EX-99.5 6 drr0598_ex99-5.htm EXHIBIT 99.5

 

Exhibit 99.5

 

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 Report on the Quarterly and Year to Date Audited Standalone Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

 

To

The Board of Directors of

Dr. Reddy’s Laboratories Limited

 

Report on the audit of the Standalone Financial Results

 

Opinion

 

We have audited the accompanying Statement of Audited Standalone Financial Results for the quarter and year ended 31 March 2024 (“Statement”) of Dr. Reddy’s Laboratories Limited (the “Company”) for the quarter and year ended March 31, 2024, attached herewith, being submitted by the Company pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).

 

In our opinion and to the best of our information and according to the explanations given to us, the Statement:

 

i.is presented in accordance with the requirements of the Listing Regulations in this regard; and

 

ii.gives a true and fair view in conformity with the applicable accounting standards and other accounting principles generally accepted in India, of the net profit and other comprehensive loss and other financial information of the Company for the quarter and year ended March 31, 2024.

 

Basis for Opinion

 

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013, as amended (“the Act”). Our responsibilities under those Standards are further described in the “Auditor’s Responsibilities for the Audit of the Standalone Financial Results” section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion.

 

Management’s Responsibilities for the Standalone Financial Results

 

The Statement has been prepared on the basis of the standalone annual financial statements. The Board of Directors of the Company are responsible for the preparation and presentation of the Statement that gives a true and fair view of the net profit and other comprehensive income of the Company and other financial information in accordance with the applicable accounting standards prescribed under Section 133 of the Act read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

 

In preparing the Statement, the Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

 

 

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

 

   

 

 

Chartered Accountants

 

The Board of Directors are also responsible for overseeing the Company’s financial reporting process.

 

Auditor’s Responsibilities for the Audit of the Standalone Financial Results

 

Our objectives are to obtain reasonable assurance about whether the Statement as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Statement.

 

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

·Identify and assess the risks of material misstatement of the Statement, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

·Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

 

·Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.

 

·Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 

·Evaluate the overall presentation, structure and content of the Statement, including the disclosures, and whether the Statement represents the underlying transactions and events in a manner that achieves fair presentation.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

 

   

 

 

Chartered Accountants

 

Other Matter

 

The Statement includes the results for the quarter ended March 31,2024 being the balancing figure between the audited figures in respect of the full financial year ended March 31, 2024 and the published unaudited year-to-date figures up to the third quarter of the current financial year, which were subjected to a limited review by us, as required under the Listing Regulations.

 

 

For S.R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants

ICAI Firm Registration Number: 101049W/E300004

 

per Shankar Srinivasan

Partner

Membership No.: 213271

 

UDIN:24213271BKELCJ6463

 

Place: Hyderabad

Date: May 07, 2024

 

   

 

 

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 AUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND YEAR ENDED 31 MARCH 2024

 

      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  Revenue from operations                          
   a) Sales     50,304    40,389    42,491    192,764    162,989 
   b) License fees and service income    514    442    2,887    1,277    6,002 
   c) Other operating income    230    199    162    797    634 
   Total revenue from operations    51,048    41,030    45,540    194,838    169,625 
                             
2  Other income    2,127    2,276    1,148    8,623    5,913 
                             
   Total income (1 + 2)    53,175    43,306    46,688    203,461    175,538 
                             
3  Expenses                          
   a) Cost of materials consumed    9,077    8,187    8,541    32,915    31,614 
   b) Purchase of stock-in-trade    5,463    5,569    3,692    19,866    17,793 
   c) Changes in inventories of finished goods, work-in-progress
and stock-in-trade		   (520)   (651)   1,068    (2,388)   1,295 
   d) Employee benefits expense    7,795    7,823    7,651    30,857    28,326 
   e) Depreciation and amortisation expense   2,462    2,464    2,367    9,756    9,232 
   f) Impairment of non current assets, net    260    -    41    260    51 
   g) Finance costs    59    56    26    218    169 
   h) Other expenses    15,187    13,539    13,936    54,064    48,398 
                             
   Total expenses    39,783    36,987    37,322    145,548    136,878 
                             
4  Profit before tax (1 + 2 - 3)   13,392    6,319    9,366    57,913    38,660 
                             
5  Tax expense/ (benefit)                          
   a) Current tax    2,702    1,569    2,319    13,618    8,641 
   b) Deferred tax    342    (2)   323    875    3,891 
                             
