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Dr Reddys Laboratories Ltd.

BSE: 500124 | NSE: DRREDDY |

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Series: EQ | ISIN: INE089A01023 | SECTOR: Pharmaceuticals

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Annual Report

For Year :
2022 2021 2019 2018 2017 2016 2015 2014 2013

Director’s Report

Your directors are pleased to present the 38th Annual Report of the Company for the year ended March 31,2022.

The FY2022 saw several challenges with respect to multiple COVID-19 waves, heightened geo-political tensions and increase in commodity prices. These factors have impacted almost every organization and your Company was no exception. However, our teams stood up to these challenges and ended the year on a winning note with growth across most of our businesses and higher profits, while continuing to serve our patients across the globe.

FINANCIAL HIGHLIGHTS AND COMPANY AFFAIRS

Table 1 gives the consolidated and standalone financial highlights of the Company based on Indian Accounting Standards (Ind AS) for FY2022 (i.e. from April 1, 2021 to March 31, 2022) compared to the previous financial year.

The Company’s consolidated total income for the year was '' 220.3 billion, which was up by 14% over the previous year. Profit before tax (PBT) was '' 30.6 billion, representing an increase of 6% over the previous year.

The Company’s standalone total income for the year was '' 148.9 billion, which was up by 5% over the previous year.

PBT was '' 22.2 billion, which was lower by 27% over the previous year.

Revenues from lines of business and geographies given below are from the company’s IFRS results.

Revenues from Global Generics were up by 16% and stood at '' 179.2 billion. There was growth across North America Generics and Europe, with strong growth in Emerging Markets and India.

Revenues from North America stood at '' 74.9 billion, registering a year-on-year growth of 6%. This was largely on account of revenue contribution from new products launched and increase in volumes for some of our base products, partly offset by high price erosions in some of our products.

During the year, the Company filed seven Abbreviated New Drug Applications (ANDAs) in the USA. As of March 31, 2022, there were 90 generic filings awaiting approval with the US Food and Drug Administration (USFDA), comprising 87 ANDAs and three NDAs filed under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act.

Revenues from Emerging Markets were '' 45.7 billion, registering a year-on-year growth of 30%. Revenues from India stood at '' 42.0 billion, showing a year-on-year growth of 26%. Revenues from Europe were '' 16.6 billion, a year-on-year growth of 8%.

Revenues from Pharmaceutical Services and Active Ingredients (PSAI) stood at '' 30.7 billion, which was lower by

4% compared to previous year. During the year, the Company filed 139 Drug Master Files (DMFs) worldwide, including 10 filings in the US.

SCHEME OF AMALGAMATION

The Hon’ble National Company Law Tribunal (the“NCLT”), Hyderabad Bench, vide order dated April 5, 2022, has approved the Scheme of Amalgamation and Arrangement (the “Scheme”) for the merger of Dr. Reddy’s Holdings Limited (the “DRHL/ Amalgamating Company”) with the Company (the “Amalgamated Company”). The order of the Hon’ble NCLT was filed by both the companies with the Registrar of Companies, Hyderabad, on April 8, 2022. Therefore, the merger becomes effective on April 8, 2022. The appointed date of the Scheme was April 1, 2019.

Pursuant to the Scheme, 41,325,300 equity shares held by the Amalgamating Company in the Company stands cancelled and the equal number of shares were issued and allotted by the Company, on April 22, 2022, to the shareholders of Amalgamating Company, in aggregate, in proportion to their shareholding in the Amalgamating Company. Effectively, there is no change in the total issued and paid-up share capital of the Company pursuant to the said Scheme, as equal number of shares were cancelled, as well as issued and allotted by the Company.

