Dr Reddys Laboratories Ltd 6-K, filed Oct 29, 2021
Dr Reddys Laboratories Ltd (RDY)
About this 6-K
Dr Reddys Laboratories Ltd filed this 6-K on October 29, 2021.
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
October 2021
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 half year ended September 30, 2021.
On October 29, 2021, we announced our results of operations for the quarter and half year ended September 30, 2021. 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 Limited Review report and Ind AS Unaudited Standalone Financial Results with Limited Review report for the quarter and half year ended September 30, 2021, 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 half year ended September 30, 2021.
Exhibits
| 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
| |||
| Date: October 29, 2021 | 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 |
USHA iyer ushaiyer@drreddys.com | |
Dr. Reddy’s Q2 & H1 FY22 Financial Results
Hyderabad, India, October 29, 2021: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY | NSEIFSC: DRREDDY) today announced its consolidated financial results for the quarter and the half year ended September 30, 2021. The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS).
| Q2 Performance Summary | H1 Performance Summary | |
|
Rs. 5,763 Cr Revenue [Up: 17% QoQ; 18% YoY] |
Rs. 10,683 Cr Revenue [Up: 15% YoY] | |
|
53.4% Gross Margin [Q1 FY22: 52.2%; Q2 FY21: 53.9%] |
52.9% Gross Margin [H1 FY21: 54.9%] | |
|
Rs.1,595 Cr SGNA expenses [Up: 6% QoQ; 22% YoY] |
Rs. 3,100 Cr SGNA expenses [Up: 20% YoY] | |
|
Rs. 446 Cr R&D expenses [7.7% of Revenues] |
Rs. 900 Cr R&D expenses [8.4% of Revenues] | |
|
Rs. 1,557 Cr EBITDA [27.0% of Revenues] |
Rs. 2,576 Cr EBITDA [24.1% of Revenues] | |
|
Rs. 1,268 Cr Profit before Tax [Up: 71% QoQ; 47% YoY] |
Rs. 2,011 Cr Profit before Tax [Up: 15% YoY] | |
|
Rs. 992 Cr Profit after Tax [Up: 74% QoQ; 30% YoY] |
Rs. 1,563 Cr Profit after Tax [Up: 16% YoY] |
Commenting on the results, Co-Chairman & MD, G V Prasad said “I am pleased with the improvement in the financial performance across our businesses. While we continue to strengthen our core businesses of generics and APIs, we are also making investments in our long-term growth drivers and deeper innovation capabilities. Our focus remains on meeting unmet patient needs around the world in keeping with our purpose”.
| 1 |
| All amounts in millions, except EPS | All US dollar amounts based on convenience translation rate of I USD = Rs. 74.16 |
Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement
| Q2 FY22 | Q2 FY21 | YoY | Q1 FY22 | QoQ | ||||||||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | Gr % | ($) | (Rs.) | Gr% | ||||||||||||||||||||||||
| Revenues | 777 | 57,632 | 660 | 48,967 | 18 | 663 | 49,194 | 17 | ||||||||||||||||||||||||
| Cost of Revenues | 362 | 26,846 | 304 | 22,558 | 19 | 317 | 23,495 | 14 | ||||||||||||||||||||||||
| Gross Profit | 415 | 30,786 | 356 | 26,409 | 17 | 347 | 25,699 | 20 | ||||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||
| Selling, General & Administrative expenses | 215 | 15,951 | 177 | 13,107 | 22 | 203 | 15,045 | 6 | ||||||||||||||||||||||||
| Research and Development expenses | 60 | 4,463 | 59 | 4,359 | 2 | 61 | 4,534 | (2 | ) | |||||||||||||||||||||||
| Impairment of non-current assets | - | - | 11 | 781 | (100 | ) | - | - | - | |||||||||||||||||||||||
| Other operating income | (24 | ) | (1,743 | ) | (2 | ) | (149 | ) | 1070 | (7 | ) | (487 | ) | 258 | ||||||||||||||||||
| Results from operating activities | 163 | 12,115 | 112 | 8,311 | 46 | 89 | 6,607 | 83 | ||||||||||||||||||||||||
| Net finance income | (4 | ) | (319 | ) | (3 | ) | (237 | ) | 35 | (9 | ) | (652 | ) | (51 | ) | |||||||||||||||||
| Share of profit of equity accounted investees | (3 | ) | (247 | ) | (1 | ) | (73 | ) | 238 | (2 | ) | (166 | ) | 49 | ||||||||||||||||||
| Profit before income tax | 171 | 12,681 | 116 | 8,621 | 47 | 100 | 7,425 | 71 | ||||||||||||||||||||||||
| Income tax expense | 37 | 2,761 | 13 | 998 | 177 | 23 | 1,717 | 61 | ||||||||||||||||||||||||
| Profit for the period | 134 | 9,920 | 103 | 7,623 | 30 | 77 | 5,708 | 74 | ||||||||||||||||||||||||
| Diluted Earnings Per Share (EPS) | 0.80 | 59.65 | 0.62 | 45.83 | 30 | 0.46 | 34.34 | 74 | ||||||||||||||||||||||||
| As % to revenues | Q2 FY22 | Q2 FY21 | Q1 FY22 | |||||||||
| Gross Profit | 53.4 | 53.9 | 52.2 | |||||||||
| SG&A | 27.7 | 26.8 | 30.6 | |||||||||
| R&D | 7.7 | 8.9 | 9.2 | |||||||||
| EBITDA | 27.0 | 25.9 | 20.7 | |||||||||
| PBT | 22.0 | 17.6 | 15.1 | |||||||||
| PAT | 17.2 | 15.6 | 11.6 | |||||||||
EBITDA Computation
| Q2 FY22 | Q2 FY21 | Q1 FY22 | ||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | ($) | (Rs.) | ||||||||||||||||||
| Profit before Income Tax | 171 | 12,681 | 116 | 8,621 | 100 | 7,425 | ||||||||||||||||||
| Interest income (net)* | (1 | ) | (93 | ) | (0 | ) | (1 | ) | (2 | ) | (142 | ) | ||||||||||||
| Depreciation | 28 | 2,075 | 30 | 2,188 | 27 | 1,973 | ||||||||||||||||||
| Amortization | 12 | 910 | 15 | 1,084 | 13 | 932 | ||||||||||||||||||
| Impairment | - | - | 11 | 781 | - | - | ||||||||||||||||||
| EBITDA | 210 | 15,572 | 171 | 12,673 | 137 | 10,188 | ||||||||||||||||||
| * | Includes income from Investments |
| 2 |
| All amounts in millions, except EPS | All US dollar amounts based on convenience translation rate of I USD = Rs. 74.16 |
Key Balance Sheet Items
| As on 30th Sep 2021 | As on 30th Jun 2021 | As on 30th Sep 2020 | ||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | ($) | (Rs.) | ||||||||||||||||||
| Cash and cash equivalents and other investments | 380 | 28,188 | 463 | 34,356 | 352 | 26,074 | ||||||||||||||||||
| Trade receivables | 926 | 68,666 | 825 | 61,148 | 679 | 50,335 | ||||||||||||||||||
| Inventories | 670 | 49,700 | 685 | 50,771 | 555 | 41,134 | ||||||||||||||||||
| Property, plant and equipment | 812 | 60,229 | 791 | 58,636 | 742 | 55,026 | ||||||||||||||||||
| Goodwill and Other Intangible assets | 502 | 37,206 | 536 | 39,746 | 614 | 45,553 | ||||||||||||||||||
| Loans and borrowings (current & non-current) | 408 | 30,273 | 450 | 33,373 | 370 | 27,429 | ||||||||||||||||||
| Trade payables | 345 | 25,552 | 386 | 28,607 | 308 | 22,833 | ||||||||||||||||||
| Equity | 2,480 | 1,83,928 | 2,402 | 1,78,114 | 2,229 | 1,65,337 | ||||||||||||||||||
Revenue Mix by Segment
| Q2 FY22 | Q2 FY21 | YoY | Q1 FY22 | QoQ | ||||||||||||||||
| Segment | (Rs.) | (Rs.) | Growth % | (Rs.) | Growth % | |||||||||||||||
| Global Generics | 47,431 | 39,841 | 19 | % | 41,113 | 15 | % | |||||||||||||
| North America | 18,909 | 18,328 | 3 | % | 17,390 | 9 | % | |||||||||||||
| Europe | 4,135 | 3,754 | 10 | % | 3,994 | 4 | % | |||||||||||||
| India | 11,402 | 9,123 | 25 | % | 10,600 | 8 | % | |||||||||||||
| Emerging Markets | 12,985 | 8,636 | 50 | % | 9,129 | 42 | % | |||||||||||||
| Pharmaceutical Services and Active Ingredients (PSAI) | 8,372 | 8,505 | -2 | % | 7,540 | 11 | % | |||||||||||||
| Proprietary Products & Others | 1,829 | 621 | 195 | % | 541 | 238 | % | |||||||||||||
| Total | 57,632 | 48,967 | 18 | % | 49,194 | 17 | % | |||||||||||||
| 3 |
COVID portfolio
We continue to play our role in the fight against Covid-19 by acting proactively to bring multiple preventive and curative treatment options, including a vaccine. Our major Covid-19 products launched till now include Sputnik V vaccine, Remdesivir, Avigan® (Favipiravir) and 2-deoxy-D-glucose (2-DG). We have commercialized all these products in India and some of these products in overseas markets. Currently, we are conducting clinical trials for Sputnik Light, Molnupiravir and are also developing several other covid drugs for treatment ranging from mild to severe conditions.
