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Published: 2023-01-25 14:48:40 ET
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EX-99.3 4 drr0456_ex99-3.htm EXHIBIT 99.3

Exhibit 99.3

 

S.R. Batliboi & Associates LLP
Chartered Accountants

THE SKYVIEW 10

18th Floor, "NORTH LOBBY"

Survey No. 83/1, Raidurgam
Hyderabad – 500 032, India

 

Tel: +91 40 6141 6000

 

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

 

Review Report to

The Board of Directors

Dr. Reddy’s Laboratories Limited

 

1.We have reviewed the accompanying Statement of Unaudited Consolidated Financial Results of Dr. Reddy’s Laboratories Limited (the “Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”), and its joint ventures for the quarter and nine month period ended December 31, 2022 (the “Statement”) attached herewith, being submitted by the Holding Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).

 

2.The Holding Company’s Management is responsible for 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 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. The Statement has been approved by the Holding Company’s Board of Directors . Our responsibility is to express a conclusion on the Statement based on our review.

 

3.We conducted our review of the Statement 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 of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We also performed procedures in accordance with the Circular No. CIR/CFD/CMD1/44/2019 dated March 29, 2019 issued by the Securities and Exchange Board of India under Regulation 33(8) of the Listing Regulations, to the extent applicable.

 

4.The Statement includes the results of the following entities:

 
S.No   Name of the Company
     
Subsidiaries    
1   Aurigene Oncology Limited (Formerly, Aurigene Discovery Technologies Limited)
2   Cheminor Investments Limited
3   Dr. Reddy’s Bio-Sciences Limited
4   Dr. Reddy’s Formulations Limited
5   Dr. Reddy’s Farmaceutica Do Brasil Ltda.
6   Dr. Reddy's Laboratories SA
7   Idea2Enterprises (India) Private Limited
8   Imperial Credit Private Limited
9   Industrias Quimicas Falcon de Mexico, S.A.de C.V.
10   Svaas Wellness Limited (Formerly known as Regkinetics Services Limited)
11   Aurigene Discovery Technologies (Malaysia) Sdn. Bhd.
12   Aurigene Pharmaceutical Services Limited
13   beta Institut gemeinnützige GmbH

 

 

 

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

 

14   betapharm Arzneimittel GmbH
15   Chirotech Technology Limited
16   DRL Impex Limited
17   Dr. Reddy’s Laboratories (Australia) Pty. Limited
18   Dr. Reddy’s (Beijing) Pharmaceutical Co. Limited
19   Dr. Reddy’s Laboratories Canada, Inc.
20   Dr. Reddy's Laboratories Chile SPA.
21   Dr. Reddy’s Laboratories (EU) Limited
22   Dr. Reddy’s Laboratories Inc.
23   Dr. Reddy's Laboratories Japan KK
24   Dr. Reddy’s Laboratories Kazakhstan LLP
25   Dr. Reddy’s Laboratories LLC, Ukraine
26   Dr. Reddy's Laboratories Louisiana LLC
27   Dr. Reddy’s Laboratories Malaysia Sdn. Bhd.
28   Dr. Reddy’s Laboratories New York, LLC
29   Dr. Reddy's Laboratories Philippines Inc.
30   Dr. Reddy’s Laboratories (Proprietary) Limited
31   Dr. Reddy's Laboratories Romania S.R.L.
32   Dr. Reddy's Laboratories SAS
33   Dr. Reddy's Laboratories Taiwan Limited
34   Dr. Reddy's Laboratories (Thailand) Limited
35   Dr. Reddy’s Laboratories (UK) Limited
36   Dr. Reddy’s New Zealand Limited
37   Dr. Reddy's Research and Development B.V.
38   Dr. Reddy’s Srl
39   Dr. Reddy's Venezuela, C.A.
40   Lacock Holdings Limited
41   Dr. Reddy’s Laboratories LLC, Russia
42   Promius Pharma LLC
43   Reddy Holding GmbH
44   Reddy Netherlands B.V.
45   Reddy Pharma Iberia SAU
46   Reddy Pharma Italia S.R.L
47   Reddy Pharma SAS
48   Nimbus Health GmbH
     
Joint ventures    
1   DRES Energy Private Limited
2   Kunshan Rotam Reddy Pharmaceutical Company Limited
     
Other consolidating entities    
1   Cheminor Employees Welfare Trust
2   Dr. Reddy's Research Foundation

 

 

 

 

 

5.Based on our review conducted and procedures performed as stated in paragraph 3 above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with recognition and measurement principles laid down in the aforesaid Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Companies Act, 2013, as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.

