EX-99.4 13 drr0100_ex99-4.htm EXHIBIT 99.4

 

Exhibit 99.4

  

 

Oval Office, 18, iLabs Centre

Hitech City, Madhapur

Hyderabad - 500 081, India

 

Tel : +91 40 6141 6000

 

Limited Review Report –Standalone Financial Results

 

Review Report to

The Board of Directors

Dr. Reddy’s Laboratories Limited

 

1.We have reviewed the accompanying statement of unaudited standalone Ind AS financial results of Dr. Reddy’s Laboratories Limited (the ‘Company’) for the quarter ended December 31, 2018 and year to date from April 01, 2018 to December 31, 2018 (the “Statement”) attached herewith, being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Regulation’), read with SEBI Circular No. CIR/CFD/FAC/62/2016 dated July 5, 2016 (‘the Circular’).

 

2.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 read with Rule 3 of Companies (Indian Accounting Standards) Rules, 2015, as amended, read with the Circular is the responsibility of the Company's management and has been approved by the Board of Directors of the Company. Our responsibility is to express a conclusion on the Statement based on our review.

 

3.We conducted our review 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 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.

 

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 applicable Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Companies Act, 2013, read with relevant rules issued thereunder and other recognised accounting practices and policies has not disclosed the information required to be disclosed in terms of the Regulation, read with the Circular, including the manner in which it is to be disclosed, or that it contains any material misstatement.

 

For S.R. BATLIBOI & ASSOCIATES LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004

 

per S Balasubrahmanyam

Partner

Membership No.: 053315 

Place: Hyderabad

Date: February 01, 2019

  

 

S.R. Batliboi & Associates LLP, a Limited Liability Partnership with LLP Identity No. AAB-4295

Regd. Office : 22, Camac Street, Block 'B', 3rd Floor, Kolkata-700 016

 

 

 

  

DR. REDDY'S LABORATORIES LIMITED

STATEMENT OF UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2018

 

      All amounts in Indian Rupees millions 
      Quarter ended   Nine months ended   Year ended 
Sl.     31.12.2018   30.09.2018   31.12.2017   31.12.2018   31.12.2017   31.03.2018 
No.  Particulars  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Audited) 
                            
1  Revenue from operations                              
   a) Net sales / income from operations   27,037    25,725    24,873    78,583    67,974    92,468 
   b) License fees and service income   145    436    140    799    286    558 
   c) Other operating income   135    149    217    421    410    567 
   Total revenue from operations   27,317    26,310    25,230    79,803    68,670    93,593 
                                  
2  Other income   928    748    477    1,657    1,309    2,040 
                                  
   Total income (1 + 2)   28,245    27,058    25,707    81,460    69,979    95,633 
                                  
3  Expenses                              
   a) Cost of materials consumed   5,461    4,799    4,968    15,799    14,370    20,110 
   b) Purchase of stock-in-trade   2,575    1,935    1,686    6,321    4,570    6,716 
   c) Changes in inventories of finished goods, work-in-progress and stock-in-trade   (251)   327    (185)   (403)   (127)   (516)
   d) Employee benefits expense   4,719    5,030    4,767    14,419    13,797    18,430 
   e) Depreciation and amortisation expense   1,935    1,908    1,983    5,764    5,841    7,741 
   f) Finance costs   158    158    133    481    487    628 
   g) Selling and other expenses   7,944    8,573    8,639    25,036    26,025    35,554 
                                  
   Total expenses   22,541    22,730    21,991    67,417    64,963    88,663 
                                  
                                  
4  Profit before tax (1 + 2 - 3)   5,704    4,328    3,716    14,043    5,016    6,970 
                                  
5  Tax expense                              
   a) Current tax   434    942    598    2,161    924    1,381 
   b) Deferred tax   1,276    (76)   149    1,137    189    (80)
                                  
6  Net profit for the period / year (4 - 5)   3,994    3,462    2,969    10,745    3,903    5,669 
                                  
7  Other comprehensive income                              
   a) (i) Items that will not be reclassified to profit or loss   4    8    7    13    2    43 
                                  
   (ii) Income tax relating to items that will not be reclassified to profit or loss   -    (3)   -    (3)   -    (16)
                                  
   b) (i) Items that will be reclassified to profit or loss   669    (327)   108    41    76    (133)
                                  
   (ii) Income tax relating to items that will be reclassified to profit or loss   (234)   114    (37)   (14)   (26)   46 
                                  
   Total other comprehensive income   439    (208)   78    37    52    (60)
                                  
8  Total comprehensive income (6 + 7)   4,433    3,254    3,047    10,782    3,955    5,609 
                                  
9  Paid-up equity share capital (face value Rs. 5/- each)   830    830    829    830    829    830 
                                  
10  Other equity                            117,248 
                                  
11  Earnings per equity share (face value Rs. 5/- each)                              
                                  
   Basic   24.08    20.86    17.90    64.75    23.54    34.19 
   Diluted   24.05    20.83    17.87    64.67    23.49    34.12 
        (Not annualised)      (Not annualised)      (Not annualised)      (Not annualised)      (Not annualised)       

 

See accompanying notes to the financial results.

