Dr Reddys Laboratories

The Directors are pleased to present the 24th Annual Report for the
 year ended 31 March 2008.
 
 FINANCIAL HIGHlIGHTS
 
 Table 1 gives the fnancial highlights of the Company in the fnancial
 year 2007–08 as compared to previous fnancial year on Indian GAAP
 standalone basis.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a dividend of Rs. 3.75 per
 equity share of Rs. 5.00 for the fnancial year 2007–08. The dividend,
 if approved at the ensuing Annual General Meeting, will be paid to
 those shareholders whose name appears on the register of members of the
 Company as on 12 July 2008.
 
 The dividend would be tax-free in the hands of the shareholders.
 
 EMPlOYEE STOCK OPTION SCHEMES
 
 Pursuant to the provisions of Guideline 12 of the Securities and
 Exchange Board of India (Employee Stock Option Scheme and Employee
 Stock Purchase Scheme), Guidelines, 1999, as amended, the details of
 stock options as on 31 March 2008 under the “Dr. Reddy’s Employees
 Stock Option Scheme, 2002” and the “Dr. Reddy’s Employees ADR Stock
 Option Scheme, 2007” are set out in the Annexure –1 to the Directors’
 Report.
 
 Your Directors proposed to amend further, the Dr. Reddy’s Employees
 Stock Option Scheme, 2002” and the “Dr. Reddy’s Employees ADR Stock
 Option Scheme, 2007 in view of the Finance Ministry’s move on levying
 the Fringe Beneft Tax (FBT) on the employee stock options (ESOPs) under
 the Income Tax Act, 1961 and also proposed to remove the grades /
 designations prescribed under the existing Clause 9 (a) of Dr. Reddy’s
 Employees Stock Option Scheme 2002 pursuant to the changes in the work
 levels in the Organisation structure of the Company and proposed for
 necessary amendment in the said clause of the scheme of the stock
 options respectively.
 
 SHARE CAPITAL
 
 The paid up Share Capital of your Company increased by Rs. 1,302,830 in
 the fnancial year ended 31 March 2008, due to allotment of 260,566
 equity shares on exercise of Stock Options by the eligible employees
 under Dr. Reddy’s Employees Stock Option Scheme, 2002.
 
 CORPORATE GOVERNANCE AND ADDITIONAL INFORMATION TO SHAREHOlDERS
 
 A detailed report on the Corporate Governance system and practices of
 the Company are given in a separate section in this annual report.
 Detailed information for the shareholders is given in Additional
 Shareholders’ Information section.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 A detailed Management Discussion and Analysis is provided in the annual
 report.
 
 SUBSIDIARY COMPANIES
 
 The Company had 34 subsidiary companies as on 31 March 2008. The
 members may refer to the Statement under Section 212 of the Companies
 Act, 1956 and information on the fnancials of subsidiaries appended to
 the above Statement under Section 212 of the Companies Act, 1956 in
 this Annual Report for further information on these subsidiaries.
 
 The Ministry of Company Affairs vide its letter No. 47/310/2008-CL-III
 dated 19 May 2008 granted approval to the Company for not attaching the
 fnancials of subsidiary companies to the fnancials of the Company for
 the fnancial year 2007–08.
 
 The members, if they desire, may write to Company Secretary at Dr.
 Reddy’s Laboratories Ltd., 7-1-27, Ameerpet, Hyderabad – 500 016 to
 obtain a copy Of the fnancials of the subsidiary companies.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 In terms of Section 217(2AA) of the Companies Act, 1956, your Directors
 confrm as under:
 
 1.  In preparation of annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 2.  We have selected such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company at the end of the fnancial year 2007–08 and of proft of the
 Company for that period;
 
 TablE 1 Financial Highlights for the Financial Year Ended 31 March (
 RS. IN THOUSA NDS )
  
