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Dr Reddys Laboratories Ltd.

BSE: 500124 Sector: Health care
NSE: DRREDDY ISIN Code: INE089A01023
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NSE 10:19 | 04 Oct 4405.00 -14.65
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OPEN 4440.00
PREVIOUS CLOSE 4420.15
VOLUME 4819
52-Week high 5078.80
52-Week low 3655.00
P/E 42.75
Mkt Cap.(Rs cr) 73,076
Buy Price 4390.00
Buy Qty 1.00
Sell Price 4392.65
Sell Qty 2.00
OPEN 4440.00
CLOSE 4420.15
VOLUME 4819
52-Week high 5078.80
52-Week low 3655.00
P/E 42.75
Mkt Cap.(Rs cr) 73,076
Buy Price 4390.00
Buy Qty 1.00
Sell Price 4392.65
Sell Qty 2.00

Dr Reddys Laboratories Ltd. (DRREDDY) - Auditors Report

Company auditors report

To the Members of Dr. Reddy's Laboratories Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of Dr.Reddy's Laboratories Limited ("the Company") which comprise the Balancesheet as at 31 March 2022 the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2022 its profit including other comprehensive income its cash flows and thechanges in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs)as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the‘Auditor's Responsibilities for the Audit of the Standalone FinancialStatements' section of our report. We are independent of the Company in accordancewith the ‘Code of Ethics 'issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thefinancial year ended 31 March 2022. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone financial statements

