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Dr Reddys Laboratories Ltd.

BSE: 500124 Sector: Health care
NSE: DRREDDY ISIN Code: INE089A01023
BSE LIVE 15:59 | 21 Aug 1933.15 -49.75
(-2.51%)
OPEN

1982.90

HIGH

2001.00

LOW

1925.50

NSE 15:50 | 21 Aug 1931.10 -50.90
(-2.57%)
OPEN

1990.00

HIGH

2001.00

LOW

1921.10

OPEN 1982.90
PREVIOUS CLOSE 1982.90
VOLUME 452887
52-Week high 3394.95
52-Week low 1901.65
P/E 33.12
Mkt Cap.(Rs cr) 32,055
Buy Price 1933.15
Buy Qty 93.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1982.90
CLOSE 1982.90
VOLUME 452887
52-Week high 3394.95
52-Week low 1901.65
P/E 33.12
Mkt Cap.(Rs cr) 32,055
Buy Price 1933.15
Buy Qty 93.00
Sell Price 0.00
Sell Qty 0.00

Dr Reddys Laboratories Ltd. (DRREDDY) - Auditors Report

Company auditors report

To the members of Dr. Reddy's Laboratories Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS fi nancial statements of Dr. Reddy'sLaboratories Limited ("the Company") which comprise the Balance Sheet as at 31March 2017 the Statement of Profi t and Loss including Other Comprehensive Income theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of signifi cant 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 Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS fi nancial statements that give a true and fair view of the financial position fi nancial performance including other comprehensive income cash fl owsand changes in equity of the Company in accordance with accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specifi ed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal fi nancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS fi nancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS fi nancialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS fi nancial statements in accordancewith the Standards on Auditing issued by the Institute of Chartered Accountants of Indiaas specifi ed under Section 143(10) of the Act. Those Standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the fi nancial statements. The procedures selected depend on the auditors'judgment including the assessment of the risks of material misstatement of the standaloneInd AS fi nancial statements whether due to fraud or error. In making those riskassessments the auditor considers internal fi nancial control relevant to the Company'spreparation of the standalone Ind AS fi nancial statements that give a true and fair viewin order to design audit procedures that are appropriate in the circumstances. An auditalso includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS fi nancial statements. Webelieve that the audit evidence we have obtained is suffi cient and appropriate to providea basis for our audit opinion on the standalone Ind AS fi nancial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the standalone Ind AS fi nancial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2017 its profi t including other comprehensive income its cash fl ows andthe changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specifi ed in paragraphs 3and 4 of the Order.

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 bestof our knowledge and belief were necessary for the purpose of our audit; (b) In ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books; (c) The Balance Sheet Statement ofProfi t and Loss including Other Comprehensive Income the Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;

(d) In our opinion the aforesaid standalone Ind AS fi nancial statements comply withthe Accounting Standards specifi ed under section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended; (e) On the basis of writtenrepresentations received from the directors as on 31 March 2017 and taken on record bythe Board of Directors none of the directors is disqualifi ed as on 31 March 2017 frombeing appointed as a director in terms of section 164 (2) of the Act; (f) With respect tothe adequacy of the internal fi nancial controls over fi nancial reporting of the Companyand the operating effectiveness of such controls refer to our separate report in"Annexure 2" to this report; (g) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us:

i. The Company has disclosed the impact of pending litigations on its fi nancialposition in its standalone Ind AS fi nancial statements – Refer note 2.36 to thestandalone Ind AS fi nancial statements; ii. The Company has made provision as requiredunder the applicable law or accounting standards for material foreseeable losses if anyon long-term contracts including derivative contracts; iii. There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company; and iv. The Company has provided requisite disclosures in note 2.27to these standalone Ind AS fi nancial statements as to the holding of Specifi ed BankNotes on 8 November 2016 and 30 December 2016 as well as dealings in Specifi ed Bank Notesduring the period from 8 November 2016 to 30 December 2016. Based on our audit proceduresand relying on the management representation regarding the holding and nature of cashtransactions including Specifi ed Bank Notes we report that these disclosures are inaccordance with the books of accounts maintained by the Company and as produced to us bythe Management.

Other Matter

The comparative fi nancial information of the Company for the year ended 31 March 2016and the transition date opening balance sheet as at 1 April 2015 prepared in accordancewith Ind AS included in these standalone Ind AS fi nancial statements have been auditedby the predecessor auditor who had audited the standalone fi nancial statements for therelevant periods. The report of the predecessor auditor on the comparative fi nancialinformation and the opening balance sheet dated 12 May 2017 expressed an unmodifi edopinion.

for S.R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 101049W/E300004

per Kaustav Ghose

Partner

Membership Number : 57828

Place : Hyderabad
Date : 12 May 2017

ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fi xed assets. (b) All fi xed assets have not beenphysically verifi ed by the management during the year but there is a regular programme ofverifi cation which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed on suchverifi cation.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment are held in thename of the Company.

ii. The Management has conducted physical verifi cation of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverifi cation.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies fi rms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.

iv. In our opinion and according to the information and explanations given to us theCompany has not advanced loans to directors / to a company in which the director isinterested to which the provisions of section 185 of the Companies Act 2013 apply andhence not commented upon. In our opinion and according to the information and explanationsgiven to us the Company has made investments and given guarantees / provided securitywhich is in compliance with the provisions of section 186 of the Companies Act 2013.

v. The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable.

vi. We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 and are of the opinion that prima facie thespecifi ed accounts and records have been made and maintained. We have not however madea detailed examination of the same.

vii. (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees' state insurance income-taxsales-tax service tax duty of custom duty of excise value added tax cess and otherstatutory dues applicable to it.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax cess and other materialstatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable.

