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DR REDDYS LABORATORIES LTD Interim / Quarterly Report 2021

Jan 29, 2021

30528_rns_2021-01-29_72cb581e-1572-4752-bfb4-43620fb4e7f0.pdf

Interim / Quarterly Report

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Dr. Rcddy'3 Loboretories 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 :[email protected] www.drreddys.com

January 29, 2021

The Secretary/ Executive Director BSE Limited National Stock Exchange of India Limited New York Stock Exchange, Inc. NSE-IFSC Limited

Dear Sir/Madam,

Sub: Outcome of Board Meeting - Unaudited Financial Results for the quarter and nine months ended December 31, 2020.

Further to our letter dated December 28, 2020, we would like to inform you that the Board of Directors of the Company at their meeting held on January 29, 2021 have inter alia approved the Unaudited Financial Results of the Company for the quarter and nine months ended December 31, 2020.

In terms of the above, we are enclosing herewith the following:

    1. Unaudited Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2020 prepared in compliance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB).
    1. Press Release on Financial Results of the Company for the above period.
    1. Unaudited Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2020 as per Indian Accounting Standards.
    1. Unaudited Standalone Financial Results of the Company for the quarter and nine months ended December 31, 2020 as per Indian Accounting Standards.

Pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Limited Review Reports of the Statutory Auditors on the Unaudited Standalone and Consolidated Financial Results at point nos. 3 and 4 are also enclosed.

The Board meeting commenced at 09.05 AM and concluded at 11.15 AM.

This is for your information and records.

With regards,

Encl.: as above

8-2-337, Road No. 3, Banjara Hills, Hyderabad· 500 034, Tehmgana, India.

CIN: L85195TG1984PLC004507

Tel :+91 40 4900 2900 Fax :+91 40 4900 2999 Email :[email protected] www.drreddys.com

Unaudited consolidated financial results of Dr. Reddy's Laboratories Limited and its subsidiaries for the quarter and nine months ended 31 December 2020 prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB)

All amoun t . I s m n d' 1an ll upces m, ions
Quarter ended Nine months ended Year ended
SI. 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 Revenues 49,296 48,967 43,838 142,438 130,282 174,600
2 Cost of revenues 22,758 22,558 20,116 64,736 59,081 80,591
3 Gross profit (1 - 2) 26,538 26,409 23,722 77,702 71,201 94,009
4 Selling, gene,al and administrative expenses 14,387 13,107 12,670 40,280 37,952 50,129
5 Research and development expenses 4,108 4,359 3,949 12,447 11,220 15,410
6 lmpainnent of non current assets 5,972 781 13,200 6,753 16,760 16,767
7 Other income, net (128) (149) (228) (395) (4,122) (4,290)
Total operating expenses 24,339 18,098 29,591 59,085 61,810 78,016
8 Results from operating activities 1(3) - (4 + 5 + 6 + 7)] 2,199 8,311 (5,869) 18,617 9,391 15,993
Finance income 681 489 571 2,008 1,796 2,461
Finance expense (188) (252) (152) (673) (753) (983)
9 Finance income, net 493 237 419 1,335 1,043 1,478
10 Share of profit of equity accounted investees, net of tax 151 73 176 301 456 561
11 Profit before tax (8 + 9 + 10) 2,843 8,621 (5,274) 20,253 10,890 18,032
12 Tax expense/(benefit), net 2,645 998 423 6,639 (966) (1,466)
13 Profit for the period/ year (11 -12) 198 7,623 (5,697) 13,614 11,856 19,498
14 Earnings per share:
Basic earnings per share of Rs.5/- each 1.19 45.96 (34.37) 82.08 71.53 117.63
Diluted earnings per share ofRs.5/- each 1.19 45.83 (34.37) 81.85 71.40 117.40
(Not annualised) (Not annualised) (Not annualised) (Not annualised) (Not an1111alised)

Sc!(mcnt reporting (consolidated)

All amounts in Indian Rup�cs millions
Quarter ended Nine months ended Year ended
SI. 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) (A111Jilcd)
Segment wise revenue and results:
I Segment revenue:
a) Pharmaceutical Services and Active Ingredients 8,745 10,256 8,549 29,091 22,984 31,657
b) Global Generics 40,751 39,841 35,927 115,667 101,725 138,123
c) Proprietary Products 124 100 241 280 7,947 7,949
d) Others 1,412 521 764 2,424 2,058 2,781
Total 51,032 50,718 45,481 147,462 134,714 180,510
Less: Inter-segment revenues 1,736 1,751 1,643 5,024 4,432 5,910
Net revenues 49,296 48,967 43,838 142,438 130,282 174,600
2 Segment results:
Gross profit from each segment
a) Pharmaceutical Services and Active Ingredients 1,773 2,284 2,072 6,913 4,147 6,190
b) Global Generics 23,454 23,685 20,910 68,665 58,117 78,449
c) Proprietary Products 100 88 246 244 7,751 7,744
d) Others 1,211 352 494 1,880 1,186 1,626
Total 26,538 26,409 23,722 77,702 71,201 94,009
Less: Selling and other un-allocable expenditure, net of other111corne 23,695 17,788 28,996 57,449 60,311 75,977
Total profit before tax 2,843 8,621 (5,274) 20,253 10,890 18,032

Global Generics segment includes operations of Biologics business. Inter-segment revenues represent sale from Phannaceutical Ser.iices and Active Ingredients to Global Generics at cost.

