EX-99.4 5 drr0388_ex99-4.htm EXHIBIT 99.4

 

Exhibit 99.4 

 

S.R. Batliboi & Associates LLP

Chartered Accountants

THE SKYVIEW 10

18th Floor,”NORTH LOBBY”

Survey No.83/1,Raidurgam

Hyderbad – 500 032,India

 

Tel :+91 40 6141 6000

 

 

Independent Auditor’s Report on the Quarterly and Year to Date Audited Standalone Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

 

To

The Board of Directors of

Dr. Reddy’s Laboratories Limited

 

Report on the audit of the Standalone Financial Results

 

Opinion

 

We have audited the accompanying statement of quarterly and year to date standalone financial results of Dr. Reddy’s Laboratories Limited (the “Company”) for the quarter and year ended March 31, 2022 (“Statement”), attached herewith, being submitted by the Company pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).

 

In our opinion and to the best of our information and according to the explanations given to us, the Statement:

 

i.is presented in accordance with the requirements of the Listing Regulations in this regard; and
ii.gives a true and fair view in conformity with the applicable accounting standards and other accounting principles generally accepted in India, of the net profit and other comprehensive income and other financial information of the Company for the quarter and year ended March 31, 2022.

 

Basis for Opinion

 

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013, as amended (“the Act”). Our responsibilities under those Standards are further described in the “Auditor’s Responsibilities for the Audit of the Standalone Financial Results” section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion.

 

Management’s Responsibilities for the Standalone Financial Results

 

The Statement has been prepared on the basis of the standalone annual financial statements. The Board of Directors of the Company are responsible for the preparation and presentation of the Statement that gives a true and fair view of the net profit and other comprehensive income of the Company and other financial information in accordance with the applicable accounting standards prescribed under Section 133 of the Act read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

 

 

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

 

In preparing the Statement, the Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

 

The Board of Directors are also responsible for overseeing the Company’s financial reporting process.

 

Auditor’s Responsibilities for the Audit of the Standalone Financial Results

 

Our objectives are to obtain reasonable assurance about whether the Statement as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Statement.

 

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

·

Identify and assess the risks of material misstatement of the Statement, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

·

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

·

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.

·

Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

·

Evaluate the overall presentation, structure and content of the Statement, including the disclosures, and whether the Statement represents the underlying transactions and events in a manner that achieves fair presentation.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

 

   

 

 

S.R. Batliboi & Associates LLP

Chartered Accountants

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

Other Matter

 

The Statement includes the results for the quarter ended March 31, 2022 being the balancing figure between the audited figures in respect of the full financial year ended March 31, 2022 and the published unaudited year-to-date figures up to the third quarter of the current financial year, which were subjected to a limited review by us, as required under the Listing Regulations.

 

For S.R. BATLIBOI & ASSOCIATES LLP  
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
 
per Shankar Srinivasan
Partner
Membership No.: 213271
 
UDIN:  22213271AJFKTD1221
 
Place: Hyderabad
Date: May 19, 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 AUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND YEAR ENDED 31 MARCH 2022

 

               All amounts in Indian Rupees millions 
      Quarter ended   Year ended 
Sl. No.   Particulars  31.03.2022   31.12.2021   31.03.2021   31.03.2022   31.03.2021 
       (Audited)   (Unaudited)   (Audited)   (Audited)   (Audited) 
                         
 1   Revenue from operations                          
     a) Net sales / income from operations    33,829    34,303    32,779    138,864    132,094 
     b) License fees and service income    2,490    335    356    4,289    720 
     c) Other operating income    368    158    372    899    677 
     Total revenue from operations    36,687    34,796    33,507    144,052    133,491 
                               
 2   Other income    1,147    630    816    4,820    8,011 
                               
     Total income (1 + 2)    37,834    35,426    34,323    148,872    141,502 
                               
 3   Expenses                          
     a) Cost of materials consumed    10,149    8,196    8,163    33,784    32,663 
     b) Purchase of stock-in-trade    3,354    4,420    3,266    20,571    12,523 
     c) Changes in inventories of finished   goods, work-in-progress and stock-in-trade   (557)   (566)   208    (3,896)   (3,956)
     d) Employee benefits expense    6,089    6,040    5,456    24,346    22,701 
     e) Depreciation and amortisation expense   2,052    2,054    2,107    8,143    8,350 
     f) Impairment of non current assets    98    -    -    98    150 
     g) Finance costs    127    77    169    380    467 
     h) Selling and other expenses    10,855    10,566    10,385    43,208    38,042 
     Total expenses    32,167    30,787    29,754    126,634    110,940 
                               
 4   Profit  before tax (1 + 2 - 3)    5,667    4,639    4,569    22,238    30,562 
                               
 5   Tax expense                          
     a) Current tax    974    812    788    3,926    5,401 
     b) Deferred tax    496    416    666    2,080    3,297 
                               
