Dr Reddys Laboratories Ltd 6-K, filed Jul 27, 2021
Dr Reddys Laboratories Ltd (RDY)
About this 6-K
Dr Reddys Laboratories Ltd filed this 6-K on July 27, 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
July 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 ended June 30,2021.
On July 27, 2021, we announced our results of operations for the quarter ended June 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 ended June 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 ended June 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 (Registrant) | |||
| Date: July 27, 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, | AMIT AGARWAL | USHA iyer | |
| Hyderabad - 500034. Telangana, India. | amita@drreddys.com | ushaiyer@drreddys.com | |
Dr. Reddy’s Q1 FY22 Financial Results
Hyderabad, India, July 27, 2021: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY | NSEIFSC: DRREDDY) today announced its consolidated financial results for the quarter ended June 30, 2021. The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS).
| Revenues | Rs. 4,919 Cr |
| [Up: 11% YoY; Up: 4% QoQ] | |
| Gross Margin | 52.2% |
| [Q1 FY21: 56.0%; Q4 FY21: 53.7%] | |
| SG&A Expenses | Rs. 1,505 Cr |
| [Up: 18% YoY; Up: 5% QoQ] | |
| R&D Expenses | Rs. 453 Cr |
| [9.2% of Revenues] | |
| EBITDA | Rs. 1,019 Cr |
| [20.7% of Revenues] | |
| Profit before Tax* | Rs. 743 Cr |
| [Down: 16% YoY; Up: 21% QoQ] | |
| Profit after Tax* | Rs. 571 Cr |
| [Down: 1% YoY; Up: 58% QoQ] |
* Q4 FY21 financials have been adjusted with an additional charge of Rs. 191 Cr ($ 26.25 mn) arising out of the arbitration award in favor of Hatchtech towards the Xeglyze product as an adjusting subsequent event for filing IFRS financials with US SEC in Form 20F on June 30, 2021.
Commenting on the results, Co-Chairman & MD, G V Prasad said “The financial performance of the quarter has been driven by healthy sales growth. I am confident about improving our margins in the upcoming quarters which will be led by the scale up of recent launches, new product launches and productivity. While we continue to sharpen execution in our core business, we are also conducting pilots in areas such as Nutrition, Direct-to-Customer, and Digital Health & Wellness, which can be future growth drivers”.
| 1 |
| All amounts in millions, except EPS | All US dollar amounts based on convenience translation rate of I USD = Rs. 74.33 |
Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement
| Q1 FY22 | Q1 FY21 | YoY | Q4 FY21 | QoQ | ||||||||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | Gr % | ($) | (Rs.) | Gr% | ||||||||||||||||||||||||
| Revenues | 662 | 49,194 | 594 | 44,175 | 11 | 636 | 47,284 | 4 | ||||||||||||||||||||||||
| Cost of Revenues | 316 | 23,495 | 261 | 19,420 | 21 | 295 | 21,909 | 7 | ||||||||||||||||||||||||
| Gross Profit | 346 | 25,699 | 333 | 24,755 | 4 | 341 | 25,375 | 1 | ||||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||
| Selling, General & Administrative expenses | 202 | 15,045 | 172 | 12,786 | 18 | 193 | 14,370 | 5 | ||||||||||||||||||||||||
| Research and Development expenses | 61 | 4,534 | 54 | 3,980 | 14 | 55 | 4,094 | 11 | ||||||||||||||||||||||||
| Impairment of non-current assets | - | - | - | - | - | 25 | 1,835 | (100 | ) | |||||||||||||||||||||||
| Other operating income | (7 | ) | (487 | ) | (2 | ) | (118 | ) | 313 | (8 | ) | (587 | ) | (17 | ) | |||||||||||||||||
| Results from operating activities | 89 | 6,607 | 109 | 8,107 | (19 | ) | 76 | 5,663 | 17 | |||||||||||||||||||||||
| Net finance income | (9 | ) | (652 | ) | (8 | ) | (605 | ) | 8 | (4 | ) | (318 | ) | 105 | ||||||||||||||||||
| Share of profit of equity accounted investees | (2 | ) | (166 | ) | (1 | ) | (77 | ) | 116 | (2 | ) | (179 | ) | (7 | ) | |||||||||||||||||
| Profit before income tax | 100 | 7,425 | 118 | 8,789 | (16 | ) | 83 | 6,160 | 21 | |||||||||||||||||||||||
| Income tax (benefit) / expense | 23 | 1,717 | 40 | 2996 | (43 | ) | 34 | 2,536 | (32 | ) | ||||||||||||||||||||||
