To the Members
 
 The Directors submit the Annual Report of the Company together with the
 audited statement of accounts for the year ended March 31, 2011.
 
 Financial results
 
 The Company''s revenue, expenditure and results of operations are
 presented as below showing both the consolidated and standalone
 financial results.
 
                                                        (Rs. lakhs)
 
 Particulars                     Standalone        Consolidated
 
                         year ended  Year ended  year ended  Year ended
 
                              march 
                           31, 2011       March 
                                       31, 2010       march 
                                                   31, 2011       March
                                                               31, 2010
 
 Net Sales                40,567.70   38,619.49   47,517.97   46,108.93
 
 Other Income                 71.17       48.00       80.25      107.36
 
 Total Income             40,638.87   38,667.49   47,598.22   46,216.29
 
 Profit Before 
 Depreciation, Interest 
 and Tax                   5,464.16    6,280.90    5,765.69    7,371.97
 
 Less: Interest and 
 Finance Charges           1,136.20    1,639.98    1,258.69    1,754.90
 
 Less: Depreciation        1,588.13    1,589.67    1,831.47    1,857.43
 
 Profit Before Tax          2,739.83    3,051.25    2,675.53    3,759.64
 
 Less: Provision for 
 Taxes Including 
 Deferred Tax                568.01      656.40      585.95      722.44
 
 Net Profit After Taxes     2,171.82    2,394.85    2,089.58    3,037.20
 
 Add: Surplus Brought 
 Forward from 
 Previous Year             6,164.89    4,123.36    6,016.52    3,332.64
 
 Surplus Available         8,336.72    6,518.22    8,106.10    6,369.84 
 
 Appropriations
 
 made to Surplus:
 
 Provision for Dividend      300.86      250.71      300.86      250.71
 
 Provision for 
 Dividend Tax                 48.81       42.61       48.80       42.61
 
 Transfer to General 
 Reserve                     108.60       60.00      108.60       60.00
 
 Balance Carried to 
 Balance Sheet             7,878.45    6,164.89    7,647.84    6,016.52
 
 Basic Earnings Per Share     10.83       11.94       10.42       15.14
 
 Diluted Earnings Per Share   10.78       11.89       10.37       15.08
 
 2. Dividend
 
 In view of the Company''s profitable performance, the Directors are
 pleased to recommend for approval of the shareholders, a dividend of
 15% on 2,00,57,154 equity shares (face value of Rs. 10 each) of the
 Company with respect to the financial year 2010-11. The dividend, if
 declared as above, would involve an outfow of Rs. 300.86 lakhs towards
 dividend and Rs. 48.81 lakhs towards dividend tax, resulting in a total
 outfow of Rs. 349.67 lakhs. Under the Income Tax Act, 1961, the
 dividend will be tax free in the hands of the shareholders.
 
 3. Transfer To The investor
 
 Education and Protection fund
 
 According to section 205C of the Companies Act, 1956, read with
 Investor Education and Protection Fund (Awareness and Protection of
 Investors) Rules, 2001, the unclaimed dividend amounting to Rs.
 71,215/- (Seventy One Thousand Two Hundred and Fifteen only) for the
 Financial Year 2002-03, was transferred to the Investor Education and
 Protection Fund established by the Central Government during the year
 under review.
 
 4.  Transfer To General reserves
 
 The Company proposes to transfer Rs. 108.60 lakhs to the General
 Reserve out of the amount available for appropriations.  After the
 appropriations, it has been proposed to retain Rs. 1,713.56 lakhs from
 the current year''s profits.
 
 5.  Review of Operations
 
 The net sales of the Company for the financial year 2010-11 stood at Rs.
 40,567.70 lakhs compared to the net sales of Rs. 38,619.49 lakhs in the
 previous Financial Year 2009-10, registering a growth of 5% in the
 current financial year. The profit before interest, depreciation and tax
 stood at Rs. 5,464.16 lakhs and profit after taxes stood at Rs. 2,171.82
 lakhs during the current financial year. The Company continued to
 strengthen its position in the rapidly growing market and aims at
 achieving productivity gains, growth in volumes, sustained margins and
 neutralising cost increases.
 
 6.  Funding
 
 During the year under review, the Company has not sought or received
 any external funding.
 
 7.  Research & Development
 
 The Company is committed to building a sound base for sustained growth
 both in both API and PFI businesses through the development of
 innovative, future-oriented technologies, intellectual property
 protection and engineering technologies in stable-ops by leveraging our
 collective R&D expertise resulting in value for all stakeholders. Our
 unrelenting focus on R&D has yielded achievements in year ending March
 2011. The Company filed first patent application during the year and is
 also preparing to file several more patent applications. The Company is
 also developing API technologies which will offer higher quality
 material. R&D efforts also helped in improving operational
 productivity.
 
