We take pleasure in presenting the 64th Annual Report and Audited
 Accounts for the Year ended 31st March 2011.
 
 PERFORMANCE HIGHLIGHTS: (Standalone)                   (Rs. in Million)
                  
 Year Ended 31st March               FY 2011      FY 2010       % Growth
 
 Operating income                   16,103.6     26,662.1       (39.6)
 
 Income from Investments             3,796.9      1,324.8        186.6
 
 Total Operating Income             19,900.5     27,986.9       (28.9)
 
 OPBIDTA excluding FOREX impact      4,221.1      7,367.8       (42.7)
 
 Foreign Exchange Gain / (Loss)        925.7      (106.1)
 
 OPBIDTA                             5,146.8      7,261.7       (29.1)
 
 % margin                               25.9         25.9
 
 Non-operating other income              0.3          0.3
 
 EBIDTA                              5,147.1      7,262.0       (29.1)
 
 Less:
 
 Interest Expenses                     797.9      1,563.6       (49.0)
 
 Depreciation                          776.1        922.2       (15.8)
 
 Profit before tax and 
 Exceptional items                   3,573.1      4,776.2       (25.2)
 
 Add: Exceptional Items Income / 
 (Expenses) (Net)                  162,099.0       (3.6)
 
 Profit beforeore tax              165,672.1       4,772.6
 Less:
 
 Income Tax provision               36,703.0        340.4      10,682.3
 
 –– Current                         36,828.2        834.4
 --Deferred                          (125.2)         78.8
 
 –– MAT Credit Entitlement              -          (572.8)
 
 Profit after tax (excluding 
 exceptional items)                 128,969.1      4,432.2      2,809.8
 
 % margin                             NA            16.6
 Add:
 
 Profit brought forward
 from previous year                  4,606.4       3,208.6
 Profit available for 
 appropriation                     133,575.5       7,640.8
 
 Appropriation:
 
 Proposed dividend
 
 –– Equity Shares                    2,006.5        1,128.6
 
 –– Dividend Distribution 
 Tax thereon                           325.5          187.5
 
 Transfer to General Reserve        73,986.0        1,393.3
 
 Transfer to Capital Redemption 
 Reserve                                -              -
 
 Transfer from Debenture 
 Redemption Reserve                   (500.0)          -
 
 Transfer to Debenture 
 Redemption Reserve                     75.0         325.0
 
 Balance carried to Balance Sheet    57,682.5      4,606.4
 
 Earnings Per Share (Basic / 
 Diluted) (Rs.)                        574.3         19.7
 
 DIVIDEND The Board has recommended the following dividends:
 
 - a regular dividend of Rs. 6 per equity share of Rs. 2 (i.e. 300%);
 and
 
 - a special dividend, as a further reward to shareholders consequent to
 the sale of the Domestic Formulations Business, of Rs. 6 per share of
 Rs. 2 (i.e.300%);
 
 both aggregating to dividend of Rs. 12 per share (i.e. 600%).
 
 The above dividends will be paid to eligible members within 5 days of
 the approval by the shareholders at the forthcoming Annual General
 Meeting.
 
 The total cash outflow on account of dividend payments, including
 distribution tax, will be Rs. 2,332 million. (FY2010 Rs.1,316.1
 million). The Board recommends the above dividends for declaration by
 the members.
 
 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR 2011:
 
 Sale of Healthcare Solutions business to Abbott:
 
 During the year, the Company has sold its Healthcare Solutions
 (Domestic Formulations) Business to Abbott Healthcare Private Limited,
 for a total cash consideration of the Indian rupee equivalent of .8
 billion. The domestic formulation business used to manufacture, market
 and sell branded pharmaceutical products in finished form mainly in the
 Indian market.  As per the terms and conditions of this transaction,
 the Company has transferred its assets including manufacturing
 facilities at Baddi, Himachal Pradesh, rights to approximately 350
 brands and trademarks and more than 5,000 employees relating to its
 domestic formulations business to Abbott.
 
 Sale of shareholding in Piramal Diagnostic Services Pvt. Ltd.:
 
 During the year, the Company also sold its shareholding in its
 subsidiary Piramal Diagnostic Services Private Limited (PDSL) to Super
 Religare Laboratories (SRL) for a total consideration of Rs. 6.0
 billion. As per the terms of this transaction, the Company has received
 Rs. 3.0 billion in cash as an upfront payment on closure of the
 transaction in the month of August 2010 and Rs. 1.4 billion in January,
 2011. The balance amount is held in the form of debentures of SRL to be
 redeemed over a period of not more than 3 years.
 