Revenue Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 47.4 billion:
| Ø | Year-on-year growth of 19% and sequential quarter growth of 15% was driven by covid portfolio, new product launches and base business volume traction across key markets. However, this was offset partly by price erosion in some of our products. |
North America
Revenues from North America at Rs. 18.9 billion:
| Ø | Year-on-year growth of 3% and sequential quarter growth of 9%, driven by launch and scale up of new products and increase in volumes of certain of our existing products, which was offset by price erosion in some molecules. |
| Ø | During this quarter, we launched 4 new products. These were Chlordiazepoxide Hydrochloride + Clidinium Bromide Capsules in the US and Lenalidomide capsules, Ertapenem injection and Dasatinib tablets in Canada. |
| Ø | We filed two new ANDAs during the quarter. As of 30th September 2021, cumulatively 93 generic filings are pending for approval with the USFDA (90 ANDAs and 3 NDAs under 505(b)(2) route). Out of these 93 pending filings, 46 are Para IVs and we believe 23 have ‘First to File’ status. |
Europe
Revenues from Europe at Rs. 4.1 billion. Year-on-year growth of 10% and sequential quarter growth of 4% was primarily on account of volume traction in base business and new product launches across our markets, which was partially offset by price erosion.
India
Revenues from India at Rs. 11.4 billion:
| Ø | Year-on-year growth of 25% and sequential quarter growth of 8% was primarily driven by increase in sales volumes of our existing products, including from our Covid portfolio, contribution from new product launches and increase in sales price of our existing products. |
| Ø | We launched two new products during the quarter. These were Melotryp and Baricax. |
| 4 |
Emerging Markets
Revenues from Emerging Markets at Rs. 13.0 billion. Year-on-year growth of 50% and sequential quarter growth of 42%:
| Ø | Revenues for Russia at Rs. 5.7 billion. Year-on-year growth of 44% and sequential quarter growth of 63% was on account of increase in volumes and sales prices in our existing products and new products launches. We have launched biosimilar bevacizumab in Russia during the quarter. |
| Ø | Revenues from other CIS countries and Romania at Rs. 2.2 billion. Year-on-year growth of 9% and sequential quarter growth of 51% was driven by primarily by new product launches. While sequential quarter growth was supported by increase in sales volumes and prices of certain of our existing products, year-on-year growth was offset partly on account of reduction in volumes and price erosion in some of our existing products. |
| Ø | Revenues from Rest of World (RoW) territories at Rs. 5.1 billion. Year-on-year growth of 90% and sequential growth of 22% was driven by covid portfolio, new products and volume traction in our base business, partially offset by a reduction in sales price of some of our products. |
Pharmaceutical Services and Active Ingredients (PSAI)
Revenues from PSAI at Rs. 8.4 billion with a year-on-year decline of 2% and sequential quarter growth of 11%.
| Ø | While there has been growth from covid portfolio, there was a decline in some of our other products due to lower traction in the volumes and further there has been decrease in sales price for some of our products. |
| Ø | During the quarter we filed two DMFs in the US. |
Proprietary Products (PP) & Others
Revenues from PP & Others at Rs. 1.8 billion. Year-on-year growth of 195% and sequential quarter growth of 238% was primarily on account of recognition of a license fee associated with the sale of our U.S. and Canada territory rights for ELYXYB® (celecoxib oral solution) 25 mg/ml, to BioDelivery Sciences International, Inc.
| 5 |
Income Statement Highlights:
| Ø | Gross profit margin for the quarter at 53.4%: |
| - | Decreased by ~50 bps over previous year majorly on account of price erosion and lower export benefits partially offset by leverage benefit on manufacturing overheads. |
| - | Increased by ~120 bps sequentially, driven majorly by leverage benefit on manufacturing overheads partially offset by price erosion. |
| - | Gross profit margin for GG and PSAI business segments are at 56.9% and 25.9% respectively. |
| Ø | Selling, general & administrative (SG&A) expenses at Rs. 16.0 billion, increased by 22% on a year-on-year basis and by 6% sequentially. This increase was in line with the business growth and primarily attributable to royalty on sales, annual increments, investments in sales & marketing of our key brands and investments in digitalization. |
| Ø | Research & development (R&D) expenses at Rs. 4.5 billion. As % to revenues – Q2 FY22: 7.7% | Q1 FY22: 9.2% | Q2 FY21: 8.9%. We continue our focus on investing in R&D to build a healthy pipeline of new products across our markets including development of products in our biosimilars and generics businesses. |
| Ø | Other operating income at Rs. 1.7 billion compared to Rs. 149 million in Q2 FY21. The increase was on account of recognition of income towards sale of all of our rights relating to our anti-cancer agent E7777 (denileukin diftitox) to Citius Pharmaceuticals, Inc. |
| Ø | Net Finance income at Rs. 319 million compared to Rs. 237 million in Q2 FY21. |
| Ø | Profit before Tax at Rs. 12.7 billion, increased by 47% year-on-year and by 71% sequentially. |
| Ø | Profit after Tax at Rs. 9.9 billion. The effective tax rate is 21.8% for the quarter. |
| Ø | Diluted earnings per share is at Rs. 59.65. |
Other Highlights:
| Ø | EBITDA is at Rs. 15.6 billion and the EBITDA margin is 27.0%. |
| Ø | Capital expenditure is at Rs. 3.6 billion. |
| Ø | Free cash flow is at Rs. 830 million. |
| Ø | Net debt for the company is at Rs. 2.7 billion as on September 30, 2021. Consequently, net debt to equity ratio is 0.015. |
| 6 |
Earnings Call Details (05:30 pm IST, 08:00 am EDT, Oct 29, 2021)
The management of the Company will host an earnings call to discuss the Company’s financial performance and answer any questions from the participants.
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Universal Access Number:
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+91 22 6280 1219 +91 22 7115 8120 |
| International Toll Free Number: |
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Transcript: Transcript of the Earnings call will be available on the Company’s website: www.drreddys.com
About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (BSE: 500124, NSE: DRREDDY, NYSE: RDY, NSEIFSC: DRREDDY) 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 reorganization , including related integration issues, and (vi) the susceptibility of our industry and the markets addressed by our, and our customers’, products and services to economic downturns as a result of natural disasters, epidemics, pandemics or other widespread illness, including coronavirus (or COVID-19), and (vii) other risks and uncertainties identified in our public filings with the Securities and Exchange Commission, including those listed under the "Risk Factors" and "Forward-Looking Statements" sections of our Annual Report on Form 20-F for the year ended March 31, 2021. The company assumes no obligation to update any information contained herein.”
The company assumes no obligation to update any information contained herein.
| 7 |
Exhibit 99.2
 |
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.drreddys.com |
DR. REDDY'S LABORATORIES LIMITED
Unaudited consolidated financial results of Dr. Reddy's Laboratories Limited and its subsidiaries for the quarter and half year ended 30 September 2021 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 | Half year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2021 | 30.06.2021 | 30.09.2020 | 30.09.2021 | 30.09.2020 | 31.03.2021 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| 1 | Revenues | 57,632 | 49,194 | 48,967 | 106,826 | 93,142 | 189,722 | |||||||||||||||||||
| 2 | Cost of revenues | 26,846 | 23,495 | 22,558 | 50,341 | 41,978 | 86,645 | |||||||||||||||||||
| 3 | Gross profit (1 - 2) | 30,786 | 25,699 | 26,409 | 56,485 | 51,164 | 103,077 | |||||||||||||||||||
| 4 | Selling, general and administrative expenses | 15,951 | 15,045 | 13,107 | 30,996 | 25,893 | 54,650 | |||||||||||||||||||
| 5 | Research and development expenses | 4,463 | 4,534 | 4,359 | 8,997 | 8,339 | 16,541 | |||||||||||||||||||
| 6 | Impairment of non-current assets | - | - | 781 | - | 781 | 8,588 | |||||||||||||||||||
| 7 | Other income, net | (1,743 | ) | (487 | ) | (149 | ) | (2,230 | ) | (267 | ) | (982 | ) | |||||||||||||
| Total operating expenses | 18,671 | 19,092 | 18,098 | 37,763 | 34,746 | 78,797 | ||||||||||||||||||||
| 8 | Results from operating activities [(3) - (4 + 5 + 6 + 7)] | 12,115 | 6,607 | 8,311 | 18,722 | 16,418 | 24,280 | |||||||||||||||||||
| Finance income | 553 | 845 | 489 | 1,398 | 1,327 | 2,623 | ||||||||||||||||||||
| Finance expense | (234 | ) | (193 | ) | (252 | ) | (427 | ) | (485 | ) | (970 | ) | ||||||||||||||
| 9 | Finance income, net | 319 | 652 | 237 | 971 | 842 | 1,653 | |||||||||||||||||||