Notes:

  • The unaudited results have been reviewed by the Audit Committee of the Board on 28 January 2021 and approved by the Board of Directors of the Company at their meeting held on 29 January 2021. The above financial results have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS), as issued by the International Accounting Standards Board (IASB).
  • 2 During the quarter ended 31 Decembe,- 2020, there were significant changes to the market conditions for certain of the products fanning part of Company's Global Generics and Proprietary Products segments The changes include the launch by competitor of generic version of the product, decrease in the market potential of products primarily due to higher than expected price erosion and increased competition, and higher than expected value erosion. Due to these adverse market developments, the Company recorded an impairment loss of:
    • Rs. 3,180 million relating to Ethinyl estradiol / Ethenogestral vaginal ring (a generic equivalent to NuvaRing®);
    • Rs 1,587 million relating to Saxagliptin and metfonnin (generic version ofKombiglyze-XR) and Phentermine and Topiramate (generic version ofQsymia®); and
    • Rs. 1,159 million relating lo other intangible assets fanning part of the Company's Global Generics and Proprietary Products segments.

In addition, an amount of Rs. 46 million was recorded as impairment loss pertaining to property, plant and equipment on write-down of assets to fair value less costs to sell fanning part of Company's Global generics segment.

  • 3 During the quarter ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Phannaceuticals 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
  • 4 Impainnent expense of Rs. 781 million for the quarter ended 30 September 2020 comprises of:
    • Rs, 728 million pertaining to product related intangible fanning 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 fom1ing part of Company's Global generics Segment due to Company's decision to discontinue their fu11her development.
  • 5 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. The said restructuring activity was concluded during the quarter ended 31 December 2020.
  • 6 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.
  • 7 "Revenues" for the year ended 31 March 2020 include 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, (fonnerly referred to as "DFN-02") to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.
  • 8 "Other income, net" 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 ofREVLIMID brand capsules, (Lenalidomide) pending before Health Canada,
  • 9 Total impairment charge for the year ended 31 March 2020 is Rs. 16,767 million, of which Rs. 11,137 million was towards impainnent of gNuvaring, Rs. 4,385 mi Ilion was cin and imiquimod, and the balance is towards other product related intangibles fanning part of Company's Global generics and Proprietary Products

10 led 3 1 March 2020 was primarily due to recognition of deferred tax asset of: MAT recoverable pursuant to enactment of Taxation Laws (Amendment) Act, 2019; to a planned restructuring activity between the g1oup Companies

  • 11 The Code 011 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 thercunde, when they come into effect.
  • 12 On 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 011 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.
  • 13 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 infonnation 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.
  • 14 The 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.
  • 15 The results for the quarter and nine months ended 31 December 2020 were subjected to a "Limited Review". An unqualified report was issued thereon.

By order of the Board For Dr. Reddy's Laboratories Limited

Place: Hyderabad Date: 29 January 2021

G V Prasad Co-Chainnan & Managing Director

DR. REDDY'S LABORATORIES LTD. 8-2-337, Road No. 3, Banjara Hills,

Hyderabad - 500034. Telangana, India.

INVESTOR RELATIONS MEDIA RELATIONS

AMIT AGARWAL APARNA TEKURI

[email protected] I [email protected] (Ph: +91-40-4900 2135) (Ph: +91-40-4900 2446)

Dr. Reddy's Q3 & 9M FY21 Financial Results

Hyderabad, India, January 29, 2021: Dr. Reddy's Laboratories Ltd. (BSE: 500124 I NSE: DRREDDY I NYSE: RDY I NSEIFSC: DRREDDY) today announced its consolidated financial results for the quarter and the nine months ended December 31, 2020. The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS).

Q3 Performance Summary

Rs. 4,930 Cr Revenue [Up: 12% YoY; 1% QoQJ

53.8% Gross Margin [Q3 FY20: 54.1%; 02 FY21: 53.9%]

Rs.1,439 Cr SGNA expenses [Up: 14% YoY; 10% QoQJ

Rs. 411 Cr R&D expenses [8.3% of Revenues]

Rs. 1,185 Cr EBITDA [24.0% of Revenues]

Rs. 284 Cr* Profit before Tax [5.8% of Revenues]

Rs. 20 Cr** Profit after Tax [0.4% of Revenues]

9M Performance Summary

Rs. 14,244 Cr Revenue [Up: 9% YoY]

54.6%

Gross Margin [9M FY20: 54. 7%]

Rs. 4,028 Cr SGNA expenses [Up: 6% YoYJ

Rs. 1,245 Cr R&D expenses [8. 7% of Revenues]

Rs. 3,615 Cr EBITDA [25.4% of Revenues]

Rs. 2,025 Cr Profit before Tax [14.2% of Revenues]

Rs. 1,361 Cr Profit after Tax [9.6% of Revenues] __,--------�

*Excluding the impairment charge in Q3 FY21, the Profit before Tax is Rs. 882 er **Q3 FY21 Profit after Tax was impacted primarily due to non-recognition of deferred tax asset on impairment

Commenting on the results, Co-chairman & MD, G V Prasad said 'We continued with our growth momentum while maintaining EBITDA margins. The profits were impacted due to trigger based impairment charge taken on a few acquired products including gNuvaring. We are progressing well on the phase 3 clinical trials for Sputnik V vaccine in India. We continue to focus on enhancing our product offerings to our patients to serve them better':

