Dear Shareowners,
 
 Backed by strong credentials and expanding footprints, the Company has
 reported excellent business and operational performance during the
 fiscal 2010-11.
 
 The Directors have pleasure in presenting here the 27th Annual Report
 on the Company''s business and operations along with the audited
 standalone and consolidated financial accounts and the auditors'' report
 thereon for the financial year ended March 31, 2011. The financial
 highlights for the year under review are given below:
 
 Financial Results
 
                                                (Rs.in million)
 
 Particulars                                  For the       For the
 
                                           year ended    year ended 
 
                                          March 31,11   March 31,10
 
 Net Turnover                                11,304.6       8,843.7
 
 Other Income                                   350.5         934.8
 
 Total Income                                11,655.1       9,778.5
 
 Profit Before Interest,                      2,648.7       1,582.5 
 
 Depreciation &Tax (EBITDA)
 
 Financial Expenses                             521.1         423.5
 
 Depreciation                                   731.1         664.5
 
 Profit before Tax (PBT)                      1,554.9       1,181.0
 
 Provision for Taxation                        (204.4)       (380.6)
 
 Profit after Tax (PAT)                       1,350.5         800.4
 
 Dividend proposed on Equity                     45.9          16.7 
 
 Shares
 
 Dividend Distribution Tax                        7.5           2.8
 
 Transfer to General Reserve                    135.0          80.0
 
 Balance in Profit & Loss Account             4,019.5       2,856.1
 
 Basic EPS (Rs.)*                                21.4          12.0
 
 Cash EPS (Rs.)*                                 30.4          19.3
 
 Book Value per Share (Rs.)*                    103.9         104.2
 
 Dividend per Equity Shares (%)                   75%           25%
 
 * Face value Re. 1/- per share
 
 Operating Results and Profits
 
 The exemplary performance of the Company is manifest in the numbers
 posted for the year under review. During the year ended March 31,2011,
 the Company registered a record net turnover of Rs.11,304.6 million as
 against Rs.8,843.7 million during the corresponding previous financial
 year, a spectacular growth of 27.8%.The Company registered EBITDA of
 Rs.2,648.7 million as compared to Rs.1,582.5 million during the
 corresponding previous financial year,a growth of 67.4%.
 Likewise,thePBTand PATfortheyear under review have grown by 31.7% and
 68.7% respectively and stood at Rs.1,554.9 million and Rs.1,350.5
 million respectively, as compared to the PBT and PAT at Rs.1,181.0
 million and Rs.800.4 million respectively in the previous fiscal.
 
 This growth was recorded across our both business segments.  The
 Vaccines Segment grew by 29.3% and registered a net turnover of
 Rs.8,332.3 million as against Rs.6,443.9 million during previous
 financial year. The Formulations Segment registered a growth of 23.9%
 with a net turnover of Rs.2,972.3 million as compared to Rs.2,398.8
 million during the previous financial year.
 
 Your Company strives to remain globally and regionally attractive to
 customers and investors by continuing to focus on sustained growth,
 cost optimization and efficient management of working capital.These
 strategic initiatives are continually fueling the Company''s growth
 across its business operations.
 
 A detailed discussion on operations for the year ended March 31,2011 is
 given in the Management Discussion and Analysis section.
 
 Dividend
 
 The Directors are pleased to recommend a dividend of 75% which
 translates to Re.0.75 per equity share of the Company for the financial
 year 2010-11 as against 25% dividend during last year.
 
 The dividend on Equity Shares is placed before you for approval at the
 ensuing Annual General Meeting and, if approved, will absorb an amount
 of Rs.45.9 million (excluding dividend distribution tax).
 
 The proposed Final Dividend will be paid to the members:
 
 i) whose names appear on the Register of Members of the Company as on
 24th September, 2011; and
 
 ii) whose names appear as beneficial owners as at the close of business
 on 20th September, 2011 as per details to be furnished by the National
 Securities Depository Limited and Central Depository Services (India)
 Limited.
 