6  Net profit for the period / year (4 - 5)   10,348    4,752    6,724    43,420    26,128 
                             
7  Other comprehensive income/(loss)                          
   a) (i) Items that will not be reclassified to profit or loss   27    (8)   86    21    89 
   (ii) Income tax relating to items that will not be reclassified
to profit or loss		   (7)   -    (22)   (7)   (53)
   b) (i) Items that will be reclassified subsequently to profit or loss   (189)   24    1,350    (446)   (928)
   (ii) Income tax relating to items that will be reclassified to
profit or loss		   49    (6)   (339)   114    358 
   Total other comprehensive income / (loss)   (120)   10    1,075    (318)   (534)
8  Total comprehensive income (6 + 7)    10,228    4,762    7,799    43,102    25,594 
                             
9  Paid-up equity share capital (face value Rs. 5/- each)   834    834    833    834    833 
                             
10  Other equity                  241,574    203,909 
                             
11  Earnings per equity share (face value Rs. 5/- each)                         
                             
   Basic    62.14    28.55    40.49    260.95    157.37 
   Diluted    62.04    28.50    40.41    260.46    157.03 
       (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 
    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   9,842    7,658    9,111    30,742    27,896 
   b) Global Generics   44,006    35,726    38,651    173,405    147,999 
   c) Others   353    66    129    678    497 
   Total   54,201    43,450    47,891    204,825    176,392 
                             
   Less: Inter-segment revenue   3,153    2,420    2,351    9,987    6,767 
   Total revenue from operations   51,048    41,030    45,540    194,838    169,625 
                             
2  Segment results                         
   Profit / (loss) before tax and interest from each segment                         
   a) Pharmaceutical Services and Active Ingredients   1,246    (397)   486    (287)   (1,336)
   b) Global Generics   12,172    6,832    9,054    57,670    46,716 
   c) Others   239    198    (51)   536    (154)
   Total   13,657    6,633    9,489    57,919    45,226 
                             
   Less: (i) Finance costs   59    56    26    218    169 
   (ii) Other un-allocable expenditure / (income), net   206    258    97    (212)   6,397 
   Total profit before tax   13,392    6,319    9,366    57,913    38,660 

 

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:

 

1The above statement of audited standalone financial results of Dr. Reddy’s Laboratories Limited (“the Company”), which have been prepared in accordance with the Indian Accounting Standards (‘‘Ind AS’’) prescribed under Section 133 of the Companies Act, 2013 (“the Act’’) read with relevant rules issued thereunder, other accounting principles generally accepted in India and guidelines issued by the Securities and Exchange Board of India (“SEBI’’) were reviewed and recommended by the Audit Committee and approved by the Board of Directors at their meetings held on 07 May 2024. The Statutory Auditors have issued an unqualified report thereon.

 

2License fee and service income for the year ended 31 March 2023 includes:

a. Rs. 2,640 million from sale of certain non-core dermatology brands in India 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 the Company’s Global Generics segment.

 

3“Other income” for the year ended 31 March 2024 includes 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).This transaction pertains to the Company’s Global Generics segment.

 

4“Other income” for the year ended 31 March 2024 includes dividend income of Rs. 445 million declared by Kunshan Rotan Reddy Pharmaceutical Company Limited, joint venture of the company.

 

5During the quarter and year ended 31 March 2024, an amount of Rs. 806 million and Rs. 4,211 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 as a reduction from cost of material consumed.

 

6“Impairment of non-current assets, net” for the year ended 31 March 2024 primarily includes:

a. The Company assessed the recoverable amount of investment in equity shares of its subsidiary, Svaas Wellness Limited, India and recognized impairment loss of Rs. 288 million as the recoverable value is below the carrying value of the investment held by the Company. This impairment loss pertains to the Company’s Others segment.

b. Consequent to adverse market conditions with respect to certain products related intangibles, the Company assessed the recoverable amount of certain products and recognized impairment loss of Rs. 7 million pertaining to products forming part of the Company’s Global Generics segment.

c. Reversal of impairment loss of Rs. 35 million in March 2024, with respect to enalaprilat (generic version of Vasotec®) pursuant to launch of the product 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 this product and accordingly capitalized under Product related intangibles with corresponding reversal of impairment loss of Rs. 35 million. This pertains to the Company’s Global Generics segment.

 

7The 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 July 6, 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.

 

 

   

 

 

 

DR. REDDY’S LABORATORIES LIMITED

 

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.