(c) According to the records of the Company the dues of income-tax sales-tax servicetax duty of custom duty of excise value added tax and cess on account of any disputeare as set out in Appendix 1.

viii. In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowings to a bank orgovernment. There are no dues which are payable to fi nancial institutions. The Companydid not have any debenture holders during the year.

ix. In our opinion and according to the information and explanations given by themanagement the Company has utilised the monies raised by way of term loans for thepurposes for which they were raised. The Company has not raised any money by way ofinitial public offer / further public offer / debt instruments and hence not commentedupon.

x. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the fi nancial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no fraud on the Companyby the offi cers and employees of the Company has been noticed or reported during theyear.

xi. According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

xii. In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.

ANNEXURE 1 REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE (CONTINUED)

xiii. According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 of theCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe fi nancial statements as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.

xv. According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of the Companies Act 2013.

xvi. According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

for S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Kaustav Ghose
Partner
Membership Number : 57828
Place : Hyderabad
Date : 12 May 2017

ANNEXURE 2 TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal fi nancial controls over fi nancial reporting of Dr.Reddy's Laboratories Limited ("the Company") as of 31 March 2017 in conjunctionwith our audit of the standalone fi nancial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internal financial controls based on the internal control over fi nancial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal fi nancial controls thatwere operating effectively for ensuring the orderly and effi cient conduct of itsbusiness including adherence to the Company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable fi nancial information asrequired under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal fi nancialcontrols over fi nancial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing as specifi edunder section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal fi nancial controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal fi nancial controls over fi nancial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal fi nancial controls system over fi nancial reporting and their operatingeffectiveness. Our audit of internal fi nancial controls over fi nancial reportingincluded obtaining an understanding of internal fi nancial controls over fi nancialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditors' judgement including the assessment of therisks of material misstatement of the fi nancial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is suffi cient and appropriate toprovide a basis for our audit opinion on the internal fi nancial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal fi nancial control over fi nancial reporting is a process designedto provide reasonable assurance regarding the reliability of fi nancial reporting and thepreparation of fi nancial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal fi nancial control over fi nancialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly refl ect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of fi nancial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the fi nancial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal fi nancial controls over fi nancialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal fi nancial controls over fi nancialreporting to future periods are subject to the risk that the internal fi nancial controlover fi nancial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

ANNEXURE 2 TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE (CONTINUED)

Opinion

In our opinion the Company has in all material respects an adequate internal financial controls system over fi nancial reporting and such internal fi nancial controlsover fi nancial reporting were operating effectively as at 31 March 2017 based on theinternal control over fi nancial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

for S.R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 101049W/E300004

per Kaustav Ghose

Partner

Membership Number : 57828 Place : Hyderabad Date : 12 May 2017

Appendix 1 as referred to in paragraph vii (b) of Annexure 1 to the IndependentAuditors' Report

Disputed Amount paid
Name of the Statute Nature of the dues amount in under protest in
` million ` million
1632
Excise duty 306
Central Excise Act 1944 40 265
142
Penalty
4
37
Customs Act 1962 Custom duty 1
6
CENVAT credit of 588
Service Tax 103
Service Tax 109
Finance Act 1994 340 143
Penalty
25
1
Interest
12
177
Central Sales Tax Act and Sales Tax 119
Sales Tax Acts of various 9 236
States 42
Penalty
13
1263 -
Income tax Act 1961 Income tax
1 -

 

Period to which the
Forum where dispute is pending
amount relates
2001-2017 Appellate Authority – upto Commissioners
1998-2016 CESTAT
2002-2008 High Court
2004-2016 CESTAT
2001-2002 High Court
2003-2014 Appellate Authority – upto Commissioners
2010-2011 High Court
2005-2016 CESTAT
2005-2016 Appellate Authority – upto Commissioners
2010-2015 CESTAT
2005-2016 CESTAT
2005-2016 Appellate Authority – upto Commissioners
2005-2016 CESTAT
2005-2016 Appellate Authority – upto Commissioners
2005-2017 Appellate Authority – upto Commissioners
2002-2013 Sales Tax Appellate Tribunal
2006-2014 High Court
2007-2014 Appellate Authority – upto Commissioners
2005-2011 Sales Tax Appellate Tribunal
2008-2009
2009-2010 Commissioner of Income Tax (Appeals)
2012-2013
2002-2003 Income Tax Appellate Tribunal