| 10 | Share of profit of equity accounted investees, net of tax | 247 | 166 | 73 | 413 | 150 | 480 | |||||||||||||||||||
| 11 | Profit before tax (8 + 9 + 10) | 12,681 | 7,425 | 8,621 | 20,106 | 17,410 | 26,413 | |||||||||||||||||||
| 12 | Tax expense/(benefit), net | 2,761 | 1,717 | 998 | 4,478 | 3,994 | 9,175 | |||||||||||||||||||
| 13 | Profit for the period/year (11 -12) | 9,920 | 5,708 | 7,623 | 15,628 | 13,416 | 17,238 | |||||||||||||||||||
| 14 | Earnings per share: | |||||||||||||||||||||||||
| Basic earnings per share of Rs.5/- each | 59.80 | 34.44 | 45.96 | 94.24 | 80.91 | 103.94 | ||||||||||||||||||||
| Diluted earnings per share of Rs.5/- each | 59.65 | 34.34 | 45.83 | 94.00 | 80.69 | 103.65 | ||||||||||||||||||||
| (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | ||||||||||||||||||||||
| Segment information | All amounts in Indian Rupees millions | |||||||||||||||||||||||||
| Quarter ended | Half year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2021 | 30.06.2021 | 30.09.2020 | 30.09.2021 | 30.09.2020 | 31.03.2021 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| Segment wise revenue and results: | ||||||||||||||||||||||||||
| 1 | Segment revenue: | |||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 9,990 | 8,862 | 10,256 | 18,852 | 20,346 | 38,887 | ||||||||||||||||||||
| b) Global Generics | 47,431 | 41,113 | 39,841 | 88,544 | 74,916 | 154,404 | ||||||||||||||||||||
| c) Proprietary Products | 1,232 | 59 | 100 | 1,291 | 156 | 523 | ||||||||||||||||||||
| d) Others | 597 | 482 | 521 | 1,079 | 1,012 | 2,813 | ||||||||||||||||||||
| Total | 59,250 | 50,516 | 50,718 | 109,766 | 96,430 | 196,627 | ||||||||||||||||||||
| Less: Inter-segment revenues | 1,618 | 1,322 | 1,751 | 2,940 | 3,288 | 6,905 | ||||||||||||||||||||
| Net revenues | 57,632 | 49,194 | 48,967 | 106,826 | 93,142 | 189,722 | ||||||||||||||||||||
| 2 | Segment results: | |||||||||||||||||||||||||
| Gross profit from each segment | ||||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 2,166 | 1,630 | 2,284 | 3,796 | 5,140 | 9,426 | ||||||||||||||||||||
| b) Global Generics | 26,990 | 23,719 | 23,685 | 50,709 | 45,211 | 91,111 | ||||||||||||||||||||
| c) Proprietary Products | 1,232 | 45 | 88 | 1,277 | 144 | 482 | ||||||||||||||||||||
| d) Others | 398 | 305 | 352 | 703 | 669 | 2,058 | ||||||||||||||||||||
| Total | 30,786 | 25,699 | 26,409 | 56,485 | 51,164 | 103,077 | ||||||||||||||||||||
| Less: Selling and other un-allocable expenditure, net of other income | 18,105 | 18,274 | 17,788 | 36,379 | 33,754 | 76,664 | ||||||||||||||||||||
| Total profit before tax | 12,681 | 7,425 | 8,621 | 20,106 | 17,410 | 26,413 | ||||||||||||||||||||
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 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 | In September 2021, the Company completed the sale of its U.S. and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc. An amount of Rs. 1,084 million is included under the head "Revenues" and this pertains to the Company’s Proprietary Products segment. |
| 3 | Included in "Other income, net" for the quarter ended 30 September 2021 is Rs. 1,064 million representing the profit on sale of intangible asset, E7777 (anti-cancer agent) to Citius Pharmaceuticals, Inc. This transaction pertains to the Company’s Proprietary Products segment. |
| 4 | On 14 June 2021, the Company received the arbitration decision and award in favour of Hatchtech Pty Limited regarding the Civil Litigation and Arbitration relating to the acquisition of the product Xeglyze®. The award required the Company to pay an amount of Rs. 3,382 million (U.S.$ 46.25 million) towards milestone payments, interest, and fees. The Company was carrying Rs. 1,471 million (U.S.$ 20 million) as the provision towards this litigation. As this constitutes an adjusting subsequent event, the consolidated financial results for the quarter and year ended 31 March 2021 were adjusted to reflect the impact of this event by recognizing the balance amount of Rs. 1,911 million (U.S.$ 26.25 million) in the financial results. Of the total amount, Rs. 1,820 million (U.S.$ 25 million) was recognised under heading "Impairment of non-current assets" and the balance Rs. 91 million (U.S.$ 1.25 million) was recognised under the heading "Selling, general and administrative expenses". The said expense forms part of the Company’s Proprietary Products segment. |
| 5 | During the year ended 31 March 2021, there were significant changes to the market conditions for certain of the products forming part of Company’s Global Generics and Proprietary Products segments. The changes include the launch by competitor of generic version of the product, decrease in the market potential of products primarily due to higher than expected price erosion and increased competition, and higher than expected value erosion. Due to these adverse market developments, the Company recorded an impairment loss of: |
- Rs. 3,291 million relating to Xeglyze®;
- Rs. 3,180 million relating to ethinyl estradiol / ethenogestral vaginal ring (a generic equivalent to NuvaRing®);
- Rs. 1,587 million relating to saxagliptin and metformin (generic version of Kombiglyze-XR) and phentermine and topiramate (generic version of Qsymia®);
- Rs. 484 million relating to other intangible assets.
Further, an amount of Rs. 46 million has been recognised as impairment of property, plant and equipment.
| 6 | Tax expense for the year ended 31 March 2021 includes the following: |
- Rs. 1,012 million of benefit, in the quarter ended 30 September 2020, on account of recognition of deferred tax asset consequent to a planned restructuring activity between the Group companies; and
- Rs. 627 million of expense, in the quarter ended 31 March 2021, on account of de-recognition of deferred tax asset due to non-availability of depreciation on goodwill pursuant to an amendment to section 2(11) of the Income Tax Act in the Finance Act, 2021.
| 7 | During the quarter ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Pharmaceuticals Limited to acquire, certain brands in various Emerging Market countries for a total consideration of Rs. 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles and pertains to Company's Global Generics segment. |
| 8 | On 10 June 2020, the Company completed the acquisition of select divisions of Wockhardt Limited's branded generics business in India and the territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas, such as respiratory, neurology, venous malformations, dermatology, gastroenterology, pain, and vaccines. This entire portfolio has been transferred to the Company, along with related sales and marketing teams, the manufacturing plant located in Baddi, Himachal Pradesh, and employees. During the quarter ended 30 September 2020, the Company completed the purchase price allocation. The fair value of consideration transferred is Rs.16,115 million. The Company recognised Rs. 373 million, Rs. 14,888 million and Rs. 530 million towards property, plant and equipment, intangible assets, and goodwill, respectively. The acquisition pertains to Company's Global Generics segment. |
| 9 | The Company has commenced a detailed investigation into an anonymous complaint. The complaint alleges that healthcare professionals in Ukraine and potentially in other countries were provided with improper payments by or on behalf of the Company in violation of U.S. anti-corruption laws, specifically the U.S. Foreign Corrupt Practices Act. A U.S. law firm is conducting the investigation at the instruction of a committee of the Company’s Board of Directors. The Company has disclosed the matter to the U.S. Department of Justice, Securities and Exchange Commission (“SEC”) and Securities Exchange Board of India. On 6 July 2021 the Company received a subpoena from the SEC for the production of documents pertaining to certain CIS geographies, and the Company is in the process of responding to the same. During the quarter ended 30 September 2021, the Company shared the report with respect to one jurisdiction with the SEC. The investigation is ongoing, and the Company is complying with its listing obligations as it relates to updating the regulatory agencies. While the findings from the aforesaid investigations may result in government enforcement actions against the Company in the United States and/or foreign jurisdictions, which could lead to civil and criminal sanctions under relevant laws, the outcome are not reasonably ascertainable at this time. The Company is also in the process of reviewing its Compliance Program including controls in relation to compliance and implement appropriate enhancements, if any. |
| 10 | Impairment charge of Rs. 781 million for the quarter ended 30 September 2020 comprises of: |
- Rs. 728 million pertaining to Xeglyze® forming part of Company’s Proprietary Products segment due to decrease in the market potential for the product;
- Rs. 53 million pertaining to certain product related intangibles forming part of Company’s Global Generics segment due to Company’s decision to discontinue their further development.
