Dear Members,
 
 The Board of Directors of your company hereby present the 21 Annual
 Report on the business & operations of the company and Audited
 Statement of Accounts for the year ended 31st March, 2011 along with
 the Auditor''s Report thereon.
 
 FINANCIAL RESULTS
 
                                                    Rs. in Lakhs
 
 Particulars                            2010- 2011      2009- 2010
 
 Net Sales/Income                          1001.21          398.46
 
 Total Expenditure                          761.74          234.42
 
 Gross Operating Profit                     239.47          164.04
 
 Interest and                                71.47           84.98
 
 Finance Charges
 
 Forex Loss                                 116.05               -
 
 Depreciation                                35.16           33.49
 
 Profit before Tax                           16.79           45.57
 
 Provision for Tax                            3.11            7.42
 
 Net Profit                                  13.68           38.15
 
 OPERATIONS
 
 The Directors'' report that during the year under review the total
 income was Rs.1001.21 Lakhs as against Rs.398.46 Lakhs in the previous
 year and the Net Profit for the year was Rs.13.69 Lakhs as against
 Rs.38.15 Lakhs for the previous year. There was a forex loss of
 Rs.116.05 lakhs due to which the profit had come down,During the year,
 the company has incurred an amount of Rs.286.01 lakhs on ongoing
 product development and Rs.64.33 Lakhs on Fixed Assets as against
 Rs.455.77 lakhs and Rs.10.05 Lakhs respectively in 2009-10.
 
 It has been a year of some satisfaction with your company raising the
 much needed funds through GDRs, the funds to enhance your company''s
 ability in reaching the desired objectives on different projects.
 
 With the funds in place, the management has initiated plans to
 restructure its operations in order to realize the inherent values of
 various projects much faster. The newly structured operations fall
 under:
 
 API division
 
 Tacrolimus
 
 - DHA
 
 - Orlistat R&D division
 
 RNAi based drugs
 
 - Breast cancer
 
 - Liver cancer
 
 - Ovarian cancer
 
 - Pancreatic cancer
 
 - Monoclonal antibodies (mAbs)
 
 - Colon cancer
 
 - Multiple myeloma
 
 - Non-Hodgkin''s lymphoma
 
 - Esophageal cancer
 
 - BeeCell technology (Auto-immune disease model)
 
 - AIDS therapeutic vaccine
 
 - Multiple Sclerosis
 
 - NDDS
 
 - Oral Insulin
 
 - Oral AIDS vaccine
 
 - Oral mAb based drugs
 
 - Transdermal delivery of AIDs vaccine
 
 APIs and commercial production:
 
 As informed earlier, this division has achieved breakthrough on two
 other APIs. Unfortunately, because of the hurdles faced by the company
 in getting the approvals for expanding the manufacturing facilities at
 the current location of your company, the management is looking at
 alternative proposals for and during land with special emphasis on
 getting environment and pollution control approvals. Realising the
 poosible delays on that front, the management has opted to start the
 commercial operations from a third party facility. We have already
 entered into a Memorandum of Understanding with a company to start the
 production using initially 64 kl fermentation facility with a capacity
 to expand it to much larger capacities. Work is progressing with
 installation of additional production and supporting equipment.
 
 We are scheduled to start commercial production of DHA, one of the APIs
 at the chosen 64 kl facility during Q3 of 2011-12. DHA, an Omega-3
 fatty acid, is a product of great demand all over the world for its
 inclusion as part of a healthy diet that helps lower risk of heart
 disease and for the development of our nervous system and visual
 abilities during the first 6 months of life.
 
 Likewise, our second API, Tacrolimus is due to start regular commercial
 production soon after DHA production is optimized at Transgene''s
 current 4 kl facility and transferred to 64 kl plant at the new
 location.
 
 With both APIs coming into commercial production during the Q3 of
 2011-12, the management is looking at expanding its marketing horizons
 beyond the shores of India.
 
 R&D
 
 RNAi drugs
 
 We have added two more oncology drugs to the existing Breast and Liver
 cancer drug development program - Pancreatic and Ovarian cancer drugs
 with the signing of MoLI with a USA based company last month. We are
 scheduled to complete highly complex pre-clinical studies conducted
 outside India in North America on specially bred and genetically
 modified mice on all these four drugs before the end of Q3 - 2011-12.
 This will be followed by animal toxicology and human clinical studies.
 
 mAb drugs
 
 As informed earlier, we have engaged the services of two companies
 outside India for humanizing our monoclonal antibody drugs. First step
 in the process of humanization has been completed by both companies.
 The chimerized antibodies are delivered for conducting in-house
 in-vitro cytotoxicity assays prior to advancing and completing the
 process of humanization. The antibodies are directed towards Colon
 cancer, Multiple myeloma, NHL and Esophageal cancer.
 