 Transfer of Amounts to Investor Education and Protection Fund
 
 Pursuant to the provisions of Section 205A(5) of the Companies Act,
 1956 (the Act), dividend for the year 2002-03, which remained unpaid
 or unclaimed for a period of 7 years, amounting to Rs.0.16 million has
 been transferred by the Company to the Central Government''s Investors
 Education and Protection Fund.
 
 Transfer to Reserves
 
 An amount of Rs.135.0 million is proposed to be transferred to the
 general reserves of the Company out of the profits of the Company for
 the year.
 
 Buyback of Shares
 
 During the year under review, the Company commenced its Buy-back offer
 on 21 st July,2010 for purchase of not more than 5,592,000 Equity
 Shares at a maximum price of Rs.229 per share from its existing
 shareholders from the open market through Stock Exchanges. The Company
 bought back the entire 5,592,000 Equity Shares at an average price of
 Rs.196.39 per share by utilising an amount of Rs.1,098.2 million under
 such Buy-back offer.The said Buy-back offer closed on 15th October,
 2010.
 
 Share Capital
 
 The Issued, Subscribed and Paid-up Equity Share Capital of the Company
 after extinguishment of shares bought back under the above referred
 Buy-back offer has been reduced to Rs.61.3 million divided into
 61,250,746 Equity Shares of Re.1 each on 31.03.2011 as against Rs.66.8
 million divided into 66,842,746 Equity Shares of Re.1 each on
 31.03.2010.
 
 Foreign Currency Convertible Bonds (FCCBs)
 
 During the year under review, outstanding Zero Coupon Convertible Bonds
 (Tranche 2) with Nominal Value of USD 36.8 million which were due for
 redemption on Maturity Date i.e., 14th February, 2011, have been
 redeemed in full at the redemption price as perthe terms and conditions
 of the Bonds.  Consequently,Tranche 2 Bonds have been extinguished and
 no bonds remain outstanding.
 
 Credit Rating
 
 During the year under review, CARE has revised the ratings assigned to
 the Company with respect to the various bank facilities availed by the
 Company and assigned ''CARE A-''(Single A Minus) to Long-term Bank
 Facilities,''PR2 ''(PR Two Plus) to the Long-term/Short-term Bank
 Facilities and''PR1''(PR one) to the CP/Shortterm NCD (within working
 capital limits from the Banks).
 
 Implementation of IFRS/IND-AS
 
 As a part of the exercise for preparing for implementation of
 IFRS/IND-AS earlier scheduled to be implemented by the Ministry of
 Corporate Affairs (MCA), Government of India w.e.f. 1st April, 2011 for
 convergence of Indian Accounting Standards with International Financial
 Reporting Standards (IFRS), the Company has carried out fair valuation
 of its Fixed Assets as on 01.04.2010. Your Directors are pleased to
 inform that the fair value of the Company''s fixed assets has been
 arrived at Rs.8,330.2 million as against the written down value (WDV)
 of Rs.5,034.1 million as on that date. However, as a prudent accounting
 policy, the revaluation of fixed assets in its books of accounts has
 not been considered. Moreover, as the implementation of IFRS/IND-AS has
 now been postponed by MCA and is now proposed to be effective w.e.f.
 1st April, 2012, the fair valuation of fixed assets will be carried out
 at appropriate time in future in order to take effect of fair valuation
 thereof into the books of accounts.
 
 Report on Corporate Governance
 
 An organization''s Corporate Governance philosophy is directly linked to
 its excellence in performance. Keeping this important dictum in view,
 your Company has always placed major thrust on managing its affairs
 with diligence, transparency, responsibility and accountability.
 
 The Company is committed to adopting and adhering to the best corporate
 governance practices recognized globally.  The Company understands and
 respects its fiduciary role and responsibility towards stakeholders and
 the society at large and strives hard to serve their interests,
 resulting in creation of value and wealth for all stakeholders at all
 times.
 
 The compliance report on Corporate Governance and a certificate
 regarding compliance of the conditions of Corporate Governance, as
 stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges,is attached herewith and forms part of this Annual Report.
 
