EX-99.2 3 d215400dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

Limited Review Report on Quarterly Standalone Financial Results of Dr. Reddy’s Laboratories Limited pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To

The Board of Directors of Dr. Reddy’s Laboratories Limited

We have reviewed the accompanying statement of unaudited standalone financial results (‘the Statement’) of Dr. Reddy’s Laboratories Limited (‘the Company’) for the quarter ended 30 June 2016, being submitted by the company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

This statement is the responsibility of the Company’s Management and has been approved by the Board of Directors in their meeting held on 26 July 2016. Our responsibility is to issue a report on these financial statements based on our review.

We conducted our review in accordance with the Standard on Review Engagement (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 financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

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 applicable accounting standards i.e., Indian Accounting Standard (Ind AS) prescribed under Section 133 of the Companies Act, 2013 read with relevant rules issued thereunder and other recognized accounting practices and policies has not disclosed the information required to be disclosed in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI Circular dated 05 July 2016 including the manner in which it is to be disclosed, or that it contains any material misstatement.

for B S R & Co. LLP

Chartered Accountants

Firm’s registration number: 101248W/ W-100022

Supreet Sachdev

Partner

Membership Number: 205385

Place: Hyderabad

Date: 26 July 2016

DR. REDDY’S LABORATORIES LIMITED

STATEMENT OF UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER ENDED 30 JUNE 2016

All amounts in Indian Rupees millions, except share data and where otherwise stated

 

          Quarter ended     Year ended  

Sl. No.

   

Particulars

    30.06.2016     31.03.2016     30.06.2015     31.03.2016  
          (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

1

   

Income from operations

         
  

a) Net sales / income from operations (Net of excise  duty)

      21,285        21,441        25,083        99,218   
  

b) License fees and service income

      41        2,021        46        2,288   
  

c) Other operating income

      89        106        130        571   
  

Total income from operations (net)

      21,415        23,568        25,259        102,077   

2

   

Expenses

         
  

a) Cost of materials consumed

      4,714        4,902        5,012        19,885   
  

b) Purchase of traded goods

      1,594        1,267        1,543        6,104   
  

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

      (1,251 )      461        (381 )      (288 ) 
  

d) Employee benefits expense

      4,684        4,322        4,066        16,934   
  

e) Selling expenses

      2,521        1,558        2,623        9,275   
  

f) Depreciation and amortisation

      1,725        1,812        1,423        6,495   
  

g) Other expenditure

      6,795        10,735        5,755        29,514   
  

Total expenses

      20,782        25,057        20,041        87,919   

3

   

Profit / (loss) before other income and finance costs (1 - 2)

      633        (1,489 )      5,218        14,158   

4

   

Other income

      3,918        987        1,105        3,249   

5

   

Profit / (loss) before finance costs (3 + 4)

      4,551        (502 )      6,323        17,407   

6

   

Finance costs

      126        147        213        641   

7

   

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

      4,425        (649 )      6,110        16,766   

8

   

Tax expense / (benefit)

      334        (262 )      1,176        3,023   

9

   

Net profit / (loss) for the period / year (7 - 8)

      4,091        (387 )      4,934        13,743   

10

   

Other Comprehensive income

      (124 )      (220 )      (14 )      (289 ) 

11

   

Total Comprehensive income (9 + 10)

      3,967        (607 )      4,920        13,454   

12

   

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

      828        853        853        853   

13

   

Reserves

            123,991   

14

   

Earnings per share (in Rupees) per Rs. 5/- share

         
  

- Basic

      24.13        (2.26 )      28.95        80.59   
  

- Diluted

      24.07        (2.26 )      28.85        80.34   
       

 

   (Not

  annualised)

  

  

    

 

   (Not

  annualised)

  

  

    

 

   (Not

  annualised)

  

  

  

See accompanying notes to the financial results

Segment Information

All amounts in Indian Rupees millions, except share data and where otherwise stated

 

          Quarter ended     Year ended  

Sl. No.