Key audit matters How our audit addressed the key audit matter
Assessment of carrying value of intangible assets intangible assets under development and goodwill (as described in note 1.3(f) and 1.3(i) of the significant accounting policies and note 2.3 2.4 and 2.5 for details and movement in goodwill other intangible assets and intangible assets under development respectively in the standalone financial statements)
As at 31 March 2022 the Company has intangible assets including intangible assets under development of Rs 20551 million and goodwill of Rs 853 million. The carrying value of these intangible assets are based on future cash flows and there is a risk that the assets may be impaired if cash flows are not in line with projections. Our audit procedures among others included the following:
• We evaluated the design and tested the operating effectiveness of the Company's controls in assessing the recoverable value of goodwill intangible assets and intangible assets under development.
• We assessed the Company's methodology applied in determining the CGUs to which these assets are allocated.
Valuation of goodwill and intangible assets is subject to management's assessment of recoverable amount being the higher of the value in use and fair value less costs to sell involving significant judgment and are based on number of variables and estimates including projection of future sales operating costs and profit margins; appropriate discount rate and terminal value growth rate; and probability of technical and regulatory success factors in applying discounted cash flow valuation methodology. As the assessment of recoverable amount involves significant degree of management judgement we have identified this a key audit matter • We tested the estimated recoverable value of these assets and assessed the methodologies used by management in deriving the recoverable value and tested the significant assumptions and the underlying data used by the Company in its analyses.
• We compared the significant assumptions to current industry market and economic trends to the Company's historical data.
• We performed sensitivity analyses of the significant assumptions to evaluate the potential change in the recoverable values of these assets resulting from hypothetical changes in underlying assumptions. We also assessed the recoverable value headroom by performing sensitivity testing of key assumptions used.
• We tested the arithmetical accuracy of the models.
Key audit matters How our audit addressed the key audit matter
Contingencies including litigations and tax (as described in note 1.3(i) of the significant accounting policies and note 2.30 containing details of contingencies in the standalone financial statements)
Our audit procedures among others included the following:
The Company is involved in disputes lawsuits claims anti-trust governmental and / or regulatory inspections inquiries investigations and proceedings including patent tax and commercial matters that arise from time to time in the ordinary course of business. Most of the claims involve complex issues. The Company assisted by their external legal counsel assesses the need to make provision or disclose a contingency on a case- to- case basis considering the underlying facts of each litigation. • We evaluated the design and tested the operating effectiveness of controls relating to identification and evaluation of claims proceedings and investigations at different levels in the Company and the measurement of provisions for disputes potential claims and litigation contingent liabilities and disclosures.
• We obtained a list of ongoing litigations from the Company's in-house legal counsel. We selected a sample of litigations based on materiality and performed inquiries with the said counsel on the legal evaluation of these litigations. We compared the evaluation with the provision or disclosure in the standalone financial statements. We tested the underlying computation of the management in relation to the measurement of provision or the contingency.
This area is significant to our audit since the accounting and disclosure for contingent legal and tax liabilities is complex and judgmental (due to the difficulty in predicting the outcome of the matter and estimating the potential impact if the outcome is unfavourable) and the amounts involved are or can be material to the standalone financial statements. • We obtained legal letters from the Company's external legal advisors with respect to the matters included in the summary. Where appropriate we examined correspondences connected with the cases.
• We inspected relevant communication with tax authorities.
• We involved tax experts in assessing the nature and amount of material tax positions and assessed the technical merits based on the correspondence and assessments from the relevant tax authorities.
• We also evaluated the disclosures made in the standalone financial statements.
Returns discounts and other deductions in Revenue (as described in note 1.3(m) of the significant accounting policies of standalone financial statements and note 2.13 of the standalone financial statements)
Revenue is recognised net of accrual for sales returns and discounts etc. The estimates relating to these accruals are important given the significance of revenue and also considering the distinctive terms of arrangement with customers. These estimates are complex and requires significant judgement and estimation by the Company for establishing an appropriate accrual. Accuracy of revenues may deviate on account of change in judgements and estimates. Accordingly the same has been considered as a key audit matter. Our audit procedures among others included the following:
• We obtained an understanding evaluated the design and tested the operating effectiveness of internal controls over the sales deduction processes.
• We also tested management's controls over the methods for making estimatesdata and assumptions of the estimates used to calculate the sales deductions.
• We tested management's estimated sales deductions and obtained management's calculations for the respective estimates. We tested management's estimates over the determination of sales deductions accruals by comparing the rates used in management's estimate to rates in the underlying contracts and historical sales deductions data.
• We compared the assumptions to contracted prices and discounts allowances and returns as applicable to current payment trends.
• We also considered the historical accuracy of the management's estimates in prior years and assessed the estimated amounts we evaluated trends in actual sales and discount accrual balances.
• We also tested the underlying data used in management's calculations for accuracy and completeness and verified source data supporting the historical sales and sales returns levels and volume discounts settled during the period.
• We tested recording of revenue in appropriate period which included the following procedures:
• Performed trend analysis over sales levels as compared to previous periods;
• Verified sample sales transactions near period-end.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the Statutory reports Management discussionand analysis corporate governance and Board's report included in the Annual reportwhich we obtained prior to the date of this auditor's report and Corporate Overviewand letter from Chairman and Co-Chairman included in the Annual report which is expectedto be made available to us after that date. The other information does not include thestandalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whethersuch other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding

the Indian Accounting Standards (Ind AS) specified under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended March 31 2022 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020("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 1" a statement on thematters specified in paragraphs 3 and 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from thedirectors as on 31 March 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2022 from being appointed as a director in termsof Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controlswith reference to these standalone financial statements and the operating effectiveness ofsuch controls refer to our separate Report in "Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year ended 31March 2022 has been paid / provided by the Company to its directors in accordance with theprovisions of section 197 read with Schedule V to the Act;

(h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended 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 itsfinancial position in its standalone financial statements - Refer Note 2.30(A) to thestandalone financial statements;

