Dr Reddys Laboratories Ltd 6-K, filed Jul 28, 2022
Dr Reddys Laboratories Ltd (RDY)
About this 6-K
Dr Reddys Laboratories Ltd filed this 6-K on July 28, 2022.
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 2022
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): ______
Yes ¨ No x
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): ______
Yes ¨ No x
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, 2022.
On July 28, 2022, we announced our results of operations for the quarter ended June 30, 2022. 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, 2022, 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, 2022.
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 28, 2022 | By: | /s/ K Randhir Singh | ||
| Name: | K Randhir Singh | |||
| Title: | Company Secretary & Compliance Officer | |||
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 FY23 Financial Results
Hyderabad, India, July 28, 2022: 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, 2022. The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS).
| Revenues | Rs. 5,215 Cr |
| [Up: 6% YoY; Down: 4% QoQ] | |
| Gross Margin | 49.9% |
| [Q1 FY22: 52.2%; Q4 FY22: 52.9%] | |
| SG&A Expenses | Rs. 1,549 Cr |
| [Up: 3% YoY; Down: 1% QoQ] | |
| R&D Expenses | Rs. 433 Cr |
| [8.3% of Revenues] | |
| EBITDA | Rs. 1,779 Cr |
| [34.1% of Revenues] | |
| Profit before Tax | Rs. 1,466 Cr |
| [Up: 97% YoY; Up: 490% QoQ] | |
| Profit after Tax | Rs. 1,188 Cr |
| [Up: 108% YoY; Up: 1,257% QoQ] |
Commenting on the results, Co-Chairman & MD, G V Prasad said “Our underlying business revenues adjusted for covid products contribution during last year have grown well. The profits were aided by a few non-recurring incomes, offsetting the near term headwinds. We continue to improve the health of our core businesses through productivity improvement and robust product pipelines”.
| 1 |
| All amounts in millions, except EPS | All US dollar amounts based on convenience translation rate of I USD = Rs. 79.02 |
Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement
| Q1 FY23 | Q1 FY22 | YoY | Q4 FY22 | QoQ | ||||||||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | Gr % | ($) | (Rs.) | Gr% | ||||||||||||||||||||||||
| Revenues | 660 | 52,154 | 623 | 49,194 | 6 | 688 | 54,368 | (4 | ) | |||||||||||||||||||||||
| Cost of Revenues | 331 | 26,148 | 297 | 23,495 | 11 | 324 | 25,625 | 2 | ||||||||||||||||||||||||
| Gross Profit | 329 | 26,006 | 325 | 25,699 | 1 | 364 | 28,743 | (10 | ) | |||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||
| Selling, General & Administrative expenses | 196 | 15,493 | 190 | 15,045 | 3 | 198 | 15,674 | (1 | ) | |||||||||||||||||||||||
| Research and Development expenses | 55 | 4,325 | 57 | 4,534 | (5 | ) | 55 | 4,326 | (0 | ) | ||||||||||||||||||||||
| Impairment of non-current assets | - | - | - | - | 95 | 7,515 | (100 | ) | ||||||||||||||||||||||||
| Other operating income | (76 | ) | (6,024 | ) | (6 | ) | (487 | ) | 1,137 | (4 | ) | (291 | ) | 1,970 | ||||||||||||||||||
| Results from operating activities | 155 | 12,212 | 84 | 6,607 | 85 | 19 | 1,519 | 704 | ||||||||||||||||||||||||
| Net finance income | (30 | ) | (2,349 | ) | (8 | ) | (652 | ) | 260 | (11 | ) | (859 | ) | 173 | ||||||||||||||||||
| Share of profit of equity accounted investees | (1 | ) | (94 | ) | (2 | ) | (166 | ) | (43 | ) | (1 | ) | (105 | ) | (10 | ) | ||||||||||||||||
| Profit before income tax | 185 | 14,655 | 94 | 7,425 | 97 | 31 | 2,483 | 490 | ||||||||||||||||||||||||
| Income tax expense | 35 | 2,779 | 22 | 1,717 | 62 | 20 | 1,608 | 73 | ||||||||||||||||||||||||
| Profit for the period | 150 | 11,876 | 72 | 5,708 | 108 | 11 | 875 | 1,257 | ||||||||||||||||||||||||
| Diluted Earnings Per Share (EPS) | 0.90 | 71.40 | 0.43 | 34.34 | 109 | 0.07 | 5.26 | 1,261 | ||||||||||||||||||||||||
| As % to revenues | Q1 FY23 | Q1 FY22 | Q4 FY22 | |||||||||
| Gross Profit | 49.9 | 52.2 | 52.9 | |||||||||
| SG&A | 29.7 | 30.6 | 28.8 | |||||||||
| R&D | 8.3 | 9.2 | 8.0 | |||||||||
| EBITDA | 34.1 | 20.7 | 23.9 | |||||||||
| PBT | 28.1 | 15.1 | 4.6 | |||||||||
| PAT | 22.8 | 11.6 | 1.6 | |||||||||
EBITDA Computation
| Q1 FY23 | Q1 FY22 | Q4 FY22 | ||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | ($) | (Rs.) | ||||||||||||||||||
| Profit before Income Tax | 185 | 14,655 | 94 | 7,425 | 31 | 2,483 | ||||||||||||||||||
| Interest (income) / expense (net)* | 1 | 84 | (2 | ) | (142 | ) | 0 | 24 | ||||||||||||||||
| Depreciation | 26 | 2,050 | 25 | 1,973 | 26 | 2,039 | ||||||||||||||||||
| Amortization | 13 | 1,000 | 12 | 932 | 12 | 920 | ||||||||||||||||||
| Impairment | - | - | - | - | 95 | 7,515 | ||||||||||||||||||
| EBITDA | 225 | 17,789 | 129 | 10,188 | 164 | 12,980 | ||||||||||||||||||
* Includes income from Investments
| 2 |
| All amounts in millions, except EPS | All US dollar amounts based on convenience translation rate of I USD = Rs. 79.02 |
Key Balance Sheet Items
| As on 30th Jun 2022 | As on 31st Mar 2022 | As on 30th Jun 2021 | ||||||||||||||||||||||
| Particulars | ($) | (Rs.) | ($) | (Rs.) | ($) | (Rs.) | ||||||||||||||||||
| Cash and cash equivalents and other investments | 449 | 35,467 | 608 | 48,033 | 435 | 34,356 | ||||||||||||||||||
| Trade receivables | 927 | 73,274 | 846 | 66,818 | 774 | 61,148 | ||||||||||||||||||
| Inventories | 656 | 51,810 | 644 | 50,884 | 643 | 50,771 | ||||||||||||||||||
| Property, plant and equipment | 808 | 63,826 | 787 | 62,169 | 742 | 58,636 | ||||||||||||||||||
| Goodwill and Other Intangible assets | 458 | 36,213 | 401 | 31,664 | 503 | 39,746 | ||||||||||||||||||
| Loans and borrowings (current & non-current) | 312 | 24,666 | 428 | 33,845 | 422 | 33,373 | ||||||||||||||||||
| Trade payables | 317 | 25,052 | 324 | 25,572 | 362 | 28,607 | ||||||||||||||||||
| Equity | 2,531 | 2,00,039 | 2,411 | 1,90,527 | 2,254 | 1,78,114 | ||||||||||||||||||
Revenue Mix by Segment
| Q1 FY23 | Q1 FY22 | YoY | Q4 FY22 | QoQ | ||||||||||||||||
| Segment | (Rs.) | (Rs.) | Gr % | (Rs.) | Gr % | |||||||||||||||
| Global Generics | 44,324 | 41,113 | 8 | 46,118 | (4 | ) | ||||||||||||||
| North America | 17,815 | 17,390 | 2 | 19,971 | (11 | ) | ||||||||||||||
| Europe | 4,141 | 3,994 | 4 | 4,444 | (7 | ) | ||||||||||||||
| India | 13,339 | 10,600 | 26 | 9,689 | 38 | |||||||||||||||
| Emerging Markets | 9,028 | 9,129 | (1 | ) | 12,013 | (25 | ) | |||||||||||||
| Pharmaceutical Services and Active Ingredients (PSAI) | 7,090 | 7,540 | (6 | ) | 7,557 | (6 | ) | |||||||||||||
| Others | 740 | 541 | 37 | 693 | 7 | |||||||||||||||
| Total | 52,154 | 49,194 | 6 | 54,368 | (4 | ) | ||||||||||||||
| 3 |
Revenue Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 44.3 billion:
