SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

January 2020

 

Commission File Number 1-15182

 

DR. REDDY’S LABORATORIES LIMITED

(Translation of registrant’s name into English)

 

8-2-337, Road No. 3, Banjara Hills

Hyderabad, Telangana 500 034, India

+91-40-49002900

______________

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  x

 

Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ______

 

Note:  Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ______

 

Note:  Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes  ¨

 

No x

 

If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b): 82-________.

 
 

 

 
 

DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

We hereby furnish the United States Securities and Exchange Commission with copies of the following information about our public disclosures regarding our results of operations and financial condition for the quarter and nine months ended December 31, 2019.

 

On January 27, 2020, we announced our results of operations for the quarter and nine months ended December 31, 2019. We issued a press release announcing our results under International Financial Reporting Standards (“IFRS”), IFRS Unaudited Consolidated Financial Results,  Ind AS Unaudited Consolidated Financial Results with review report and Ind AS Unaudited Standalone Financial Results with review report for the quarter and nine months ended December 31, 2019, a copy of which is attached to this Form 6-K as Exhibit 99.1 , 99.2 , 99.3 and 99.4 respectively. 

 

We have also made available to the public on our web site, www.drreddys.com, the following: IFRS Unaudited Consolidated Financial Results, Ind AS Unaudited Consolidated Financial Results  and Ind AS Unaudited Standalone Financial Results for the quarter and nine months ended December 31, 2019.

 

Exhibits

 

Exhibit Number

 

Description of Exhibits

 

 

 

99.1

 

Press Release, “Dr. Reddy’s Q3 FY20 Financial Results”, January 27, 2020

 

 

 

99.2

 

IFRS Unaudited Consolidated Financial Results for the quarter and nine months ended December 31, 2019

 

 

 

99.3

 

Ind AS Unaudited Consolidated Financial Results for the quarter and nine months ended December 31, 2019

 

 

 

99.4

 

Ind AS Unaudited Standalone Financial Results for the quarter and nine months ended December 31, 2019

 

 
 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

DR. REDDY’S LABORATORIES LIMITED
(Registrant)

 

 

 

 

Date:  January 27, 2020

By:

/s/ Sandeep Poddar

 

 

 

Name:

Sandeep Poddar

 

 

 

Title:

Company Secretary

 

 
 
 

 

Exhibit 99.1

 

 

 

CONTACT

DR. REDDY'S LABORATORIES LTD.

Investor relationS

Media relationS

8-2-337, Road No. 3, Banjara Hills,
Hyderabad - 500034. Telangana, India.

AMIT AGARWAL amita@drreddys.com
(Ph: +91-40-4900 2135)

DEEP GHATAK deepghatak@drreddys.com
(Ph: +91-40-4900 2121)

 

 

 

Dr. Reddy’s Q3 & 9M FY20 Financial Results

 

Hyderabad, India, January 27, 2020: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY) today announced its consolidated financial results for the quarter ended December 31, 2019 under International Financial Reporting Standards (IFRS).

 

Q3 Performance Summary

 

9M Performance Summary

Rs. 4,384 Cr

Revenue

[Down: 9% QoQ; Up: 14% YoY]

 

54.1%

Gross Margin

[Q2 FY20: 57.5%; Q3 FY19: 53.9%]

 

Rs. 1,267 Cr

SGNA expenses

[Down: 4% QoQ, Up: 5% YoY]

 

Rs. 395 Cr

R&D expenses

[9.0% of Revenues]

 

Rs. 1,074 Cr

EBITDA

[Down: 25% QoQ; Up: 24% YoY]

 

Rs. (527 Cr)*

Profit before Tax

[Down: 169% QoQ; 191% YoY]

 

Rs. 13,028 Cr

Revenue

[Up: 15% YoY]

 

54.7%

Gross Margin

[9M FY19: 54.9%]

Rs. 3,795 Cr

SGNA expenses

[Up: 4% YoY]

 

Rs. 1,122 Cr

R&D expenses

[8.6% of Revenues]

 

Rs. 3,642 Cr

EBITDA

[Up: 44% YoY]

 

Rs. 1,089 Cr

Profit before Tax

[Down: 34% YoY]

 

 * Excluding intangibles impairment of Rs. 1,320 Cr; Profit before tax is Rs. 793 Cr

 

Commenting on the results, Co-Chairman and MD, GV Prasad said “The current quarter performance has been good across all our businesses and we achieved strong EBITDA margins. The profits were impacted due to trigger based impairment charge taken on a few products including gNuvaring. We continue to focus on execution and have made significant progress on quality systems and operational efficiencies”.  

 
 
 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of I USD = Rs. 71.36

 

Dr. Reddy’s Laboratories Limited and Subsidiaries

 

Consolidated Income Statement

 

 

 

Q3 FY20

 

 

Q3 FY19

 

 

YoY

 

 

Q2 FY20

 

 

QoQ

 

Particulars

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

 

Gr %

 

 

($)

 

 

(Rs.)

 

 

Gr%

 

Revenues

 

 

614

 

 

 

43,838

 

 

 

540

 

 

 

38,500

 

 

 

14

 

 

 

673

 

 

 

48,009

 

 

 

(9

)

Cost of Revenues

 

 

282

 

 

 

20,116

 

 

 

249

 

 

 

17,748

 

 

 

13

 

 

 

286

 

 

 

20,389

 

 

 

(1

)

Gross Profit

 

 

332

 

 

 

23,722

 

 

 

291

 

 

 

20,752

 

 

 

14

 

 

 

387

 

 

 

27,620

 

 

 

(14

)

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General & Administrative expenses

 

 

178

 

 

 

12,670

 

 

 

169

 

 

 

12,036

 

 

 

5

 

 

 

185

 

 

 

13,217

 

 

 

(4

)

Research and Development expenses

 

 

55

 

 

 

3,949

 

 

 

51

 

 

 

3,668

 

 

 

8

 

 

 

51

 

 

 

3,662

 

 

 

8

 

Impairment of non-current assets

 

 

185

 

 

 

13,200

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

50

 

 

 

3,560

 

 

 

271

 

Other operating (income)

 

 

(3

)

 

 

(228

)

 

 

(10

)

 

 

(681

)

 

 

(67

)

 

 

(2

)

 

 

(135

)

 

 

68

 

Results from operating activities

 

 

(82

)

 

 

(5,869

)

 

 

80

 

 

 

5,729

 

 

 

(202

)

 

 

103

 

 

 

7,316

 

 

 

(180

)

Net finance (income)

 

 

(6

)

 

 

(419

)

 

 

0

 

 

 

13

 

 

 

 

 

 

 

(3

)

 

 

(231

)

 

 

81

 

Share of (profit) / loss of equity accounted investees

 

 

(2

)

 

 

(176

)

 

 

(1

)

 

 

(89

)

 

 

98

 

 

 

(2

)

 

 

(117

)

 

 

50

 

Profit before income tax

 

 

(74

)

 

 

(5,274

)

 

 

81

 

 

 

5,805

 

 

 

(191

)

 

 

107

 

 

 

7,664

 

 

 

(169

)

Income tax expense

 

 

6

 

 

 

423

 

 

 

13

 

 

 

953

 

 

 

(56

)

 

 

(46

)

 

 

(3,261

)

 

 

(113

)

Profit for the period

 

 

(80

)

 

 

(5,697

)

 

 

68

 

 

 

4,852

 

 

 

(217

)

 

 

153

 

 

 

10,925

 

 

 

(152

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share (EPS)

 

 

(0.48

)

 

 

(34.37

)

 

 

0.41

 

 

 

29.21

 

 

 

(217

)

 

 

0.92

 

 

 

65.82

 

 

 

(152

)

 

As % to Revenues

 

Q3 FY20

 

 

Q3 FY19

 

 

Q2

FY20

 

Gross Profit

 

 

54.1

 

 

 

53.9

 

 

 

57.5

 

SG&A

 

 

28.9

 

 

 

31.3

 

 

 

34.9

 

R&D

 

 

9.0

 

 

 

9.5

 

 

 

7.6

 

EBITDA

 

 

24.5

 

 

 

22.5

 

 

 

29.9

 

PBT*

 

 

(12.0

)

 

 

15.1

 

 

 

16.0

 

PAT

 

 

(13.0

)

 

 

12.6

 

 

 

22.8

 

 

*Excluding intangibles impairment Q3 FY20 PBT @ 18.1%

 

EBITDA Computation

 

 

 

Q3 FY20

 

 

Q3 FY19

 

 

Q2 FY20

 

Particulars

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

Profit before Income Tax

 

 

(74

)

 

 

