EX-99.3 4 drr0598_ex99-3.htm EXHIBIT 99.3

 

Exhibit 99.3

 

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

Audited consolidated financial results of Dr. Reddy's Laboratories Limited and its subsidiaries for the quarter and year ended 31 March 2024 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   Year ended 
       31.03.2024   31.12.2023   31.03.2023   31.03.2024   31.03.2023 
Sl. No.   Particulars  (Audited)   (Unaudited)   (Audited)   (Audited)   (Audited) 
 1   Revenues   70,830    72,148    62,968    279,164    245,879 
 2   Cost of revenues   29,347    29,945    26,971    115,557    106,536 
 3   Gross profit (1 - 2)   41,483    42,203    35,997    163,607    139,343 
 4   Selling, general and administrative expenses   20,476    20,228    17,992    77,201    68,026 
 5   Research and development expenses   6,877    5,565    5,366    22,873    19,381 
 6   Impairment of non-current assets, net   (173)   110    540    3    699 
 7   Other income, net   (656)   (967)   (281)   (4,199)   (5,907)
     Total operating expenses   26,524    24,936    23,617    95,878    82,199 
 8   Results from operating activities [(3) - (4 + 5 + 6 + 7)]   14,959    17,267    12,380    67,729    57,144 
     Finance income   1,615    1,357    1,153    5,705    4,281 
     Finance expense   (593)   (394)   (354)   (1,711)   (1,428)
 9   Finance income, net   1,022    963    799    3,994    2,853 
 10   Share of profit of equity accounted investees, net of tax   35    27    76    147    370 
 11   Profit before tax (8 + 9 + 10)   16,016    18,257    13,255    71,870    60,367 
 12   Tax expense, net   2,946    4,468    3,663    16,186    15,300 
 13   Profit for the period/year (11 -12)   13,070    13,789    9,592    55,684    45,067 
 14   Earnings per share:                         
     Basic earnings per share of Rs.5/- each   78.49    82.81    57.74    334.65    271.43 
     Diluted earnings per share of Rs.5/- each   78.35    82.68    57.62    334.02    270.85 
         (Not annualised)    (Not annualised)    (Not annualised)           

 

 

 

 

 

 

Segment information  All amounts in Indian Rupees millions 
       Quarter ended   Year ended 
      31.03.2024   31.12.2023   31.03.2023   31.03.2024   31.03.2023 
Sl. No.  Particulars  (Audited)   (Unaudited)   (Audited)   (Audited)   (Audited) 
    Segment wise revenue and results:                         
 1   Segment revenue:                         
     a) Pharmaceutical Services and Active Ingredients   11,526    10,390    10,261    40,580    36,646 
     b) Global Generics   61,191    63,095    54,257    245,453    213,768 
     c) Others   1,420    1,214    924    3,910    3,042 
     Total   74,137    74,699    65,442    289,943    253,456 
     Less: Inter-segment revenues   3,307    2,551    2,474    10,779    7,577 
     Total Revenues   70,830    72,148    62,968    279,164    245,879 
                               
 2   Segment results:                         
     Gross profit from each segment                         
     a) Pharmaceutical Services and Active Ingredients   2,350    2,306    1,963    6,919    4,715 
     b) Global Generics   37,933    39,075    33,498    154,268    132,719 
     c) Others   1,200    822    536    2,420    1,909 
     Total   41,483    42,203    35,997    163,607    139,343 
     Less: Selling and other un-allocable expenditure, net of other income   25,467    23,946    22,742    91,737    78,976 
     Total profit before tax   16,016    18,257    13,255    71,870    60,367 

 

Global Generics segment includes operations of Biologics business. Inter-segment revenues represent sale from Pharmaceutical Services and Active Ingredients to Global Generics and Others at cost.

 

Segmental capital employed

 

As certain assets of the Company including manufacturing facilities, development facilities, 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:

 

1The above statement of financial results of Dr.Reddy's Laboratories Limited ("the Company"), which have been prepared in accordance with recognition and measurement principles as issued by the International Accounting Standards Board (IASB) and were reviewed and recommended by Audit Committee and approved by the Board of Directors at their meetings held on 07 May 2024. The Independent Auditors have issued an unqualified report thereon.

 

2Revenues for the year ended 31 March 2023 includes :
a) Rs. 2,640 million from sale of certain non-core dermatology brands to Eris Lifesciences Limited for the quarter ended 31 March 2023;
b) Rs. 1,399 million from sale of brands Styptovit-E, Finast, Finast-T and Dynapres to Torrent Pharmaceuticals Limited;
c) Rs. 902 million from sale of brands Z&D, Pedicloryl, Pecef and Ezinapi to J B Chemicals and Pharmaceuticals Limited.
The amounts recognised above are adjusted for expected sales returns. These transactions pertain to Company’s Global Generics segment.