| Ø | Year-on-year growth of 8% was driven by new product launches across most of our businesses and divestment of a few non-core brands in India, partly offset by price erosion in our generic markets, and higher base due to covid product sales in previous year. |
| Ø | Sequential decline of 4% was due to sales decline in North America (incremental competition on key products and price erosion) and Emerging Markets (normalization of channel inventory in Russia). This was partly offset by new product launches. |
North America
Revenues from North America at Rs. 17.8 billion:
| Ø | Year-on-year growth of 2%, driven by launch of new products and favorable forex rates, which was offset by price erosion in some of our key molecules. |
| Ø | Sequential decline of 11% was primarily on account of price erosion and decline in volumes for few products due to incremental competition. |
| Ø | During this quarter, we launched 7 new products. This includes launch of Ketorolac, OTC Nicotine Lozenges Original, Methylprednisolone Sodium Succinate, Pemetrexed Injection, Posaconazole Tabs and Sorafenib in the US and Pemetrexed Inj. in Canada. |
| Ø | We filed three ANDAs during the quarter. As of 30th June 2022, cumulatively 86 generic filings are pending for approval with the USFDA (83 ANDAs and 3 NDAs under 505(b)(2) route). Out of these 86 pending filings, 44 are Para IVs and we believe 24 have ‘First to File’ status. |
Europe
Revenues from Europe at Rs. 4.1 billion:
| Ø | Year-on-year growth of 4%, driven by launch of new products and scale up of base business, which was partly offset by price erosion in some molecules and adverse forex rates during the quarter. |
| Ø | Sequential decline of 7% was primarily on account of price erosion and adverse forex rates, which was partly offset by volume traction in base business. |
India
Revenues from India at Rs. 13.3 billion:
| Ø | Year-on-year growth of 26% was driven by divestment of a few non-core brands, revenue contribution from the products acquired / in-licensed from Novartis, growth in base business and new products contribution. The growth was partially offset due to covid product sales in Q1 FY22 which was not there in the current quarter. |
| Ø | Sequential growth of 38% was primarily driven by divestment of a few non-core brands, revenue contribution from the products acquired / in-licensed from Novartis, new products contribution and growth in base business. |
| Ø | We launched five new products during the quarter. |
| 4 |
Emerging Markets
Revenues from Emerging Markets at Rs. 9.0 billion. Year-on-year decline of 1% and sequential decline of 25%:
| Ø | Revenues for Russia at Rs. 3.2 billion. Year-on-year decline of 9% is primarily due to channel inventory normalization post stocking up in Q4 FY22, which was partly offset with launch of new products. Sequential decline of 53% was due to higher base in Q4 FY22 from brand divestment income and channel inventory normalization in the current quarter. |
| Ø | Revenues from other CIS countries and Romania at Rs. 1.9 billion. Year-on-year growth of 33% driven by volume traction in base business, favorable price benefits in some of our products and launch of new products. Sequential decline of 16% was primarily on account of reduction in volumes. |
| Ø | Revenues from Rest of World (RoW) territories at Rs. 3.9 billion. Year-on-year decline of 6% primarily on account of higher base in Q1 FY22 due to covid product sales and price decline in current quarter, partly offset by new product launches. Sequential growth of 36% was largely attributable to volume traction in our base business, price benefits in some of our markets and launch of new products. |
Pharmaceutical Services and Active Ingredients (PSAI)
Revenues from PSAI at Rs. 7.1 billion. Year-on-year and sequential decline of 6% each.
| Ø | Year-on-year decline was primarily on account of higher base in Q1 FY22 with covid product sales, partly offset by new products launched and favorable forex rates. |
| Ø | Sequential decline was primarily due to lower volumes of base business, partly offset by new product launches. |
| 5 |
Income Statement Highlights:
| Ø | Gross profit margin at 49.9%: |
| - | Decreased by ~230 bps over previous year and by ~300 bps sequentially, primarily on account of higher commodity prices, adverse leverage on manufacturing overheads, price erosion and forex related impact, which was partially benefited from brand divestment income. |
| - | Gross profit margin for GG and PSAI business segments are at 55.0% and 15.7% respectively. |
| Ø | Selling, general & administrative (SG&A) expenses at Rs. 15.5 billion, increased by 3% on a year-on-year basis and declined by 1% sequentially. Year-on-year increase was primarily attributable to investments being done towards marketing of some of our key brands, investments in digitalization and annual increments, which was partially offset with lower legal and professional expenses. On sequential basis, the expenses have been largely flat. |
| Ø | Research & development (R&D) expenses at Rs. 4.3 billion. As % to revenues – Q1 FY23: 8.3% | Q4 FY22: 8.0% | Q1 FY22: 9.2%. Our focus continues on building a global pipeline of products across our markets. |
| Ø | Other operating income at Rs. 6.0 billion compared to Rs. 0.5 billion in Q1 FY22. The increase was mainly on account of recognition of income from settlement agreement, with Indivior Inc., Indivior UK Limited and Aquestive Therapeutics, Inc., resolving all claims between the parties relating to the generic buprenorphine and naloxone sublingual film. |
| Ø | Net Finance income at Rs. 2.3 billion compared to Rs. 0.7 billion in Q1 FY22. The increase was primarily on account of foreign exchange gains due to favorable ruble rates. |
| Ø | Profit before Tax at Rs. 14.7 billion, increased by 97% year-on-year and increased by 490% sequentially. |
| Ø | Profit after Tax at Rs. 11.9 billion. The effective tax rate is 19.0% for the quarter. |
| Ø | Diluted earnings per share is at Rs. 71.40. |
Other Highlights:
| Ø | EBITDA is at Rs. 17.8 billion and the EBITDA margin is 34.1%. |
| Ø | Capital expenditure is at Rs. 3.3 billion. |
| Ø | Free cash-flow is a net outflow of Rs. 2.3 billion. |
| Ø | Net cash surplus for the company is at Rs. 12.8 billion as on June 30, 2022. Consequently, net debt to equity ratio is (0.06). |
| 6 |
Earnings Call Details (06:30 pm IST, 09:00 am EDT, July 28, 2022)
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
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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 |
| 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 August 3rd, 2022. For play back dial in phone No: +91 22 7194 5757 | +91 22 6663 5757, and Playback Code is 96436.