Dr. Reddy's Laboratories Limited and Subsidiaries

Q3 FY21 Q3 FY20 Q2 FY21YoY QoQ
Particulars ($) (Rs.) ($) (Rs.) Gr% ($) (Rs.) Gr%
Revenues 675 49,296 600 43,838 12 671 48,967 1
Cost of Revenues 312 22,758 276 20,116 13 309 22,558 1
Gross Profit 363 26,538 325 23,722 12 362 26,409 0
Operating Expenses
Selling, General & Administrativeexpenses 197 14,387 174 12,670 14 180 13,107 10
Research and Developmentexpenses 56 4,108 54 3,949 4 60 4,359 (6)
Impairment of non-current assets 82 5,972 181 13,200 (55) 11 781 665
Other operating income (2) (128) (3) (228) (4'1-) (2) (149) (14)
Results from operating activities 30 2;199 (80) (5,869) - 114 8,311 (74)
Net finance income (7) (493) (6) (419) 18 (3) (237) 108
Share of profit of equity accountedinvestees (2) (151) (2) (176) (14) (1) (73) 107
Profit/ (loss) before Income Tax 39 2,843 (72) (5,274) - 118 8,621 (67)
Income Tax 36 2,645 6 423 525 14 998 165
Profit/ (loss) for the period 3 198 (78) (5,697) - 104 7,623 (97)

Consolidated Income Statement

I Diluted Earnings Per Share (EPS) 0.02 1.19 co.47) 1 (34.37) 1 0.63 45.83 (97)

As % to revenues
Gross Profit 53.8 54.1 53.9
SG&A 29.2 28.9 26.8
R&D 8.3 9.0 8.9
EBITDA 24.0 24.5 25.9
PBT 5.8 (12.0) 17.6
PAT 0.4 (13.0) 15.6

EBITDA Computation

Particulars Q3 FY21 Q3 FY20 Q2 FY21
($) (Rs.) ($) (Rs.) ($) (Rs.)
Profit before Income Tax 39 2,843 (72) (5,274) 118 8,621
Interest income (net)* (2) (180) (4) (274) (0) (1)
Depreciation 29 2,131 29 2,130 30 2,188
Amortization 15 1,086 13 955 15 1,084
Impairment 82 5,972 181 13,200 11 781
EBITDA 162 11,851 147 10,737 174 12,673

* Includes income from Investments

Key Balance Sheet Items

Particulars As on 31st Dec2020 As on 30th Sep2020 As on 31st Dec2019
($) (Rs.) ($) (Rs.) ($) (Rs.)
Cash and cash equivalents and currentinvestments 291 21,282 357 26,074 280 20,457
Trade receivables ( current & non-current) 732 53,408 689 50,335 631 46,095
Inventories 607 44,309 563 41,134 517 37,746
Property, plant and equipment 771 56,263 754 55,026 722 52,709
Goodwill and Other Intangible assets 562 41,062 624 45,553 423 30,847
Loans and borrowings (current & non-current) 280 20,443 376 27,429 224 16,320
Trade payables 316 23,072 313 22,833 244 17,810
Equity 2,320 1,69,395 2,265 1,65,337 2,036 1,48,672

Revenue Mix by Segment

Segment Q3 FY21(Rs.) Q3 FY20(Rs.) YoYGr% Q2 FY21(Rs.) QoQGr%
Global Generics 40,751 35,927 13 39,841 2
North America 17,394 15,999 9 18,328 (5)
Europe 4,143 3,093 34 3,754 10
India 9,591 7,636 26 9,123 5
Emerging Markets 9,623 9,199 5 8,636 11
Pharmaceutical Services and ActiveIn2redients (PSAO 7,009 6,906 1 8,505 (18)
Proprietary Products & Others 1,536 1,005 53 621 147
Total 49,296 43,838 12 48,967 1

Revenue Analysis

Global Generics (GG)

Revenues from GG segment at Rs. 40.8 billion:

► Year-on-year growth of 13% and sequential quarter growth of 2%, primarily driven by new product launches and integration of the acquired portfolio from Wockhardt in India. The volume growth in the base business was largely offset by price erosion.

North America

Revenues from North America at Rs. 17.4 billion:

  • ► Year-on-year growth of 9%, driven by new products launches, increase in volumes of our base business and a favorable forex rate, which was partially offset by price erosion.
  • ► Sequential decline of 5%, primarily due to price erosion in some of the key molecules.
  • ► We launched four new products during the quarter. This included Cinacalcet Tablets, Sapropterin Dihydrochloride Tablets and Succinylcholine Chloride Injection in the US along with Daptomycin Injection in Canada. We also re-launched one product in US - OTC Famotidine.
  • ► We filed two new ANDAs during the quarter. As of 31st December 2020, cumulatively 89 generic filings are pending for approval with the USFDA (87 ANDAs and 2 NDAs under 505(b)(2) route). Of the 89 ANDAs, 48 are Para IVs and we believe 24 have 'First to File' status.

Europe

Revenues from Europe at Rs. 4.1 billion:

► Year-on-year growth of 34% and sequential growth of 10%, which were driven by new product launches, favorable forex movement and volume traction, offset partly by price erosion.

India

Revenues from India at Rs. 9.6 billion:

► Year-on-year growth of 26% and sequential growth of 5%. YoY growth is on account of revenues from the acquired portfolio of Wockhardt and contribution from new product launches. QoQ growth was driven by volume traction.

Emerging Markets

Revenues from Emerging Markets at Rs. 9.6 billion. Year-on-year growth of 5%. Sequential growth of 11%:

  • ► Revenues from Russia at Rs. 4.5 billion. Year-on-year decline of 8% is primarily due to weakening Ruble. Sequential growth of 14% contributed by increased volumes
  • ► Revenues from other CIS countries and Romania market at Rs. 2.1 billion. Year-on-year growth of 18% and sequential growth of 8% driven by both base business and new product launches.
  • ► Revenues from Rest of World (RoW) territories at Rs. 3.0 billion. Year-on-year growth of 20% and sequential growth of 10% is due to volume traction in the base business and new product launches.