| Profit for the period | 77 | 5,708 | 78 | 5,793 | (1 | ) | 49 | 3,624 | 58 | |||||||||||||||||||||||
| Diluted Earnings Per Share (EPS) | 0.46 | 34.34 | 0.47 | 34.86 | (1 | ) | 0.29 | 21.80 | 58 | |||||||||||||||||||||||
| As % to revenues | Q1 FY22 | Q1 FY21 | Q4 FY21 | |||||||||
| Gross Profit | 52.2 | 56.0 | 53.7 | |||||||||
| SG&A | 30.6 | 28.9 | 30.4 | |||||||||
| R&D | 9.2 | 9.0 | 8.7 | |||||||||
| EBITDA | 20.7 | 26.3 | 23.8 | |||||||||
| PBT | 15.1 | 19.9 | 13.0 | |||||||||
| PAT | 11.6 | 13.1 | 7.7 | |||||||||
EBITDA Computation
| Q1 FY22 | Q1 FY21 | Q4 FY21 | ||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | ($) | (Rs.) | ||||||||||||||||||
| Profit before Income Tax | 100 | 7,425 | 118 | 8,789 | 83 | 6,160 | ||||||||||||||||||
| Interest (income) / expense (net)* | (2 | ) | (142 | ) | (4 | ) | (306 | ) | 1 | 75 | ||||||||||||||
| Depreciation | 27 | 1,973 | 29 | 2,120 | 28 | 2,089 | ||||||||||||||||||
| Amortization | 13 | 932 | 14 | 1,020 | 15 | 1,080 | ||||||||||||||||||
| Impairment | - | - | - | - | 25 | 1,835 | ||||||||||||||||||
| EBITDA | 137 | 10,188 | 156 | 11,622 | 151 | 11,239 | ||||||||||||||||||
| * | Includes income from Investments |
| 2 |
| All amounts in millions, except EPS | All US dollar amounts based on convenience translation rate of I USD = Rs. 74.33 |
Key Balance Sheet Items
| As
on 30th Jun 2021 | As
on 31st Mar 2021 | As
on 30th Jun 2020 | ||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | ($) | (Rs.) | ||||||||||||||||||
| Cash and cash equivalents and other investments | 462 | 34,356 | 532 | 39,531 | 380 | 28,227 | ||||||||||||||||||
| Trade receivables (current & non-current) | 823 | 61,148 | 669 | 49,759 | 650 | 48,316 | ||||||||||||||||||
| Inventories | 683 | 50,771 | 611 | 45,412 | 527 | 39,148 | ||||||||||||||||||
| Property, plant and equipment | 789 | 58,636 | 768 | 57,111 | 729 | 54,183 | ||||||||||||||||||
| Goodwill and Other Intangible assets | 535 | 39,746 | 541 | 40,216 | 619 | 45,991 | ||||||||||||||||||
| Loans and borrowings (current & non-current) | 449 | 33,373 | 408 | 30,308 | 425 | 31,582 | ||||||||||||||||||
| Trade payables | 385 | 28,607 | 319 | 23,744 | 256 | 19,038 | ||||||||||||||||||
| Equity | 2,396 | 1,78,114 | 2,328 | 1,73,062 | 2,176 | 1,61,748 | ||||||||||||||||||
Revenue Mix by Segment
| Q1 FY22 | Q1 FY21 | YoY | Q4 FY21 | QoQ | ||||||||||||||||
| Segment | (Rs.) | (Rs.) | Gr % | (Rs.) | Gr % | |||||||||||||||
| Global Generics | 41,113 | 35,075 | 17 | 38,737 | 6 | |||||||||||||||
| North America | 17,390 | 17,282 | 1 | 17,491 | (1 | ) | ||||||||||||||
| Europe | 3,994 | 3,551 | 12 | 3,956 | 1 | |||||||||||||||
| India | 10,600 | 6,260 | 69 | 8,445 | 26 | |||||||||||||||
| Emerging Markets | 9,129 | 7,984 | 14 | 8,845 | 3 | |||||||||||||||
| Pharmaceutical Services and Active Ingredients (PSAI) | 7,540 | 8,553 | (12 | ) | 7,915 | (5 | ) | |||||||||||||
| Proprietary Products & Others | 541 | 547 | (1 | ) | 632 | (14 | ) | |||||||||||||
| Total | 49,194 | 44,175 | 11 | 47,284 | 4 | |||||||||||||||
| 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. Some of our major Covid-19 products are:
Sputnik V vaccine: We launched the vaccine in India in May 2021 after receiving Emergency Use Authorization (EUA) in April 2021. We are working with RDIF for ramping up supplies. We are also working with six CMOs in India for manufacturing readiness. We have launched it across 80 cities and 2.5+ Lakh people have been vaccinated so far. We are also working on Sputnik Light, for which Russia phase 3 trials will be leveraged for India approval as per recommendation from SEC.
Remdesivir: We launched it in India and ramped up our supplies in this quarter to meet with the higher demand due to surge of the COVID cases during the second wave in India.
Avigan® (Favipiravir): We launched it in India and also in few other markets.
2-deoxy-D-glucose (2-DG): We developed it in collaboration with DRDO lab and received EUA as adjunct therapy for hospitalized moderate to severe Covid-19 patients. We have launched it in India in June 2021.