 Certificate from Managing Director and Chief Financial Officer,
 inter-alia,confirming the correctness of the financial statements,
 compliance with Company''s Code of Conduct,adequacy of the Internal
 Control measures and reporting of matters to the Audit Committee in
 terms of Clause 49 of the Listing Agreement with the Stock Exchanges,
 is also enclosed as a part of the Annual Report.
 
 Management Discussion & Analysis Report
 
 As required by Clause 49 of the Listing Agreement with the Stock
 Exchanges, a detailed Management Discussion and Analysis Report forms a
 part of the Annual Report.
 
 Subsidiaries
 
 Driven by prudent operational stratagem and aimed at facilitating ease
 of functioning, the Company has put in place a network of Subsidiaries.
 
 The Company has 4 wholly owned subsidiaries (WOS), viz.  Best On Health
 Ltd., Panacea Biotec FZE, Panacea Biotec GmbH and Rees Investments Ltd.
 NewRise Healthcare Private Limited (formerly known as Umkal Medical
 Institute Pvt. Ltd.) is also a subsidiary in terms of Section
 4(1)(b)(ii) of the Act.The Company has 11 other subsidiaries in terms
 of Section 4(1)(c) of the Act,as under:
 
 Radicura & Co. Ltd., Panacea Hospitality Services Pvt.  Ltd., Sunanda
 Steel Company Ltd., Panacea Educational Institute Pvt. Ltd., Best on
 Health Foods Limited (w.e.f. 6th December,2010)and Nirmala Organic
 Farms & Resorts Pvt.  Ltd. (formerly known as Sugandh Agri. Development
 Pvt.  Ltd.) (w.e.f. 22nd February, 2011),all being WOS of Best On
 Health Ltd.;
 
 Kelisia Holdings Ltd., Cyprus, the WOS of Rees Investments Ltd.; and
 Kelisia Investment Holding AG,Switzerland,Panacea Biotec
 (International) SA, Switzerland, Panacea Biotec (Europe) AG,
 Switzerland and Panacea Biotec Germany GmbH, all being the step-down
 subsidiaries of Rees Investments Ltd.
 
 During the current financial year, the Company''s WOS Panacea Biotec
 Inc. has been wound up.
 
 As per the provisions of Section 212 of the Act,your Company is
 required to attach the Directors''Report, Balance Sheet, Profit and Loss
 Account and other information of the subsidiary companies to its
 Balance Sheet. However, Ministry of Corporate Affairs, Government of
 India has, vide its General Circular No.  2 and 3 dated 8th February,
 2011 and 21st February, 2011 respectively, granted a general exemption
 from compliance with section 212(8) of the Act, from attaching the
 Annual Accounts of subsidiaries in the annual published accounts of the
 Company subject to fulfillment of conditions stipulated in the
 circulars.
 
 In compliance of the above said circular, the Annual Accounts will be
 made available upon request by any investor of the Company/ Subsidiary,
 interested in obtaining the same. The annual accounts of the Subsidiary
 companies will also be kept for inspection by any investor at the
 Company''s Corporate Office at B-1 Extn./G-3, Mohan Cooperative
 Industrial Estate, Mathura Road, New Delhi - 110 044, India and at the
 office of the respective Subsidiary companies during business hours of
 the respective company and shall also be available on the Company''s
 website www.panaceabiotec.com. Further, the following information, in
 aggregate, for each Subsidiary is being disclosed at some other place
 herein and forms part of the Annual Report (a) Capital, (b) Reserves &
 Surplus, (c) Total Assets, (d) Total Liabilities, (e) Details of
 investment (except in case of investment in subsidiaries), (f) Turnover
 including other Income, (g) Profit/Loss Before Tax, (h) Provision for
 Tax, (i) Profit AfterTax,and (j) Proposed Dividend.
 
 Further as per the provisions of Section 212 of the Act, a statement of
 the holding Company''s interest in the Subsidiary companies is attached
 herewith and forms part of the Annual Report.
 
