EX-99.3 4 drr0238_ex99-3.htm EXHIBIT 99.3

 

Exhibit 99.3

 

Independent Auditor’s Review Report on the Quarterly 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 ended June 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”).

 

2.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.

 

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:

 

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.
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 Pharmaceutical 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

 

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.

 

For S.R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants

ICAI Firm registration number: 101049W/E300004

 

per S Balasubrahmanyam

Partner

Membership No.: 053315

 

UDIN: 20053315AAAACC1821

 

Chennai

July 29, 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 ENDED 30 JUNE 2020

 

All amounts in Indian Rupees millions

 

      Quarter ended   Year ended 
Sl.
No.		  Particulars  30.06.2020   31.03.2020   30.06.2019   31.03.2020 
      (Unaudited)   (Audited)   (Unaudited)   (Audited) 
                    
1  Revenue from operations                    
   a) Net sales / income from operations   43,244    43,361    37,624    163,574 
   b) License fees and service income   931    957    812    11,026 
   c) Other operating income   90    171    146    570 
                        
   Total revenue from operations   44,265    44,489    38,582    175,170 
                        
2  Other income   871    736    4,301    6,206 
                        
3  Total income (1 + 2)   45,136    45,225    42,883    181,376 
                        
4  Expenses                    
   a) Cost of materials consumed   11,439    7,453    7,364    29,848 
   b) Purchase of stock-in-trade   5,276    5,875    5,216    25,459 
   c) Changes in inventories of finished goods, work-in-progress and stock-in-trade   (3,519)   1,983    (511)   237 
   d) Employee benefits expense   8,724    8,555    8,615    33,802 
   e) Depreciation and amortisation expense   2,923    2,741    2,890    11,631 
   f) Impairment of non-current assets   -    7    -    16,767 
   g) Finance costs   233    230    298    983 
   h) Selling and other expenses   11,132    11,124    10,481    44,353 
                        
   Total expenses   36,208    37,968    34,353    163,080 
                        
5  Profit / (loss) before tax and before share of equity accounted investees(3 - 4)   8,928    7,257    8,530    18,296 
                        
6  Share of profit of equity accounted investees, net of tax   77    105    163    561 
                        
7  Profit before tax (5+6)   9,005    7,362    8,693    18,857 
                        
8  Tax expense / (benefit):                    
   a) Current tax   3,166    417    2,355    6,616 
   b) Deferred tax   (107)   (866)   (427)   (8,019)
                        
                        
9  Net profit after taxes and share of profit of associates (7 - 8)   5,946    7,811    6,765    20,260 
                        
10  Other comprehensive income                    
   a) (i) Items that will not be reclassified subsequently to profit or loss   207    (326)   (47)   (412)
   (ii) Income tax relating to items that will not be reclassified to profit or loss   -    (22)   -    (22)
       -    -           
   b) (i) Items that will be reclassified subsequently to profit or loss   731    (1,011)   (269)   (448)
   (ii) Income tax relating to items that will be reclassified to profit or loss   (156)   96    23    232 
   Total other comprehensive income   782    (1,263)   (293)   (650)
                        
11  Total comprehensive income (9 + 10)   6,728    6,548    6,472    19,610 
                        
12  Paid-up equity share capital (face value Rs. 5/- each)   831    831    831    831 
                        
13  Other equity                  155,157 
                        
14  Earnings per equity share (face value Rs. 5/- each)                    
                        
   Basic   35.87    47.12    40.81    122.22 
   Diluted   35.78    47.03    40.74    121.99 
       (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  30.06.2020   31.03.2020   30.06.2019   31.03.2020 
      (Unaudited)   (Audited)   (Unaudited)   (Audited) 
   Segment wise revenue and results:                    
1  Segment revenue :                    
   a) Pharmaceutical Services and Active Ingredients   10,165    8,782    6,052    32,086 
   b) Global Generics   35,092    36,460    33,010    138,264 
   c) Proprietary Products   56    2    281    7,949 
   d) Others   489    723    633    2,781 
   Total   45,802    45,967    39,976    181,080 
                        
   Less: Inter-segment revenue   1,537    1,478    1,394    5,910 
   Total revenue from operations   44,265    44,489    38,582    175,170 
                        
2  Segment results:                    
   Gross profit from each segment                    
   a) Pharmaceutical Services and Active Ingredients   2,859    2,050    332    6,219 
   b) Global Generics   21,526    20,332    19,007    78,449 
   c) Proprietary Products   56    (7)   207    7,744 
   d) Others   317    442    320    1,626 
   Total   24,758    22,817    19,866    94,038 
                        
   Less: Selling and other un-allocable expenditure / (income), net   15,753    15,455    11,173    75,181 
   Total profit before tax   9,005    7,362    8,693    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:

 

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.

 

2On 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, dermatology, 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. The Company is in the process of determination of the fair value of consideration transferred, assets acquired and liabilities assumed. As at 30 June 2020, the Company, on a provisional basis, recognised Rs. 373 million and Rs. 14,141 million towards property, plant and equipment and intangible assets, respectively. The acquisition pertains to the Company's Global Generics segment.

 

3"Other income" for the quarter ended 30 June 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.

 

4Total 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.

 

5Tax 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.

 

6"Revenue from operations" for the year ended 31 March 2020 includes an amount of Rs. 7,486 million (U.S.$108.7 million) 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.

 

7The 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.

 

8The 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 29 July 2020.

 

9The figures of the quarter ended 31 March 2020 are the balancing number between audited figures in respect of the full financial year and the published unaudited year to date figures up to the third quarter of the relevant financial year, which are subject to limited review.

 

10The results for the quarter ended 30 June 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: 29 July 2020 Co-Chairman & Managing Director