprivileged
 girls through project Nanhi Kali, for primary education to contribute
 to Millennium Development goal.
 
 Among other new initiatives taken during the year is the support to
 Paraplegic Foundation in Mumbai for rehabilitation of the severely
 orthopedically disabled lower socio-economic class patients. The
 Installation of Solar photovoltaic technology to meet the electricity
 need of 108 girls in residential school in Allahabad to facilitate
 their studies was also undertaken. Another regional project continued
 was the support to mentally challenged children for special education
 through Ashirwad Special Education School, New Delhi.
 
 GSK plc continued its efforts in strengthening immunization
 infrastructure in 5 Health Posts of Mumbai slums with PATH, an
 international development organization. The Personal Hygiene and
 Sanitation Education (PHASE) Programme supported by GSK plc was
 implemented successfully this year as well through Pratham, an NGO
 working towards child''s right to education. GSK plc also extended its
 support to increased donation of Albendazole, effective in treating
 people at risk of intestinal worms as part of its global program
 towards the elimination of Lymphatic Filariasis.
 
 (k) Cautionary Note
 
 Certain statements in the Management Discussion and Analysis
 section may be forward- looking and are stated as required by
 applicable laws and regulations. Many factors may affect the actual
 results, which could be different from what the Directors envisage in
 terms of future performance and outlook.
 
 4. Directors
 
 The Board of Directors have appointed Mr. R. Krishnaswamy as Executive
 Director in place of Dr. A. Banerjee with effect from 1st August 2011
 and have appointed Mr. A.N. Roy as additional Director with effect from
 4th November 2011 and he would hold the office upto the ensuing Annual
 General Meeting. The Board has also appointed Dr. A. Banerjee as
 alternate Director to Mr. S. Harford, Non - Executive Director with
 effect from 1st August 2011.
 
 Mr. R. R. Bajaaj, Mr. N. Kaviratne and Mr. R. Krishnaswamy retire by
 rotation and, being eligible, offer themselves for re-appointment.
 
 5. Directors'' Responsibility Statement
 
 Your Directors confirm:
 
 (i) that in the preparation of the annual accounts, the applicable
 accounting standards have been followed;
 
 (ii) that the Directors have selected such accounting policies and
 applied them consistently 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 31st
 December 2011 and of the profit of the Company for that year;
 
 (iii) that the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 (iv) that the Directors have prepared the annual accounts on a going
 concern basis.
 
 6. Corporate Governance
 
 Your Company is part of the GlaxoSmithKline plc group and conforms to
 norms of Corporate Governance adopted by them. As a Listed Company,
 necessary measures are taken to comply with the Listing Agreements with
 the Stock Exchanges. A report on Corporate Governance, along with a
 certificate of compliance from the Auditors, given in Annexure ''B'',
 forms a part of this Report.
 
 7. Auditors
 
 Members are requested to re-appoint M/s. Price Waterhouse & Co,
 Chartered Accountants, as the Auditors of the Company and authorise the
 Audit Committee to fix their remuneration.
 
 Pursuant to the Order issued by the Central Government under Section
 233B of the Companies Act, 1956, the Board of Directors of your Company
 have appointed Messrs R. Nanabhoy & Co., Cost Accountants for
 conducting the audit of the cost accounting records maintained by the
 Company for its Bulk Drugs and Formulations.
 
 8. General
 
 The particulars relating to conservation of energy, technology
 absorption and foreign exchange earnings and outgo are given in
 Annexure ''A'' forming part of this Report. The particulars of
 employees required to be furnished under Section 217(2A) of the
 Companies Act, 1956, read with the rules there under, forms part of this
 Report. However, as per the provisions of Section 219(1) (b)
 
 (iv) of the Companies Act, 1956, the reports and accounts are being
 sent to all the Shareholders of the Company excluding the statement of
 particulars of employees. Any Shareholder interested in obtaining a
 copy may write to the Company Secretary at the Registered Office of the
 Company.  Further, attached to the accounts of the Company are the
 Report and Audited Accounts of Biddle Sawyer Limited, a subsidiary
 company.
 
 9. Employees
 
 The Directors express their appreciation for the contribution made by
 the employees to the significant improvement in the operations of the
 Company and for the support received from all other stakeholders,
 including shareholders, doctors, medical professionals, customers,
 suppliers and business partners.
 
                                     On behalf of the Board of Directors
 
                                                             D.S. Parekh
                                                                Chairman
 
 Mumbai, 16th February 2012