 However, pursuant to Accounting Standard AS-21 issued by the Institute
 of Chartered Accountants of India, Consolidated Financial Statements
 presented by the Company include the financial statements of each of
 its Subsidiaries.
 
 Joint Venture
 
 Chiron Panacea Vaccines Pvt. Ltd.
 
 Panacea Biotec''s strong legacy of growth and excellence makes it an
 ideal Joint Venture partner for Indian and global companies.The Company
 has nurtured several important JVs that enable it to strengthen its
 growth fundamentals and to enhance its customer value.
 
 During the year under review, your Company''s Joint Venture Company (JV
 Company), Chiron Panacea Vaccines Pvt. Ltd.  (CPV), has grown its
 business in DTwP based Pediatric combination vaccines, Polio and Flu
 franchisee by 24% over last year in spite of intense competitive price
 pressure within the pediatric vaccine market and has a significant
 market share in the DTwP-Hib combination vaccines, IPV vaccines and
 Trivalent Flu vaccines.
 
 CPV has retained its customers by offering value added services by
 introducing novel concept of pre-booking for flu vaccines and flu
 protection clinic and arranging for international speakers, thereby
 creating awareness and benefit of a flu vaccination.
 
 CPV has also lead a partnering program with the Pediatricians on the
 World Polio Day through various activities conducted across the Country
 like CME''s, creating awareness on synergestic role of IPV OPV in polio
 eradication, vaccination camp, with a drive to protect maximum children
 against Polio.lt has also carried out a Trust campaign to re-emphasise
 the role of Easyrange vaccines in the Hib segment over past five years.
 
 CPVcontinuestohavea strong portfolio of innovative pediatric vaccines
 and enjoy its significant position at market place.  CPV achieved a
 turnover of Rs.555.4 million and net profit of Rs.21.2 million during
 the year under review and commands a significant market share in the
 pediatric combination vaccines segment in India.
 
 Associates
 
 Your Company''s associate Company, PanEra Biotec Pvt. Ltd.  is
 continuing to meet requirement of bulk vaccines and antigens for the
 manufacture of Hepatitis B and Combination Vaccines by your Company.
 During the year under review, it has achieved a net turnover and profit
 after tax of Rs.721.7 million and Rs.236.1 million recording a
 spectacular growth of 18.4% & 31.6% respectively.The Company''s another
 Associate Company, Lakshmi & Manager Holdings Ltd. is mainly engaged in
 the business of making investments.
 
 Consolidated Financial Statements
 
 As required under clause 41 of the Listing Agreement with the stock
 exchanges, a consolidated financial statement of the Company and its
 subsidiaries, joint ventures and associates, as prepared in accordance
 with the Accounting Standard AS-21 on ''Consolidated Financial
 Statements'' read with Accounting Standard AS-27 on ''Financial Reporting
 of Interest in Joint Ventures'' and Accounting Standard AS-23 on
 ''Accounting for Investments in Associates'', as issued by the Institute
 of Chartered Accountants of India, is attached herewith and the same,
 together with Auditors''Report thereon, forms part of the Annual Report
 of the Company.
 
 Listing of Equity Shares / Bonds
 
 The Equity Shares of the Company continue to be listed on NSE and
 BSE.The Foreign Currency Convertible Bonds (FCCBs) were listed at
 Singapore Stock Exchange (SGX) till their Maturity Date i.e., 14th
 February, 2011 only. The requisite annual listing fees have been paid
 to these Exchanges.
 
 Public Deposits
 
 During the year under review, your Company has not invited or accepted
 any deposits from the public pursuant to the provisions
 ofSection58Aofthe Act and no amount of principal or interest was
 outstanding in respect of deposits from the public as on the date of
 Balance Sheet. However,during the year under review, the Company has
 continued to accept deposits from the Company''s Directors, their
 relatives, associates and the Company''s employees without inviting
 deposits from them.
 
