Dr. Reddy’s Q4 & FY13 Financial Results

  Dr. Reddy’s Q4 & FY13 Financial Results

                      Highest ever Quarterly Performance

                      FY13 Revenues at Rs. 116.3 billion
                            (YoY growth of 26%)^#

                       FY13 EBITDA at Rs. 27.8 billion

                        FY13 PAT* at Rs. 17.5 billion

                     Q4 FY13 Revenues at Rs. 33.4 billion
                             (YoY growth of 26%)

                      Q4 FY13 EBITDA at Rs. 9.3 billion

                        Q4 FY13 PAT at Rs. 5.7 billion

Business Wire

HYDERABAD, India -- May 14, 2013

Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its audited
consolidated financial results for the fourth quarter and full year ended
March 31, 2013 under International Financial Reporting Standards (IFRS).

Key Highlights

  *Consolidated revenues for FY13 at Rs. 116.3 billion, recorded year-on-year
    growth of 20%. Excluding the beneficial impact of olanzapine exclusivity
    in FY12, registered year-on-year growth of 26%. Growth primarily driven by
    North America and Emerging Markets (which include Russia, other CIS
    countries and Rest of World (RoW) territories) in the Global Generics
    segment; and overall performance by Pharmaceutical Services and Active
    Ingredients segment.

       *Consolidated revenues of Rs. 33.4 billion in Q4 FY13, year-on-year
         growth of 26%.

  *EBITDA of Rs. 27.8 billion in FY13, 24% of revenues, with year-on-year
    growth of 9.5%.

       *EBITDA of Rs. 9.3 billion in Q4 FY13, 28% of revenues, with
         year-on-year growth of 37%.

  *Profit after tax* for FY13 at Rs. 17.5 billion, 15% of revenues with
    year-on-year growth of 17%

       *Profit after tax of  Rs. 5.7 billion in Q4 FY13, 17% of revenues with
         year-on-year growth of 67%.

  *During the year, the company launched 78 new generic products, filed 56
    new product registrations and filed 47 DMFs globally.

       *During the quarter, the company launched 18 new generic products,
         filed 14 new product registrations and filed 17 DMFs globally.

# Excluding olanzapine exclusivity in FY12

*PAT adjusted for Impairment of intangibles/goodwill

All figures in    All US dollar figures based on convenience translation rate as on 31^st
millions,        March, 2013 1USD = Rs. 54.52
except EPS
                  
Dr. Reddy’s Laboratories Limited and Subsidiaries
Audited Consolidated Income Statement
                  
Particulars      FY13                              FY12                             Growth
                  ($)       (Rs.)       %        ($)       (Rs.)      %        %
Revenue           2,133       116,266       100       1,774       96,737       100       20
Cost of           1,021      55,687       48       797        43,432      45       28   
revenues
Gross profit      1,111      60,579       52       978        53,305      55       14   
Operating
Expenses
Selling,
general &         616         33,584        29        529         28,867       30        16
administrative
expenses
Research and
development       141         7,673         7         108         5,911        6         30
expenses
Write down of
intangible        9           507           0         19          1,040        1         (51  )
assets
Write down of     3           181           0         0           0            0         0
goodwill
Other
operating         (45   )     (2,479  )     (2  )     (14   )     (765   )     (1  )     224  
income
Results from
operating         387        21,112       18       335        18,252      19       16   
activities
Net finance       (8    )     (460    )     (0  )     (3    )     (160   )     (0  )     187
income
Share of
profit of
equity            (2    )     (104    )     (0  )     (1    )     (54    )     (0  )     93   
accounted
investees
Profit before     398        21,677       19       339        18,466      19       17   
income tax
Income tax        90         4,900        4        77         4,204       4        17   
expense
Profit for the    308        16,776       14       262        14,262      15       18   
year
                                                                                         
Diluted EPS       1.8        98.44                 1.5        83.81                17   
                                                                                              
                                                                                              

EBITDA Computation
                                                         
Particulars                             FY13                  FY12
                                        ($)     (Rs.)        ($)     (Rs.)
PBT                                     398      21,677       339       18,466
Interest and Income from Mutual         (2  )    (94    )     13        690
Funds
Depreciation                            71       3,859        67        3,628
Amortization & Impairment               44      2,378       48       2,626
EBITDA                                  510     27,820      466      25,409
                                                                        
                                                                        

All figures in          All US dollar figures based on convenience translation
millions, except      rate as on 31^st March, 2013 1USD = Rs. 54.52
EPS

Appendix 1: Key Balance Sheet Items
                        
Particulars             As on 31st March 13          As on 31st March 12
                        ($)            (Rs.)         ($)           (Rs.)
Cash and cash           405             22,099        333            18,152
equivalents
Trade receivables       586             31,972        465            25,339
Inventories             396             21,600        355            19,352
Property, plant and     694             37,814        610            33,246
equipment
Goodwill and Other      257             14,021        248            13,529
Intangible assets
Loans and
borrowings (current     674             36,760        591            32,210
& non-current)
Trade payables          218             11,862        174            9,503
Equity                  1,341           73,085        1,054          57,444
                                                                       
                                                                       

Appendix 2: FY13 Revenue Mix by Segment

Particulars   FY13                          FY12                         Growth
                ($)       (Rs.)     %       ($)       (Rs.)    %       %
Global          1,514      82,563      71      1,288      70,243     73      18  
Generics
North                      37,846      46                 31,889     45      19  
America
Europe                     7,716       9                  8,259      12      (7  )
India                      14,560      18                 12,931     18      13  
Russia &                   16,908      20                 13,260     19      28  
Other CIS
RoW                        5,533       7                  3,904      6       42  
PSAI            563        30,702      26      437        23,812     25      29  
North                      5,744       19                 4,272      18      34  
America
Europe                     12,007      39                 8,424      35      43  
India                      4,638       15                 3,586      15      29  
RoW                        8,313       27                 7,531      32      10  
Proprietary
Products &      55         3,001       3       49         2,682      3       12  
Others
Total           2,133      116,266     100     1,774      96,737     100     20  
                                                                               
                                                                               

Segmental Analysis

Global Generics

Revenues from Global Generics segment for FY13 are at Rs. 82.6 billion with a
year-on-year growth of 18%, primarily driven by North America and Emerging
Markets.

