Exhibit 99.4
S.R. Batliboi & Associates LLP Chartered Accountants | THE SKYVIEW 10 18th Floor, "NORTH LOBBY" Survey No. 83/1, Raidurgam Hyderabad – 500 032, India Tel: +91 40 6141 6000 |
Independent Auditor’s Review Report on the Quarterly and Year to Date Unaudited Standalone Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended
Review Report to
The Board of Directors
Dr. Reddy’s Laboratories Limited
1. | We have reviewed the accompanying statement of unaudited standalone financial results of Dr. Reddy’s Laboratories Limited (the “Company”) for the quarter and nine month ended December 31, 2022 (the “Statement”) attached herewith, being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”). |
2. | The Company’s Management is responsible for the preparation of the Statement 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 and in compliance with Regulation 33 of the Listing Regulations. The Statement has been approved by the Company’s Board of Directors. Our responsibility is to express a conclusion on the Statement based on our review. |
3. | We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. |
4. | Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with the recognition and measurement principles laid down in the aforesaid Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Companies Act, 2013 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement. |
For S.R. BATLIBOI & ASSOCIATES LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
/s/ Shankar Srinivasan | |
per Shankar Srinivasan Partner Membership No.: 213271
UDIN: 23213271BGSEFC3320 |
Hyderabad
January 25, 2023
S.R. Batliboi & Associates LLP, a Limited Liability Partnership with LLP Identity No. AAB-4295
Regd. Office: 22, Camac Street, Block ‘B’, 3rd Floor, Kolkata-700 016
Dr. Reddy’s Laboratories Ltd. 8-2-337, Road No. 3, Banjara Hills, Hyderabad - 500 034, Telangana, CIN : L85195TG1984PLC004507
Tel :+91 40 4900 2900 Fax :+91 40 4900 2999 Email :mail@drreddys.com www.drreddys.com |
DR. REDDY'S LABORATORIES LIMITED
STATEMENT OF UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2022
All amounts in Indian Rupees millions | ||||||||||||||||||||||||||
Quarter ended | Nine months ended | Year ended | ||||||||||||||||||||||||
31.12.2022 | 30.09.2022 | 31.12.2021 | 31.12.2022 | 31.12.2021 | 31.03.2022 | |||||||||||||||||||||
Sl. No. | Particulars | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||
1 | Revenue from operations | |||||||||||||||||||||||||
a) Net sales / income from operations | 38,624 | 48,475 | 34,303 | 1,20,498 | 1,05,035 | 1,38,864 | ||||||||||||||||||||
b) License fees and service income | 172 | 186 | 335 | 3,115 | 1,799 | 4,289 | ||||||||||||||||||||
c) Other operating income | 180 | 142 | 158 | 472 | 531 | 899 | ||||||||||||||||||||
Total revenue from operations | 38,976 | 48,803 | 34,796 | 1,24,085 | 1,07,365 | 1,44,052 | ||||||||||||||||||||
2 | Other income | 514 | 1,180 | 630 | 5,343 | 3,673 | 4,820 | |||||||||||||||||||
Total income (1 + 2) | 39,490 | 49,983 | 35,426 | 1,29,428 | 1,11,038 | 1,48,872 | ||||||||||||||||||||
3 | Expenses | |||||||||||||||||||||||||
a) Cost of materials consumed | 8,659 | 6,367 | 5,078 | 23,073 | 20,517 | 33,784 | ||||||||||||||||||||
b) Purchase of stock-in-trade | 4,874 | 4,391 | 7,538 | 14,101 | 20,335 | 20,571 | ||||||||||||||||||||
c) Changes in inventories of finished goods, work-in-progress and stock-in-trade | (1,281 | ) | 1,336 | (566 | ) | 227 | (3,339 | ) | (3,896 | ) | ||||||||||||||||
d) Employee benefits expense | 7,084 | 7,101 | 6,040 | 20,675 | 18,257 | 24,346 | ||||||||||||||||||||
e) Depreciation and amortisation expense | 2,388 | 2,262 | 2,054 | 6,865 | 6,091 | 8,143 | ||||||||||||||||||||
f) Impairment of non-current assets | 10 | - | - | 10 | - | 98 | ||||||||||||||||||||
