The Directors are pleased to present their Report for the year ended
 March 31, 2010, along with the Balance Sheet and Profit and Loss
 Account.
 
 Financial Results
 
 The financial performance of your Company on both a stand-alone and a
 consolidated basis for the year ended March 31, 2010 is summarised
 below:
 
                                                         Rs. Million
 
 Particulars                      Stand-alone basis  Consolidated basis
 
                                  2009-10  2008-09   2009-10   2008-09
  
 Net sales                       18680.26 14790.24  27768.20  22738.48
 
 Profit before Interest, 
 Depreciation, Tax & Exceptional 
 items                            3459.13  3568.27   5043.75   3604.66
 
 Interest                          509.81   569.18   1204.53   1470.99
 
 Depreciation & Amortisation       562.64   429.37   1032.78    908.91
 
 Profit before tax and 
 Exceptional Items                2386.69  2569.72   2806.44   1224.76
 
 Exceptional Items                 606.08       -    3924.99        -
 
 Tax Expense                      (854.43) (680.21) (1346.40)  (878.40)
 
 Minority Interest and share 
 of loss in associate                  -        -    (357.82)   (46.41)
 
 Net profit for the year          2138.34  1889.51   5027.21    299.95
 
 Add: Profit Brought forward      2864.21   974.70   (397.06)  (697.01)
 
 Total available for 
 appropriation and being 
 carried forward                  5002.55  2864.21   4630.15   (397.06)
 
 
 
 
 Review of Operations
 
 Your Company posted yet another impressive year of performance. During
 the year under review, the turnover, on a stand alone basis, increased
 by 26%, while the net profit increased by 13% over the previous
 financial year. On a consolidated basis, the sales increased by 22%
 over the previous year. The increase in sales was mainly due to the
 increase in Finished Dosage Form product sales in both ARV segment
 (Anti retro virals) and Non-ARV segments.
 
 During the year under review, your Company filed 8 US Drug Master Files
 (DMFs) and 20 EU DMFs / Certificates of Suitability to European
 Pharmacopoeia (CEPs). With these filings, as on March 31, 2010, the
 cumulative number of DMFs filed by your Company, together with its
 subsidiaries and associates is 119 US DMFs and 116 EU DMFs / CEPs.
 
 During the year, your Company has filed 28 ANDAs with the FDA, 20 with
 European regulatory agencies, 1 with the WHO, 12 with Canada regulatory
 agencies and 10 with Australian regulatory agencies. Aggregate filings
 covering Finished Dosage Forms during the year were 96 in numbers.
 
 Cumulatively, your Company made the filings of 89 ANDAs with the FDA,
 36 regulatory filings with European regulatory agencies, 30 filings
 with the WHO, 14 with Canadian regulatory agencies and 13 with
 Australian regulatory agencies, 12 with New Zealand and 13 with RSA
 aggregating to 207 regulatory submissions. During the year under
 review, your Company secured approvals for 10 ANDAs from the FDA, 10
 from the WHO, 4 from the European regulatory agencies and 5 from
 Australian regulatory agencies (TGA).
 
 During the year, the Company had acquired a new manufacturing facility
 from Vivin Laboratories Private Limited which is situated at Jawaharlal
 Nehru Pharma City, Visakhapatnam to increase its manufacturing
 capacities of Active Pharmaceutical Ingredients (APIs).
 
 On April 14, 2010 your Company entered into a definitive agreement for
 purchase of business undertaking, comprising of research & development
 and manufacturing of APIs from Mylan India Pvt. Ltd., whose registered
 office is at Plot No.1A/2, MIDC Industrial Estate, Taloja, Panvel,
 District Raigad, Maharashtra - 410 208. The transaction was closed
 during the month of June, 2010.
 
 Dividend
 
 Keeping in view the ongoing expansion cum modernisation and other
 significant capital expenditure programmes on the anvil to augment
 production capacities / modernization of its facilities, your Directors
 have, after due deliberations, decided to plough back profits and
 hence, do not recommend any dividend for the financial year 2009-10.
 
 Divestments
 
 Fine Chemicals Corporation (Pty) Limited
 
 Your Company had entered into agreements in October, 2008 for the
 termination of the joint venture agreements with Aspen Pharmacare
 Holdings Limited (Aspen). The Astrix Laboratories Limited (Astrix)
 and Fine Chemicals Corporation (Pty) Limited (FCC) joint ventures
 were held 50:50 by Aspen and your Company along with their respective
 subsidiaries. Under the terms of the termination agreements, 50% of the
 Companys stake in FCC was bought by Aspen.
 
 50% Aspens stake in Astrix was assigned by Matrix to its parent
 company (49%) and to a fellow subsidiary (1%).
 
 The transaction was closed with effect from May 31, 2009.  With effect
 from June 1, 2009, the composition of Board of Directors of Astrix is
 under the control of your Company.  The financials of Astrix are
 consolidated line by line with effect from June 1, 2009 in the
 consolidated results of your Company.
 