   

Particulars

    30.06.2016     31.03.2016     30.06.2015     31.03.2016  
          (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
  

Segment wise revenue and results:

         

1

   

Segment revenue:

         
  

a) Pharmaceutical Services and Active Ingredients

      5,227        6,199        5,778        22,913   
  

b) Global Generics

      17,719        18,854        20,667        84,472   
  

c) Proprietary Products

      —          —          —          1   
  

Total

      22,946        25,053        26,445        107,386   
  

Less: Inter segment revenue

      1,531        1,485        1,186        5,309   
  

Add: Other unallocable income

      —          —          —          —     
  

Total income from operations

      21,415        23,568        25,259        102,077   

2

   

Segment results:

         
  

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

         
  

a) Pharmaceutical Services and Active Ingredients

      (743 )      (1,042 )      276        (1,324 ) 
  

b) Global Generics

      3,865        1,667        7,571        23,081   
  

c) Proprietary Products

      (750 )      (918 )      (723 )      (2,975 ) 
  

Total

      2,372        (293 )      7,124        18,782   
  

Less: (i) Interest

      126        147        213        641   
  

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

      (2,179 )      209        801        1,375   
  

Total profit / (loss) before tax

      4,425        (649 )      6,110        16,766   

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.

The Company adopted Indian Accounting Standards (“Ind AS”) from 1 April 2016 and accordingly these results have been prepared in accordance with the recognition and measurement principles laid down in the Ind AS 34, Interim Financial Reporting prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued thereunder and other accounting pronouncements generally accepted in India. Financial results for all the periods presented have been prepared in accordance with the recognition and measurement principles of Ind AS 34.

2.

Reconciliation between financial results as previously reported under Previous GAAP and Ind AS for the quarter ended 30 June 2015

 

Particulars   

Amounts in Indian

Rupees millions

  

Net profit under previous GAAP

      4,758   

Impact on account of measuring investments at fair value through profit and loss

      196   

Recognition of intangible assets not eligible for recognition under Previous GAAP

      5   

Reversal of goodwill amortised under Previous GAAP

      (9 ) 

Difference in measurement of employee share based payments

      22   

Impact on current and deferred taxes

      (37 ) 

Others

      (1 ) 

Net profit for the period under Ind AS

      4,934   

 

3.

Other income includes dividend income of Rs. 3,018 million from one of the wholly owned subsidiaries of the Company in Switzerland.

 

4.

During the quarter ended 30 June 2016, the Company bought back and extinguished 5,077,504 equity shares for an aggregate purchase price of Rs. 15,694 million. The aggregate face value of the shares bought back was Rs. 25 million.

 

5.

Other expenditure for the year ended 31 March 2016 includes provision for doubtful debts of Rs. 3,559 million pertaining to outstanding receivable from Venezuelan subsidiary.

 

6.

The Company received a warning letter, dated 5 November 2015 from the U.S. FDA, regarding deviations with current Good Manufacturing Practices at its API manufacturing facilities in Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as regarding violations at its oncology formulation manufacturing facility at Duvvada, Visakhapatnam, Andhra Pradesh. The Company submitted its response to the warning letter on 7 December 2015. The Company believes that it can resolve the issues raised by the U.S. FDA satisfactorily in a timely manner. The Company takes the matters identified by U.S. FDA in the warning letter seriously and will continue to work diligently to address the observations identified in the warning letter and is concurrently continuing to develop and implement its corrective action plans relating to the warning letter. Further, the Company has provided an update to the U.S. FDA on the progress of remediation in January 2016, March 2016 and May 2016.

 

7.

The unaudited results have been reviewed by the Audit Committee of the Board and approved by the Board of Directors of the Company at their meeting held on 26 July 2016.

 

8.

The results for all the periods presented have been subjected 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: 26 July 2016

    Co-Chairman & Chief Executive Officer