 Discontinuation of JV with Arkray:
 
 In the month of September, 2010, the Company sold its entire stake of
 49% in its Joint Venture, Arkray Piramal Medical Private Limited and
 recognized a profit (net of expenses) of Rs. 177.4 million on account
 of this.
 
 Acquisition of Oxygen Bio Research:
 
 During the year, the Company acquired Oxygen Bio Research (Oxygen)
 based in Ahmedabad, India. Oxygen is a 7 year old discovery services
 Company providing integrated discovery services – synthetic chemistry,
 medicinal chemistry, computational chemistry and in-vitro Biology. The
 acquisition of Oxygen marks the Companys entry into the discovery
 services and will enable the Company to partner with its client
 companies at the early stage of drug life cycle.
 
 Buyback of equity shares:
 
 The total shares bought back by the Company under the Buyback of Equity
 Shares was 41.8 million shares, which represented 20% of the equity, at
 a price of Rs. 600 per share aggregating to Rs. 25.1 billion. The
 buyback price represented a premium of 19% over the average share price
 for the last three months at the time of announcement of buyback (22nd
 October, 2010).
 
 OPERATIONS REVIEW:
 
 FY2011 financials include the financials of the Healthcare Solutions
 business only till 7th September, 2010 being the date upto which this
 business was with the Company. Net Sales and Net Profit related to
 Healthcare Solutions business included in FY2011 was Rs. 8.0 billion
 and Rs. 1.5 billion as compared to Rs. 19.7 billion and Rs. 5.8 billion
 in FY2010. As a result, Total Operating Income for the year was lower
 at Rs. 19.9 billion as compared to Rs. 28.0 billion for the year ended
 31 March, 2010. Operating Profit (OPBIDTA) was lower at Rs. 5.1 billion
 as compared to Rs. 7.3 billion in FY2010. The net gain related to sale
 of Healthcare Solutions business and sale of shareholding in PDSL
 resulted in exceptional income of Rs. 162.1 billion.  Hence, Profit
 After Tax was higher at Rs. 129.0 billion as compared to Rs. 4.4
 billion in FY2010 and Earnings Per Share were Rs. 574.3 for the year as
 compared to Rs. 19.7 per share for FY2010.
 
 A detailed discussion of operations for the year ended 31st March, 2011
 is given in the Management Discussion and Analysis section.
 
 RESEARCH & DEVELOPMENT:
 
 The Company continues to conduct Research and Development related to:
 
 - Pre-formulation and formulation development and clinical
 manufacturing of NCEs for external clients; Process optimization,
 research and scale up, for the early phase projects from clients;
 
 - Development of cost effective and environmentally friendly process
 for commercial manufacturing of Active Pharmaceutical Ingredients
 (APIs) and their intermediates.
 
 Total R&D expenditure during the year was Rs. 413.2 million, including
 capital expenditure of Rs. 19.4 million. The corresponding previous
 year spends were Rs. 403.8 million and Rs. 41.9 million respectively.
 The strength of the research and development staff was reduced to 129
 people in FY2011 from earlier of 191 people, due to sale of the
 Healthcare Solutions business to Abbott and consequent transfer of R&D
 related staff to Abbott.
 
 SUBSIDIARY COMPANIES:
 
 Piramal Healthcare UK Ltd.
 
 Net sales for FY2011 were lower at Rs. 4.2 billion as compared to Rs.
 4.6 billion for FY2010 as FY2010 had some sales from Huddersfield
 facility that was shut down later. Adverse movement of INR/GBP exchange
 rate also impacted the performance of Piramal Healthcare UK Ltd. INR
 appreciated by 7% vs. GBP resulting in lower sales and profitability.
 Operating margin for the year was lower at 10.9% compared with 12.4% in
 the last year. Operating Profit for the year was lower at Rs. 463.5
 million as compared to Rs. 570.3 million in FY2010. Net profit was
 lower at Rs. 315.3 million as compared to Rs. 618.4 million in FY2010
 mainly due to one time exceptional expenditure related to Voluntary
 Retirement cost of Rs. 48.5 million in FY2011 and FY2010 number
 including a gain of Rs. 234.7 million by way of deferred tax asset.
 
 Piramal Healthcare (Canada) Ltd.
 