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 businesses, 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, 2022. The company assumes no obligation to update any information contained herein.”
| 7 |
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 |
DR. REDDY'S LABORATORIES LIMITED
Unaudited consolidated financial results of Dr. Reddy's Laboratories Limited and its subsidiaries for the quarter 30 June 2022 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 | ||||||||||||||||||
| Sl. No | Particulars | 30.06.2022 | 31.03.2022 | 30.06.2021 | 31.03.2022 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||
| 1 | Revenues | 52,154 | 54,368 | 49,194 | 214,391 | |||||||||||||
| 2 | Cost of revenues | 26,148 | 25,625 | 23,495 | 100,551 | |||||||||||||
| 3 | Gross profit (1 - 2) | 26,006 | 28,743 | 25,699 | 113,840 | |||||||||||||
| 4 | Selling, general and administrative expenses | 15,493 | 15,674 | 15,045 | 62,081 | |||||||||||||
| 5 | Research and development expenses | 4,325 | 4,326 | 4,534 | 17,482 | |||||||||||||
| 6 | Impairment of non-current assets | - | 7,515 | - | 7,562 | |||||||||||||
| 7 | Other income, net | (6,024 | ) | (291 | ) | (487 | ) | (2,761 | ) | |||||||||
| Total operating expenses | 13,794 | 27,224 | 19,092 | 84,364 | ||||||||||||||
| 8 | Results from operating activities [(3) - (4 + 5 + 6 + 7)] | 12,212 | 1,519 | 6,607 | 29,476 | |||||||||||||
| Finance income | 2,696 | 1,175 | 845 | 3,077 | ||||||||||||||
| Finance expense | (347 | ) | (316 | ) | (193 | ) | (958 | ) | ||||||||||
| 9 | Finance income, net | 2,349 | 859 | 652 | 2,119 | |||||||||||||
| 10 | Share of profit of equity accounted investees, net of tax | 94 | 105 | 166 | 703 | |||||||||||||
| 11 | Profit before tax (8 + 9 + 10) | 14,655 | 2,483 | 7,425 | 32,298 | |||||||||||||
| 12 | Tax expense/(benefit), net | 2,779 | 1,608 | 1,717 | 8,730 | |||||||||||||
| 13 | Profit for the period/year (11 -12) | 11,876 | 875 | 5,708 | 23,568 | |||||||||||||
| 14 | Earnings per share: | |||||||||||||||||
| Basic earnings per share of Rs.5/- each | 71.56 | 5.28 | 34.44 | 142.08 | ||||||||||||||
| Diluted earnings per share of Rs.5/- each | 71.40 | 5.26 | 34.34 | 141.69 | ||||||||||||||
| (Not annualised) | (Not annualised) | (Not annualised) | ||||||||||||||||
 |
 |
| Segment information | All amounts in Indian Rupees millions |
| Quarter ended | ||||||||||||||||||
| Sl. No. | Particulars | 30.06.2022 | 31.03.2022 | 30.06.2021 | 31.03.2022 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||
| 1 | Segment revenue: | |||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 8,133 | 9,256 | 8,862 | 36,995 | ||||||||||||||
| b) Global Generics | 44,324 | 46,118 | 41,113 | 179,170 | ||||||||||||||
| c) Others | 740 | 693 | 541 | 4,481 | ||||||||||||||
| Total | 53,197 | 56,067 | 50,516 | 220,646 | ||||||||||||||
| Less: Inter-segment revenues | 1,043 | 1,699 | 1,322 | 6,255 | ||||||||||||||
| Net revenues | 52,154 | 54,368 | 49,194 | 214,391 | ||||||||||||||
| 2 | Segment results: | |||||||||||||||||
| Gross profit from each segment | ||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 1,110 | 1,387 | 1,630 | 6,821 | ||||||||||||||
| b) Global Generics | 24,399 | 26,830 | 23,719 | 103,270 | ||||||||||||||
| c) Others | 497 | 526 | 350 | 3,749 | ||||||||||||||
| Total | 26,006 | 28,743 | 25,699 | 113,840 | ||||||||||||||
| Less: Selling and other un-allocable expenditure, net of other income | 11,351 | 26,260 | 18,274 | 81,542 | ||||||||||||||
| Total profit before tax | 14,655 | 2,483 | 7,425 | 32,298 | ||||||||||||||
Global Generics segment includes operations of Biologics business. Inter-segment revenues represent sale from Pharmaceutical Services and Active Ingredients to Global Generics at cost.
Notes:
| 1 | The above financial results have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS), as issued by the International Accounting Standards Board (IASB). |
| 2 | Revenues for the quarter ended 30 June 2022 includes: |
a) Rs. 902 million from sale of brands Z&D, Pedicloryl, Pecef and Ezinapi to J B Chemicals and Pharmaceuticals Limited;
b) Rs. 1,399 million from sale of brands Styptovit-E, Finast, Finast-T and Dynapres to Torrent Pharmaceuticals Limited.