Pharmaceutical Services and Active Ingredients (PSAI)

Revenues from PSAI at Rs. 7.0 billion:

  • ► Year-on-year growth of 1 % driven by new products and favorable forex rate, offset by lower volumes for some products.
  • ► Sequential decline of 18% on account of lower volumes of certain products.
  • ► During the quarter we filed DMF for five products in the US.

Proprietary Products (PP) & Others

Revenues from PP & Others at Rs. 1.5 billion:

► Year-on-year growth of 53% and sequential growth of 147%. The growth was driven by milestone income received for the compound AUR102.

Income Statement Highlights:

  • ► Gross profit margin at 53.8%:
    • Decline of 30 bps over previous year and 10 bps sequentially, which was primarily impacted due to price erosion and lower export benefits, partially offset by the milestone income received for the compound AUR102.
    • Gross profit margin for GG and PSAI business segments are at 57.6% and 25.3% respectively.
  • ► SG&A expenses at Rs. 14.4 billion, increased by 14% year-on-year primarily due to incremental costs post the integration of the acquired portfolio from Wockhardt in this year and increased freight expenses. Sequentially, it increased by 10% primarily due to pickup in sales & marketing activities in branded markets and increase in freight expenses.
  • ► Impairment charge of Rs. 6.0 billion. In January, 2021 there has been an additional generic launch for the product Nuvaring®, which has led to a considerable erosion in the value of this product for us, and accordingly we have taken an impairment charge of Rs. 3.2 billion. In addition to this, considering the current market dynamics, we have taken an additional impairment charge of Rs. 2.8 billion on the intangibles pertaining to other products. We had an impairment charge of Rs. 13.2 billion in Q3 FY 20 and Rs. 781 million in Q2 FY21.
  • ► R&D expenses at Rs. 4.1 billion. As % to revenues these are: Q3 FY21: 8.3% I Q2 FY 21: 8.9% I Q3 FY20: 9.0%. Our focus continues on building a healthy pipeline of new products across our markets including d'evelopment of products pertaining to COVID-19 treatment.
  • ► Other operating income at Rs. 128 million compared to Rs. 228 million in Q3 FY20.
  • ► Net Finance income at Rs. 493 million compared to Rs. 419 million in Q3 FY20.
  • ► Profit before Tax at Rs. 2.8 billion, which is 5.8% of revenues.
  • ► Profit after Tax at Rs. 198 million. The effective tax rate is ~93.0% for the quarter, impacted primarily due to non-recognition of deferred tax asset on impairment.
  • ► Diluted earnings per share is at Rs. 1.19.

Other Highlights:

  • ► EBITDA at Rs. 11.9 billion and the EBITDA margin is 24.0%
  • ► Capital expenditure is at Rs. 2.9 billion.
  • ► Free cash-flow: Net out-flow during the quarter stood at Rs. 580 million.
  • ► Net cash surplus for the company is at Rs. 839 million as on December 31, 2020. Consequently, net debt to equity ratio is (0.005).

�

Earnings Call Details (05:30 pm 1ST, 07:00 am EST, Jan 29, 2021)

The management of the Company will host an earnings call to discuss the Company's financial performance and answer any questions from the participants.

Conference Joining Information

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Play Back: The play back will be available after the earnings call, till February 5th, 2021. For play back dial in phone No: +9122 7194 57571+91226663 5757, and Playback Code is 37 918.

Transcript: Transcript of the Earnings call will be available on the Company's website: www.drreddys.com

About Dr. Raddy's: Dr Reddy's Laboratories Lid (BSE: 500124, NSE: DRREDDY, NYSE: RDY) Is an integrated pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives Through its three businesses - Pharmaceutical Services & Active Ingredients, Global Generics and Proprietary Products - Dr Reddy's offers a portfolio of products and services including AP ls, custom pharmaceutical services, generics. biosimilars and differentiated formulations Our major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology Dr Reddy's operates in mar1<ets across the globe Our major markets include - USA, India, Russia & CIS countries. and Europe For more information, log on to: www drreddys.com

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Disclaimer: This press release may include statements of future expectations and other forward-looking statements that are based on the management's current views and assumptions and involve known or unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements In addition to statements which are forward-looking by reason of context, the words "may", "will", "should", "expects", "plans", "intends", ·anticipates", "believes", "estimates", "predicts", "potential", or "continue" and similar expressions identify forward-looking statements Actual results, performance or events may differ materially from those in such statements due to without limitation, (1) general economic conditions such as performance of financial mar1<ets, credit defaults , currency exchange rates , interest rates , persistency levels and frequency / severity of insured loss events (ii) mortality and morbidity levels and trends, (iii) changing levels of competition and general competitive factors, (iv) changes in laws and regulations and In the policies of central banks and/or governments, (v) the impact of acquisitions or reorganization . including related integration issues. (vi) the susceptibility of our industry and the mar1<ets addressed by our, and our customers', products and services to economic downturns as a result of natural disasters. epidemics, pandemics or other widespread illness, including coronavirus (or COVID-19), and (vii) other risks and uncertainties identified in our public filings with the Securities and Exchange Commission. including those listed under the 'Risk Factors" and "Forward-Looking Statements" sections of our Annual Report on Form 20-F for the year ended March 31, 2020 The company assumes no obligation to update any information contained herein

Independent Auditor's Rcvil'w Report on the Quarterly and Year 1o Date Unaudited Consolidated Finandal Results of the Company Pursuant to the Rcgulalion 33 of the SEHi {Listing Obligations and Disclosure Rt•quircmcnts) Regulations, 2015, as amended

