The Directors take pleasure in presenting the Forty Second Annual
 Report together with Audited Statements of Accounts for the year ended
 31st March 2011.
 
 Financial Results
 
                                                 (Rupees in million) 
 
                                         2010-11           2009-10 
 
 Gross Turnover                            24883             20240
 
 Turnover, Net of Excise                   23538             19322
 
 Profit Before Tax                          3975              3289
 
 Current Years Tax                          942               423
 
 Profit After Current Years Tax            3033              2866
 
 Deferred Tax                                (6)              (25)
 
 Profit After Current and Deferred Tax      3039              2891
 
 Add: Prior Year Tax Provision 
 written back                                  -                44
 
 Profit After Tax                           3039              2935
 
 Profit Brought Forward                     1006               779
 
 Profit available for appropriation         4045              3714 
 
 Appropriations
 
 Proposed Dividend on Equity Shares          886               759
 
 Tax on Dividend                             143               126
 
 Transfer to Debenture Redemption Reserve     42               323
 
 Transfer to General Reserve                1900              1500
 
 Total                                      2971              2708
 
 Balance Carried to Balance Sheet           1074              1006
 
                                            4045              3714
 
 Financial Performance
 
 The Operating Profit and Net Profit, for the year at Rs 4945 million
 and Rs 3039 million increased by 20% and 5% respectively. Income Tax
 for the current year at Rs 942 million is higher than Rs 423 million in
 the last year, due to completion of the first five year tax holiday
 period for 3 manufacturing units located in Himachal Pradesh.
 
 Due to the improvement in the economic conditions in India, as
 evidenced by the strong GDP growth, sales growth was higher than last
 few years trend.  The economic revival in the developed markets in the
 world also resulted in growth in exports, particularly in the second
 half of the year.
 
 However, there has been an increase in the input costs, largely in the
 last quarter, due to firming up of commodity prices and that has put
 pressure on margins particularly of Industrial Products.
 
 The stable Indian Rupee and cost control measures taken by the Company
 have helped to maintain the profitability at levels similar to that of
 the previous year.
 
 The exchange rate of Indian Rupee was at Rs 44.40 to a USD in March
 2011 as compared to Rs 44.97 to a USD in March 2010. Accordingly there
 was a nominal credit of Rs 1.99 million to carrying cost of depreciable
 assets and Rs 8.05 million was credited to the Foreign Exchange
 Monetary Item Translation Account.  Out of the said Foreign Currency
 Monetary Item Translation Account, Rs 1.07 Million has been amortised
 in the current year.
 
 After deferred tax of Rs 34 million and prior years tax provision
 written back of Rs 2 million
 
 After deferred tax of Rs 140 million and prior years tax provision
 written back of Rs 4 million
 
 After deferred tax of Rs 18 million and prior years tax provision
 written back of Rs nil.
 
 After deferred tax reversal of Rs 25 million and prior years tax
 provision written back of Rs 44 million.
 
 After deferred tax reversal of Rs 6 million and before exceptional item
 of Rs 250 million.  $ Excludes exceptional item of Rs 250 million
 
 
 Dividend
 
 The Directors recommend a dividend of Rs 1.75 per equity share of Rs 1
 each out of the current years profit, on 506.1 million equity shares
 of Rs 1 each (previous year @ Rs 1.50 per equity share including Rs
 0.50 per equity share as Golden Jubilee Special Dividend), amounting
 to Rs 886 million (previous year Rs 759.2 million). In accordance with
 the terms of issue of Foreign Currency Convertible Bonds (FCCBs),
 shares alloted on conversion of FCCBs will also be entitled to
 Dividend, where request for conversion is received before the book
 closure for payment of dividend for the financial year 2010-11. The
 dividend for the current year will be free of tax in the hands of
 shareholders. The dividend payout amount has grown at a CAGR of 23.68 %
 during the last 5 years.
 
 Term Finance
 
 The Company had borrowed USD 17 million through an ECB Term loan
 amounting to Rs 796.2 million, repayable in 3 annual installments.
 During the year the Company has repaid the 2nd of the 3 annual
 installments amounting to USD 5.67 million equivalent to Rs 241.18
 million.
 
 Capital Expenditure
 
 The overall expenditure during the year was Rs 1235.68 million. Out of
 this approximately Rs 711.72 million was spent on fixed assets for
 various manufacturing units, offices, laboratories and warehouses and
 on information technology. The expenditure on the Synthetic Elastomer
 Project was approximately Rs 458.59 million.
 
 Investment in Subsidiaries
 
 During the year, Investment of Rs 131.73 million was made in overseas
 subsidiaries.
 
 Synthetic Elastomer Project
 
 The Company has started the construction of the Synthetic Elastomer
 Plant. Civil work at site has commenced and Company is targeting
 completion in the first half of the next financial year.
 
 The total amount spent on this project is Rs 3106.61 million.
 
