Dear Shareholder''s
 
 The year 2011-12 was a satisfying one as Vivimed Labs implemented
 initiatives that will progressively graduate it into the next orbit.
 The initiatives were validated by global investors who made sizeable
 investments in the Company. As a result, the Company emerged stronger
 from an intellectual and financial perspective to drive sustainable
 growth.
 
 On the financial front, the Company''s growth was exciting inspite of
 global challenges: revenues grew a healthy 64% while EBIDTA and net
 profit increased 54% and 29% respectively in 2011-12.
 
 However, the exciting part of the Vivimed growth story is how it
 established a strong presence in the high-growth, high-value
 pharmaceutical space, evolving the Company''s identity from a speciality
 chemicals-dominant player into an organisation whose growth will be
 prudently accelerated by two engines – Speciality Chemicals and
 pharmaceuticals – over the foreseeable future. The management believes
 that this transformation will catalyse revenue growth, strengthen
 margins and enhance shareholder value in an attractive way.
 
 Speciality Chemicals
 
 During the year under review, the Company strengthened its Speciality
 Chemicals business through partnerships with a number of global giants,
 receiving product approvals and commercialising product supplies. The
 management felt that it could have done better but for certain product
 launches getting delayed at customer''s end and from our R&D
 perspective.  While the Company provided leading global brands a large
 product basket, a large section of its customers continued to outsource
 only few products, a reality that the team could have improved upon.
 
 Accelerating demand: The growth in this vertical will be primarily
 organic.  The team will focus on enhancing opportunities with existing
 clients, attracting Tier-II customers and establishing a growing
 presence in emerging markets. In the last two years, the completion of
 a significant number of customer audits of its facilities and products
 will stimulate demand.  Besides, the team is working on a robust
 pipeline of 20 molecules under various stages of development/customer
 approval, including the prospects of commercialising a few in the
 current year.
 
 Lateral shift: The Company is also expanding its product basket to
 cater to other Speciality Chemicals such as automotive, biocides and
 plastic electronics. Its unstinted focus on research in these segments
 will eventually lead to value-added products in emerging business
 segments.
 
 Augmenting supply: Vivimed continued its capacity expansions in various
 segments through brownfield and greenfield initiatives. A sizeable
 investment was made and will continue to be made to catalyse growth.
 
 Pharmaceuticals
 
 The Company''s strategic focus on the
 
 pharmaceutical business over the last year led to the acquisition of an
 API business in Europe as well as acquisition of domestic branded
 formulation companies. These initiatives will strengthen the Company''s
 holistic presence covering various pharmaceutical segments like APIs
 for regulated markets, CRAMS and branded formulations marketing.
 
 Business integration
 
 The Company''s challenge lies in the integration of its two business
 verticals under a common corporate structure, while leveraging
 synergies and competencies.
 
 As a first step, Vivimed will strengthen Uquifa''s operations by
 manufacturing a majority of its intermediates at two new intermediate
 blocks, which are expected to commence operations in the second quarter
 of 2012-13. In doing so, the Company will create additional capacities
 for API production and CRAMS opportunities at Uquifa. These initiatives
 will optimise manufacturing costs, strengthening the competitive edge.
 
 The second phase will focus on commissioning API and formulation
 capacities in India, which will enable the team to market formulations
 to global marquee clients (Uquifa''s customers) and widen the product
 basket of its domestic retail arms (Klar Sehen and Octtantis Nobel).
 
 The Company committed Rs 1,200 million for a sector-specific special
 economic zone in Srikakulam, Andhra Pradesh, which will house
 manufacturing facilities for Speciality Chemicals and APIs (commencing
 2014-15).
 
 Capex funding
 
 Vivimed invested Rs 1,495.63 million in business strengthening
 initiatives and committed Rs 1,900 million for capacity expansion
 (greenfield and brownfield) which will fructify in a phased manner over
 36 months. The Company secured the funds for its proposed investment
 plans through a prudent mix of debt, equity and accruals.
 
 Conclusion
 
 The Company has blended aggression with stability. It would like to
 assure shareholders that investments in projects, products and markets
 will reinforce its competitive position. The Company''s strategic
 blueprint will unfold in a phased manner and as it does, it is
 confident of enhancing shareholder value on a sustained basis over the
 medium to long-term.
 
 With warm regards, 
 
 Santosh Varalwar