 To face challenges in the business environment, the Company has
 strengthened its R&D by enhancing resources and creating new
 facilities. The Company also lined up several programmes for in-house
 R&D and formed alliances with national and international reputed
 institutions. We are positioning the period covered by the 2011-2012
 Plan as a time of transformation, in which the Company will move
 forward from our past successes and grow into a new Granules which
 focuses on our activities on the themes of Innovation, Culture and
 Growth.
 
 8.  Directors
 
 The Board consists of executive and non-executive directors including
 independent directors who have wide and varied experience in different
 disciplines of corporate functioning.  During the year under review the
 following changes were witnessed:
 
 a.  Mr. Arun Rao Akinepally was appointed Additional Independent
 Director by resolution of the Board passed by circulation on April 27,
 2010 duly confrmed by the shareholders in the Annual General Meeting
 dated September 27, 2010.
 
 b.  Mr. Harsha Chigurupati was appointed as an Additional Director by
 Board Resolution on July 26, 2010 and was subsequently confrmed and
 appointed as an Executive Director for a period of five years w.e.f
 August 1, 2010 by the shareholders in the Annual General Meeting dated
 September 27, 2010.
 
 There is no change in the Board after the date of Balance Sheet.
 
 Pursuant to provisions of Sections 255 and 256 of the Companies Act,
 1956 and Article 51 of the Articles of Association of the Company, Mr.
 L.S. Sarma and Mr. C.  Parthasarathy, Independent Directors of the
 Company are liable to retire by rotation at the ensuing Annual General
 Meeting and being eligible offers themselves for re-appointment to the
 office of Directorship. Your Board of Directors recommend for their
 re-appointment.
 
 Brief profiles of Mr. L.S. Sarma and Mr. C. Parthasarathy, the nature of
 their expertise in specific functional areas and the number of companies
 in which they hold directorships and memberships/chairmanships of
 Committees of the Board, as stipulated under Clause 49 of the Listing
 Agreement with the stock exchanges, are provided in the section on
 Corporate Governance in this Annual Report.
 
 The Board has formed different Committees delegating various functions,
 the description of the same is provided in the Corporate Governance
 Report, attached herewith.
 
 9.  Corporate Governance Report
 
 Your Company is committed to good Corporate Governance Practices and
 following the guidelines prescribed by the Stock Exchange Board of
 India from time to time. Your Company still continually works at
 improving its practices and processes as it is spreading through
 nations to ensure that the best practices are identifed, adopted and
 followed. The Company has implemented all of its major stipulations as
 applicable to the Company. The Statutory Auditors Certificate, dated
 July 28, 2011 in accordance with Clause 49 of the Listing Agreement is
 annexed with Corporate Governance Report.
 
 Mr. C. Krishna Prasad, Managing Director and Mr. Pranesh Raj Mathur,
 CFO and President (API), have given a Certificate to the Board with
 regard to the Financial Statements for the Year ending March 31, 2011
 and the same is annexed with Corporate Governance Report, as
 contemplated in Clause 49 of the Listing Agreement.
 
 A Detailed report on Corporate Governance practices followed by your
 Company, in terms of Clause 49 of the Listing Agreement with Stock
 Exchanges, is provided separately in this Annual Report.
 
 10. Management Discussion and analysis Statement
 
 A Management Discussion and Analysis statement as required under the
 clause 49 of the Listing Agreement is annexed, forming a part of the
 Directors Report.
 
 11. Director''s Responsibility Statement
 
 Pursuant to the requirement of Section 217(2AA) of the Companies Act,
 1956 and based on the representations received from the operating
 management, the Directors hereby confrm that:
 
 i. In the preparation of accounts, the applicable accounting standards
 have been followed.
 
 ii. Appropriate accounting policies were applied consistently.
 Judgment and estimates that were reasonable and prudent were made to
 give a true and fair view of the Company''s state of affairs as at the
 end of the financial year and of the Company''s profits for the year.
 
 iii. Proper and sufficient care was taken to maintain adequate
 accounting records in accordance with the provisions of the Companies
 Act, 1956, to safeguard the Company''s assets and prevent and detect
 fraud and other irregularities.
 
 iv. The annual accounts were prepared on a going concern basis.
 
 12. Subsidiary companies
 
 Granules uSa inc.
 
