Dr. Reddy's Q3 & 9 Months FY13 Financial Results

  Dr. Reddy's Q3 & 9 Months FY13 Financial Results

                     Q3 FY13 Revenues at Rs. 28.7 billion

                             (YoY growth of 23%)#

                      Q3 FY13 EBITDA at Rs. 6.0 billion

                   *Adjusted Q3 FY13 PAT at Rs. 3.6 billion

                  9 months FY13 Revenues at Rs. 82.9 billion

                             (YoY growth of 26%)#

                   9 months FY13 EBITDA at Rs. 18.6 billion

                 **Adj 9 months FY13 PAT at Rs. 11.3 billion

Business Wire

HYDERABAD, India -- February 14, 2013

Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited
consolidated financial results for the quarter ended December 31, 2012 under
International Financial Reporting Standards (IFRS).

Key Highlights (Q3 FY13)

  *Consolidated revenues for Q3 FY13 at Rs. 28.7 billion, recorded YoY growth
    of 23%^#. Consolidated revenues for 9 months FY13 at Rs. 82.9 billion,
    recorded YoY growth of 26%^#.

       *Revenues from the Global Generics segment for Q3 FY13 at Rs. 20.8
         billion, recorded a YoY growth of 24%^# primarily driven by North
         America and the Emerging market territories.
       *Revenues from the PSAI segment for Q3 FY13 at Rs. 7.1 billion,
         recorded YoY growth of 28%.

  *EBITDA for Q3 FY13 at Rs. 6.0 billion, 21% of revenues. EBITDA for 9
    months FY13 at Rs. 18.6 billion, 22% of the revenues.
  *PAT for Q3 FY13 at Rs. 3.8 billion, 13% of revenues. PAT for 9 months at
    Rs. 11.1 billion, 13% of revenues.
  **Adjusted PAT for Q3 FY13 at Rs. 3.6 billion, 13% of revenues.
  *During the quarter, the company launched 17 new products, filed 13 new
    product registrations and filed 13 DMFs globally.

# Excluding the impact of the olanzapine profit share recorded in Q3 FY12

* Adjusted for tax normalization on account of the annual effective tax rate

** Adjusted for (a) impairment charges in Q2 FY13 and (b) tax normalization on
account of the annual effective tax rate.

All figures in     All US dollar figures based on convenience translation rate
millions,        of 1USD = Rs. 54.86
except EPS
                                                                    
Dr. Reddy’s Laboratories Limited and Subsidiaries
Unaudited Consolidated Income Statement
                                                                         
                   Q3 FY13                    Q3 FY12                    
Particulars        ($)   (Rs.)    %       ($)   (Rs.)    %       Growth
                                                                         %
Revenue            522     28,651     100     505     27,692     100     3
Cost of            247     13,559     47      203     11,117     40      22
revenues
Gross profit       275     15,092     53      302     16,575     60      (9)
Operating
Expenses
Selling,
general &          156     8,571      30      140     7,679      28      12
administrative
expenses
Research and
development        37      2,026      7       28      1,514      5       34
expenses
Other
operating          (4)     (233)      (1)     (3)     (165)      (1)     41
(income) /
expense
Results from
operating          86      4,728      17      138     7,547      27      (37)
activities
Net finance
(income) /         2       96         0       (3)     (174)      (1)     NC
expense
Share of
(profit) /
loss of equity     (1)     (32)       (0)     (0)     (26)       (0)     23
accounted
investees
Profit before      85      4,664      16      141     7,747      28      (40)
income tax
Income tax         16      882        3       48      2,617      9       (66)
expense
Profit for the     69      3,782      13      94      5,130      19      (26)
period
                                                                  
Diluted EPS        0.4     22.20             0.5     30.16             (26)

Profit Computation:

EBITDA Computation                 Q3 FY13         Q3 FY12
                                     ($)   (Rs.)     ($)   (Rs.)
PBT                                  85      4,664     141     7,747
Net Interest Expenses / (Income)     (0)     (13)      3       155
Depreciation                         18      971       16      899
Amortization                         7       411       7       408
Reported EBITDA                      110     6,033     168     9,209
                                                       
Adjusted PAT Computation             Q3 FY13           Q3 FY12
                                     ($)     (Rs.)     ($)     (Rs.)
PAT (reported)                       69      3,782     94      5,130
Adjustments:
Tax adjustment*                      (3)     (138)     16      852
Adjusted PAT                         66      3,644     109     5,982

* Q3 FY13 normalized to the FY13 annual effective tax rate and Q3 FY12
normalized to the FY12 annual effective tax rate

Note: The above presented unaudited consolidated income statement for 3 months
ended 31 December 2012 is based on the financial submissions to be made with
the US SEC in the form 6K. A charge of Rs 20.4 crs towards fuel surcharge
adjustment was accounted in Q2 FY13 after the unaudited results were announced
as a subsequent event adjustment since the related judgement of AP High Court
was delivered before the filing of Form 6K with US SEC for Q2 FY13 financials.
However, in the financials submitted to SEBI this charge has been considered
in Q3 FY13 only.