 BeeCell technology
 
 The BeeCell technology platform developed by Transgene has been
 improved further with the acquisition of another technology. This is to
 enable Transgene to accelerate and widen the auto-immune disease drug
 development program. It is reported that the drugs against auto-immune
 diseases generated in excess of US billion in 2008 and growing
 further rapidly.
 
 Intellectual property and patents
 
 The advancement of drug development programs on several fronts along
 with addition of new projects, there has been a tremendous increase in
 the number of patents filed during the final quarter of 2010-11 and
 subsequently. So far, more than 30 patents have been filed during this
 period covering India, USA and PCT countries in addition to the earlier
 filed ones.
 
 Expansion of scientific staff
 
 In line with the expansion of manufacturing operations and with
 advancing R&D milestones, several new and experienced scientists have
 been added to each division headed by highly qualified and experienced
 leaders.
 
 DIVIDEND
 
 In spite of increased revenue and profits, your Directors are unable to
 recommend any dividend for the year due, keeping in mind of substantial
 funds needed to support the increasing R&D activities where activities
 such as pre-clinical and clinical studies are known to be highly cost
 intensive.
 
 GROWTH PLANS AND OUTLOOK
 
 Transgene Biotek''s own comprehensive technology platforms represent a
 powerful tool for the development of various therapeutic products for
 treatment of several dangerous and debilitating conditions''such as
 AIDS, Multiple Sclerosis etc. Recent acquisition of another technology
 for auto-immune diseases has contributed to the rapid advancement of
 drug development for auto-immune diseases apart from addition of two
 more drugs for conditions such as Parkinson''s disease and Psoariasis.
 
 In cancer treatment, the products being developed by Transgene are
 first in-class targeting the tumour cells in a selective manner, with
 release of high concentration of siRNAs be it shRNA or miRNAs into the
 cancer cells and may therefore induce tumor regression or even tumor
 death in a safe and effective manner. This in turn reduces or
 eliminates the need for chemo-therapy. With advancing in-vivo studies
 on several cancer drugs, the management hopes to enter the critical
 milestone of human studies on some of these by the end of 2011- 12. We
 have engaged the services of an experienced CRO company in North
 America for conducting pre- clinical studies on three products to
 substantiate and add value to our pipeline.
 
 Global sales of cancer drugs will grow at a compounded annual rate of
 12 to 15 percent, reaching  to  billion by 2012, according to a
 new forecast by IMS Health (NYSE: RX), the world''s leading provider of
 market intelligence to the pharmaceutical and healthcare industries.
 The growth rate for oncology products will be nearly double the
 forecasted growth rate of the global pharmaceutical market. Recent
 innovations have improved quality of life, delayed disease progression
 and helped prolong survival for patients battling different types of
 cancer.
 
 The expanding nature of new drug delivery technologies at Transgene
 with the scientists gaining better insight over the last decade into
 the challenges posed in delivering those drugs through routes other
 than by injectable path, opened up another dimension in creating or
 enhancing the value of each drug under development at Transgene. Today,
 Transgene is on the cusp of achieving its objective in providing a
 better alternative to the injections and in doing so, increasing the
 patient compliance resulting in better or effective treatment of
 conditions such as AIDs, Cancer etc.
 
 New or novel drug delivery systems continue to be a fast-growing
 market. Currently approaching  billion in annual sales, it is
 estimated that this industry will reach  billion by 2009 - close to
 20% of total global pharmaceutical sales.
 
 The API division at Transgene, headed by a highly experienced and
 committed team of scientists provides a stable and sustainable platform
 for the company in moving forward with its devout objective of becoming
 a globally recognized and innovative biotech company as we advance with
 API manufacturing and R&D projects. The expanding manufacturing
 operations and expansion of its marketing horizons beyond India shail
 enhance its value even further.
 
 The market for Omega-3 fatty acids (DHA/EHA) was estimated at over B
 (2007), according to Scientia Advisors. With lot of emerging scientific
 evidence demonstrating the health benefits of DHA / EPA and consumer
 awareness, the market is expected to drive >60% growth in the coming
 years, according to a reteni Frost & Sullivan report (2010). Demand is
 projected to outstrip available supply. 
 
 Marillion Pharmaceuticals Inc
 
 In the context of its restructuring program, the management has decided
 to terminate its proposed acquisition of Marillion Pharmaceuticals Inc
 of USA, following an in-depth due diligence exercise. However,
 Transgene continues its quest for inorganic growth through selective
 acquisition of or strategic partnerships with companies within and
 outside India.
 
 In the near and medium term, Transgene is to grow through expanding its
 API manufacturing operations within and outside India generating
 substantial revenues and profits. Over the longer term, the Company
 continues to advance its novel drugs and achieving the critical
 milestones which are protected by patents and which are of significant
 value.
 
