Dr Reddys Laboratories Ltd 6-K, filed Oct 28, 2020
Dr Reddys Laboratories Ltd (RDY)
About this 6-K
Dr Reddys Laboratories Ltd filed this 6-K on October 28, 2020.
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 2020
Commission File Number 1-15182
DR. REDDY’S LABORATORIES LIMITED
(Translation of registrant’s name into English)
8-2-337, Road No. 3, Banjara Hills
Hyderabad, Telangana 500 034, India
+91-40-49002900
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ______
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ______
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b): 82-________.
DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
We hereby furnish the United States Securities and Exchange Commission with copies of the following information about our public disclosures regarding our results of operations and financial condition for the quarter and half year ended September 30,2020.
On October 28, 2020, we announced our results of operations for the quarter and half year ended September 30, 2020. We issued a press release announcing our results under International Financial Reporting Standards (“IFRS”), IFRS Unudited Consolidated Financial Results, Ind AS Unudited Consolidated Financial Results with Limited Review report and Ind AS Unudited Standalone Financial Results with Limited Review report for the quarter and half year ended September 30, 2020, 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 Unudited 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, 2020.
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.
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DR. REDDY’S LABORATORIES LIMITED (Registrant)
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| Date: October 28, 2020 | By: | /s/ Sandeep Poddar | ||
| Name: | Sandeep Poddar | |||
| Title: | Company Secretary | |||
Exhibit 99.1
| CONTACT | ||
| DR. REDDY'S LABORATORIES LTD. | Investor relationS | Media relationS |
| 8-2-337, Road No. 3, Banjara Hills, Hyderabad - 500034. Telangana, India. |
AMIT AGARWAL amita@drreddys.com (Ph: +91-40-4900 2135) |
APARNA TEKURI aparnatekuri@drreddys.com (Ph: +91-40-4900 2446) |
Dr. Reddy’s Q2 & H1 FY21 Financial Results
Hyderabad, India, October 28, 2020: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY) today announced its consolidated financial results for the quarter and the half year ended September 30, 2020. 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. 4,897 Cr Revenue [Up: 11% QoQ; 2% YoY]
53.9% Gross Margin [Q1 FY21: 56.0%; Q2 FY20: 57.5%]
Rs.1,311 Cr SGNA expenses [Up: 3% QoQ; Down: 1% YoY]
Rs. 436 Cr R&D expenses [8.9% of Revenues]
Rs. 1,267 Cr EBITDA [Up: 9% QoQ; Down: 12% YoY]
Rs. 862 Cr Profit before Tax [Down: 2% QoQ; Up: 12% YoY]
Rs. 762 Cr Profit after Tax [Up: 32% QoQ; Down: 30% YoY] |
Rs. 9,314 Cr Revenue [Up: 8% YoY]
54.9% Gross Margin [H1 FY20: 54.9%]
Rs. 2,589 Cr SGNA expenses [Up: 2% YoY]
Rs. 834 Cr R&D expenses [9.0% of Revenues]
Rs. 2,430 Cr EBITDA [Down: 5% YoY]
Rs. 1,741 Cr Profit before Tax [Up: 8% YoY]
Rs. 1,342 Cr Profit after Tax [Down: 24% YoY] |
*Q2 FY21 YoY sales growth of 20% adjusted for proprietary products out-licensing income in previous year
Commenting on the results, Co-chairman & MD, G V Prasad said “We are pleased to report continued growth across all the markets and improved productivity which is reflected in the healthy EBITDA margin and RoCE. Our research teams are working on several potential remedies for COVID in addition to the already launched products.”
| 1 |
| All amounts in millions, except EPS | All US dollar amounts based on convenience translation rate of I USD = Rs. 73.54 |
Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement
| Q2 FY21 | Q2 FY20 | YoY | Q1 FY21 | QoQ | ||||||||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | Gr % | ($) | (Rs.) | Gr% | ||||||||||||||||||||||||
| Revenues | 666 | 48,967 | 653 | 48,009 | 2 | 601 | 44,175 | 11 | ||||||||||||||||||||||||
| Cost of Revenues | 307 | 22,558 | 277 | 20,389 | 11 | 264 | 19,420 | 16 | ||||||||||||||||||||||||
| Gross Profit | 359 | 26,409 | 376 | 27,620 | (4 | ) | 337 | 24,755 | 7 | |||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||
| Selling, General & Administrative expenses | 178 | 13,107 | 180 | 13,217 | (1 | ) | 174 | 12,786 | 3 | |||||||||||||||||||||||
| Research and Development expenses | 59 | 4,359 | 50 | 3,662 | 19 | 54 | 3,980 | 10 | ||||||||||||||||||||||||
| Impairment of non-current assets | 11 | 781 | 48 | 3,560 | (78 | ) | ||||||||||||||||||||||||||
| Other operating income | (2 | ) | (149 | ) | (2 | ) | (135 | ) | 10 | (2 | ) | (118 | ) | 26 | ||||||||||||||||||
| Results from operating activities | 113 | 8,311 | 99 | 7,316 | 14 | 110 | 8,107 | 3 | ||||||||||||||||||||||||
| Net finance income | (3 | ) | (237 | ) | (3 | ) | (231 | ) | 3 | (8 | ) | (605 | ) | (61 | ) | |||||||||||||||||
| Share of profit of equity accounted investees | (1 | ) | (73 | ) | (2 | ) | (117 | ) | (38 | ) | (1 | ) | (77 | ) | (5 | ) | ||||||||||||||||
| Profit before income tax | 117 | 8,621 | 104 | 7,664 | 12 | 120 | 8,789 | (2 | ) | |||||||||||||||||||||||
| Income tax | 13 | 998 | (44 | ) | (3,261 | ) | (131 | ) | 41 | 2,996 | (67 | ) | ||||||||||||||||||||
| Profit for the period | 104 | 7,623 | 149 | 10,925 | (30 | ) | 79 | 5,793 | 32 | |||||||||||||||||||||||
| Diluted Earnings Per Share (EPS) | 0.62 | 45.83 | 0.90 | 65.82 | (30 | ) | 0.47 | 34.86 | 31 | |||||||||||||||||||||||
| As a % to revenues | Q2 FY21 | Q2 FY20 | Q1 FY21 | |||||||||
| Gross Profit | 53.9 | 57.5 | 56.0 | |||||||||
| SG&A | 26.8 | 27.5 | 28.9 | |||||||||
| R&D | 8.9 | 7.6 | 9.0 | |||||||||
| EBITDA | 25.9 | 29.9 | 26.3 | |||||||||
| PBT | 17.6 | 16.0 | 19.9 | |||||||||
| PAT | 15.6 | 22.8 | 13.1 | |||||||||
EBITDA Computation
| Q2 FY21 | Q2 FY20 | Q1 FY21 | ||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | ($) | (Rs.) | ||||||||||||||||||
| Profit before Income Tax | 117 | 8,621 | 104 | 7,664 | 120 | 8,789 | ||||||||||||||||||
| Interest income (net)* | (0 | ) | (1 | ) | (3 | ) | (226 | ) | (4 | ) | (306 | ) | ||||||||||||
| Depreciation | 30 | 2,188 | 31 | 2,306 | 29 | 2,120 | ||||||||||||||||||
| Amortization | 15 | 1,084 | 14 | 1,033 | 14 | 1,020 | ||||||||||||||||||
| Impairment | 11 | 781 | 48 | 3,560 | ||||||||||||||||||||
| EBITDA | 172 | 12,673 | 195 | 14,337 | 158 | 11,622 | ||||||||||||||||||
* Includes income from Investments
| 2 |
| All amounts in millions, except EPS | All US dollar amounts based on convenience translation rate of I USD = Rs. 73.54 |
Key Balance Sheet Items
| As on 30th Sep 2020 | As on 30th Jun 2020 | As on 30th Sep 2019 | ||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | ($) | (Rs.) | ||||||||||||||||||
| Cash and cash equivalents and other investments | 355 | 26,074 | 384 | 28,227 | 414 | 30,446 | ||||||||||||||||||
| Trade receivables (current & non-current) | 684 | 50,335 | 657 | 48,316 | 573 | 42,153 | ||||||||||||||||||
| Inventories | 559 | 41,134 | 532 | 39,148 | 476 | 35,033 | ||||||||||||||||||
| Property, plant and equipment | 748 | 55,026 | 737 | 54,183 | 721 | 53,008 | ||||||||||||||||||
| Goodwill and Other Intangible assets | 619 | 45,553 | 625 | 45,991 | 603 | 44,340 | ||||||||||||||||||
| Loans and borrowings (current & non-current) | 373 | 27,429 | 429 | 31,582 | 429 | 31,545 | ||||||||||||||||||
| Trade payables | 310 | 22,833 | 259 | 19,038 | 210 | 15,434 | ||||||||||||||||||
| Equity | 2,248 | 1,65,337 | 2,199 | 1,61,748 | 2,092 | 1,53,816 | ||||||||||||||||||
Revenue Mix by Segment
| Q2 FY21 | Q2 FY20 | YoY | Q1 FY21 | QoQ | ||||||||||||||||
| Particulars | (Rs.) | (Rs.) | Growth % | (Rs.) | Growth % | |||||||||||||||
| Global Generics | 39,841 | 32,816 | 21 | % | 35,075 | 14 | % | |||||||||||||
| North America | 18,328 | 14,265 | 28 | % | 17,282 | 6 | % | |||||||||||||
| Europe | 3,754 | 2,764 | 36 | % | 3,551 | 6 | % | |||||||||||||
| India | 9,123 | 7,511 | 21 | % | 6,260 | 46 | % | |||||||||||||
| EM | 8,636 | 8,276 | 4 | % | 7,982 | 8 | % | |||||||||||||
| Pharmaceutical Services and Active Ingredients (PSAI) | 8,505 | 7,107 | 20 | % | 8,553 | (1 | %) | |||||||||||||
| Proprietary Products & Others | 621 | 8,086 | (92 | %) | 547 | 14 | % | |||||||||||||
| Total | 48,967 | 48,009 | 2 | % | 44,175 | 11 | % | |||||||||||||
| 3 |
Cyber Attack Update
On 22nd October 2020, we experienced an information security incident and consequently isolated the impacted IT services. This incident involved a ransom-ware attack. We promptly engaged leading outside cybersecurity experts, launched a comprehensive containment and remediation effort and investigation to address the incident.