                                               2008          2007
 
 Income                                    35,850,075      40,843,048
 gross proft                                7,460,889      14,993,466
 Depreciation                               1,619,862       1,335,009
 Proft before tax                           5,841,027      13,658,457 
 Taxation Current tax                      (1,088,808)     (1,889,864)
 Net proft for the year                     4,752,219      11,768,593
 Add: Proft and loss brought forward       13,036,395       3,196,508
 TOTAL AVAILABLE FOR APPROPRIATIONS        17,788,614      14,965,101
 
 APPROPRIATIONS
 
 Proposed dividend on equity shares 630,648 629,671 Tax on proposed
 dividend 107,179 107,013 Dividend of previous year 604 242 Transfer to
 general reserve 475,222 1,176,859 Balance carried forward 16,574,961
 13,051,316
 
 3.  We have taken proper and suffcient care for the maintenance of
 adequate accounting records in accordance with the provisions of this
 Act for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities;
 
 4.  We have prepared the annual accounts on an on going concern basis.
 
 FIXED DEPOSITS
 
 Your Company has not accepted any fxed deposits under Section 58A of
 the Companies Act, 1956 and hence no amount of principal or interest
 was outstanding as of the Balance Sheet date.
 
 DIRECTORS
 
 Mr. Anupam Puri, Mr. P N Devarajan and Dr. Krishna G Palepu retire by
 rotation at the ensuing Annual General Meeting scheduled on 22 July
 2008. Mr. P N Devarajan expressed his unwillingness to be reappointed
 and ceased to be the Director of the Company effective 20 May 2008. The
 other retiring Directors are eligible for re-appointment. The brief
 profles of Mr. Anupam Puri and Dr. Krishna G Palepu are given in the
 Corporate Governance section for the reference of members.
 
 The Board placed a record of their deep appreciation of the services
 rendered by Mr. P N Devarajan during his tenure of offce.
 
 AUDITORS
 
 The Statutory Auditors of the Company BSR & Co., Chartered Accountants,
 retire at the ensuing Annual General Meeting and have confrmed their
 eligibility and willingness to accept offce of Statutory Auditors, if
 reappointed. The Audit Committee and the Board of Directors recommend
 BSR & Co. as Statutory Auditors of the Company for the fnancial year
 2008–09 for shareholders approval.
 
 COST AUDIT
 
 Pursuant to Section 233B of the Companies Act, 1956, the Central
 Government has prescribed Cost Audit of the Company’s Bulk Drugs
 Division and Formulations Division.
 
 Subject to the approval of the Central Government, the Board has
 appointed Sagar& Associates as Cost Auditors of the Company for the
 fnancial year 2007–08.  The Cost Audit is under process and the Company
 will submit the Cost Auditors’ report to the Central Government in
 time.
 
 PARTICULARS OF EMPlOYEES
 
 Pursuant to the provisions of Section 217(2A) of the Companies Act,
 1956 read with Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of employees are set out in
 the Annexure – 2 to the Directors’ Report.
 
 CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENTS, TECHNOLOGY
 ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
 
 The particulars as prescribed under Section 217(1)(e) of the Companies
 Act, 1956, read with the Companies (Disclosure of particulars in the
 report of Board of Directors) Rules, 1988 are set out in the Annexure –
 3 to the Directors’ Report.
 
 ACKNOWLEDGEMENT
 
 Your Directors place on record their sincere appreciation for
 signifcant contribution made by the employees through their dedication,
 hard work and commitment and the trust reposed on us by the medical
 fraternity and the patients.
 
 We also acknowledge the support and wise counsel extended to us by the
 analysts, bankers, government agencies, shareholders and investors at
 large. We look forward to having the same support in our endeavour to
 help people lead healthier lives.
 
                                     FOR DR. REDDY’S LABORATORIES LIMITED
 
                                               DR. K ANJI REDDY
                                                     CHAIRMAN
 Date  20 May 2008
 Place Hyderabad