Molnupiravir: We are collaborating with 5 other pharmaceutical companies for the clinical trial of the investigational oral anti-viral drug for the treatment of mild Covid-19 in an outpatient setting in India.
Other Covid drugs: We are also working on Baricitinib and several other covid drugs for treatment ranging from mild to severe conditions.
Revenue Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 41.1 billion:
| Ø | Year-on-year growth of 17% was driven primarily by branded markets (India and emerging markets) and Europe. The overall growth was on account of new product launches and volume traction in the base business, partly offset by price erosion in some of our products and adverse forex rates. |
| Ø | Sequential growth of 6% driven by higher sales in India. The overall growth was attributable to higher volumes and new product launches, offset partially due to price erosion in certain products. |
North America
Revenues from North America at Rs. 17.4 billion:
| Ø | Year-on-year growth of 1%, driven by launch of new products and increase in volumes of certain of our existing products, which was offset by price erosion in some molecules and adverse forex rates. |
| Ø | Sequential decline of 1%, on account of price erosion in some of our products, partially offset by volume traction and new products launched. |
| Ø | During this quarter, we launched 6 new products. These were Sapropterin Dihydrochloride Powder, Albendazole Tablets, Ertapenem Injection and Icosapent Ethyl Capsules in the US and two products in Canada. |
| 4 |
| Ø | We filed two new ANDAs during the quarter. As of 30th June 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, 47 are Para IVs and we believe 24 have ‘First to File’ status. |
Europe
Revenues from Europe at Rs. 4.0 billion. Year-on-year growth of 12% and sequential growth of 1% 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. 10.6 billion:
| Ø | Year-on-year growth of 69% and sequential growth of 26% was primarily driven by increase in sales volumes of our existing products, led by increase in sale of covid drugs due to the severe second wave witnessed in India. The growth was also aided by contribution from new product launches and increase in sales prices of our existing products. |
| Ø | We launched six new products during the quarter including Sputnik-V vaccine and 2-deoxy-D-glucose for covid. We also launched Curhealth™, a nutritional health mix for building immunity. |
Emerging Markets
Revenues from Emerging Markets at Rs. 9.1 billion. Year-on-year growth of 14% and sequential growth of 3%:
| Ø | Revenues for Russia at Rs. 3.5 billion. Year-on-year growth of 8% was on account of increase in volumes and sales prices in our existing products and new products launches. Sequential decline of 13% was on account of lower volumes, offset partly by increase in sales price of certain products and new products launched. |
| Ø | Revenues from other CIS countries and Romania at Rs. 1.4 billion. Year-on-year growth of 4% driven by new product launches, offset partially by a reduction in sales volumes and prices of certain of our existing products. Sequential decline of 24% was on account of reduction in volumes and price of some of our existing products, offset partly by new products launched. |
| Ø | Revenues from Rest of World (RoW) territories at Rs. 4.2 billion. Year-on-year growth of 25% and sequential growth of 43% was largely attributable to new products launched and volume traction in our base business, partially offset by a reduction in sales prices of some of our products. |
Pharmaceutical Services and Active Ingredients (PSAI)
Revenues from PSAI at Rs. 7.5 billion. Year-on-year decline of 12% and sequential decline of 5%.
| Ø | The decline was on account of a decrease in sales volumes and prices of our existing products, partially offset by new products launched. Year-on-year was also impacted due to customer stocking up in last year. |
| Ø | During the quarter we filed DMFs for two products in the US. |
Proprietary Products (PP) & Others
Revenues from PP & Others at Rs. 541 million. Year-on-year growth of 1% and sequential decline of 14%.