 

3During the quarter and year ended 31 March 2024, an amount of Rs. 810 million and Rs. 4,232 million respectively, and during the quarter and year ended 31 March 2023, an amount of Rs. 305 million and Rs. 3,111 million, respectively, representing government grants has been accounted for as a reduction from cost of revenues.

 

4"Impairment of non-current assets, net" for the year ended 31 March 2024 primarily includes:
a. Reversal of impairment loss of Rs. 226 million in March 2024, with respect to saxagliptin/metformin (generic version of Kombiglyze® - XR) and enalaprilat (generic version of Vasotec®) pursuant to launch of these two products during the year.
The Company re-assessed the recoverable amount pursuant to favorable market conditions and change in circumstances that led to initial impairment during year ended 31 March 2021 by revisiting the market volumes, share and price assumptions of these two products and accordingly, capitalized under product related intangibles with corresponding reversal of impairment loss of Rs. 191 million and Rs. 35 million respectively. This impairment loss pertains to the Company’s Global Generics segment
b. Consequent to adverse market conditions with respect to certain products related intangibles and software platforms, the Company assessed the recoverable amount of certain products and recognized impairment loss of Rs. 86 million and Rs. 99 million pertaining to products and software platforms forming part of the Company’s Global Generics and Others segment, respectively.

 

5During the quarter ended 31 March 2023, Company considered a total impairment of Rs. 540 million towards:
a. The Company assessed performance of business acquired from Nimbus Health GmbH against the initial estimates and performance of the products. Basis the assessment, the Company had recorded an impairment charge of the carrying values amounting to Rs. 375 million (Goodwill- Rs. 272 million and Other intangibles- Rs. 103 million). The said impairment charge pertains to the Company’s Global Generics segment.
b. Consequent to adverse market conditions with respect to certain of the Company’s products related intangibles forming part of the Company’s Global Generics and Pharmaceutical Services and Active Ingredients segments, the Company assessed the recoverable amount of these products and recognised an amount of Rs. 165 million as impairment charge during the quarter ended 31 March 2023.

 

6“Other income, net” for the year ended 31 March 2024 includes:
a. Rs. 540 million recognised, in April 2023, pursuant to settlement agreement with Janssen Group in settlement of the claim brought in the Federal Court of Canada by the Company and its affiliates for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of Zytiga®(Abiraterone).
b. Rs. 984 million recognised pursuant to settlement of product related litigation by the Company and its affiliates in the United Kingdom.
These transactions pertains to the Company's Global Generics segment.

 

7“Other income, net” for the year ended 31 March 2023 includes:
a. Rs. 991 million representing the loss on sale of assets recognised in December 2022, pursuant to agreement dated 16 December 2022 with Delpharm Development Leiden B.V (Delpharm) for transfer of certain assets, liabilities and employees at its site at Leiden, Netherlands.This transaction pertains to Company’s Global Generics segment.
b. Rs. 5,638 million (U.S.$71.39 million discounted to present value) recognised in June 2022 towards the settlement of an ongoing litigation relating to launch of a product with Indivior Inc., Indivior UK Limited and Aquestive Therapeutics, Inc.

 

 

 

 

 

 

8The Company considered the uncertainties relating to the escalation of conflict in the middle east, and duration of 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.

 

9The 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 06 July 2021, the Company received a subpoena from the SEC for the production of related documents, which were provided to the SEC.

 

During the previous years, the Company made presentations to the SEC and the DOJ in relation to the investigation in the aforementioned countries, and in relation to its Global Compliance Framework, which includes enhancement initiatives undertaken by the Company. The Company continues to respond to the requests made by the SEC and the DOJ and 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 or regulatory enforcement actions against the Company in the United States and/or foreign jurisdictions and can also lead to civil and criminal sanctions under relevant laws, the outcomes, including liabilities, are not reasonably ascertainable at this time.

 

10Consolidated statements of financial position

 

All amounts in Indian Rupees millions 
   As at   As at 
   31.03.2024   31.03.2023 
Particulars  (Audited)   (Audited) 
ASSETS          
Current assets          
Cash and cash equivalents   7,107    5,779 
Other investments   74,363    56,018 
Trade and other receivables   80,298    72,485 
Inventories   63,552    48,670 
Derivative financial instruments   169    1,232 
Other current assets   22,560    20,069 
Total current assets   248,049    204,253 
Non-current assets          
Property, plant and equipment   76,886    66,462 
Goodwill   4,253    4,245 
Other intangible assets   36,951    30,849 
Investment in equity accounted investees   4,196    4,702 
Other investments   1,059    660 
Deferred tax assets   10,774    7,196 
Tax assets   3,718    2,687 
Other non-current assets   1,632    800 
Total non-current assets   139,469    117,601 
Total assets   387,518    321,854 
           