Segmental Analysis

Global Generics

Revenues from Global Generics segment for Q3 FY13 at Rs. 20.8 billion,
recorded YoY growth of 24%^# driven by key markets of North America and the
Emerging market territories.

  *Revenues from North America for Q3 FY13 at Rs. 9.2 billion ($178 Mn),
    recorded YoY growth of 38%^#.

       *Growth is largely driven by key limited competition products of
         ziprasidone, tacrolimus, fondaparinux and ramp-up in antibiotics
         portfolio.
       *Continued focus on gaining market shares in new products such as
         atorvastatin, metoprolol, ibandronate and montelukast granules during
         the quarter.
       *31 products from the prescription portfolio are ranked among the Top
         3 in their respective market shares. (Source: IMS Health Volumes,
         November 2012)
       *During the quarter, 4 ANDAs were filed. Cumulatively, 65 ANDAs are
         pending for approval with the USFDA of which 35 are Para IVs and 8
         have ‘First To File’ status.

  *Revenues from Russia and Other CIS markets for Q3 FY13 at Rs. 4.4 billion
    recorded YoY growth of 32%.

       *Revenues from Russia for Q3 FY13 at Rs. 3.7 billion recorded YoY
         growth of 35%, largely aided by seasonal offtake across major brands
         and new product launches.
       *Revenues from Other CIS markets for Q3 FY13 at Rs. 0.7 billion
         recorded YoY growth of 19%.

  *Revenues from India for  Q3 FY13 at Rs. 3.7 billion recorded YoY growth of
    12%.

       *Biosimilars portfolio grew YoY by 47% during the quarter.
       *8 new brands were launched during the quarter.

  *Revenues from Europe for Q3 FY13 at Rs. 1.9 billion declined YoY by 20%.

Pharmaceutical Services and Active Ingredients (PSAI)

  *Revenues from PSAI for Q3 FY13 at Rs. 7.1 billion, recorded YoY growth of
    28%.
  *During the quarter, 13 DMFs were filed globally, including 3 in the US and
    1 in Europe. The cumulative number of DMF filings as of December 31, 2012
    is 566.

# Excluding the impact of the olanzapine profit share recorded in Q3 FY12

Income Statement Highlights:

  *Gross profit margin is at 53% in Q3 FY13. Gross profit margin for Global
    Generics and PSAI business segments are at 60% and 29% respectively.
  *Selling, General and Administration (SG&A) expenses for Q3 FY13 including
    amortization at Rs. 8.6 billion increased YoY by 12%.
  *Research & development expenses for Q3 FY13 at Rs. 2.0 billion is at 7% of
    revenues.
  *Net Finance expense is at Rs. 96 million, in Q3 FY13 compared to the net
    finance income of Rs. 174 million in Q3 FY12. The change is on account of:

       *Net decline in the forex benefit primarily on account of the loss on
         time value of options, due to the recent depreciation in the rupee.
       *Incremental Interest income of Rs. 168 million primarily on account
         of higher interest income from Fixed Deposit and mutual funds.

  *EBITDA for Q3 FY13 is Rs. 6.0 billion, 21% of revenues.
  *Profit after Tax in Q3 FY13 at Rs. 3.8 billion, 13% of revenues.
  **Adjusted Profit after tax in Q3 FY13 at Rs. 3.6 billion, 13% of revenues.
  *Diluted earnings per share in Q3 FY13 are Rs. 22.2.
  *Capital expenditure for Q3 FY13 is Rs. 1.5 billion.

* Adjusted for tax normalization on account of the annual effective tax rate

All figures in        All US dollar figures based on convenience translation
millions                rate of 1USD = Rs. 54.86
                                                    
Appendix 1: Key
Balance Sheet Items
                                                         
Particulars             As on 31st Dec 12                As on 30th Sep 12
                        ($)           (Rs.)            ($)         (Rs.)
Cash and cash           424             23,264           376           20,641
equivalents
Trade receivables       490             26,873           478           26,247
Inventories             422             23,169           399           21,885
Property, plant and     659             36,126           643           35,300
equipment
Goodwill and Other      226             12,436           224           12,297
Intangible assets
Loans and
borrowings (current     672             36,825           636           34,901
& non current)
Trade payables          200             10,996           190           10,412
Equity                  1,217           66,789           1,155        63,354