 

 

 

 

Segment information   All amounts in Indian Rupees millions 
      Quarter ended   Nine months ended   Year ended 
Sl.    31.12.2018   30.09.2018   31.12.2017   31.12.2018   31.12.2017   31.03.2018 
No.  Particulars  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Audited) 
   Segment wise revenue and results                              
1  Segment revenue                              
   a) Pharmaceutical Services and Active Ingredients   6,661    6,548    5,605    18,861    16,473    22,741 
   b) Global Generics   21,924    21,294    20,929    65,197    56,082    76,150 
   c) Proprietary Products   27    96    26    154    82    109 
   Total   28,612    27,938    26,560    84,212    72,637    99,000 
                                  
   Less: Inter-segment revenue   1,295    1,628    1,330    4,409    3,967    5,407 
   Total revenue from operations   27,317    26,310    25,230    79,803    68,670    93,593 
                                  
2  Segment results                              
   Profit / (loss) before tax and interest from each segment                              
   a) Pharmaceutical Services and Active Ingredients   1,230    968    56    2,124    (386)   (3)
   b) Global Generics   3,457    6,690    3,828    16,830    8,474    11,956 
   c) Proprietary Products   (395)   (609)   (701)   (1,633)   (2,623)   (3,464)
   Total   4,292    7,049    3,183    17,321    5,465    8,489 
                                  
   Less:   (i) Finance costs   158    158    133    481    487    628 
     (ii) Other un-allocable expenditure / (income), net   (1,570)   2,563    (666)   2,797    (38)   891 
   Total profit before tax   5,704    4,328    3,716    14,043    5,016    6,970 

 

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:

 

1These results have been prepared in accordance with the Ind AS notified under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules 2015 as amended.

 

2Post implementation of Goods and Services Tax (“GST”) in India with effect from 1 July 2017, revenues are disclosed net of GST. Revenues for the period prior to 1 July 2017 included excise duty which is now subsumed in the GST. Accordingly, revenues for the nine months ended 31 December 2017 and year ended 31 March 2018 are not comparable with those of the other periods presented.

 

3The 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 has provided an update to the U.S. FDA on the progress of remediation in January 2016, March 2016, May 2016 and August 2016. The U.S. FDA completed the reinspection of the aforementioned facilities in March and April 2017. The Company has responded to the observations identified by the U.S. FDA. The Company received Establishment Inspection Report ("EIR") from the U.S. FDA for API manufacturing facility at Miryalaguda in June 2017 which indicates that the audit is closed. With regard to the Oncology manufacturing facility at Duvvada and API manufacturing facility at Srikakulam, the Company received EIRs from the U.S. FDA in November 2017 and February 2018, respectively, which indicates that the status remains unchanged. In June 2018, the Company requested the U.S. FDA to schedule an inspection of the oncology formulation manufacturing facility at Duvvada. In October 2018, the re-inspection was completed and the U.S.FDA issued Form 483 with eight observations. The Company responded to these observations identified by U.S. FDA in November 2018 and awaiting to hear from agency. With respect to API manufacturing facility at Srikakulam, the Company was asked to carry out certain detailed investigations and analyses. In response, the Company submitted the results of the investigations and analyses in October 2018. As part of the review of the response by the U.S. FDA, certain additional follow on queries have been received by the Company. The Company responded to all queries in January 2019 to U.S. FDA and awaiting re-inspection by the U.S. FDA.

 

4Ind AS 115, Revenue from Contracts with Customers, mandatory for reporting periods beginning on or after 1 April 2018, replaces existing revenue recognition requirements. Under the modified retrospective approach, there were no significant adjustments required to the retained earnings as at 1 April 2018. Also, the application of Ind AS 115 did not have any significant impact on recognition and measurement of revenue and related items in the financial results of the Company.

 

5During the three months ended 31 December 2018, the Company sold one of its API manufacturing business units located in Jeedimetla, Hyderabad to Therapiva Private Limited.  This sale was done by way of slump sale including all related property, plant and equipment, current assets, current liabilities, and transfer of employees. An amount of Rs. 423 million representing the profit on sale of such business unit was included under the head “other income”.

 

6The 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 1 February 2019.

 

7The results for the quarter and nine months ended 31 December 2018 were subjected to a “Limited review” by the Statutory Auditors of the Company. An unqualified report was issued by them thereon.

 

By order of the Board

For Dr. Reddy's Laboratories Limited

  

Place: Hyderabad   G V Prasad
Date: 1 February 2019   Co-Chairman & Chief Executive Officer