These transactions pertain to Company’s Global Generics segment.
| 3 | On 23 June 2022, the Company entered into a settlement agreement with Indivior Inc., Indivior UK Limited and Aquestive Therapeutics, Inc. Pursuant to the agreement, the Company will receive payments totaling U.S.$ 72 million by 31 March 2024. The said agreement resolves all claims between the parties relating to the Company’s generic buprenorphine and naloxone sublingual film including Indivior’s and Aquestive’s patent infringement allegations and the Company’s antitrust counterclaims. On 28 June 2022 the U.S. Court dismissed all claims and counterclaims pending in the case with prejudice, pursuant to a joint stipulation of dismissal filed by the parties. The Company recognised the present value of the amount receivable at Rs.5,638 million (U.S.$ 71.39 million discounted to present value) on the date of the settlement as ‘Other income, net’ in the consolidated financial results of the Company. The aforesaid transaction pertain to Company’s Global Generics segment. |
| 4 | On 5 April 2022 the Company received approval from the Honorable National Company Law Tribunal, Hyderabad Bench (“NCLT”) for the merger of Dr. Reddy’s Holding Limited into Dr. Reddy’s Laboratories Limited. Subsequently, the Company has filed the NCLT order, with the Ministry of Company Affairs on 8 April 2022 (‘Effective Date’). Consequently, Dr. Reddy’s Holding Limited has been merged with the Company. |
| 5 | As the revenues and gross profits of the Proprietary Products segment are considerably lower than the quantitative thresholds mentioned in IFRS 8, “Operating Segments”, the Company believes that Proprietary Products segment no longer qualifies to be a reportable segment and consequently, effective 1 April 2022, the Company included the financial information relating to Proprietary Products segment in “Others”. The corresponding information relating to Proprietary Products segment for earlier periods has been restated to reflect the aforementioned change. |
| 6 | Revenues for the year ended 31 March 2022 includes: |
a) Rs. 1,774 million towards the sale of territorial rights relating to two of the Company’s anti-bacterial brands (Ciprolet® and Levolet®) in Russia and CIS region to Alium JSC;
b) Rs. 390 million towards the sale of two of the Company's Brands (Daffy bar and Combihale) in India to Mankind Pharma Limited;
c) Rs. 1,084 million towards sale of its U.S. and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc.
The aforesaid transactions pertain to Company’s Global Generics and Others segment.
| |
|
| 7 | During the quarter and year ended 31 March 2022, there were significant changes to the market conditions for certain of the products forming part of Company’s Global Generics and Others segment. The changes include, decrease in the market potential of products, increased competition leading to lower volumes, and revenues not being in line with projections. Due to these adverse market developments, the Company recorded an impairment loss of Rs. 7,562 million on various non-current assets. The said impairment loss includes: |
a) Rs. 4,337 million relating to PPC-06 (Tepilamide
Fumarate Extended Release Tablets) in-process research and development asset;
b) Rs. 3,051 million pertaining to Shreveport Cash Generating Unit (“CGU”) comprising of Property, plant and equipment
and Goodwill;
c) Rs. 174 million relating to other intangible assets.
| 8 | On 3 February 2022, the Company entered into an agreement with Nimbus Health GmbH to acquire 100% of its share capital along with the existing employees for an upfront payment of Rs. 421 million (EUR 5 million) plus performance and milestone-based earn-outs over the next four years. The Company completed the acquisition effective as of 24 February 2022. During the quarter ended 30 June 2022, the Company completed the purchase price allocation and recognised Rs. 161 million and Rs. 260 million towards the fair value of assets acquired and goodwill, respectively. The acquisition pertains to the Company’s Global Generic segment. |
| 9 | Included in “Selling, general and administrative expenses” for the quarter ended 31 March 2022 is Rs. 983 million towards settlement of an ongoing Civil Investigative Demand (“CID”) matter with the State of Texas. |
| 10 | Included in “Other income, net” for the year ended 31 March 2022, is Rs. 1,064 million representing the profit on sale of intangible asset, E7777 (anti-cancer agent) to Citius Pharmaceuticals, Inc. This transaction pertains to the Company’s Others segment. |
| 11 | The Company received an anonymous complaint in September 2020, alleging 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. The Company disclosed the matter to the U.S.
Department of Justice (“DOJ”), Securities and Exchange Commission (“SEC”) and Securities Exchange Board
of India. The Company engaged a U.S. law firm to conduct the investigation at the instruction of a committee of the Company’s
Board of Directors. On 6 July 2021 the Company received a subpoena from the SEC for the production of related documents, which
were provided to the SEC. The Company made presentations to the SEC and the DOJ in relation to the investigation with respect to certain countries during the current and previous year. The Company also made a presentation to SEC and DOJ in relation to its Global Compliance Framework including the ongoing enhancement initiatives during the three months ended June 30, 2022. The Company is complying with its listing obligations as it relates to updating the regulatory agencies. While the findings from the aforesaid investigations could result in regulatory enforcement actions against the Company in the United States and/or foreign jurisdictions, including civil and criminal sanctions under relevant laws, the outcomes including liabilities are not reasonably ascertainable at this time. |
| 12 | India’s Code on Social Security, 2020, which aims to consolidate, codify and revise certain existing social security laws, received Presidential assent in September 2020 and has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which this Code will come into effect has not been announced. The Company will assess the impact of this Code and the rules thereunder when they come into effect. |
| 13 | The Company considered the uncertainties relating to the COVID-19 pandemic and military conflict between Russia and Ukraine, in assessing the recoverability of receivables, goodwill, intangible assets, investments and other assets. For this purpose, the Company considered internal and external sources of information up to the date of approval of these financial results. Based on its judgments, estimates and assumptions, including sensitivity analysis, the Company expects to fully recover the carrying amount of receivables, goodwill, intangible assets, investments and other assets. The Company will continue to closely monitor any material changes to future economic conditions. |
| 14 | 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 28 July 2022. |
| 15 | The figures of the quarter ended 31 March 2022 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. |
| 16 | The results for the quarter ended 30 June 2022 were subject to a “Limited Review” by the Independent Auditors of the Company. An unqualified report has been issued by them thereon. |
|
Place: Hyderabad Date: 28 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
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 for the quarter ended June 30, 2022 (the “Statement”) 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 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. | The Holding Company’s Management is responsible for the preparation of the Statement 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 and in compliance with Regulation 33 of the Listing Regulations. The Statement has been approved by the Holding Company’s Board of Directors . 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: |
| S. No | Name of the Company |
| Subsidiaries | |
| 1 | Aurigene Discovery Technologies Limited |
| 2 | Cheminor Investments Limited |
| 3 | Dr. Reddy’s Bio-Sciences Limited |
| 4 | Dr. Reddy’s Formulations Limited |
| 5 | Dr. Reddy’s Farmaceutica Do Brasil Ltda. |
| 6 | Dr. Reddy's Laboratories SA |
| 7 | Idea2Enterprises (India) Private Limited |
| 8 | Imperial Credit Private Limited |
| 9 | Industrias Quimicas Falcon de Mexico, S.A.de C.V. |
| 10 | Svaas Wellness Limited (Formerly known as Regkinetics Services Limited) |
| 11 | Aurigene Discovery Technologies (Malaysia) Sdn. Bhd. |
| 12 | Aurigene Pharmaceutical Services Limited |
| 13 | beta Institut gemeinnützige GmbH |
| 14 | betapharm Arzneimittel GmbH |
| 15 | Chirotech Technology Limited |
S.R. Batliboi & Associates LLP, a Limited Liability Partnership with LLP Identity No. AAB-4295
Regd. Office : 22, Camac Street, Block ‘B’, 3rd Floor, Kolkata-700 016
S.R.