 In summary, despite the economic and financial turbulence in the
 developed markets, we now have the team and the strategy in place to
 take the business forward to the next stage of its evolution. At
 Transgene we will continue to consolidate what we have been building on
 our solid platform and diversify where needed. This will be through a
 combination of organic growth and innovation, product licensing and
 acquisition, and strategic partnerships or company acquisitions.
 
 EMPLOYEES STOCK OPTION SCHEME
 
 The employee stock option scheme is still under implementation.
 
 DIRECTORS
 
 Sri S S Marthi and Dr P K Ghosh retire by rotation and being eligible
 offer themselves for re-appointment.
 
 ISSUE OF GDRs
 
 The company was able to successfully issue 2500000 GDRs @ USD 9.2 per
 GDR which were fully subscribed.  The underlying shares of 25000000
 Equity Shares of Rs.10/- each were listed on the Bombay Stock Exchange
 Limited w.ef. May 06, 2011.
 
 FIXED DEPOSITS
 
 The company has not accepted any Fixed Deposits and the provisions of
 section 58A of the Companies Act, 1956 are not applicable to the
 Company.
 
 AUDITORS
 
 M/s Sarath & Associates, Chartered Accountants, the statutory Auditors
 of the Company retire at the ensuing Annual General Meeting and are
 eligible for reappointment.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 As required under the Companies Act, 1956, your Directors wish to
 state:
 
 (a) That in the preparation of the Annual Accounts, the applicable
 accounting standards have been followed.
 
 (b) That the Directors had 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 of the Company for that period;
 
 (c) That the Directors had 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.
 
 (d) That the Directors had prepared the annual accounts for the year
 ended 31st March 2011 on a going concern basis.
 
 CORPORATE GOVERNANCE
 
 Pursuant to clause 49 of the listing agreement, your Company has taken
 adequate steps to ensure that all mandatory provisions of corporate
 Governance as prescribed under the listing agreement of the Stock
 Exchange with due compliance of all the applicable laws, rules and
 regulations. A separate report on Corporate Governance and the
 Auditor''s certificate on its compliance are annexed hereto and forms
 part of this Annual report.
 
 EMPLOYEE RELATIONS
 
 The key to our success is to develop core values within all of our
 staff which lead to an environment where they believe that what they
 are doing is making a difference.  The core values with which we
 operate are participation, achievement, trust and respect, innovation
 and enthusiasm.
 
 Transgene recognises that in an industry based on innovation and
 research and development, its employees are some of its biggest assets
 and it seeks to communicate and, where appropriate, consult with them
 on matters affecting them as employees, in the correct manner.
 
 Transgene provides training and development appropriate to individual
 needs and offers remuneration packages (including pensions, permanent
 health and life insurance) and a working environment that are designed
 to be both fair and competitive with larger companies within the
 industry.
 
 There is no employee whose particulars are to be furnished pursuant to
 the provisions under Section 217 (2A) of the Companies Act, 1956 read
 with the Companies (Particulars of Employees) Rules, 1975 as amended by
 the Companies (Amendment) Act, 1988.
 
 CONSERVATION OF ENERGY, ENVIRONMENT, TECHNOLOGY ABSORPTION AND FOREIGN
 EXCHANGE
 
 A.  Conservation of Energy, Power and Environment :
 
 We are committed to minimising the impact of our activities on the
 environment and energy efficiency is the most important means of
 climate protection currently available to the company. Efforts for
 conservation of energy and fuel consumption are ongoing processes in
 the Company and every effort is made in that direction.
 
 B.  Research & Development:
 
 The Company''s R&D division continues to be recognized and certified
 under DSIR guidelines. The company fosters the development of molecules
 owned/co-owned byTransgene Biotek Ltd, in terms of finding right CROs
 in India, US and Europe based on their capabilities, overseeing,
 analysis and monitoring of information on in-vivo efficacy/ toxicology
 studies being conducted within or outside India.
 
 C.  Foreign Exchange Earnings : Nil
 
 D.  Foreign Exchange Outgo : Rs. 4,55,64,518
 
 ACKNOWLEDGEMENTS
 
 Our employees remain crucial to the success of Transgene and it is
 their skill and expertise that have enabled us to achieve our progress
 to date. This has been recognised at various meetings where, over the
 past twelve months, Transgene has made presentations on its drug
 development pipeline.
 
 We are committed to the development of a motivated and professional
 workforce in order to build a business that is constantly looking to
 innovate and evolve. On behalf of the Board, we thank all our staff for
 their hard work and continued support and commitment.
 
 Your Directors wish to place on record their gratitude to the
 Government authorities, for the support and co- operation received from
 M/S Union Bank of India, Bankers of the company, Shareholders,
 Auditors, Customers, vendors, business associates and Staff of the
 Company for their valued support during the year under review.
 
                                             By order of the Board 
 
                                      For TRANSGENE BIOTEK LIMITED
 
 Place: Hyderabad                             Dr. K. Koteswara Rao
 
 Date: 05-09-2011                     Chairman & Managing Director