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Published: 2021-01-29 08:09:18 ET
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EX-99.4 5 drr0281_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

Hyderabad - 500 032, India

Tel : +91 40 6141 6000

 

Independent Auditor’s Review Report on the Quarterly and Year to Date Unaudited Standalone 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 standalone financial results of Dr. Reddy’s Laboratories Limited (the “Company”) for the quarter ended December 31, 2020 and year to date from April 01, 2020 to December 31, 2020 (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, as amended (the “Listing Regulations”).

 

2.This Statement, which is the responsibility of the Company’s Management and approved by the Company’s Board of Directors, has been prepared 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. 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.

 

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 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.

 

For S.R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants

ICAI Firm registration number: 101049W/E300004

 

per Navneet Rai Kabra

Partner

Membership No.: 102328

 

UDIN: 21102328AAAAAV6613

 

Place: Hyderabad

Date: January 29, 2021

 

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 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 STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2020

 

      All amounts in Indian Rupees millions 
Sl.     Quarter ended   Nine months ended   Year ended 
No.  Particulars  31.12.2020   30.09.2020   31.12.2019   31.12.2020   31.12.2019   31.03.2020 
      (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Audited) 
                            
1  Revenue from operations                              
   a) Net sales / income from operations   33,818    33,233    29,864    99,315    81,730    109,925 
   b) License fees and service income   157    103    458    364    7,921    8,105 
   c) Other operating income   107    122    118    305    336    474 
   Total revenue from operations   34,082    33,458    30,440    99,984    89,987    118,504 
                                  
2  Other income   628    266    693    7,195    6,158    7,432 
                                  
   Total income (1 + 2)   34,710    33,724    31,133    107,179    96,145    125,936 
                                  
3  Expenses                              
   a) Cost of materials consumed   8,453    8,165    6,730    24,500    19,022    25,565 
   b) Purchase of stock-in-trade   3,211    3,043    3,461    9,257    8,911    11,172 
   c) Changes in inventories of finished goods, work-in-progress and stock-in-trade   (877)   (1,358)   (1,001)   (4,164)   (1,671)   (999)
   d) Employee benefits expense   5,715    6,080    5,112    17,245    15,136    20,302 
   e) Depreciation and amortisation expense   2,124    2,142    1,958    6,243    5,969    7,892 
   f) Finance costs   65    93    117    298    360    478 
   g) Selling and other expenses   9,840    9,362    8,581    27,807    25,101    33,768 
                                  
   Total expenses   28,531    27,527    24,958    81,186    72,828    98,178 
                                  
4  Profit  before tax (1 + 2 - 3)   6,179    6,197    6,175    25,993    23,317    27,758 
                                  
5  Tax expense / (benefit)                              
   a) Current tax   1,108    1,114    1,092    4,613    4,149    4,839 
   b) Deferred tax   634    273    (134)   2,631    (5,181)   (6,458)
                                  
6  Net profit for the period / year (4 - 5)   4,437    4,810    5,217    18,749    24,349    29,377 
                                  
7  Other comprehensive income                              
   a)    (i) Items that will not be reclassified to profit or loss   6    -    4    5    3    88 
   (ii) Income tax relating to items that will not be reclassified to profit or loss   -    -    -    -    -    (33)
   b)    (i) Items that will be reclassified to profit or loss   136    420    (33)   916    (286)   (750)
   (ii) Income tax relating to items that will be reclassified to profit or loss   (33)   (157)   12    (318)   98    259 
                                  
   Total other comprehensive income   109    263    (17)   603    (185)   (436)
                                  
8  Total comprehensive income (6 + 7)   4,546    5,073    5,200    19,352    24,164    28,941 
                                  
9  Paid-up equity share capital (face value Rs. 5/- each)   831    831    831    831    831    831 
                                  
10  Other equity                            151,088 
                                  
11  Earnings per equity share (face value Rs. 5/- each)                              
                                  
   Basic   26.74    29.00    31.47    113.05    146.89    177.23 
   Diluted   26.66    28.92    31.42    112.73    146.62    176.88 
       (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.  Particulars  31.12.2020   30.09.2020   31.12.2019   31.12.2020   31.12.2019   31.03.2020 
No.     (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Audited) 
   Segment wise revenue and results                              
1  Segment revenue                              
   a) Pharmaceutical Services and Active Ingredients   7,763    7,996    7,106    24,465    19,623    26,996 
   b) Global Generics   27,970    27,112    24,680    80,323    67,168    89,774 
   c) Proprietary Products   85    101    296    220    7,628    7,644 
   Total   35,818    35,209    32,082    105,008    94,419    124,414 
                                  
   Less: Inter-segment revenue   1,736    1,751    1,642    5,024    4,432    5,910 
   Total revenue from operations   34,082    33,458    30,440    99,984    89,987    118,504 
                                  
2  Segment results                              
   Profit / (loss) before tax and interest from each segment                              
   a) Pharmaceutical Services and Active Ingredients   428    145    957    6,259    1,027    1,465 
   b) Global Generics   6,447    5,674    6,193    20,363    17,913    22,116 
   c) Proprietary Products   (220)   (281)   92    (675)   6,622    6,525 
   Total   6,655    5,538    7,242    25,947    25,562    30,106 
                                  
   Less: (i) Finance costs   65    93    117    298    360    478 
   (ii) Other un-allocable expenditure / (income), net   411    (752)   950    (344)   1,885    1,870 
   Total profit before tax   6,179    6,197    6,175    25,993    23,317    27,758 

 

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.