S 1 FINANCIAL HIGHLIGHTS

('' MILLION)

PARTICULARS

CONSOLIDATED

STANDALONE

FY2022

FY2021

FY2022

FY2021

Total income

220,296

193,389

148,872

141,502

Profit before depreciation, amortization, impairment and tax

50,867

47,411

30,479

39,062

Depreciation and amortization

11,652

12,288

8,143

8,350

Impairment of non-current assets

9,304

6,768

98

150

Profit before tax and before share of equity accounted investees

29,911

28,355

22,238

30,562

Share of profit of equity accounted investees, net of tax

703

480

-

-

Profit before tax

30,614

28,835

22,238

30,562

Tax expense

8,789

9,319

6,006

8,698

Net profit for the year

21,825

19,516

16,232

21,864

Opening balance of retained earnings

142,395

128,349

141,373

124,979

Net profit for the year

21,825

19,516

16,232

21,864

Other comprehensive income/ (loss)

-

3

-

3

Dividend paid during the year

(4,146)

(4,147)

(4,146)

(4,147)

Transfer to SEZ re-investment Reserve, net

571

(1,326)

571

(1,326)

Transfer to Debenture Redemption Reserve

(304)

-

-

-

Closing balance of retained earnings

160,341

142,395

154,030

141,373

Note: FY2022 represents fiscal year 2021-22, from April 1, 2021 to March 31, 2022, and analogously for FY2021 and other such labelled years

In accordance with Section 136 of the Act, the audited financial statements and related information of the Company and its subsidiaries, wherever applicable, are available on the Company’s website: www.drreddys.com, These are also available for inspection during regular business hours at our registered office in Hyderabad, India and/or in electronic mode,

Any member desirous of inspecting such documents are requested to write to the Company by sending an email to shares@drreddys.com,

MATERIAL SUBSIDIARIES

In terms of Regulation 16(1)(c) of the Listing Regulations, Material Subsidiary shall mean a subsidiary, whose income or net worth exceeds ten percent of the consolidated income or net worth, respectively, of the Company and its subsidiaries in the immediately preceding accounting year, Accordingly, the Company has four material overseas subsidiary companies as on March 31, 2022, namely, Dr, Reddy’s Laboratories Inc, (USA), Dr, Reddy’s Laboratories SA (Switzerland),

Dr, Reddy’s Laboratories LLC (Russia) and Reddy Holding GmbH (Germany),

Further, in terms of Regulation 24(1) of the Listing Regulations, at least one Independent Director on the Board of the Company shall be a Director on the Board of an unlisted material subsidiary, i,e, a subsidiary, whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the Company and its subsidiaries in the immediately preceding accounting year, In compliance with the said provisions, Dr, Bruce L A Carter, Independent Director of the Company, is a Director on the Board of Dr, Reddy’s Laboratories Inc, (USA), Mr, Sridar Iyengar, Independent Director of the Company, is a Director on the Board of Dr, Reddy’s Laboratories SA (Switzerland),

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company makes investments or extends loans/guarantees to its wholly-owned subsidiaries for their business purposes,

Details of loans, guarantees and investments covered under Section

DIVIDEND

Your directors are pleased to recommend a dividend of '' 30 (600%) for FY2022, per equity share of '' 5/- each. The recommended dividend is in line with the Dividend Distribution Policy of the Company,

The dividend, if approved at the 38th Annual General Meeting (the “AGM”) will be paid to those members whose names appear on the register of members of the Company as of end of the day on July 12, 2022. In terms of the provisions of the Income Tax Act, 1961, such dividend will be taxable in the hands of the members,

In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “Listing Regulations”), the Dividend Distribution Policy, is available on the Company’s website on https://www.drreddys.com/ investors/governance/policies-and-documents/#governance#policies-and-documents

TRANSFER TO RESERVES

The Company has not proposed to transfer any amount to the general reserve for the year ended March 31, 2022.