RcYicw Report to The Board of Din•ctors Dr. Rcddy's Laboratories Limited

  • I. We have reviewed the accompanying Statement or Unaudited Cons(ilidated Financial Results or Dr. Rcddy's Laboratories Limited (the "llolding Company'') and its subsidiaries (the Holding Company and its subsidiaries together rcforrcd to as ·'the Group''), and its joint ventures for the quai1cr ended December 31, 2020 and year to date from April O 1, 2020 to December 31, 2020 (the "Statement'') attached herewith, being submit1ed by the Holding Company pursuant to the require111ents of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations.2015, as amended (1he "Listing Regulations").
    1. This Statement, which is the responsibility of the Holding Company's Management and approved by the Holding Company's Board or Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34. (Ind AS 34) "'Interim Financial Rep011ing"' 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.
    1. We conducted our review of the Statement in accordance with the Standard 011 Review Engagenwnts ( S RE) 2,110, ··Review of Interim Financial Information Perfrmned by the lndeprndcnt Auditor of the Entity'' issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perfom1 the review to obtain moderate assurance as to whether the Statement is free of material misstatement. J\ review or interim financial information coiisists 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 e11ablc 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, ClR/CFD/CMDI/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.

,1. The Statement includes the results of the following entities:

S.No Name of the Company

Subsidiaries:

  • I. Aurigenc Discovery Technologies Limited
    1. Cheminor Investments Limited
    1. Dr. Reddy's Bio-Sciences Limited
    1. Dr. Reddy's Farmaceutica Do Brasil L1da.
    1. Dr. Reddy's Laboratories SA
    1. ldca2Entcrprises (India) Private Limited
    1. lmperial Credit Private Limited
    1. Industrias ()uimicas ralcon de Mexico, S.A.de C.V.
    1. Reddy An1illes N.V. (till 02 November, 2019)

JO. Svaas Wellness Limited (J'ormerly ·Regkinetics Services Limited' nnme changed effective December 18, 2020)

    1. Aurigenc Discovery Technologies (Malaysia) SDN BHD
    1. Aurigene Discovciy Technologies Inc.
    1. Aurigene Pharmaceutical Services Limited (from 16 September 2019)
    1. beta lnstitut gemeinnUtzigc GmbH

  1. betApharm Arzneimittel Gmbll

  2. Chirotech Technology Limited

  3. DRL Impex Limited

  4. Dr. Rcddy's Laboratories (Australia) Pty. Limited

  5. Dr. Rcddy's Laboratories Canada, Inc.

  6. Dr. Rcddy's Laboratories Chile SPA.

  7. Dr. Roddy's Laboratories (EU) Limited

  8. Dr. Reddy's Laboratories Inc.

  9. Dr. Reddy's Laboratories Japan KK

  10. Dr. Rcddy's Laboratories Kazakhstan Ll.P

  11. Dr. Reddy's Laboratories LLC

  12. Dr. Reddy's Laboratories Louisiana LLC

  13. Dr. Reddy's Laboratories Malaysia Sdn. Bhd.

  14. Dr. Reddy's Laboratories New York, LLC

  15. Dr. Reddy's Laboratories Philippines Inc.

  16. Dr. Reddy's Laboratories (Proprietary) Limited

  17. Dr. Reddy's Laboratories Romania S.R.L.

  18. Dr. Reddy's Laboratories SAS

  19. Dr. Reddy's Laboratories Taiwan Limited

  20. Dr. Reddy's Laboratories (Thailand) Limited

  21. Dr. Recldy's Laboratories (UK) Limited

  22. Dr. Reddy's Research and Development B.V.

  23. Dr. Redcly's Singapore PTE Limited (till 04 June, 2019)

  24. Dr. Reddy's Sri

  25. Dr. Reddy's New Zealand Limited

  26. Dr. Reddy's (WUXl) Phannaceutjcal Co: Limited

  27. Dr. Reddy's Venezuela, C.A.

  28. Dr. Reddy's Laboratories B.V. (Fonncrly Eurobridge Consulting B.V.)

  29. Lacock Holdings Limited

  30. 000 Dr. Re.ddy's Laboratories Limited

  31. 000 ORS LLC

  32. Promius Pharma LLC

  33. Reddy Ho.lding GmbH

  34. Reddy Netherlands RV.

  35. Reddy Pharma Iberia SA

  36. Reddy Pharma Italia S.R.L

5 l. Reddy Pharma SAS

  1. Dr. Reddy's (Beijing) Pharmaceutical Co. Limited (from August 19, 2020)

Joint Ventures:

I. DRANU LLC

  1. ORES Energy Private Limited

  2. Kunshan Rotam Reddy Pharmaceutical Company Limite�

Othel' Consolidati11g entities:

  • t. Chemin or Employees Welfare Trust
    1. Dr. Reddy's Employees ESOS Trust
    1. Dr. Reddy's Research Foundation

l

  1. Based on our review conducted and procedures performed as stated in paragraph 3 nothing has come to our attention that causes us to believe that the accompanying St11tement, prepared in accordance with recognition and measurement principles laid down in the afrlresaid Indian Accounting Standards ('Ind AS') specified under Section 133 of the Companies Act, 2013, as amended, read with relevant rules issued thereunder and otJ1er accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms oftbe Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material tn isstatement.

For S.R. BATLIBOI & ASSOCIATES LLP Chartered Accountants ]CAI Firm registrntion number: l 0 l 049W/E300004

�!�cc&i�;;:1 Partner Membership No.: I 02328

UDIN: 211O2328AAAAAU4019

Hyderabad Janua1•y 29,202]

Dr. Raddy's Laboratories Ltd. 8-2-337, Road No. 3, Banjara Hills, Hyderabad· GOO 034, Telangana, India.