As of date, our investigation has not ascertained if any data breaches in the incident pertain to personally identifiable information stored in the Company's systems.
Recovery and restoration of all applications and data is underway. All critical operations are being enabled in a controlled manner.
COVID-19 Update
We continue our fight against the current pandemic by ensuring health and safety of our employees and business partners by adopting adequate precautionary measures. We continued our operations across plants enabling us to serve our patients across markets.
During the quarter we saw gradual recovery in the market demand across India, Russia and other markets after a low demand in Q1 FY 21, although the demand is yet to fully recover to pre-covid levels.
We launched COVID-19 treatment drugs Avigan (Favipiravir) and Remdesivir. We further strengthened our development pipeline for COVID-19 treatment drugs including the vaccine candidate Sputnik V.
Revenue Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 39.8 billion:
| Ø | Year-on-year growth of 21% and sequential quarter growth of 14%, were driven primarily on account of new product launches, volume traction in the base business and integration of the acquired business from Wockhardt in India. |
North America
Revenues from North America at Rs. 18.3 billion:
| Ø | Year-on-year growth of 28%, driven by contribution from new products launched, increase in volumes of our base products and aided by a favorable forex rate, which was partially offset by price erosion. |
| Ø | Sequential growth of 6%, on account of volume traction in the base business and new product launches, offset by adverse forex movement and price erosion. |
| Ø | We launched nine new products including Ciprofloxacin & Dexamethasone Otic Suspension, Fulvestrant Injection, OTC Diclofenac and OTC Olapatadine. |
| Ø | We filed two new ANDAs during the quarter. As of 30th September 2020, cumulatively 94 generic filings are pending for approval with the USFDA (92 ANDAs and 2 NDAs under 505(b)(2) route). Of the 92 ANDAs, 50 are Para IVs and we believe 26 have ‘First to File’ status. |
| 4 |
Europe
Revenues from Europe at Rs. 3.8 billion:
| Ø | Year-on-year growth of 36% and sequential growth of 6%, primarily on account of new product launches and favorable forex movement. |
| Ø | We also forayed into a new country Austria, beyond our EU5 markets. |
India
Revenues from India at Rs. 9.1 billion:
| Ø | Year-on-year growth of 21% and sequential growth of 46% is primarily on account of revenues from the acquired business of Wockhardt and contribution from new products including the Avigan (Favipiravir) and Remdesivir launched for treatment of Covid-19. |
Emerging Markets
Revenues from Emerging Markets at Rs. 8.6 billion. Year-on-year growth of 4%. Sequential growth of 8%:
| Ø | Revenues from Russia at Rs. 4.0 billion. Year-on-year decline of 3% is primarily on account of weakening Ruble. Sequential growth of 22% contributed by increased volumes with a gradual recovery in market demand after Q1 was impacted due to COVID-19. |
| Ø | Revenues from other CIS countries and Romania market at Rs. 2.0 billion. Year-on-year growth of 19% and sequential growth of 43% driven by both base business and new product launches. |
| Ø | Revenues from Rest of World (RoW) territories at Rs. 2.7 billion. Year-on-year growth of 7% driven by new products. Sequential decline of 20% is on account of lower volumes sold for existing products. |
Pharmaceutical Services and Active Ingredients (PSAI)
Revenues from PSAI at Rs. 8.5 billion:
| Ø | Year-on-year growth of 20% driven by new products, growth in the services business and favorable forex rate. |
| Ø | Sequential decline of 1% on account of lower volumes of certain products, partially offset by new products and growth in the services business. |
| Ø | During the quarter we filed DMF for one product in the US. |
Proprietary Products (PP) & Others
Revenues from PP & Others at Rs. 622 million:
| Ø | Year-on-year decline of 92%. Q2 FY 20 was higher due to income from sale of the US and select territory rights for two of Neurology franchise products pertaining to PP. |
| Ø | Sequential growth of 14%. |
| 5 |
Income Statement Highlights:
| Ø | Gross profit margin at 53.9%: |
| - | Decline of 360 bps over previous year, which was impacted due to inclusion of revenue from sale of Neurology franchise products in the previous year, partially offset by improvement in productivity and favorable forex rates. Sequentially the margin reduced by 210 bps, primarily on account of lower export incentives, adverse forex and product mix. |
| - | Gross profit margin for GG and PSAI business segments are at 59.4% and 26.8% respectively. |
| Ø | SG&A expenses at Rs. 13.1 billion, reduced by 1% year-on-year due to certain one-off expenses last year, which was partly offset by incremental costs post the integration of the acquired divisions from Wockhardt in this year. Sequentially it increased by 3% primarily due to the integration of the acquired divisions from Wockhardt and pickup in sales & marketing activities post un-lock. |
| Ø | R&D expenses at Rs. 4.4 billion. As % to revenues these are: Q2 FY21: 8.9% | Q1 FY 21: 9.0% | Q2 FY20: 7.6%. Our focus continues on building a healthy pipeline of new products across our markets including development of products pertaining to COVID-19 treatment. |
| Ø | Other operating income at Rs. 149 million compared to Rs. 135 million in Q2 FY20. |
| Ø | Net Finance income at Rs. 237 million compared to Rs. 231 million in Q2 FY20. |
| Ø | Profit before Tax at Rs. 8.6 billion, increased by 12% year-on-year and reduced by 2% sequentially. |
| Ø | Profit after Tax at Rs. 7.6 billion. The effective tax rate is ~ 11.6% for the quarter, which is lower primarily due to recognition of deferred tax assets for one of our subsidiaries. |
| Ø | Diluted earnings per share is at Rs. 45.83. |
Other Highlights:
| Ø | EBITDA at Rs. 12.7 billion and the EBITDA margin is 25.9% |
| Ø | Capital expenditure is at Rs. 2.5 billion. |
| Ø | Free cash-flow generated during the quarter stood at Rs. 6.0 billion. |
| Ø | Net debt of the company is at Rs. 1.4 billion as on September 30, 2020. Consequently, net debt to equity ratio is 0.01. |
| 6 |
Earnings Call Details (05:30 pm IST, 08:00 am EDT, Oct 28, 2020)
The management of the Company will host an earnings call to discuss the Company’s financial performance and answer any questions from the participants.
Conference Joining Information
Option 1: Express Join with DiamondPass™
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| Option 2: Join through below Dial-In Numbers | |
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Universal Access Number:
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+91 22 6280 1219 +91 22 7115 8120 |
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Local Access Number: Available all over India |
+91 70456 71221 |
| International Toll Free Number: |
USA: 1 866 746 2133 UK: 0 808 101 1573 Singapore: 800 101 2045 Hong Kong: 800 964 448 |
No password/pin number is necessary to dial in to any of the above numbers. The operator will provide instructions on asking questions before and during the call.
Play Back: The play back will be available after the earnings call, till November 4th, 2020. For play back dial in phone No: +91 22 7194 5757 | +91 22 6663 5757, and Playback Code is 97779.
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) 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, (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, 2020. The company assumes no obligation to update any information contained herein.