SHARE CAPITAL

The paid-up share capital of your Company increased by '' 0,62 million to '' 832,13 million in FY2022 due to allotment of 124,618 equity shares, on exercise of stock options by eligible employees through the ‘Dr, Reddy’s Employees Stock Option Scheme, 2002’ and ‘Dr, Reddy’s Employees ADR Stock Option Scheme, 2007’,

PUBLIC DEPOSITS

The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 (“Act”), Accordingly, there is no disclosure or reporting required in respect of details relating to deposits,

CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year, there was no change in the nature of business of the Company, Further, there was no significant change in the nature of business carried on by its subsidiaries,

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no such changes during the year,

SUBSIDIARIES AND ASSOCIATES

The Company has 42 overseas subsidiary companies (including step-down subsidiaries), nine subsidiary companies in India and one joint venture Company as on March 31,2022,

Dr, Reddy’s (WUXI) Pharmaceutical Co, Limited in China ceased to be a step-down subsidiary of the Company with effect from December 13, 2021, consequent to its liquidation,

Aurigene Discovery Technologies Inc, in USA, ceased to be a step-down subsidiary of the Company with effect from March 23, 2022, consequent to its liquidation,

Further, the Company acquired Nimbus Health GmbH (Nimbus) as a step-down subsidiary, on February 24, 2022,

Nimbus is a German Company, founded in 2018, specialized wholesaler of medical cannabis,

Section 129(3) of the Act, states that where the Company has one or more subsidiaries or associate companies, it shall, in addition to its financial statements, prepare a consolidated financial statements of the Company and of all subsidiaries and associate companies in the same form and manner as that of its own and also attach along with its financial statements, a separate statement containing the salient features of the financial statements of its subsidiaries and associates,

Hence, the consolidated financial statements of the Company and all its subsidiaries and associates, prepared in accordance with Ind AS 110 and Ill as specified in the Companies (Indian Accounting Standards) Rules, 2015, form part of the Annual Report, Moreover, a statement containing the salient features of the financial statements of the Company’s subsidiaries and joint ventures in the prescribed Form AOC-1, is attached as Annexure I to this Board’s Report,

This statement also provides details of the performance and financial position of each subsidiary and joint venture,

186 of the Act, along with the purpose for which such loan or guarantee was proposed to be utilized by the recipient, form part of the notes to the financial statements provided in this Annual Report,

CORPORATE GOVERNANCE AND ADDITIONAL SHAREHOLDERS’ INFORMATION

A detailed report on the Corporate Governance systems and practices of the Company is given in a separate chapter of this Annual Report, Similarly, other information for shareholders is provided in the chapter on Additional Shareholders’ Information, The Company has also formulated a Policy on Group Governance to monitor governance of its unlisted subsidiaries across the globe,

A certificate from the statutory auditors of the Company confirming compliance with the conditions of corporate governance is attached to the chapter on Corporate Governance,

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed report on the Management Discussion and Analysis in terms of Regulation 34 of the Listing Regulations is provided as a separate chapter in the Annual Report,

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL CHANGES IN DIRECTORS

Mr, Bharat N Doshi completed his term as an Independent Director on May 10, 2021 and did not seek reappointment, The Board placed on record its sense of appreciation for the services rendered by Mr, Doshi to the Company,

During the year, Members of the Company approved the appointment of Dr, K P Krishnan and Ms, Penny Wan as Independent Directors through postal ballot, with effect from January 7, 2022 and January 28, 2022, respectively, The Board is of the opinion that the above Independent Directors possess requisite integrity, experience and expertise (including the proficiency),

Mr, K Satish Reddy, Chairman, is liable to retire by rotation at the forthcoming 38th AGM and being eligible, seeks reappointment, The Board of Directors of the Company at its meeting held on May 19, 2022, on recommendation

of the Nomination, Governance and Compensation Committee, has approved the re-appointment of Mr, K Satish Reddy as a Whole-time Director of the Company, designated as the Chairman, with effect from October 1, 2022, subject to the approval of shareholders at the forthcoming 38th AGM, For reference of the members, a brief profile of Mr, K Satish Reddy is given in the chapter on Corporate Governance and in the Notice convening the 38th AGM,

None of the directors is disqualified under Section 164(2) of the Act, They are not debarred from holding the office of Director pursuant to order of SEBI or any other authority, Further details are provided in the chapter on Corporate Governance,

CHANGES IN KEY MANAGERIAL PERSONNEL

Mr, Sandeep Poddar resigned as the Company Secretary and Compliance Officer of the Company, from close of business hours on November 18,