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts - Refer Note 2.28 to the standalone financialstatements;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company;

iv. a) The management has represented that to the best of itsknowledge and belief no funds have been advanced or loaned or

invested (either from borrowed funds or share premium or any othersources or kind of funds) by the Company to or in any other persons or entities includingforeign entities ("Intermediaries") with the understanding whether recorded inwriting or otherwise that the Intermediary shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Company ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries;

b) The management has represented that to the best of its knowledgeand belief no funds have been received by the Company from any persons or entitiesincluding foreign entities ("Funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall whether directly or indirectlylend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Funding Party ("Ultimate Beneficiaries") or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries; and

c) Based on such audit procedures performed that have been consideredreasonable and appropriate in the circumstances nothing has come to our notice that hascaused us to believe that the representations under sub-clause (a) and (b) contain anymaterial misstatement.

v. a) The final dividend paid by the Company during the year in respectof the same declared for the previous year is in accordance with section 123 of the Act tothe extent it applies to payment of dividend.

b) As stated in note 2.9 to the standalone financial statements theBoard of Directors of the Company have proposed final dividend for the year which issubject to the approval of the members at the ensuing Annual General Meeting. The dividenddeclared is in accordance with section 123 of the Act to the extent it applies todeclaration of dividend.

For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Shankar Srinivasan
Partner
Membership Number: 213271
UDIN: 22213271AJFMRM8990
Place of Signature: Hyderabad
Date: 19 May 2022

RE: DR. REDDY'S LABORATORIES LIMITED ("the Company")

In terms of the information and explanations sought by us and given bythe company and the books of account and records examined by us in the normal course ofaudit and to the best of our knowledge and belief we state that:

(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(B) The Company has maintained proper records showing full particularsof intangibles assets.

(b) All Property Plant and Equipment have not been physically verifiedby the management during the year but there is a regular programme of verification whichin our opinion is reasonable having regard to the size of the Company and the nature ofits assets. No material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (other thanproperties where the Company is the lessee and the lease agreements are duly executed infavour of the lessee) are held in the name of the company.

(d) The Company has not revalued its Property Plant and Equipment(including Right of use assets) or intangible assets during the year ended 31 March 2022.

(e) There are no proceedings initiated or are pending against theCompany for holding any benami property under the Prohibition of Benami PropertyTransactions Act 1988 and rules made thereunder.

(ii) (a) The inventory has been physically verified by the managementduring the year. In our opinion the frequency of verification by the management isreasonable and the coverage and procedure for such verification is appropriate.Inventories lying with third parties have been confirmed by them as at 31 March 2022.There were no discrepancies of 10% or more in aggregate for each class of inventory.

(b) The Company has not been sanctioned working capital limits inexcess of ' five crores in aggregate from banks or financial institutions during any pointof time of the year on the basis of security of current assets. Accordingly therequirement to report on clause 3(ii)(b) of the Order is not applicable to the Company.

(iii) (a) During the year the Company has not provided loans advancesin the nature of loans stood guarantee or provided security to companies firms LimitedLiability Partnerships or any other parties. Accordingly the requirement to report onclause 3(iii)(a) of the Order is not applicable to the Company.

(b) During the year the investments made guarantees provided securitygiven and the terms and conditions of the grant of all loans and advances in the nature ofloans investments and guarantees to companies firms Limited Liability Partnerships orany other parties are not prejudicial to the Company's interest.

(c) The Company has outstanding loans from subsidiary companies duringthe year where the schedule of repayment of principal and payment of interest has beenstipulated and the repayment or receipts are regular.

(d) There are no amounts of loans and advances in the nature of loansgranted to companies firms limited liability partnerships or any other parties which areoverdue for more than ninety days.

(e) There were no loans or advance in the nature of loan granted tocompanies firms Limited Liability Partnerships or any other parties which had fallen dueduring the year. Accordingly the requirement to report on clause 3(iii)(e) of the Orderis not applicable to the Company.

(f) The Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repaymentto companies firms Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(f) of the Order is not applicable to the Company.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has not advanced loans to directors / to a company in which theDirector is interested to which provisions of section 185 of the Act apply and hence notcommented upon. In our opinion and according to the information and explanations given tous the Company has made investments and given guarantees/ provided security which is incompliance with the provisions of section 186 of the Act.