| 5 |
Income Statement Highlights:
| Ø | Gross profit margin for the year at 52.2%: |
| - | Decreased by ~380 bps over previous year and by ~150 bps sequentially, majorly on account of price erosion and increase in inventory provisions related to few products. Q1 FY 21 was higher due to higher export incentives and favourable product mix. |
| - | Gross profit margin for GG and PSAI business segments are at 57.7% and 21.6% respectively. |
| Ø | Selling, general & administrative (SG&A) expenses at Rs. 15.0 billion, increased by 18% on a year-on-year basis and by 5% sequentially. This increase was primarily attributable to investments being done towards marketing of some of our key brands, investments in digitalization and annual increments. The year-on-year increase is also due to additional expenses incurred with the integration of Wockhardt acquired portfolio. |
| Ø | Research & development (R&D) expenses at Rs. 4.5 billion. As % to revenues – Q1 FY22: 9.2% | Q4 FY21: 8.7% | Q1 FY21: 9.0%. We continue our focus on investing in R&D to build a healthy pipeline of new products across our markets including development of biosimilars and products pertaining to COVID-19 treatment. |
| Ø | Other operating income at Rs. 487 million compared to Rs. 118 million in Q1 FY21. The increase was on account of certain settlements and other income during the quarter. |
| Ø | Net Finance income at Rs. 652 million compared to Rs. 605 million in Q1 FY21. |
| Ø | Profit before Tax at Rs. 7.4 billion, declined by 16% year-on-year and increased by 21% sequentially. |
| Ø | Profit after Tax at Rs. 5.7 billion. The effective tax rate is 23.1% for the quarter. |
| Ø | Diluted earnings per share is at Rs. 34.34. |
Other Highlights:
| Ø | EBITDA is at Rs. 10.2 billion and the EBITDA margin is 20.7%. |
| Ø | Capital expenditure is at Rs. 3.2 billion. |
| Ø | Free cash-outflow is at Rs. 6.8 billion. |
| Ø | Net cash surplus for the company is at Rs. 451 million as on June 30, 2021. Consequently, net debt to equity ratio is (0.003). |
| 6 |
Earnings Call Details (05:30 pm IST, 08:00 am EDT, July 27, 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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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 |
Unaudited consolidated financial results of Dr. Reddy's Laboratories Limited and its subsidiaries for the quarter 30 June 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 | Year ended | |||||||||||||||||
| Sl. No. | Particulars | 30.06.2021 | 31.03.2021 | 30.06.2020 | 31.03.2021 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||
| 1 | Revenues | 49,194 | 47,284 | 44,175 | 189,722 | |||||||||||||
| 2 | Cost of revenues | 23,495 | 21,909 | 19,420 | 86,645 | |||||||||||||
| 3 | Gross profit (1 - 2) | 25,699 | 25,375 | 24,755 | 103,077 | |||||||||||||
| 4 | Selling, general and administrative expenses | 15,045 | 14,370 | 12,786 | 54,650 | |||||||||||||
| 5 | Research and development expenses | 4,534 | 4,094 | 3,980 | 16,541 | |||||||||||||
| 6 | Impairment of non current assets | - | 1,835 | - | 8,588 | |||||||||||||
| 7 | Other income, net | (487 | ) | (587 | ) | (118 | ) | (982 | ) | |||||||||
| Total operating expenses | 19,092 | 19,712 | 16,648 | 78,797 | ||||||||||||||
| 8 | Results from operating activities [(3) - (4 + 5 + 6 + 7)] | 6,607 | 5,663 | 8,107 | 24,280 | |||||||||||||
| Finance income | 845 | 615 | 838 | 2,623 | ||||||||||||||
| Finance expense | (193 | ) | (297 | ) | (233 | ) | (970 | ) | ||||||||||
| 9 | Finance income, net | 652 | 318 | 605 | 1,653 | |||||||||||||
| 10 | Share of profit of equity accounted investees, net of tax | 166 | 179 | 77 | 480 | |||||||||||||
| 11 | Profit before tax (8 + 9 + 10) | 7,425 | 6,160 | 8,789 | 26,413 | |||||||||||||
| 12 | Tax expense/(benefit), net | 1,717 | 2,536 | 2,996 | 9,175 | |||||||||||||
| 13 | Profit for the period / year (11 -12) | 5,708 | 3,624 | 5,793 | 17,238 | |||||||||||||
| 14 | Earnings per share: | |||||||||||||||||
| Basic earnings per share of Rs.5/- each | 34.44 | 21.86 | 34.94 | 103.94 | ||||||||||||||
| Diluted earnings per share of Rs.5/- each | 34.34 | 21.80 | 34.86 | 103.65 | ||||||||||||||
| (Not annualised) | (Not annualised) | (Not annualised) | ||||||||||||||||
Segment reporting (consolidated)
| All amounts in Indian Rupees millions | ||||||||||||||||||
| Quarter ended | Year ended | |||||||||||||||||
| Sl. No. | Particulars | 30.06.2021 | 31.03.2021 | 30.06.2020 | 31.03.2021 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||
| Segment wise revenue and results: | ||||||||||||||||||
| 1 | Segment revenue: | |||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 8,862 | 9,796 | 10,090 | 38,887 | ||||||||||||||
| b) Global Generics | 41,113 | 38,737 | 35,075 | 154,404 | ||||||||||||||
| c) Proprietary Products | 59 | 243 | 56 | 523 | ||||||||||||||
| d) Others | 482 | 389 | 491 | 2,813 | ||||||||||||||
| Total | 50,516 | 49,165 | 45,712 | 196,627 | ||||||||||||||
| Less: Inter-segment revenues | 1,322 | 1,881 | 1,537 | 6,905 | ||||||||||||||
| Net revenues | 49,194 | 47,284 | 44,175 | 189,722 | ||||||||||||||
| 2 | Segment results: | |||||||||||||||||
| Gross profit from each segment | ||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 1,630 | 2,513 | 2,856 | 9,426 | ||||||||||||||