(5,274

)

 

 

81

 

 

 

5,805

 

 

 

107

 

 

 

7,664

 

Interest (income) net*

 

 

(4

)

 

 

(274

)

 

 

(4

)

 

 

(260

)

 

 

(3

)

 

 

(226

)

Depreciation

 

 

30

 

 

 

2,130

 

 

 

29

 

 

 

2,073

 

 

 

32

 

 

 

2,306

 

Amortization

 

 

13

 

 

 

955

 

 

 

14

 

 

 

1,035

 

 

 

14

 

 

 

1,033

 

Impairment

 

 

185

 

 

 

13,200

 

 

 

-

 

 

 

-

 

 

 

50

 

 

 

3,561

 

EBITDA

 

 

150

 

 

 

10,737

 

 

 

121

 

 

 

8,652

 

 

 

201

 

 

 

14,338

 

 

* Includes income from Investments      

 

Note:

Q3 FY20 Financials include an impairment charge of Rs. 13,200 million on some of the Company’s products forming part of Global Generics and Proprietary Products segments
Q2 FY20 Financials include Rs. 6,901 million from the out-licensing income, net of expenses related to Neuro products of Proprietary Products
Q2 FY20 Financials include an impairment charge of Rs. 3,561 million on some of the Company’s products forming part of Global Generics segment

 
 
 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of I USD = Rs. 71.36

 

Key Balance Sheet Items

 

 

 

As on 31st Dec,
2019

 

 

As on 30th Sep
2019

 

 

As on 31st Dec
2018

 

Particulars

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

 

($)

 

 

(Rs.)

 

Cash and cash equivalents and other investments

 

 

287

 

 

 

20,457

 

 

 

427

 

 

 

30,446

 

 

 

359

 

 

 

25,593

 

Trade receivables (current & non-current)

 

 

646

 

 

 

46,095

 

 

 

591

 

 

 

42,153

 

 

 

523

 

 

 

37,302

 

Inventories

 

 

529

 

 

 

37,746

 

 

 

491

 

 

 

35,033

 

 

 

475

 

 

 

33,911

 

Property, plant and equipment

 

 

739

 

 

 

52,709

 

 

 

743

 

 

 

53,008

 

 

 

776

 

 

 

55,344

 

Goodwill and Other Intangible assets

 

 

432

 

 

 

30,847

 

 

 

621

 

 

 

44,340

 

 

 

690

 

 

 

49,205

 

Loans and borrowings (current & non-current)

 

 

229

 

 

 

16,320

 

 

 

442

 

 

 

31,545

 

 

 

614

 

 

 

43,836

 

Trade payables

 

 

250

 

 

 

17,810

 

 

 

216

 

 

 

15,434

 

 

 

223

 

 

 

15,939

 

Equity

 

 

2,083

 

 

 

1,48,672

 

 

 

2,155

 

 

 

1,53,816

 

 

 

1,902

 

 

 

1,35,708

 

 

Revenue Mix by Segment

 

 

 

Q3 FY20

 

 

Q3 FY19

 

 

YoY

 

 

Q2 FY20

 

 

QoQ

 

Particulars

 

(Rs.)

 

 

(Rs.)

 

 

Growth %

 

 

(Rs.)

 

 

Growth %

 

Global Generics

 

 

35,927

 

 

 

31,347

 

 

 

15

%

 

 

32,816

 

 

 

9

%

North America

 

 

15,999

 

 

 

14,832

 

 

 

8

%

 

 

14,265

 

 

 

12

%

Europe

 

 

3,093

 

 

 

2,030

 

 

 

52

%

 

 

2,764

 

 

 

12

%

India

 

 

7,636

 

 

 

6,741

 

 

 

13

%

 

 

7,511

 

 

 

2

%

Emerging Markets

 

 

9,199

 

 

 

7,744

 

 

 

19

%

 

 

8,276

 

 

 

11

%

Pharmaceutical Services and Active Ingredients (PSAI)

 

 

6,906

 

 

 

5,937

 

 

 

16

%

 

 

7,107

 

 

 

-3

%

Proprietary Products & Others

 

 

1,005

 

 

 

1,216

 

 

 

(18

)%

 

 

8,086

 

 

 

(88

)%

Total

 

 

43,838

 

 

 

38,500

 

 

 

14

%

 

 

48,009

 

 

 

(9

)%

 

 

 
 
 

Revenue analysis (Segment wise)

 

Sales for the quarter is Rs. 43.8 billion with a year-on-year growth of 14%. Sequentially, it has declined by 9%. In Q2 FY 20, we had out-licensed 2 neuro products of the proprietary products business and recognized a revenue of Rs. 7.2 billion. Adjusted for this, the sequential quarter growth is 7%, and is highest ever quarterly sales from operations, without any one-off item.

 

Global Generics (GG)

 

Revenues from GG segment at Rs. 35.9 billion. Year-on-year growth of 15%, primarily driven by Europe, Emerging Markets and India. Sequential growth of 9%, primarily driven by NAG, Europe and EM.

 

·

Revenues from North America at Rs. 16.0 billion. Year-on-year revenues grew by 8%. Sequential growth of 12%, largely on account of higher volumes in some of our key molecules partly offset by price erosion in some of our key molecules. We launched five new products (Bortezomib injection, Doxercalciferol, Deferasirox dispersable tabs, Deferasirox film coated tabs, Sodium Nitroprusside injection) during the quarter.

 

As of 31st December 2019, cumulatively 101 generic filings are pending for approval with the USFDA (99 ANDAs and 2 NDAs under 505(b)(2) route). Of these 99 ANDAs, 53 are Para IVs out of which we believe 32 have ‘First to File’ status.

 

·

Revenues from Emerging Markets at Rs. 9.2 billion. Year-on-year growth is 19%. Sequential growth is 11%.

 

-

Revenues from Russia at Rs. 4.9 billion. Year-on-year growth of 20%. Growth primarily driven by increase in volumes coupled with better realizations in some of the key molecules.

 

-

Revenues from other CIS countries and Romania market at Rs. 1.8 billion. Year-on-year growth of 26% largely driven by new products and volume traction.

 

-

Revenues from Rest of World (RoW) territories at Rs. 2.5 billion. Year-on-year growth of 12%, primarily driven by new products coupled with volume traction partly offset by price erosions in some of the key molecules.

 

·

Revenues from India at Rs. 7.6 billion. Year-on-year growth of 13%, driven by new products, improved realizations in base business and volume traction. Sequential growth is 2% due to improved realizations and launch of new products.

 

·

Revenues from Europe at Rs. 3.1 billion. Year-on-year growth of 52%, primarily on account of new products and volume traction in base business partly offset by lower realizations as few key molecules entered tenders. Sequential growth is 12% due to improvement in the sales of base business.

 

Pharmaceutical Services and Active Ingredients (PSAI)

 

·

Revenues from PSAI at Rs. 6.9 billion. Year-on-year growth of 16% largely driven by increase in volumes of API business. There is a sequential decline of 3% due to lower volumes pick up compared to Q2.

 
 
 

Proprietary Products Segment (PP)

 

·

Revenues from PP at Rs. 0.2 billion, as against Rs. 0.7 billion in Q3 FY 19 and Rs. 7.4 billion in Q2 FY 20, as we had out-licensed our commercialized derma products in Q4 FY 19 and commercialized neuro products in Q2 FY 20.

 

Income Statement Highlights:

 

·

Gross profit margin at 54.1% vs. Q3 FY 19 margin of 53.9% and Q2 FY 20 margin of 57.5%

 

-

Gross profit margin for GG and PSAI business segments are at 58.2% and 30.0% respectively.

 

-

Year on year gross profit margins marginally improved on account of new products contribution with better margins and manufacturing leverage offset by higher price erosion in some of the key molecules in the US, Europe and RoW markets.

 

-

Sequentially there is a decline in margin as during the last quarter we recognized revenue from the out-licencing of PP Neuro products. On a like to like basis, the margins improved by ~260 bps due to manufacturing leverage and business mix.

 

·

SG&A expenses at Rs. 12.7 billion, an increase of 5% on a year-on-year basis and decline of 4% sequentially. SG&A as % to sales improved by 240 bps on a year-on-year basis and on a like-to-like basis leverage improved sequentially as well.

 

·

In December, 2019 there has been a generic launch and an authorized generic launch for the product Nuvaring®, which has led to a considerable erosion in the value of this product for us, and accordingly we have taken an impairment charge of Rs. 11.1 billion ($ 156.5 mn). In addition to this, considering the current market dynamics, we have taken an impairment charge of Rs. 2.1 billion on the intangibles pertaining to other products. In total, we have taken an impairment of Rs. 13.2 billion on the intangible assets for this quarter. In Q2 FY 20, we had an impairment charge of Rs. 3.6 billion.

