Dear Shareholders
 
 It was an exciting year at Granules due to several notable
 accomplishments. Our finished dosage division, which had Rs. 9 cr. in
 sales two years ago reached Rs. 101 cr. We received approval for two
 abbreviated new drug applications (ANDAs) which will enable us to
 participate in the lucrative U.S. formulation market. We also started
 an expansion plan that will increase capacities across all three
 divisions. In addition, we started an exciting new chapter by entering
 the CRAMs business by forming a joint-venture with Ajinomoto OmniChem.
 
 OFFERING VALUE
 
 Our goal is to be the industry leader in the products we offer In order
 to accomplish this, we are focused on high-volume, off-patent products
 that have sustained, long-term demand with no viable alternatives for
 the foreseeable future. Our focus has enabled us to develop our
 competitive advantage of manufacturing high quality products through
 efficient processes The core of this advantage is our vertical
 integration and the scale of our operations
 
 To distinguish ourselves from others, we are vertically integrated and
 are able to offer our customers all three components of the pharma
 manufacturing value chain - APIs, PFIs and FDs.  Our vertical
 integration provides customers with a wide range of benefits such as
 freeing up their manufacturing capacity by sourcing their requirements
 through our efficient processes.
 
 Customers can also manage fluctuations in their needs by purchasing
 material from any of our three components. In addition to helping our
 customers as their needs change, our vertically integrated model
 ensures business stability since the three components of our model
 cater to a diverse set of customers as well as a variety of
 geographies.
 
 The second component of our competitive advantage is the scale of our
 operations. Granules'' current facilities are among the largest in the
 industry, including the largest PFI facility in the world. Due to our
 large capacities and batch sizes, we have economies of scale and are
 able to reduce costs for customers.  Also, our capacities enable us to
 increase wallet share with leading brands since they can allocate large
 portions of their requirements with us
 
 BUILDING A SUSTAINABLE FUTURE
 
 While we have an advantage over our competitors, it is critical that we
 strengthen our competitive advantage. Granules is bolstering our
 competitive advantage in two ways; our Operational Excellence (OE) team
 finds ways of improving existing processes while our R&D department
 works on developing cutting-edging technologies.
 
 Our OE team is dedicated to look at existing processes and develop
 methods to improve them, whether it is removing bottlenecks for
 productivity enhancement or reducing effluents for optimising costs.
 This program has been successful and has led to numerous
 accomplishments including improving our Metformin and Guaifenesin API
 output by 25% and 20% respectively. The team has also implemented
 systems that have standardised quality and reduced variation. Due to
 our culture of continuous improvement, we are able to garner
 efficiencies that provide an advantage over our competitors
 
 While our OE programme improves existing assets, our R&D team is
 developing innovative, industry-disruptive process technologies that
 will provide a sustainable, patent-protected competitive advantage. Our
 efforts paid off during the year when we filed our first patent
 application. We are working on several new technologies that we intend
 to implement over the next few years
 
 BUSINESS PERFORMANCE
 
 While all three divisions had positive developments, our finished
 dosage division continued to break out and grew 170% to Rs. 101 Cr. We
 expect strong sales to continue due to the approval of two ANDAs. We
 received approval for a Metformin ANDA, which is the world''s most
 popular diabetes medication and a Ibuprofen ANDA, which is the fastest
 growing mainstream analgesic OTC product. In addition, we
 commercialised several formulation contracts that will ramp up during
 the current fiscal year; the increased utilisation will lower our
 overheads and improve profitability. While all our divisions will grow
 in absolute terms, we expect formulation sales to contribute an even
 larger portion of our overall revenue mix. Given our performance and
 contracted sales pipeline, our Board of Directors voted to increase our
 dividend by 20%
 
 LOOKING FORWARD
 
 Our goal has always been to be a premier Company in the products we
 compete in and I believe Granules has reached this stage. Customers in
 our field recognise that we are the preferred partner since we offer an
 ideal blend of quality, service, and scale. While we have several
 advantages, we are not resting and are working on ways to strengthen
 our capabilities
 
 Since we are focused on maintaining our position as an industry leader,
 we are increasing our capacities. We are tripling our finished dosage
 capacity, more than doubling our PFI capacity and increasing our API
 capacity. These capacities are being added with new technologies that
 are more efficient than our existing processes. The expansion will
 allow Granules to gain more PFI and formulation market share and will
 strengthen our vertically integrated model. While we are committed to
 our current product portfolio, we are focused on leveraging our
 strengths.
 
 In July 2011, we entered the CRAMs sector by forming Granules- OmniChem
 Pvt. Limited, a 50:50 joint venture with Ajinomoto OmniChem. The JV
 will manufacture products including APIs and intermediates for branded,
 patented products owned by innovator companies. Since we have partnered
 with a company that has an established track record and existing
 customers, we can focus on leveraging our strength in efficient
 manufacturing.  We are very excited about this opportunity because it
 will allow Granules to enter new therapeutic sectors including
 cardiovascular, central nervous system (CNS) and oncology In addition,
 Granules will manufacture formulations in these sectors. Both of these
 opportunities will help further develop our business and increase
 profitability
 
 I am proud that we are able to offer such high levels of quality and
 manufacturing efficiencies. Our hard work has allowed us to become the
 preferred partner in our industry and while our success is rewarding, I
 am happier that we are building and leveraging our competitive
 advantage. I believe we have developed a framework that will bring
 significant success to Granules and all its shareholders over the next
 several years.
 
 Warm regards
 
 C. Krishna Prasad
 
 Managing Director