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Exhibit 99.2
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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 and half year ended 30 September 2020 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 | 30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.09.2019 | 31.03.2020 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| 1 | Revenues | 48,967 | 44,175 | 48,009 | 93,142 | 86,444 | 174,600 | |||||||||||||||||||
| 2 | Cost of revenues | 22,558 | 19,420 | 20,389 | 41,978 | 38,965 | 80,591 | |||||||||||||||||||
| 3 | Gross profit (1 - 2) | 26,409 | 24,755 | 27,620 | 51,164 | 47,479 | 94,009 | |||||||||||||||||||
| 4 | Selling, general and administrative expenses | 13,107 | 12,786 | 13,217 | 25,893 | 25,282 | 50,129 | |||||||||||||||||||
| 5 | Research and development expenses | 4,359 | 3,980 | 3,662 | 8,339 | 7,271 | 15,410 | |||||||||||||||||||
| 6 | Impairment of non current assets | 781 | - | 3,560 | 781 | 3,560 | 16,767 | |||||||||||||||||||
| 7 | Other income, net | (149 | ) | (118 | ) | (135 | ) | (267 | ) | (3,894 | ) | (4,290 | ) | |||||||||||||
| Total operating expenses | 18,098 | 16,648 | 20,304 | 34,746 | 32,219 | 78,016 | ||||||||||||||||||||
| 8 | Results from operating activities [(3) - (4 + 5 + 6 + 7)] | 8,311 | 8,107 | 7,316 | 16,418 | 15,260 | 15,993 | |||||||||||||||||||
| Finance income | 489 | 838 | 535 | 1,327 | 1,225 | 2,461 | ||||||||||||||||||||
| Finance expense | (252 | ) | (233 | ) | (304 | ) | (485 | ) | (601 | ) | (983 | ) | ||||||||||||||
| 9 | Finance income, net | 237 | 605 | 231 | 842 | 624 | 1,478 | |||||||||||||||||||
| 10 | Share of profit of equity accounted investees, net of tax | 73 | 77 | 117 | 150 | 280 | 561 | |||||||||||||||||||
| 11 | Profit before tax (8 + 9 + 10) | 8,621 | 8,789 | 7,664 | 17,410 | 16,164 | 18,032 | |||||||||||||||||||
| 12 | Tax expense/(benefit), net | 998 | 2,996 | (3,261 | ) | 3,994 | (1,389 | ) | (1,466 | ) | ||||||||||||||||
| 13 | Profit for the period / year (11 -12) | 7,623 | 5,793 | 10,925 | 13,416 | 17,553 | 19,498 | |||||||||||||||||||
| 14 | Earnings per share: | |||||||||||||||||||||||||
| Basic earnings per share of Rs.5/- each | 45.96 | 34.94 | 65.93 | 80.91 | 105.90 | 117.63 | ||||||||||||||||||||
| Diluted earnings per share of Rs.5/- each | 45.83 | 34.86 | 65.82 | 80.69 | 105.71 | 117.40 | ||||||||||||||||||||
| (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | ||||||||||||||||||||||
Segment reporting (consolidated)
| All amounts in Indian Rupees millions | ||||||||||||||||||||||||||
| Quarter ended | Half year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.09.2019 | 31.03.2020 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| Segment wise revenue and results: | ||||||||||||||||||||||||||
| 1 | Segment revenue: | |||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 10,256 | 10,090 | 8,502 | 20,346 | 14,435 | 31,657 | ||||||||||||||||||||
| b) Global Generics | 39,841 | 35,075 | 32,816 | 74,916 | 65,798 | 138,123 | ||||||||||||||||||||
| c) Proprietary Products | 100 | 56 | 7,425 | 156 | 7,706 | 7,949 | ||||||||||||||||||||
| d) Others | 521 | 491 | 661 | 1,012 | 1,294 | 2,781 | ||||||||||||||||||||
| Total | 50,718 | 45,712 | 49,404 | 96,430 | 89,233 | 180,510 | ||||||||||||||||||||
| Less: Inter-segment revenues | 1,751 | 1,537 | 1,395 | 3,288 | 2,789 | 5,910 | ||||||||||||||||||||
| Net revenue from operations | 48,967 | 44,175 | 48,009 | 93,142 | 86,444 | 174,600 | ||||||||||||||||||||
| 2 | Segment results: | |||||||||||||||||||||||||
| Gross profit from each segment | ||||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 2,284 | 2,856 | 1,750 | 5,140 | 2,075 | 6,190 | ||||||||||||||||||||
| b) Global Generics | 23,685 | 21,526 | 18,200 | 45,211 | 37,207 | 78,449 | ||||||||||||||||||||
| c) Proprietary Products | 88 | 56 | 7,298 | 144 | 7,505 | 7,744 | ||||||||||||||||||||
| d) Others | 352 | 317 | 372 | 669 | 692 | 1,626 | ||||||||||||||||||||
| Total | 26,409 | 24,755 | 27,620 | 51,164 | 47,479 | 94,009 | ||||||||||||||||||||
| Less: Selling and other un-allocable expenditure, net of other income | 17,788 | 15,966 | 19,956 | 33,754 | 31,315 | 75,977 | ||||||||||||||||||||
| Total profit before tax | 8,621 | 8,789 | 7,664 | 17,410 | 16,164 | 18,032 | ||||||||||||||||||||
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 on 27 October 2020 and approved by the Board of Directors of the Company at their meeting held on 28 October 2020. The above financial results have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS), as issued by the International Accounting Standards Board (IASB). |
| 2 | 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, dennatology, 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. |
| 3 | Impairment charge of Rs. 781 million for the quarter ended 30 September 2020 comprises of: |
- Rs. 728 million pertaining to product related intangible forming part of Company’s Proprietary 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.
| 4 | Tax expense for the quarter ended 30 September 2020 includes benefit on account of recognition of deferred tax asset amounting to Rs. 1,012 million pursuant to a planned restructuring activity between the Group companies. |
| 5 | "Revenues" for the quarter ended 30 September 2019 and year ended 31 March 2020 include an amount of Rs. 7,229 million (U.S.$105.1 million) and Rs. 7,486 million (U.S.$108.7 million), respectively, towards license fee for selling US and select territory rights for ZEMBRACE® SYMTOUCH® (sumatriptan injection) 3 mg and TOSYMRA® (sumatriptan nasal spray) 10 mg, (formerly referred to as “DFN-02”) to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million. |
| 6 | "Other income, net" for the half year ended 30 September 2019 and year ended 31 March 2020 includes an amount of Rs. 3,457 million received from Celgene, pursuant to a settlement agreement entered in April 2019. The agreement effectively settles any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada. |
| 7 | Total impairment charge for the year ended 31 March 2020 is Rs. 16,767 million, of which Rs. 11,137 million was towards impairment of gNuvaring, Rs. 4,385 million was towards ramelteon, tobramycin and imiquimod, and the balance is towards other product related intangibles forming part of Company’s Global generics and Proprietary Products segments. |
| 8 | Tax benefit for the year ended 31 March 2020 was primarily due to recognition of deferred tax asset of: |
- Rs. 4,989 million towards MAT recoverable pursuant to enactment of Taxation Laws (Amendment) Act, 2019;
- Rs. 1,264 million pursuant to a planned restructuring activity between the group Companies.