2021, The Board placed on record its appreciation for the work done by Mr, Poddar during his tenure, The Board of Directors, at its meeting held on March 17, 2022, appointed Mr, K Randhir Singh as the Company Secretary and Compliance Officer of the Company,

DECLARATION BY INDEPENDENT DIRECTORS

In accordance with Section 149(7) of the Act, each Independent Director has confirmed to the Company that he or she meets the criteria of independence laid down in Section 149(6) of the Act, and is in compliance with Rule 6(3) of the Companies (Appointment and Qualifications of Directors) Rules, 2014 and Regulation 16(1 )(b) of the Listing Regulations, Further, each Independent Director has affirmed compliance to the Code of Conduct for Independent Directors as prescribed in Schedule IV of the Act, The Board has taken on record such declarations after due assessment of veracity,

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board has carried out performance evaluation of its own performance, the Directors (including the Chairman) individually, as well as the evaluation of the working of the Committees, The performance evaluation process has been designed in such a manner which helps to measure effectiveness of the entire Board, its Committees and Directors, Such processes help in ensuring overall performance of the Board and demonstrates a high level of corporate governance standards, There are various key performance areas and evaluation criteria which are measured and analysed during the performance evaluation process,

The Board performance was reviewed on various parameters, including composition & role of the Board, communication and relationships, Board Committees, compensation, strategic planning, governance, legal and financial duties, overall ratings, qualitative feedback, managing conflicts, diversity in the knowledge and related industry expertise, roles and responsibilities of Board members, appropriate utilization of talents and skills of Board members, etc, The evaluation of performance of the Directors including the Chairperson of the Company was conducted on various parameters, such as, attendance, participation, deliberation of various agenda items, understanding of the organization’s strategy and risk environment, representing interests of shareholders and focuses on enhancing shareholder value, proactive feedback and guidance to top management on areas of business strategy, governance and risk, to set and achieve stretch goals, functional relationships with fellow Board members and senior management, participation in Board discussions based on Director’s personal knowledge and expertise, etc,

Further details of performance evaluation are given in the chapter on Corporate Governance,

APPOINTMENT OF DIRECTORS AND REMUNERATION POLICY

Assessment and appointment of members to the Board are based on a combination of criterion that includes ethics, personal and professional stature, domain expertise, gender diversity and specific qualifications required for the position, For appointment of an Independent Director, the independence criteria defined in Section 149(6) of the

meetings and the Board retreat are given in the chapter on Corporate Governance.

SEPARATE MEETING OF INDEPENDENT DIRECTORS

In terms of requirements under Schedule IV of the Act and Regulation 25(3) of the Listing Regulations, four separate meetings of the Independent Directors were held during FY2022. Further details are mentioned in the chapter on Corporate Governance.

AUDIT COMMITTEE

As on March 31,2022, the Audit Committee of the Board of Directors consisted entirely of Independent Directors comprising of Mr. Sridar Iyengar (Chairman), Ms. Kalpana Morparia, Ms. Shikha Sharma and Dr. K P Krishnan. Further details are given in the chapter on Corporate Governance. The Board has accepted all recommendations made by the Audit Committee during the year.

The details of the Corporate Social Responsibility Committee; Nomination, Governance and Compensation Committee; Risk Management Committee; Stakeholders’ Relationship Committee; Science, Technology and Operations Committee and Banking and Authorisations Committee, are given in the Chapter on Corporate Governance

DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Act, your Directors state that:

1. Applicable accounting standards have been followed in the preparation of the annual accounts;

2. Accounting policies have been selected and applied consistently. 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 FY2022 and of the 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 the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

Co., Practicing Company Secretaries (Certificate of Practice No. 3662), Mumbai, India, were appointed as Secretarial Auditors of the Company for FY2022. The Secretarial Audit Report for FY2022 is annexed as Annexure III to this Report.

Based on the consent received from M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, Mumbai, India and on the recommendation of the Audit Committee, the Board has approved their appointment as the Secretarial Auditor of the Company for FY2023.

