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Dr Reddys Laboratories
BSE: 500124|NSE: DRREDDY|ISIN: INE089A01023|SECTOR: Pharmaceuticals
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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    Mar 12
Dear Members,
 
 The Directors are pleased to present the 29th annual report for the
 year ended 31 March 2013.
 
 FINANCIAL HIGHLIGHTS
 
 Table 1 gives the financial highlights of the Company for FY2013 as
 compared to previous financial year on Indian GAAP standalone basis.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a dividend of R15 on every
 equity share of R5 each (300%) for FY2013. The dividend, if approved at
 the 29th Annual General Meeting, will be paid to those shareholders
 whose names appear on the register of members of the Company as on 16
 July 2013.
 
 The dividend would be tax-free in the hands of the shareholders.
 
 SHARE CAPITAL
 
 The paid-up share capital of your Company increased by R 1.38 million
 in FY2013 due to the allotment of 276,129 equity shares on exercise of
 stock options by the eligible employees under Dr. Reddy''s Employees
 Stock Option Scheme, 2002 and Dr. Reddy''s Employees ADR Stock Option
 Scheme, 2007.
 
 UNSECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES
 
 The bonus non-convertible debentures (NCDs) issued by the Company in
 FY2011 are listed on the Bombay Stock Exchange and the National Stock
 Exchange and rated LAA  by ICRA.
 
 During FY2013, the second year''s interest on these NCDs was paid on due
 date.
 
 CORPORATE GOVERNANCE AND ADDITIONAL INFORMATION TO SHAREHOLDERS
 
 A detailed report on the corporate governance systems and practices of
 the Company is given in a separate section of the annual report
 2012-13. Detailed information for the shareholders is given in
 Additional Shareholders'' Information section.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 A detailed report on the Management Discussion and Analysis is provided
 as a separate section in the annual report.
 
 BUSINESS RESPONSIBILITY REPORT
 
 A detailed Business Responsibility report is given as a separate
 section in the annual report.
 
 SUBSIDIARY COMPANIES
 
 The Company has 50 subsidiaries as on 31 March 2013.
 
 During FY2013, the Company has acquired 98.91% of the issued and
 subscribed share capital of OctoPlus N.V., Netherlands, an entity
 listed on the Amsterdam stock exchange. OctoPlus is a specialty
 pharmaceutical company focused on the development and manufacture of
 improved injectable pharmaceuticals based on proprietary drug delivery
 technologies that exhibit fewer side effects, improved patient
 convenience and a better efficacy/ safety balance than existing
 therapies.  Subsequently, the shares of OctoPlus N.V.  were delisted
 from the Amsterdam stock exchange w.e.f. 16 April 2013.
 
 Further, subsidiaries of OctoPlus N.V., namely OctoShare BV, OctoPlus
 Development BV, OctoPlus Technologies BV, OctoPlus Science BV, OctoPlus
 PolyActive Science BV and Chienna BV also become the subsidiaries of
 the Company.
 
 During FY2013, Reddy Pharmaceuticals Hongkong Limited, Hongkong; Dr.
 Reddy''s Laboratories ILAC TICARET, Turkey; OOO Alfa, Russia; Trigenesis
 Therapeutics Inc., USA; and Dr. Reddy''s Laboratories (Canada) Inc.,
 Canada ceased to be subsidiaries of the Company.
 
 As per Section 212 of the Companies Act, 1956, the Company is required
 to attach the Directors'' Report, Balance Sheet and Statement of Profit
 and Loss of the subsidiaries to the annual report.
 
 The Ministry of Corporate Affairs, Government of India vide its
 circular No. 2/2011 dated 8 February 2011 has provided an exemption to
 companies from complying with Section 212, provided such companies
 publish the audited consolidated financial statements in their annual
 report.  Accordingly, the annual report 2012-13 does not contain the
 financial statements of the subsidiaries. The audited annual accounts
 and related information of the subsidiaries, where applicable, will be
 made available for inspection during business hours at our registered
 office in Hyderabad, India.
 
 The same will also be published on the Company''s website,
 www.drreddys.com.
 
 The members, if desire, may write to the Company Secretary at Dr.
 Reddy''s Laboratories Limited, 8-2-337, Road No. 3, Banjara Hills,
 Hyderabad 500 034 to obtain a copy of the financials of the subsidiary
 companies.
 
 The consolidated financial statements, in terms of Clause 32 of the
 Listing Agreement and prepared in accordance with Accounting Standard
 21 as specified in the Companies (Accounting Standards) Rules, 2006
 also forms a part of this annual report.
 
 TABLE 1 FINANCIAL HIGHLIGHTS                           IN RS. MILLION 
 
                                                   FY2013      FY2012 
 
 Total revenue                                     85,757      68,215
 
 Profit before depreciation and tax                20,660      15,603
 
 Depreciation                                       3,128       3,011
 
 Profit before tax                                 17,532      12,592
 
 Tax expense                                        4,877       3,468
 
 Net profit for the year                           12,655       9,124
 
 Add: Surplus at the beginning of the year         36,049      31,397
 
 Total available for appropriation                 48,704      40,521
 
 Appropriations:
 
 Proposed dividend on equity shares                 2,548       2,331
 
 Tax on proposed dividend                             433         378
 
 Credit of dividend distribution tax                   (4)          -
 
 Dividend of previous years (including tax)             3           3
 
 Debenture Redemption Reserve                         845         848
 
 Transfer to General Reserve                        1,265         912
 
 Balance carried forward                           43,614      36,049
 
 DIRECTORS
 
 On 15 March 2013, Dr. K Anji Reddy, Founder Chairman of the Company,
 passed away at Hyderabad. His mission in life was to provide affordable
 medicines to millions of patients worldwide while also innovating for
 healthier life. Under his leadership, the Company became a pioneer and
 trend setter in the Indian pharmaceutical industry.
 