 Granules USA Inc., a wholly-owned subsidiary company, operates for the
 marketing requirements of the Company in the U.S. During the financial
 year 2010-11, the Company achieved a turnover of Rs. 7,543.74 lakhs.
 
 Gil lifesciences Private limited
 
 GIL Lifesciences Private Limited, a wholly-owned subsidiary of the
 Company has acquired land at Jawaharlal Nehru Pharma City (JNPC),
 Parwada Mandal, Visakhapatnam (AP) to set up a Pharmaceutical
 manufacturing unit. The Company is yet to commence operations here.
 
 Granules Singapore Pte limited
 
 The Company has not commenced any activity from this wholly-owned
 subsidiary company.
 
 The relevant particulars of subsidiary companies and the consolidated
 final accounts for the year ended March 31, 2011, in accordance with the
 Accounting Standard AS-21 on Consolidated Financial Statements, read
 with Accounting Standard AS-23 on Accounting for Investment in
 Associates are appended to this Report.
 
 13. Joint venture companies
 
 Granules-biocause Pharmaceutical co. limited
 
 During the financial year 2010-11, Granules-Biocause Pharmaceutical Co.
 Limited, our Joint Venture Company achieved a turnover of Rs. 6,299.46
 lakhs.
 
 The Company has signed Joint Venture Agreement with a Belgium based
 Company, S. A. Ajinomoto Omnichem N.V. on July 14, 2011 for the purpose
 of establishing a 50:50 Joint Venture Company in India for manufacture
 of pharmaceutical intermediates and APIs. The incorporation of the
 Joint Venture Company is under process however, the name of the
 proposed companyGranules Omnichem Private Limited” has been approved
 by the Registrar of Companies, Hyderabad (AP).
 
 14. Statement under Section 212 of The companies act, 1956
 
 Pursuant to the General Circular no. 2/2011 dated February 8, 2011
 issued by Ministry of Corporate Affairs, the Company is entitled for
 exemption from the provisions of section 212 of the Companies Act, 1956
 and the Company has complied with the requisite criteria mentioned in
 the above stated circular.  However, a brief statement pursuant to
 section 212 of the Companies Act, 1956 related to Subsidiary Companies
 has been given as Annexure to the Balance Sheet and forms a part of
 this Annual Report.
 
 Copies of the Annual Report of the Subsidiary Companies and the related
 detailed information will be made available to any member of the
 Company and its Subsidiaries who may be interested in obtaining the
 same. The Annual Report of the Subsidiaries Companies will also be kept
 open for inspection by any investor at the Registered Office of the
 Company and that of the respective Subsidiary Companies.  The
 consolidated Annual Report is attached with the Annual Report of the
 Company.
 
 15. Auditors and Their report
 
 M/s. Kumar & Giri, Chartered Accountants, Statutory Auditors of the
 Company retire at the conclusion of the ensuing Annual General Meeting
 and being eligible have offered themselves for re-appointment. The
 Company has received a certificate from the Auditors to the effect that
 their re-appointment if made, would be in accordance with the
 provisions of Section 224(1B) of the Companies Act, 1956. The Directors
 recommend their re-appointment and to fix their remuneration.
 
 Comments of the Auditors in their report and the notes forming part of
 the Accounts, are self explanatory and need no comments.
 
 16. Cost auditors
 
 M/s. EVS & Associates, Cost Accountants, were appointed as the
 Company''s Cost Auditors subject to the consent of the Government of
 India to conduct cost audit of the bulk drugs and formulations division
 of the Company for the Financial Year 2010-11. The said appointment was
 approved by the Central Government.
 
 17. Fixed Deposits
 
 Your Company did not accept any public deposits and no amount on
 account of principal or interest on public deposits was outstanding on
 the date of Balance Sheet.
 
 18. conservation of energy, Technology absorption, and foreign exchange
 earnings and outgo
 
 The information pertaining to conservation of energy, technology,
 absorption, foreign exchange earnings and outgo, as required under
 section 217(1)(e) of the Companies Act, 1956, read with Companies
 (Disclosure of Particulars in the Report of the Board of Directors)
 Rules, 1988 is given as ''Annexure I'' and forms part of the Directors
 Report.
 
 19. Human resources
 
 Your Company continued to have cordial relations with its employees.
 Your Company is striving relentlessly to strengthen talent pipeline
 across all levels and to drive performance orientation as work culture
 by implementing various schemes, system, process and programs from time
 to time resulting in all around development of the employees and
 vibrant work culture. Your Company has robust process of human
 resources development which is provided for in Management Discussion
 and Analysis.
 
