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EX-99.3 4 drr0262_ex99-3.htm EXHIBIT 99.3

Exhibit 99.3

S.R. Batliboi & Associates LLP

Chartered Accountants

6th Floor – “A” Block

Tidel Park, No. 4,

Rajiv Gandhi Salai

Taramani, Chennai – 600 113, India

Tel: + 91 44 6117 9000

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

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 ended September 30, 2020 and year to date from April 01, 2020 to September 30, 2020 (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”).

This Statement, which is the responsibility of the Holding Company’s Management and approved by the Holding 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.

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.

The Statement includes the results of the following entities:

SL.No	Name of the Company
Subsidiaries
1	Aurigene Discovery Technologies Limited
2	Cheminor Investments Limited
3	Dr. Reddy’s Bio-Sciences Limited
4	Dr. Reddy’s Farmaceutica Do Brasil Ltda.
5	Dr. Reddy's Laboratories SA
6	Idea2Enterprises (India) Private Limited
7	Imperial Credit Private Limited
8	Industrias Quimicas Falcon de Mexico, S.A.de C.V.

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

9	Reddy Antilles N.V. (till 02 November, 2019)
10	Regkinetics Services Limited (formerly Dr. Reddy’s Pharma SEZ Limited)
11	Aurigene Discovery Technologies (Malaysia) Sdn. Bhd.
12	Aurigene Discovery Technologies Inc.
13	Aurigene Pharma Services Limited (from 16 September, 2019)
14	beta Institut gemeinnützige GmbH
15	betapharm Arzneimittel GmbH
16	Chirotech Technology Limited
17	DRL Impex Limited
18	Dr. Reddy’s Laboratories (Australia) Pty. 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
26	Dr. Reddy's Laboratories Louisiana LLC
27	Dr. Reddy’s Laboratories Malaysia Sdn. Bhd.
28	Dr. Reddy’s Laboratories New York, Inc.
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 Research and Development B.V.
37	Dr. Reddy’s Singapore PTE Limited (till 04 June, 2019)
38	Dr. Reddy’s Srl
39	Dr. Reddy’s New Zealand Limited
40	Dr. Reddy’s (WUXI) Pharmaceutical Co. Limited
41	Dr. Reddy's Venezuela, C.A.
42	Dr. Reddy's Laboratories B.V. (Formerly Eurobridge Consulting B.V.)
43	Lacock Holdings Limited
44	OOO Dr. Reddy’s Laboratories Limited
45	OOO DRS LLC
46	Promius Pharma LLC
47	Reddy Holding GmbH
48	Reddy Netherlands B.V.
49	Reddy Pharma Iberia SA
50	Reddy Pharma Italia S.R.L
51	Reddy Pharma SAS

Joint ventures
1	DRANU LLC
2	DRES Energy Private Limited
3	Kunshan Rotam Reddy Pharmaceutical Company Limited

Other consolidating entities
1	Cheminor Employees Welfare Trust
2	Dr. Reddy's Employees ESOS Trust
3	Dr. Reddy's Research Foundation

S.R. Batliboi & Associates LLP

Chartered Accountants

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.

For S.R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants

ICAI Firm registration number: 101049W/E300004

per S Balasubrahmanyam

Partner

Membership No.: 053315

UDIN: 20053315AAAACX1530

Chennai

October 28, 2020

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 HALF YEAR ENDED 30 SEPTEMBER 2020

		All amounts in Indian Rupees millions
		Quarter ended									Half year ended						Year ended
Sl. No.	Particulars	30.09.2020			30.06.2020			30.09.2019			30.09.2020			30.09.2019			31.03.2020
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Audited)

1	Revenue from operations
	a) Net sales / income from operations		47,766			43,244			39,982			91,010			77,606			163,574
	b) License fees and service income		1,201			931			8,026			2,132			8,838			11,026
	c) Other operating income		142			90			120			232			266			570

	Total revenue from operations		49,109			44,265			48,128			93,374			86,710			175,170