 Manufacturing Plants
 
 Health, Safety and Environment activities continued during the year
 bringing greater focus on safety and environment at all manufacturing
 units.
 
 Continuous improvement plans in the manufacturing units resulted in 400
 plus Kaizens leading to productivity and process improvement.
 
 Manufacturing capacity of insulation tapes, Fevikwik and Fevicol were
 enhanced.
 
 Technology and automation projects initiated and completed on various
 lines like Fevigum, Fevicol, M-seal, insulation tapes, Fevikwik and
 various industrial products.
 
 Foreign Currency Convertible Bonds (FCCB)
 
 Of the USD 40 million raised through issue of zero coupon Foreign
 Currency Convertible Bonds in 2007-2008, bonds aggregating USD 37.2
 million were outstanding as on March 2011. The bond holders are
 entitled to convert their holdings into Equity shares anytime on or
 after 16th January 2008 upto 1st December 2012.
 
 Fixed Deposits
 
 Your Company has not accepted any fixed deposits during the year
 2010-11.
 
 Subsidiaries - Overseas Subsidiaries
 
 During the year, Pidilite Industries Trading (Shanghai) Company Limited
 was incorporated in China as a wholly owned subsidiary of Pidilite
 International Pte. Ltd., Singapore (which is a wholly owned subsidiary
 of the Company).
 
 The business in USA reported a 11.4% growth in sales.  This growth
 together with improvement in operating margins helped the subsidiary to
 post cash profits as compared to cash losses last year.
 
 While the subsidiary in Brazil, reported a 10.5% growth in sales, due
 to increase in input costs, the unit incurred losses from operations.
 
 The operations in Bangladesh continued to gain strength with increased
 market penetration. The unit reported a profit after tax in its first
 full year of operations.  Though the operations in Thailand reported
 higher cash profits than in the previous year, sales growth was lower
 than expected. Post tax losses were at levels similar to last year.
 Performance of the subsidiary in Dubai was impacted by adverse
 conditions in the markets serviced by the subsidiary.
 
 Operations and performance of the subsidiaries in Egypt were disturbed
 due to political developments in the country and neighboring areas.
 
 Due to the reasons mentioned above the overseas operations made a
 nominal cash loss. The net loss before tax was higher than the previous
 year.  Total revenue from overseas subsidiaries for the year stood at
 Rs 3021 million, up by 11.4% over the previous year.  The total
 investment in overseas subsidiaries as on 31st March 2011 stands at Rs
 2578 million
 
 A statement pursuant to Section 212 of the Companies Act, 1956,
 relating to subsidiaries in India and abroad, is attached hereto.
 
 Consolidated Accounts
 
 In accordance with the requirements of Accounting Standards AS 21 (read
 with AS 23) issued by the Institute of Chartered Accountants of India,
 the Consolidated Accounts of the Company and its subsidiaries are
 annexed to this Annual Report. Additionally, a statement giving
 prescribed particulars of information, in aggregate for each
 subsidiary, is attached.
 
 In terms of the General Circular No. 2/2011 dated 08.02.2011, issued by
 the Government of India, Ministry of Corporate Affairs, the Annual
 Reports of the Subsidiary Companies are not annexed to this Report.
 Members desiring to have a copy of audited Annual Accounts and the
 related detailed information of the above subsidiaries may write to the
 Company Secretary at the Registered Office of the Company and they will
 be provided with the same upon such a request. Annual Accounts of these
 subsidiary Companies will also be kept for inspection of the Members at
 the Registered Office of the Company as well as at the Registered
 Office of the subsidiary companies.
 
 Directors
 
 In accordance with the Articles of Association of the Company, Shri B K
 Parekh, Shri S K Parekh, Shri A N Parekh and Shri Bharat Puri,
 Directors of the Company, retire by rotation and being eligible, offer
 themselves for re-appointment.
 
 Directors Responsibility Statement
 
 Your Directors confirm that:
 
 In the preparation of the Annual Accounts, the applicable accounting
 standards have been followed;
 
 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 ended 31st March 2011 and
 of the profit of the Company for the year ended on that date;
 
 The Directors have 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
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 The Directors have prepared the Annual Accounts on a going concern
 basis.
 
 Corporate Governance
 
 Reports on Corporate Governance and Management Discussion and Analysis,
 in accordance with Clause 49 of the Listing Agreements with Stock
 Exchanges, along with a certificate from M/s. M M Sheth & Co,
 Practising Company Secretaries, are given separately in this Annual
 Report.
 
 Auditors
 
 Members are requested to re-appoint M/s. Haribhakti & Co, Chartered
 Accountants, as Auditors of the Company and also for its branches/C & F
 depots/depots, for the current financial year and to fix their
 remuneration.
 
 Cost Auditor
 
 The Company has received the approval of the Central Government for the
 appointment of M/s. V J Talati & Co.  as Cost Auditor to conduct cost
 audit for the financial year 2011-12.
 
 
 
 Conservation of Energy, Technology Absorption, etc.
 