CIN: L85195TG1984PLC004507

Tel :+91 40 4900 2900 Fax :+91 40 4900 2999 Email :[email protected] www.drreddys.com

DR. REDDY'S LABORATORIES LIMITED

STATEMENT OF UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2020

All amounts m n . I d.R ian u1,ees m1 10ns
SI. Quarter ended Nine months endedYear ended
No. Particulars 3l.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 operationsa) Net sales/ income from operationsb) License fees and service incomec) Other operating income 47,1092,187123 47,7661,201142 42,6071,231133 138,1194,319355 120,21310,069399 163,57411,026570
Total revenue from operations 49,419 49,109 43,971 142,793 130,681 175,170
2 Other income 705 512 673 2,088 5,470 6,206
3 Total income (1 + 2) 50,124 49,621 44,644 144,881 136,151 181,376
4 Expenses
a) Cost ofmate1ials consumedb) Purchase of stock-in-tradec) Changes in invento1ies of finished goods, work-in-progressand stock-in-traded) Employee benefits expensee) Depreciation and ammtisation expensef) lmpainnent of non-cmTent assetsg) Finance costs 11,7736,803(2,199)9,1573,1125,972188 9,4856,889(573)9,4883,165781252 7,5288,426(1,801)8,3772,86913,200152 32,69718,968(6,291)27,3699,2006,753673 22,39519,584(1,746)25,2478,89016,760753 29,84825,45923733,80211,63116,767983
h) Selling and other expenses 12,520 11,478 11,128 35,130 33,229 44,353
Total expenses 47,326 40,965 49,879 124,499 125,112 163,080
5 Profit/ (loss) before tax and before share of equityaccounted investees(3 - 4) 2,798 8,656 (5,235) 20,382 11,039 18,296
6 Share of profit of equity accounted investees, net of tax 151 73 176 301 456 561
7 Profit/ (loss) before tax(5+6) 2,949 8,729 (5,059) 20,683 11,495 18,857
89 Tax expense/ (benefit):a) CuiTent taxb) Deferred taxNet profit/ (loss) after taxes and share of profit ofassociates (7 - 8) 1,902768279 1,724(713)7,718 1,736(1,411)(5,384) 6,792(52)13,943 6,199(7,153)12,449 6,616(8,019)20,260
IO Other comprehensive income
a) (i) Items that will not be reclassified subsequently toprofit or loss 2,803 (26) (200) 2,984 (86) (412)
(ii) Income tax relating to items that will not be reclassifiedto profit or loss - - - - - (22)
b) (i) Items that will be reclassified subsequently to profit orloss 930 258 606 1,919 563 (448)
{ii) Income tax relating to items that will be reclassifiedto profit or loss (I) (138) 48 (295) 136 232
Total other comprehensive income 3,732 94 454 4,608 613 (650)
11 Total comprehensive income (9 + IO) 4,011 7,812 (4,930) 18,551 13,062 19,610
12 Paid-up equity share capital (face value Rs. 5/-each) 831 831 831 831 831 831
13 Othere� 155,157
14( E� ·1y share (face value Rs. 5/- each)! } } )( otruttiv.�· 1.681.67 46.5446.40 (32.48)(32.48)(Not a1111t1a!ised) (Not annualised) (Not a111111a/ised) (Not a111111a/ised) 84.0783.83 75.1174.97(Not annualised) 122.22121.99

1-St��� ICS to the financial results

'/;,cJera'o'o --

DR. REDDV'S LABORATORIES LIMITED

s CJ:IIICIII I f 11 ormation All amounts 111 I n d. ian R Ul)�CS 1111 ions
Quarter ended Nine months ended Year ended
�I. 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)
Segment wise revenue and results:
I Segment revenue:
a) Phannaceutical Services and Active lng1edienls 8,841 10,355 8,654 29,361 23,304 32,086
b) Global Genetics 40,778 39,882 35,956 115,752 101,804 I 38,264
c) Proprielaty Products 124 100 241 280 7,947 7,949
d) Others 1,412 523 763 2,424 2,058 2,781
Total 51,155 50,860 45,614 147,817 135,l 13 181,080
Less: Inter-segment revenue 1,736 1,751 1,643 5,024 4,432 5,910
Total revenue from operations 49,419 49,109 43,971 142,793 130,681 175,170
2 Segment results:
Gross profit from each segment
a) Phannaceutical Services and Active Ingredients 1,776 2,292 2,079 6,927 4,169 6,219
b) Global Genetics 23,454 23,685 20,910 68,665 58,117 78,449
c) Prop1ietary Products 100 88 246 244 7,751 7,744
d) Others 1,211 352 492 1,880 1,184 1,626
Total 26,541 26,417 23,727 77,716 71,221 94,038
Less: Selling and other un-allocable expenditure/(income), nu! 23,592 17,688 28,786 57,033 59,726 75,181
Total profit before tax 2,949 8,729 (5,059) 20,683 11,495 18,857

Global Generics includes operations of Biologics business Inter-segment revenue represents sale from Phannaceutical Services and Active Ingredients to Global Generics at cost.

