EX-99.3

EX-99.3 4 d215400dex993.htm EX-99.3 EX-99.3

Exhibit 99.3

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

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

We have reviewed the accompanying statement of unaudited consolidated financial results (“the statement”) of Dr. Reddy Laboratories Limited (“the company”), its subsidiaries and its jointly controlled entity (the company, its subsidiaries and its jointly controlled entity constitute “the group”) for the quarter ended 30 June 2016, attached herewith, 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 the meeting held on 26 July 2016. Our responsibility is to issue a report on the statement 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.

The Statement includes the results of the following entities:

1)	Aurigene Discovery Technologies (Malaysia) Sdn. Bhd.

2)	Aurigene Discovery Technologies Inc.

3)	Aurigene Discovery Technologies Limited

4)	beta Institut gemeinnützige GmbH

5)	betapharm Arzneimittel GmbH

6)	Cheminor Investments Limited

7)	Chienna B.V.

8)	Chirotech Technology Limited

DRANU LLC

10)	Dr. Reddy’s Bio-Sciences Limited

11)	Dr. Reddy’s Farmaceutica Do Brasil Ltda.

12)	Dr. Reddy’s Laboratories (Australia) Pty. Limited

13)	Dr. Reddy’s Laboratories Canada, Inc.

14)	Dr. Reddy’s Laboratories (EU) Limited

15)	Dr. Reddy’s Laboratories Inc.

16)	Dr. Reddy’s Laboratories International SA

17)	Dr. Reddy’s Laboratories Japan KK

18)	Dr. Reddy’s Laboratories, LLC

19)	Dr. Reddy’s Laboratories Louisiana LLC

20)	Dr. Reddy’s Laboratories New York, Inc.

21)	Dr. Reddy’s Laboratories (Proprietary) Limited

22)	Dr. Reddy’s Laboratories Romania S.R.L.

23)	Dr. Reddy’s Laboratories SA

24)	Dr. Reddy’s Laboratories SAS

25)	Dr. Reddy’s Laboratories Tennessee, LLC

26)	Dr. Reddy’s Laboratories (UK) Limited

27)	Dr. Reddy’s New Zealand Limited.

28)	Dr. Reddy’s Pharma SEZ Limited

29)	Dr. Reddy’s Singapore PTE Limited

30)	Dr. Reddy’s Srl

31)	Dr. Reddy’s Venezuela, C.A.

32)	DRL Impex Limited

33)	Eurobridge Consulting B.V.

34)	Industrias Quimicas Falcon de Mexico, S.A. de CV

35)	Idea2Enterprises (India) Pvt. Limited

36)	Kunshan Rotam Reddy Pharmaceutical Co. Limited

37)	Lacock Holdings Limited

38)	OOO Dr. Reddy’s Laboratories Limited

39)	OOO DRS LLC

40)	OctoPlus B.V. (formerly OctoPlus N.V.)

41)	OctoPlus Development B.V.

42)	OctoPlus Sciences B.V.

43)	OctoPlus PolyActive Sciences B.V.

44)	OctoPlus Technologies B.V.

45)	OctoShare B.V.

46)	Promius Pharma LLC

47)	Reddy Antilles N.V.

48)	Reddy Specialities GmbH

49)	Reddy Cheminor S.A.

50)	Reddy Holding GmbH

51)	Reddy Netherlands B.V.

52)	Reddy Pharma Iberia SA

53)	Reddy Pharma Italia S.p.A.