 20. ParticularS of employees
 
 Particulars of employees, as required under section 217(2A) of the
 Companies Act, 1956, read with the Companies (Particulars of employees)
 Rules, 1975, as amended, form part of this Report as ''Annexure II''.
 However in pursuance of section 219(1)(b)(iv) of the Companies Act,
 1956, this report is being sent to all shareholders of the Company,
 excluding the aforesaid information and the said particulars are made
 available at the Registered Office of the Company. The members
 interested in obtaining such particulars may write to the Company
 Secretary at the Registered Office of the Company.
 
 21. Employee Stock Option Plan
 
 Your Company implemented the Granules India Equity Option Plan 2002
 with the objective of enhanced employee commitment.  The details of the
 stock options granted under the Granules India Equity Option Plan 2002,
 are given below:
 
 Sr. no.  Description Details
 
 (a) Options granted during the year NIL
 
 (b) Pricing formula Not Applicable.
 
 (c) Options vested during the year 3,750 options out of those granted
 during the financial year 2006-07.
 
 69,500 options out of those granted during the financial year 2009-10.
 
 (d) Options exercised during the year Nil
 
 (e) Total number of shares arising as a result of exercise of options
 Not Applicable
 
 (f) Options lapsed during the year Nil
 
 (g) Variation in terms of options Nil
 
 (h) Money realised by exercise of options during the year Nil
 
 (i) Total number of options in force 1,54,000
 
 (j) Employee wise details of options granted during the year to:
 
 (j)(i) Senior managerial personnel Not Applicable
 
 (j)(ii) Any other employee who receives a grant in any one year of
 options amounting to 5% or more of options granted during the year.
 
 Not Applicable
 
 (j)(iii) Identifed employees who were granted option, during any one
 year, equal to or exceeding 1% of the issued capital (excluding
 outstanding warrants and conversions) of the Company at the time of
 grant.
 
 Not Applicable
 
 (k) Diluted Earnings per share (EPS) pursuant to issue of shares on
 exercise of options calculated in accordance with Accounting Standard
 (AS) 20 – Earning per share.
 
 Not Applicable
 
 (l) Where the Company has calculated the employee compensation cost
 using the intrinsic value of the stock options, the difference between
 the employee compensation cost that shall have been recognised if it
 had used the fair value of the options.
 
 Not Applicable
 
 (m) Weighted-average exercise prices and weighted-average fair values
 of options, whose exercise price either equals or exceeds or is less
 than the market price of the stock
 
 Not Applicable
 
 (n) Description of the method and significant assumptions used during
 the year to estimate the fair values of options.
 
 Not Applicable
 
 Pursuant to clause 14 of the SEBI (Employee Stock Option Scheme and
 Employee Stock Purchase Scheme) Guidelines, 1999, certificate from M/s.
 Kumar & Giri, Statutory Auditors is given as Annexure III to this
 report.
 
 22. Related Party Transactions
 
 As a matter of policy, your Company carries out transactions with
 related parties on an arm''s length basis. Statement of these
 transactions is given in the Notes to Accounts (Point no.  13) in
 compliance of Accounting Standard (AS) 18.
 
 23. Code of conduct
 
 Your Company has laid down a Code of Conduct for all Board members and
 senior management of the Company. The code of conduct has been posted
 on the website of the Company.  In pursuance of Clause 49 of the
 Listing Agreement, the declaration by the Managing Director of the
 Company affrming compliance with the code of conduct by the directors
 and senior management personnel is provided herein as ''Annexure IV'' and
 forms part of Directors Report.
 
 24. Acknowledgements
 
 Your Company continues to build shareholder value and your Directors
 look to the future with confdence. Your Directors place on record their
 appreciation for the overwhelming co- operation and assistance received
 from investors, customers, business associates, bankers, vendors and
 financial institutions. The Directors also thank the Government of India
 and Governments of various countries, concerned State Governments and
 other Government Departments and Governmental Agencies for their
 co-operation and support.
 
 Your Directors are especially indebted to employees of the Company and
 its subsidiaries at all levels, who through their dedication,
 co-operation, support and dynamic work, have enabled the Company to
 achieve rapid growth.
 
                                  On behalf of the Board of Directors
 
                                                                 Sd/-
 
                                                          L. S. Sarma
 
                                                             Director
 
                                                                 Sd/-
 
                                                    C. krishna Prasad
 
                                                    Managing Director
 Place: Hyderabad
 
 Date: July 28, 2011