Dear Fellow Stakeholders,
 
 It is with an even greater sense of responsibility than usual that I
 pen my note for this year, as our inorganic thrust at the end of the
 year has the potential to raise our company to a higher level.
 
 Before I report the developments of the year and provide an insight
 into what our future plans are, the teaching of the Bhagwad Geeta which
 says that the only constant is change comes to my mind. I believe that
 to adapt to change, one must be innovative and constantly seek new
 opportunities. This was our line of thinking during the year when we
 took a major step forward with our acquisition of Henkel India, a
 subsidiary of Henkel AG & Co. KGaA, Germany.
 
 The Indian markets are perceived to be among the most lucrative markets
 for both - domestic and international investors. Following market
 liberalisation, increasing consumerism and the entry of more foreign
 players, the Indian consumer is rapidly evolving and has grown more
 demanding.
 
 The Indian FMCG industry has been on a fast track of growth following a
 surge in middle class income resulting in rising disposable incomes.
 However, one must note too that the industry is also facing a lot of
 pressure on account of high inflation and the rising cost of
 production.
 
 Adapting to Changing Scenarios
 
 In such a scenario, Jyothy Laboratories posted a 4% increase in Net
 Sales at Rs. 59980 lakhs.  EBITDA margins dipped marginally due to
 inflationary pressures at 17.8% as against 19.1% last year. Pressure at
 the operating level percolated into the Net Profits which sustained at
 Rs. 8005 lakhs as compared to Rs. 8027 lakhs for the Year under review.
 
 In the Soaps and Detergents business the company posted a 13% return
 which was lower than expected. This was primarily on account of input
 cost pressures and a reduced sales due to unavoidable price hike in the
 last quarter of the fiscal. We have also undertaken heavy advertising
 for the detergent segment which is expected to drive scalability.
 
 The Household Insecticides category witnessed a de-growth of 13%. This
 was primarily due to trade schemes and promotions being withdrawn.
 However, we have launched Maxo Military in February 2011 in line with
 our agreement with Government of India and Department of Research and
 Development Organisation. The technology has been transferred to us and
 we have commenced the manufacturing and sales of the same. Initially we
 have targeted the major cities and gradually we hope to widen our
 reach. The efforts over the last one year are expected to fructify in
 the financial year 2011-12 and we expect this segment to boost the
 overall topline and bottomline of the Maxo segment.
 
 Exo ( Surface Cleaners) has done well on a lower base and the national
 rollout is being undertaken in a phased manner. The Fabric Spa business
 too has made satisfactory progress both organically and inorganically
 and as we have discussed at the time of launching the business, it will
 start yielding positive financial results over the next 12 months.
 
 Acquiring to Grow
 
 In our core business, our focus on technical innovation and deeper
 understanding of customer behaviour has enabled us to continuously
 improve the key benefits of our products and create huge brand loyalty.
 This year we felt that the time was right to not only continue with our
 focus on innovations but also seek new opportunities.
 
 The Indian economy has been booming and many product categories in
 India are getting bigger and more relevant than they were a couple of
 years ago. Thus, while protecting and scaling our core business had
 become critical, entering niche product categories and building a
 strong presence there had become equally important.
 
 Thus, we chose the inorganic growth route and acquired Henkel India, a
 subsidiary of Henkel AG & Co. KGaA, Germany and have acquired 14.9% as
 on March 31, 2011 and on May 31, 2011 50.97% from Henkel. The Open
 offer is on and we hope to acquire 86%. for Rs. 78,730 lakhs. We propose
 to fund this acquisition through our internal accruals, Funds raised
 through QIP and bank borrowings.
 
 Perfect Synergies
 
 Henkel India has a strong urban presence which complements our strong
 rural presence and widens our market coverage. In segments where we
 have an overlap like the fabric care segment, Henkel India compliments
 our existing portfolio by providing us presence in premium category
 with products like Henko Stain Champion and strengthening our presence
 in mid-lower segment categories with products like Mr. White.
 
 The acquisition also marks our entry into personal care products like
 Margo soap and Neem tooth paste and Fa Men''s range deodorants and
 soaps. We believe that these brands have immense potential and with the
 right positioning and marketing push, they can achieve a much higher
 market share.
 
 Henkel India''s Pril already has a good market share and compliments our
 surface cleaner brand Exo.
 
 Thus with our core businesses, we are striving to reshape our portfolio
 toward higher-growth categories and entering certain niche categories
 to expand our presence across market segments within the FMCG industry.
 
 With the strong parentage of internationally acclaimed Henkel AG, the
 company''s supply chain management will raise the level of our existing
 practices and improvise operational efficiencies. We will also be
 rationalising the manufacturing and distribution networks to facilitate
 higher profitability through better logistics management.
 
 Financial Clarity
 
 We understand the financial implications of this acquisition very well
 as it is after a lot of debate and weighing of its pros and cons that
 we went ahead and completed it.
 
 We are comfortable with the debt implications the acquisition brings
 and are confident about servicing it by hiving off non- core real
 estate assets. The losses made by Henkel India will also provide us a
 significant tax shield, especially since our Uttaranchal unit will soon
 lose the tax break it has enjoyed thus far.
 
 As a company, we are fully aware and prepared in terms of the time
 commitment and the efforts required to integrate the work culture and
 businesses and understand the fact that it will be a task requiring
 dedicated efforts in the near term. However, we are confident that once
 the transition takes place, the company will emerge as a much stronger
 entity in terms of its business model and financial muscle.
 
 Appreciation of Our Strength
 
 I have no hesitation in saying that it is our enthusiastic and talented
 employees who have and will move our company forward. They execute the
 strategies designed by our management team precisely in a very
 challenging economic environment and we are proud and honoured to work
 alongside them.
 
 Finally, there is no doubt in our mind that the most important element
 for delivering shareholder returns is superior leadership and execution
 excellence. Building on the path breaking changes that we have
 undertaken in this financial year, we are confident of delivering the
 same and repositioning the company on an even higher growth curve.
 
 Finally, Ithankeach one of you, my fellow stakeholders foryour
 continuing support and on behalf of every Board and staff member of our
 company, assure you of our best efforts in the year ahead.
 
 M. P. Ramachandran
 
 Founder, Chairman and Managing Director