 Concord Biotech Limited
 
 On December 4, 2009, your Company sold its 52.38% equity stake
 comprising of 13,27,070 Equity Shares of Rs.10/- each in Concord
 Biotech Limited (Concord) to the Promoters of Concord. Concord has
 thus, ceased to be a subsidiary of the Company with effect from the
 said date. The Company recorded a gain of Rs. 342 million on
 consolidated basis and Rs. 606 million on stand alone basis on the sale
 of the said equity shares.
 
 Restructuring of subsidiaries of your Company
 
 Your Company held 100% equity interest in Matrix Laboratories BVBA,
 Belgium (formerly known as Matrix Laboratories NV) through its wholly
 owned subsidiary Matrix Laboratories B V, Netherlands. Matrix
 Laboratories BVBA held 100% equity interest in Docpharma and its group
 companies (Docpharma Group). The shareholding of your Company in
 Matrix Laboratories BVBA came down to 39.99% as of December 29, 2009 on
 account of the conversion of debt, held by ultimate Holding Company and
 its Subsidiaries in Matrix Laboratories BVBA to equity. Consequently,
 your Companys interest in Docpharma Group also came down to 39.99%.
 
 The Company deconsolidated Matrix Laboratories BVBA (the operations of
 the Docpharma Group) as of January 1, 2010 and recorded a gain of Rs
 4014 million on deconsolidation.  The gain is principally on account of
 the conversion of the debt held by the Mylan Group. The carrying cost
 of the investment in Matrix Laboratories BVBA is nil as a provision for
 diminution in value of the investment was made during the year ended
 March 31, 2008.
 
 Your Company has obtained the approval of the shareholders as well as
 the approval of Reserve Bank of India (RBI) for sale and transfer of
 Matrix Laboratories BV together with its direct and indirect
 subsidiaries comprising of Matrix Laboratories BVBA and Docpharma and
 its subsidiaries to Mylan Luxembourg 2 Sarl, a wholly owned subsidiary
 of Mylan Inc., the ultimate parent company of your Company. The
 transfer would be effected at a fair value arrived at by an independent
 valuer.
 
 Delisting of equity shares from Stock Exchanges
 
 The equity shares of your Company were delisted from the Bombay Stock
 Exchange (BSE) and The National Stock Exchange of India Limited (NSE)
 (collectively Stock Exchanges) with effect from August 21, 2009, in
 terms of the Securities and Exchange Board of India (Delisting of
 Securities) Guidelines, 2003.
 
 Changes in Capital Structure
 
 Issue of shares on exercise of Employee Stock Options
 
 During the year under review, the Company has allotted 1,725,170 equity
 shares of Rs.2/- each pursuant to exercise of stock options. Consequent
 to the above, the paid-up share
 
 capital of the company as at March 31, 2010 increased to Rs. 309.22
 millions.
 
 Notes on Subsidiaries
 
 Your Company has 10 subsidiaries (including step down subsidiaries) as
 on March 31, 2010.
 
 Pursuant to section 212(8) of the Companies Act, 1956, the Central
 Government vide its letter no. 47/249/2010-CL-III dated July 6, 2010
 granted exemption from attaching to the Balance Sheet of the Company,
 the Accounts and other documents of each of its subsidiaries. However,
 the Consolidated Financial Statements of the Company, which include the
 results of the said subsidiaries, form part of this Annual Report. A
 statement containing certain particulars of the subsidiaries, as
 stipulated by the Government of India, Ministry of Corporate Affairs
 while granting such exemption, are attached to the Annual Report.
 Copies of the annual accounts of the Companys subsidiaries can be
 sought by any investor of the Company on making a written request to
 the Company at the Registered Office of the Company in this regard. The
 Annual Accounts of the subsidiary companies are also available for
 inspection to any investor at the Companys registered office.
 
 Consolidated Financial Statements
 
 In accordance with the Accounting Standard AS-21 on Consolidated
 Financial Statements, the audited Consolidated Financial Statements are
 attached to this Annual Report.
 
 Fixed Deposits
 
 Your Company has not accepted / renewed any fixed deposits under
 Section 58A of the Companies Act, 1956 during the year 2009-2010.
 
 Directors
 
 Appointment of Dr. B. Hari Babu and Mr. Sanjeev Sethi as Additional
 Directors
 
 Dr. B. Hari Babu and Mr. Sanjeev Sethi were appointed as additional
 directors of the Company effective October 7, 2009 and will hold office
 of directorship till the ensuing Annual General Meeting of the Company.
 Due notice(s) under Section 257 of the Companies Act, 1956 have been
 received from members proposing their appointment as directors of the
 Company. It is proposed to appoint them as Directors of the Company
 liable to retire by rotation.
 
 Dr. Hari Babu was also appointed as Chief Operating Officer and
 Executive Director of the Company effective October 7, 2009.
 
 Cessation of Directors
 
 During the year under review, M/s. Robert J. Coury, N. Prasad, C.
 Ramakrishna, K. R. V. Subrahmanian, Prof P. V. Indiresan and Dr. Fred
 E. Cohen ceased to be Directors of the Company.
 