| b) Global Generics | 23,719 | 22,446 | 21,526 | 91,111 | ||||||||||||||
| c) Proprietary Products | 45 | 238 | 56 | 482 | ||||||||||||||
| d) Others | 305 | 178 | 317 | 2,058 | ||||||||||||||
| Total | 25,699 | 25,375 | 24,755 | 103,077 | ||||||||||||||
| Less: Selling and other un-allocable expenditure, net of other income | 18,274 | 19,215 | 15,966 | 76,664 | ||||||||||||||
| Total profit before tax | 7,425 | 6,160 | 8,789 | 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 unaudited results have been reviewed by the Audit Committee of the Board and approved by the Board of Directors of the Company at their meeting held on 27 July 2021. 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 | 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 statements for the 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 consolidated income statement. Of the total amount, Rs. 1,820 million (U.S.$ 25 million) was recognised as impairment and the balance Rs. 91 million (U.S.$ 1.25 million) was recognised as selling, general and administrative expenses. |
| 3 | During the year ended 31 March 2021, there were significant changes to the market conditions for certain of the products. 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; and - Rs. 46 million relating to property, plant and equipment. |
| 4 | Tax expense for the year ended 31 March 2021 includes the following: - Rs. 1,012 million of benefit, in the quarter ended 30 June 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 derecognition 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. |
| 5 | During the quarter ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Pharmaceuticals Ltd. 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. |
| 6 | 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. |
| 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 investigation is ongoing. The Company has disclosed the matter to the U.S. Department of Justice, Securities and Exchange Commission (“SEC”) and Securities Exchange Board of India, and 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. While the matter 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 probability of such action and the outcome are not reasonably ascertainable at this time. |
| 8 | The Code on Social Security, 2020 (‘Code’) received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code and the rules thereunder when they come into effect. |
| 9 | On 22 October 2020, the Company experienced a cybersecurity incident related to ransomware. The Company could contain the incident in a timely fashion and has also ensured that all traces of the infection are completely cleaned from the network. All affected systems were restored and brought back to normalcy in the order of priority. Based on our forensic investigation, no evidence was found of any data breaches leading to personally identifiable information. Since then, the Company has also been focused on implementing significant improvements to its cyber and data security systems to safeguard from such risks in the future. |
| 10 | The Company continues to consider the impact of COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, and certain investments. For this purpose, the Company considered internal and external sources of information up to the date of approval of these financial results. The Company based on its judgements, estimates and assumptions including sensitivity analysis 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. |
| 11 | The unaudited results were reviewed by the Audit Committee of the Board and approved by the Board of Directors of the Company at their meeting held on 27 July 2021. |
| 12 | The figures of the quarter ended 31 March 2021 are the balancing number between audited figures in respect of the full financial year and the published unaudited year to date figures up to the third quarter of the relevant financial year, which are subject to limited review. |
| 13 | The results for the quarter ended 30 June 2021 were subjected to a "Limited Review". An unqualified report was issued thereon. |
|
Place: Hyderabad Date: 27 July 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 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 June 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 following entities: |
| SL.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 (formerly ‘Regkinetics Services Limited’ name changed December 18, 2020) |
| 10 | Aurigene Discovery Technologies (Malaysia) SDN BHD |
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
| 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. (Formerly Eurobridge Consulting 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 Navneent Rai Kabra Partner Membership No.: 102328
UDIN: 21102328AAAAES1194
Place: Hyderabad Date: July 27, 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 ENDED 30 JUNE 2021
All amounts in Indian Rupees millions
| Quarter ended | Year ended | |||||||||||||||||||
| Sl. No. | Particulars | 30.06.2021 | 31.03.2021 | 30.06.2020 | 31.03.2021 | |||||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||||
| 1 | Revenue from operations | |||||||||||||||||||
| a) Net sales / income from operations | 48,262 | 46,083 | 43,244 | 184,202 | ||||||||||||||||