 Net Sales for FY2011 grew by 5.2% to Rs. 940.2 million as compared to
 Rs. 893.6 million in FY2010. The results of Piramal Healthcare (Canada)
 Ltd. have been impacted due to consolidation of financials related to
 Biosyntech, a company whose assets were acquired during the year.
 Biosyntech is a medical devices company specializing in development,
 manufacturing and commercialization of advanced biotherapeutic
 thermogels for regenerative medicines. Biosyntech related operations
 had an operating loss of Rs 194.0 million for FY2011. Hence, there was
 a loss at Operating level for Piramal Healthcare (Canada) Ltd.  of Rs.
 34.5 million as compared to Operating Profit of Rs. 93.0 million for
 FY2010. Similarly, Net loss for the year was Rs.  159.8 million as
 compared to Net profit of Rs. 27.5 million for FY2010.
 
 Piramal Healthcare Inc.
 
 Piramal Healthcare Inc. includes financials of Piramal Critical Care
 Inc. Net sales for the year grew by 50.9% to Rs. 2.7 billion as
 compared to Rs. 1.8 billion for FY2010 due to increased sales of
 Sevoflurane. The Operating Profit was lower at Rs. 99.9 million as
 compared to Rs. 172.6 million in FY2010 due to increased legal and
 professional charges mainly related to ongoing proceedings related to
 Desflurane. Net loss for the year was higher at Rs. 380.0 million
 compared to Rs. 211.0 million in FY2010.
 
 Piramal Pharmaceutical Development Services Pvt. Ltd.
 
 Net sales for the year grew by 108.3% to Rs. 194.4 million as compared
 to Rs. 93.3 million for FY2010 due to consolidation of financials of
 Oxygen Bio Research, which was acquired during the year. The Operating
 profit was much higher at Rs. 64.0 million as compared to Rs. 14.6
 million in FY2010. Net Profit for the year was higher at Rs. 32.6
 million as compared to Net Loss of Rs. 3.6 million in FY2010.
 
 The Ministry of Corporate Affairs has vide its circular dated 8th
 February, 2011 issued directions under section 212(8) of the Companies
 Act, 1956, granting general exemption to companies from attaching to
 their Balance Sheets, the Accounts and other documents of their
 subsidiaries, subject to fulfillment of specified conditions. In view
 of this general exemption and being in compliance with the conditions
 thereof, the Accounts and other documents of the Companys subsidiaries
 are not attached to the Balance Sheet of the Company. The Consolidated
 Financial Statements of the Company, which include the results of its
 subsidiaries, are included in this Annual Report. Further, a statement
 containing the relevant particulars prescribed under the terms of the
 general exemption, for each of the Companys subsidiaries, is enclosed
 in this Annual Report. The Annual Accounts of the Companys
 subsidiaries and the related detailed information can also be sought by
 any shareholder of the
 
 Company or its subsidiaries by making a written request to the Company
 Secretary. The Annual Accounts of the Companys subsidiaries are also
 available for inspection for any shareholder at the Companys and/or
 the concerned subsidiaries registered office. These documents are also
 available on the Companys website i.e. www.piramalhealthcare.com.
 
 JOINT VENTURES:
 
 Allergan India Private Limited (‘AIL):
 
 AIL is a 51:49 Joint Venture between Allergan Inc., USA and Piramal
 Healthcare Limited. Total revenues of AIL grew by 25.4% to Rs. 1.4
 billion (FY2010 Net Sales: 1.1 billion). The Operating Profit for
 FY2011 was up by 7.9% to Rs. 384.5 million as compared to Rs. 356.3
 million in FY2010. Profit After Tax for FY2011 was up by 9.6% to Rs.
 241.8 million as compared to Rs. 220.6 million for FY2010.
 
 INDUSTRY OUTLOOK:
 
 The global Custom Manufacturing market was estimated to be worth $ 13
 billion in 2002 and has grown to an estimated $ 22 billion in 2009.
 Growth in the CMO industry has been impacted in last two years due to
 global financial crisis and resultant reduction in inventory level at
 many large multinational pharmaceutical companies. However the
 de-stocking phenomenon is now coming to an end and the industry is on
 recovery phase. Global pharmaceutical companies faced with patent
 expiry of large blockbuster products and fewer new products approval
 are under tremendous pressure to cut costs. Indian companies with their
 high quality, low cost production capabilities are well poised to
 benefit from this trend.
 