| 11 | Consolidated statements of financial position |
| All amounts in Indian Rupees millions | ||||||||
| As at | As at | |||||||
| Particulars | 30.09.2021 | 31.03.2021 | ||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 9,980 | 14,829 | ||||||
| Other investments | 14,601 | 19,744 | ||||||
| Trade and other receivables | 68,611 | 49,641 | ||||||
| Inventories | 49,700 | 45,412 | ||||||
| Derivative financial instruments | 1,158 | 1,218 | ||||||
| Tax assets | 3,174 | 2,745 | ||||||
| Other current assets | 15,898 | 14,509 | ||||||
| Total current assets before assets held for sale | 163,122 | 148,098 | ||||||
| Assets held for sale | 150 | 151 | ||||||
| Total current assets | 163,272 | 148,249 | ||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 60,229 | 57,111 | ||||||
| Goodwill | 4,576 | 4,568 | ||||||
| Other intangible assets | 32,630 | 35,648 | ||||||
| Trade and other receivables | 55 | 118 | ||||||
| Investment in equity accounted investees | 3,882 | 3,375 | ||||||
| Other investments | 3,607 | 4,958 | ||||||
| Deferred tax assets | 9,422 | 10,630 | ||||||
| Other non-current assets | 827 | 834 | ||||||
| Total non-current assets | 115,228 | 117,242 | ||||||
| Total assets | 278,500 | 265,491 | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | 25,552 | 23,744 | ||||||
| Short-term borrowings | 23,380 | 23,136 | ||||||
| Long-term borrowings, current portion | 916 | 864 | ||||||
| Provisions | 3,744 | 3,435 | ||||||
| Tax liabilities | 1,311 | 1,389 | ||||||
| Derivative financial instruments | 449 | 326 | ||||||
| Bank overdraft | - | 9 | ||||||
| Other current liabilities | 30,550 | 30,488 | ||||||
| Total current liabilities | 85,902 | 83,391 | ||||||
| Non-current liabilities | ||||||||
| Long-term borrowings | 5,977 | 6,299 | ||||||
| Deferred tax liabilities | 99 | 338 | ||||||
| Provisions | 58 | 58 | ||||||
| Other non-current liabilities | 2,536 | 2,343 | ||||||
| Total non-current liabilities | 8,670 | 9,038 | ||||||
| Total liabilities | 94,572 | 92,429 | ||||||
| Equity | ||||||||
| Share capital | 832 | 832 | ||||||
| Treasury shares | (1,660 | ) | (1,967 | ) | ||||
| Share premium | 9,205 | 8,887 | ||||||
| Share based payment reserve | 1,407 | 1,461 | ||||||
| Capital redemption reserve | 173 | 173 | ||||||
| Special economic zone re-investment reserve | 1,012 | 1,326 | ||||||
| Retained earnings | 167,819 | 156,023 | ||||||
| Other components of equity | 5,140 | 6,327 | ||||||
| Total equity | 183,928 | 173,062 | ||||||
| Total liabilities and equity | 278,500 | 265,491 | ||||||
| 12 | Consolidated statements of cash flows |
| All amounts in Indian Rupees millions | ||||||||
| Half year ended | ||||||||
| Particulars | 30.09.2021 | 30.09.2020 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from/(used in) operating activities : | ||||||||
| Profit for the period | 15,628 | 13,416 | ||||||
| Adjustments for: | ||||||||
| Tax expense/(benefit), net | 4,478 | 3,994 | ||||||
| Fair value changes and profit on sale of financial instruments measured at FVTPL*, net | (217 | ) | (389 | ) | ||||
| Depreciation and amortization | 5,890 | 6,411 | ||||||
| Impairment of non-current assets | - | 781 | ||||||
| Allowance for credit losses (on trade receivables and other advances) | 138 | 61 | ||||||
| (Gain)/loss on sale or de-recognition of non-current assets, net | (1,161 | ) | 15 | |||||
| Share of profit of equity accounted investees | (413 | ) | (150 | ) | ||||
| Foreign exchange (gain)/loss, net | (398 | ) | 919 | |||||
| Interest (income)/expense, net | (19 | ) | 82 | |||||
| Equity settled share-based payment expense | 290 | 304 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade and other receivables | (19,031 | ) | 1,620 | |||||
| Inventories | (4,288 | ) | (5,602 | ) | ||||
| Trade and other payables | 4,934 | 4,773 | ||||||
| Other assets and other liabilities, net | (634 | ) | (3,991 | ) | ||||
| Cash generated from operations | 5,197 | 22,244 | ||||||
| Income tax paid, net | (3,539 | ) | (2,077 | ) | ||||
| Net cash generated from operating activities | 1,658 | 20,167 | ||||||
| Cash flows from/(used in) investing activities : | ||||||||
| Expenditures on property, plant and equipment | (6,781 | ) | (3,999 | ) | ||||
| Proceeds from sale of property, plant and equipment | 154 | 33 | ||||||
| Expenditures on other intangible assets | (3,767 | ) | (567 | ) | ||||
| Proceeds from sale of other intangible assets | 2,946 | - | ||||||
| Payment for acquisition of business | - | (15,514 | ) | |||||
| Purchase of other investments | (30,095 | ) | (50,933 | ) | ||||
| Proceeds from sale of other investments | 35,494 | 53,296 | ||||||
| Interest received | 411 | 714 | ||||||
| Net cash used in investing activities | (1,638 | ) | (16,970 | ) | ||||
| Cash flows from/(used in) financing activities : | ||||||||
| Proceeds from issuance of equity shares (including treasury shares) | 281 | 177 | ||||||
| Purchase of treasury shares | - | (190 | ) | |||||
| (Repayment of)/ proceeds from short-term borrowings | (62 | ) | 3,644 | |||||
| Proceeds from long-term borrowings | - | 3,800 | ||||||
| Repayment of long-term borrowings | - | (3,743 | ) | |||||
| Payment of principal portion of lease liabilities | (408 | ) | (366 | ) | ||||
| Dividend paid | (4,146 | ) | (4,147 | ) | ||||
| Interest paid | (616 | ) | (559 | ) | ||||
| Net cash used in financing activities | (4,951 | ) | (1,384 | ) | ||||
| Net (decrease)/increase in cash and cash equivalents | (4,931 | ) | 1,813 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 91 | 13 | ||||||
| Cash and cash equivalents at the beginning of the period(1) | 14,820 | 1,962 | ||||||
| Cash and cash equivalents at the end of the period(2) | 9,980 | 3,788 | ||||||
*FVTPL (fair value through profit or loss)
(1)Adjusted for bank-overdraft of Rs. 9 million and Rs. 91 million for the periods ended 30 September 2021 and 30 September 2020, respectively.
(2)Adjusted for bank-overdraft of Rs. Nil and Rs. 101 million for the periods ended 30 September 2021 and 30 September 2020, respectively.
| 13 | India’s Code on Social Security, 2020, which aims to consolidate, codify and revise certain existing social security laws, received Presidential assent in September 2020 and has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which this Code will come into effect has not been announced. The Company will assess the impact of this Code and the rules thereunder when they come into effect. |
| 14 | The Company considered the uncertainty relating to the COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, investments and other assets. For this purpose, the Company considered internal and external sources of information up to the date of approval of these interim financial results. Based on its judgments, estimates and assumptions, including sensitivity analysis, the Company expects to fully recover the carrying amount of receivables, goodwill, intangible assets, investments and other assets. |
The Company will continue to closely monitor any material changes to future economic conditions.
| 15 | The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 28 October 2021 and approved by the Board of Directors of the Company at their meeting held on 29 October 2021. |
| 16 | The results for the quarter and half year ended 30 September 2021 were subject to a "Limited Review" by the Independent Auditors of the Company. An unqualified report has been issued by them thereon. |
|
Place: Hyderabad Date: 29 October 2021 |
 |
By order of the Board For Dr. Reddy's Laboratories Limited
G V Prasad Co-Chairman & Managing Director |
Exhibit 99.3
|
S.R. Batliboi
& Associates LLP
|
THE SKYVIEW 10 18th Floor, “NORTH LOBBY” Survey No. 83/1, Raidurgam Hyderabad - 500 032, 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 joint ventures for the quarter ended September 30, 2021 and year to date from April 1, 2021 to September 30, 2021 (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 Holding Company and following entities: |
| S. No | Name of the Company |
| Subsidiaries | |
| 1 | Aurigene Discovery Technologies Limited |
| 2 | Cheminor Investments Limited |
| 3 | Dr. Reddy’s Bio-Sciences Limited |
| 4 | Dr. Reddy’s Farmaceutica Do Brasil Ltda. |
| 5 | Dr. Reddy's Laboratories SA |
| 6 | Idea2Enterprises (India) Private Limited |
| 7 | Imperial Credit Private Limited |
| 8 | Industrias Quimicas Falcon de Mexico, S.A. de C.V. |
| 9 | Svaas Wellness Limited |
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
Chartered Accountants
| S. No | Name of the Company |
| 10 | Aurigene Discovery Technologies (Malaysia) SDN BHD |
| 11 | Aurigene Discovery Technologies Inc. |
| 12 | Aurigene Pharmaceuticals Services Limited |
| 13 | beta Institut gemeinnützige GmbH |
| 14 | betapharm Arzneimittel GmbH |
| 15 | Chirotech Technology Limited |
| 16 | DRL Impex Limited |
| 17 | Dr. Reddy’s Laboratories (Australia) Pty. Limited |
| 18 | Dr. Reddy’s Laboratories Canada, Inc. |
| 19 | Dr. Reddy's Laboratories Chile SPA. |
| 20 | Dr. Reddy’s Laboratories (EU) Limited |
| 21 | Dr. Reddy’s Laboratories Inc. |
| 22 | Dr. Reddy's Laboratories Japan KK |
| 23 | Dr. Reddy’s Laboratories Kazakhstan LLP |
| 24 | Dr. Reddy’s Laboratories LLC |
| 25 | Dr. Reddy's Laboratories Louisiana LLC |
| 26 | Dr. Reddy’s Laboratories Malaysia Sdn. Bhd. |
| 27 | Dr. Reddy’s Laboratories New York, LLC |
| 28 | Dr. Reddy's Laboratories Philippines Inc. |
| 29 | Dr. Reddy’s Laboratories (Proprietary) Limited |
| 30 | Dr. Reddy's Laboratories Romania S.R.L. |
| 31 | Dr. Reddy's Laboratories SAS |
| 32 | Dr. Reddy's Laboratories Taiwan Limited |
| 33 | Dr. Reddy's Laboratories (Thailand) Limited |
| 34 | Dr. Reddy’s Laboratories (UK) Limited |