Batliboi & Associates LLP
Chartered Accountants
| 16 | DRL Impex Limited |
| 17 | Dr. Reddy’s Laboratories (Australia) Pty. Limited |
| 18 | Dr. Reddy’s (Beijing) Pharmaceutical Co. Limited |
| 19 | Dr. Reddy’s Laboratories B.V. |
| 20 | Dr. Reddy’s Laboratories Canada, Inc. |
| 21 | Dr. Reddy's Laboratories Chile SPA. |
| 22 | Dr. Reddy’s Laboratories (EU) Limited |
| 23 | Dr. Reddy’s Laboratories Inc. |
| 24 | Dr. Reddy's Laboratories Japan KK |
| 25 | Dr. Reddy’s Laboratories Kazakhstan LLP |
| 26 | Dr. Reddy’s Laboratories LLC, Ukraine |
| 27 | Dr. Reddy's Laboratories Louisiana LLC |
| 28 | Dr. Reddy’s Laboratories Malaysia Sdn. Bhd. |
| 29 | Dr. Reddy’s Laboratories New York, LLC |
| 30 | Dr. Reddy's Laboratories Philippines Inc. |
| 31 | Dr. Reddy’s Laboratories (Proprietary) Limited |
| 32 | Dr. Reddy's Laboratories Romania S.R.L. |
| 33 | Dr. Reddy's Laboratories SAS |
| 34 | Dr. Reddy's Laboratories Taiwan Limited |
| 35 | Dr. Reddy's Laboratories (Thailand) Limited |
| 36 | Dr. Reddy’s Laboratories (UK) Limited |
| 37 | Dr. Reddy’s New Zealand Limited |
| 38 | Dr. Reddy's Research and Development B.V. |
| 39 | Dr. Reddy’s Srl |
| 40 | Dr. Reddy's Venezuela, C.A. |
| 41 | Lacock Holdings Limited |
| 42 | Dr. Reddy’s Laboratories LLC, Russia |
| 43 | DRS LLC |
| 44 | Promius Pharma LLC |
| 45 | Reddy Holding GmbH |
| 46 | Reddy Netherlands B.V. |
| 47 | Reddy Pharma Iberia SAU |
| 48 | Reddy Pharma Italia S.R.L |
| 49 | Reddy Pharma SAS |
| 50 | Nimbus Health GmbH |
| 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 Research Foundation |
S.R.
Batliboi & Associates LLP
Chartered Accountants
| 5. | Based on our review conducted and procedures performed as stated in paragraph 3 above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with recognition and measurement principles laid down in the aforesaid Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Companies Act, 2013, as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement. |
For S.R. BATLIBOI & ASSOCIATES LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
per Shankar Srinivasan Partner Membership No.: 213271
UDIN: 22213271ANTTOS1456
Place: Hyderabad Date: July 28, 2022 |
 |
 |
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 2022
All amounts in Indian Rupees millions
| Quarter ended | Year ended | |||||||||||||||||
| Sl. No. | Particulars | 30.06.2022 | 31.03.2022 | 30.06.2021 | 31.03.2022 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||
| 1 | Revenue from operations | |||||||||||||||||
| a) Net sales/income from operations | 48,180 | 50,684 | 48,262 | 205,144 | ||||||||||||||
| b) License fees and service income | 3,974 | 3,684 | 932 | 9,247 | ||||||||||||||
| c) Other operating income | 175 | 381 | 257 | 1,061 | ||||||||||||||
| Total revenue from operations | 52,329 | 54,749 | 49,451 | 215,452 | ||||||||||||||
| 2 | Other income | 8,539 | 1,219 | 1,079 | 4,844 | |||||||||||||
| 3 | Total income (1 + 2) | 60,868 | 55,968 | 50,530 | 220,296 | |||||||||||||
| 4 | Expenses | |||||||||||||||||
| a) Cost of materials consumed | 11,891 | 13,030 | 11,139 | 43,124 | ||||||||||||||
| b) Purchase of stock-in-trade | 8,755 | 7,087 | 9,735 | 34,837 | ||||||||||||||
| c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | (1,533 | ) | (1,139 | ) | (3,853 | ) | (3,539 | ) | ||||||||||
| d) Employee benefits expense | 10,457 | 9,726 | 9,465 | 38,858 | ||||||||||||||
| e) Depreciation and amortisation expense | 3,018 | 2,930 | 2,839 | 11,652 | ||||||||||||||
| f) Impairment of non-current assets | - | 7,419 | 1,838 | 9,304 | ||||||||||||||
| g) Finance costs | 347 | 315 | 193 | 958 | ||||||||||||||
| h) Selling and other expenses | 13,347 | 14,116 | 13,782 | 55,191 | ||||||||||||||
| Total expenses | 46,282 | 53,484 | 45,138 | 190,385 | ||||||||||||||
| 5 | Profit before tax and share of equity accounted investees(3 - 4) | 14,586 | 2,484 | 5,392 | 29,911 | |||||||||||||
| 6 | Share of profit of equity accounted investees, net of tax | 94 | 105 | 166 | 703 | |||||||||||||
| 7 | Profit before tax (5+6) | 14,680 | 2,589 | 5,558 | 30,614 | |||||||||||||
| 8 | Tax expense/(benefit): | |||||||||||||||||
| a) Current tax | (2,905 | ) | 6,064 | 1,367 | 11,013 | |||||||||||||
| b) Deferred tax | 5,695 | (4,445 | ) | 387 | (2,224 | ) | ||||||||||||
| 9 | Net profit after taxes and share of profit of associates (7 - 8) | 11,890 | 970 | 3,804 | 21,825 | |||||||||||||
| 10 | Other comprehensive income | |||||||||||||||||
| a) (i) Items that will not be reclassified subsequently to profit or loss | (562 | ) | (981 | ) | (1,243 | ) | (3,568 | ) | ||||||||||
| (ii) Income tax relating to items that will not be reclassified to profit or loss | - | 12 | 293 | 305 | ||||||||||||||
| b) (i) Items that will be reclassified subsequently to profit or loss | (3,135 | ) | 796 | (68 | ) | 653 | ||||||||||||
| (ii) Income tax relating to items that will be reclassified to profit or loss | 1,568 | (327 | ) | 173 | (288 | ) | ||||||||||||
| Total other comprehensive (loss)/income | (2,129 | ) | (500 | ) | (845 | ) | (2,898 | ) | ||||||||||
| 11 | Total comprehensive income (9 + 10) | 9,761 | 470 | 2,959 | 18,927 | |||||||||||||
| 12 | Paid-up equity share capital (face value Rs. 5/- each) | 832 | 832 | 832 | 832 | |||||||||||||
| 13 | Other equity | 191,292 | ||||||||||||||||
| 14 | Earnings per equity share (face value Rs. 5/- each) | |||||||||||||||||
| Basic | 71.64 | 5.84 | 22.95 | 131.57 | ||||||||||||||
| Diluted | 71.49 | 5.83 | 22.89 | 131.21 | ||||||||||||||
