Dr Reddy Laboratories : Outcome of Board Meeting – May 14, 2021

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Dr.Reddy's �;•

Dr. Reddy's Laboratories Ltd.

8-2-337, Road No. 3, Banjara Hills,

Hyderabad - 500 034, Telangana,

India.

CIN: L85195TG1984PLC004507

May 14, 2021	Tel	:[phone]
The Secretary / Executive Director	Fax	:[phone]
Email :[e-mail]
BSE Limited	www.drreddys.com

National Stock Exchange of India Ltd.

New York Stock Exchange Inc.

NSE IFSC Limited

Dear Sir/Madam,

Sub:Outcome of Board Meeting - Audited Financial Results for the quarter and year ended March 31, 2021.

Further to our letter dated March 29, 2021 we would like to inform you that the Board of Directors of the Company at their meeting held on May 14, 2021, have inter alia approved the Audited Financial Results of the Company for the qua11er and year ended March 31, 2021.

In terms of the above, we are enclosing herewith the foJ.lowing:

1. Audited Consolidated Financial Results of the Company and its subsidiaries for the quarter and year ended March 31, 2021 as per International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB).
2. Press Release on Financial Results of the Company for the above period.
3. Audited Consolidated Financial Results of the Company and its subsidiaries for the quarter and year ended March 31, 2021 as per Indian Accounting Standards.
4. Audited Standalone Financial Results of the Company for the quarter and year ended March 31, 2021 as per Indian Accounting Standards.

Pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audit Report of the Statutory Auditors on the financial results as mentioned at serial Nos. 3 & 4 are also enclosed.

We would like to confirm that the Statutory Auditors of the Company, have issued Audit Reports with 'Unmodified Opinion' on the Audited Financial Statements of the Company (Standalone and Consolidated) for the year ended March 31, 2021.

We would also like to inform that the Board of Directors have recommended a final dividend of Rs. 25/- (500%) per equity share of Rs. 5/- face value for the financial year 2020-21. The dividend will be paid on or after five days from the date of declaration of the final dividend by the shareholders at the 37th Annual General Meeting (AGM). The AGM date and book closure date for the purpose of the payment of final dividend will be announced in due course.

The Board Meeting commenced at 09.00 AM and concluded at 12.05 PM.

This is for your information and records.

Encl : as above

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Dr.Reddy's �;•

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 :[e-mail] www.drreddys.com

Audited consolidated financial results of Dr. Reddy's Laboratories Limited and its subsidiaries for the quarter and year ended 31 March 2021 prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB)

					All amounts in Indian R1q11:C!l millions
SI.No.	Particulars			Quarter ended		Year ended
		31.03.2021	31.12.2020	31.03.2020	31.03.2021	31.03.2020
I	Revenues		(Audited)	(Unaudited)	(Audited)	(Audited)	(Audited)
	47,284	49,296	44,318	189,722	174,600
2	Cost ofrevenues		21,909	22,758	21,510	86,645	80,591
3	Gross profit (I - 2)		25,375	26,538	22,808	103,077	94,009
4	Selling, general and administrative expenses		14,279	14,387	12,177	54,559	50,129
5	Research and development expenses		4,094	4,108	4,190	16,541	15,410
6	Impairment ofnon current assets		15	5,972	7	6,768	16,767
7	Other income, net		(587)	(128)	(168)	(982)	(4,290)
	Total operating expenses		17,801	24,339	16,206	76,886	78,016
8	Results from operating activities 1(3) - (4 + S + 6 + 7))		7,574	2,199	6,602	26,191	15,993
	Finance income	615	681	665	2,623	2,461
	Finance expense		(297)	(188)	(230)	(970)	(983)
9	Finance income, net		318	493		1,653	1,478
10	Share ofprofit ofequity accounted investees, net of tax		179	151	105	480	561
11	Profit before tax (8 + 9 + 10)		8,071	2,843	7,142	28,324	18,032
12	Tax expense/(benefit), net		2,536	2,645	(500)	9,175	(1,466)
13	Profit for the period/ year (11 -12)		5,535	198	7,642	19,149	19,498
14	Earnings per share:
	Basic earnings per share ofRs.5/- each		33.38	1.19	46.10	115.47	117.63
	Diluted earnings per share ofRs.5/- each		33.29	1.19	46.01	115.14	117.40
			(Not annualised)	(Not annualised)	(Not annualised)