| 35 | Dr. Reddy's Research and Development B.V. |
| 36 | Dr. Reddy’s Srl |
| 37 | Dr. Reddy’s New Zealand Limited |
| 38 | Dr. Reddy’s (WUXI) Pharmaceutical Co. Limited |
| 39 | Dr. Reddy's Venezuela, C.A. |
| 40 | Dr. Reddy's Laboratories B.V. |
| 41 | Lacock Holdings Limited |
| 42 | OOO Dr. Reddy’s Laboratories Limited |
| 43 | OOO DRS LLC |
| 44 | Promius Pharma LLC |
| 45 | Reddy Holding GmbH |
| 46 | Reddy Netherlands B.V. |
| 47 | Reddy Pharma Iberia SA |
| 48 | Reddy Pharma Italia S.R.L. |
| 49 | Reddy Pharma SAS |
| 50 | Dr. Reddy’s (Beijing) Pharmaceutical Co. Limited (from August 19, 2020) |
| 51 | Dr. Reddy’s Formulations Limited (from March 11, 2021) |
| Joint Ventures | |
| 1 | DRES Energy Private Limited |
| 2 | Kunshan Rotam Reddy Pharmaceutical Company Limited |
| Other consolidating entities | |
| 1 | Cheminor Employees Welfare Trust |
| 2 | Dr. Reddy's Employees ESOS Trust |
| 3 | Dr. Reddy's Research Foundation |
S.R. Batliboi & Associates LLP
Chartered 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 Shankar Srinivasan
Partner
Membership No.: 213271
UDIN: 21213271AAAAHI8453
Place: Hyderabad
Date: October 29, 2021
 |
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.drreddys.com |
DR. REDDY'S LABORATORIES LIMITED
STATEMENT OF UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30 SEPTEMBER 2021
| All amounts in Indian Rupees millions | ||||||||||||||||||||||||||
| Quarter ended | Half year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2021 | 30.06.2021 | 30.09.2020 | 30.09.2021 | 30.09.2020 | 31.03.2021 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| 1 | Revenue from operations | |||||||||||||||||||||||||
| a) Net sales/income from operations | 55,167 | 48,262 | 47,766 | 103,429 | 91,010 | 184,202 | ||||||||||||||||||||
| b) License fees and service income | 2,465 | 932 | 1,201 | 3,397 | 2,132 | 5,520 | ||||||||||||||||||||
| c) Other operating income | 237 | 257 | 142 | 494 | 232 | 753 | ||||||||||||||||||||
| Total revenue from operations | 57,869 | 49,451 | 49,109 | 107,320 | 93,374 | 190,475 | ||||||||||||||||||||
| 2 | Other income | 2,055 | 1,079 | 512 | 3,134 | 1,383 | 2,914 | |||||||||||||||||||
| 3 | Total income (1 + 2) | 59,924 | 50,530 | 49,621 | 110,454 | 94,757 | 193,389 | |||||||||||||||||||
| 4 | Expenses | |||||||||||||||||||||||||
| a) Cost of materials consumed | 8,232 | 11,139 | 9,485 | 19,371 | 20,924 | 42,958 | ||||||||||||||||||||
| b) Purchase of stock-in-trade | 10,314 | 9,735 | 6,889 | 20,049 | 12,165 | 25,736 | ||||||||||||||||||||
| c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | 1,730 | (3,853 | ) | (573 | ) | (2,123 | ) | (4,092 | ) | (7,905 | ) | |||||||||||||||
| d) Employee benefits expense | 10,104 | 9,465 | 9,488 | 19,569 | 18,212 | 36,299 | ||||||||||||||||||||
| e) Depreciation and amortisation expense | 2,941 | 2,839 | 3,165 | 5,780 | 6,088 | 12,288 | ||||||||||||||||||||
| f) Impairment of non-current assets | - | 1,838 | 781 | 1,838 | 781 | 6,768 | ||||||||||||||||||||
| g) Finance costs | 234 | 193 | 252 | 427 | 485 | 970 | ||||||||||||||||||||
| h) Selling and other expenses | 13,891 | 13,782 | 11,478 | 27,673 | 22,610 | 47,920 | ||||||||||||||||||||
| Total expenses | 47,446 | 45,138 | 40,965 | 92,584 | 77,173 | 165,034 | ||||||||||||||||||||
| 5 | Profit before tax and before share of equity accounted investees(3 - 4) | 12,478 | 5,392 | 8,656 | 17,870 | 17,584 | 28,355 | |||||||||||||||||||
| 6 | Share of profit of equity accounted investees, net of tax | 247 | 166 | 73 | 413 | 150 | 480 | |||||||||||||||||||
| 7 | Profit before tax (5+6) | 12,725 | 5,558 | 8,729 | 18,283 | 17,734 | 28,835 | |||||||||||||||||||
| 8 | Tax expense/(benefit): | |||||||||||||||||||||||||
| a) Current tax | 1,668 | 1,367 | 1,724 | 3,035 | 4,890 | 8,172 | ||||||||||||||||||||
| b) Deferred tax | 1,099 | 387 | (713 | ) | 1,486 | (820 | ) | 1,147 | ||||||||||||||||||
| 9 | Net profit after taxes and share of profit of associates (7 - 8) | 9,958 | 3,804 | 7,718 | 13,762 | 13,664 | 19,516 | |||||||||||||||||||
| 10 | Other comprehensive income | |||||||||||||||||||||||||
| a) (i) Items that will not be reclassified subsequently to profit or loss | (101 | ) | (1,243 | ) | (26 | ) | (1,344 | ) | 181 | 4,026 | ||||||||||||||||
| (ii) Income tax relating to items that will not be reclassified to profit or loss | - | 293 | - | 293 | - | (220 | ) | |||||||||||||||||||
| b) (i) Items that will be reclassified subsequently to profit or loss | (137 | ) | (68 | ) | 258 | (205 | ) | 989 | 1,913 | |||||||||||||||||
| (ii) Income tax relating to items that will be reclassified to profit or loss | (77 | ) | 173 | (138 | ) | 96 | (294 | ) | (319 | ) | ||||||||||||||||
| Total other comprehensive income | (315 | ) | (845 | ) | 94 | (1,160 | ) | 876 | 5,400 | |||||||||||||||||
| 11 | Total comprehensive income (9 + 10) | 9,643 | 2,959 | 7,812 | 12,602 | 14,540 | 24,916 | |||||||||||||||||||
| 12 | Paid-up equity share capital (face value Rs. 5/- each) | 832 | 832 | 831 | 832 | 831 | 832 | |||||||||||||||||||
| 13 | Other equity | 175,585 | ||||||||||||||||||||||||
| 14 | Earnings per equity share (face value Rs. 5/- each) | |||||||||||||||||||||||||
| Basic | 60.03 | 22.95 | 46.54 | 82.99 | 82.40 | 117.67 | ||||||||||||||||||||
| Diluted | 59.88 | 22.89 | 46.40 | 82.77 | 82.18 | 117.34 | ||||||||||||||||||||
| (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | ||||||||||||||||||||||
See accompanying notes to the financial results
 |
 |
DR. REDDY'S LABORATORIES LIMITED
| Segment information | All amounts in Indian Rupees millions | |||||||||||||||||||||||||
| Quarter ended | Half year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2021 | 30.06.2021 | 30.09.2020 | 30.09.2021 | 30.09.2020 | 31.03.2021 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| Segment wise revenue and results: | ||||||||||||||||||||||||||
| 1 | Segment revenue : | |||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 10,187 | 8,980 | 10,355 | 19,167 | 20,520 | 39,284 | ||||||||||||||||||||
| b) Global Generics | 47,472 | 41,251 | 39,882 | 88,723 | 74,974 | 154,759 | ||||||||||||||||||||
| c) Proprietary Products | 1,232 | 59 | 100 | 1,291 | 156 | 523 | ||||||||||||||||||||
| d) Others | 596 | 483 | 523 | 1,079 | 1,012 | 2,814 | ||||||||||||||||||||
| Total | 59,487 | 50,773 | 50,860 | 110,260 | 96,662 | 197,380 | ||||||||||||||||||||
| Less: Inter-segment revenue | 1,618 | 1,322 | 1,751 | 2,940 | 3,288 | 6,905 | ||||||||||||||||||||
| Total revenue from operations | 57,869 | 49,451 | 49,109 | 107,320 | 93,374 | 190,475 | ||||||||||||||||||||
| 2 | Segment results: | |||||||||||||||||||||||||
| Gross profit from each segment | ||||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 2,169 | 1,634 | 2,292 | 3,803 | 5,151 | 9,444 | ||||||||||||||||||||
| b) Global Generics | 26,990 | 23,718 | 23,685 | 50,708 | 45,211 | 91,111 | ||||||||||||||||||||
| c) Proprietary Products | 1,232 | 45 | 88 | 1,277 | 144 | 482 | ||||||||||||||||||||
| d) Others | 397 | 306 | 352 | 703 | 669 | 2,058 | ||||||||||||||||||||
| Total | 30,788 | 25,703 | 26,417 | 56,491 | 51,175 | 103,095 | ||||||||||||||||||||
| Less: Selling and other un-allocable expenditure/(income), net | 18,063 | 20,145 | 17,688 | 38,208 | 33,441 | 74,260 | ||||||||||||||||||||
| Total profit before tax | 12,725 | 5,558 | 8,729 | 18,283 | 17,734 | 28,835 | ||||||||||||||||||||
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 | In September 2021, the Company completed the sale of its U.S. and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc. An amount of Rs. 1,084 million is included under the head “License fee and service income” and this pertains to the Company’s Proprietary Products segment. |
| 3 | Included in "Other income" for the quarter ended 30 September 2021 is Rs. 1,064 million representing the profit on sale of intangible asset, E7777 (anti-cancer agent) to Citius Pharmaceuticals, Inc. This transaction pertains to the Company’s Proprietary Products segment. |
| 4 | On 14 June 2021, the Company received the arbitration decision and award in favour of Hatchtech Pty Limited regarding the Civil Litigation and Arbitration relating to the acquisition of the product Xeglyze®. The award required the Company to pay an amount of Rs. 3,401 million (U.S.$ 46.25 million) towards milestone payments, interest, and fees. The Company was carrying Rs. 1,471 million (U.S.$ 20 million) as the provision towards this litigation, an additional expense of Rs. 1,930 million (U.S.$ 26.25 million) [Rs. 1,838 million (U.S.$ 25 million) as "Impairment of non-current assets" and Rs. 92 million (U.S.$ 1.25 million) as "selling and other expenses"] was recognized during the quarter ended 30 June 2021. The said expense forms part of the Company’s Proprietary Products segment. |
| 5 | During the year ended 31 March 2021, there were significant changes to the market conditions for certain of the products forming part of Company’s Global Generics and Proprietary Products segments. The changes include the launch by competitor of generic version of the product, decrease in the market potential of products primarily due to higher than expected price erosion and increased competition, and higher than expected value erosion. Due to these adverse market developments, the Company recorded an impairment loss of: |
- Rs. 3,180 million relating to ethinyl estradiol / ethenogestral vaginal ring (a generic equivalent to NuvaRing®);
- Rs. 1,587 million relating to saxagliptin and metformin (generic version of Kombiglyze-XR) and phentermine and topiramate (generic version of Qsymia®);
- Rs. 1,471 million relating to Xeglyze®;
- Rs. 484 million relating to other intangible assets.