| (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 | ||||||||||||||||||
| Sl. No. | Particulars | 30.06.2022 | 31.03.2022 | 30.06.2021 | 31.03.2022 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||||
| Segment wise revenue and results: | ||||||||||||||||||
| 1 | Segment revenue : | |||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 8,263 | 9,316 | 8,980 | 37,499 | ||||||||||||||
| b) Global Generics | 44,371 | 46,359 | 41,251 | 179,647 | ||||||||||||||
| c) Others | 738 | 773 | 542 | 4,561 | ||||||||||||||
| Total | 53,372 | 56,448 | 50,773 | 221,707 | ||||||||||||||
| Less: Inter-segment revenue | 1,043 | 1,699 | 1,322 | 6,255 | ||||||||||||||
| Total revenue from operations | 52,329 | 54,749 | 49,451 | 215,452 | ||||||||||||||
| 2 | Segment results: | |||||||||||||||||
| Gross profit from each segment | ||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 1,115 | 1,390 | 1,634 | 6,834 | ||||||||||||||
| b) Global Generics | 24,399 | 26,830 | 23,718 | 103,270 | ||||||||||||||
| c) Others | 497 | 526 | 351 | 3,749 | ||||||||||||||
| Total | 26,011 | 28,746 | 25,703 | 113,853 | ||||||||||||||
| Less: Selling and other un-allocable expenditure/(income), net | 11,331 | 26,157 | 20,145 | 83,239 | ||||||||||||||
| Total profit before tax | 14,680 | 2,589 | 5,558 | 30,614 | ||||||||||||||
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 | License fee and service income for the quarter ended 30 June 2022 includes: a. Rs. 902 million from sale of brands Z&D, Pedicloryl, Pecef and Ezinapi to J B Chemicals and Pharmaceuticals Limited; |
b. Rs. 1,399 million from sale of brands Styptovit-E, Finast, Finast-T and Dynapres to Torrent Pharmaceuticals Limited.
These transactions pertain to Company’s Global Generics segment.
| 3 | On 23 June 2022, the Company entered into a Settlement Agreement with Indivior Inc., Indivior UK Limited and Aquestive Therapeutics, Inc. Pursuant to the agreement, the Company will receive payments totaling U.S.$ 72 million by 31 March 2024. The said agreement resolves all claims between the parties relating to the Company’s generic buprenorphine and naloxone sublingual film including Indivior’s and Aquestive’s patent infringement allegations and the Company’s antitrust counterclaims. On 28 June 2022 the U.S. Court dismissed all claims and counterclaims pending in the case with prejudice, pursuant to a joint stipulation of dismissal filed by the parties. The Company recognised the present value of the amount receivable at Rs.5,638 million (U.S.$ 71.39 million discounted to present value) on the date of the settlement as ‘Other income’ in the consolidated financial results of the Company. The aforesaid transaction pertain to Company’s Global Generics segment. |
| 4 | On 5 April 2022 the Company received approval from the Honorable National Company Law Tribunal, Hyderabad Bench (“NCLT”) for the merger of Dr. Reddy’s Holding Limited into Dr. Reddy’s Laboratories Limited. Subsequently, the Company has filed the NCLT order, with the Ministry of Company Affairs on 8 April 2022 (‘Effective Date’). Consequently, Dr. Reddy’s Holding Limited has been merged with the Company. |
| 5 | As the revenues and gross profits of the Proprietary Products segment are considerably lower than the quantitative thresholds mentioned in IND AS 108, “Operating Segments”, the Company believes that Proprietary Products segment no longer qualifies to be a reportable segment and consequently, effective 1 April 2022, the Company included the financial information relating to Proprietary Products Segment in “Others”. The corresponding information relating to Proprietary Products segment for earlier periods has been restated to reflect the aforementioned change. |
| 6 | During the quarter ended 30 June 2022, pursuant to a change in the U.S. Income tax regulations relating to the timing of recognition of certain sales based accruals, the Company recognised a reduction in current tax liability of Rs. 4,768 million with a corresponding increase in the deferred tax liability. |
| 7 | License fee and service income for the year ended 31 March 2022 includes: |
a) Rs. 1,774 million towards the sale of territorial rights relating to two of the Company’s anti-bacterial brands (Ciprolet® and Levolet®) in Russia and CIS region to Alium JSC;
b) Rs. 390 million towards the sale of two of the Company’s Brands (Daffy bar and Combihale) in India to Mankind Pharma Limited;
c) Rs. 1,084 million towards sale of its U.S. and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc.
The aforesaid transactions pertain to Company’s Global Generics and Others segment.
| |
|
|
DR. REDDY'S LABORATORIES LIMITED
| 8 | During the quarter and year ended 31 March 2022, there were significant changes to the market conditions for certain of the products forming part of Company’s Global Generics and Others segment. The changes include, decrease in the market potential of products, and increased competition leading to lower volumes and revenues not being in line with projections. Due to these adverse market developments, the Company recorded an impairment loss of Rs. 9,304 million on various non-current assets. The said impairment loss includes: |
a) Rs. 4,337 million relating to PPC-06 (Tepilamide Fumarate Extended Release Tablets) intangible assets under development;
b) Rs. 2,955 million pertaining to Shreveport Cash Generating Unit (“CGU”) comprising of Property, plant and equipment and Goodwill;
c) Rs. 174 million relating to other intangible assets.