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Dr.Reddy's �;•

Segment reporting (consolidated)

All amounts in Indian Rupees millions

SI. No.				Quarter ended
Particulars	31.03.2021	31.12.2020
			(Audited)		(Unaudited)
Segment wise revenue and results:

• Segment revenue:

	a) Pharmaceutical Services and Active Ing, edients	9,796	8,745
	b) Global Generics	38,737	40,751
	c) Proprietary Products	243	124
	d) Others	389	1,412
	Total	49,165	51,032
	Less: Inter-segment revenues	1,881	1,736
	Net revenues	47,284	49,296
2	Segment results:
	Gross profit from each segment

31.03.2020

(Audited)

8,673

36,398

2

723

45,796

1,478

44,318

Year ended

31.oJ.2021	31.03.2020
(Audited)	(Audited)
38,887	31,657
154,404	138,123
523	7,949
2,813	2,781
196,627	180,510
6,905	5,910
189,722	174,600

a) Pharmaceutical Services and Active Ingredients	2,513	1,773
b) Global Generics	22,446	23,454
c) Proprietary Products	238	100
d) Others	178	1,211
Total	25,375	26,538
Less: Selling and other un-allocable expenditure, net of other	17,304	23,695
income
Total profit before tax	8,071	2,843

2,043	9,426	6,190
20,332	91,111	78,449
(7)	482	7,744
440	2,058	1,626
22,808	103,077	94,009
15,666	74,753	75,977
7,142	28,324	18,032

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

Notes:

The audited results have been reviewed by the Audit Committee of the Board on 13 May 2021 and approved by the Board of Directors of the Company at their meeting held on 14 May 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).

• During the year ended 31 March 2021, there were significant changes to the market conditions for certain of the products forming 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 of Kombiglyze-XR) and Phentermine and Topiramate (generic version of Qsymia®); and
  • Rs. 1,955 million relating to other intangible assets forming part of the Company's Global Generics and Proprietary Products segments.

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

• Tax expense for the year ended 31 March 2021 includes the following:
• • Rs. 1,012 million of benefit, in the quarter ended 30 June 2020, on account of recognition of deferred tax asset consequmt to a planned restructuring activity between the Group companies; and
  • Rs. 627 million of expense, in the quarter ended 31 March 2021, on account of derecognition of deferred tax asset due to non-availability of depreciation on goodwill pursuant to an amendment to section 2(11) of the Income Tax Act in the Finance Act, 2021.

• During the quarter ended 31 December 2020, the Company entered into a definitive agreement with Glenmark Pharmaceuticals Ltd_ to acquire, certain brands in various Emerging Market countries for a total consideration of Rs. 1,5I6 million. The said transaction was accounted for as an acquisition of product related intangibles.

• On IO June 2020, the Company completed the acquisition of select divisions of Wockhardt Limited's branded generics business in India and the territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas, such as respiratory, neurology, venous malformations, dermatology, gastroenterology, pain, and vaccines. This entire portfolio has been transferred to the Company, along with related sales and marketing teams, the manufacturing plant located in Baddi, Himachal Pradesh, and employees. During the quarter ended 30 September 2020, the Company completed the purchase price allocation. The fair value of consideration transferred is Rs.I6,115 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.

