DEAR SHAREHOLDERS
 
 FY 2012 has been a good year for your Company The key financial results
 were:
 
 - Consolidated revenues increased by 30% to Rs. 96.7 billion in
 FY2012.
 
 - Earnings before interest, taxes, depreciation and amortization
 (EBITDA)1 rose by 55% to Rs. 25.4 billion.
 
 - Profit after Tax (PAT)2 grew by 45% to Rs. 15.3 billion.
 
 - Diluted Earnings per Share (EPS) increased from Rs. 64.9 in FY2011
 to Rs. 83.8 in FY2012.
 
 I am particularly delighted by four developments.
 
 First, your Company succeeded in yet another blockbuster generic launch
 in the USA under 180- days marketing exclusivity. Dr. Reddy''s launched
 olanzapine 20 mg tablets, the generic version of the brand Zyprexa®.
 Olanzapine is used to treat schizophrenia and bipolar disorder. This
 product has added around USD 100 million to your Company''s revenues for
 FY2012.
 
 Second, the biosimilars business continues along its impressive growth
 path. In my letter to you last year, I had discussed the critical
 importance of developing biosimilars in the years to come.
 
 I am happy to note that your Company''s global biosimilars business grew
 by 45% over last year and recorded sales of USD 26 million. Today, the
 biosimilars portfolio of Dr. Reddy''s constitutes (i) filgrastim, (ii)
 peg-filgrastim, (iii) rituximab and (iv) darbepoetin alfa, which have
 commercial presence in 13 countries among emerging markets.  These are
 helping to treat patients suffering from cancer — and at prices that
 are significantly more affordable than the corresponding innovator
 drugs. Soon, I expect to see Dr. Reddy''s biosimilars entering developed
 markets.
 
 Third, as a scientist-entrepreneur, I am pleased with the steady growth
 in your Company''s investments in R&D — which grew by 17% to clock USD
 125 million in FY2012, or 6% of sales. Two- thirds were spent towards
 generics development which continues to be an area of high potential
 and sound returns; the balance was dedicated to biologies and innovator
 research.  I hope that the target of 7% of sales will continue to be
 maintained in the years to come.
 
 Fourth, I must share with you the news of our entry into Japan. As you
 might know, Japan is the second largest pharmaceutical market in the
 world, with an estimated size of USD 97 billion. It also has low
 generics penetration: 23% of Japanese prescription drug sales by volume
 are generics, versus 70% in the USA. Through a joint venture, your
 Company is working with Fujifilm to develop, manufacture and promote
 generics, with a plan to launch the first products in the next three to
 four years.
 
 Allow me to go down Memory Lane.
 
 I go back 28 years ago, when your Company was established with an
 initial capital outlay of Rs. 2.5 million, and our joys were unbound
 when we made our first profits manufacturing ibuprofen for the domestic
 market.
 
 Fast forward to 11 years ago: April 2001, when Dr. Reddy''s got listed
 on the New York Stock Exchange. That year, i.e. FY2002, your Company''s
 revenues shot up to Rs. 15,578 million — driven by sales of
 fluoxetine 40 mg, which was its first successful 180-days exclusivity
 in the US generics market.
 
 We had several other successful generics launches in the US. I remember
 FY2007 when, in a single year, we launched four exclusive 180-days
 products: simvastatin, finasteride, ondansetron and fexofenadine. In
 the process, consolidated revenues of your Company shot up to USD 1.5
 billion.
 
 And in FY2012, Dr. Reddy''s became the fastest Indian pharmaceutical
 company to surpass USD 2 billion in sales — doing so in less than
 four years of crossing the USD 1 billion mark.
 
 The financial people in your Company recently did some work on
 shareholder value. It went thus.
 
 If an Indian investor purchased 100 shares during the Company''s IPO in
 August 1986, plus the 50% rights issue in August 1989, and held on to
 these till date, s(he) would be owning 5,400 shares of Dr. Reddy''s,
 whose market value on 31 March 2012 would have been Rs. 9.48 million.
 The shareholder would have also earned a total of Rs. 0.56 million as
 dividends. The numbers are similarly attractive for a long term US ADR
 holder.
 
 These are attractive returns on investment, both as capital gains and
 as dividends.
 
 Given the way your Company is heading, with regular first-to-file
 exclusivities coupled with a predictably healthy annual growth in base
 revenues and incomes, I am sure that Dr. Reddy''s will continue
 delivering superior value to its investors.
 
 Most importantly, your Company will continue to deliver superior value
 to millions of patients across the globe — by providing affordable
 and innovative medicines for healthier lives.
 
 May the Company''s progress continue. For medicine. And better lives.
 
 Thank you for your constant kindness and support.
 
 
 
 With my very best,
 
 DR. K. ANJI REDDY 
 
 Chairman