| 9 | On 22 October 2020, the Company informed the stock exchanges that it had experienced an information security incident and consequent isolation of impacted IT services. This incident involved a ransom-ware attack. The Company promptly engaged leading outside cybersecurity experts, launched a comprehensive containment and remediation effort and investigation to address the incident. As of date, the Company's investigation has not ascertained if any data breaches in the incident pertain to personally identifiable information stored in the Company's systems. Recovery and restoration of all applications and data is underway. All critical operations are being enabled in a controlled manner. |
| 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 Board of Directors have also give their in principle approval for the potential secondary listing of American Depository Receipts (ADRs) on NSE IFSC Limited (NSE International Exchange) subject to compliance of applicable laws and approval of concerned authorities. |
| 12 | Consolidated statements of financial position |
| All amounts in Indian Rupees millions | ||||||||
| As at | ||||||||
| Particulars | 30.09.2020 | 31.03.2020 | ||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 3,889 | 2,053 | ||||||
| Other investments | 21,154 | 23,687 | ||||||
| Trade and other receivables | 50,077 | 50,278 | ||||||
| Inventories | 41,134 | 35,066 | ||||||
| Derivative financial instruments | 985 | 1,105 | ||||||
| Tax assets | 2,206 | 4,379 | ||||||
| Other current assets | 15,561 | 13,802 | ||||||
| Total current assets | 135,006 | 130,370 | ||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 55,026 | 52,332 | ||||||
| Goodwill | 4,581 | 3,994 | ||||||
| Other intangible assets | 40,972 | 27,659 | ||||||
| Trade and other receivables | 258 | 1,737 | ||||||
| Investment in equity accounted investees | 2,961 | 2,763 | ||||||
| Other investments | 1,031 | 328 | ||||||
| Deferred tax assets | 12,657 | 12,214 | ||||||
| Other non-current assets | 885 | 844 | ||||||
| Total non-current assets | 118,371 | 101,871 | ||||||
| Total assets | 253,377 | 232,241 | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | 22,833 | 16,659 | ||||||
| Short-term borrowings | 19,852 | 16,441 | ||||||
| Long-term borrowings, current portion | 815 | 4,266 | ||||||
| Provisions | 3,885 | 3,800 | ||||||
| Current tax liabilities | 1,156 | 573 | ||||||
| Derivative financial instruments | 597 | 1,602 | ||||||
| Bank overdraft | 101 | 91 | ||||||
| Other current liabilities | 29,330 | 29,382 | ||||||
| Total current liabilities | 78,569 | 72,814 | ||||||
| Non-current liabilities | ||||||||
| Long-term borrowings, excluding current portion | 6,661 | 1,304 | ||||||
| Deferred tax liabilities | 206 | 275 | ||||||
| Provisions | 55 | 54 | ||||||
| Other non-current liabilities | 2,549 | 2,806 | ||||||
| Total non-current liabilities | 9,471 | 4,439 | ||||||
| Total liabilities | 88,040 | 77,253 | ||||||
| Equity | ||||||||
| Share capital | 831 | 831 | ||||||
| Treasury shares | (1,048 | ) | (1,006 | ) | ||||
| Share premium | 8,792 | 8,495 | ||||||
| Share based payment reserve | 1,269 | 1,233 | ||||||
| Capital redemption reserve | 173 | 173 | ||||||
| Special economic zone re-investment reserve | 1,059 | - | ||||||
| Retained earnings | 152,458 | 144,247 | ||||||
| Other components of equity | 1,803 | 1,015 | ||||||
| Total equity | 165,337 | 154,988 | ||||||
| Total liabilities and equity | 253,377 | 232,241 | ||||||
| 13 | Consolidated statements of cash flows |
| All amounts in Indian Rupees millions | ||||||||
| Half year ended | ||||||||
| Particulars | 30.09.2020 | 30.09.2019 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash generated from operating activities: | ||||||||
| Profit for the period | 13,416 | 17,553 | ||||||
| Adjustments for: | ||||||||
| Income tax expense/(benefit) | 3,994 | (1,389 | ) | |||||
| Fair value changes and profit on sale of units of mutual funds, net | (389 | ) | (562 | ) | ||||
| Depreciation and amortization | 6,411 | 6,422 | ||||||
| Impairment of non-current assets | 781 | 3,560 | ||||||
| Allowance for credit losses and doubtful trade receivables and other advances | 61 | 105 | ||||||
| Loss on sale or de-recognition of property, plant and equipment and other intangible assets, net | 15 | 39 | ||||||
| Share of profit of equity accounted investees | (150 | ) | (280 | ) | ||||
| Foreign exchange (gain)/loss, net | 919 | (29 | ) | |||||
| Interest (income)/expense, net | 82 | 101 | ||||||
| Equity settled share-based payment expense | 304 | 272 | ||||||
| Dividends income | - | (5 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Trade and other receivables | 1,620 | (2,512 | ) | |||||
| Inventories | (5,602 | ) | (1,454 | ) | ||||
| Trade and other payables | 4,773 | 910 | ||||||
| Other assets and other liabilities, net | (3,991 | ) | 872 | |||||
| Cash generated from operations | 22,244 | 23,603 | ||||||
| Income tax paid, net | (2,077 | ) | (3,664 | ) | ||||
| Net cash generated from operating activities | 20,167 | 19,939 | ||||||
| Cash flows from/(used in) investing activities: | ||||||||
| Expenditure on property, plant and equipment | (3,999 | ) | (2,137 | ) | ||||
| Proceeds from sale of property, plant and equipment | 33 | 53 | ||||||
| Expenditures on other intangible assets | (567 | ) | (501 | ) | ||||
| Proceeds from sale of other intangible assets | - | 259 | ||||||
| Payment for acquisition of business | (15,514 | ) | - | |||||
| Purchase of other investments | (50,933 | ) | (69,304 | ) | ||||
| Proceeds from sale of other investments | 53,296 | 65,885 | ||||||
| Dividends received from equity accounted investees | - | 392 | ||||||
| Interest received | 714 | 461 | ||||||
| Net cash used in investing activities | (16,970 | ) | (4,892 | ) | ||||
| Cash flows from/(used in) financing activities: | ||||||||
| Proceeds from issuance of equity shares (including treasury shares) | 177 | - | * | |||||
| Purchase of treasury shares | (190 | ) | (474 | ) | ||||
| Proceeds from/(repayment of) short-term borrowings, net | 3,644 | (2,012 | ) | |||||
| Proceeds from long-term borrowings | 3,800 | - | ||||||
| Repayment of long-term borrowings | (3,743 | ) | (6,765 | ) | ||||
| Payment of principal portion of lease liabilities | (366 | ) | (287 | ) | ||||
| Dividend paid (30 September 2019 including corporate dividend tax) | (4,147 | ) | (3,916 | ) | ||||
| Interest paid | (559 | ) | (839 | ) | ||||
| Net cash used in financing activities | (1,384 | ) | (14,293 | ) | ||||
| Net increase / (decrease) in cash and cash equivalents | 1,813 | 754 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 13 | 26 | ||||||
| Cash and cash equivalents at the beginning of the period(1) | 1,962 | 2,228 | ||||||
| Cash and cash equivalents at the end of the period(2) | 3,788 | 3,008 | ||||||
*Rounded off to millions
(1)Adjusted for bank-overdraft of Rs. 91 million and Rs. Nil for the half years ended 30 September 2020 and 30 September 2019, respectively.
(2)Adjusted for bank-overdraft of Rs. 101 million and Rs. 4 million for the half years ended 30 September 2020 and 30 September 2019, respectively.
| 14 | The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 27 October 2020 and approved by the Board of Directors of the Company at their meeting held on 28 October 2020. |
| 15 | The results for the quarter and half year ended 30 September 2020 were subjected to a "Limited Review". An unqualified report was issued thereon. |
 |
By order of the Board For Dr. Reddy's Laboratories Limited
|
| Place: Hyderabad | G V Prasad |
| Date: 28 October 2020 | Co-Chairman & Managing Director |
Exhibit 99.3
|
S.R. Batliboi & Associates LLP Chartered Accountants |
6th Floor – “A” Block Tidel Park, No. 4, Rajiv Gandhi Salai Taramani, Chennai – 600 113, India
Tel: + 91 44 6117 9000 |
Independent Auditor’s Review Report on the Quarterly and Year to Date Unaudited Consolidated Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended
Review Report to
The Board of Directors
Dr. Reddy’s Laboratories Limited
| 1. | We have reviewed the accompanying Statement of Unaudited Consolidated Financial Results of Dr. Reddy’s Laboratories Limited (the “Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”), and its joint ventures for the quarter ended September 30, 2020 and year to date from April 01, 2020 to September 30, 2020 (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. |
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
| 9 | Reddy Antilles N.V. (till 02 November, 2019) |