| 9 | On 3 February 2022, the Company entered into an agreement with Nimbus Health GmbH to acquire 100% of its share capital along with the existing employees for an upfront payment of Rs. 421 million (EUR 5 million) plus performance and milestone-based earn-outs over the next four years. The Company completed the acquisition effective as of 24 February 2022. During the quarter ended 30 June 2022, the Company completed the purchase price allocation and recognised Rs. 161 million and Rs. 260 million towards the fair value of assets acquired and goodwill, respectively. The acquisition pertains to the Company’s Global Generic segment. |
| 10 | Included in “Selling and other expenses” for the quarter ended 31 March 2022, is Rs. 983 million towards settlement of an ongoing Civil Investigative Demand (“CID”) matter with the State of Texas. |
| 11 | Included in “Other income” for the year ended 31 March 2022, is Rs.1,064 million representing the profit on sale of intangible asset, E7777 (anti-cancer agent) to Citius Pharmaceuticals, Inc. This transaction pertains to the Company’s Others segment. |
| 12 | 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 only Rs. 1,471 million (U.S.$ 20 million) as the provision towards this litigation, an additional expense of Rs. 1,930 million (U.S.$ 26.25 million) [Rs. 1,838 million (U.S.$ 25 million) as “Impairment of non-current assets” and Rs. 92 million (U.S.$ 1.25 million) as “selling and other expenses”] was recognised during the quarter ended 30 June 2021. The said expense forms part of the Company’s Others segment. |
| 13 | The Company received an anonymous complaint in September 2020, alleging 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. The Company disclosed the matter to the U.S. Department of Justice (“DOJ”), Securities and Exchange Commission (“SEC”) and Securities Exchange Board of India. The Company engaged a U.S. law firm to conduct the investigation at the instruction of a committee of the Company’s Board of Directors. On 6 July 2021 the Company received a subpoena from the SEC for the production of related documents, which were provided to the SEC. |
The Company made presentations to the SEC and the DOJ in relation to the investigation with respect to certain countries during the current and previous year. The Company also made a presentation to SEC and DOJ in relation to its Global Compliance Framework including the ongoing enhancement initiatives during the three months ended June 30, 2022. The Company is complying with its listing obligations as it relates to updating the regulatory agencies. While the findings from the aforesaid investigations could result in regulatory enforcement actions against the Company in the United States and/or foreign jurisdictions, including civil and criminal sanctions under relevant laws, the outcomes including liabilities are not reasonably ascertainable at this time.
| 14 | India’s Code on Social Security, 2020, which aims to consolidate, codify and revise certain existing social security laws, received Presidential assent in September 2020 and has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which this Code will come into effect has not been announced. The Company will assess the impact of this Code and the rules thereunder when they come into effect. |
| 15 | The Company considered the uncertainties relating to the COVID-19 pandemic and military conflict between Russia and Ukraine, in assessing the recoverability of receivables, goodwill, intangible assets, investments and other assets. For this purpose, the Company considered internal and external sources of information up to the date of approval of these financial results. Based on its judgments, estimates and assumptions, including sensitivity analysis, the Company expects to fully recover the carrying amount of receivables, goodwill, intangible assets, investments and other assets. The Company will continue to closely monitor any material changes to future economic conditions. |
| 16 | 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 28 July 2022. |
| 17 | The figures of the quarter ended 31 March 2022 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. |
| 18 | The results for the quarter ended 30 June 2022 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
G V Prasad
Co-Chairman & Managing Director
Place: Hyderabad
Date: 28 July 2022
| |
|
|
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 for the quarter ended June 30, 2022 (the “Statement”) of Dr. Reddy’s Laboratories Limited (the “Company”) 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. | The Company’s Management is responsible for the preparation of the Statement 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 and in compliance with Regulation 33 of the Listing Regulations. The Statement has been approved by the Company’s Board of Directors. 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
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per Shankar Srinivasan Partner Membership No.: 213271
UDIN: 22213271ANTTFS9552
Place: Hyderabad Date: July 28, 2022 |
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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
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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 |
DR. REDDY'S LABORATORIES LIMITED
STATEMENT OF UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER ENDED 30 JUNE 2022
All amounts in Indian Rupees millions
| Quarter ended | Year ended | ||||||||||||||||||
Sl. No. | Particulars | 30.06.2022 | 31.03.2022 | 30.06.2021 | 31.03.2022 | ||||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | ||||||||||||||||
| 1 | Revenue from operations | ||||||||||||||||||
| a) Net sales / income from operations | 33,399 | 33,829 | 34,001 | 138,864 | |||||||||||||||
| b) License fees and service income | 2,757 | 2,490 | 100 | 4,289 | |||||||||||||||
| c) Other operating income | 150 | 368 | 234 | 899 | |||||||||||||||
| Total revenue from operations | 36,306 | 36,687 | 34,335 | 144,052 | |||||||||||||||
| 2 | Other income | 4,034 | 1,147 | 1,862 | 4,820 | ||||||||||||||
| Total income (1 + 2) | 40,340 | 37,834 | 36,197 | 148,872 | |||||||||||||||
| 3 | Expenses | ||||||||||||||||||
| a) Cost of materials consumed | 8,047 | 10,149 | 8,707 | 33,784 | |||||||||||||||
| b) Purchase of stock-in-trade | 4,836 | 3,354 | 6,235 | 20,571 | |||||||||||||||
| c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | 172 | (557 | ) | (3,025 | ) | (3,896 | ) | ||||||||||||
| d) Employee benefits expense | 6,490 | 6,089 | 5,865 | 24,346 | |||||||||||||||
| e) Depreciation and amortisation expense | 2,215 | 2,052 | 1,971 | 8,143 | |||||||||||||||
| f) Impairment | - | 98 | - | 98 | |||||||||||||||
| g) Finance costs | 98 | 127 | 65 | 380 | |||||||||||||||
| h) Selling and other expenses | 10,966 | 10,855 | 10,934 | 43,208 | |||||||||||||||
| Total expenses | 32,824 | 32,167 | 30,752 | 126,634 | |||||||||||||||
| 4 | Profit before tax (1 + 2 - 3) | 7,516 | 5,667 | 5,445 | 22,238 | ||||||||||||||
| 5 | Tax expense / (benefit) | ||||||||||||||||||
| a) Current tax | 1,358 | 974 | 984 | 3,926 | |||||||||||||||
| b) Deferred tax | 1,163 | 496 | 327 | 2,080 | |||||||||||||||
| 6 | Net profit for the period / year (4 - 5) | 4,995 | 4,197 | 4,134 | 16,232 | ||||||||||||||
| 7 | Other comprehensive income | ||||||||||||||||||
| a) (i) Items that will not be reclassified to profit or loss | (1 | ) | (47 | ) | 1 | (45 | ) | ||||||||||||
| (ii) Income tax relating to items that will not be reclassified to profit or loss | - | 17 | - | 17 | |||||||||||||||
| b) (i) Items that will be reclassified to profit or loss | (4,486 | ) | 955 | (531 | ) | 832 | |||||||||||||
| (ii) Income tax relating to items that will be reclassified to profit or loss | 1,568 | (335 | ) | 186 | (291 | ) | |||||||||||||
| Total other comprehensive (loss)/income | (2,919 | ) | 590 | (344 | ) | 513 | |||||||||||||
| 8 | Total comprehensive income (6 + 7) | 2,076 | 4,787 | 3,790 | 16,745 | ||||||||||||||
| 9 | Paid-up equity share capital (face value Rs. 5/- each) | 832 | 832 | 832 | 832 | ||||||||||||||
| 10 | Other equity | 182,530 | |||||||||||||||||
| 11 | Earnings per equity share (face value Rs. 5/- each) | ||||||||||||||||||
| Basic | 30.10 | 25.29 | 24.94 | 97.85 | |||||||||||||||
| Diluted | 30.03 | 25.24 | 24.87 | 97.58 | |||||||||||||||
| (Not annualised) | (Not annualised) | (Not annualised) | |||||||||||||||||
See accompanying notes to the financial results.