| b) License fees and service income | 932 | 1,201 | 931 | 5,520 | ||||||||||||||||
| c) Other operating income | 257 | 398 | 90 | 753 | ||||||||||||||||
| Total revenue from operations | 49,451 | 47,682 | 44,265 | 190,475 | ||||||||||||||||
| 2 | Other income | 1,079 | 826 | 871 | 2,914 | |||||||||||||||
| 3 | Total income (1 + 2) | 50,530 | 48,508 | 45,136 | 193,389 | |||||||||||||||
| 4 | Expenses | |||||||||||||||||||
| a) Cost of materials consumed | 11,139 | 10,261 | 11,439 | 42,958 | ||||||||||||||||
| b) Purchase of stock-in-trade | 9,735 | 6,768 | 5,276 | 25,736 | ||||||||||||||||
| c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | (3,853 | ) | (1,614 | ) | (3,519 | ) | (7,905 | ) | ||||||||||||
| d) Employee benefits expense | 9,465 | 8,930 | 8,724 | 36,299 | ||||||||||||||||
| e) Depreciation and amortisation expense | 2,839 | 3,088 | 2,923 | 12,288 | ||||||||||||||||
| f) Impairment of non-current assets | 1,838 | 15 | - | 6,768 | ||||||||||||||||
| g) Finance costs | 193 | 297 | 233 | 970 | ||||||||||||||||
| h) Selling and other expenses | 13,782 | 12,790 | 11,132 | 47,920 | ||||||||||||||||
| Total expenses | 45,138 | 40,535 | 36,208 | 165,034 | ||||||||||||||||
| 5 | Profit before tax and before share of equity accounted investees(3 - 4) | 5,392 | 7,973 | 8,928 | 28,355 | |||||||||||||||
| 6 | Share of profit of equity accounted investees, net of tax | 166 | 179 | 77 | 480 | |||||||||||||||
| 7 | Profit before tax (5+6) | 5,558 | 8,152 | 9,005 | 28,835 | |||||||||||||||
| 8 | Tax expense / (benefit): | |||||||||||||||||||
| a) Current tax | 1,367 | 1,380 | 3,166 | 8,172 | ||||||||||||||||
| b) Deferred tax | 387 | 1,199 | (107 | ) | 1,147 | |||||||||||||||
| 9 | Net profit after taxes and share of profit of associates (7 - 8) | 3,804 | 5,573 | 5,946 | 19,516 | |||||||||||||||
| 10 | Other comprehensive income | |||||||||||||||||||
| a) (i) Items that will not be reclassified subsequently to profit or loss | (1,243 | ) | 1,042 | 207 | 4,026 | |||||||||||||||
| (ii) Income tax relating to items that will not be reclassified to profit or loss | 293 | (220 | ) | - | (220 | ) | ||||||||||||||
| b) (i) Items that will be reclassified subsequently to profit or loss | (68 | ) | (6 | ) | 731 | 1,913 | ||||||||||||||
| (ii) Income tax relating to items that will be reclassified to profit or loss | 173 | (24 | ) | (156 | ) | (319 | ) | |||||||||||||
| Total other comprehensive income | (845 | ) | 792 | 782 | 5,400 | |||||||||||||||
| 11 | Total comprehensive income (9 + 10) | 2,959 | 6,365 | 6,728 | 24,916 | |||||||||||||||
| 12 | Paid-up equity share capital (face value Rs. 5/- each) | 832 | 832 | 831 | 832 | |||||||||||||||
| 13 | Other equity | 175,585 | ||||||||||||||||||
| 14 | Earnings per equity share (face value Rs. 5/- each) | |||||||||||||||||||
| Basic | 22.95 | 33.61 | 35.87 | 117.67 | ||||||||||||||||
| Diluted | 22.89 | 33.51 | 35.78 | 117.34 | ||||||||||||||||
| (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 | Year ended | |||||||||||||||||||
| Sl. No. | Particulars | 30.06.2021 | 31.03.2021 | 30.06.2020 | 31.03.2021 | |||||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||||
| Segment wise revenue and results: | ||||||||||||||||||||
| 1 | Segment revenue : | |||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 8,980 | 9,923 | 10,165 | 39,284 | ||||||||||||||||
| b) Global Generics | 41,251 | 39,007 | 35,092 | 154,759 | ||||||||||||||||
| c) Proprietary Products | 59 | 243 | 56 | 523 | ||||||||||||||||
| d) Others | 483 | 390 | 489 | 2,814 | ||||||||||||||||
| Total | 50,773 | 49,563 | 45,802 | 197,380 | ||||||||||||||||
| Less: Inter-segment revenue | 1,322 | 1,881 | 1,537 | 6,905 | ||||||||||||||||
| Total revenue from operations | 49,451 | 47,682 | 44,265 | 190,475 | ||||||||||||||||
| 2 | Segment results: | |||||||||||||||||||
| Gross profit from each segment | ||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 1,634 | 2,517 | 2,859 | 9,444 | ||||||||||||||||
| b) Global Generics | 23,718 | 22,446 | 21,526 | 91,111 | ||||||||||||||||
| c) Proprietary Products | 45 | 238 | 56 | 482 | ||||||||||||||||
| d) Others | 306 | 178 | 317 | 2,058 | ||||||||||||||||
| Total | 25,703 | 25,379 | 24,758 | 103,095 | ||||||||||||||||
| Less: Selling and other un-allocable expenditure/(income), net | 20,145 | 17,227 | 15,753 | 74,260 | ||||||||||||||||
| Total profit before tax | 5,558 | 8,152 | 9,005 | 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 | 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. As 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 and Rs. 92 million (U.S.$ 1.25 million) as other expenses] was recognized during the three months ended 30 June 2021. |
| 3 | During the year ended 31 March 2021, there were significant changes to the market conditions for certain of the products. 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; and - Rs. 46 million relating to property, plant and equipment. |
| 4 | Tax expense for the year ended 31 March 2021 includes the following: - Rs. 1,012 million of benefit, in the quarter ended 30 June 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 derecognition 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. |
| 5 | During the quarter ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Pharmaceuticals Ltd. 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. |