| 10 | Regkinetics Services Limited (formerly Dr. Reddy’s Pharma SEZ Limited) |
| 11 | Aurigene Discovery Technologies (Malaysia) Sdn. Bhd. |
| 12 | Aurigene Discovery Technologies Inc. |
| 13 | Aurigene Pharma Services Limited (from 16 September, 2019) |
| 14 | beta Institut gemeinnützige GmbH |
| 15 | betapharm Arzneimittel GmbH |
| 16 | Chirotech Technology Limited |
| 17 | DRL Impex Limited |
| 18 | Dr. Reddy’s Laboratories (Australia) Pty. Limited |
| 19 | Dr. Reddy’s Laboratories Canada, Inc. |
| 20 | Dr. Reddy's Laboratories Chile SPA. |
| 21 | Dr. Reddy’s Laboratories (EU) Limited |
| 22 | Dr. Reddy’s Laboratories Inc. |
| 23 | Dr. Reddy's Laboratories Japan KK |
| 24 | Dr. Reddy’s Laboratories Kazakhstan LLP |
| 25 | Dr. Reddy’s Laboratories LLC |
| 26 | Dr. Reddy's Laboratories Louisiana LLC |
| 27 | Dr. Reddy’s Laboratories Malaysia Sdn. Bhd. |
| 28 | Dr. Reddy’s Laboratories New York, Inc. |
| 29 | Dr. Reddy's Laboratories Philippines Inc. |
| 30 | Dr. Reddy’s Laboratories (Proprietary) Limited |
| 31 | Dr. Reddy's Laboratories Romania S.R.L. |
| 32 | Dr. Reddy's Laboratories SAS |
| 33 | Dr. Reddy's Laboratories Taiwan Limited |
| 34 | Dr. Reddy's Laboratories (Thailand) Limited |
| 35 | Dr. Reddy’s Laboratories (UK) Limited |
| 36 | Dr. Reddy's Research and Development B.V. |
| 37 | Dr. Reddy’s Singapore PTE Limited (till 04 June, 2019) |
| 38 | Dr. Reddy’s Srl |
| 39 | Dr. Reddy’s New Zealand Limited |
| 40 | Dr. Reddy’s (WUXI) Pharmaceutical Co. Limited |
| 41 | Dr. Reddy's Venezuela, C.A. |
| 42 | Dr. Reddy's Laboratories B.V. (Formerly Eurobridge Consulting B.V.) |
| 43 | Lacock Holdings Limited |
| 44 | OOO Dr. Reddy’s Laboratories Limited |
| 45 | OOO DRS LLC |
| 46 | Promius Pharma LLC |
| 47 | Reddy Holding GmbH |
| 48 | Reddy Netherlands B.V. |
| 49 | Reddy Pharma Iberia SA |
| 50 | Reddy Pharma Italia S.R.L |
| 51 | Reddy Pharma SAS |
| Joint ventures | |
| 1 | DRANU LLC |
| 2 | DRES Energy Private Limited |
| 3 | 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 S Balasubrahmanyam
Partner
Membership No.: 053315
UDIN: 20053315AAAACX1530
Chennai
October 28, 2020
 |
Dr. Reddy’s Laboratories Ltd. 8-2-337, Road No. 3, Banjara Hills, Hyderabad - 500 034, Telangana, India. CIN : L85195TG1984PLC004507
Tel :+91 40 4900 2900 Fax :+91 40 4900 2999 Email :mail@drreddys.com www.drreddys.com |
DR. REDDY'S LABORATORIES LIMITED
STATEMENT OF UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30 SEPTEMBER 2020
| All amounts in Indian Rupees millions | ||||||||||||||||||||||||||
| Quarter ended | Half year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.09.2019 | 31.03.2020 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| 1 | Revenue from operations | |||||||||||||||||||||||||
| a) Net sales / income from operations | 47,766 | 43,244 | 39,982 | 91,010 | 77,606 | 163,574 | ||||||||||||||||||||
| b) License fees and service income | 1,201 | 931 | 8,026 | 2,132 | 8,838 | 11,026 | ||||||||||||||||||||
| c) Other operating income | 142 | 90 | 120 | 232 | 266 | 570 | ||||||||||||||||||||
| Total revenue from operations | 49,109 | 44,265 | 48,128 | 93,374 | 86,710 | 175,170 | ||||||||||||||||||||
| 2 | Other income | 512 | 871 | 540 | 1,383 | 4,837 | 6,206 | |||||||||||||||||||
| 3 | Total income (1 + 2) | 49,621 | 45,136 | 48,668 | 94,757 | 91,547 | 181,376 | |||||||||||||||||||
| 4 | Expenses | |||||||||||||||||||||||||
| a) Cost of materials consumed | 9,485 | 11,439 | 7,503 | 20,924 | 14,867 | 29,848 | ||||||||||||||||||||
| b) Purchase of stock-in-trade | 6,889 | 5,276 | 5,942 | 12,165 | 11,158 | 25,459 | ||||||||||||||||||||
| c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | (573 | ) | (3,519 | ) | 566 | (4,092 | ) | 55 | 237 | |||||||||||||||||
| d) Employee benefits expense | 9,488 | 8,724 | 8,255 | 18,212 | 16,870 | 33,802 | ||||||||||||||||||||
| e) Depreciation and amortisation expense | 3,165 | 2,923 | 3,131 | 6,088 | 6,021 | 11,631 | ||||||||||||||||||||
| f) Impairment of non-current assets | 781 | - | 3,560 | 781 | 3,560 | 16,767 | ||||||||||||||||||||
| g) Finance costs | 252 | 233 | 303 | 485 | 601 | 983 | ||||||||||||||||||||
| h) Selling and other expenses | 11,478 | 11,132 | 11,664 | 22,610 | 22,141 | 44,353 | ||||||||||||||||||||
| - | ||||||||||||||||||||||||||
| Total expenses | 40,965 | 36,208 | 40,924 | 77,173 | 75,273 | 163,080 | ||||||||||||||||||||
| 5 | Profit / (loss) before tax and before share of equity accounted investees(3 - 4) | 8,656 | 8,928 | 7,744 | 17,584 | 16,274 | 18,296 | |||||||||||||||||||
| 6 | Share of profit of equity accounted investees, net of tax | 73 | 77 | 117 | 150 | 280 | 561 | |||||||||||||||||||
| 7 | Profit before tax (5+6) | 8,729 | 9,005 | 7,861 | 17,734 | 16,554 | 18,857 | |||||||||||||||||||
| 8 | Tax expense / (benefit): | |||||||||||||||||||||||||
| a) Current tax | 1,724 | 3,166 | 2,108 | 4,890 | 4,463 | 6,616 | ||||||||||||||||||||
| b) Deferred tax | (713 | ) | (107 | ) | (5,315 | ) | (820 | ) | (5,742 | ) | (8,019 | ) | ||||||||||||||
| 9 | Net profit after taxes and share of profit of associates (7 - 8) | 7,718 | 5,946 | 11,068 | 13,664 | 17,833 | 20,260 | |||||||||||||||||||
| 10 | Other comprehensive income | |||||||||||||||||||||||||
| a) (i) Items that will not be reclassified subsequently to profit or loss | (26 | ) | 207 | 161 | 181 | 114 | (412 | ) | ||||||||||||||||||
| (ii) Income tax relating to items that will not be reclassified to profit or loss | - | - | - | - | - | (22 | ) | |||||||||||||||||||
| b) (i) Items that will be reclassified subsequently to profit or loss | 258 | 731 | 226 | 989 | (43 | ) | (448 | ) | ||||||||||||||||||
| (ii) Income tax relating to items that will be reclassified to profit or loss | (138 | ) | (156 | ) | 65 | (294 | ) | 88 | 232 | |||||||||||||||||
| Total other comprehensive income | 94 | 782 | 452 | 876 | 159 | (650 | ) | |||||||||||||||||||
| 11 | Total comprehensive income (9 + 10) | 7,812 | 6,728 | 11,520 | 14,540 | 17,992 | 19,610 | |||||||||||||||||||
| 12 | Paid-up equity share capital (face value Rs. 5/- each) | 831 | 831 | 831 | 831 | 831 | 831 | |||||||||||||||||||
| 13 | Other equity | 155,157 | ||||||||||||||||||||||||
| 14 | Earnings per equity share (face value Rs. 5/- each) | |||||||||||||||||||||||||
| Basic | 46.54 | 35.87 | 66.78 | 82.40 | 107.59 | 122.22 | ||||||||||||||||||||
| Diluted | 46.40 | 35.78 | 66.68 | 82.18 | 107.40 | 121.99 | ||||||||||||||||||||
| (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 | 30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.09.2019 | 31.03.2020 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| Segment wise revenue and results: | ||||||||||||||||||||||||||
| 1 | Segment revenue : | |||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 10,355 | 10,165 | 8,598 | 20,520 | 14,650 | 32,086 | ||||||||||||||||||||
| b) Global Generics | 39,882 | 35,092 | 32,838 | 74,974 | 65,848 | 138,264 | ||||||||||||||||||||
| c) Proprietary Products | 100 | 56 | 7,425 | 156 | 7,706 | 7,949 | ||||||||||||||||||||
| d) Others | 523 | 489 | 662 | 1,012 | 1,295 | 2,781 | ||||||||||||||||||||
| Total | 50,860 | 45,802 | 49,523 | 96,662 | 89,499 | 181,080 | ||||||||||||||||||||
| Less: Inter-segment revenue | 1,751 | 1,537 | 1,395 | 3,288 | 2,789 | 5,910 | ||||||||||||||||||||
| Total revenue from operations | 49,109 | 44,265 | 48,128 | 93,374 | 86,710 | 175,170 | ||||||||||||||||||||
| 2 | Segment results: | |||||||||||||||||||||||||
| Gross profit from each segment | ||||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 2,292 | 2,859 | 1,758 | 5,151 | 2,090 | 6,219 | ||||||||||||||||||||
| b) Global Generics | 23,685 | 21,526 | 18,200 | 45,211 | 37,207 | 78,449 | ||||||||||||||||||||
| c) Proprietary Products | 88 | 56 | 7,298 | 144 | 7,505 | 7,744 | ||||||||||||||||||||
| d) Others | 352 | 317 | 372 | 669 | 692 | 1,626 | ||||||||||||||||||||
| Total | 26,417 | 24,758 | 27,628 | 51,175 | 47,494 | 94,038 | ||||||||||||||||||||
| Less: Selling and other un-allocable expenditure / (income), net | 17,688 | 15,753 | 19,767 | 33,441 | 30,940 | 75,181 | ||||||||||||||||||||
| Total profit before tax | 8,729 | 9,005 | 7,861 | 17,734 | 16,554 | 18,857 | ||||||||||||||||||||
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 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, dennatology, 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. |
| 3 | Impairment charge of Rs. 781 million for the quarter ended 30 September 2020 comprises of: |
- Rs. 728 million pertaining to product related intangible forming part of Company’s Proprietary 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.