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DR. REDDY'S LABORATORIES LIMITED
| Segment information |
All amounts in Indian Rupees millions
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| Quarter ended | Year ended | ||||||||||||||||||
Sl. No. | Particulars | 30.06.2022 | 31.03.2022 | 30.06.2021 | 31.03.2022 | ||||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | ||||||||||||||||
| Segment wise revenue and results | |||||||||||||||||||
| 1 | Segment revenue | ||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | 5,976 | 7,932 | 7,392 | 31,718 | |||||||||||||||
| b) Global Generics | 31,221 | 30,255 | 28,199 | 116,999 | |||||||||||||||
| c) Others | 152 | 199 | 66 | 1,590 | |||||||||||||||
| Total | 37,349 | 38,386 | 35,657 | 150,307 | |||||||||||||||
| Less: Inter-segment revenue | 1,043 | 1,699 | 1,322 | 6,255 | |||||||||||||||
| Total revenue from operations | 36,306 | 36,687 | 34,335 | 144,052 | |||||||||||||||
| 2 | Segment results | ||||||||||||||||||
| Profit / (loss) before tax and interest from each segment | |||||||||||||||||||
| a) Pharmaceutical Services and Active Ingredients | (282 | ) | (322 | ) | 207 | 384 | |||||||||||||
| b) Global Generics | 11,124 | 5,944 | 5,724 | 21,871 | |||||||||||||||
| c) Others | 22 | 129 | (44 | ) | 1,160 | ||||||||||||||
| Total | 10,864 | 5,751 | 5,887 | 23,415 | |||||||||||||||
| Less: (i) Finance costs | 98 | 127 | 65 | 380 | |||||||||||||||
| (ii) Other un-allocable expenditure / (income), net | 3,250 | (43 | ) | 377 | 797 | ||||||||||||||
| Total profit before tax | 7,516 | 5,667 | 5,445 | 22,238 | |||||||||||||||
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 | License fee and service income for the quarter ended 30 June 2022 includes: a. Rs. 902 million from sale of brands Z&D, Pedicloryl, Pecef and Ezinapi to J B Chemicals and Pharmaceuticals Limited; b. Rs. 1,399 million from sale of brands Styptovit-E, Finast, Finast-T and Dynapres to Torrent Pharmaceuticals Limited. These transactions pertain to Company’s Global Generics segment. | |
| 3 | On 5 April 2022 the Company received approval from the Honorable National Company Law Tribunal, Hyderabad Bench (“NCLT”) for the merger of Dr. Reddy’s Holding Limited into Dr. Reddy's Laboratories Limited. Subsequently, the Company has filed the NCLT order, with the Ministry of Company Affairs on 8 April 2022 (‘Effective Date’). Consequently, Dr. Reddy’s Holding Limited has been merged with the Company. | |
| 4 | As the revenues and gross profits of the Proprietary Products segment are considerably lower than the quantitative thresholds mentioned in IND AS 108, “Operating Segments”, the Company believes that Proprietary Products segment no longer qualifies to be a reportable segment and consequently, effective 1 April 2022, the Company included the financial information relating to Proprietary Products segment in “Others”. The corresponding information relating to Proprietary Products segment for earlier periods has been restated to reflect the aforementioned change. | |
| 5 | License fee and service income for the year ended 31 March 2022 includes: a) Rs. 1,774 million towards the sale of territorial rights relating to two of the Company’s anti-bacterial brands (Ciprolet® and Levolet®) in Russia and CIS region to Alium JSC; b) Rs. 390 million towards the sale of two of the Company’s Brands (Daffy bar and Combihale) in India to Mankind Pharma Limited; c) Rs. 1,084 million towards the sale of U.S. and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc. The aforesaid transactions pertain to Company’s Global Generics and Others segment. | |
| 6 | India’s Code on Social Security, 2020, which aims to consolidate, codify and revise certain existing social security laws, received Presidential assent in September 2020 and has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which this Code will come into effect has not been announced. The Company will assess the impact of this Code and the rules thereunder when they come into effect. |
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DR. REDDY'S LABORATORIES LIMITED
| 7 | The Company received an anonymous complaint in September 2020, alleging 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. The Company disclosed the matter to the U.S. Department of Justice (“DOJ”), Securities and Exchange Commission (“SEC”) and Securities Exchange Board of India. The Company engaged a U.S. law firm to conduct the investigation at the instruction of a committee of the Company’s Board of Directors. On 6 July 2021 the Company received a subpoena from the SEC for the production of related documents, which were provided to the SEC.
The Company made presentations to the SEC and the DOJ in relation to the investigation with respect to certain countries during the current and previous year. The Company also made a presentation to SEC and DOJ in relation to its Global Compliance Framework including the ongoing enhancement initiatives during the three months ended June 30, 2022. The Company is complying with its listing obligations as it relates to updating the regulatory agencies. While the findings from the aforesaid investigations could result in regulatory enforcement actions against the Company in the United States and/or foreign jurisdictions, including civil and criminal sanctions under relevant laws, the outcomes including liabilities are not reasonably ascertainable at this time. | |
| 8 | The Company considered the uncertainties relating to the COVID-19 pandemic and military conflict between Russia and Ukraine, in assessing the recoverability of receivables, goodwill, intangible assets, investments and other assets. For this purpose, the Company considered internal and external sources of information up to the date of approval of these financial results. Based on its judgments, estimates and assumptions, including sensitivity analysis, the Company expects to fully recover the carrying amount of receivables, goodwill, intangible assets, investments and other assets. The Company will continue to closely monitor any material changes to future economic conditions. | |
| 9 | 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 28 July 2022. | |
| 10 | The figures of the quarter ended 31 March 2022 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. | |
| 11 | The results for the quarter ended 30 June 2022 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
G V Prasad
Co-Chairman & Managing Director
Place: Hyderabad
Date: 28 July 2022
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