 SIGNIFICANT EVENTS POST BALANCE SHEET DATE:
 
 Entry Into Financial Services Sector:
 
 We have been evaluating various sectors to invest some of the net
 proceeds received on sale of the Healthcare Solutions business, in a
 way that results in long term value creation for our shareholders. With
 this in mind, the Board of Directors has approved a plan for PHL to
 invest in subsidiaries engaged in financial services sector. India has
 had strong GDP growth in the past decade and is likely to continue with
 8-9% GDP growth rate for the next decade. Given sound economic
 fundamentals, rising disposable income, financial sector liberalization
 and growth of consumer oriented, credit oriented culture; the financial
 services sector is poised for strong growth in India. To participate in
 this growth story, PHL has decided to invest in the financial services
 sector.
 
 To begin with, PHL will invest in NBFCs engaged in lending to
 Infrastructure sector and to other sectors and will also invest in
 subsidiaries engaged in Fund Management for real estate &
 infrastructure sector.
 
 Acquisition of Indiareit Fund Advisors & Indiareit Investment
 Management:
 
 Towards building a strong financial services business, the Board of PHL
 has approved acquisition of Indiareit Fund Advisors Pvt. Ltd. and
 Indiareit Investment Management Company for the total consideration of
 Rs. 2.3 billion. Indiareit Fund Advisors Pvt. Ltd. are advisors to the
 Indiareit Fund which is a domestic real estate Private Equity fund
 focused on the Indian markets.  Indiareit Investment Management Company
 is manager to Offshore Real Estate Private Equity funds investing in
 India through the FDI route. The total fund size under management for
 these funds is Rs. 38 billion.
 
 Proposed de-merger of PLSLs NCE research unit into PHL:
 
 The Board of PHL has also approved the scheme for De-merger of the NCE
 Research Unit of Piramal Life Sciences Limited (PLSL) into Piramal
 Healthcare Limited. Under the proposed De-merger scheme, each
 shareholder of PLSL will be entitled to one fully paid up equity share
 of Rs. 2 each of PHL for every four equity shares of Rs. 10 each held
 in PLSL. All assets and liabilities of the NCE Research Unit will be
 transferred to PHL at book value.
 
 Since April 2007, when PLSL was de-merged from PHL as an independent
 discovery research company, it has made significant progress. The
 pipeline of R&D programs has increased from nine to twenty four with
 nine additional programs moving into Phase I/II clinical trials and two
 additional programs moving into Phase II clinical trials. Subsequent to
 the significant progress that PLSL has made, the risk profile of NCE
 R&D activity has been relatively reduced.
 
 Through this de-merger, PHL will have an access to the innovation
 platform of PLSL through which it can build its innovative discovery
 and commercialization business. PHL can also better utilize its
 manufacturing infrastructure and leverage its marketing experience with
 products from PLSL. The Demerger Scheme is subject to the consent of
 requisite majority of shareholders and creditors of the Company and of
 PLSL. The Demerger Scheme is also subject to the sanction of the High
 Court of Judicature at Bombay and all other regulatory approvals as may
 be necessary for the implementation of the Demerger Scheme.
 
 INTERNAL CONTROL SYSTEM:
 
 The Company has a sound internal control system, which ensures that all
 assets are protected against loss from unauthorized use and all
 transactions are recorded and reported correctly. The internal control
 systems are further supplemented by internal audit carried out by an
 independent firm 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.
 
 HUMAN RESOURCES:
 
 Employees are vital to Piramal Healthcare. We have created a favorable
 work environment that encourages innovation and meritocracy. We had
 staff strength of 2,337 employees (FY2010: 7,311employees) as at 31st
 March, 2011. The reduction is on account of sale of Healthcare
 Solutions business to Abbott and subsequent transfer of concerned
 employees to Abbott.
 
 Sr. 
 No.  Function      31st March, 2011       31st March, 2010       Change
 
 a.   Field                436                 4,103             (3,667)
 
 b.   R&D                  129                  191                (62)
 
 c.   Others             1,772                3,017              (1,245)
 
      Total              2,337                7,311              (4,974)
 
 Any shareholder interested in obtaining a copy of the statement of
 particulars of employees referred to in section 217(2A) of the
 Companies Act 1956, may write to the Company Secretary at the
 registered office of the Company. The statement is also available for
 inspection by the members on any working day (except Saturday) upto one
 day prior to the date of the meeting at the registered office of the
 Company between 10.00 a.m. to 5.00 p.m.
 
 Stock Options disclosures pursuant to the applicable requirements of
 the Securities and Exchange Board of India (Employee Stock Option
 Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given
 as an Annexure to this Report.
 
 ENVIRONMENT, HEALTH AND SAFETY (EHS):
 
 We at PHL believe that Environment, Health and Safety is not only a
 crucial pillar for good Corporate Governance and sustainable business
 but also act in a safe and environmentally responsible manner so that
 the employees, the society at large and our stake holders are well
 protected. Our baseline commitment is to maintain complete EHS
 compliance at PHL.
 