Segmental Capital employed

As cettain assets of the Company including manufactuting facilities, development facilities and treasmy 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:

u,.,Q

*

o* IY;,ae ra'O�

  • 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.
  • 2 Dming the quatter ended 31 December 2020, there were significant changes to the market conditions for cettain of the products fanning patt of Company's Global Generics and Proprietary Products segments. The changes include the launch by competitor of genetic version of the product, decrease in the market potential of products primarily due to higher than expected price erosion and increased competition, and higher than expected valu.e erosion. Due to these adverse market developments, the Company recorded an impainnent loss of:
    • Rs. 3,180 million relating to Ethinyl estradiol / Ethenogestral vaginal ting (a genetic equivalent to NuvaRing®);
    • Rs. 1,587 million relating to Saxagliptin and metfonnin (genetic version of Kombiglyze-XR) and Phentennine and Topiramate (genetic version of Qsymia®); and
    • Rs. I, 159 million relating to other intangible assets fanning pmt of the Company's Global Genetics and Prop1ietmy Products segments.

In addition, an amount of Rs. 46 million was recorded as impainnent loss pettaining to propetty, plant and equipment on wtite-down of assets to fair value less costs to sell fanning patt of Company's Global genetics segment.

  • 3 Dming the quatter ended 31 December 2020, the Company entered into a definitive agreement with Glemnark Pharmaceuticals Ltd. to acquire, cettain brands in vatious Emerging Market countties for a total consideration of Rs. 1,516 million. The said transaction was accounted for as an acquisition of product related intangibles.
  • 4 Impainnent expense of Rs. 781 million for the quatter ended 30 September 2020 comprises of:
    • Rs. 728 million pettaining to product related intangible fanning patt of Company's Proptietaty Segment due to decrease in the market potential for the product;
  • Rs. 53 million pettaining to cettain product related intangibles fmming part of Company's Global genetics Segment due to Company's decision to discontinue their fmther development.
  • 5 Tax expense for the quarter ended 30 September 2020 includes benefit on account of recognition of defetTed tax asset amounting to Rs. 1,012 million pursuant to a planned restrnctuting activity between the Group companies. The said restructuting activity was concluded during the quatter ended 31 December 2020.
  • 6 On IO June 2020, the Company completed the acquisition of select divisions of Wockhardt Limited's branded genetics business in India and the tenitoties of Nepal, S,i Lanka, Bhutan and Maldives. The business comptises a pottfolio of 62 brands in multiple therapy areas, such as respirat01y, neurology, venous malfonnations, dennatology, gastroenterology, pain, and vaccines. This entire portfolio has been transfeITed to the Company, along with related sales and marketing teams, the manufactming plant located in Baddi, Himachal Pradesh, and employees. Dming the quatter ended 30 September 2020, the Company completed the purchase ptice allocation. The fair value of consideration transfetTed is Rs.16,115 million. The Company recognised Rs. 373 million, Rs. 14,888 million and Rs. 530 million towards propetty, plant and equipment, intangible assets, and goodwill, respectively. The acquisition pettains to Company's Global Genetics segment.
  • 7 "Revenue f r om operations" for the year ended 31 March 2020 includes an amount of Rs. 7,486 million (U.S.$! 08.7 million) towards license fee for selling US and · his for ZEMBRACE'�' SYMTOUCH1g1(sumattiptan injection) 3 mg and TOSYMRA''' (sumattiptan nasal spray) 10 mg, (fonnerly refetTed to as .,...,,:::::::=:;:;:;� "DfN- Cli) sh-, Smith Laboratoties, LLC. The costs associated with this transaction are Rs. 328 million. '':> r,;,
  • 8 me" lo -\1\e_. r ended 31 March 2020 includes an amount of Rs. 3,457 million received from Celgene, pursuant to a settlement agreement entered in I�( I' ,h • ogr�c; ic effectively settles any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines ( t%c or b11_1pli;rnc � gulatlo11s in regard to the Company's ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Ca aoa. 1 , • Q.

DR. REDDY'S LABORATORIES LIMITED

  • 9 Total impainnent charge for the year ended 31 March 2020 is Rs. 16,767 million, of which Rs. 11,137 million was towards impainnent of gNuvaring, Rs. 4,385 million was towards ramelleon, tobramycin and imiquimod, and the balance is towards other product related intangibles fanning pa1t of Company's Global generics and Proprieta1y Products segments,
  • IO Tax benefit for the year ended 31 March 2020 was p1imaiily due to recognition of defell'ed 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 restmctu1ing activity between the group Companies.
  • 11 The Code on Social Secmity, 2020 ('Code') received Presidential assent in September 2020. The Code has been published in the Gazette of India, However, the related final mies 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 mies thereunder when they come into effect.
  • 12 On 22 October 2020, the Company expelienced a cybersecmity 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 nonnalcy in the order of plio1ity. Based on our forensic investigation, no evidence was found of any data breaches leading to personally identifiable infonnation. Since then, the Company has also been focused on implementing significant improvements to its cyber and data secmity systems to safeguard from such 1isks in the future.
  • 13 The Company continues to consider the impact of COVID-19 pandemic in assessing the recoverability of receivables, goodwill, intangible assets, and ce1tain investments. For this purpose, the Company considered internal and external sources of infonnation 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 canying amount of receivables, goodwill, intangible assets, investments and other assets.The Company will continue to closely monitor any material changes to future economic conditions.
  • 14 The unaudited results were reviewed by the Audit Committee of the Board at their meeting held on 28 Janumy 2021 and approved by the Board of Directors of the Company at their meeting held on 29 Janua1y 2021.
  • IS The results for the quaiter and nine months ended 31 December 2020 were subject to a "Limited Review" by the Statuto1y Auditors of the Company. An unqualified repo1t has been issued by them thereon.