 The particulars under Section 217(1) (e) of the Companies Act, 1956,
 read with the Companies (Disclosure of Particulars in the Report of the
 Board of Directors) Rules, 1988, are attached to this Report as
 Annexure I .
 
 Industry Structure and Development
 
 There is no material change in the industry structure as was reported
 last year
 
 The Company operates under two major business segments i.e. Branded
 Consumer & Bazaar Products and Speciality Industrial Chemicals.
 
 Products such as Adhesives, Sealants, Art Materials, Construction and
 Paint Chemicals are covered under branded Consumer & Bazaar Products
 segment. These products are widely used by carpenters, painters,
 plumbers, mechanics, households, students, offices, etc.
 
 Speciality Industrial Chemicals segment covers products such as
 Industrial Adhesives, Synthetic Resins, Organic Pigments, Pigment
 Preparations, Surfactants, etc. and caters to various industries like
 packaging, textiles, paints, printing inks, paper, leather, etc.
 
 In both the above business segments, there are a few medium to large
 companies with national presence, and a large number of small size
 companies that are active regionally. There is growing presence of
 multinationals in many of the segments in which the Company operates.
 The share of imports is less than 10 % of domestic volumes in most of
 the product segments.
 
 The Other segment largely covers manufacture and sale of VAM. As
 mentioned earlier, due to global demand supply situation it was viable
 to import VAM rather than manufacture in-house and accordingly the
 plant remained shut last year. Going forward, in the near future,
 import of VAM is likely to remain more viable. The Company is exploring
 alternate products which can be manufactured in the same plant.
 
 Current Year Outlook
 
 During the current year, due to the inflationary pressures, the Reserve
 Bank of India has been steadily increasing interest rates. This is
 expected to adversely impact overall economic growth and therefore
 could impact the demand for the Companys products, thereby impacting
 the sales growth.
 
 Due to the steep increase in commodity prices, input costs have gone up
 sharply. Though the Company does pass on these increases by way of
 price increases, this could impact margins as there is a lag between
 the cost increase and the price increase.
 
 The Companys major subsidiaries are in USA, Brazil, UAE, Thailand,
 Egypt and Bangladesh. While all the units are expected to show improved
 performance, the business in Brazil is vulnerable to high inflation and
 slow down in growth rate. The operations in Egypt and U.A.E. could be
 impacted by the local political situation.
 
 Outlook on Opportunities, Threats, Risks and Concerns
 
 Stable economic growth in India will provide an opportunity to the
 Company to grow its business and introduce differentiated products for
 meeting customer expectations.  The improving global economy will
 facilitate growth of export oriented products.
 
 Increasing interest rates could slow down economic demand thereby
 impacting Companys sales in the current year. In addition input costs
 increases are likely to put pressure on margins in the short term.
 
 Though the Company has strengthened its management structure in the
 overseas subsidiaries, due to the political uncertainties in some
 countries and the small size of the overseas operations, the
 performance in these units could be impacted by local events.
 
 Internal Control Systems and their adequacy
 
 The Company has adequate internal control procedures commensurate with
 its size and nature of business.
 
 The Company has appointed Internal Auditors who audit the adequacy and
 effectiveness of internal controls laid down by the management and
 suggest improvements.
 
 For overseas subsidiaries, this is being done by their Statutory
 Auditors.
 
 The Audit Committee of the Board of Directors periodically reviews the
 audit plans, internal audit reports, and adequacy of internal controls
 and risks management.
 
 Human Resources
 
 The Company continues to place significant importance on its Human
 Resources and enjoys cordial relations at all levels.
 
 A New Performance & Potential Management System, branded as PILglobin
 has been launched. This process is likely to provide a steady stream of
 talent across the Company with clear career plans to occupy key jobs.
 
 Further to improve the operational efficiency, the Company has also
 initiated automation of all its HR processes.
 
 The total number of employees as on 31st March 2011 was 4130.
 
 A statement of particulars pursuant to Section 217(2A) of the Companies
 Act, 1956 read with the Companies (Particulars of Employees) Rules,
 1975, forms part of this Report as Annexure II. As per the provisions
 of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report,
 together with Accounts, is being sent to the Shareholders of the
 Company, excluding the statement of particulars of employees under
 Section 217(2A) of the Act. Members desiring to have a copy of the same
 may write to the Company Secretary at the Registered Office of the
 Company and they will be provided with the same upon such a request.
 
 Appreciation
 
 Your Directors wish to place on record their appreciation of the
 contribution made by employees at all levels to the continued growth
 and prosperity of your Company. Your Directors also wish to place on
 record their appreciation for the shareholders, dealers, distributors,
 consumers, banks and other financial institutions for their continued
 support.
 
 
                                      FOR AND ON BEHALF OF THE BOARD
 
 
 Mumbai
 
 Date: 19th May 2011                                      B K PAREKH
 
                                                            CHAIRMAN