Further, an amount of Rs. 46 million has been recognised as impairment of property, plant and equipment.
| 6 | Tax expense for the year ended 31 March 2021 includes the following: |
- Rs. 1,012 million of benefit, in the quarter ended 30 Septmeber 2020, on account of recognition of deferred tax asset consequent to a planned restructuring activity between the Group companies; and
- Rs. 627 million of expense, in the quarter ended 31 March 2021, on account of de recognition of deferred tax asset due to non-availability of depreciation on goodwill pursuant to an amendment to section 2(11) of the Income Tax Act in the Finance Act, 2021.
| 7 | During the quarter ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Pharmaceuticals Limited to acquire, certain brands in various Emerging Market countries for a total consideration of Rs. 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles, and pertains to Company's Global Generics segment. |
| 8 | On 10 June 2020, the Company completed the acquisition of select divisions of Wockhardt Limited's branded generics business in India and the territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas, such as respiratory, neurology, venous malformations, dermatology, gastroenterology, pain, and vaccines. This entire portfolio has been transferred to the Company, along with related sales and marketing teams, the manufacturing plant located in Baddi, Himachal Pradesh, and employees. During the quarter ended 30 September 2020, the Company completed the purchase price allocation. The fair value of consideration transferred is Rs.16,115 million. The Company recognised Rs. 373 million, Rs. 14,888 million and Rs. 530 million towards property, plant and equipment, intangible assets, and goodwill, respectively. The acquisition pertains to Company's Global Generics segment. |
| 9 | The Company has commenced a detailed investigation into an anonymous complaint. The complaint alleges that healthcare professionals in Ukraine and potentially in other countries were provided with improper payments by or on behalf of the Company in violation of U.S. anti-corruption laws, specifically the U.S. Foreign Corrupt Practices Act. A U.S. law firm is conducting the investigation at the instruction of a committee of the Company’s Board of Directors. The Company has disclosed the matter to the U.S. Department of Justice, Securities and Exchange Commission (“SEC”) and Securities Exchange Board of India. On 6 July 2021 the Company received a subpoena from the SEC for the production of documents pertaining to certain CIS geographies, and the Company is in the process of responding to the same. During the quarter ended 30 September 2021, the Company shared the report with respect to one jurisdiction with the SEC. The investigation is ongoing, and the Company is complying with its listing obligations as it relates to updating the regulatory agencies. While the findings from the aforesaid investigations may result in government enforcement actions against the Company in the United States and/or foreign jurisdictions, which could lead to civil and criminal sanctions under relevant laws, the outcome are not reasonably ascertainable at this time. The Company is also in the process of reviewing its Compliance Program including controls in relation to compliance and implement appropriate enhancements, if any. |
|
|
DR. REDDY'S LABORATORIES LIMITED
| 10 | Impairment charge of Rs. 781 million for the quarter ended 30 September 2020 comprises of: |
- Rs. 728 million pertaining to Xeglyze® forming part of Company’s Proprietary Products segment due to decrease in the market potential for the product;
- Rs. 53 million pertaining to certain product related intangibles forming part of Company’s Global Generics segment due to Company’s decision to discontinue their further development.
| 11 | Consolidated Balance Sheet |
| All amounts in Indian Rupees millions | ||||||||
| As at | ||||||||
| Particulars | 30.09.2021 | 31.03.2021 | ||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 48,168 | 47,322 | ||||||
| Capital work-in-progress | 11,771 | 9,539 | ||||||
| Goodwill | 5,614 | 5,599 | ||||||
| Other intangible assets | 27,913 | 29,136 | ||||||
| Intangible assets under development | 4,416 | 6,112 | ||||||
| Investment in equity accounted investees | 3,882 | 3,375 | ||||||
| Financial assets | ||||||||
| Investments | 3,607 | 4,958 | ||||||
| Trade receivables | 55 | 118 | ||||||
| Other financial assets | 767 | 768 | ||||||
| Deferred tax assets, net | 9,396 | 10,686 | ||||||
| Tax assets, net | 3,174 | 2,745 | ||||||
| Other non-current assets | 349 | 307 | ||||||
| Total non-current assets | 119,112 | 120,665 | ||||||
| Current assets | ||||||||
| Inventories | 49,700 | 45,412 | ||||||
| Financial assets | ||||||||
| Investments | 14,601 | 19,744 | ||||||
| Trade receivables | 68,611 | 49,641 | ||||||
| Derivative instruments | 1,158 | 1,218 | ||||||
| Cash and cash equivalents | 9,980 | 14,829 | ||||||
| Other financial assets | 2,120 | 1,858 | ||||||
| Other current assets | 13,778 | 12,650 | ||||||
| Total current assets before assets held for sale | 159,948 | 145,352 | ||||||
| Assets held for sale | 150 | 151 | ||||||
| Total current assets | 160,098 | 145,503 | ||||||
| TOTAL ASSETS | 279,210 | 266,168 | ||||||
| EQUITY AND LIABILITIES | ||||||||
| Equity | ||||||||
| Equity share capital | 832 | 832 | ||||||
| Other equity | 184,612 | 175,585 | ||||||
| Total equity | 185,444 | 176,417 | ||||||
| Liabilities | ||||||||
| Non-current liabilities | ||||||||
| Financial liabilities | ||||||||
| Borrowings | 3,800 | 3,800 | ||||||
| Lease liabilities | 2,177 | 2,499 | ||||||
| Provisions | 718 | 508 | ||||||
| Deferred tax liabilities, net | 13 | 289 | ||||||
| Other non-current liabilities | 1,799 | 1,617 | ||||||
| Total non-current liabilities | 8,507 | 8,713 | ||||||
| Current liabilities | ||||||||
| Financial liabilities | ||||||||
| Borrowings | 23,380 | 23,145 | ||||||
| Lease liabilities | 916 | 864 | ||||||
| Trade payables | ||||||||
| Total outstanding dues of micro enterprises and small enterprises | 189 | 158 | ||||||
| Total outstanding dues of creditors other than micro enterprises and small enterprises | 22,854 | 17,951 | ||||||
| Derivative instruments | 449 | 326 | ||||||
| Other financial liabilities | 22,603 | 23,417 | ||||||
| Liabilities for current tax, net | 1,310 | 1,388 | ||||||
| Provisions | 5,023 | 5,015 | ||||||
| Other current liabilities | 8,535 | 8,774 | ||||||
| Total current liabilities | 85,259 | 81,038 | ||||||
| TOTAL EQUITY AND LIABILITIES | 279,210 | 266,168 | ||||||
|
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DR. REDDY'S LABORATORIES LIMITED
| 12 | Consolidated statement of cashflows |
| All amounts in Indian Rupees millions | ||||||||
| Half year ended | ||||||||
| Particulars | 30.09.2021 | 30.09.2020 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from/(used in) operating activities : | ||||||||
| Profit before tax | 18,283 | 17,734 | ||||||
| Adjustments for: | ||||||||
| Fair value changes and profit on sale of financial instruments measured at FVTPL*, net | (217 | ) | (389 | ) | ||||
| Depreciation and amortisation expense | 5,780 | 6,088 | ||||||
| Impairment of non-current assets | 1,838 | 781 | ||||||
| Allowance for credit losses (on trade receivables and other advances) | 138 | 61 | ||||||
| (Gain)/loss on sale or de-recognition of non-current assets, net | (1,161 | ) | 15 | |||||
| Share of profit of equity accounted investees | (413 | ) | (150 | ) | ||||
| Foreign exchange loss/(gain), net | (395 | ) | 918 | |||||
| Interest income | (446 | ) | (403 | ) | ||||
| Finance costs | 427 | 485 | ||||||
| Equity settled share-based payment expense | 290 | 304 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | (19,031 | ) | 1,620 | |||||
| Inventories | (4,288 | ) | (5,602 | ) | ||||
| Trade payables | 4,934 | 4,773 | ||||||
| Other assets and other liabilities, net | (542 | ) | (3,991 | ) | ||||
| Cash generated from operations | 5,197 | 22,244 | ||||||
| Income tax paid, net | (3,539 | ) | (2,077 | ) | ||||
| Net cash from operating activities | 1,658 | 20,167 | ||||||
| Cash flows from/(used in) investing activities : | ||||||||
| Expenditures on property, plant and equipment | (6,781 | ) | (3,999 | ) | ||||
| Proceeds from sale of property, plant and equipment | 154 | 33 | ||||||
| Expenditures on other intangible assets | (3,767 | ) | (567 | ) | ||||
| Proceeds from sale of other intangible assets | 2,946 | - | ||||||
| Payment for acquisition of business | - | (15,514 | ) | |||||
| Purchase of other investments | (30,095 | ) | (50,933 | ) | ||||
| Proceeds from sale of other investments | 35,494 | 53,296 | ||||||
| Interest received | 411 | 714 | ||||||
| Net cash used in investing activities | (1,638 | ) | (16,970 | ) | ||||
| Cash flows from/(used in) financing activities : | ||||||||
| Proceeds from issuance of equity shares (including treasury shares) | 281 | 177 | ||||||
| Purchase of treasury shares | - | (190 | ) | |||||
| (Repayment of)/proceeds from short-term borrowings | (62 | ) | 3,644 | |||||
| Proceeds from long term borrowings | - | 3,800 | ||||||
| Repayment of long-term loans and borrowings | - | (3,743 | ) | |||||
| Payment of principal portion of lease liabilities | (408 | ) | (366 | ) | ||||
| Dividend paid | (4,146 | ) | (4,147 | ) | ||||
| Interest paid | (616 | ) | (559 | ) | ||||
| Net cash used in financing activities | (4,951 | ) | (1,384 | ) | ||||
| Net (decrease)/increase in cash and cash equivalents | (4,931 | ) | 1,813 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 91 | 13 | ||||||
| Cash and cash equivalents at the beginning of the period(1) | 14,820 | 1,962 | ||||||
| Cash and cash equivalents at the end of the period(2) | 9,980 | 3,788 | ||||||
*FVTPL (fair value through profit or loss)
(1)Adjusted for bank-overdraft of Rs. 9 million and Rs. 91 million for the periods ended 30 September 2021 and 30 September 2020, respectively.