2	Other income		512			871			540			1,383			4,837			6,206

3	Total income (1 + 2)		49,621			45,136			48,668			94,757			91,547			181,376

4	Expenses
	a) Cost of materials consumed		9,485			11,439			7,503			20,924			14,867			29,848
	b) Purchase of stock-in-trade		6,889			5,276			5,942			12,165			11,158			25,459
	c) Changes in inventories of finished goods, work-in-progress and stock-in-trade		(573	)		(3,519	)		566			(4,092	)		55			237
	d) Employee benefits expense		9,488			8,724			8,255			18,212			16,870			33,802
	e) Depreciation and amortisation expense		3,165			2,923			3,131			6,088			6,021			11,631
	f) Impairment of non-current assets		781			-			3,560			781			3,560			16,767
	g) Finance costs		252			233			303			485			601			983
	h) Selling and other expenses		11,478			11,132			11,664			22,610			22,141			44,353
			-
	Total expenses		40,965			36,208			40,924			77,173			75,273			163,080

5	Profit / (loss) before tax and before share of equity accounted investees(3 - 4)		8,656			8,928			7,744			17,584			16,274			18,296

6	Share of profit of equity accounted investees, net of tax		73			77			117			150			280			561

7	Profit before tax (5+6)		8,729			9,005			7,861			17,734			16,554			18,857

8	Tax expense / (benefit):
	a) Current tax		1,724			3,166			2,108			4,890			4,463			6,616
	b) Deferred tax		(713	)		(107	)		(5,315	)		(820	)		(5,742	)		(8,019	)

9	Net profit after taxes and share of profit of associates (7 - 8)		7,718			5,946			11,068			13,664			17,833			20,260

10	Other comprehensive income
	a) (i) Items that will not be reclassified subsequently to profit or loss		(26	)		207			161			181			114			(412	)
	(ii) Income tax relating to items that will not be reclassified to profit or loss		-			-			-			-			-			(22	)
	b) (i) Items that will be reclassified subsequently to profit or loss		258			731			226			989			(43	)		(448	)
	(ii) Income tax relating to items that will be reclassified to profit or loss		(138	)		(156	)		65			(294	)		88			232
	Total other comprehensive income		94			782			452			876			159			(650	)

11	Total comprehensive income (9 + 10)		7,812			6,728			11,520			14,540			17,992			19,610

12	Paid-up equity share capital (face value Rs. 5/- each)		831			831			831			831			831			831

13	Other equity																	155,157

14	Earnings per equity share (face value Rs. 5/- each)

	Basic		46.54			35.87			66.78			82.40			107.59			122.22
	Diluted		46.40			35.78			66.68			82.18			107.40			121.99
			(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						Half year ended				Year ended
Sl. No.	Particulars	30.09.2020		30.06.2020		30.09.2019		30.09.2020		30.09.2019		31.03.2020
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Audited)
	Segment wise revenue and results:
1	Segment revenue :
	a) Pharmaceutical Services and Active Ingredients		10,355		10,165		8,598		20,520		14,650		32,086
	b) Global Generics		39,882		35,092		32,838		74,974		65,848		138,264
	c) Proprietary Products		100		56		7,425		156		7,706		7,949
	d) Others		523		489		662		1,012		1,295		2,781
	Total		50,860		45,802		49,523		96,662		89,499		181,080

	Less: Inter-segment revenue		1,751		1,537		1,395		3,288		2,789		5,910
	Total revenue from operations		49,109		44,265		48,128		93,374		86,710		175,170

2	Segment results:
	Gross profit from each segment
	a) Pharmaceutical Services and Active Ingredients		2,292		2,859		1,758		5,151		2,090		6,219
	b) Global Generics		23,685		21,526		18,200		45,211		37,207		78,449
	c) Proprietary Products		88		56		7,298		144		7,505		7,744
	d) Others		352		317		372		669		692		1,626
	Total		26,417		24,758		27,628		51,175		47,494		94,038

	Less: Selling and other un-allocable expenditure / (income), net		17,688		15,753		19,767		33,441		30,940		75,181
	Total profit before tax		8,729		9,005		7,861		17,734		16,554		18,857

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:

These 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.