• The Company has commenced a detailed investigation into an anonymous complaint. The complaint alleges 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 US Foreign Corrupt Practices Act. A legal Firm is conducting the investigation at the instruction of a Committee of the Company Board of Directors. The investigation is ongoing. The Company has disclosed the matter to the US Department of Justice, Securities and Exchange Commission and Securities Exchange Board of India. While the matter may result in government enforcement actions against the Company in the United States and/or foreign jurisdictions, which could lead to civil and criminal sanctions under relevant laws, the probability of such action and the outcome are not reasonably ascertainable at this time.

;hfor 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

MBRACE SYMTOUCH•' (sumatriptan injection) 3 mg and TOSYMRA00 (sumatriptan nasal spray) IO mg, (fonnerly refe1Ted to as "DFN-02") to �l Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.

		•••
Dr. Reddy's �;•
8	"Otht:r i11comL', net" fo1	lhc yern ended JI Mai ch 2020 includL's an amount oJ' Rs. .1,457 million n::ceivL'd fiom Cclg.�111.:, pu1suant lo a sclllcment ag.1ccme11l
	cntc1cd in Jp1il 2019	The ag,ccm...:nt l!ffcctivcly setlles any claim the Company ni ils nrtiliatcs may lrnvc lrnd for dnma�cs unckr section 8 of the Canadian
	Patented Medicines (Notice ofCnmpliancc) Regulations in regard In Lhc Company's iNDS l,1r a genaic ve,sion of REVLIMID brand capsules, (Lcnalidnmide)
	pending befo1c Heallh Canada.
9	Total impairment charge for the yea, ended 31 Mrnch 2020 is Rs. 16,767 million, of which Rs I I,137 million was towards impairment of gNuvaring, Rs 4,385
	million was towards rameltenn, tnbramycin and imiquimnd, and the balance is towards other product related intangibles forming pa,1 nf thc Company's Global
	generics and Prop, icta,y Products segments.
IO	Tax benefit for the year ended 31 Ma,ch 2020 was primarily due to recognition of deferred Lax asset of:
	- Rs 4,989 million towards MAT 1ecove1able pursuant to enactment ofTaxation Laws (Amendment) Acl, 2019;
	- Rs. 1,264 million pu1suant to a planned restructuring activity between the group Companies.

11 Consolidated statements of financial position

All amounts in Indian Rupe� millions

/4

I o

Particulars

ASSETS

Current assets

Cash and cash equivalents

Other investments

Trade and other receivables

Inventories

Derivative financial instruments

Tax assets

Other current assets

Total current assets before assets held for sale

Assets held for sale

Total current assets

Non-current assets

Property, plant and equipment

Goodwill

Other intangible assets

Trade and other receivables

Investment in equity accounted investees

Other investments

Deferred tax assets

Other non-current assets

Total non-current assets

Total assets

LIABILITIES AND EQUITY

Current liabilities

Trade and other payables

Short-term borrowings

Long-term borrowings, current portion

Provisions

Tax liabilities

Derivative financial instruments

Bank overdraft

Other current liabilities

Total current liabilities

Non-current liabilities

Long-term borrowings

Deferred tax liabilities

Provisions

Other non-current liabilities

Total non-current liabilities

Total liabilities

Equity

Share capital

Treasury shares

Share premium

Share based payment reserve

Capital redemption reserve

Special economic zone re-investment reserve

Retained cHmi,,gs

o ;;- her components or equity o...��

�l"'foiil! cq1111y

I ·n,01 �lnl.>llilics nud equity

or.Roddy'-. /}

As at

31.03.2021

(Audited)

14,829

19,744

49,641

45,412

1,218

2,745

14,509

148,098

151

148,249

57,111

4,568

35,648

118 3,375 4,958 10,630 834

117,242

265,491

21,916

23,136

864

3,435

1,389

326

9

30,397

81,472

6,299

338

58

2,343

9,038

90,510

832

(1,967)

8,887

1,461

173

1,326

157,934

6,335

174,981

265,491

As at

31.03.2020

(Audited)

2,053

23,687

50,278

35,066

1,105 4,379 13,802

130,370

-

130,370

52,332

3,994

27,659

1,737

2,763

328

12,214

844

101,871

232,241

16,659

16,441

4,266

3,800

1,602

91

29,382

72,814

1,304

275 54 2,806

4,439

77,253

831 (1,006) 8,495 1,233 173

144,247

1,015

154,988

232,241

•.c,: .}-,�.c,,hlerol:>"

b'l,

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Dr.Reddy's �;•

12 Consolidated statements of cash flows

Particulars

Cash generated from operating activities:

Profit for the year

Adi11stmentsf01'.