Appendix 2: Revenue Mix by Segment

Segment         Q3 FY13                  Q3 FY12                  Growth
                  ($)   (Rs.)    %       ($)   (Rs.)    %       %
Global            380     20,828     73      388     21,287     77      (2)
Generics
North America            9,243      44             11,114     52      (17)
Europe                   1,931      9              2,426      11      (20)
India                    3,718      18             3,333      16      12
Russia &                 4,380      21             3,317      16      32
Other CIS
RoW                      1,556      7              1,097      5       42
PSAI              130     7,127      25      101     5,563      20      28
North America            1,266      18             1,170      21      8
Europe                   2,472      35             1,652      30      50
India                    1,268      18             862        15      47
RoW                      2,121      30             1,880      34      13
Proprietary
Products &        13      696        2       15      841        3       (17)
Others
Total             522     28,651     100     505     27,691     100     3

All figures in     All US dollar figures based on convenience translation rate of
millions,        1USD = Rs. 54.86
except EPS
                                                                        
Appendix 3: Consolidated Income Statement
                                                                             
Particulars        9 months FY13                9 months FY12                Growth
                   ($)     (Rs.)    %       ($)     (Rs.)    %       %
Revenues           1,510     82,866     100     1,279     70,153     100     18
Cost of            713       39,133     47      562       30,818     44      27
revenues
Gross profit       797       43,733     53      717       39,335     56      11
Operating
Expenses
Selling,
general and        453       24,862     30      395       21,651     31      15
administrative
expenses
Research and
development        97        5,347      6       76        4,170      6       28
expenses
Impairment
loss on
goodwill and       12        688        1       0         0          0       0
intangible
assets
Other
operating          (15)      (848)      (1)     (10)      (567)      (1)     50
(income) /
expense
Results from
operating          249       13,684     17      257       14,081     20      (3)
activities
Net finance
(income) /         (1)       (63)       (0)     (1)       (78)       (0)     (20)
expense
Share of
(profit) /
loss of equity     (1)       (79)       (0)     (1)       (43)       (0)     84
accounted
investees
Profit before      252       13,826     17      259       14,202     20      (3)
income tax
Income tax         50        2759       3       61        3,367      5       (18)
expense
Profit for the     202       11,067     13      197       10,835     15      2
period
                                                                      
Diluted EPS        1.2       64.95             1.2       63.68             2

Appendix 4: Profit Computation:

EBITDA Computation                         9 months FY13    9 months FY12
                                             ($)   (Rs.)      ($)   (Rs.)
PBT                                          252     13,826     259     14,202
Net Interest Expenses / (Income)             (0)     (1)        11      601
Depreciation                                 51      2,810      48      2,607
Amortization & Impairment                    35      1,932      22      1,202
Reported EBITDA                              338     18,567     339     18,612
                                                                
PAT Computation                              9 months FY13      9 months FY12
                                             ($)     (Rs.)      ($)     (Rs.)
PAT (reported)                               202     11,067     197     10,835
Adjustments:
Impairment loss on goodwill and              13      688
intangible assets
Tax adjustment*                              (8)     (417)      2       133
Adjusted PAT                                 207     11,338     199     10,968

* Adjusted for tax normalization on account of the annual effective tax rate
for respective YTD financial years.

Disclaimer

This press release includes forward-looking statements, as defined in the U.S.
Private Securities Litigation Reform Act of 1995. We have based these
forward-looking statements on our current expectations and projections about
future events. Such statements involve known and unknown risks, uncertainties
and other factors that may cause actual results to differ materially. Such
factors include, but are not limited to, changes in local and global economic
conditions, our ability to successfully implement our strategy, the market
acceptance of and demand for our products, our growth and expansion,
technological change and our exposure to market risks. By their nature, these
expectations and projections are only estimates and could be materially
different from actual results in the future.

About Dr. Reddy's

Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) is an integrated global
pharmaceutical company, committed to providing affordable and innovative
medicines for healthier lives. Through its three businesses Pharmaceutical
Services and Active Ingredients, Global Generics and Proprietary Products –
Dr. Reddy’s offers a portfolio of products and services including APIs, custom
pharmaceutical services, generics, biosimilars, differentiated formulations
and NCEs. Therapeutic focus is on gastro¬intestinal, cardiovascular,
diabetology, oncology, pain management, anti¬infective and pediatrics. Major
markets include India, USA, Russia and CIS, Germany, UK, Venezuela, S. Africa,
Romania, and New Zealand.

For more information, log on to: www.drreddys.com

Note: All discussions in this release are based on unaudited consolidated IFRS
financials.

Contact:

Dr. Reddy's Laboratories Ltd.
Investors and Financial Analysts:
Kedar Upadhye
+91-40-66834297
kedaru@drreddys.com
or
Saunak Savla
+91-40-49002135
saunaks@drreddys.com
or
Milan Kalawadia (USA)
+1 908-203-4931
mkalawadia@drreddys.com
or
Media:
S Rajan
+91-40-49002445
rajans@drreddys.com
 
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