 

2During the three months ended 31 December, 2020 there were significant changes to the market conditions for certain products forming part of Company’s Global Generics segments. The changes include decrease in the market potential of products primarily due to higher than expected price erosion, increased competition and higher than expected value erosion. Due to these adverse market developments, the Company recorded an impairment loss of Rs.97 million for the quarter ended 31 December, 2020

 

Consequent to the company’s decision to discontinue the development of certain product related intangibles in the Company’s Global Generics segment, an amount of Rs.53 million is recognised as impairment charge for the quarter ended 30 September, 2020

 

3During the three months ended 31 December, 2020, the Company entered into a definitive agreement with Glenmark Pharmaceuticals Ltd. to acquire certain brands in various Emerging Market countries for a total consideration of Rs. 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles.

 

4On 10 June 2020, the Company completed the acquisition of select divisions of Wockhardt Limited’s branded generics business in India and the territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas, such as respiratory, neurology, venous malformations, dennatology, gastroenterology, pain, and vaccines. This entire portfolio has been transferred to the Company, along with related sales and marketing teams, the manufacturing plant located in Baddi, Himachal Pradesh, and employees. During the quarter ended 30 September 2020, the Company completed the purchase price allocation. The fair value of consideration transferred is Rs.16,115 million. The Company recognised Rs. 373 million, Rs. 14,888 million and Rs. 530 million towards property, plant and equipment, intangible assets, and goodwill, respectively. The acquisition pertains to Company’s Global Generics segment.

 

5“Revenue from operations” for the year ended 31 March 2020 includes an amount of Rs. 7,486 million (U.S.$108.7 million), respectively, towards license fee for selling US and select territory rights for ZEMBRACE® SYMTOUCH® (sumatriptan injection) 3 mg and TOSYMRA® (sumatriptan nasal spray) 10 mg, (formerly referred to as “DFN-02”) to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.

 

6“Other income” for the year ended 31 March 2020 includes an amount of Rs. 3,457 million received from Celgene, pursuant to a settlement agreement entered in April 2019. The agreement effectively settles any claim the Company or its affiliates may have had 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 REVLIMID brand capsules, (Lenalidomide) pending before Health Canada.

 

7During the quarter ended 30 September 2019, the Government of India promulgated the Taxation Laws (Amendment) Ordinance 2019 (enacted into Taxation laws (Amendment) Act 2019), announcing key changes to corporate tax rates in the Income-tax Act, 1961. The key changes include, among others, reduction of MAT rate from 21.55% to 17.47% (including surcharge and cess). As a result of this, the Company reassessed the MAT recoverability and recognised an amount of Rs. 4,989 million as deferred tax asset during the quarter ended 30 September 2019.

During the quarter ended 31 March 2020, the Company recognised deferred tax benefit of Rs. 1,264 million pursuant to a plan for restructuring of the Company’s pharmaceutical services in India.

 

8The Code on Social Security, 2020 (‘Code’) received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the related final rules have not yet been issued and the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code and the rules thereunder when they come into effect.

 

9On 22 October 2020, the Company experienced a cybersecurity incident related to ransomware. The company could contain the incident in a timely fashion and has also ensured that all traces of the infection are completely cleaned from the network. All affected systems were restored and brought back to normalcy in the order of priority. Based on our forensic investigation, no evidence was found of any data breaches leading to personally identifiable information. Since then, the Company has also been focused on implementing significant improvements to its cyber and data security systems to safeguard from such risks in the future.

 

10The Company continues to consider the impact of COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, and certain investments. For this purpose, the Company considered internal and external sources of information up to the date of approval of these financial results. The Company based on its judgements, estimates and assumptions including sensitivity analysis 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.

 

 

 

 

 

 

DR. REDDY’S LABORATORIES LIMITED

 

11The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 28 January 2021 and approved by the Board of Directors of the Company at their meeting held on 29 January 2021.

 

12The results for the quarter and nine months ended 31 December 2020 presented were subjected to a “Limited review” by the Statutory Auditors of the Company. An unqualified report was issued by them thereon.

 

Place: Hyderabad

Date: 29 January 2021

By order of the Board

For Dr. Reddy’s Laboratories Limited

 

 

G V Prasad

Co-Chairman & Managing Director