 Insurance
 
 Risk mitigation continues to be a key area of concern for the Company,
 which has regularly invested in insuring itself against unforeseen
 risks. The Company''s Stocks and insurable assets like Building, Plant &
 Machinery, Computer Equipments, Office Equipments, Furniture &
 Fixtures, Lease Hold Improvements and upcoming projects have been
 adequately insured against major risks.The Company has also taken
 appropriate product liability insurance policies for conducting
 clinical trials and for insuring its products (manufactured & sold)
 with an extension of unnamed vendor liability and add on cover of
 Public liability inclusive of pollution liability to cover the risk on
 account of claims, if any, filed against the Company.
 
 Internal Control System
 
 The Company has devised a strong Internal Control System through its
 extensive experience that ensures control over various functions in its
 business.
 
 The Company has a well placed, proper and adequate Internal Control
 System, which ensures that all assets are protected against loss from
 unauthorized use and all transactions are recorded and reported
 correctly.The Company''s internal control system comprises internal
 audit carried out by independent firms of Chartered Accountants and
 periodical review by management. The Audit Committee of the Board
 addresses significant issues raised by both, the Internal Auditors and
 the Statutory Auditors.
 
 Directors
 
 During the year under review, Mr. Gurmeet Singh ceased to be the
 director of the company, w.e.f. 25th September, 2010. The Board places
 on its record its appreciation for valuable services rendered by him as
 a Director during his tenure of more than 14 years.
 
 Mr. Soshil Kumar Jain, Mr. Ravinder Jain, Dr. Rajesh Jain and Mr.
 Sandeep Jain were re-appointed by the Board as Chairman, Managing
 Director, Joint Managing Director and Joint Managing Director
 respectively for a period of five years from 01.04.2011, subject to the
 approval of Shareholders in the forthcoming general meeting.
 
 In accordance with the provisions of the Act and Articles of
 Association of the Company, Dr. A.N. Saksena, Mr. Sumit Jain, Director
 Operations & Projects and Mr. R.L. Narasimhan, Directors of the
 Company, are liable to retire by rotation and being eligible, offer
 themselves for re-appointment.
 
 The brief resumes of the Directors who are to be re-appointed, the
 nature of their expertise in specific functional areas, names of
 companies in which they have held directorships,committee
 memberships/chairmanships, their shareholding, etc. are furnished in
 the explanatory statement to the notice of the ensuing Annual General
 Meeting.
 
 The Board recommends their re-appointment at the ensuing Annual General
 Meeting.
 
 Auditors
 
 M/s. S.R. Batliboi & Co., Chartered Accountants, Statutory Auditors of
 your Company, will retire at the conclusion of the ensuing Annual
 General Meeting and being eligible, offer themselves for reappointment
 as statutory auditors for the financial year 2011-12.The Company has
 received a letter from them to the effect that their re-appointment, if
 made, would be within the limits prescribed under section 224(1 B) of
 the Act,and that they are not disqualified for such re-appointment
 within the meaning of Section 226 of the Act.
 
 Based on the recommendation of the Audit Committee, the Board of
 Directors of the Company proposes the re- appointment of M/s. S.R.
 Batliboi & Co., Chartered Accountants, as the Statutory Auditors of the
 Company.
 
 Auditors''Report
 
 With regard to the matters of emphasis and observations contained in
 the Auditors'' Report, the Management''s explanations are given below:
 
 Capitalization of expenditure on clinical trials amounting toRs.67.2
 million for the year ended March 31,2011 for the purpose of
 registration of Company''s products in US and/ or Europe.The expenditure
 is not towards basic research and therefore no new chemical entity
 comes into being.  Basic Research is conducted by the Company in its
 own R&D Centres but such developmental work is performed through
 external agencies (CROs). Safety profile of the basic molecule is well
 established in several countries in Europe and in India and the
 products are being marketed successfully in several countries. There is
 no experience to suggest that the studies conducted by CROs on behalf
 of the Company would lead to or make it difficult for the Company to
 obtain regulatory approvals in US and/or Europe. The management
 believes that these products would be commercially viable and there is
 no reason to believe that there is any uncertainty that may lead to not
 securing registration for the products from regulatory authorities in
 US and/or Europe.
 