DR. REDDY'S LABORATORIES LIMITED
| 6 | 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. |
| 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 investigation is ongoing. The Company has disclosed the matter to the U.S. Department of Justice, Securities and Exchange Commission (“SEC”) and Securities Exchange Board of India, and on July 6, 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. While the matter 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 probability of such action and the outcome are not reasonably ascertainable at this time. |
| 8 | The Code on Social Security, 2020 (‘Code’) received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code and the rules thereunder when they come into effect. |
| 9 | On 22 October 2020, the Company experienced a cybersecurity incident related to ransomware. The Company could contain the incident in a timely fashion and has also ensured that all traces of the infection are completely cleaned from the network. All affected systems were restored and brought back to normalcy in the order of priority. Based on our forensic investigation, no evidence was found of any data breaches leading to personally identifiable information. Since then, the Company has also been focused on implementing significant improvements to its cyber and data security systems to safeguard from such risks in the future. |
| 10 | The Company continues to consider the impact of COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, and certain investments. For this purpose, the Company considered internal and external sources of information up to the date of approval of these financial results. The Company based on its judgements, estimates and assumptions including sensitivity analysis 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. |
| 11 | The unaudited results have been reviewed by the Audit Committee of the Board and approved by the Board of Directors of the Company at their meeting held on 27 July 2021. |
| 12 | The figures of the quarter ended 31 March 2021 are the balancing number between audited figures in respect of the full financial year and the published unaudited year to date figures up to the third quarter of the relevant financial year, which are subject to limited review. |
| 13 | The results for the quarter ended 30 June 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: 27 July 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 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 June 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 Navneet Rai Kabra Partner Membership No.: 102328 UDIN: 21102328AAAAET5948
Place: Hyderabad Date: July 27, 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 ENDED 30 JUNE 2021
All amounts in Indian Rupees millions
| Quarter ended | Year ended | |||||||||||||||||
| Sl. No. | Particulars | 30.06.2021 | 31.03.2021 | 30.06.2020 | 31.03.2021 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||
| 1 | Revenue from operations | |||||||||||||||||
| a) Net sales / income from operations | 34,001 | 32,779 | 32,264 | 132,094 | ||||||||||||||
| b) License fees and service income | 100 | 356 | 104 | 720 | ||||||||||||||
| c) Other operating income | 234 | 372 | 76 | 677 | ||||||||||||||
| Total revenue from operations | 34,335 | 33,507 | 32,444 | 133,491 | ||||||||||||||
| 2 | Other income | 1,862 | 816 | 6,447 | 8,011 | |||||||||||||
| Total income (1 + 2) | 36,197 | 34,323 | 38,891 | 141,502 | ||||||||||||||
| 3 | Expenses | |||||||||||||||||
| a) Cost of materials consumed | 8,707 | 8,163 | 7,882 | 32,663 | ||||||||||||||
| b) Purchase of stock-in-trade | 6,235 | 3,266 | 3,003 | 12,523 | ||||||||||||||
| c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | (3,025 | ) | 208 | (1,929 | ) | (3,956 | ) | |||||||||||
| d) Employee benefits expense | 5,865 | 5,456 | 5,450 | 22,701 | ||||||||||||||
| e) Depreciation and amortisation expense | 1,971 | 2,107 | 1,977 | 8,350 | ||||||||||||||
| f) Impairment | - | - | - | 150 | ||||||||||||||
| g) Finance costs | 65 | 169 | 140 | 467 | ||||||||||||||
| h) Selling and other expenses | 10,934 | 10,385 | 8,751 | 38,042 | ||||||||||||||
| Total expenses | 30,752 | 29,754 | 25,274 | 110,940 | ||||||||||||||
| 4 | Profit before tax (1 + 2 - 3) | 5,445 | 4,569 | 13,617 | 30,562 | |||||||||||||
| 5 | Tax expense / (benefit) | |||||||||||||||||
| a) Current tax | 984 | 788 | 2,391 | 5,401 | ||||||||||||||
| b) Deferred tax | 327 | 666 | 1,724 | 3,297 | ||||||||||||||
| 6 | Net profit for the period / year (4 - 5) | 4,134 | 3,115 | 9,502 | 21,864 | |||||||||||||
| 7 | Other comprehensive income | |||||||||||||||||
| a) (i) Items that will not be reclassified to profit or loss | 1 | (174 | ) | (1 | ) | (169 | ) | |||||||||||
| (ii) Income tax relating to items that will not be reclassified to profit or loss | - | 62 | - | 62 | ||||||||||||||
| b) (i) Items that will be reclassified to profit or loss | (531 | ) | 78 | 360 | 994 | |||||||||||||
| (ii) Income tax relating to items that will be reclassified to profit or loss | 186 | (28 | ) | (128 | ) | (346 | ) | |||||||||||
| Total other comprehensive income | (344 | ) | (62 | ) | 231 | 541 | ||||||||||||
| 8 | Total comprehensive income (6 + 7) | 3,790 | 3,053 | 9,733 | 22,405 | |||||||||||||