 

·

R&D expenses at Rs. 3.9 billion. As % to Revenues- Q3 FY20: 9.0% | Q2 FY 20: 7.6% | Q3 FY19: 9.5%. Focus continues on building healthy pipeline of products across our markets.

 

·

Other operating income at Rs. 228 million compared to Rs. 681 million in Q3 FY19. Previous year includes Rs. 423 million on account of sale of API business manufacturing unit located at Jeedimetla, Hyderabad.

 

·

Net Finance income at Rs. 419 million compared to net finance expense of Rs. 13 million in Q3 FY19. The increase is primarily on account of foreign exchange gain in current quarter compared to loss in Q3 FY19.

 

·

Loss before Tax at Rs. 5.3 billion, loss is primarily on account of impairment of intangible assets. Excluding impairment, profit before tax is at Rs. 7.9 billion.

 

·

The net tax for the quarter is at Rs. 0.42 billion.

 

·

Diluted loss per share is at Rs. 34.4

 

·

Capital expenditure is at Rs. 1.2 billion.

 
 
 

Earnings Call Details (06:30 pm IST, 08:00 am EST, January 27, 2020)

 

The Company will host an earnings call to discuss the performance and answer any questions from participants.

 

Audio conference Participants can dial-in on the numbers below:

 

Universal Access Number:

+91 22 6280 1219

Secondary number:

+91 22 7115 8120

 

 

Local Access number:

+91 70456 71221

(Available all over India)

 

 

International Toll Free Number

USA

1 866 746 2133

 

UK

0 808 101 1573

 

Singapore

800 101 2045

 

Hong Kong

800 964 448

 

Playback of call:

+91 22 7194 5757, +91 22 6663 5757

Conference ID:

58113

 

Transcript of the event will be available at www.drreddys.com. Playback will be available for a few days.

 

 

 

About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (BSE: 500124, NSE: DRREDDY, NYSE: RDY) is an integrated pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesses - Pharmaceutical Services & Active Ingredients, Global Generics and Proprietary Products – Dr. Reddy’s offers a portfolio of products and services including APIs, custom pharmaceutical services, generics, biosimilars and differentiated formulations. Our major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr. Reddy’s operates in markets across the globe. Our major markets include – USA, India, Russia & CIS countries, and Europe. For more information, log on to: www.drreddys.com

 

 

 

Disclaimer: This press release may include statements of future expectations and other forward-looking statements that are based on the management’s current views and assumptions and involve known or unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words "may", "will", "should", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to  without limitation, (i) general economic conditions such as performance of financial markets, credit defaults , currency exchange rates , interest rates , persistency levels and frequency / severity of insured loss events (ii) mortality and morbidity levels and trends, (iii) changing levels of competition and general competitive factors, (iv) changes in laws and regulations and in the policies of central banks and/or governments, (v) the impact of acquisitions or reorganisation , including related integration issues.

 

The company assumes no obligation to update any information contained herein.

 
 
 

 

Exhibit 99.2

 

Unaudited consolidated financial results of Dr. Reddy's Laboratories Limited and its subsidiaries for the quarter and nine months ended 31 December 2019 prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB)

 

All amounts in Indian Rupees millions

 

 

 

 

 

 

Quarter ended

 

 

Nine months ended

 

 

Year ended

 

Sl. No.

 

Particulars

 

 

31.12.2019

 

 

30.09.2019

 

 

31.12.2018

 

 

31.12.2019

 

 

31.12.2018

 

 

31.03.2019

 

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Audited)

 

1

 

 

Revenues

 

 

 

43,838

 

 

 

48,009

 

 

 

38,500

 

 

 

130,282

 

 

 

113,685

 

 

 

153,851

 

2

 

 

Cost of revenues

 

 

 

20,116

 

 

 

20,389

 

 

 

17,748

 

 

 

59,081

 

 

 

51,308

 

 

 

70,421

 

3

 

 

Gross profit (1 - 2)

 

 

 

23,722

 

 

 

27,620

 

 

 

20,752

 

 

 

71,201

 

 

 

62,377

 

 

 

83,430

 

4

 

 

Selling, general and administrative expenses

 

 

 

12,670

 

 

 

13,217

 

 

 

12,036

 

 

 

37,952

 

 

 

36,386

 

 

 

48,680

 

5

 

 

Research and development expenses

 

 

 

3,949

 

 

 

3,662

 

 

 

3,668

 

 

 

11,220

 

 

 

11,945

 

 

 

15,607

 

6

 

 

Impairment of non current assets

 

 

 

13,200

 

 

 

3,560

 

 

 

-

 

 

 

16,760

 

 

 

128

 

 

 

210

 

7

 

 

Other income, net

 

 

 

(228

)

 

 

(135

)

 

 

(681

)

 

 

(4,122

)

 

 

(1,625

)

 

 

(1,955

)

 

 

 

Total operating expenses

 

 

 

29,591

 

 

 

20,304

 

 

 

15,023

 

 

 

61,810

 

 

 

46,834

 

 

 

62,542

 

8

 

 

Results from operating activities [(3) - (4 + 5 + 6 + 7)]

 

 

 

(5,869

)

 

 

7,316

 

 

 

5,729

 

 

 

9,391

 

 

 

15,543

 

 

 

20,888

 

 

 

 

Finance income

 

 

 

571

 

 

 

535

 

 

 

502

 

 

 

1,796

 

 

 

1,686

 

 

 

2,280

 

 

 

 

Finance expense

 

 

 

(152

)

 

 

(304

)

 

 

(515

)

 

 

(753

)

 

 

(918

)

 

 

(1,163

)

9

 

 

Finance (expense)/income, net

 

 

 

419

 

 

 

231

 

 

 

(13

)

 

 

1,043

 

 

 

768

 

 

 

1,117

 

10

 

 

Share of profit of equity accounted investees, net of tax

 

 

 

176

 

 

 

117

 

 

 

89

 

 

 

456

 

 

 

281

 

 

 

438

 

11

 

 

Profit / (loss) before tax (8 + 9 + 10)

 

 

 

(5,274

)

 

 

7,664

 

 

 

5,805

 

 

 

10,890

 

 

 

16,592

 

 

 

22,443

 

12

 

 

Tax expense/(benefit), net

 

 

 

423

 

 

 

(3,261

)

 

 

953

 

 

 

(966

)

 

 

2,141

 

 

 

3,648

 

13

 

 

Profit / (loss) for the period / year (11 -12)

 

 

 

(5,697

)

 

 

10,925

 

 

 

4,852

 

 

 

11,856

 

 

 

14,451

 

 

 

18,795

 

14

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of Rs.5/- each

 

 

 

(34.37

)

 

 

65.93

 

 

 

29.25

 

 

 

71.53

 

 

 

87.08

 

 

 

113.28

 

 

 

 

Diluted earnings per share of Rs.5/- each

 

 

 

(34.37

)

 

 

65.82

 

 

 

29.21

 

 

 

71.40

 

 

 

86.97

 

 

 

113.09

 

 

 

 

 

 

 

 

(Notannualised)

 

 

 

(Notannualised)

 

 

 

(Notannualised)

 

 

 

(Notannualised)

 

 

 

(Notannualised)

 

 

 

 

 

 
 
 

Segment reporting (consolidated)

All amounts in Indian Rupees millions

 

 

 

 

 

Quarter ended

 

 

Nine months ended

 

 

Year ended

 

Sl. No.