| 4 | Tax expense for the quarter ended 30 September 2020 includes benefit on account of recognition of deferred tax asset amounting to Rs. 1,012 million pursuant to a planned restructuring activity between the Group companies. |
| 5 | "Revenue from operations" for the quarter ended 30 September 2019 and year ended 31 March 2020 includes an amount of Rs. 7,229 million (U.S.$105.1 million) and Rs. 7,486 million (U.S.$108.7 million), respectively, towards license fee for selling US and select territory rights for ZEMBRACE® SYMTOUCH® (sumatriptan injection) 3 mg and TOSYMRA® (sumatriptan nasal spray) 10 mg, (formerly referred to as “DFN-02”) to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million. |
| 6 | "Other income" for the half year ended 30 September 2019 and year ended 31 March 2020 includes an amount of Rs. 3,457 million received from Celgene, pursuant to a settlement agreement entered in April 2019. The agreement effectively settles any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada. |
| 7 | Total impairment charge for the year ended 31 March 2020 is Rs. 16,767 million, of which Rs. 11,137 million was towards impairment of gNuvaring, Rs. 4,385 million was towards ramelteon, tobramycin and imiquimod, and the balance is towards other product related intangibles forming part of Company’s Global generics and Proprietary Products segments. |
| 8 | Tax benefit for the year ended 31 March 2020 was primarily due to recognition of deferred tax asset of: |
- Rs. 4,989 million towards MAT recoverable pursuant to enactment of Taxation Laws (Amendment) Act, 2019;
- Rs. 1,264 million pursuant to a planned restructuring activity between the group Companies.
| 9 | On 22 October 2020, the Company informed the stock exchanges that it had experienced an information security incident and consequent isolation of impacted IT services. This incident involved a ransom-ware attack. The Company promptly engaged leading outside cybersecurity experts, launched a comprehensive containment and remediation effort and investigation to address the incident. As of date, the Company's investigation has not ascertained if any data breaches in the incident pertain to personally identifiable information stored in the Company's systems. Recovery and restoration of all applications and data is underway. All critical operations are being enabled in a controlled manner. |
| 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 Board of Directors have also give their in principle approval for the potential secondary listing of American Depository Receipts (ADRs) on NSE IFSC Limited (NSE International Exchange) subject to compliance of applicable laws and approval of concerned authorities. |
DR. REDDY’S LABORATORIES LIMITED
| 12 | Consolidated Balance Sheet |
| All amounts in Indian Rupees millions | ||||||||
| As at | ||||||||
| Particulars | 30.09.2020 | 31.03.2020 | ||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 47,423 | 47,779 | ||||||
| Capital work-in-progress | 7,314 | 4,364 | ||||||
| Goodwill | 5,626 | 4,913 | ||||||
| Other intangible assets | 29,545 | 15,811 | ||||||
| Intangible assets under development | 10,849 | 10,987 | ||||||
| Investment in equity accounted investees | 2,961 | 2,763 | ||||||
| Financial assets | ||||||||
| Investments | 1,031 | 328 | ||||||
| Trade receivables | 258 | 1,737 | ||||||
| Other financial assets | 773 | 793 | ||||||
| Deferred tax assets, net | 12,647 | 12,199 | ||||||
| Tax assets, net | 2,196 | 4,379 | ||||||
| Other non-current assets | 379 | 209 | ||||||
| Total non-current assets | 121,002 | 106,262 | ||||||
| Current assets | ||||||||
| Inventories | 41,134 | 35,067 | ||||||
| Financial assets | ||||||||
| Investments | 21,154 | 23,687 | ||||||
| Trade receivables | 50,077 | 50,278 | ||||||
| Derivative instruments | 985 | 1,105 | ||||||
| Cash and cash equivalents | 3,889 | 2,053 | ||||||
| Other financial assets | 2,810 | 3,377 | ||||||
| Other current assets | 12,751 | 10,424 | ||||||
| Total current assets | 132,800 | 125,991 | ||||||
| TOTAL ASSETS | 253,802 | 232,253 | ||||||
| EQUITY AND LIABILITIES | ||||||||
| Equity | ||||||||
| Equity share capital | 831 | 831 | ||||||
| Other equity | 165,843 | 155,157 | ||||||
| Total equity | 166,674 | 155,988 | ||||||
| Liabilities | ||||||||
| Non-current liabilities | ||||||||
| Financial liabilities | ||||||||
| Borrowings | 6,661 | 1,304 | ||||||
| Provisions | 618 | 745 | ||||||
| Deferred tax liabilities, net | 25 | 20 | ||||||
| Other non-current liabilities | 1,817 | 2,055 | ||||||
| Total non-current liabilities | 9,121 | 4,124 | ||||||
| Current liabilities | ||||||||
| Financial liabilities | ||||||||
| Borrowings | 19,953 | 16,532 | ||||||
| Trade payables | ||||||||
| Total outstanding dues of micro enterprises and small enterprises | 30 | 55 | ||||||
| Total outstanding dues of creditors other than micro enterprises and small enterprises | 19,993 | 15,193 | ||||||
| Derivative instruments | 597 | 1,602 | ||||||
| Other financial liabilities | 24,352 | 27,006 | ||||||
| Liabilities for current tax, net | 1,142 | 572 | ||||||
| Provisions | 4,660 | 4,669 | ||||||
| Other current liabilities | 7,280 | 6,512 | ||||||
| Total current liabilities | 78,007 | 72,141 | ||||||
| TOTAL EQUITY AND LIABILITIES | 253,802 | 232,253 | ||||||
DR. REDDY’S LABORATORIES LIMITED
| 13 | Consolidated statement of cashflows |
| All amounts in Indian Rupees millions | ||||||||
| Half year ended | ||||||||
| Particulars | 30.09.2020 | 30.09.2019 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from / (used in) operating activities | ||||||||
| Profit before tax | 17,734 | 16,554 | ||||||
| Adjustments for: | ||||||||
| Depreciation and amortisation expense | 6,088 | 6,021 | ||||||
| Share of profit of equity accounted investees | (150 | ) | (280 | ) | ||||
| Impairment of non-current assets | 781 | 3,560 | ||||||
| Equity settled share-based payment expense | 304 | 273 | ||||||
| Fair value changes and profit on sale of units of mutual funds, net | (389 | ) | (562 | ) | ||||
| Foreign exchange loss / (gain), net | 918 | (19 | ) | |||||
| (Gain) / loss on sale or de-recognition of property , plant and equipment and other intangible assets, net | 15 | 39 | ||||||
| Interest income | (403 | ) | (500 | ) | ||||
| Finance costs | 485 | 601 | ||||||
| Dividend income | - | (5 | ) | |||||
| Allowance for credit loss and doubtful trade and other advances | 61 | 105 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | 1,620 | (2,512 | ) | |||||
| Inventories | (5,602 | ) | (1,454 | ) | ||||
| Trade payables | 4,773 | 910 | ||||||
| Other assets and other liabilities, net | (3,991 | ) | 872 | |||||
| Cash generated from operations | 22,244 | 23,603 | ||||||
| Income tax paid, net | (2,077 | ) | (3,664 | ) | ||||
| Net cash from operating activities | 20,167 | 19,939 | ||||||
| Cash flows from / (used in) investing activities | ||||||||
| Proceeds from sale of property, plant and equipment | 33 | 53 | ||||||
| Proceeds from sale of other intangible assets | - | 259 | ||||||
| Expenditures on property, plant and equipment | (3,999 | ) | (2,137 | ) | ||||
| Expenditures on other intangible assets | (567 | ) | (501 | ) | ||||
| Payment for acquisition of business | (15,514 | ) | - | |||||
| Purchase of other investments | (50,933 | ) | (69,304 | ) | ||||
| Proceeds from sale of other investments | 53,296 | 65,885 | ||||||
| Dividends received from equity accounted investees | - | 392 | ||||||
| Interest received | 714 | 461 | ||||||
| Net cash used in investing activities | (16,970 | ) | (4,892 | ) | ||||
| Cash flows from / (used in) financing activities | ||||||||
| Proceeds from issuance of equity shares (including treasury shares) | 177 | - | * | |||||
| Purchase of treasury shares | (190 | ) | (474 | ) | ||||
| Proceeds from / (repayment of ) short-term loans and borrowings, net | 3,644 | (2,012 | ) | |||||
| Repayment of long-term loans and borrowings | (3,743 | ) | (6,765 | ) | ||||
| Proceeds from long term borrowings | 3,800 | - | ||||||
| Payment of principal portion of lease liabilities | (366 | ) | (287 | ) | ||||
| Dividend paid (30 September 2019 including corporate dividend tax) | (4,147 | ) | (3,916 | ) | ||||
| Interest paid | (559 | ) | (839 | ) | ||||
| Net cash used in financing activities | (1,384 | ) | (14,293 | ) | ||||
| Net increase / (decrease) in cash and cash equivalents | 1,813 | 754 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 13 | 26 | ||||||
| Cash and cash equivalents at the beginning of the year(1) | 1,962 | 2,228 | ||||||
| Cash and cash equivalents at the end of the year(2) | 3,788 | 3,008 | ||||||
*Rounded off to millions.
(1)Adjusted for bank-overdraft of Rs. 91 million and Rs. Nil for the half years ended 30 September 2020 and 30 September 2019, respectively.