On 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.

Impairment charge of Rs. 781 million for the quarter ended 30 September 2020 comprises of:

- Rs. 728 million pertaining to product related intangible forming part of Company’s Proprietary Segment due to decrease in the market potential for the product;

- Rs. 53 million pertaining to certain product related intangibles forming part of Company’s Global generics Segment due to Company’s decision to discontinue their further development.

Tax expense for the quarter ended 30 September 2020 includes benefit on account of recognition of deferred tax asset amounting to Rs. 1,012 million pursuant to a planned restructuring activity between the Group companies.

"Revenue from operations" for the quarter ended 30 September 2019 and year ended 31 March 2020 includes an amount of Rs. 7,229 million (U.S.$105.1 million) and 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.

"Other income" for the half year ended 30 September 2019 and 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.

Total impairment charge for the year ended 31 March 2020 is Rs. 16,767 million, of which Rs. 11,137 million was towards impairment of gNuvaring, Rs. 4,385 million was towards ramelteon, tobramycin and imiquimod, and the balance is towards other product related intangibles forming part of Company’s Global generics and Proprietary Products segments.

Tax benefit for the year ended 31 March 2020 was primarily due to recognition of deferred tax asset of:

- Rs. 4,989 million towards MAT recoverable pursuant to enactment of Taxation Laws (Amendment) Act, 2019;

- Rs. 1,264 million pursuant to a planned restructuring activity between the group Companies.

On 22 October 2020, the Company informed the stock exchanges that it had experienced an information security incident and consequent isolation of impacted IT services. This incident involved a ransom-ware attack. The Company promptly engaged leading outside cybersecurity experts, launched a comprehensive containment and remediation effort and investigation to address the incident. As of date, the Company's investigation has not ascertained if any data breaches in the incident pertain to personally identifiable information stored in the Company's systems. Recovery and restoration of all applications and data is underway. All critical operations are being enabled in a controlled manner.

The 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.

The Board of Directors have also give their in principle approval for the potential secondary listing of American Depository Receipts (ADRs) on NSE IFSC Limited (NSE International Exchange) subject to compliance of applicable laws and approval of concerned authorities.

DR. REDDY’S LABORATORIES LIMITED

Consolidated Balance Sheet

	All amounts in Indian Rupees millions
	As at
Particulars	30.09.2020		31.03.2020
	(Unaudited)		(Audited)

ASSETS
Non-current assets
Property, plant and equipment		47,423		47,779
Capital work-in-progress		7,314		4,364
Goodwill		5,626		4,913
Other intangible assets		29,545		15,811
Intangible assets under development		10,849		10,987
Investment in equity accounted investees		2,961		2,763
Financial assets
Investments		1,031		328
Trade receivables		258		1,737
Other financial assets		773		793
Deferred tax assets, net		12,647		12,199
Tax assets, net		2,196		4,379
Other non-current assets		379		209
Total non-current assets		121,002		106,262
Current assets
Inventories		41,134		35,067
Financial assets
Investments		21,154		23,687
Trade receivables		50,077		50,278
Derivative instruments		985		1,105
Cash and cash equivalents		3,889		2,053
Other financial assets		2,810		3,377
Other current assets		12,751		10,424
Total current assets		132,800		125,991

TOTAL ASSETS		253,802		232,253

EQUITY AND LIABILITIES
Equity
Equity share capital		831		831
Other equity		165,843		155,157
Total equity		166,674		155,988
Liabilities
Non-current liabilities
Financial liabilities
Borrowings		6,661		1,304
Provisions		618		745
Deferred tax liabilities, net		25		20
Other non-current liabilities		1,817		2,055
Total non-current liabilities		9,121		4,124
Current liabilities
Financial liabilities
Borrowings		19,953		16,532
Trade payables
Total outstanding dues of micro enterprises and small enterprises		30		55
Total outstanding dues of creditors other than micro enterprises and small enterprises		19,993		15,193
Derivative instruments		597		1,602
Other financial liabilities		24,352		27,006
Liabilities for current tax, net		1,142		572
Provisions		4,660		4,669
Other current liabilities		7,280		6,512
Total current liabilities		78,007		72,141