 

Particulars

 

 

31.12.2019

 

 

30.09.2019

 

 

31.12.2018

 

 

31.12.2019

 

 

31.12.2018

 

 

31.03.2019

 

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Audited)

 

 

 

 

Segment wise revenue and results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

Segment revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Pharmaceutical Services and Active Ingredients

 

 

 

8,549

 

 

 

8,502

 

 

 

7,232

 

 

 

22,984

 

 

 

21,784

 

 

 

29,925

 

 

 

 

b) Global Generics

 

 

 

35,927

 

 

 

32,816

 

 

 

31,347

 

 

 

101,725

 

 

 

92,519

 

 

 

122,903

 

 

 

 

c) Proprietary Products

 

 

 

241

 

 

 

7,425

 

 

 

735

 

 

 

7,947

 

 

 

2,237

 

 

 

4,750

 

 

 

 

d) Others

 

 

 

764

 

 

 

661

 

 

 

481

 

 

 

2,058

 

 

 

1,554

 

 

 

2,058

 

 

 

 

Total

 

 

 

45,481

 

 

 

49,404

 

 

 

39,795

 

 

 

134,714

 

 

 

118,094

 

 

 

159,636

 

 

 

 

Less: Inter-segment revenues

 

 

 

1,643

 

 

 

1,395

 

 

 

1,295

 

 

 

4,432

 

 

 

4,409

 

 

 

5,785

 

 

 

 

Net revenue from operations

 

 

 

43,838

 

 

 

48,009

 

 

 

38,500

 

 

 

130,282

 

 

 

113,685

 

 

 

153,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

Segment results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit from each segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Pharmaceutical Services and Active Ingredients

 

 

 

2,072

 

 

 

1,750

 

 

 

1,826

 

 

 

4,147

 

 

 

4,708

 

 

 

6,128

 

 

 

 

b) Global Generics

 

 

 

20,910

 

 

 

18,200

 

 

 

18,049

 

 

 

58,117

 

 

 

54,916

 

 

 

71,924

 

 

 

 

c) Proprietary Products

 

 

 

246

 

 

 

7,298

 

 

 

628

 

 

 

7,751

 

 

 

1,875

 

 

 

4,182

 

 

 

 

d) Others

 

 

 

494

 

 

 

372

 

 

 

249

 

 

 

1,186

 

 

 

878

 

 

 

1,196

 

 

 

 

Total

 

 

 

23,722

 

 

 

27,620

 

 

 

20,752

 

 

 

71,201

 

 

 

62,377

 

 

 

83,430

 

 

 

 

Less: Selling and other un-allocable expenditure, net of other income

 

 

 

28,996

 

 

 

19,956

 

 

 

14,947

 

 

 

60,311

 

 

 

45,785

 

 

 

60,987

 

 

 

 

Total profit / (loss) before tax

 

 

 

(5,274

)

 

 

7,664

 

 

 

5,805

 

 

 

10,890

 

 

 

16,592

 

 

 

22,443

 

 

Global Generics segment includes operations of Biologics business. Inter-segment revenues represent sale from Pharmaceutical Services and Active Ingredients to Global Generics at cost.

 

Notes:

 

1

The unaudited results have been reviewed by the Audit Committee of the Board at their meeting held on 25 January 2020 and approved by the Board of Directors of the Company at their meeting held on 27 January 2020. The above financial results have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS), as issued by the International Accounting Standards Board (IASB).

 

2

Impairment of intangible assets:

 

Total impairment charge for the quarter ended 31 December 2019 is Rs. 13,200 million, of which Rs. 11,137 million is towards impairment of gNuvaring and the balance of Rs. 2,063 million is towards other product related intangibles.

 

Impairment of gNuvaring

 

There were significant changes to the generics market of Ethinyl estradiol / Ethenogestral vaginal ring (a generic equivalent to Nuvaring®), one of the 8 ANDAs acquired from Teva in June 2016,  with the launch of a generic and authorised generic versions of the product in the month of December 2019.  Due to these adverse market conditions, the Company recorded an impairment loss of Rs.11,137 million during the quarter ended 31 December 2019.   The carrying value of the asset after the impairment is Rs. 3,084 million. The said impairment pertains to the Company’s Global Generics segment.

 

Other intangible assets

 

In view of the specific triggers occurring in the quarter with respect to some of product related intangible assets forming part of  the Company's Global Generics and Proprietary products segments, the Company determined that there was a decrease in the market potential of these products primarily due to higher than expected price erosion and increased competition leading to lower volumes.Consequently, the Company recorded an amount of Rs.2,063 million as an impairment loss for the quarter ended 31 December 2019.

 

3

Revenue for the quarter ended 30 September 2019 includes an amount of Rs. 7,229 million (U.S.$105.1 million) towards license fee for selling US and select territory rights for ZEMBRACE® SYMTOUCH® (sumatriptan injection) 3 mg and TOSYMRATM (sumatriptan nasal spray) 10 mg, (formerly referred to as “DFN-02”) to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.

 

4

Consequent to the adverse market conditions with respect to certain of the Company’s products forming part of the Global Generics segment, the Company assessed the recoverable amount of three product related intangibles (viz., ramelteon, tobramycin and imiquimod) and recognised an amount of Rs. 3,551 million as impairment charge during the quarter ended 30 September 2019. The said impairment charge is recognised under the head “impairment of non-current assets”.

 

5

During the quarter ended 30 September 2019, the Government of India promulgated the Taxation Laws (Amendment) Ordinance 2019, announcing key changes to corporate tax rates in the Income-tax Act, 1961. The key changes include, among others, reduction of MAT rate from 21.55% to 17.47% (including surcharge and cess). As a result of this, the Company reassessed the MAT recoverability and recognised an amount of Rs. 4,989 million as deferred tax asset during the quarter ended 30 September 2019.

 

6

"Other income, net" for the quarter ended 30 June 2019 includes an amount of Rs. 3,457 million received from Celgene pursuant to a settlement agreement entered in April 2019. The agreement effectively settles any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada.

 

7

The Company received a warning letter, dated 5 November 2015 from the U.S. FDA, regarding deviations with current Good Manufacturing Practices at its API manufacturing facilities in Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as regarding violations at its oncology formulation manufacturing facility at Duvvada, Visakhapatnam, Andhra Pradesh. Of these three manufacturing facilities, two facilities (API manufacturing facility at Miryalaguda and Oncology manufacturing facility at Duvvada) received Establishment Inspection Reports from the U.S. FDA in the months of June 2017 and February 2019, respectively which indicate that the audit is closed. With respect to API manufacturing facility at Srikakulam, in October 2018, the Company was asked to carry out certain detailed investigations and analysis. As part of the review of the response by the U.S. FDA, certain additional follow-on queries were received by the Company. The Company responded to all queries in January 2019 to the U.S. FDA. In February 2019, the Company received certain follow on questions from the U.S. FDA and the Company responded to these questions in March 2019. As on 27 January 2020, the facility is undergoing inspection by the U.S. FDA.

 
 

8

Effective 1 April 2019, the Company adopted IFRS 16, Leases, using the modified retrospective approach. IFRS 16 brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Upon implementation of IFRS 16, majority of leases for which the company is the lessee became on-balance sheet liabilities with corresponding right-of-use assets also recognised on the balance sheet. Accordingly, on 1 April 2019, the Company recognised lease liabilities of Rs. 1,335 million and right-of-use assets of Rs. 1,153 million (after adjustments of Rs. 182 million towards lease incentives and other items related to the lease agreement as at 31 March 2019).

 

9

During the quarter ended 31 December 2018, the Company sold one of its API manufacturing business units located in Jeedimetla, Hyderabad to Therapiva Private Limited. This sale was done by way of slump sale including all related property, plant and equipment, current assets, current liabilities, and transfer of employees. An amount of Rs. 423 million representing the profit on sale of such business unit was included under the head “other income, net”.

 

10

The results for the quarter and nine months ended 31 December 2019 were subjected to a "Limited Review". An unqualified report was issued thereon.

 

By order of the Board

For Dr. Reddy's Laboratories Limited

 

Place: Hyderabad

G V Prasad

Date:  27 January 2020

Co-Chairman & Managing Director

 
 
 

 

Exhibit 99.3

 

S.R. Batliboi & Associates LLP

Charted Accountants

Tablespace, 6th Floor

Western Aqua Building

Whitefields, Hitech City

Hyderabed - 500 081, India

 

Tel: +91 40 6141 6000

 

Independent Auditor’s Review Report on the Quarterly and Year to Date Unaudited Consolidated Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

 

Review Report to

The Board of Directors

Dr. Reddy’s Laboratories Limited

 

1.

We have reviewed the accompanying Statement of Unaudited Consolidated Financial Results of Dr. Reddy’s Laboratories Limited (the “Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”) and its share of the net profit after tax and total comprehensive income of joint ventures for the quarter ended December 31, 2019 and year to date from April 01, 2019 to December 31, 2019 (the “Statement”) attached herewith, being submitted by the Holding Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).

 

2.

This Statement, which is the responsibility of the Holding Company’s Management and approved by the Holding Company’s Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34, (Ind AS 34) “Interim Financial Reporting” prescribed under Section 133 of the Companies Act, 2013 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Statement based on our review.

 

3.

We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We also performed procedures in accordance with the Circular No. CIR/CFD/CMD1/44/2019 dated March 29, 2019 issued by the Securities and Exchange Board of India under Regulation 33(8) of the Listing Regulations, to the extent applicable.

 

4.

The Statement includes the results of the following entities:

SL. NO.