(v) The Company has neither accepted any deposits from the public noraccepted any amounts which are deemed to be deposits within the meaning of sections 73 to76 of the Act and the rules made thereunder to the extent applicable. Accordingly therequirement to report on clause 3(v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Act and are of the opinion that prima facie thespecified accounts and records have been made and maintained. We have not however made adetailed examination of the same.

(vii) (a) The Company is regular in depositing with appropriateauthorities undisputed statutory dues including goods and services tax provident fundemployees' state insurance income-tax sales-tax service tax duty of customs dutyof excise value added tax cess and other statutory dues applicable to it. According tothe information and explanations given to us and based on audit procedures performed byus no undisputed amounts payable in respect of these statutory dues were outstanding atthe year end for a period of more than six months from the date they became payable.

(b) The dues of goods and services tax provident fund employees'state insurance income-tax sales-tax service tax duty of custom duty of excise valueadded tax cess and other statutory dues have not been deposited on account of anydispute are as follows:

Name of the statute Nature of the dues Amount ' Paid under protest Period to which the amount relates Forum where the dispute is pending
Income Tax Act

Income Tax

84 2017-2018

Commissioner Appeals

1961 6 2018-2019
Central Excise Act 1944

Excise Duty Interest and Penalty

1629 2001-2019 Appellate Authority - up to Commissioners
584 84 2003-2019 CESTAT
52 2002-2008 High Court
Customs Act

Custom Duty

41

6

2010-2020 Appellate Authority - up to Commissioners
1962 6 2010-2011 High Court
CGST Act 2017 GST 386 - 2017-2019 Appellate Authority - up to Commissioners
Cenvat Credit of Service 109

5

2012-2016 CESTAT
Finance Act Tax Interest and Penalty 29 2004-2016 Appellate Authority - up to Commissioners
1994

Service Tax and Penalty

194 2010-2016 CESTAT
4 2015-2016 Appellate Authority - up to Commissioners
Central Sales 176 2002-2017 Sales Tax Appellate Tribunal
Tax Act and Sales Tax Acts of various Sales Tax and Penalty 94

201

2003-2018 Appellate Tribunal - up to Commissioner
1 2002-2004 Supreme Court
States 78 2005-2014 High Court

(viii) The Company has not surrendered or disclosed any transactionpreviously unrecorded in the books of account in the tax assessments

under the Income Tax Act 1961 as income during the year. Accordinglythe requirement to report on clause 3(viii) of the Order is not applicable to the Company.

(ix) (a) The Company has not defaulted in repayment of loans or otherborrowings or in the payment of interest thereon to any lender.

(b) The Company has not been declared wilful defaulter by any bank orfinancial institution or government or any government authority.

(c) The Company did not have any term loans outstanding during the yearhence the requirement to report on clause (ix)(c) of the Order is not applicable to theCompany.

(d) On an overall examination of the standalone financial statements ofthe Company no funds raised on short-term basis have been used for long-term purposes bythe Company.

(e) On an overall examination of the standalone financial statements ofthe Company the Company has not taken any funds from any entity or person on account ofor to meet the obligations of its subsidiaries associates or joint ventures.

(f) The Company has not raised loans during the year on the pledge ofsecurities held in its subsidiaries joint ventures or associate companies. Hence therequirement to report on clause (ix)(f) of the Order is not applicable to the Company.

(x) (a) The Company has not raised any money during the year by way ofinitial public offer / further public offer (including debt instruments) hence therequirement to report on clause 3(x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or privateplacement of shares /fully or partially or optionally convertible debentures during theyear under audit and hence the requirement to report on clause 3(x)(b) of the Order isnot applicable to the Company.

(xi) (a) No fraud by the Company or no material fraud on the Companyhas been noticed or reported during the year.

(b) During the year no report under sub-section (12) of section 143 ofthe Act has been filed by cost auditor/ secretarial auditor or by us in Form ADT - 4 asprescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014 with the CentralGovernment.