LIABILITIES AND EQUITY          
Current liabilities          
Trade and other payables   30,919    26,444 
Short-term borrowings   12,723    7,390 
Long-term borrowings, current portion   1,307    4,804 
Provisions   5,383    5,454 
Tax liabilities   2,342    2,144 
Derivative financial instruments   468    137 
Other current liabilities   42,897    39,472 
Total current liabilities   96,039    85,845 
Non-current liabilities          
Long-term borrowings   5,990    1,278 
Deferred tax liabilities   909    833 
Provisions   61    59 
Other non-current liabilities   3,969    2,848 
Total non-current liabilities   10,929    5,018 
Total liabilities   106,968    90,863 
Equity          
Share capital   834    833 
Treasury shares   (991)   (1,269)
Share premium   10,765    9,688 
Share based payment reserve   1,508    1,652 
Capital redemption reserve   173    173 
Debenture redemption reserve   -    380 
Special economic zone re-investment reserve   653    886 
Retained earnings   265,257    215,593 
Other components of equity   2,351    3,055 
Total equity   280,550    230,991 
Total liabilities and equity        387,518    321,854 

 

 

 

 

 

 

 

  11 Consolidated statements of cash flows

 

All amounts in Indian Rupees millions
   Year ended 
   31.03.2024   31.03.2023 
Particulars  (Audited)   (Audited) 
Cash flows from/(used in) operating activities :               
Profit for the year   55,684    45,067 
Adjustments for:          
Tax expense, net   16,186    15,300 
Fair value changes and profit on sale of financial instruments measured at FVTPL**, net   (3,149)   (876)
Depreciation and amortization   14,841    12,636 
Impairment of non-current assets, net   3    699 
Allowance for credit losses (on trade receivables and other advances)   275    205 
(Gain)/loss on sale or de-recognition of non-current assets, net   (900)   208 
Share of profit of equity accounted investees   (147)   (370)
Unrealized exchange (gain)/loss, net   (534)   (939)
Interest (income)/expense, net   (567)   248 
Inventories write-down   3,563    4,869 
Equity settled share-based payment expense   407    397 
Dividend income   -*   -*
Changes in operating assets and liabilities:          
Trade and other receivables   (8,054)   (5,752)
Inventories   (18,445)   (2,654)
Trade and other payables   3,460    23 
Other assets and other liabilities, net   2,857    528 
Cash generated from operations   65,480    69,589 
Income tax paid, net   (20,047)   (10,714)
Net cash generated from operating activities   45,433    58,875 
Cash flows from/(used in) investing activities :          
Purchase of property, plant and equipment   (16,403)   (11,323)
Proceeds from sale of property, plant and equipment   1,064    82 
Purchase of other intangible assets   (11,032)   (7,543)
Proceeds from sale of other intangible assets   21    - 
Investment in associates   (12)   - 
Purchase of other investments (incuding bank deposits)   (145,488)   (136,171)
Proceeds from sale of other investments (incuding bank deposits)   129,784    112,805 
Dividend received from equity accounted investees   445    - 
Interest and dividend received   1,338    777 
Net cash used in investing activities   (40,283)   (41,373)
Cash flows from/(used in) financing activities :          
Proceeds from issuance of equity shares (including treasury shares)   805    157 
Proceeds from sale of treasury shares   -    211 
Proceeds from/(Repayment of) short-term loans and borrowings, net   5,493    (19,382)
Proceeds from long-term borrowings   3,800    - 
Repayment of long-term borrowings   (3,800)   - 
Payment of principal portion of lease liabilities   (1,147)   (1,015)
Dividend paid   (6,648)   (4,979)
Interest paid   (2,266)   (1,853)
Net cash used in financing activities   (3,763)   (26,861)
Net increase/(decrease) in cash and cash equivalents   1,387    (9,359)
Effect of exchange rate changes on cash and cash equivalents   (59)   286 
Cash and cash equivalents at the beginning of the year   5,779    14,852 
Cash and cash equivalents at the end of the year        7,107    5,779 

*Rounded off to million.
**FVTPL (fair value through profit or loss)

 

  12

The Board of Directors, at their meeting held on 07 May 2024, have recommended a final dividend of Rs.40 per share subject to approval of shareholders.

 

  13 The figures of the fourth quarter are the balancing figures between audited figures in respect of the full financial year and the 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. Previous period figures have been regrouped/rearranged, wherever necessary.

 

  By order of the Board
  For Dr. Reddy's Laboratories Limited
   
Place: Hyderabad G V Prasad
Date:  07 May 2024 Co-Chairman & Managing Director