g) Finance costs | 28 | 17 | 77 | 143 | 253 | 380 | ||||||||||||||||||||
h) Selling and other expenses | 12,879 | 11,580 | 10,566 | 35,040 | 32,353 | 43,208 | ||||||||||||||||||||
Total expenses | 34,641 | 33,054 | 30,787 | 1,00,134 | 94,467 | 1,26,634 | ||||||||||||||||||||
4 | Profit before tax (1 + 2 - 3) | 4,849 | 16,929 | 4,639 | 29,294 | 16,571 | 22,238 | |||||||||||||||||||
5 | Tax expense / (benefit) | |||||||||||||||||||||||||
a) Current tax | 1,988 | 2,976 | 812 | 6,322 | 2,952 | 3,926 | ||||||||||||||||||||
b) Deferred tax | (385 | ) | 2,790 | 416 | 3,568 | 1,584 | 2,080 | |||||||||||||||||||
6 | Net profit for the period / year (4 - 5) | 3,246 | 11,163 | 3,411 | 19,404 | 12,035 | 16,232 | |||||||||||||||||||
7 | Other comprehensive income | |||||||||||||||||||||||||
a) (i) Items that will not be reclassified subsequently to profit or loss | 2 | 2 | - | 3 | 2 | (45 | ) | |||||||||||||||||||
(ii) Income tax relating to items that will not be reclassified to profit or loss | (31 | ) | - | - | (31 | ) | - | 17 | ||||||||||||||||||
b) (i) Items that will be reclassified subsequently to profit or loss | 1,296 | 912 | 201 | (2,278 | ) | (123 | ) | 832 | ||||||||||||||||||
(ii) Income tax relating to items that will be reclassified to profit or loss | (551 | ) | (320 | ) | (69 | ) | 697 | 44 | (291 | ) | ||||||||||||||||
Total other comprehensive income | 716 | 594 | 132 | (1,609 | ) | (77 | ) | 513 | ||||||||||||||||||
8 | Total comprehensive income (6 + 7) | 3,962 | 11,757 | 3,543 | 17,795 | 11,958 | 16,745 | |||||||||||||||||||
9 | Paid-up equity share capital (face value Rs. 5/- each) | 833 | 832 | 832 | 833 | 832 | 832 | |||||||||||||||||||
10 | Other equity | 1,82,530 | ||||||||||||||||||||||||
11 | Earnings per equity share (face value Rs. 5/- each) | |||||||||||||||||||||||||
Basic | 19.54 | 67.25 | 20.55 | 116.88 | 72.56 | 97.85 | ||||||||||||||||||||
Diluted | 19.50 | 67.10 | 20.51 | 116.63 | 72.38 | 97.58 | ||||||||||||||||||||
(Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) | (Not annualised) |
See accompanying notes to the financial results.
Segment information | All amounts in Indian Rupees millions | |||||||||||||||||||||||||
Quarter ended | Nine months ended | Year ended | ||||||||||||||||||||||||
31.12.2022 | 30.09.2022 | 31.12.2021 | 31.12.2022 | 31.12.2021 | 31.03.2022 | |||||||||||||||||||||
Sl. No. | Particulars | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||||||
Segment wise revenue and results | ||||||||||||||||||||||||||
1 | Segment revenue | |||||||||||||||||||||||||
a) Pharmaceutical Services and Active Ingredients | 6,357 | 6,452 | 7,305 | 18,785 | 23,786 | 31,718 | ||||||||||||||||||||
b) Global Generics | 34,298 | 43,829 | 28,997 | 1,09,348 | 86,744 | 1,16,999 | ||||||||||||||||||||
c) Others | 110 | 106 | 110 | 368 | 1,391 | 1,590 | ||||||||||||||||||||
Total | 40,765 | 50,387 | 36,412 | 1,28,501 | 1,11,921 | 1,50,307 | ||||||||||||||||||||
Less: Inter-segment revenue | 1,789 | 1,584 | 1,616 | 4,416 | 4,556 | 6,255 | ||||||||||||||||||||
Total revenue from operations | 38,976 | 48,803 | 34,796 | 1,24,085 | 1,07,365 | 1,44,052 | ||||||||||||||||||||
2 | Segment results | |||||||||||||||||||||||||
Profit / (loss) before tax and interest from each segment | ||||||||||||||||||||||||||
a) Pharmaceutical Services and Active Ingredients | (671 | ) | (869 | ) | (226 | ) | (1,822 | ) | 706 | 384 | ||||||||||||||||
b) Global Generics | 7,498 | 19,040 | 5,312 | 37,662 | 15,927 | 21,871 | ||||||||||||||||||||
c) Others | (97 | ) | (28 | ) | 36 | (103 | ) | 1,031 | 1,160 | |||||||||||||||||
Total | 6,730 | 18,143 | 5,122 | 35,737 | 17,664 | 23,415 | ||||||||||||||||||||
Less: (i) Finance costs | 28 | 17 | 77 | 143 | 253 | 380 | ||||||||||||||||||||