NAME OF THE COMPANY

Subsidiaries

1

Dr. Reddy's New Zealand Limited

2

Dr. Reddy’s Laboratories (Australia) Pty. Limited

3

Dr. Reddy’s Laboratories (Proprietary) Limited

4

Dr. Reddy's Venezuela, C.A.

5

Dr. Reddy’s Laboratories, Inc.

6

Promius Pharma, LLC

7

Dr. Reddy’s Laboratories Louisiana, LLC

8

Reddy Pharma Italia S.R.L.

9

Dr. Reddy’s S.R.L.

10

Reddy Pharma Iberia SA

 

 

 

S.R. Batliboi & Associates LLP, a Limited Liability Partnership with LLP Identity No. AAB-4295

Regd. Office : 22, Camac Street, Block ‘B’, 3rd Floor, Kolkata-700 016

 
 
 

S.R. Batliboi & Associates LLP

Charted Accountants

 

11

Dr. Reddy’s Farmaceutica Do Brasil Ltda.

12

Dr. Reddy’s Laboratories (UK) Limited

13

Dr. Reddy’s Laboratories (EU) Limited

14

Chirotech Technology Limited

15

OOO Dr. Reddy’s Laboratories Limited

16

Dr. Reddy’s Laboratories Romania S.R.L.

17

Reddy Holding GmbH

18

beta Institut gemeinnützige GmbH

19

betapharm Arzneimittel  GmbH

20

Lacock Holdings Limited

21

Reddy Netherlands B.V.

22

Reddy Antilles N.V.

23

Dr. Reddy’s Laboratories SA

24

Dr. Reddy’s Laboratories International SA (Merged with Dr. Reddy’s Laboratories SA w.e.f. June 28, 2019)

25

Industrias Quimicas Falcon de Mexico, S.A. de CV

26

Aurigene Discovery Technologies (Malaysia) Sdn. Bhd.

27

Dr. Reddy's Laboratories New York, Inc.

28

Dr. Reddy's Laboratories LLC

29

Dr. Reddy`s Research and Development B.V. (formerly Octoplus B.V.)

30

Dr. Reddy's Laboratories Canada Inc.

31

Dr. Reddy's Singapore Pte. Limited (striked off w.e.f. June 4, 2019)

32

Dr. Reddy's Laboratories S.A.S.

33

Aurigene Discovery Technologies, Inc.

34

Dr. Reddy's Laboratories B.V. (Formerly known as Eurobridge Consulting B.V.)

35

OOO DRS LLC

36

Dr. Reddy’s Laboratories Japan KK

37

Reddy Pharma SAS

38

Dr Reddy’s Laboratories Kazakhstan LLP

39

Dr. Reddy’s (WUXI) Pharmaceutical Co. Limited

40

Dr. Reddy's Laboratories Chile SPA.

41

Dr. Reddy's Laboratories Malaysia Sdn.Bhd.

42

Dr. Reddy’s Laboratories Taiwan Limited

43

Dr. Reddy's Laboratories Philippines Inc.

44

Dr. Reddy's Laboratories (Thailand) Limited

45

Aurigene Discovery Technologies Limited

46

DRL Impex Limited

47

Dr. Reddy's Bio-Sciences Limited

48

Idea2Enterprises (India) Private Limited

49

Cheminor Investments Limited

50

Regkinetics Services Limited (Formerly known as Dr. Reddy’s Pharma SEZ Limited)

51

Imperial Credit Private Limited 

52

Aurigene Pharmaceutical Services Limited (from September 16, 2019)

 

 

Joint ventures

1

Kunshan Rotam Reddy Pharmaceutical Co. Limited

2

DRANU LLC

3

DRES Energy Private Limited

 

 

Other Consolidating entities

1

Cheminor Employees Welfare Trust

2

Dr. Reddy's Research Foundation

 

 

 

  

S.R. Batliboi & Associates LLP

Charted Accountants 

 

5.

Based on our review conducted and procedures performed as stated in paragraph 3 above nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with recognition and measurement principles laid down in the aforesaid Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Companies Act, 2013, as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.

 

For S.R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants

ICAI Firm registration number: 101049W/E300004

 

 

per S Balasubrahmanyam

Partner

Membership No.: 053315

 

UDIN: 20053315AAAAAH7535

 

Chennai

Date: January 27, 2020

 
 
 

 

 

 

Dr. Reddy’s Laboratories Ltd.

8-2-337, Road No. 3, Banjara Hills,

Hyderabad – 500 034, Telangana,

India.

CIN : L85195TG1984PLC004507

 

Tel      : +91 40 4900 2900

Fax     : +91 40 4900 2999

Email : mail@drreddys.com

www.drreeddys.com

 

DR. REDDY'S LABORATORIES LIMITED

STATEMENT OF UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2019

 

All amounts in Indian Rupees millions

 

Sl. No.

 

 

 

 

Quarter ended

 

 

Nine months ended

 

 

Year ended

 

 

 

Particulars

 

 

31.12.2019

 

 

30.09.2019

 

 

31.12.2018

 

 

31.12.2019

 

 

31.12.2018

 

 

31.03.2019

 

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

Revenue from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Net sales / income from operations

 

 

 

42,607

 

 

 

39,982

 

 

 

37,861

 

 

 

120,213

 

 

 

111,234

 

 

 

148,706

 

 

 

 

b) License fees and service income

 

 

 

1,231

 

 

 

8,026

 

 

 

639

 

 

 

10,069

 

 

 

2,451

 

 

 

5,145

 

 

 

 

c) Other operating income

 

 

 

133

 

 

 

120

 

 

 

146

 

 

 

399

 

 

 

501

 

 

 

631

 

 

 

 

Total revenue from operations

 

 

 

43,971

 

 

 

48,128

 

 

 

38,646

 

 

 

130,681

 

 

 

114,186

 

 

 

154,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

Other income

 

 

 

673

 

 

 

540

 

 

 

1,023

 

 

 

5,470

 

 

 

2,542

 

 

 

3,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

Total income (1 + 2)

 

 

 

44,644

 

 

 

48,668

 

 

 

39,669

 

 

 

136,151

 

 

 

116,728

 

 

 

157,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Cost of materials consumed

 

 

 

7,528

 

 

 

7,503

 

 

 

7,354

 

 

 

22,395

 

 

 

21,534

 

 

 

28,894

 

 

 

 

b) Purchase of stock-in-trade

 

 

 

8,426

 

 

 

5,942

 

 

 

5,418

 

 

 

19,584

 

 

 

14,415

 

 

 

18,808

 

 

 

 

c) Changes in inventories of finished goods, work-in-progress and stock-in-trade

 

 

 

(1,801

)

 

 

566

 

 

 

(1,014

)

 

 

(1,746

)

 

 

(3,625

)

 

 

(2,754

)

 

 

 

d) Employee benefits expense

 

 

 

8,377

 

 

 

8,255

 

 

 

8,054

 

 

 

25,247

 

 

 

25,147

 

 

 

33,562

 

 

 

 

e) Depreciation and amortisation expense

 

 

 

2,869

 

 

 

3,131

 

 

 

2,903

 

 

 

8,890

 

 

 

8,476

 

 

 

11,348

 

 

 

 

f) Impairment of non-current assets

 

 

 

13,200

 

 

 

3,560

 

 

 

-

 

 

 

16,760

 

 

 

34

 

 

 

116

 

 

 

 

g) Finance costs

 

 

 

152

 

 

 

303

 

 

 

241

 

 

 

753

 

 

 

644

 

 

 

889

 

 

 

 

h) Selling and other expenses

 

 

 

11,128

 

 

 

11,664

 

 

 

10,788

 

 

 

33,229

 

 

 

33,088

 

 

 

44,074

 

 

 

 

Total expenses

 

 

 

49,879

 

 

 

40,924

 

 

 

33,744

 

 

 

125,112

 

 

 

99,713

 

 

 

134,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

Profit / (loss) before tax and before share of equity accounted investees(3 - 4)

 

 

 

(5,235

)

 

 

7,744

 

 

 

5,925

 

 

 

11,039

 

 

 

17,015

 

 

 

22,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

Share of profit of equity accounted investees, net of tax

 

 

 

176

 

 

 

117

 

 

 

89

 

 

 

456

 

 

 

281

 

 

 

438

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

Profit / (loss) before tax (5+6)

 

 

 

(5,059

)

 

 

7,861

 

 

 

6,014

 

 

 

11,495

 

 

 

17,296

 

 

 

23,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

Tax expense / (benefit):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Current tax

 

 

 

1,736

 

 

 

2,108

 

 

 

610

 

 

 

6,199

 

 

 

3,294

 