Tax expense/(benefit), net

Fair value changes and profit on sale of units of mutual funds, net

Depreciation and amortization

Impainnent ofnon-cun ent assets

Allowance for c,·edit losses (on trade receivables and other advances)

Loss/(gain) on sale or de-recognition of non-current assets, net

Share ofprofit of equity accounted investees

Foreign exchange (gain)/loss, net

Interest expense, net

Equity settled share-based payment expense

Dividends income

Changes in operating assets and liabilities:

Trade and other receivables

Inventories

Trade and other payables

Other assets and other liabilities, net

Cash generated from operations

Income tax paid, net

Net cash generated from operating activities

Cash flows from/(used in) investing activities:

Expenditure on prope,ty, plant and equipment

P1oceeds from sale of property, plant and equipment

Expenditures on other intangible assets

Proceeds from sale of other intangible assets

Payment for acquisition ofbusiness

Purchase of other investments

Proceeds from sale of other investments

Dividends received from equity accounted investees

Interest and dividend received

Net cash used in investing activities

Cash flows from/(used in) financing activities:

Proceeds from issuance of equity shares (including treasury shares) Purchase of treasury shares

Proceeds from short-term borrowings, net Proceeds from long-tenn borrowings Repayment oflong-tenn borrowings Payment ofprincipal portion oflease liabilities

Dividend paid (including corporate dividend tax for the year ended 31 March 2020) Interest paid

Net cash used in financing activities

Net increase/ (decrease) in cash and cash equivalents

Effect ofexchange rate changes on cash and cash equivalents

Cash and cash equivalents at the beginning of the year<' >

All amounts in Indian Ru11ue< millions

Vear ended	Vear ended
31.03.2021	31.03.2020
(Audited)	(Audited)
19,149	19,498

9,175(1,466)

1. (929)

12,796	12,472
6,768	16,767
230	190
42	68

1. (561)

1,856	(2,168)
144	95
584	521
	.•	(5)
2,081	(12,446)
(9,881)	(1,487)
2,861	1,576
(3,349)	4,821
41,419	36,946
(5.716)	(7.105)
35,703	29,841
(9,741)	(4,846)
85	131
(2,820)	(1,269)
(15,514)	259
(111,918)
(75,418)
79,528	111,704
		392
1,220	624
	(22,660)	(4,923)
269	4
(1,193)	(474)
6,791	4,235
3,800	(22,918)
(3,743)
(754)	(482)
(4,147)	(3,916)
(1,321)	(1.608)

1. (25,159)

12,745(241)

113(25)

1,9622,228

Cash and cash equivalents at the end of the year1')

14,820

1,962

Rounded oflto the nearest million.

(IJ Adjusted/or bank-overdraft ofRs, 91111i/lio11 and Rs, Nil/or the years ended 31 March 2021 and 31 March 2020, respectively,

/l) Adjusted/or bank-overdraft ofRs 9 million and Rs. 91 million/or the years e11ded 31 March 2021 a11d 31 Marci, 2020, respectively.

1. The Code on 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 thereunder when they come into effect.
2. 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 ofpriority. Based on our forensic investigation, no evidence was found of any data breaches leading to personally identifiable information. Since then, the �=-=111111nr has also been focused on implementing significant improvements to its cyber and data security systems to safeguard from such risks in the future. �t; Ubo,.,,. o ·

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