 6   Net profit for the period / year (4 - 5)    4,197    3,411    3,115    16,232    21,864 
                               
 7   Other comprehensive income                          
      a)     (i) Items that will not be reclassified to profit or loss   (47)   -    (174)   (45)   (169)
              (ii) Income tax relating to items that  will not be reclassified to profit or loss   17    -    62    17    62 
                               
      b)     (i) Items that will be reclassified to profit or loss   955    201    78    832    994 
                               
             (ii) Income tax relating to items that will be reclassified to  profit or loss   (335)   (69)   (28)   (291)   (346)
                   -           
      Total other comprehensive income    590    132    (62)   513    541 
                               
 8    Total comprehensive income (6 + 7)    4,787    3,543    3,053    16,745    22,405 
                               
 9   Paid-up equity share capital (face value Rs. 5/- each)   832    832    832    832    832 
                               
 10   Other equity                  182,530    169,005 
                               
 11   Earnings per equity share (face value Rs. 5/- each)                         
                               
    

a) Before Extra-ordinary items

                         
             Basic    25.29    20.55    18.78    97.85    131.84 
             Diluted    25.24    20.51    18.73    97.58    131.46 
          (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   Year ended 
Sl. No.   Particulars  31.03.2022   31.12.2021   31.03.2021   31.03.2022   31.03.2021 
       (Audited)   (Unaudited)   (Audited)   (Audited)   (Audited) 
      Segment wise revenue and results                         
 1    Segment revenue                         
      a) Pharmaceutical Services and Active Ingredients   7,932    7,305    8,993    31,718    33,458 
      b) Global Generics   30,255    28,997    26,144    116,999    106,467 
      c) Proprietary Products   199    110    251    1,590    471 
      Total   38,386    36,412    35,388    150,307    140,396 
                               
      Less: Inter-segment revenue   1,699    1,616    1,881    6,255    6,905 
      Total revenue from operations   36,687    34,796    33,507    144,052    133,491 
                               
 2    Segment results                         
      Profit / (loss) before tax and interest from each segment                         
      a) Pharmaceutical Services and Active Ingredients   (322)   (226)   1,227    384    7,486 
      b) Global Generics   5,944    5,312    3,565    21,871    23,928 
      c) Proprietary Products   129    36    44    1,160    (631)
      Total   5,751    5,122    4,836    23,415    30,783 
                               
      Less: (i) Finance costs   127    77    169    380    467 
                (ii) Other un-allocable expenditure / (income), net   (43)   406    98    797    (246)
      Total profit before tax   5,667    4,639    4,569    22,238    30,562 

 

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 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 and 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. The aforesaid transactions pertain to Company’s Global Generics Segment.

 

3In September 2021, the Company completed the sale of its U.S. and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc, for an amount of Rs. 1,084 million is included under the head “License fee and service income” and this pertains to the Company’s Proprietary Products segment.

 

4On 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’).

 

5"Other income" for the year ended 31 March 2021, includes Rs. 4,772 million received from Aurigene Pharmaceutical Services limited (APSL) during the quarter ended 30 June 2020, pursuant to sale of the contract development and manufacturing organisation (CDMO) division of the Custom Pharmaceutical Services (CPS) business of the Company.

 

6The 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 shared the report with respect to one country with the SEC/DOJ during the quarter ended 30 September 2021, and certain other countries in the quarter ended 31 March 2022, and subsequent to the year end. 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 government enforcement actions against the Company in the United States and/or foreign jurisdictions, which can lead to civil and criminal sanctions under relevant laws, the outcomes including liabilities are not reasonably ascertainable at this time.

 

7India’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.

 

 

   

 

 

 

DR. REDDY’S LABORATORIES LIMITED

 

8The Company considered the uncertainties relating to the COVID-19 pandemic and the geopolitical situation in 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.

 

9Balance sheet

 

   All amounts in Indian Rupees millions 
Particulars  As at   As at 
    31.03.2022    31.03.2021 
    (Audited)    (Audited) 
ASSETS          
 Non-current assets          
 Property, plant and equipment   40,240    35,792 
 Capital work-in-progress   11,864    8,771 
 Goodwill   853    853 
 Other intangible assets   20,412    21,798 
 Intangible assets under development   139    237 
 Financial assets          
 Investments   30,243    33,922 
 Trade receivables   54    118 
 Loans   12    12 
 Other financial assets   2,514    492 
 Deferred tax assets, net   194    2,548 
 Tax assets, net   3,115    2,151 
 Other non-current assets   480    160 
 Total non-current assets   110,120    106,854 
           
 Current assets          
 Inventories   33,478    28,197 
 Financial assets          
 Investments   19,124    12,570 
 Trade receivables   49,454    40,800 
 Derivative financial instruments   1,903    915 
 Cash and cash equivalents   11,595    13,063 
 Other bank balances   8,710    3,402 
 Other financial assets   565    529 
 Other current assets   9,981    9,966 
 Total current assets before assets held for sale   134,810    109,442 
 Assets held for sale   26    - 
 Total current assets   134,836    109,442 
           