(2)Adjusted for bank-overdraft of Rs. 101 million and Rs. 4 million for the half years ended 30 September 2020 and 30 September 2019, respectively.
| 14 | The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 27 October 2020 and approved by the Board of Directors of the Company at their meeting held on 28 October 2020. |
| 15 | The results for the quarter and half year ended 30 September 2020 were subject to a "Limited Review" by the Statutory Auditors of the Company. An unqualified report has been issued by them thereon. |
 |
By order of the Board For Dr. Reddy's Laboratories Limited
|
| Place: Hyderabad | G V Prasad |
| Date: 28 October 2020 | Co-Chairman & Managing Director |
Exhibit 99.4
|
S.R. Batliboi & Associates LLP Chartered Accountants |
6th Floor – “A” Block Tidel Park, No. 4, Rajiv Gandhi Salai Taramani, Chennai – 600 113, India
Tel: + 91 44 6117 9000 |
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, 2020 and year to date from April 01, 2020 to September 30, 2020 (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 S Balasubrahmanyam
Partner
Membership No.: 053315
UDIN: 20053315AAAACW5088
Place: Chennai
Date: October 28, 2020
S.R. Batliboi & Associates LLP, a Limited Liability Partnership with LLP Identity No. AAB-4295
Regd. Office 22, Camac Street, Block ‘B’, 3rd floor, Kolkata 700 016
 |
Dr. Reddy’s Laboratories Ltd. 8-2-337, Road No. 3, Banjara Hills, Hyderabad - 500 034, Telangana, India. CIN : L85195TG1984PLC004507
Tel :+91 40 4900 2900 Fax :+91 40 4900 2999 Email :mail@drreddys.com www.drreddys.com |
DR. REDDY'S LABORATORIES LIMITED
STATEMENT OF UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30 SEPTEMBER 2020
| All amounts in Indian Rupees millions | ||||||||||||||||||||||||||
| Quarter ended | Half Year ended | Year ended | ||||||||||||||||||||||||
| Sl. No. | Particulars | 30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.09.2019 | 31.03.2020 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| 1 | Revenue from operations | |||||||||||||||||||||||||
| a) Net sales / income from operations | 33,233 | 32,264 | 27,039 | 65,497 | 51,866 | 109,925 | ||||||||||||||||||||
| b) License fees and service income | 103 | 104 | 7,314 | 207 | 7,463 | 8,105 | ||||||||||||||||||||
| c) Other operating income | 122 | 76 | 107 | 198 | 218 | 474 | ||||||||||||||||||||
| Total revenue from operations | 33,458 | 32,444 | 34,460 | 65,902 | 59,547 | 118,504 | ||||||||||||||||||||
| 2 | Other income | 266 | 6,447 | 767 | 6,593 | 5,481 | 7,432 | |||||||||||||||||||
| Total income (1 + 2) | 33,724 | 38,891 | 35,227 | 72,495 | 65,028 | 125,936 | ||||||||||||||||||||
| 3 | Expenses | |||||||||||||||||||||||||
| a) Cost of materials consumed | 8,165 | 7,882 | 6,453 | 16,047 | 12,292 | 25,565 | ||||||||||||||||||||
| b) Purchase of stock-in-trade | 3,043 | 3,003 | 2,971 | 6,046 | 5,450 | 11,172 | ||||||||||||||||||||
| c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | (1,358 | ) | (1,929 | ) | 5 | (3,287 | ) | (670 | ) | (999 | ) | |||||||||||||||
| d) Employee benefits expense | 6,080 | 5,450 | 5,028 | 11,530 | 10,024 | 20,302 | ||||||||||||||||||||
| e) Depreciation and amortisation expense | 2,142 | 1,977 | 2,041 | 4,119 | 4,011 | 7,892 | ||||||||||||||||||||
| f) Finance costs | 93 | 140 | 122 | 233 | 243 | 478 | ||||||||||||||||||||
| g) Selling and other expenses | 9,362 | 8,751 | 8,395 | 17,993 | 16,536 | 33,768 | ||||||||||||||||||||
| Total expenses | 27,527 | 25,274 | 25,015 | 52,681 | 47,886 | 98,178 | ||||||||||||||||||||
| 4 | Profit before tax (1 + 2 - 3) | 6,197 | 13,617 | 10,212 | 19,814 | 17,142 | 27,758 | |||||||||||||||||||
| 5 | Tax expense / (benefit) | |||||||||||||||||||||||||
| a) Current tax | 1,114 | 2,391 | 1,529 | 3,505 | 3,057 | 4,839 | ||||||||||||||||||||
| b) Deferred tax | 273 | 1,724 | (4,968 | ) | 1,997 | (5,047 | ) | (6,458 | ) | |||||||||||||||||
| 6 | Net profit for the period / year (4 - 5) | 4,810 | 9,502 | 13,651 | 14,312 | 19,132 | 29,377 | |||||||||||||||||||
| 7 | Other comprehensive income | |||||||||||||||||||||||||
| a) (i) Items that will not be reclassified to profit or loss | - | (1 | ) | (5 | ) | (1 | ) | (1 | ) | 88 | ||||||||||||||||
| (ii) Income tax relating to items that will not be reclassified to profit or loss | - | - | - | - | - | (33 | ) | |||||||||||||||||||
| - | - | - | - | |||||||||||||||||||||||
| b) (i) Items that will be reclassified to profit or loss | 420 | 360 | (187 | ) | 780 | (251 | ) | (750 | ) | |||||||||||||||||
| (ii) Income tax relating to items that will be reclassified to profit or loss | (157 | ) | (128 | ) | 65 | (285 | ) | 85 | 259 | |||||||||||||||||
| Total other comprehensive income | 263 | 231 | (127 | ) | 494 | (167 | ) | (436 | ) | |||||||||||||||||
| 8 | Total comprehensive income (6 + 7) | 5,073 | 9,733 | 13,524 | 14,806 | 18,965 | 28,941 | |||||||||||||||||||
| 9 | Paid-up equity share capital (face value Rs. 5/- each) | 831 | 831 | 831 | 831 | 831 | 831 | |||||||||||||||||||
| 10 | Other equity | 151,088 | ||||||||||||||||||||||||
| 11 | Earnings per equity share (face value Rs. 5/- each) | |||||||||||||||||||||||||
| Basic | 29.00 | 57.31 | 82.36 | 86.31 | 115.42 | 177.23 | ||||||||||||||||||||
| Diluted | 28.92 | 57.18 | 82.24 | 86.08 | 115.21 | 176.88 | ||||||||||||||||||||
| (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 | 30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.09.2019 | 31.03.2020 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||||
| Segment wise revenue and results | ||||||||||||||||||||||||||
| 1 | Segment revenue | |||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 7,996 | 8,706 | 6,900 | 16,702 | 12,517 | 26,996 | ||||||||||||||||||||
| b) Global Generics | 27,112 | 25,241 | 21,659 | 52,353 | 42,487 | 89,774 | ||||||||||||||||||||
| c) Proprietary Products | 101 | 34 | 7,296 | 135 | 7,332 | 7,644 | ||||||||||||||||||||
| Total | 35,209 | 33,981 | 35,855 | 69,190 | 62,336 | 124,414 | ||||||||||||||||||||
| Less: Inter-segment revenue | 1,751 | 1,537 | 1,395 | 3,288 | 2,789 | 5,910 | ||||||||||||||||||||
| Total revenue from operations | 33,458 | 32,444 | 34,460 | 65,902 | 59,547 | 118,504 | ||||||||||||||||||||
| 2 | Segment results | |||||||||||||||||||||||||
| Profit / (loss) before tax and interest from each segment | ||||||||||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 145 | 5,686 | 494 | 5,831 | 70 | 1,465 | ||||||||||||||||||||
| b) Global Generics | 5,674 | 8,242 | 3,910 | 13,916 | 11,720 | 22,116 | ||||||||||||||||||||
| c) Proprietary Products | (281 | ) | (174 | ) | 6,807 | (455 | ) | 6,530 | 6,525 | |||||||||||||||||
| Total | 5,538 | 13,754 | 11,211 | 19,292 | 18,320 | 30,106 | ||||||||||||||||||||
| Less: (i) Finance costs | 93 | 140 | 122 | 233 | 243 | 478 | ||||||||||||||||||||
| (ii) Other un-allocable expenditure / (income), net | (752 | ) | (3 | ) | 877 | (755 | ) | 935 | 1,870 | |||||||||||||||||
| Total profit before tax | 6,197 | 13,617 | 10,212 | 19,814 | 17,142 | 27,758 | ||||||||||||||||||||
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 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, dennatology, 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. |
| 3 | Consequent to the company’s decision to discontinue the development of certain product related intangibles in the Company’s Global Generics segment, an amount of Rs.53 million is recognised as impairment charge for the quarter ended 30 September, 2020. |
| 4 | "Other income" for the quarter ended 30 June 2020 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 receipt of preference dividend declared by Dr. Reddy's Laboratories S.A. during the quarter.