TOTAL EQUITY AND LIABILITIES		253,802		232,253

DR. REDDY’S LABORATORIES LIMITED

Consolidated statement of cashflows

	All amounts in Indian Rupees millions
	Half year ended
Particulars	30.09.2020			30.09.2019
	(Unaudited)			(Unaudited)
Cash flows from / (used in) operating activities
Profit before tax		17,734			16,554
Adjustments for:
Depreciation and amortisation expense		6,088			6,021
Share of profit of equity accounted investees		(150	)		(280	)
Impairment of non-current assets		781			3,560
Equity settled share-based payment expense		304			273
Fair value changes and profit on sale of units of mutual funds, net		(389	)		(562	)
Foreign exchange loss / (gain), net		918			(19	)
(Gain) / loss on sale or de-recognition of property , plant and equipment and other intangible assets, net		15			39
Interest income		(403	)		(500	)
Finance costs		485			601
Dividend income		-			(5	)
Allowance for credit loss and doubtful trade and other advances		61			105
Changes in operating assets and liabilities:
Trade receivables		1,620			(2,512	)
Inventories		(5,602	)		(1,454	)
Trade payables		4,773			910
Other assets and other liabilities, net		(3,991	)		872
Cash generated from operations		22,244			23,603
Income tax paid, net		(2,077	)		(3,664	)
Net cash from operating activities		20,167			19,939

Cash flows from / (used in) investing activities
Proceeds from sale of property, plant and equipment		33			53
Proceeds from sale of other intangible assets		-			259
Expenditures on property, plant and equipment		(3,999	)		(2,137	)
Expenditures on other intangible assets		(567	)		(501	)
Payment for acquisition of business		(15,514	)		-
Purchase of other investments		(50,933	)		(69,304	)
Proceeds from sale of other investments		53,296			65,885
Dividends received from equity accounted investees		-			392
Interest received		714			461
Net cash used in investing activities		(16,970	)		(4,892	)

Cash flows from / (used in) financing activities
Proceeds from issuance of equity shares (including treasury shares)		177			-	*
Purchase of treasury shares		(190	)		(474	)
Proceeds from / (repayment of ) short-term loans and borrowings, net		3,644			(2,012	)
Repayment of long-term loans and borrowings		(3,743	)		(6,765	)
Proceeds from long term borrowings		3,800			-
Payment of principal portion of lease liabilities		(366	)		(287	)
Dividend paid (30 September 2019 including corporate dividend tax)		(4,147	)		(3,916	)
Interest paid		(559	)		(839	)
Net cash used in financing activities		(1,384	)		(14,293	)

Net increase / (decrease) in cash and cash equivalents		1,813			754
Effect of exchange rate changes on cash and cash equivalents		13			26
Cash and cash equivalents at the beginning of the year⁽¹⁾		1,962			2,228
Cash and cash equivalents at the end of the year⁽²⁾		3,788			3,008

*Rounded off to millions.

⁽¹⁾Adjusted for bank-overdraft of Rs. 91 million and Rs. Nil for the half years ended 30 September 2020 and 30 September 2019, respectively.

⁽²⁾Adjusted for bank-overdraft of Rs. 101 million and Rs. 4 million for the half years ended 30 September 2020 and 30 September 2019, respectively.

The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 27 October 2020 and approved by the Board of Directors of the Company at their meeting held on 28 October 2020.

The results for the quarter and half year ended 30 September 2020 were subject to a "Limited Review" 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: 28 October 2020

Co-Chairman & Managing Director