Dear Shareholders,
 
 Your Company has completed 50 years of successful operations. I am sure
 that you would be happy to note the steady growth of the Company over
 the years. From a single factory started in Kukatpally, Hyderabad in
 April 1961 the Company operations have become pan-Indian and expanded
 to Bangladesh, China and Indonesia, whilst domestic turnover has
 exceeded Rs. 1000 crores with exports to over 20 countries. While our
 achievements have been noteworthy over these 50 years, the journey into
 new business areas, new endeavours, meeting new challenges will
 continue to bring even more shareholder value in the years ahead.
 
 BUSINESS OVERVIEW
 
 The global economy has been severely affected by the recessionary
 trends visible in the US and European Union. The Indian economy,
 however, continues with the growth patterns established over the last
 few years. GDP in India for 2010-11 manifested a growth of 8.6% with 6
 core industries comprising crude oil, petroleum, refining, coal,
 electricity, cement and finished steel recording significant growth.
 India, therefore, is currently rated as one of the most attractive
 investment destinations on the globe.
 
 The main 2 areas of the economy which have a direct bearing on the
 operations of your Company are Automobiles and Mining sectors. In the
 Automobiles sector, there was a robust overall growth of 26%. All major
 segments of the industry viz. Commercial vehicles (  27% ), Passenger (
  29% ) and 2 wheelers (  26% ) grew at a significant pace on the back
 of the strong economic growth with more focus on rural areas and new
 model launches. Higher spending on infrastructure development, strong
 consumer confidence, and moderate price hike by auto makers also
 contributed to the consistent good growth in the industry over the last
 6 quarters.
 
 Our Lubricants Division achieved a turnover of Rs. 679 crores, a robust
 increase of 21% and recorded growth rates higher than competition. The
 focus on segment wise approach backed by channel expansion, promotions
 and very aggressive brand building initiatives was successfully
 executed by the team. The strong brand building exercises will be
 continued in the future supported by promotions for trade influencers
 and end users.
 
 On the other hand, the sectors which have seen considerable erosion of
 growth momentum over the last one year are mining and quarrying, and
 manufacturing. Mining witnessed a fall in growth to 5.9% in 2010-11
 from 10% from 2009-10.  As a consequence, the growth in electricity
 generation also slowed down to 5.6% in 2010-11 from 6.0% in 2009-10.
 The moderation in the pace of expansion of the mining sector can be
 related to certain adverse developments relating to the mining sector.
 Most mining activities in the dominant mining states have been affected
 due to environment and forest issues. The MoE&F categorized 203 coal
 blocks as no go mining zones, and this has contributed to supply
 shortfalls.  It is estimated that these 203 coal blocks could have
 generated 1.3 lakhs MW of power per year. Moreover, a considerable
 number of power projects were said to get delayed because of
 uncertainty of availability of supply of coal.
 
 Against the above backdrop your Company''s Explosives Division''s
 consolidated revenue grew to Rs. 322 crores by 5% over the last
 financial year. However, due to spinning off of a major portion of the
 explosives business into a 100% subsidiary w.e.f. 1.10.2010, the
 turnover reported for your Company was Rs. 194 crores. The growth of
 this Division is directly linked to the growth of the mining and
 infrastructure segment in India.
 
 As a fallout of the slow down noticed in the mining sector and market
 conditions in a mining services industry, the Service Income reported
 by the Mining & Infrastructure Division reduced considerably to Rs. 126
 crores from Rs. 194 crores in the previous year. In the Orissa sector
 where the Division is engaged in large scale iron ore mining, there has
 been a lull in operations in the last three quarters. It is expected
 that with the policy reviews being undertaken by the State and the
 Union Governments, the mining policy issues will be resolved over the
 next few months, and our full-fledged operations would resume. In the
 meantime, the Division has started work at a mining project for Uranium
 Corporation of India near Jamshedpur, and also undertaken work on a
 major irrigation project in Andhra Pradesh to deploy the available
 equipment.
 
 NEW INITIATIVES
 
 Lubricants
 
 The Division was able to retain its overall No. 2 position across India
 in the key bazaar segement with the aggressive marketing of New
 Generation Diesel Engine Oils. Technological upgradation of product
 portfolio was done with the launch of an Advanced Engine Oil, Gulf
 Super Fleet Dura Max, with high extended life of 80,000 Kms from the
 existing 36000 kms. Along with this, new OEM tie-up was forged with
 Mahindra & Mahindra''s Automotive Division with the launch of the
 co-branded lubricants. Several new initiative with fleet operators and
 infrastructure companies especially BOT participants were also
 concluded.
 
 To cater to the growth in demand, an automated plant in the South is
 being planned with an investment of over Rs.100 crs.
 
 Industrial Explosives
 
 The separation of the cartridge and bulk explosives business into a
 100% subsidiary namely IDL Explosives Limited was completed after
 obtaining the approval of the Andhra Pradesh High Court in March 2011.
 With this segregation we hope to achieve focus on a major portion of
 the explosives business which we have been operating since the early
 1970s, so that strategic actions / partners can be inducted for the
 future revamp of the business. The subsidiary has started full fledged
 operations w.e.f. 24th May, 2011 with the completion of the formalities
 required for this purpose.  Several plans are under consideration of
 your Board and will be announced as they are finalised.
 
 Four years ago we had introduced electronic detonators, based on our
 R&D efforts. I am happy to announce that we have now been able to
 upgrade the product to a field programmable type whereby our users can
 set specific delay times based on the precise mine requirements at the
 site.
 
 To enhance the Health and Environment Management System in the
 Explosives Division, the Division implemented Integrated Management
 System ( IMS ) which incorporates the Environmental Management System (
 ISO 14001 ) and Occupational Health & Safety Management System ( OHSAS
 18001 ).
 
 Mining & Infrastructure Division
 
 The Division also obtained the ISO 14001 and OHSAS 18001 Certificate
 covering Quality, Safety, Occupational Health and Environment. In view
 of the challenges, both in the mining and quarrying sectors, the
 management is relooking at the strategies to optimise the strengths and
 capabilities of the Division in other infrastructure areas.
 
 PROPERTY DEVELOPMENT
 
 Development of the Company''s property at Yelahanka, Bangalore, where
 5.05 mn. sq.ft. is planned to be constructed, a fresh market survey
 through Cushman Weikfield was completed to revalidate the revenue and
 construction phasing plans and the Developer has shortlisted a reputed
 main contractor, the project management consultant and the quality
 surveyor. In the meantime, all building plans have been revalidated and
 work on construction of the 1st phase comprising of 1.2 mn sq. ft. of
 built up area is being started after the monsoon this year.
 
 The global economy is changing and we may see new structures emerging
 out of the current market turmoil. We will continue to remain flexible
 as the business climate shifts and demand fluctuates for our products
 and services. We know that our responsibility to you is to continue
 seeking new ways to improve everything we do.
 
 Thank you for your continued support. I also wish to thank all members
 of Team Gulf and our business associates for their long association and
 contribution to our success.
 
                                                        S. G. Hinduja
 
 August 16, 2011                                             CHAIRMAN