 TOTAL ASSETS   244,956    216,296 
           
 EQUITY AND LIABILITIES          
 Equity          
 Equity share capital   832    832 
 Other equity   182,530    169,005 
 Total Equity   183,362    169,837 
           
 Liabilities          
 Non-current liabilities          
 Financial liabilities          
 Lease liabilities   197    177 
 Provisions   104    251 
 Other non-current liabilities   842    428 
 Total non-current liabilities   1,143    856 
           
 Current liabilities          
 Financial liabilities          
 Borrowings   21,711    11,809 
 Lease liabilities   146    159 
 Trade payables          
           Total outstanding dues of micro enterprises and small enterprises   120    152 
           Total outstanding dues of creditors other than micro enterprises and small enterprises   16,542    13,212 
 Derivative financial instruments   472    306 
 Other financial liabilities   12,153    12,010 
 Provisions   3,222    2,987 
 Other current liabilities   6,085    4,968 
 Total current liabilities   60,451    45,603 
           
 TOTAL EQUITY AND LIABILITIES   244,956    216,296 

 

  

   

 

 

 

DR. REDDY’S LABORATORIES LIMITED

 

10Statement of cashflows

 

   All amounts in Indian Rupees millions 
Particulars  Year ended   Year ended 
     31.03.2022     31.03.2021 
     (Audited)     (Audited) 
Cash flows from/(used in) operating activities          
Profit before taxation   22,238    30,562 
Adjustments for:          
Fair value changes and profit on sale of financial instruments measured at FVTPL**, net   (233)   (510)
Depreciation and amortisation expense   8,143    8,350 
Impairment of non-current assets   98    150 
Allowance for credit losses (on trade receivables and other advances)   65    69 
Loss/(Profit) on sale/disposal of property , plant and equipment and other intangible assets, net   78    (4,711)
Foreign exchange loss / (gain), net   (1,623)   (443)
Interest income   (1,669)   (1,223)
Finance costs   380    467 
Equity settled share-based payment expense   592    584 
Dividend income   -    -*
Changes in operating assets and liabilities:          
Trade receivables   (8,655)   7,137 
Inventories   (5,281)   (5,827)
Trade payables   3,298    2,680 
Other assets and other liabilities, net   844    2,337 
Cash generated from operations   18,275    39,622 
Income taxes paid, net   (4,888)   (4,480)
Net cash generated from operating activities   13,387    35,142 
           
Cash flows from/(used in) investing activities          
Expenditures on property, plant and equipment   (13,113)   (8,575)
Proceeds from sale of property, plant and equipment   94    4,900 
Expenditures on other intangible assets   (543)   (2,364)
Payment for acquisition of business   -    (15,514)
Proceeds from redemption of preference shares   16,878    - 
Purchase of investments   (91,118)   (69,520)
Proceeds from sale of investments   65,848    74,861 
Dividends received   -    -*
Interest income received   1,574    1,632 
Net cash used in investing activities   (20,380)   (14,580)
           
Cash flows from/(used in) financing activities          
Proceeds from issuance of equity shares (including treasury shares)   334    269 
Proceeds from short-term loans and borrowings, net   9,683    1,527 
Repayment of long-term loans and borrowings   -    (3,743)
Payment of principal portion of lease liabilities   (172)   (38)
Dividend paid   (4,146)   (4,147)
Purchases of treasury shares   -    (1,193)
Interest paid   (644)   (618)
Net cash from/(used in) financing activities   5,055    (7,943)
           
Net increase / (decrease) in cash and cash equivalents   (1,938)   12,619 
Effect of exchange rate changes on cash and cash equivalents   479    44 
Cash and cash equivalents at the beginning of the year (1)   13,054    391 
Cash and cash equivalents at the end of the year(2)   11,595    13,054 

 

*Rounded off to million.
**FVTPL (fair value through profit or loss)
(1)Adjusted for bank overdraft of Rs.9 million and Rs. 1 million for the years ended 31 March 2022 and year ended 31 March 2021 respectively.

(2)Adjusted for bank overdraft of Rs. Nil and Rs. 9 million for the years ended 31 March 2022 and year ended 31 March 2021 respectively.

 

11The audited results were reviewed by the Audit Committee of the Board on 18 May 2022 and approved by the Board of Directors of the Company at their meeting held on 19 May 2022.

 

12The Board of Directors, at their meeting held on 19 May 2022, have recommended a final dividend of Rs. 30 per share subject to the approval of shareholders.

 

13The figures of the fourth quarter are the balancing figures between audited figures in respect of the full financial year and published year to date figures upto the third quarter of the relevant financial year. Also the figures upto the end of third quarter were only reviewed and not subjected to audit.

 

14The results for the quarter and year ended 31 March 2022 periods presented have been audited 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: 19 May 2022 Co-Chairman & Managing Director