 

9Balance sheet

 

  All amounts in Indian Rupees millions 
   As at   As at 
Particulars  31.03.2024   31.03.2023 
   (Audited)   (Audited) 
ASSETS        
Non-current assets          
Property, plant and equipment   51,094    47,379 
Capital work-in-progress   11,719    8,991 
Goodwill   853    853 
Other intangible assets   23,944    23,721 
Intangible assets under development   391    253 
Financial assets          
Investments   32,027    31,422 
Loans   617    11 
Other financial assets   919    533 
Tax assets, net   3,161    2,546 
Other non-current assets   709    156 
Total non-current assets   125,434    115,865 
           
Current assets          
Inventories   40,189    30,430 
Financial assets          
Investments   41,179    42,978 
Trade receivables   46,239    42,889 
Derivative financial instruments   165    715 
Cash and cash equivalents   2,014    1,123 
Other bank balances   10,155    5,335 
Other financial assets   22,078    2,224 
Other current assets   16,140    12,189 
Total current assets   178,159    137,883 
           
TOTAL ASSETS   303,593    253,748 
           
EQUITY AND LIABILITIES          
Equity          
Equity share capital   834    833 
Other equity   241,574    203,909 
Total Equity   242,408    204,742 
           
Liabilities          
Non-current liabilities          
Financial liabilities          
Lease liabilities   495    286 
Provisions   93    79 
Deferred tax liabilities, net   4,161    3,392 
Other non-current liabilities   1,055    852 
Total non-current liabilities   5,804    4,609 
           
Current liabilities          
Financial liabilities          
Borrowings   7,100    6 
Lease liabilities   334    216 
Trade payables          
Total outstanding dues of micro enterprises and small enterprises   268    72 
Total outstanding dues of creditors other than micro enterprises and small enterprises   20,180    17,573 
Derivative financial instruments   290    135 
Other financial liabilities   17,023    15,369 
Liabilities for current tax, net   670    - 
Provisions   3,283    3,052 
Other current liabilities   6,233    7,974 
Total current liabilities   55,381    44,397 
           
TOTAL EQUITY AND LIABILITIES   303,593    253,748 

 

 

   

 

 

 

DR. REDDY’S LABORATORIES LIMITED

 

10Statement of cashflows
  All amounts in Indian Rupees millions 
   Year ended   Year ended 
Particulars  31.03.2024   31.03.2023 
   (Audited)   (Audited) 
Cash flows from/(used in) operating activities :          
Profit before taxation   57,913    38,660 
Adjustments for:          
Fair value changes and profit on sale of financial instruments measured at FVTPL**, net   (2,961)   (798)
Depreciation and amortisation expense   9,756    9,232 
Impairment of non-current assets   260    51 
Allowance for credit losses (on trade receivables and other advances)   177    161 
(Profit)/Loss on sale or de-recognition of non-current assets, net   (771)   233 
Unrealized exchange loss / (gain), net   76    (1,656)
Interest income   (3,046)   (1,300)
Finance costs   218    169 
Equity settled share-based payment expense   346    318 
Inventories write-down   2,411    4,048 
Dividend income   (446)   -*
Changes in operating assets and liabilities:          
Trade receivables   (3,410)   6,568 
Inventories   (12,170)   (1,000)
Trade payables   2,803    983 
Other assets and other liabilities, net   (3,464)   2,687 
Cash generated from operations   47,692    58,356 
Income taxes paid, net   (13,195)   (7,827)
Net cash generated from operating activities   34,497    50,529 
           
Cash flows from/(used in) investing activities          
Purchase of property, plant and equipment   (13,611)   (10,002)
Proceeds from sale of property, plant and equipment   882    247 
Purchase of other intangible assets   (2,325)   (5,711)
Purchase of investments (including bank deposits)   (137,578)   (120,320)
Proceeds from sale of investments (including bank deposits)   117,468    100,769 
Equity investments in subsidiary/associates   (802)   (459)
Dividend received   446    - 
Interest income received   1,823    1,000 
Loans and advances given to subsidiaries   (606)   - 
Net cash used in investing activities   (34,303)   (34,476)
           
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/(Repayment of) from short-term loans and borrowings, net   7,094    (21,705)
Payment of principal portion of lease liabilities   (237)   (195)
Dividend paid   (6,648)   (4,979)
Interest paid   (333)   (458)
Net cash from/(used in) financing activities   681    (26,969)
           
Net increase / (decrease) in cash and cash equivalents   875    (10,916)
Effect of exchange rate changes on cash and cash equivalents   16    445 
Cash and cash equivalents at the beginning of the year   1,123    11,594 
Cash and cash equivalents at the end of the year   2,014    1,123 

 

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

 

  11 The Board of Directors, at their meeting held on 07 May 2024, have recommended a final dividend of Rs.40 per share subject to the approval of shareholders.
     
  12 The figures of the fourth quarter are the balancing figures between audited figures in respect of the full financial year and 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.

 

By order of the Board

For Dr. Reddy's Laboratories Limited

 

 

 
Place: Hyderabad G V Prasad
Date: 07 May 2024 Co-Chairman & Managing Director