 

 

4,707

 

 

 

 

b) Deferred tax

 

 

 

(1,411

)

 

 

(5,315

)

 

 

401

 

 

 

(7,153

)

 

 

(944

)

 

 

(849

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

Net profit / (loss) after taxes and share of profit of associates (7 - 8)

 

 

 

(5,384

)

 

 

11,068

 

 

 

5,003

 

 

 

12,449

 

 

 

14,946

 

 

 

19,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) (i) Items that will not be reclassified subsequently to profit or loss

 

 

 

(200

)

 

 

161

 

 

 

(438

)

 

 

(86

)

 

 

(886

)

 

 

(379

)

 

 

 

(ii) Income tax relating to items that will not be reclassified to profit or loss

 

 

 

-

 

 

 

-

 

 

 

103

 

 

 

-

 

 

 

227

 

 

 

(673

)

 

 

 

b) (i) Items that will be reclassified subsequently to profit or loss

 

 

 

606

 

 

 

226

 

 

 

199

 

 

 

563

 

 

 

(207

)

 

 

19

 

 

 

 

(ii) Income tax relating to items that will be reclassified to profit or loss

 

 

 

48

 

 

 

65

 

 

 

(230

)

 

 

136

 

 

 

1

 

 

 

(54

)

 

 

 

Total other comprehensive income

 

 

 

454

 

 

 

452

 

 

 

(366

)

 

 

613

 

 

 

(865

)

 

 

(1,087

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

Total comprehensive income (9 + 10)

 

 

 

(4,930

)

 

 

11,520

 

 

 

4,637

 

 

 

13,062

 

 

 

14,081

 

 

 

18,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

Paid-up equity share capital (face value Rs. 5/- each)

 

 

 

831

 

 

 

831

 

 

 

830

 

 

 

831

 

 

 

830

 

 

 

830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

Other equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

139,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

Earnings per equity share (face value Rs. 5/- each)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

(32.48

)

 

 

66.78

 

 

 

30.16

 

 

 

75.11

 

 

 

90.07

 

 

 

117.53

 

 

 

 

Diluted

 

 

 

(32.48

)

 

 

66.68

 

 

 

30.12

 

 

 

74.97

 

 

 

89.96

 

 

 

117.33

 

 

 

 

 

 

 

 

(Notannualised) 

 

 

 

(Notannualised) 

 

 

 

(Notannualised) 

 

 

 

(Notannualised) 

 

 

 

(Notannualised) 

 

 

 

 

 

 

See accompanying notes to the financial results

 

 
 
 

 

 

DR. REDDY’S LABORATORIES LIMITED

 

Segment Information

All amounts in Indian Rupees millions

 

 

 

 

 

Quarter ended

 

 

Nine months ended

 

 

Year ended

 

Sl. No.

 

 

Particulars

 

31.12.2019

 

 

30.09.2019

 

 

31.12.2018

 

 

31.12.2019

 

 

31.12.2018

 

 

31.03.2019

 

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Audited)

 

 

 

 

Segment wise revenue and results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

Segment revenue :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Pharmaceutical Services and Active Ingredients

 

 

8,654

 

 

 

8,598

 

 

 

7,355

 

 

 

23,304

 

 

 

22,162

 

 

 

30,403

 

 

 

 

b) Global Generics

 

 

35,956

 

 

 

32,838

 

 

 

31,369

 

 

 

101,804

 

 

 

92,641

 

 

 

123,056

 

 

 

 

c) Proprietary Products

 

 

241

 

 

 

7,425

 

 

 

735

 

 

 

7,947

 

 

 

2,237

 

 

 

4,750

 

 

 

 

d) Others

 

 

763

 

 

 

662

 

 

 

482

 

 

 

2,058

 

 

 

1,555

 

 

 

2,058

 

 

 

 

Total

 

 

45,614

 

 

 

49,523

 

 

 

39,941

 

 

 

135,113

 

 

 

118,595

 

 

 

160,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Inter-segment revenue

 

 

1,643

 

 

 

1,395

 

 

 

1,295

 

 

 

4,432

 

 

 

4,409

 

 

 

5,785

 

 

 

 

Total revenue from operations

 

 

43,971

 

 

 

48,128

 

 

 

38,646

 

 

 

130,681

 

 

 

114,186

 

 

 

154,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

Segment results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit from each segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Pharmaceutical Services and Active Ingredients

 

 

2,079

 

 

 

1,758

 

 

 

1,833

 

 

 

4,169

 

 

 

4,730

 

 

 

6,158

 

 

 

 

b) Global Generics

 

 

20,910

 

 

 

18,200

 

 

 

18,049

 

 

 

58,117

 

 

 

54,916

 

 

 

71,924

 

 

 

 

c) Proprietary Products

 

 

246

 

 

 

7,298

 

 

 

628

 

 

 

7,751

 

 

 

1,875

 

 

 

4,182

 

 

 

 

d) Others

 

 

492

 

 

 

372

 

 

 

249

 

 

 

1,184

 

 

 

878

 

 

 

1,196

 

 

 

 

Total

 

 

23,727

 

 

 

27,628

 

 

 

20,759

 

 

 

71,221

 

 

 

62,399

 

 

 

83,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Selling and other un-allocable expenditure / (income), net

 

 

28,786

 

 

 

19,767

 

 

 

14,745

 

 

 

59,726

 

 

 

45,103

 

 

 

60,102

 

 

 

 

Total profit / (loss) before tax

 

 

(5,059

)

 

 

7,861

 

 

 

6,014

 

 

 

11,495

 

 

 

17,296

 

 

 

23,358

 

 

Global Generics includes operations of Biologics business. Inter-segment revenue represents sale from Pharmaceutical Services and Active Ingredients to Global Generics at cost.

 

Segmental Capital employed

As certain assets of the Company including manufacturing facilities, development facilities and treasury assets and liabilities are often deployed interchangeably across segments, it is impractical to allocate these assets and liabilities to each segment. Hence, the details for capital employed have not been disclosed in the above table.

 

Notes:

 

1

These results have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules 2015 as amended.

 

2

Impairment of intangible assets:

 

Total impairment charge for the quarter ended 31 December 2019 is Rs. 13,200 million, of which Rs. 11,137 million is towards impairment of gNuvaring and the balance of Rs. 2,063 million is towards other product related intangibles.

 

Impairment of gNuvaring

 

There were significant changes to the generics market of Ethinyl estradiol / Ethenogestral vaginal ring (a generic equivalent to Nuvaring®), one of the 8 ANDAs acquired from Teva in June 2016,  with the launch of a generic and authorised generic versions of the product in the month of December 2019.  Due to these adverse market conditions, the Company recorded an impairment loss of Rs.11,137 million during the quarter ended 31 December 2019.   The carrying value of the asset after the impairment is Rs. 3,084 million. The said impairment pertains to the Company’s Global Generics segment.  

 

Other intangible assets

 

In view of the specific triggers occurring in the quarter with respect to some of product related intangible assets forming part of  the Company's Global Generics and Proprietary products segments, the Company determined that there was a decrease in the market potential of these products primarily due to higher than expected price erosion and increased competition leading to lower volumes.Consequently, the Company recorded an amount of Rs.2,063 million as an impairment loss for the quarter ended 31 December 2019.

 

3

Revenue for the quarter ended 30 September 2019 includes an amount of Rs. 7,229 million (U.S.$105.1 million) towards license fee for selling US and select territory rights for ZEMBRACE® SYMTOUCH® (sumatriptan injection) 3 mg and TOSYMRATM (sumatriptan nasal spray) 10 mg, (formerly referred to as “DFN-02”) to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.

 

4

Consequent to the adverse market conditions with respect to certain of the Company’s products forming part of the Global Generics segment, the Company assessed the recoverable amount of three product related intangibles (viz., ramelteon, tobramycin and imiquimod) and recognised an amount of Rs. 3,551 million as impairment charge during the quarter ended 30 September 2019. The said impairment charge is recognised under the head “impairment of non-current assets”.

 

5

During the quarter ended 30 September 2019, the Government of India promulgated the Taxation Laws (Amendment) Ordinance 2019, announcing key changes to corporate tax rates in the Income-tax Act, 1961. The key changes include, among others, reduction of MAT rate from 21.55% to 17.47% (including surcharge and cess). As a result of this, the Company reassessed the MAT recoverability and recognised an amount of Rs. 4,989 million as deferred tax asset during the quarter ended 30 September 2019.

 

6

"Other income" for the quarter ended 30 June 2019 includes an amount of Rs. 3,457 million received from Celgene pursuant to a settlement agreement entered in April 2019. The agreement effectively settles any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada.