(2)Adjusted for bank-overdraft of Rs. Nil and Rs. 101 million for the periods ended 30 September 2021 and 30 September 2020, respectively.
| 13 | India’s Code on Social Security, 2020, which aims to consolidate, codify and revise certain existing social security laws, received Presidential assent in September 2020 and has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which this Code will come into effect has not been announced. The Company will assess the impact of this Code and the rules thereunder when they come into effect. |
| 14 | The Company considered the uncertainty relating to the COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, investments and other assets. For this purpose, the Company considered internal and external sources of information up to the date of approval of these interim financial results. Based on its judgments, estimates and assumptions, including sensitivity analysis, the Company expects to fully recover the carrying amount of receivables, goodwill, intangible assets, investments and other assets. |
The Company will continue to closely monitor any material changes to future economic conditions.
| 15 | The unaudited results were reviewed by the Audit Committee of the Board on 28 October 2021 and approved by the Board of Directors of the Company at their meeting held on 29 October 2021. |
| 16 | The results for the quarter and half year ended 30 September 2021 were subject to a "Limited Review" by the Statutory Auditors of the Company. An unqualified report has been issued by them thereon. |
|
Place: Hyderabad Date: 29 October 2021 |
 |
|
By order of the Board For Dr. Reddy's Laboratories Limited
G V Prasad Co-Chairman & Managing Director |
Exhibit 99.4
|
S.R. Batliboi & Associates LLP Chartered Accountants |
THE SKYVIEW 10 18th Floor, “NORTH LOBBY” Survey No. 83/1, Raidurgam Hyderabad - 500 032, 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 September 30, 2021 and year to date from April 1, 2021 to September 30, 2021 (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 & ASSOCIATES LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
per Shankar Srinivasan
Partner
Membership No.: 213271
UDIN:21213271AAAAHJ4251
Place: Hyderabad
Date: October 29, 2021
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.drreddys.com |
DR. REDDY'S LABORATORIES LIMITED
STATEMENT OF UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30 SEPTEMBER 2021
| All amounts in Indian Rupees millions | ||||||||||||||||||||||||||
| Quarter ended | Half year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2021 | 30.06.2021 | 30.09.2020 | 30.09.2021 | 30.09.2020 | 31.03.2021 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| 1 | Revenue from operations | |||||||||||||||||||||||||
| a) Net sales/income from operations | 36,731 | 34,001 | 33,233 | 70,732 | 65,497 | 132,094 | ||||||||||||||||||||
| b) License fees and service income | 1,364 | 100 | 103 | 1,464 | 207 | 720 | ||||||||||||||||||||
| c) Other operating income | 139 | 234 | 122 | 373 | 198 | 677 | ||||||||||||||||||||
| Total revenue from operations | 38,234 | 34,335 | 33,458 | 72,569 | 65,902 | 133,491 | ||||||||||||||||||||
| 2 | Other income | 1,181 | 1,862 | 266 | 3,043 | 6,593 | 8,011 | |||||||||||||||||||
| Total income (1 + 2) | 39,415 | 36,197 | 33,724 | 75,612 | 72,495 | 141,502 | ||||||||||||||||||||
| 3 | Expenses | |||||||||||||||||||||||||
| a) Cost of materials consumed | 6,732 | 8,707 | 8,165 | 15,439 | 16,047 | 32,663 | ||||||||||||||||||||
| b) Purchase of stock-in-trade | 6,562 | 6,235 | 3,043 | 12,797 | 6,046 | 12,523 | ||||||||||||||||||||
| c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | 252 | (3,025 | ) | (1,358 | ) | (2,773 | ) | (3,287 | ) | (3,956 | ) | |||||||||||||||
| d) Employee benefits expense | 6,352 | 5,865 | 6,080 | 12,217 | 11,530 | 22,701 | ||||||||||||||||||||
| e) Depreciation and amortisation expense | 2,066 | 1,971 | 2,142 | 4,037 | 4,119 | 8,350 | ||||||||||||||||||||
| f) Impairment of non-current assets | - | - | - | - | 53 | 150 | ||||||||||||||||||||
| g) Finance costs | 111 | 65 | 93 | 176 | 233 | 467 | ||||||||||||||||||||
| h) Selling and other expenses | 10,853 | 10,934 | 9,362 | 21,787 | 17,940 | 38,042 | ||||||||||||||||||||
| Total expenses | 32,928 | 30,752 | 27,527 | 63,680 | 52,681 | 110,940 | ||||||||||||||||||||
| 4 | Profit before tax (1 + 2 - 3) | 6,487 | 5,445 | 6,197 | 11,932 | 19,814 | 30,562 | |||||||||||||||||||
| 5 | Tax expense/(benefit) | |||||||||||||||||||||||||
| a) Current tax | 1,156 | 984 | 1,114 | 2,140 | 3,505 | 5,401 | ||||||||||||||||||||
| b) Deferred tax | 841 | 327 | 273 | 1,168 | 1,997 | 3,297 | ||||||||||||||||||||
| 6 | Net profit for the period/year (4 - 5) | 4,490 | 4,134 | 4,810 | 8,624 | 14,312 | 21,864 | |||||||||||||||||||
| 7 | Other comprehensive income | |||||||||||||||||||||||||
| a) (i) Items that will not be reclassified to profit or loss | 1 | 1 | - | 2 | (1 | ) | (169 | ) | ||||||||||||||||||
| (ii) Income tax relating to items that will not be reclassified to profit or loss | - | - | - | - | - | 62 | ||||||||||||||||||||
| b) (i) Items that will be reclassified to profit or loss | 207 | (531 | ) | 420 | (324 | ) | 780 | 994 | ||||||||||||||||||
| (ii) Income tax relating to items that will be reclassified to profit or loss | (73 | ) | 186 | (157 | ) | 113 | (285 | ) | (346 | ) | ||||||||||||||||
| Total other comprehensive income | 135 | (344 | ) | 263 | (209 | ) | 494 | 541 | ||||||||||||||||||
| 8 | Total comprehensive income (6 + 7) | 4,625 | 3,790 | 5,073 | 8,415 | 14,806 | 22,405 | |||||||||||||||||||
| 9 | Paid-up equity share capital (face value Rs. 5/- each) | 832 | 832 | 831 | 832 | 831 | 832 | |||||||||||||||||||
| 10 | Other equity | 169,005 | ||||||||||||||||||||||||
| 11 | Earnings per equity share (face value Rs. 5/- each) | |||||||||||||||||||||||||
| Basic | 27.07 | 24.94 | 29.00 | 52.01 | 86.31 | 131.84 | ||||||||||||||||||||
| Diluted | 27.00 | 24.87 | 28.92 | 51.87 | 86.08 | 131.46 | ||||||||||||||||||||
| (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | ||||||||||||||||||||||
See accompanying notes to the financial results.
 |
 |
DR. REDDY'S LABORATORIES LIMITED
| Segment information | All amounts in Indian Rupees millions | |||||||||||||||||||||||||
| Quarter ended | Half year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2021 | 30.06.2021 | 30.09.2020 | 30.09.2021 | 30.09.2020 | 31.03.2021 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| Segment wise revenue and results | ||||||||||||||||||||||||||
| 1 | Segment revenue | |||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 9,089 | 7,392 | 7,996 | 16,481 | 16,702 | 33,458 | ||||||||||||||||||||
| b) Global Generics | 29,548 | 28,199 | 27,112 | 57,747 | 52,353 | 106,467 | ||||||||||||||||||||
| c) Proprietary Products | 1,215 | 66 | 101 | 1,281 | 135 | 471 | ||||||||||||||||||||
| Total | 39,852 | 35,657 | 35,209 | 75,509 | 69,190 | 140,396 | ||||||||||||||||||||
| Less: Inter-segment revenue | 1,618 | 1,322 | 1,751 | 2,940 | 3,288 | 6,905 | ||||||||||||||||||||
| Total revenue from operations | 38,234 | 34,335 | 33,458 | 72,569 | 65,902 | 133,491 | ||||||||||||||||||||
| 2 | Segment results | |||||||||||||||||||||||||
| Profit/(loss) before tax and interest from each segment | ||||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 725 | 207 | 145 | 932 | 5,831 | 7,486 | ||||||||||||||||||||
| b) Global Generics | 4,891 | 5,724 | 5,674 | 10,615 | 13,916 | 23,928 | ||||||||||||||||||||
| c) Proprietary Products | 1,039 | (44 | ) | (281 | ) | 995 | (455 | ) | (631 | ) | ||||||||||||||||
| Total | 6,655 | 5,887 | 5,538 | 12,542 | 19,292 | 30,783 | ||||||||||||||||||||
| Less: (i) Finance costs | 111 | 65 | 93 | 176 | 233 | 467 | ||||||||||||||||||||
| (ii) Other un-allocable expenditure/(income), net | 57 | 377 | (752 | ) | 434 | (755 | ) | (246 | ) | |||||||||||||||||
| Total profit before tax | 6,487 | 5,445 | 6,197 | 11,932 | 19,814 | 30,562 | ||||||||||||||||||||
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 | In September 2021, the Company completed the sale of its U.S. and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc. An amount of Rs. 1,084 million is included under the head “License fee and service income” and this pertains to the Company’s Proprietary Products segment. |
| 3 | During the year ended 31 March 2021, the Company recorded a total impairment loss of Rs.150 million the details of which are as under: |
- Rs.97 million in the quarter ended 31 December 2020 on account of decreased market potential of certain products, forming part of the Company’s Global Generics segment, primarily due to higher than expected price erosion, increased competition, and higher than expected value erosion.