| 5 | "Revenue from operations" for the quarter ended 30 September 2019 and year ended 31 March 2020 includes an amount of Rs. 7,229 million (U.S.$105.1 million) and Rs. 7,486 million (U.S.$108.7 million), respectively, towards license fee for selling US and select territory rights for ZEMBRACE® SYMTOUCH® (sumatriptan injection) 3 mg and TOSYMRA® (sumatriptan nasal spray) 10 mg, (formerly referred to as “DFN-02”) to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million. |
| 6 | "Other income" for the half year ended 30 September 2019 includes dividend income of Rs. 392 million declared by Kunshan Rotam Reddy Pharmaceutical Company Limited. |
| 7 | "Other income" for the half year ended 30 September 2019 and year ended 31 March 2020 includes an amount of Rs. 3,457 million received from Celgene, pursuant to a settlement agreement entered in April 2019. The agreement effectively settles any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada. |
| 8 | During the quarter ended 30 September 2019, the Government of India promulgated the Taxation Laws (Amendment) Ordinance 2019 (enacted into Taxation laws (Amendment) Act 2019), announcing key changes to corporate tax rates in the Income-tax Act, 1961. The key changes include, among others, reduction of MAT rate from 21.55% to 17.47% (including surcharge and cess). As a result of this, the Company reassessed the MAT recoverability and recognised an amount of Rs. 4,989 million as deferred tax asset during the quarter ended 30 September 2019. |
During the year ended 31 March 2020, the Company recognised deferred tax benefit of Rs. 1,264 million pursuant to a plan for restructuring of the Company’s pharmaceutical services in India.
| 9 | On 22 October 2020, the Company informed the stock exchanges that it had experienced an information security incident and consequent isolation of impacted IT services. This incident involved a ransom-ware attack. The Company promptly engaged leading outside cybersecurity experts, launched a comprehensive containment and remediation effort and investigation to address the incident. As of date, the Company's investigation has not ascertained if any data breaches in the incident pertain to personally identifiable information stored in the Company's systems. Recovery and restoration of all applications and data is underway. All critical operations are being enabled in a controlled manner. |
| 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 Board of Directors have also give their in principle approval for the potential secondary listing of American Depository Receipts (ADRs) on NSE IFSC Limited (NSE International Exchange) subject to compliance of applicable laws and approval of concerned authorities. |
DR. REDDY'S LABORATORIES LIMITED
| 12 | Balance sheet |
| All amounts in Indian Rupees millions | ||||||||
| As at | As at | |||||||
| Particulars | 30.09.2020 | 31.03.2020 | ||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 35,659 | 37,698 | ||||||
| Capital work-in-progress | 6,609 | 3,841 | ||||||
| Goodwill | 853 | 323 | ||||||
| Other intangible assets | 21,132 | 6,318 | ||||||
| Intangible assets under development | 277 | 277 | ||||||
| Financial assets | ||||||||
| Investments | 34,542 | 33,671 | ||||||
| Trade receivables | 258 | 1,737 | ||||||
| Loans | 12 | 12 | ||||||
| Other financial assets | 483 | 474 | ||||||
| Deferred tax assets, net | 3,847 | 6,129 | ||||||
| Tax assets, net | 1,043 | 3,073 | ||||||
| Other non-current assets | 229 | 138 | ||||||
| Total non-current assets | 104,944 | 93,691 | ||||||
| Current assets | ||||||||
| Inventories | 27,354 | 21,904 | ||||||
| Financial assets | ||||||||
| Investments | 19,985 | 21,184 | ||||||
| Trade receivables | 47,688 | 46,387 | ||||||
| Derivative instruments | 335 | 783 | ||||||
| Cash and cash equivalents | 2,282 | 392 | ||||||
| Other financial assets | 1,387 | 1,888 | ||||||
| Other current assets | 10,757 | 8,529 | ||||||
| Total current assets | 109,788 | 101,067 | ||||||
| TOTAL ASSETS | 214,732 | 194,758 | ||||||
| EQUITY AND LIABILITIES | ||||||||
| Equity | ||||||||
| Equity share capital | 831 | 831 | ||||||
| Other equity | 162,037 | 151,088 | ||||||
| Total Equity | 162,868 | 151,919 | ||||||
| Liabilities | ||||||||
| Non-current liabilities | ||||||||
| Financial liabilities | ||||||||
| Borrowings | 198 | 193 | ||||||
| Provisions | 407 | 545 | ||||||
| Other non-current liabilities | 461 | 296 | ||||||
| Total non-current liabilities | 1,066 | 1,034 | ||||||
| Current liabilities | ||||||||
| Financial liabilities | ||||||||
| Borrowings | 15,773 | 10,436 | ||||||
| Trade payables | ||||||||
| Total outstanding dues of micro enterprises and small enterprises | 30 | 55 | ||||||
| Total outstanding dues of creditors other than micro enterprises and small enterprises | 15,498 | 10,629 | ||||||
| Derivative instruments | 554 | 1,524 | ||||||
| Other financial liabilities | 12,281 | 13,928 | ||||||
| Provisions | 2,334 | 2,073 | ||||||
| Other current liabilities | 4,328 | 3,160 | ||||||
| Total current liabilities | 50,798 | 41,805 | ||||||
| TOTAL EQUITY AND LIABILITIES | 214,732 | 194,758 | ||||||
DR. REDDY'S LABORATORIES LIMITED
| 13 | Statement of cashflows |
| All amounts in Indian Rupees millions | ||||||||
| Half year ended | ||||||||
| Particulars | 30.09.2020 | 30.09.2019 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from/(used in) operating activities | ||||||||
| Profit before taxation | 19,814 | 17,142 | ||||||
| Adjustments for: | ||||||||
| Depreciation and amortisation expense | 4,119 | 4,011 | ||||||
| Impairment of non current assets | 53 | - | ||||||
| Equity settled share-based payment expense | 304 | 273 | ||||||
| Fair value changes and profit on sale of mutual funds, net | (353 | ) | (518 | ) | ||||
| Foreign exchange loss / (gain), net | (220 | ) | 92 | |||||
| (Gain)/loss on sale/disposal of property , plant and equipment and other intangible assets, net | (4,733 | ) | 81 | |||||
| Interest income | (382 | ) | (489 | ) | ||||
| Finance costs | 233 | 243 | ||||||
| Dividend income | (516 | ) | (397 | ) | ||||
| Allowances for credit losses and doubtful advances, net | 41 | 64 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | 136 | (5,715 | ) | |||||
| Inventories | (4,984 | ) | (1,436 | ) | ||||
| Trade payables | 4,844 | 476 | ||||||
| Other assets and other liabilities, net | 23 | (468 | ) | |||||
| Cash generated from operations | 18,379 | 13,359 | ||||||
| Income taxes paid, net | (1,387 | ) | (2,080 | ) | ||||
| Net cash from operating activities | 16,992 | 11,279 | ||||||
| Cash flows from/(used in) investing activities | ||||||||
| Proceeds from sale of property, plant and equipment | 4,890 | 2 | ||||||
| Expenditures on property, plant and equipment | (3,439 | ) | (1,915 | ) | ||||
| Expenditures on other intangible assets | (438 | ) | (362 | ) | ||||
| Payment for acquisition of business | (15,514 | ) | - | |||||
| Purchase of other investments | (48,769 | ) | (66,982 | ) | ||||
| Proceeds from sale of investments | 49,763 | 64,133 | ||||||
| Loans and advances (given) /repaid by subsidiaries | - | (10 | ) | |||||
| Dividend received | 516 | 392 | ||||||
| Interest received | 693 | 402 | ||||||
| Net cash used in investing activities | (12,298 | ) | (4,340 | ) | ||||
| Cash flows from/(used in) financing activities | ||||||||
| Proceeds from issuance of equity shares (including treasury shares) | 177 | - | * | |||||
| Purchases of treasury shares | (190 | ) | (474 | ) | ||||
| Proceeds from/(repayment of ) short-term loans and borrowings, net | 5,491 | (2,006 | ) | |||||
| Repayment of long-term loans and borrowings | (3,743 | ) | (94 | ) | ||||
| Payment of principle portion of lease liabilities | (90 | ) | - | |||||
| Dividend paid (30 September 2019 including corporate dividend tax) | (4,147 | ) | (3,914 | ) | ||||
| Interest paid | (284 | ) | (246 | ) | ||||
| Net cash used in financing activities | (2,786 | ) | (6,734 | ) | ||||
| Net increase / (decrease) in cash and cash equivalents | 1,908 | 205 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (17 | ) | (2 | ) | ||||
| Cash and cash equivalents at the beginning of the year(1) | 391 | 1,132 | ||||||
| Cash and cash equivalents at the end of the year(2) | 2,282 | 1,335 | ||||||
*Rounded off to millions.
(1)Adjusted for bank overdraft of Rs. 1 million and Rs. Nil for half year ended 30 September 2020 and half year ended 30 September 2019 respectively.
(2)Adjusted for bank overdraft of Rs. Nil and Rs. 4 million for half year ended 30 September 2020 and half year ended 30 September 2019 respectively.
| 14 | The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 27 October 2020 and approved by the Board of Directors of the Company at their meeting held on 28 October 2020. |
| 15 | The results for the quarter ended 30 September 2020 presented were subjected to a “Limited review” by the Statutory Auditors of the Company. An unqualified report was issued by them thereon. |
 |
By order of the Board For Dr. Reddy's Laboratories Limited
|
| Place: Hyderabad | G V Prasad |
| Date: 28 October 2020 | Co-Chairman & Managing Director |