 

/s/ Shankar Srinivasan
per Shankar Srinivasan
Partner
Membership No.: 213271
 
UDIN: 23213271BGSEFB8138
 

Place: Hyderabad

Date: January 25, 2023

 

 

 

 

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 UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2022

 

               All amounts in Indian Rupees millions 
      Quarter ended   Nine months ended   Year ended 
Sl. .     31.12.2022   30.09.2022   31.12.2021   31.12.2022   31.12.2021   31.03.2022 
No.   Particulars  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
 1   Revenue from operations                              
     a) Net sales/income from operations   66,353    61,632    51,031    1,76,165    1,54,460    2,05,144 
     b) License fees and service income   1,346    1,425    2,166    6,745    5,563    9,247 
     c) Other operating income   199    261    186    635    680    1,061 
     Total revenue from operations   67,898    63,318    53,383    1,83,545    1,60,703    2,15,452 
 2   Other income   587    408    558    9,170    3,692    4,844 
 3   Total income (1 + 2)   68,485    63,726    53,941    1,92,715    1,64,395    2,20,296 
 4   Expenses                              
     a) Cost of materials consumed   12,891    6,688    7,605    31,470    26,976    43,124 
     b) Purchase of stock-in-trade   9,160    8,089    10,819    26,004    30,868    34,837 
     c) Changes in inventories of finished goods, work-in-progress      and stock-in-trade   (2,037)   3,693    (277)   123    (2,400)   (3,539)
     d) Employee benefits expense   11,732    11,517    9,563    33,706    29,132    38,858 
     e) Depreciation and amortisation expense   3,237    3,092    2,942    9,347    8,722    11,652 
     f) Impairment of non-current assets   134    25    47    159    1,885    9,304 
     g) Finance costs   418    309    216    1,074    643    958 
     h) Selling and other expenses   16,633    14,317    13,469    43,933    41,142    55,191 
     Total expenses   52,168    47,730    44,384    1,45,816    1,36,968    1,90,385 
 5   Profit before tax and before share of equity  accounted investees(3 - 4)   16,317    15,996    9,557    46,899    27,427    29,911 
 6   Share of profit of equity accounted investees, net of tax   60    140    185    294    598    703 
 7   Profit before tax (5+6)   16,377    16,136    9,742    47,193    28,025    30,614 
 8   Tax expense/(benefit):                              
     a) Current tax   3,096    3,674    1,914    3,865    4,949    11,013 
     b) Deferred tax   842    1,320    735    7,857    2,221    (2,224)
 9   Net profit after taxes and share of profit of associates (7 - 8)   12,439    11,142    7,093    35,471    20,855    21,825 
 10   Other comprehensive income                              
     a) (i) Items that will not be reclassified subsequently to profit or loss   (69)   (112)   (1,243)   (743)   (2,587)   (3,568)
     (ii) Income tax relating to items that will not be reclassified      to profit or loss   (31)   -    -    (31)   293    305 
     b) (i) Items that will be reclassified subsequently to profit or loss   2,404    (189)   62    (920)   (143)   653 
     (ii) Income tax relating to items that will be reclassified      to profit or loss   (600)   (320)   (57)   648    39    (288)
     Total other comprehensive income   1,704    (621)   (1,238)   (1,046)   (2,398)   (2,898)
 11   Total comprehensive income (9 + 10)   14,143    10,521    5,855    34,425    18,457    18,927 
 12   Paid-up equity share capital (face value Rs. 5/- each)   833    832    832    833    832    832 
 13   Other equity                            1,91,292 
 14   Earnings per equity share (face value Rs. 5/- each)                              
     Basic   74.91    67.13    42.75    213.68    125.74    131.57 
     Diluted   74.76    66.98    42.65    213.23    125.43    131.21 
         (Not annualised)    (Not annualised)    (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   Nine months ended   Year ended 
Sl.     31.12.2022   30.09.2022   31.12.2021   31.12.2022   31.12.2021   31.03.2022 
No.  Particulars  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Audited) 
   Segment wise revenue and results:                              
1  Segment revenue :                              
   a) Pharmaceutical Services and Active Ingredients   10,304    8,230    9,016    26,797    28,183    37,499 
   b) Global Generics   59,276    56,009    44,565    1,59,656    1,33,288    1,79,647 
   c) Others   702    755    1,418    2,195    3,788    4,561 
   Total   70,282    64,994    54,999    1,88,648    1,65,259    2,21,707 
   Less: Inter-segment revenue   2,384    1,676    1,616    5,103    4,556    6,255 
   Total revenue from operations   67,898    63,318    53,383    1,83,545    1,60,703    2,15,452 
                                  
2  Segment results:                              
   Gross profit from each segment                              
   a) Pharmaceutical Services and Active Ingredients   1,413    235    1,641    2,763    5,444    6,834 
   b) Global Generics   38,254    36,568    25,732    99,221    76,440    1,03,270 
   c) Others   430    447    1,243    1,374    3,223    3,749 
   Total   40,097    37,250    28,616    1,03,358    85,107    1,13,853 
   Less: Selling and other un-allocable expenditure/(income), net   23,721    21,114    18,874    56,166    57,082    83,239 
   Total profit before tax   16,377    16,136    9,742    47,193    28,025    30,614 

 

Global Generics includes operations of Biologics business. Inter-segment revenue represents sales 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 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.