By order of the Board For Dr. Reddy's Laboratories Limited

G V Prasad Co-Chainnan & Managing Director

Place: Hyderabad Date: 29 Janua1y 2021

I< I L

r ,

l11dcpc111lcnt Auditor's Review Report on the Quartt'rly and Year to natl' Unaudited Standalone Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Rcquircmcnts) H.cgnlation�, 2015, as amc111kd

Review Report to The Bo11rd of Directors Dr. Rcdcly's Laboratories Limited

    1. We have reviewed the accompanying statement of unaudited standalone financial rcsu Its ol' Dr. Reddy's J ,aborato1 ies Limited (the "Company") l'or the qum1er ended December 3 I, 2020 and year to dmc f'ro111 April 0 I, 2020 to December 3 L 2020 (the "Statement'') attached herewith, being submitted hy the Comrany pursuant to 1hc requirements ofr{egulation 33 ofthe SEBI (Listing Obligations and Disclosure Requ ircments) Regulations, 2015. as a111c11ded (the "Listing Regulatio11s'').
    1. This Statement. which is the responsibility or the Company's Management and approved by the Company's Board of Directors, has been prepared in accord.i11cc with the recog11itio11 and measurement principles laid down in Indian Accounting Standard 34, (Ind AS 3,1) "Interim Financial Reporting'' prescribed under Section 133 or the Companies Act, 2013 as amended, read with relevant ru lcs issued thereunder and other accounting principles generally accepted in lndin. Our rc'sponsibility is to express a conclusion on the Statement based on our review.
    1. We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2<1 IO. "Review of Interim Financial Information Performed by the Independent Autlitor of the Entity'' issued by the l.nstitutc of Chartered Accountants of India. This standard requires that we plan ,md perform the review to obtain moderate assurance as to whc!hcr the S!atement is free of material misstatement. A review of interim financial infonnation consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is subs1antially less in scope than an ,111dit condw.:ted in accordance with Standards on Auditing and consequently docs not enable us to obtain assurance that we would beco111c aware of all signifirnnt matters that might be idcn!ilicd in an audit. Accordingly, we do not express un audit opinion.
    1. 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, rend with relevant rnlcs issued thereunder and other accounting principles generally accepted in India, has nol 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 Kahra Partner Membership No.: 102�28

UDIN: 21102328AAAAAV6613

Place: I'lyderabad Date: January 29, 2021

Dr. Raddy'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 :[email protected] 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 nn.,f}Urus. m n ian . I d' R LIP�OS llll 1011S
SI. 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
(1Jnn11ditcd) ( IJnaudited) (Unaudited) lLinauditedJ (Unaudited) (Audited)
l Revenue from operations
a) Net sales/ income from operations 33,818 33,233 99,315
b) License fees and service income 157 103 29,864458 81,7307,921 109,925
c) Other operating income 107 122 118 364305 336 8,!05
Total revenue from operations 34,082 33,458 30,440 99,984 89,987 474118,504
2 Other income 628 266 693 7,195 6,158 7,432
Total income (l + 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 (l + 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 reclassifiedto 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
IO 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
(Nol annualised) (Nol annualised) (Nol annualised) (Nol annualised) (Nol annualised) ,

See accompanymg notes to the financial results.

DR, HEDIJY'S LABOHA'I ORIES LIMl'I ED

Segment information
Se�u1cul informationAll amounts 111 lndrnn Ruucc.s millions
Quarter ended Nine months ended Year ended
SI. 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 :rncl results
I Segment revenue
a) Phannaccutical Services nnd Aclive lng1edicnts 7,763 7,996 7,106 24,465 19,623 26,996
b) G loba I Generics 27,970 27,112 24,680 80,323 67,168 89,774
c) Prop1ielary Products 85 IOI 296 220 7,628 7,644
Total 35,818 35,209 32,082 105,008 94,419 124,414
Less: lnte1-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 IJS,504
2 Segment results
Profit/ (loss) before tax and inte1est from each segment
a) Phannaceutical Services and Active Ingredients 428 145 957 6,259 1,027 1,465
b) Globa I 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 1epresents 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:

  • I 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.
  • 2 During the three months ended 31 December, 2020 there were significant changes to the market conditions for certain products fanning part of Company's Global Gene1ics 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 impainnent Joss 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 se!,onent, an amount of Rs,53 million is recognised as impainnent charge for the quarter ended 30 September, 2020

  • 3 During the tlu-ee months ended 31 December, 2020, the Company entered into a definitive agreement with Glenmark Phannaceuticals 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,
  • 4 On JO June 2020, the Company completed the acquisition of select divisions ofWockhardt 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 malfonnations, 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) IO mg, (fonnerly 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,
  • 7 During 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 2 L55% 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 phannaceutical services in India

  • 8 The Code on Social Security, 2020 ('Code') received Presidential assent in September 2020. The Code has been published in the Gazette oflndia. 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,
  • 9 On 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 nonnalcy in the order of priority. Based on our forensic investigation, no evidence was found of any data breaches leading to personally identifiable infonnation. 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_
  • IO 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 infonnation up to the date of approval of these financial results. The Company based on its judgements, · •)J:.i�=��lt' including sensitivity analysis expects to fully recover the carrying amount of receivables, goodwill, intangible assets, investments and other assets, o closely monitor any material changes lo future economic conditions

DR. REDDY'S LABORATORIES LIMITED

  • 11 The unaudiled resulls were reviewed by the Audit Committee of the Board at lheir meeting held on 28 January 2021 and approved by the Boa,d ofDirecto1s of the Company at theii meeting held on 29 Janua1y 2021.
  • 12 The resulls for the qumier and nine months ended 31 December 2020 presented were subjected to a "Limited 1eview" by the Statutory Audito,s of the Company. An unqualified report was issued by them thereon

By order of the Board For Dr. Reddy's Laboratories Limited

fL(

G V Prasad Co-Chairman & Managing Director

Place: Hyderabad Date: 29 January 2021

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