(ii) Other un-allocable expenditure / (income), net | 1,853 | 1,197 | 406 | 6,300 | 840 | 797 | ||||||||||||||||||||
Total profit before tax | 4,849 | 16,929 | 4,639 | 29,294 | 16,571 | 22,238 |
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:
1 | 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 quarter and nine months ended 31 December 2022, an amount of Rs. 435 million and Rs. 2,806 million respectively, representing government grants has been accounted for as a reduction from cost of material consumed. | |
3 | License fee and service income for the quarter ended 30 June 2022 includes: a. Rs. 902 million from sale of brands Z&D, Pedicloryl, Pecef and Ezinapi to J B Chemicals and Pharmaceuticals Limited; b. Rs. 1,399 million from sale of brands Styptovit-E, Finast, Finast-T and Dynapres to Torrent Pharmaceuticals Limited. These transactions pertain to Company’s Global Generics segment. | |
4 | As the revenues and gross profits of the Proprietary Products segment are considerably lower than the quantitative thresholds mentioned in IND AS 108, “Operating Segments”, the Company believes that Proprietary Products segment no longer qualifies to be a reportable segment and consequently, effective 1 April 2022, the Company included the financial information relating to Proprietary Products segment in “Others”. The corresponding information relating to Proprietary Products segment for earlier periods has been restated to reflect the aforementioned change. | |
5 | License fee and service income for the year ended 31 March 2022 includes: a) Rs. 1,774 million towards the sale of territorial rights relating to two of the Company’s anti-bacterial brands (Ciprolet® and Levolet®) in Russia and CIS region to Alium JSC; b) Rs. 390 million towards the sale of two of the Company’s Brands (Daffy bar and Combihale) in India to Mankind Pharma Limited; c) Rs. 1,084 million towards the sale of U.S. and Canada territory rights for ELYXYBTM (celecoxib oral solution) 25 mg/mL, to BioDelivery Sciences International, Inc. The aforesaid transactions pertain to Company’s Global Generics and Others segment. | |
6 | The Company has considered the impact of recent tax regulations and developments, including updates to its estimate on the impact of adoption of the Taxation Laws (Amendment) Act 2019, in determining its “Tax expense/(benefit)” for the quarter and nine months ended 31 December 2022. | |
7 | The 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 06 July 2021 the Company received a subpoena from the SEC for the production of related documents, which were provided to the SEC. The Company made presentations to the SEC and the DOJ in relation to the investigation with respect to certain countries during the current and previous fiscal year. The Company also made a presentation to the SEC and the DOJ in relation to its Global Compliance Framework, including the ongoing enhancement initiatives, during the nine months ended 31 December 2022. The Company 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, which can lead to civil and criminal sanctions under relevant laws, the outcomes including liabilities are not reasonably ascertainable at this time. |
8 | The Company considered the uncertainties relating to the 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. | |
9 | The 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 25 January 2023. | |
10 | The results for the quarter and nine months ended 31 December 2022 presented were subjected to a “Limited review” by the Statutory Auditors of the Company. An unqualified report was issued by them thereon. |
Place: Hyderabad Date: 25 January 2023 | By order of the Board For Dr. Reddy's Laboratories Limited
G V Prasad Co-Chairman & Managing Director
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