- Rs. 53 million in the quarter ended 30 September 2020 on account of the Company’s decision to discontinue the development of certain product related intangibles in the Company’s Global Generics segment.
| 4 | During the quarter ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Pharmaceuticals Limited to acquire certain brands in various Emerging Market countries for a total consideration of Rs. 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles, and pertains to Company's Global Generics segment. |
| 5 | On 10 June 2020, the Company completed the acquisition of select divisions of Wockhardt Limited's branded generics business in India and the territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas, such as respiratory, neurology, venous malformations, dermatology, gastroenterology, pain, and vaccines. This entire portfolio has been transferred to the Company, along with related sales and marketing teams, the manufacturing plant located in Baddi, Himachal Pradesh, and employees. During the quarter ended 30 September 2020, the Company completed the purchase price allocation. The fair value of consideration transferred is Rs.16,115 million. The Company recognised Rs. 373 million, Rs. 14,888 million and Rs. 530 million towards property, plant and equipment, intangible assets, and goodwill, respectively. The acquisition pertains to Company's Global Generics segment. |
| 6 | "Other income" for the year ended 31 March 2021 includes Rs. 4,772 million received from Aurigene Pharmaceutical Services limited (APSL) during the quarter ended 30 June 2020, pursuant to sale of the contract development and manufacturing organisation (CDMO) division of the Custom Pharmaceutical Services (CPS) business of the Company. |
| 7 | The Company has commenced a detailed investigation into an anonymous complaint. The complaint alleges that healthcare professionals in Ukraine and potentially in other countries were provided with improper payments by or on behalf of the Company in violation of U.S. anti-corruption laws, specifically the U.S. Foreign Corrupt Practices Act. A U.S. law firm is conducting the investigation at the instruction of a committee of the Company’s Board of Directors. The Company has disclosed the matter to the U.S. Department of Justice, Securities and Exchange Commission (“SEC”) and Securities Exchange Board of India. On 6 July 2021 the Company received a subpoena from the SEC for the production of documents pertaining to certain CIS geographies, and the Company is in the process of responding to the same. During the quarter ended 30 September 2021, the Company shared the report with respect to one jurisdiction with the SEC. The investigation is ongoing, and the Company is complying with its listing obligations as it relates to updating the regulatory agencies. While the findings from the aforesaid investigations may result in government enforcement actions against the Company in the United States and/or foreign jurisdictions, which could lead to civil and criminal sanctions under relevant laws, the outcome are not reasonably ascertainable at this time. The Company is also in the process of reviewing its Compliance Program including controls in relation to compliance and implement appropriate enhancements, if any. |
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DR. REDDY'S LABORATORIES LIMITED
| 8 | Balance sheet |
| All amounts in Indian Rupees millions | ||||||||
| As at | As at | |||||||
| Particulars | 30.09.2021 | 31.03.2021 | ||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 36,843 | 35,792 | ||||||
| Capital work-in-progress | 10,844 | 8,771 | ||||||
| Goodwill | 853 | 853 | ||||||
| Other intangible assets | 21,096 | 21,798 | ||||||
| Intangible assets under development | 237 | 237 | ||||||
| Financial assets | ||||||||
| Investments | 34,332 | 33,922 | ||||||
| Trade receivables | 55 | 118 | ||||||
| Loans | 12 | 12 | ||||||
| Other financial assets | 491 | 492 | ||||||
| Deferred tax assets, net | 1,494 | 2,548 | ||||||
| Tax assets, net | 1,930 | 2,151 | ||||||
| Other non-current assets | 208 | 160 | ||||||
| Total non-current assets | 108,395 | 106,854 | ||||||
| Current assets | ||||||||
| Inventories | 32,240 | 28,197 | ||||||
| Financial assets | ||||||||
| Investments | 11,089 | 15,972 | ||||||
| Trade receivables | 60,022 | 40,800 | ||||||
| Derivative instruments | 942 | 915 | ||||||
| Cash and cash equivalents | 7,896 | 13,063 | ||||||
| Other financial assets | 548 | 529 | ||||||
| Other current assets | 11,093 | 9,966 | ||||||
| Total current assets | 123,830 | 109,442 | ||||||
| TOTAL ASSETS | 232,225 | 216,296 | ||||||
| EQUITY AND LIABILITIES | ||||||||
| Equity | ||||||||
| Equity share capital | 832 | 832 | ||||||
| Other equity | 173,843 | 169,005 | ||||||
| Total Equity | 174,675 | 169,837 | ||||||
| Liabilities | ||||||||
| Non-current liabilities | ||||||||
| Financial liabilities | ||||||||
| Lease liabilities | 160 | 177 | ||||||
| Provisions | 512 | 251 | ||||||
| Other non-current liabilities | 967 | 428 | ||||||
| Total non-current liabilities | 1,639 | 856 | ||||||
| Current liabilities | ||||||||
| Financial liabilities | ||||||||
| Borrowings | 17,850 | 11,809 | ||||||
| Lease liabilities | 135 | 159 | ||||||
| Trade payables | ||||||||
| Total outstanding dues of micro enterprises and small enterprises | 151 | 152 | ||||||
| Total outstanding dues of creditors other than micro enterprises and small enterprises | 18,070 | 13,212 | ||||||
| Derivative instruments | 346 | 306 | ||||||
| Other financial liabilities | 11,531 | 12,010 | ||||||
| Provisions | 2,882 | 2,987 | ||||||
| Other current liabilities | 4,946 | 4,968 | ||||||
| Total current liabilities | 55,911 | 45,603 | ||||||
| TOTAL EQUITY AND LIABILITIES | 232,225 | 216,296 | ||||||
|
|
DR. REDDY'S LABORATORIES LIMITED
| 9 | Statement of cashflows |
| All amounts in Indian Rupees millions | ||||||||
| Half year ended | ||||||||
| Particulars | 30.09.2021 | 30.09.2020 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from/(used in) operating activities : | ||||||||
| Profit before tax | 11,932 | 19,814 | ||||||
| Adjustments for: | ||||||||
| Fair value changes and profit on sale of financial instruments measured at FVTPL*, net | (199 | ) | (353 | ) | ||||
| Depreciation and amortisation expense | 4,037 | 4,119 | ||||||
| Impairment of non-current assets | - | 53 | ||||||
| Allowance for credit losses (on trade receivables and other advances) | 105 | 41 | ||||||
| (Gain)/loss on sale or de-recognition of non-current assets, net | 12 | (4,733 | ) | |||||
| Foreign exchange loss/(gain), net | (754 | ) | (220 | ) | ||||
| Interest income | (929 | ) | (382 | ) | ||||
| Finance costs | 176 | 233 | ||||||
| Dividend income | - | (516 | ) | |||||
| Equity settled share-based payment expense | 290 | 304 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | (19,267 | ) | 136 | |||||
| Inventories | (4,043 | ) | (4,984 | ) | ||||
| Trade payables | 4,857 | 4,844 | ||||||
| Other assets and other liabilities, net | (1,221 | ) | 23 | |||||
| Cash flow (used in)/from operations | (5,004 | ) | 18,379 | |||||
| Income taxes paid, net | (1,919 | ) | (1,387 | ) | ||||
| Net cash (used in)/from operating activities | (6,923 | ) | 16,992 | |||||
| Cash flows from/(used in) investing activities : | ||||||||
| Proceeds from sale of property, plant and equipment | 19 | 4,890 | ||||||
| Expenditures on property, plant and equipment | (5,864 | ) | (3,439 | ) | ||||
| Expenditures on other intangible assets | (264 | ) | (438 | ) | ||||
| Payment for acquisition of business | - | (15,514 | ) | |||||
| Purchase of other investments | (28,967 | ) | (48,769 | ) | ||||
| Proceeds from sale of investments | 34,006 | 49,763 | ||||||
| Dividend received | - | 516 | ||||||
| Interest received | 916 | 693 | ||||||
| Net cash used in investing activities | (154 | ) | (12,298 | ) | ||||
| Cash flows from/(used in) financing activities : | ||||||||
| Proceeds from issuance of equity shares (including treasury shares) | 281 | 177 | ||||||
| Purchases of treasury shares | - | (190 | ) | |||||
| Proceeds from/(repayment of ) short-term loans and borrowings, net | 6,050 | 5,491 | ||||||
| Repayment of long-term loans and borrowings | - | (3,743 | ) | |||||
| Payment of principle portion of lease liabilities | (96 | ) | (90 | ) | ||||
| Dividend paid | (4,146 | ) | (4,147 | ) | ||||
| Interest paid | (253 | ) | (284 | ) | ||||
| Net cash from/(used in) financing activities | 1,837 | (2,786 | ) | |||||
| Net (decrease)/increase in cash and cash equivalents | (5,240 | ) | 1,908 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 83 | (17 | ) | |||||
| Cash and cash equivalents at the beginning of the period(1) | 13,054 | 391 | ||||||
| Cash and cash equivalents at the end of the period(2) | 7,896 | 2,282 | ||||||
*FVTPL (fair value through profit or loss)
(1)Adjusted for bank overdraft of Rs. 9 million and Rs. 1 million for periods ended 30 September 2021 and 30 September 2020 respectively.
(2)Adjusted for bank overdraft of Rs. Nil and Rs. Nil for periods ended 30 September 2021 and 30 September 2020 respectively.
| 10 | India’s Code on Social Security, 2020, which aims to consolidate, codify and revise certain existing social security laws, received Presidential assent in September 2020 and has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which this Code will come into effect has not been announced. The Company will assess the impact of this Code and the rules thereunder when they come into effect. |
| 11 | The Company considered the uncertainty relating to the COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, investments and other assets. For this purpose, the Company considered internal and external sources of information up to the date of approval of these interim financial results. Based on its judgments, estimates and assumptions, including sensitivity analysis, the Company expects to fully recover the carrying amount of receivables, goodwill, intangible assets, investments and other assets. |
The Company will continue to closely monitor any material changes to future economic conditions.
| 12 | The unaudited results were reviewed by the Audit Committee of the Board on 28 October 2021 and approved by the Board of Directors of the Company at their meeting held on 29 October 2021. |
| 13 | The results for the quarter and half year ended 30 September 2021 were subject to a "Limited Review" by the Statutory Auditors of the Company. An unqualified report has been issued by them thereon. |
|
Place: Hyderabad Date: 29 October 2021 |
 |
 |
By order of the Board For Dr. Reddy's Laboratories Limited
G V Prasad Co-Chairman & Managing Director |