 Dr. Reddy also set-up the ''Dr. Reddy''s Institute of Life Sciences'' at
 Hyderabad, which is a public-private partnership with the Government of
 Andhra Pradesh for carrying out cutting edge research in Life Sciences.
 Critically aware of his responsibility to society, Dr. Reddy in the
 last decade was engaged in outcome based institutionalized philanthropy
 that positively impacted the lives of nearly 5 million underprivileged
 citizens, mainly children and youth.
 
 The Board places on record its enormous appreciation for the
 contribution made by Dr. K Anji Reddy for creating and growing the
 Company.
 
 Following the demise of Dr. K Anji Reddy, Founder Chairman, the Board
 of Directors, based on the recommendation of the Nomination, Governance
 and Remuneration Committee, has designated:
 
 - Mr. G V Prasad as Chairman and Chief Executive Officer of the
 Company; and
 
 - Mr. Satish Reddy as Vice Chairman in addition to his role of
 Managing Director and Chief Operating Officer.
 
 The above changes were effective 30 March 2013. The terms and
 conditions like remuneration, balance tenure and others relating to the
 appointment of Mr. G V Prasad and Mr.  Satish Reddy, as approved by the
 shareholders at their annual general meetings held on 21 July 2011 and
 20 July 2012, respectively, remain the same.
 
 The disclosure regarding change in designations of Mr. G V Prasad,
 Chairman and CEO and Mr. Satish Reddy, Vice Chairman and Managing
 Director in this section of annual report may also be regarded as an
 abstract and memorandum of interest of Directors under Section 302 of
 the Companies Act, 1956.
 
 As per Article 113 of the Articles of Association of the Company, Dr.
 Ashok S Ganguly, Dr. J P Moreau and Ms. Kalpana Morparia retire by
 rotation at the forthcoming Annual General Meeting scheduled to be held
 on 31 July 2013 and being eligible, seek re-appointment.
 
 The brief profiles of Dr. Ashok S Ganguly, Dr. J P Moreau and Ms.
 Kalpana Morparia are given in the Corporate Governance section of the
 annual report for reference of the members.
 
 AUDITORS
 
 The statutory auditors of the Company, B S R & Co., Chartered
 Accountants, retire at the ensuing Annual General Meeting and have
 confirmed their eligibility and willingness to accept office of the
 statutory auditors for FY2014, if re-appointed.  The Audit Committee
 and the Board of Directors recommend the re-appointment of B S R & Co.
 as statutory auditors of the Company for FY2014 for shareholders''
 approval.
 
 COST AUDIT
 
 Pursuant to Section 233B of the Companies Act, 1956, the Central
 Government has prescribed an audit of cost accounting records in
 respect of Pharmaceuticals business of the Company.
 
 Based on the recommendations of the Audit Committee, and subject to the
 approval of the Central Government, the Board of Directors had
 appointed M/s. Sagar & Associates as cost auditors of the Company for
 FY2013. The cost audit report would be filed with the Central
 Government as per timeline.
 
 The relevant cost audit reports for FY2012 were filed within the due
 date on 27 February 2013. The due date for filing these reports was 28
 February 2013.
 
 SECRETARIAL AUDIT
 
 A secretarial audit for FY2013 was carried out by Dr. K R Chandratre,
 practicing Company Secretary. The secretarial audit report forms a part
 of the annual report.
 
 The said secretarial audit report confirms that the Company has
 complied with all the applicable provisions of the Companies Act, 1956,
 Depositories Act, 1996, Equity and Debt Listing Agreements with the
 Stock Exchanges, Debenture Trust Deed, Securities Contracts
 (Regulation) Act, 1956 and all the regulations of Securities and
 Exchange Board of India (SEBI) as applicable to the Company, including
 the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
 2011 and the SEBI (Prohibition of Insider Trading) Regulations, 1992.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 In terms of Section 217(2AA) of the Companies Act, 1956, your Directors
 confirm as under:
 
 1 In preparation of annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 2 Accounting policies have been selected and applied consistently and
 judgments and estimates made, 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 financial year 2012-13 and of profit of the Company for that
 period;
 
 3 Proper and sufficient care has been taken to maintain 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 Annual accounts have been prepared on a going concern basis.
 
 TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO IEPF
 
 Pursuant to the provisions of Section 205A(5) of the Companies Act,
 1956, the declared dividends, which remained unpaid or unclaimed for a
 period of seven years, have been transferred by the Company to the
 Investor Education and Protection Fund (IEPF) established by the
 Central Government pursuant to Section 205C of the said Act.
 
 EMPLOYEES STOCK OPTION SCHEMES
 
 The details of stock options as on 31 March 2013 under the Dr. Reddy''s
 Employees Stock Option Scheme, 2002 and the Dr. Reddy''s Employees ADR
 Stock Option Scheme, 2007, in terms of Guideline 12 of the Securities
 and Exchange Board of India (Employee Stock Option Scheme and Employee
 Stock Purchase Scheme) Guidelines, 1999, as amended, are set out in the
 Annexure 1 to the Directors'' Report.
 
 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 the
 significant 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 endeavor to help people lead healthier
 lives.
 
 For Dr. Reddy''s Laboratories Limited
 
 G V Prasad
 
 CHAIRMAN AND CHIEF EXECUTIVE OFFICER
 
 PLACE HYDERABAD
 
 DATE 14 MAY 2013
Source : Dion Global Solutions Limited
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