54)	Reddy Pharma SAS

55)	Kunshan Rotam Reddy Pharmaceutical Co. Limited (accounted in accordance with Ind AS 111)

56)	DRSS Solar Power Private Limited (accounted in accordance with Ind AS 111)

57)	DRES Energy Private Limited (accounted in accordance with Ind AS 111)

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. 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 5 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 Registration Number: 101248W/W-100022

Supreet Sachdev

Partner

Membership Number: 205385

Date: 26 July 2016

Place: Hyderabad

DR. REDDY’S LABORATORIES LIMITED

STATEMENT OF UNAUDITED CONSOLIDATED 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)		31,635			36,735			37,009			151,633
	b) License fees and service income		488			610			363			2,233
	c) Other operating income		102			389			150			975
	Total income from operations (net)		32,225			37,734			37,522			154,841
2	Expenses
	a) Cost of materials consumed		5,742			5,430			6,330			25,002
	b) Purchase of traded goods		3,282			2,585			3,199			11,743
	c) Changes in inventories of finished goods, work-in-progress and stock-in-trade		(1,793	)		943			(1,050	)		(957	)
	d) Employee benefits expense		8,050			7,909			7,502			31,174
	e) Selling expenses		3,268			2,685			3,130			11,811
	f) Depreciation and amortisation		2,436			2,767			2,033			9,389
	g) Other expenditure		9,774			13,365			8,541			40,215
	Total expenses		30,759			35,684			29,685			128,377
3	Profit before other income and finance costs (1 - 2)		1,466			2,050			7,837			26,464
4	Other income		670			850			757			2,950
5	Profit before finance costs (3 + 4)		2,136			2,900			8,594			29,414
6	Finance costs		148			170			281			826
7	Profit before tax (5 - 6)		1,988			2,730			8,313			28,588
8	Tax expense		526			1,563			1,888			7,511
9	Net profit for the period / year (7 - 8)		1,462			1,167			6,425			21,077
10	Share of profit of equity accounted investees, net of tax		73			59			49			229
11	Net Profit after taxes and share of profit of associates (9 + 10)		1,535			1,226			6,474			21,306
12	Other comprehensive income		147			(1,408	)		779			(370	)
13	Total comprehensive income		1,682			(182	)		7,253			20,936
14	Paid-up equity share capital (face value Rs. 5/- each)		828			853			853			853
15	Reserves											128,842
16	Earnings per share (in Rupees) per Rs. 5/- share
	- Basic		9.06			7.19			37.99			124.93
	- Diluted		9.03			7.17			37.86			124.54
			(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		6,306		7,461		5,691		28,255
	b) Global Generics		26,459		30,740		32,026		127,671
	c) Proprietary Products		623		645		697		2,659
	d) Others		399		381		312		1,703
	Total		33,787		39,227		38,726		160,288
	Less: Inter segment revenue		1,562		1,493		1,204		5,447
	Add: Other unallocable income		—		—		—		—
	Total income from operations		32,225		37,734		37,522		154,841
2	Segment results:
	Gross profit from each segment
	a) Pharmaceutical Services and Active Ingredients		1,139		1,195		1,341		4,954
	b) Global Generics		16,339		19,435		20,916		84,427
	c) Proprietary Products		525		533		577		2,217
	d) Others		183		121		121		706
	Total		18,186		21,284		22,955		92,304
	Less: Other un-allocable expenditure / (income), net		16,198		18,554		14,642		63,716
	Total profit before tax		1,988		2,730		8,313		28,588

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:

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 under Previous GAAP and Ind AS for the quarter ended 30 June 2015


Particulars	Amounts in Indian Rupees millions
Net profit under previous GAAP		6,122
Impact on account of measuring investments at fair value through profit and loss		200
Recognition of intangible assets not eligible for recognition under Previous GAAP		(4	)
Reversal of goodwill amortised under Previous GAAP		99
Difference in measurement of employee share based payments		22
Impact on current and deferred taxes		52
Others		(17	)
Net profit for the period under Ind AS		6,474

3.	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.

Other expenditure for the quarter and year ended 31 March 2016 includes foreign exchange loss of Rs. 3,845 million and Rs. 4,621 million, respectively, on account of currency devaluation and translation of monetary assets and liabilities using SIMADI / DICOM rate pertaining to the Company’s Venezuelan subsidiary.

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.

6.	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.

7.	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