 Payment of managerial remuneration of approx. Rs.38.2 million during
 financial year 2008-09,in excess of the limits prescribed under Section
 198 and 309 read with Part II of Schedule XIII to the Act, without
 obtaining approval of Central Government:The Company had adequate
 profits for past many years and thus was paying remuneration to its
 managerial personnel within overall limits as specified
 undertheAct.However,in view of the losses incurred during the financial
 year 2008-09, the managerial remuneration paid during that year
 exceeded the limits prescribed under the Act. The Company has sought
 approval of the Central Government for such remuneration. While the
 approvals in respect of remuneration to Dr. Rajesh Jain and
 Mr.SandeepJainJointManaging Directors of the Company, were received in
 full during financial year 2009-10, the requisite approvals permitting
 waiver of recovery of excess remuneration paid to Mr.Soshil
 KumarJain,Chairman and Mr. Ravinder Jain, Managing Director have been
 received vide letters dated 20th May, 2011.
 
 Slight delay in deposition of Income Tax in few cases: Only three
 instances occurred during the financial year in which there was slight
 delay in deposition of Income Tax.  Further, the amount involved was
 not significant and the said delays were due to normal operational
 difficulties.The total amount of such Income Tax was Rs.34,689/- only
 and the Company has already deposited the said amount.
 
 Cost Auditors
 
 Pursuant to the provisions of Section 233B of the Act, M/s J.P.  Gupta
 & Associates, Cost Accountants, have been appointed as the Cost
 Auditors to conduct the audit of the Company''s Cost Records in respect
 of formulations for the year ended 31 st March, 2011, with the approval
 of the Central Government.The cost audit is under process and the
 Company will submit the Cost Auditors'' Report to the Central Government
 in time.They have also been appointed by the Board as the Cost Auditors
 for the financial year 2011-12.
 
 Disclosures Under Section 217 of the Act
 
 Except as disclosed elsewhere in the report, there have been no
 material changes and commitments which can affect the financial
 position of the Company between the end of the financial year and the
 date of report.
 
 As required under Section 217(2) of the Act, the Board of Directors
 inform the members that during the financial year, there have been no
 material changes, except as disclosed elsewhere in this report:
 
 in the nature of Company''s business,
 
 in the Company''s subsidiaries or in the nature of business carried out
 by them,
 
 in the classes of business in which the Company has an
 interest.
 
 Energy Conservation, Technology Absorption & Foreign Exchange
 
 Particulars required under Section 217(1)(e) of the Act, read with the
 Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988, regarding conservation of energy, technology
 absorption and foreign exchange earnings &outgo,are given in Annexure
 A, forming part of this Report.
 
 Particulars of Employees
 
 Particulars of employees as required under Section 217(2A) of the Act,
 read with the Companies (Particulars of Employees) Rules, 1975 as
 amended,are given in Annexure B,forming part of this Report.
 
 Directors'' Responsibility Statement
 
 The Directors hereby confirm:
 
 i) that in the preparation of the annual accounts, the applicable
 accounting standards have been followed, along with proper explanation
 relating to material departures;
 
 ii) that the directors have selected such accounting policies and
 applied them consistently and made judgments and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit or loss of the Company for that period;
 
 iii) that the directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities; and
 
 iv) that the directors have prepared the annual accounts on a going
 concern basis.
 
 Acknowledgements
 
 Your Directors acknowledge with gratitude the co-operation and
 assistance received from the UN Agencies, Central Government, State
 Governments and all other Government agencies and encouragement they
 have extended to the Company.
 
 Your Directors also thank the shareholders, Financial
 lnstitutions,Banks/other lenders,Customers,Vendors and other business
 associates for their confidence in the Company and its management and
 look forward for their continuous support.
 
 The Board wishes to place on record its appreciation for the dedication
 and commitment of your Company''s employees at all levels which has
 continued to be our major strength.
 
                                        Forand on behalf of the Board
 
 New Delhi                                          Soshil Kumar Jain
 
 27th July, 2011                                             Chairman