(c) We have taken into consideration the whistle blower complaintsreceived by the Company during the year while determining the nature timing and extent ofaudit procedures.

(xii) The Company is not a nidhi Company as per the provisions of theAct. Therefore the requirement to report on clause 3(xii)(a) of the Order is notapplicable to the Company.

(xiii) Transactions with the related parties are in compliance withsections 177 and 188 of Act where applicable and the details have been disclosed in thenotes to the standalone financial statements as required by the applicable accountingstandards.

(xiv) (a) The Company has an internal audit system commensurate withthe size and nature of its business.

(b) The internal audit reports of the Company issued till the date ofthe audit report for the period under audit have been considered by us.

(xv) The Company has not entered into any non-cash transactions withits directors or persons connected with its directors and hence requirement to report onclause 3(xv) of the Order is not applicable to the Company.

(xvi) (a) The provisions of section 45-IA of the Reserve Bank of IndiaAct 1934 are not applicable to the Company. Accordingly the requirement to report onclause (xvi)(a) of the Order is not applicable to the Company.

(b) The Company is not engaged in any Non-Banking Financial or HousingFinance activities. Accordingly the requirement to report on clause (xvi)(b) of the Orderis not applicable to the Company.

(c) The Company is not a Core Investment Company as defined in theregulations made by Reserve Bank of India. Accordingly the requirement to report onclause 3(xvi) of the Order is not applicable to the Company.

(d) There is no Core Investment Company as a part of the Group.Accordingly the requirement to report on clause 3(xvi) of the Order is not applicable tothe Company.

(xvii) The Company has not incurred cash losses in the current year andpreceding financial year.

(xviii) There has been no resignation of the statutory auditors duringthe year and accordingly requirement to report on Clause 3(xviii) of the Order is notapplicable to the Company.

(xix) On the basis of the financial ratios disclosed in note 2.42 tothe standalone financial statements ageing and expected dates of realization of financialassets and payment of financial liabilities other information accompanying the standalonefinancial statements our knowledge of the Board of Directors and management plans andbased on our examination of the evidence supporting the assumptions nothing has come toour attention which causes us to believe that any material uncertainty exists as on thedate of the audit report that Company is not capable of meeting its liabilities existingat the date of balance sheet as and when they fall due within a period of one year fromthe balance sheet date. We however state that this is not an assurance as to the futureviability of the Company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.

(xx) (a) In respect of other than ongoing projects there are nounspent amounts that are required to be transferred to a fund specified in

Schedule VII of the Act in compliance with second proviso to subsection 5 of section 135 of the Act. This matter has been disclosed in note 2.20 to thestandalone financial statements.

(b) All amounts that are unspent under section (5) of section 135 ofCompanies Act pursuant to any ongoing project has been transferred to special account incompliance of with provisions of sub section (6) of section 135 of the said Act. Thismatter has been disclosed in note 2.20 to the financial statements.

For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Shankar Srinivasan
Partner
Membership Number: 213271
UDIN: 22213271AJFMRM8990
Place: Hyderabad
Date: 19 May 2022

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF DR. REDDY'S LABORATORIES LIMTED

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference tostandalone financial statements of Dr. Reddy's Laboratories ("the Company")as of 31 March 2022 in conjunction with our audit of the standalone financial statementsof the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to these standalone financial statements basedon our audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the "Guidance Note") andthe Standards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both issued by ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to these standalone financial statements was establishedand maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding of internal financial controls with reference to these standalone financialstatements 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 auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to these standalone financial statements.

Meaning of Internal Financial Controls With Reference to theseStandalone Financial Statements

A company's internal financial controls with reference tostandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial controls with reference to standalonefinancial statements includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 financial statements.

Inherent Limitations of Internal Financial Controls With Reference toStandalone Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as at 31 March 2022 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI.

For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Shankar Srinivasan
Partner
Membership Number: 213271
UDIN: 22213271AJFMRM8990
Place: Hyderabad
Date: 19 May 2022

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