COST AUDITOR

Pursuant to Section 148(1) of the Act, read with the relevant Rules made thereunder, the Company maintains the cost records in respect of its ‘pharmaceuticals’ business.

On the recommendation of the Audit Committee, the Board has appointed M/s. Sagar & Associates, Cost Accountants (Firm Registration No. 000118) as Cost Auditor of the Company for the FY2023 at a remuneration of '' 700,000/- plus reimbursement of out-of-pocket expenses at actuals and applicable taxes. The provisions also require that the remuneration of the Cost Auditors be ratified by the members and therefore, the same is recommended for approval of the members at the forthcoming 38th AGM.

As a matter of record, relevant Cost Audit Reports for FY2021 were filed with the Central Government on August 19, 2021, within the stipulated timeline. The Cost Audit Report for FY2022 will also be filed within the timeline.

AUDITORS’ QUALIFICATIONS, RESERVATIONS, ADVERSE REMARKS OR DISCLAIMERS

There are no qualifications, reservations, adverse remarks or disclaimers by the Statutory Auditors in their report, or by the Practicing Company Secretaries in the Secretarial Audit Report. During the year, there were no instances of frauds reported by Auditors under Section 143(12) of the Act.

SECRETARIAL STANDARDS

In terms of Section 118(10) of the Act, the Company complies with Secretarial Standards 1 and 2, relating to the ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively as issued by the Institute of Company Secretaries of India and approved by the Central

Act, and Regulation 16(1 )(b) of the Listing Regulations is also considered.

In accordance with Section 178(3) of the Act, Regulation 19(4) of the Listing Regulations and on recommendation of the Company’s Nomination, Governance and Compensation Committee, the Board adopted a Remuneration Policy for Directors, KMP, senior management and other employees. The policy forms part of the chapter on Corporate Governance.

Our executive compensation program supports attracting, motivating, and encouraging continuity of experienced and well-qualified executive officers who advance our critical business objectives and promote the creation of shareholders’ value over the long-term. The key tenets of our philosophy are designed to:

a) Attract highly talented individuals from within and across industries drawing from a diverse pool of global talent.

b) Provide long term and short-term incentives that advance the interests of shareholders and deliver levels of pay commensurate with performance.

The three principal components of the compensation package include, base salary, annual cash-based variable pay, and equity-based long-term incentives.

In making decisions with respect to each element of compensation, the competitive market for executives and compensation levels provided by comparable companies are considered.

Executive compensation is reviewed annually. In general executive increment, percentages are lesser than the average with the frontline receiving the highest increase. A higher increase may be made in the event of a role change, promotion, or in exceptional circumstances. The Company’s performance, affordability and individual performance are other considerations, while deciding on compensation.

NUMBER OF BOARD MEETINGS

The Board of Directors met seven times during the year. In addition, an annual Board retreat was held to discuss strategic matters. The intervening gap between the meetings was within the period prescribed under the Act and Listing Regulations. Details of Board

4. Annual accounts have been prepared on a going concern basis;

5. Adequate internal financial controls for the Company to follow have been laid down and these are operating effectively; and

6. Proper and adequate systems have been devised to ensure compliance with the provisions of all applicable laws and these systems are operating effectively.

ADEQUACY OF INTERNAL FINANCIAL CONTROL SYSTEMS

The Company has in place adequate internal financial controls with reference to its financial statements. These controls ensure the accuracy and completeness of the accounting records and the preparation of reliable financial statements.

ENTERPRISE RISK MANAGEMENT (ERM)

The Company has a Risk Management Committee of the Board, consisting entirely of Independent Directors, and chaired by Ms. Shikha Sharma. Details of the Committee and its terms of reference are set out in the chapter on Corporate Governance.

The Audit and Risk Management Committees review key risk elements of the Company’s business, finance, operations and compliance, and their respective mitigation strategies. The Risk Management Committee reviews strategic, business, compliance and operational risks whereas the Audit Committee reviews issues around ethics and fraud, internal control over financial reporting (ICOFR), as well as process risks and their mitigation.