 PHLs Corporate Environment, Health and Safety function provides
 technical support and assistance to all the sites on EHS matters.
 During the year, the EHS function ensured that the products are
 manufactured in a safe environment and in compliance with national and
 international regulations and customer expectations. Regular audits of
 our sites ensure compliance and also provide a strong and robust system
 for continuous improvements.
 
 Performance of EHS management systems is regularly evaluated and
 reviewed.
 
 ENVIRONMENT
 
 We recognize that preservation of the environment is vital and we
 remain committed to conserving resources and acting responsibly. All
 our manufacturing sites remained fully compliant with applicable
 environmental regulations. Reuse & recycle of natural resources is one
 of our key objectives. We have developed adequate infrastructure to
 treat waste water and reuse it.
 
 Various initiatives were taken to upgrade the infrastructure for
 environment management at our manufacturing sites.  Upgradation of
 Waste Treatment Plant in order to reach beyond compliance, installation
 of online monitoring system for process emissions and ambient air
 quality, switch over from fossil fuel to carbon neutral fuel, etc. are
 among the few of such initiatives.
 
 Most of our facilities have achieved various recognitions/
 certifications such as ISO-14001 & OHSAS-18001.
 
 OCCUPATIONAL HEALTH AND SAFETY
 
 PHL has undertaken numerous initiatives to enhance safety standards at
 its manufacturing sites / office premises to ensure that employees and
 other stake holders feel safe while working at PHL. As an
 acknowledgment of our efforts, our Digwal facility received Zero
 Accident Award from the Department of Factories, Andhra Pradesh.
 
 To provide a hygienic working condition for employees, we have
 developed a well defined Industrial Hygiene Program.  Through this
 program, working environmental conditions are monitored to ensure that
 our people are at all times safe from short term or long term exposure
 from chemicals, dust, heat, noise, etc.
 
 DIRECTORS RESPONSIBILITY STATEMENT:
 
 As required under section 217(2AA) of the Companies Act, 1956 we hereby
 state:
 
 a) That in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures, if any;
 
 b) 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 as at 31st March, 2011 and its profit for the
 year ended on that date;
 
 c) 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;
 
 d) That the Directors have prepared the annual accounts on a going
 concern basis.
 
 DIRECTORS:
 
 Mr. Y. H. Malegam and Mr. Deepak Satwalekar retire by rotation at the
 ensuing Annual General Meeting and are eligible for re-appointment,
 which the Board recommends.
 
 Your approval is also being sought for the appointment of Mr. Amit
 Chandra as Director of the Company. Mr. Amit Chandra was appointed by
 the Board as an Additional Director with effect from June 20, 2011 and
 holds office upto the date of the ensuing Annual General Meeting. The
 Board recommends his appointment as Director at the ensuing Annual
 General Meeting.
 
 CORPORATE GOVERNANCE:
 
 The Company has complied with the applicable provisions of Corporate
 Governance under Clause 49 of the Listing Agreement with the Stock
 Exchanges. A separate report on Corporate Governance compliance is
 included as a part of the Annual Report alongwith the Certificate from
 Mr. N.L. Bhatia, Practicing Company Secretary.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION:
 
 Particulars required under Section 217 (1) (e) of the Companies Act,
 1956 read with Rule 2 of the Companies (Disclosure of Particulars in
 the Report of Board of Directors) Rules, 1988 is given in the Annexure
 to this Report.
 
 GROUP:
 
 As per the intimations from the Promoters, the names of the Promoters
 and the entities comprising ‘group as defined in the Monopolies and
 Restrictive Trade Practices Act,1969 (MRTP) are given for the purpose
 of the SEBI (Substantial Acquisitions of Shares and Takeovers)
 Regulations,1997 in the Annexure to this Report.
 
 AUDITORS:
 
 M/s Price Waterhouse retire as Auditors of the Company at the ensuing
 Annual General Meeting and are eligible for re- appointment.
 
 ACKNOWLEDGEMENTS:
 
 We take this opportunity to thank the employees for their dedicated
 service and contribution to the Company.
 
 We also thank our strategic alliances and joint venture partners,
 banks, financial institutions, business associates and our shareholders
 for their continued support to the Company.
 
                                                     By Order of the Board
 
                                                       Ajay G. Piramal
 Mumbai
                                                             Chairman 
 Dated: 21st June, 2011