 

2During the quarter and nine month ended 31 December 2022, an amount of Rs. 435 million and Rs. 2,806 million respectively representing government grants has been accounted for as a reduction from cost of material consumed.

 

3Included in “Selling and other expenses” for the quarter ended 31 December 2022, is an amount of Rs. 991 million representing the Loss on sale of Assets, pursuant to agreement dated 16 December 2022 with Delpharm Development Leiden B.V (Delpharm) for transfer of its certain assets, liabilities and employees at its site at Leiden, Netherlands.This transaction pertains to Company’s Global Generics segment.

 

4On 23 June 2022, the Company entered into a Settlement Agreement with Indivior Inc., Indivior UK Limited and Aquestive Therapeutics, Inc. Pursuant to the agreement, the Company will receive payments totaling U.S.$ 72 million by 31 March 2024. The said agreement resolves all claims between the parties relating to the Company’s generic buprenorphine and naloxone sublingual film including Indivior’s and Aquestive’s patent infringement allegations and the Company’s antitrust counterclaims. On 28 June 2022 the U.S. Court dismissed all claims and counterclaims pending in the case with prejudice, pursuant to a joint stipulation of dismissal filed by the parties. The Company recognised the present value of the amount receivable at Rs.5,638 million (U.S.$ 71.39 million discounted to present value) on the date of the settlement as ‘Other income’ in the consolidated financial results of the Company. The aforesaid transaction pertain to Company’s Global Generics segment.

 

5As the revenues and gross profits of the Proprietary Products segment are considerably lower than the quantitative thresholds mentioned in IND AS 108, “Operating Segments”, the Company believes that Proprietary Products segment no longer qualifies to be a reportable segment and consequently, effective 1 April 2022, the Company included the financial information relating to Proprietary Products Segment in “Others”. The corresponding information relating to Proprietary Products segment for earlier periods has been restated to reflect the aforementioned change.

 

6During the quarter ended 30 June 2022, pursuant to a change in the U.S. Income tax regulations relating to the timing of recognition of certain sales based accruals, the Company recognised a reduction in current tax liability of Rs. 4,768 million with a corresponding increase in the deferred tax liability.

 

7License fee and service income for the 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;

c) Rs. 1,084 million towards sale of its U.S. and Canada territory rights for ELYXYBTM (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc. The aforesaid transactions pertain to Company’s Global Generics and Others segment.

 

8During the year ended 31 March 2022, there were significant changes to the market conditions for certain of the products forming part of Company’s Global Generics and Others segment. The changes include, decrease in the market potential of products, and increased competition leading to lower volumes and revenues not being in line with projections.  Due to these adverse market developments, the Company recorded an impairment loss of Rs. 9,304 million on various non-current assets.  The said impairment loss includes:

 

   

 

 

a) Rs. 4,337 million relating to PPC-06 (Tepilamide Fumarate Extended Release Tablets) intangible assets under development;

b) Rs. 2,955 million pertaining to Shreveport Cash Generating Unit (“CGU”) comprising of Property, plant and equipment and Goodwill;

c) Rs. 174 million relating to other intang©ble assets.

 

 

 

 

 

 

DR. REDDY'S LABORATORIES LIMITED

9On 14 June 2021, the Company received the arbitration decision and award in favour of Hatchtech Pty Limited regarding the Civil Litigation and Arbitration relating to the acquisition of the product Xeglyze®.  The award required the Company to pay an amount of Rs. 3,401 million (U.S.$ 46.25 million) towards milestone payments, interest, and fees. As the Company was carrying only Rs. 1,471 million (U.S.$ 20 million) as the provision towards this litigation, an additional expense of Rs. 1,930 million (U.S.$ 26.25 million) [Rs. 1,838 million (U.S.$ 25 million) as “Impairment of non-current assets” and Rs. 92 million (U.S.$ 1.25 million) as “selling and other expenses”] was recognised during the nine months ended 31 December 2021. The said expense forms part of the Company’s Others segment.

 

10The Company has considered the impact of recent tax regulations and developments, including updates to its estimate on the impact of adoption of the Taxation Laws (Amendment) Act 2019, in determining its “Tax expense/(benefit)” for the quarter and nine months ended 31 December 2022.

 

11The 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 made presentations to the SEC and the DOJ in relation to the investigation with respect to certain countries during the current and previous fiscal year. The Company also made a presentation to the SEC and the DOJ in relation to its Global Compliance Framework, including the ongoing enhancement initiatives, during the nine months ended 31 December 2022. 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 or regulatory 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.

 

12The Company considered the uncertainties relating to the 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.

 

13The 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 25 January 2023.

 

14The results for the quarter and nine months ended 31 December 2022 were subject to a “Limited Review” by the Statutory Auditors of the Company. An unqualified report has been issued by them thereon.

 

 

Place: Hyderabad

Date: 25 January 2023

 

By order of the Board

For Dr. Reddy's Laboratories Limited

 

G V Prasad

Co-Chairman & Managing Director