| 9 | Paid-up equity share capital (face value Rs. 5/- each) | 832 | 832 | 831 | 832 | |||||||||||||
| 10 | Other equity | 169,005 | ||||||||||||||||
| 11 | Earnings per equity share (face value Rs. 5/- each) | |||||||||||||||||
| Basic | 24.94 | 18.78 | 57.31 | 131.84 | ||||||||||||||
| Diluted | 24.87 | 18.73 | 57.18 | 131.46 | ||||||||||||||
| (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 | Year ended | |||||||||||||||||
| Sl. No. | Particulars | 30.06.2021 | 31.03.2021 | 30.06.2020 | 31.03.2021 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||
| Segment wise revenue and results | ||||||||||||||||||
| 1 | Segment revenue | |||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 7,392 | 8,993 | 8,706 | 33,458 | ||||||||||||||
| b) Global Generics | 28,199 | 26,144 | 25,241 | 106,467 | ||||||||||||||
| c) Proprietary Products | 66 | 251 | 34 | 471 | ||||||||||||||
| Total | 35,657 | 35,388 | 33,981 | 140,396 | ||||||||||||||
| Less: Inter-segment revenue | 1,322 | 1,881 | 1,537 | 6,905 | ||||||||||||||
| Total revenue from operations | 34,335 | 33,507 | 32,444 | 133,491 | ||||||||||||||
| 2 | Segment results | |||||||||||||||||
| Profit / (loss) before tax and interest from each segment | ||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 207 | 1,227 | 5,686 | 7,486 | ||||||||||||||
| b) Global Generics | 5,724 | 3,565 | 8,242 | 23,928 | ||||||||||||||
| c) Proprietary Products | (44 | ) | 44 | (174 | ) | (631 | ) | |||||||||||
| Total | 5,887 | 4,836 | 13,754 | 30,783 | ||||||||||||||
| Less: (i) Finance costs | 65 | 169 | 140 | 467 | ||||||||||||||
| (ii) Other un-allocable expenditure / (income), net | 377 | 98 | (3 | ) | (246 | ) | ||||||||||||
| Total profit before tax | 5,445 | 4,569 | 13,617 | 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 | "Other income" for the quarter ended 30 June 2021 includes Rs. 529 million received of preference dividend declared by Dr. Reddy's Laboratories S.A. during the quarter. |
| 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, 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.
| 4 | During the three months ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Pharmaceuticals Ltd. 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. |
| 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. |
| 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.
- Rs. 516 million of preference dividend from Dr. Reddy's Laboratories S.A. during the quarter ended 30 June 2020.
| 7 | Tax expense for the quarter ended 31 March 2021 includes an amount Rs. 627 million on account of derecognition 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. |
DR. REDDY'S LABORATORIES LIMITED
| 8 | 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 investigation is ongoing. The Company has disclosed the matter to the U.S. Department of Justice, Securities and Exchange Commission (“SEC”) and Securities Exchange Board of India, and on July 6, 2021 the Company received a subpoena from the SEC for the production of documents. While the matter 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 probability of such action and the outcome are not reasonably ascertainable at this time. |
| 9 | The Code on Social Security, 2020 (‘Code’) received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code and the rules thereunder when they come into effect. |
| 10 | On 22 October 2020, the Company experienced a cybersecurity incident related to ransomware. The Company could contain the incident in a timely fashion and has also ensured that all traces of the infection are completely cleaned from the network. All affected systems were restored and brought back to normalcy in the order of priority. Based on our forensic investigation, no evidence was found of any data breaches leading to personally identifiable information. Since then, the Company has also been focused on implementing significant improvements to its cyber and data security systems to safeguard from such risks in the future. |
| 11 | The Company continues to consider the impact of COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, and certain investments. For this purpose, the Company considered internal and external sources of information up to the date of approval of these financial results. The Company based on its judgements, estimates and assumptions including sensitivity analysis 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 and approved by the Board of Directors of the Company at their meeting held on 27 July 2021. |
| 13 | The figures of the quarter ended 31 March 2021 are the balancing number between audited figures in respect of the full financial year and the published unaudited year to date figures up to the third quarter of the relevant financial year, which are subject to limited review. |
| 14 | The results for the quarter ended 30 June 2021 presented were subjected to a “Limited review” by the Statutory Auditors of the Company. An unqualified report was issued by them thereon. |
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Place: Hyderabad Date: 27 July 2021 |
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By order of the Board For Dr. Reddy's Laboratories Limited
G V Prasad Co-Chairman & Managing Director |