The Company’s Executive Risk Management Committee operates under the Company’s Risk Management Policy and focuses on risks associated with the Company’s business and compliance matters. This Committee periodically reviews matters pertaining to risk management. Additionally, the Enterprise wide Risk Management (ERM) function helps the Board and the Management to prioritize, review and measure business risks against a pre-determined risk appetite, and their suitable response, depending on whether such risks are internal, strategic or external.

During FY2022, focus areas of Risk Management Committee included review of risks and mitigations related to cyber security, quality, talent and capability, compliance and ethics programs across the Company, supply chain and other operating risk exposures and risk transfer through insurance.

RELATED PARTY TRANSACTIONS

In accordance with Section 134(3)(h) of the Act, and Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of the contracts or arrangements with related parties referred to in Section 188(1) of the Act, in Form AOC-2, is attached as Annexure II to this Board’s Report. All contracts and arrangements with related parties were at arm’s length and in the ordinary course of business of the Company. Details of related party disclosures form part of the notes to the financial statements provided in the Annual Report.

VIGIL MECHANISM/ WHISTLEBLOWER/ OMBUDSPERSON POLICY

The Company has an Ombudsperson Policy (Whistle-Blower/ Vigil mechanism) to report concerns. Reporting channels under the vigil mechanism include an independent hotline, a web based reporting site (drreddys.ethicspoint. com) and a dedicated e-mail to Chief Compliance Officer. The Ombudsperson Policy also safeguards against retaliation of those who use this mechanism. The Audit Committee Chairperson is the Chief Ombudsperson. The Policy also provides for raising concerns directly to the Chief Ombudsperson. Details of the policy are available on the Company’s website: https://www.drreddys.com/ investors/governance/policies-and-documents/#governance.

STATUTORY AUDITORS

M/s. S.R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No. 101049W/E300004) were re-appointed as Statutory Auditors by the members of the Company at the 37th AGM held on July 28, 2021, for a period of five years till the conclusion of the 42nd AGM.

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Act, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. Makarand M. Joshi &

Government. The Company has also voluntarily adopted the recommendatory Secretarial Standards 3 on ‘Dividend’ and Secretarial Standards 4 on ‘Report of the Board of Directors’ issued by the Institute of Company Secretaries of India.

SIGNIFICANT/ MATERIAL ORDERS PASSED BY COURTS/ REGULATORS/ TRIBUNALS

Disputes with Hatchtech Pty Limited (“Hatchtech”) and related parties: On

January 21, 2022, the Company entered into a Settlement and Transfer Agreement with Hatchtech Pty Limited (an Australian Company) for, among other things, the Company to transfer and assign the product Xeglyze® (including all patents, intellectual property, regulatory approvals, marketing and commercialization rights) to Hatchtech.

In 2015, the Company acquired the Xeglyze® Product (including certain patent, intellectual property, regulatory, marketing and commercialization rights) from Hatchtech, pursuant to an Asset Purchase Agreement dated December 7, 2015. On July 24, 2020, the Company successfully obtained approval from the U.S. Food and Drug Administrations for its New Drug Application (NDA) for Xeglyze®. Since the NDA approval in July 2020, the Company and Hatchtech have been engaged in court cases and an arbitration in the United States and Australia, in which both parties have asserted claims against the other and resulting in one arbitration award. The Settlement Agreement settles and resolves all pending and remaining claims between the Parties relating to the Xeglyze® Product and the 2015 Asset Purchase Agreement, which is terminated by the Settlement Agreement, and the parties agreed to the transfer of the Xeglyze® product back to Hatchtech.

INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has a policy to ensure prevention, prohibition and redressal of sexual harassment at the workplace. It has an apex Committee and an Internal Complaints Committee which operate under a defined framework for complaints pertaining to sexual harassment at workplace. The details are available in the principle 5 of the Business Responsibility

and Sustainability Report forming part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

As per Section 135 of the Act, the Company has a Board-level CSR Committee consisting of Mr. Prasad R Menon (Chairman), Mr. G V Prasad and Mr. K Satish Reddy. Based on the recommendation of the CSR Committee, the Board has adopted a CSR policy that provides guiding principles for selection, implementation and monitoring of CSR activities and formulation of the annual action plan. During the year, the Committee monitored the CSR activities undertaken by the Company including the expenditure incurred thereon as well as implementation and adherence to the CSR policy. An impact assessment of the eligible projects has been carried by an independent agency and the report of such impact assessment was noted by the Board. Details of the CSR Policy and initiatives taken by the Company during the year are available on the Company’s website: www.drreddys.com. The report on CSR activities as well as executive summary of the impact assessment report are attached as Annexure IV to this Board’s Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

The Company has opted to submit the Business Responsibility and Sustainability Report for FY2022 on a voluntary basis. A detailed Business Responsibility and Sustainability Report as mentioned under Regulation 34 of the Listing Regulations, is given as a separate chapter in this Annual Report.

TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the provisions of the Act, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules,

2016, as amended, declared dividends which remained unpaid or unclaimed for a period of seven years have been transferred by the Company to the IEPF, which has been established by the Central Government.

The above Rules also mandate transfer of shares on which dividends are lying unpaid and unclaimed for a period of

seven consecutive years to IEPF. The Company has issued individual notices to the members whose equity shares are liable to be transferred to IEPF, with respect to unclaimed and unpaid dividend for FY2015 advising them to claim their dividend on or before August 30, 2022. The details of transfer of unpaid and unclaimed amounts to IEPF are given in the chapter on Additional Shareholders Information.

EMPLOYEES STOCK OPTION SCHEMES

The Company has three stock option schemes namely, ‘Dr. Reddy’s Employees Stock Option Scheme, 2002’, ‘Dr. Reddy’s Employees ADR Stock Option Scheme, 2007’, and ‘Dr. Reddy’s Employees Stock Option Scheme, 2018’ (the “Schemes”). The term of Dr. Reddy’s Employees Stock Option Scheme, 2002, ended on January 28, 2022. However the options already granted under the 2002 Scheme are eligible for exercise, in terms of the Scheme. There are no other changes in the said schemes during the year. The Schemes are in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

The details of Company’s stock option Schemes as required under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are available on the Company’s website: https://www.drreddys.com/ investors/governance/policies-anddo cuments/#governance#policies-and-documents

The details also form part of note 2.25 of the notes to accounts of the standalone financial statements.

PARTICULARS OF EMPLOYEES

The disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are attached as Annexure V to this Board’s Report.

In terms of Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of limits set out in the said rules forms part of the Annual Report.

Considering the provisions of Section 136 of the Act, the Annual Report, excluding the aforesaid information, is being sent to the members of the Company and others entitled thereto. The said information is available for inspection at the registered office of the Company or through electronic mode, during business hours on working days up to the date of the forthcoming 38th AGM, by members. Any member interested in obtaining a copy thereof may write to the Company Secretary in this regard.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars as prescribed under Section 134(3)(m) of the Act, read with Rule 8(3) of the Companies (Accounts) Rules,

2014, are attached as Annexure VI to this Board’s Report.

ANNUAL RETURN

The Annual Return of the Company as on March 31, 2022, in terms of the provisions of Section 134(3)(a) of the Act, is available on the Company’s website: https://www.drreddys.com/investors/ reports-and-filings/annual-reports/

ACKNOWLEDGMENT

Your directors place on record their sincere appreciation for the significant contribution made by your Company’s employees through their dedication, hard work and commitment, as also for the trust reposed in your Company by the medical fraternity and patients. The Board of Directors also acknowledges the support extended by the analysts, bankers, government agencies, media, customers, business partners, members and investors at large.

The Board looks forward to your continued support in the Company’s endeavor to accelerate access to innovative and affordable medicines, because Good Health Can''t Wait.

For and on behalf of the Board of Directors

K Satish Reddy

Chairman DIN: 00129701

Place: Hyderabad Date: May 19, 2022

Director’s Report