 

 
 
 
 

7

The Company received a warning letter, dated 5 November 2015 from the U.S. FDA, regarding deviations with current Good Manufacturing Practices at its API manufacturing facilities in Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as regarding violations at its oncology formulation manufacturing facility at Duvvada, Visakhapatnam, Andhra Pradesh. Of these three manufacturing facilities, two facilities (API manufacturing facility at Miryalaguda and Oncology manufacturing facility at Duvvada) received Establishment Inspection Reports from the U.S. FDA in the months of June 2017 and February 2019, respectively which indicate that the audit is closed. With respect to API manufacturing facility at Srikakulam, in October 2018, the Company was asked to carry out certain detailed investigations and analysis. As part of the review of the response by the U.S. FDA, certain additional follow-on queries were received by the Company. The Company responded to all queries in January 2019 to the U.S. FDA. In February 2019, the Company received certain follow on questions from the U.S. FDA and the Company responded to these questions in March 2019. As on 27 January 2020, the facility is undergoing inspection by the U.S. FDA.

 

8

Effective 1 April 2019, the Company adopted Ind AS 116, Leases, using the modified retrospective approach. Ind AS 116 brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Upon implementation of Ind AS 116, majority of leases for which the company is the lessee became on-balance sheet liabilities with corresponding right-of-use assets also recognised on the balance sheet. Accordingly, on 1 April 2019, the Company recognised lease liabilities of Rs. 1,335 million and right-of-use assets of Rs. 1,153 million (after adjustments of Rs. 182 million towards lease incentives and other items related to the lease agreement as at 31 March 2019).

 

9

During the quarter ended 31 December 2018, the Company sold one of its API manufacturing business units located in Jeedimetla, Hyderabad to Therapiva Private Limited. This sale was done by way of slump sale including all related property, plant and equipment, current assets, current liabilities, and transfer of employees. An amount of Rs. 423 million representing the profit on sale of such business unit was included under the head “other income”.

 

10

The unaudited results have been reviewed by the Audit Committee of the Board at their meeting held on 25 January 2020 and approved by the Board of Directors of the Company at their meeting held on and 27 January 2020.

 

11

The results for the quarter and nine months ended 31 December 2019 were subject to a "Limited Review" by the Statutory Auditors of the Company. An unqualified report has been issued by them thereon.

 

 

By order of the Board

For Dr. Reddy's Laboratories Limited

 

Place: Hyderabad

G V Prasad

Date: 27 January 2020

Co-Chairman & Managing Director

 

 
 
 

 

 

Exhibit 99.4

 

S.R. Batliboi & Associates LLP

Charted Accountants

Tablespace, 6th Floor

Western Aqua Building

Whitefields, Hitech City

Hyderabed - 500 081, India

 

Tel: +91 40 6141 6000

 

Independent Auditor’s Review Report on the Quarterly and Year to Date Unaudited Standalone Financial Results of the Company Pursuant to the Regulation 33  of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

 

Review Report to

The Board of Directors

Dr. Reddy’s Laboratories Limited 

 

1.

We have reviewed the accompanying statement of unaudited standalone financial results of Dr. Reddy’s Laboratories Limited (the “Company”) for the quarter ended December 31, 2019 and year to date from April 1, 2019 to December 31, 2019 (the “Statement”) attached herewith, being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).

 

2.

This Statement, which is the responsibility of the Company’s Management and approved by the Company’s Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34, (Ind AS 34) “Interim Financial Reporting” prescribed under Section 133 of the Companies Act, 2013 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Statement based on our review.

 

3.

We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

4.

Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with the recognition and measurement principles laid down in the aforesaid Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Companies Act, 2013 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.

 

For S.R. BATLIBOI & CO. LLP

Chartered Accountants

ICAI Firm registration number: 101049W/E300004

 

 

per S Balasubrahmanyam

Partner

Membership No.: 053315

 

UDIN: 20053315AAAAAG7417

 

 

 

Chennai

Date: January 27, 2020

 

S.R. Batliboi & Associates LLP, a Limited Liability Partnership with LLP Identity No. AAB-4295

Regd. Office : 22, Camac Street, Block ‘B’, 3rd Floor, Kolkata-700 016

 
 
 

 

Dr. Reddy’s Laboratories Ltd.

8-2-337, Road No. 3, Banjara Hills,

Hyderabad - 500 034, Telangana,

India.

CIN : L85195TG1984PLC004507

 

Tel      : +91 40 4900 2900

Fax     : +91 40 4900 2999

Email : mail@drreddys.com

www.drreeddys.com

 

DR. REDDY'S LABORATORIES LIMITED

STATEMENT OF UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2019

 

All amounts in Indian Rupees millions

Sl.

 

 

 

 

Quarter ended

 

 

Nine months ended

 

 

Year ended

 

No.

 

Particulars

 

 

31.12.2019

 

 

30.09.2019

 

 

31.12.2018

 

 

31.12.2019

 

 

31.12.2018

 

 

31.03.2019

 

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

Revenue from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Net sales / income from operations

 

 

 

29,864

 

 

 

27,039

 

 

 

27,037

 

 

 

81,730

 

 

 

78,583

 

 

 

104,667

 

 

 

 

b) License fees and service income

 

 

 

458

 

 

 

7,314

 

 

 

145

 

 

 

7,921

 

 

 

799

 

 

 

1,062

 

 

 

 

c) Other operating income

 

 

 

118

 

 

 

107

 

 

 

135

 

 

 

336

 

 

 

421

 

 

 

526

 

 

 

 

Total revenue from operations

 

 

 

30,440

 

 

 

34,460

 

 

 

27,317

 

 

 

89,987

 

 

 

79,803

 

 

 

106,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

Other income

 

 

 

693

 

 

 

767

 

 

 

928

 

 

 

6,158

 

 

 

1,657

 

 

 

2,384

 

 

 

 

Total income (1 + 2)

 

 

 

31,133

 

 

 

35,227

 

 

 

28,245

 

 

 

96,145

 

 

 

81,460

 

 

 

108,639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Cost of materials consumed

 

 

 

6,730

 

 

 

6,453

 

 

 

5,461

 

 

 

19,022

 

 

 

15,799

 

 

 

21,032

 

 

 

 

b) Purchase of stock-in-trade

 

 

 

3,461

 

 

 

2,971

 

 

 

2,575

 

 

 

8,911

 

 

 

6,321

 

 

 

8,686

 

 

 

 

c) Changes in inventories of finished goods, work-in-progress and stock-in-trade

 

 

 

(1,001

)

 

 

5

 

 

 

(251

)

 

 

(1,671

)

 

 

(403

)

 

 

660

 

 

 

 

d) Employee benefits expense

 

 

 

5,112

 

 

 

5,028

 

 

 

4,719

 

 

 

15,136

 

 

 

14,419

 

 

 

19,319

 

 

 

 

e) Depreciation and amortisation expense

 

 

 

1,958

 

 

 

2,041

 

 

 

1,935

 

 

 

5,969

 

 

 

5,764

 

 

 

7,806

 

 

 

 

f) Finance costs

 

 

 

117

 

 

 

122

 

 

 

158

 

 

 

360

 

 

 

481

 

 

 

568

 

 

 

 

g) Selling and other expenses

 

 

 

8,581

 

 

 

8,395

 

 

 

7,944

 

 

 

25,101

 

 

 

25,036

 

 

 

33,561

 

 

 

 

Total expenses

 

 

 

24,958

 

 

 

25,015

 

 

 

22,541

 

 

 

72,828

 

 

 

67,417

 

 

 

91,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

Profit  before tax (1 + 2 - 3)

 

 

 

6,175

 

 

 

10,212

 

 

 

5,704

 

 

 

23,317

 

 

 

14,043

 

 

 

17,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

Tax expense / (benefit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Current tax

 

 

 

1,092

 

 

 

1,529

 

 

 

434

 

 

 

4,149

 

 

 

2,161

 

 

 

2,818

 

 

 

 

b) Deferred tax

 

 

 

(134

)

 

 

(4,968

)

 

 

1,276

 

 

 

(5,181

)

 

 

1,137

 

 

 

1,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

Net profit for the period / year (4 - 5)

 

 

 

5,217

 

 

 

13,651

 

 

 

3,994

 

 

 

24,349

 

 

 

10,745

 

 

 

12,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) (i) Items that will not be reclassified to profit or loss

 

 

 

4

 

 

 

(5

)

 

 

4

 

 

 

3

 

 

 

13

 

 

 

(1

)

 

 

 

(ii) Income tax relating to items that will not be reclassified to profit or loss