 Your Board places on record its appreciation of the valuable services
 rendered by the above-mentioned Directors, during their tenure.
 
 Re-appointment of Directors by rotation
 
 In accordance with the provisions of the Companies Act, 1956, M/s.
 Rajiv Malik and S. Srinivasan retire by rotation at the ensuing Annual
 General Meeting of your Company and, being
 
 eligible, offer themselves for re-appointment.
 
 Your Board of Directors recommend the appointment of M/s. Rajiv Malik
 and Srinivasan, as Directors of the Company.
 
 Auditors
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, Statutory
 Auditors of the Company, hold office until the conclusion of ensuing
 Annual General Meeting and are eligible for re-appointment. The Company
 has received a certificate from M/s. Deloitte Haskins & Sells,
 Chartered Accountants, under Section 224 (1) of the Companies Act,
 1956, confirming their eligibility and willingness to accept the office
 of the Statutory Auditors for the financial year 2010-2011, if
 re-appointed. Your Board recommends the appointment of M/s. Deloitte
 Haskins & Sells, as Statutory Auditors of the Company for the financial
 year 2010-2011.
 
 Cost Audit
 
 Pursuant to Section 233B of the Companies Act, 1956, the Central
 Government has prescribed Cost Audit of the Companys Bulk Drugs Units.
 Subject to the approval of the Central Government, the Board has
 appointed M/s. Sagar & Associates as Cost Auditors of the Company for
 the financial year 2010-2011. The Cost Auditors Report shall be
 submitted to the Central Government as required under the provisions of
 the Companies Act, 1956.
 
 Directors Responsibility Statement
 
 As required under Section 217 (2AA) of the Companies Act, 1956, your
 directors confirm having:
 
 i) Followed the applicable accounting standards with proper explanation
 relating to material departures in the preparation of the Annual
 Accounts;
 
 ii) 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 your Company at
 the end of the financial year 2009-2010 and of the profit of your
 Company for that period;
 
 iii) 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 your Company and for
 preventing and detecting fraud and other irregularities; and
 
 iv) Prepared the Annual Accounts on a going-concern basis.
 
 Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988
 
 Information in accordance with the provisions of Section 217(1)(e) of
 the Companies Act, 1956, read with Companies (Disclosure of Particulars
 in the Report of Board of Directors) Rules, 1988 relating to the
 conservation of energy, technology absorption and foreign exchange
 earnings and outgo is given in the annexure II forming part of this
 report.
 
 Particulars of employees
 
 The details of the employees drawing remuneration exceeding the limits
 prescribed under the provisions of Section 217 (2A) of the Companies
 Act, 1956 is given in the annexure III forming part of this Report.
 
 Employee Stock Option Scheme
 
 During the year with the approval of the Members, Employee Stock
 Option Plans (ESOP Plans) were amended to provide for immediate
 vesting of all outstanding stock options, revised reset prices in case
 the employees acquire the shares within a period of 6 months from the
 date of delisting. Further, the employees right to purchase the shares
 from the Company have been substituted with the right to purchase
 equity shares from Matrix ESOP Trust.
 
 There were no fresh stock options granted by the Company to any
 employees / Directors under the ESOP Plans during the year. However,
 during the year under review, 1,725,170 stock options were exercised
 and equivalent number of equity shares were issued and allotted under
 the ESOP Scheme. As on date there are no outstanding stock options
 which are exercisable.
 
 The details of the options granted up to March 31, 2010, pursuant to
 clause 12 of Securities and Exchange Board of India (Employee Stock
 Options Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are
 set out in the annexure - I to this Report.
 
 Transfer of Unpaid / Unclaimed dividend to Investor Education
 Protection Fund
 
 Pursuant to the provisions of Section 205A (5) of the Companies Act,
 1956, the dividend declared for the financial years 2001-02 and
 2002-03, which remained unclaimed for a period of seven years has been
 transferred by the Company to the Investor Education and Protection
 Fund established by the Central Government.
 
 Acknowledgements
 
 Your Directors wish to express their grateful appreciation for the
 co-operation and support received from the Government of India,
 Governments of Andhra Pradesh and Maharashtra, Banks viz., Export
 Import Bank of India, State Bank of India, Andhra Bank, The Bank of
 Nova Scotia, HDFC Bank, ABN Amro Bank, HSBC Bank, Deutsche Bank, Yes
 Bank and IndusInd Bank. Your Directors also thank the vendors,
 customers, consultants, auditors and others who have been assisting
 your Company in the various facets of its operations.  Your Directors
 also wish to place on record their sincere appreciation to its parent
 company Mylan Inc., for its support in implementing the organizational
 goals.
 
 The Directors also wish to place on record their sincere appreciation
 of the employees at all levels for their dedicated contribution towards
 the growth of your Company.
 
 
 
                     For and on behalf of the Board of Directors
 
 Place: Secunderabad                               S. Srinivasan
 
 Date: July 30, 2010.                  Chief Executive Officer &
 
                                               Managing Director
 
                                                Dr. B. Hari Babu
 
                                       Chief Operating Officer &
 
                                              Executive Director