We have audited the accompanying standalone financial statements of Dr.
Reddy''s Laboratories Limited (the Company), which comprise the
balance sheet as at 31 March 2015, the statement of profit and loss and
the cash flow statement for the year then ended, and a summary of the
significant accounting policies and other explanatory information.
Management''s Responsibility for the Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 (the Act) with respect
to the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''s Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at 31 March 2015 and its profit and its cash flows for the year ended
on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2015 (the
Order), issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in paragraph 3 and 4 of the Order,
to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit;
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
(c) The balance sheet, the statement of profit and loss and the cash
flow statement dealt with by this Report are in agreement with the
books of account;
(d) In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of the written representations received from the
directors as on 31 March 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March 2015
from being appointed as a director in terms of Section 164(2) of the
(f) With respect to the other matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 2.25 to the
ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long term contracts including derivative contracts; and
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
The Annexure referred to in the independent auditors'' report of even
date to the members of Dr. Reddy''s Laboratories Limited (the Company)
on the standalone financial statements for the year ended 31 March
2015, we report that:
i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
(b) The Company has a regular programme of physical verification of its
fixed assets by which all the fixed assets are verified in a phased
manner over a period of 3 years. In our opinion, the periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. No material discrepancies were
noticed on such verification.
ii. (a) Inventories, except goods-in-transit and stocks lying with
third parties have been physically verified by the management during
the year. In our opinion, the frequency of such verification is
reasonable. For stocks lying with third parties at the year-end,
written confirmations have been obtained.
(b) In our opinion, the procedures of physical verification of
inventories followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
iii. (a) The Company has granted unsecured loans to seven subsidiary
companies covered in the register maintained under Section 189 of the
Companies Act, 2013 (the Act).
(b) In the case of the loans granted to the companies listed in the
register maintained under Section 189 of the Act, the borrowers have
been regular in repaying the principal amounts as stipulated and in the
payment of interest, wherever applicable.
(c) There are no overdue amounts of more than rupees one lakh in
respect of the loans granted to any of the companies, firms and other
parties covered in the register maintained under section 189 of the
iv. In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories are for the Company''s specialized
requirements and similarly certain goods sold are for the specialized
requirements of the buyers and suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business with regard to purchase of inventories and
fixed assets and with regard to the sale of goods and services. We have
not observed any major weakness in the internal control system during
the course of the audit.
v. The Company has not accepted any deposits from the public.
vi. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
the maintenance of cost records under Section 148(1) of the Act, and
are of the opinion that prima facie the prescribed accounts and records
have been made and maintained. However, we have not made a detailed
examination of the records.
vii. (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/ accrued in the books of account in respect of undisputed
statutory dues including provident fund, employees'' state insurance,
income tax, sales tax, wealth tax, service tax, duty of customs, duty
of excise, value added tax, cess and other material statutory dues have
been generally regularly deposited during the year by the Company with
the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, employees''
state insurance, income tax, sales tax, wealth tax, service tax, duty
of customs, duty of excise, value added tax, cess and other material
statutory dues were in arrears as at 31 March 2015 for a period of more
than six months from the date they became payable.
(b) According to the information and explanations given to us, the dues
set out in Appendix - 1 in respect of income tax, sales tax, service
tax, duty of customs, duty of excise and value added tax have not been
deposited with the appropriate authorities on account of disputes. As
explained to us, the Company did not have any disputed dues on account
of wealth tax and cess.
(c) According to the information and explanations given to us, the
amounts which were required to be transferred to the investor education
and protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules there under has been
transferred to such fund within time.
viii. The Company does not have any accumulated losses at the end of
the financial year and has not incurred cash losses in the financial
year and in the immediately preceding financial year.
ix. In our opinion and according to the information and explanations
given to us, the Company, has not defaulted in repayment of dues to its
bankers or to any financial institutions, or to debenture holders
during the year.
x. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by others from banks or financial
institutions are not prejudicial to the interests of the Company.
xi. In our opinion and according to the information and explanations
given to us by the management, term loans availed by the Company were
applied for the purposes for which the loans were obtained.
xii. According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
Name ot the Statute Nature ot dues Amount in
Income Tax Act, 1961 Income Tax 166
Central Excise Act, 1944 1,497
Customs Act,1962 , 26
Finance Act, 1994 271
CENVAT Credit of 317
Central Sales Tax Act and 143
Sales Tax Acts of various
states Tax 152
Name of the Statute Forum where the dispute Period to
is pending which the
Income Tax Act, 1961 Commissioner Appeals 2002-2006
Income Tax Appellate Tribunal 1992-2009
High Court 1990-1994
Central Excise Act, 1944 Appellate Authority - upto 2004-2015
High court 2002-2010
Customs Act,1962 Appellate Authority - upto 2003-2014
Supreme Court 1992-1999
Supreme Court 1992-1999
Appellate Authority - upto 2014-2015
Finance Act, 1994 CESTAT 2006-2013
Appellate Authority - upto 2006-2015
High Court 2005-2008
Appellate Authority - upto 2011-2014
Central Sales Tax Act and Sales Tax Appellate Tribunal 2008-2009
Sales Tax Acts of various
states Appellate Authority - upto 2004-2013
High Court 2006-2013
Appellate Authority - upto 2008-2013
Sales Tax Tribunal 2005-2011
Appellate Authority - upto 2007-2013
Out of total dues, an amount of Rs. 336 million has been paid under
protest for sales tax related matters, Rs. 117 million has been paid
under protest for service tax related matters, Rs. 18 million has been
paid for custom related matters and Rs. 9 million has been paid for
excise related matters.
for B S R & Co. LLP
Firm Registration No.: 101248W/W-100022
Membership No.: 205385
Place : Hyderabad
Date : 12 May 2015