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3

)

 

 

3

 

 

 

 

b) (i) Items that will be reclassified to profit or loss

 

 

 

(33

)

 

 

(187

)

 

 

669

 

 

 

(286

)

 

 

41

 

 

 

209

 

 

 

 

(ii) Income tax relating to items that will be reclassified to profit or loss

 

 

 

12

 

 

 

65

 

 

 

(234

)

 

 

98

 

 

 

(14

)

 

 

(73

)

 

 

 

Total other comprehensive income

 

 

 

(17

)

 

 

(127

)

 

 

439

 

 

 

(185

)

 

 

37

 

 

 

138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

Total comprehensive income (6 + 7)

 

 

 

5,200

 

 

 

13,524

 

 

 

4,433

 

 

 

24,164

 

 

 

10,782

 

 

 

12,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

Paid-up equity share capital (face value Rs. 5/- each)

 

 

 

831

 

 

 

831

 

 

 

830

 

 

 

831

 

 

 

830

 

 

 

830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

Other equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

126,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

Earnings per equity share (face value Rs. 5/- each)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

31.47

 

 

 

82.36

 

 

 

24.08

 

 

 

146.89

 

 

 

64.75

 

 

 

76.98

 

 

 

 

Diluted

 

 

 

31.42

 

 

 

82.24

 

 

 

24.05

 

 

 

146.62

 

 

 

64.67

 

 

 

76.85

 

 

 

 

 

 

 

 

(Notannualised)

 

 

 

(Notannualised)

 

 

 

(Notannualised)

 

 

 

(Notannualised)

 

 

 

(Notannualised)

 

 

 

 

 

 

See accompanying notes to the financial results.

 

 

 
 

 

 

DR. REDDY’S LABORATORIES LIMITED

 

Segment information

All amounts in Indian Rupees millions

 

Sl.

 

 

 

 

Quarter ended

 

 

Nine months ended

 

 

Year ended

 

No.

 

Particulars

 

 

31.12.2019

 

 

30.09.2019

 

 

31.12.2018

 

 

31.12.2019

 

 

31.12.2018

 

 

31.03.2019

 

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Audited)

 

 

 

 

Segment wise revenue and results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

Segment revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Pharmaceutical Services and Active Ingredients

 

 

 

7,106

 

 

 

6,900

 

 

 

6,661

 

 

 

19,623

 

 

 

18,861

 

 

 

25,802

 

 

 

 

b) Global Generics

 

 

 

24,680

 

 

 

21,659

 

 

 

21,924

 

 

 

67,168

 

 

 

65,197

 

 

 

85,936

 

 

 

 

c) Proprietary Products

 

 

 

296

 

 

 

7,296

 

 

 

27

 

 

 

7,628

 

 

 

154

 

 

 

303

 

 

 

 

Total

 

 

 

32,082

 

 

 

35,855

 

 

 

28,612

 

 

 

94,419

 

 

 

84,212

 

 

 

112,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Inter-segment revenue

 

 

 

1,642

 

 

 

1,395

 

 

 

1,295

 

 

 

4,432

 

 

 

4,409

 

 

 

5,786

 

 

 

 

Total revenue from operations

 

 

 

30,440

 

 

 

34,460

 

 

 

27,317

 

 

 

89,987

 

 

 

79,803

 

 

 

106,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

Segment results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) before tax and interest from each segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a) Pharmaceutical Services and Active Ingredients

 

 

 

957

 

 

 

494

 

 

 

1,230

 

 

 

1,027

 

 

 

2,124

 

 

 

2,156

 

 

 

 

b) Global Generics

 

 

 

6,193

 

 

 

3,910

 

 

 

3,457

 

 

 

17,913

 

 

 

16,830

 

 

 

20,852

 

 

 

 

c) Proprietary Products

 

 

 

92

 

 

 

6,807

 

 

 

(395

)

 

 

6,622

 

 

 

(1,633

)

 

 

(2,252

)

 

 

 

Total

 

 

 

7,242

 

 

 

11,211

 

 

 

4,292

 

 

 

25,562

 

 

 

17,321

 

 

 

20,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: (i) Finance costs

 

 

 

117

 

 

 

122

 

 

 

158

 

 

 

360

 

 

 

481

 

 

 

568

 

 

 

 

(ii) Other un-allocable expenditure / (income), net

 

 

 

950

 

 

 

877

 

 

 

(1,570

)

 

 

1,885

 

 

 

2,797

 

 

 

3,181

 

 

 

 

Total profit before tax

 

 

 

6,175

 

 

 

10,212

 

 

 

5,704

 

 

 

23,317

 

 

 

14,043

 

 

 

17,007

 

 

Global Generics includes operations of Biologics business. Inter-segment revenue represents sale from Pharmaceutical Services and Active Ingredients to Global Generics at cost.

 

Segmental capital employed

As certain assets of the Company including manufacturing facilities, development facilities and treasury assets and liabilities are often deployed interchangeably across segments, it is impractical to allocate these assets and liabilities to each segment. Hence, the details for capital employed have not been disclosed in the above table.

 

Notes:

1

These results have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules 2015 as amended.

 

2

Effective 1 April 2019, the Company adopted Ind As 116, Leases, using the modified retrospective approach. Ind AS 116 brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Upon implementation of Ind AS 116, majority of leases for which the company is the lessee became on-balance sheet liabilities with corresponding right-of-use assets also recognised on the balance sheet. Accordingly, on 1 April 2019, the Company recognised lease liabilities of Rs. 332 million and right-of-use assets of Rs. 332 million.

 

3

The Company received a warning letter, dated 5 November 2015 from the U.S. FDA, regarding deviations with current Good Manufacturing Practices at its API manufacturing facilities in Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as regarding violations at its oncology formulation manufacturing facility at Duvvada, Visakhapatnam, Andhra Pradesh. Of these three manufacturing facilities, two facilities (API manufacturing facility at Miryalaguda and Oncology manufacturing facility at Duvvada) received Establishment Inspection Reports from the U.S. FDA in the months of June 2017 and February 2019, respectively which indicate that the audit is closed. With respect to API manufacturing facility at Srikakulam, in October 2018, the Company was asked to carry out certain detailed investigations and analysis. As part of the review of the response by the U.S. FDA, certain additional follow-on queries were received by the Company. The Company responded to all queries in January 2019 to the U.S. FDA. In February 2019, the Company received certain follow on questions from the U.S. FDA and the Company responded to these questions in March 2019. As on 27 January 2020, the facility is undergoing inspection by the U.S. FDA.

 

4

Revenue for the quarter ended 30 September 2019 includes an amount of Rs. 7,229 million (U.S.$105.1 million) towards license fee for selling US and select territory rights for ZEMBRACE® SYMTOUCH® (sumatriptan injection) 3 mg and TOSYMRATM (sumatriptan nasal spray) 10 mg, (formerly referred to as “DFN-02”) to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.

 

5

During the quarter ended 30 September 2019, the Government of India promulgated the Taxation Laws (Amendment) Ordinance 2019, announcing key changes to corporate tax rates in the Income-tax Act, 1961. The key changes include, among others, reduction of MAT rate from 21.55% to 17.47% (including surcharge and cess). As a result of this, the Company reassessed the MAT recoverability and recognised an amount of Rs. 4,989 million as deferred tax asset during the quarter ended 30 September 2019.

 

6

"Other income" includes an amount of Rs. 3,457 million received from Celgene during the quarter ended 30 June 2019, pursuant to a settlement agreement entered in April 2019. The agreement effectively settles any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada.

 

7

"Other income" includes dividend income of Rs. 392 million declared by Kunshan Rotam Reddy Pharmaceutical Company Limited during the quarter ended 30 June 2019.

 

 

 
 

 

DR. REDDY’S LABORATORIES LIMITED

 

8

During the quarter ended 31 December 2018, the Company sold one of its API manufacturing business units located in Jeedimetla, Hyderabad to Therapiva Private Limited. This sale was done by way of slump sale including all related property, plant and equipment, current assets, current liabilities, and transfer of employees. An amount of Rs. 423 million representing the profit on sale of such business unit was included under the head “other income”.

 

9

The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 25 January 2020 and approved by the Board of Directors of the Company at their meeting held on 27 January 2020.

 

10

The results for the quarter and nine months ended 31 December 2019 presented were subjected to a “Limited review” by the Statutory Auditors of the Company. An unqualified report was issued by them thereon.

 

By order of the Board

For Dr. Reddy's Laboratories Limited

 

  

Place: Hyderabad

G V Prasad

Date: 27 January 2020

Co-Chairman & Managing Director