  *Revenues from North America for FY13 at Rs. 37.8 billion, recorded
    year-on-year growth of 19%. Excluding the beneficial impact of olanzapine
    exclusivity in FY12, registered year-on-year growth of 38%.

       *Growth is largely driven by key limited competition products such as
         ziprasidone, fondaparinux, ramp-up in our antibiotics portfolio and
         products from our Shreveport facility.
       *Significant contribution from new products launched during the year.
         14 new products have been launched during the year, major
         contributors being finasteride 1mg (180 day exclusivity), montelukast
         granules, atorvastatin, metoprolol, clopidogrel, ibandronate and
         zoledronic acid 4mg/5mL.
       *19 product filings (18 ANDAs and 1 NDA). Cumulatively, 65 ANDAs are
         pending for approval with the USFDA of which 38 are Para IVs and 8
         have ‘First To File’ status.

  *Revenues from Emerging Markets for FY13 at Rs. 22.4 billion recorded
    year-on-year growth of 31%.

       *Revenues from Russia for FY13 stood at Rs. 14.0 billion and recorded
         year-on-year growth of 27%, largely driven by volume growth in the
         major brands and new product launches.
       *Revenues from Other CIS markets for FY13 stood at Rs. 2.9 billion
         recorded year-on-year growth of 28%.
       *Revenues from Rest of World (RoW) territories at Rs. 5.5 billion
         recorded year-on-year growth of 42%. Of this Venezuela and Australia
         have shown strong growth in FY13 on the back of higher volumes for
         existing products and new product launches.

  *Revenues from India for  FY13 at  Rs.  14.6 billion recorded year-on-year
    growth of 13%.

       *Growth driven by volume increase across most key brands and new
         products launches.
       *24 new brands were launched.
       *IMS Mar ’13, Dr. Reddy’s MAT Gr% 13.7% Vs IPM MAT Gr% of 10.2%.
         (Source: IMS).
       *Biosimilars portfolio has grown by 25% in FY13 compared to FY12.

Pharmaceutical Services and Active Ingredients (PSAI)

  *Revenues from PSAI for FY13 at Rs. 30.7 billion, recorded Year-on-year
    growth of 29%.
  *High growth on account of increased sales to generic customers on account
    of patent expirations and higher customer orders in the custom
    pharmaceutical business.
  *During the year, 47 DMFs were filed globally, including 5 in the US and 10
    in Europe. The cumulative number of DMF filings as of March 31, 2013 is
    577.

Income Statement Highlights:

  *Gross profit margin stood at 52.1% in FY13 as compared to 55.1% in FY12.
    Adjusted for the olanzapine exclusivity in FY12, the gross profit margins
    remained stable. Gross profit margin for Global Generics and PSAI business
    segments are at 59.0% and 32.5% respectively for FY13.

  *Selling, General and Administration (SG&A) expenses including amortization
    at Rs. 33.6 billion increased Year-on-year by 16%. The increase is
    primarily on account of regular year-on-year increments in manpower costs,
    selling costs and the effect of rupee depreciation against multiple
    currencies. SG&A as a percentage to sales stood at 29% in FY13 and
    compared to previous year there is a fall of 100 bps indicating improved
    operating leverage.
  *Research & development expenses for FY13 at Rs. 7.7 billion is at 6.6% of
    revenues as against Rs. 5.9 billion at 6.1% of revenues in FY12.
  *During the year Dr. Reddy’s benefited by an amount of USD 22.5 Mn from
    one-time settlement done with Nordion Inc [which is formerly MDS Inc]. The
    settlement is towards the damages sustained by the Company due to the
    breach by Nordion of the then existing Laboratory services agreement for
    bioequivalence studies.
  *Net Finance income in FY13 is at Rs. 460 million compared to the net
    finance income of Rs. 160 million in FY12. The change is on account of:

       *Net forex gain of Rs. 365 million in FY13 compared to net forex gain
         of Rs. 689 million.
       *Net interest expense of Rs. 118 million in FY13 compared to net
         interest expense of Rs. 690 million in FY12.
       *Incremental income from mutual funds of Rs. 51 million in FY13 over
         FY12.

  *EBITDA for FY13 is Rs. 27.8 billion, 24% of revenues and increased by 9.5%
    as compared to the previous year.
  *Profit after Tax* in FY13 at Rs. 17.5 billion, 15% of revenues and
    increased by 17% as compared to the previous year.
  *Diluted earnings per share in FY13 are Rs. 98.4
  *Capital expenditure for FY13 is Rs. 6.6 billion.

*PAT adjusted for Impairment of intangibles/goodwill

All figures in     All US dollar figures based on convenience translation rate as on 31^st
millions,        March, 2013 1USD = Rs. 54.52
except EPS
                   
Appendix 3: Q4 FY13 Consolidated Income Statement
                   
Particulars        Q4 FY13                        Q4 FY12                        Growth
                   ($)     (Rs.)      %        ($)     (Rs.)      %        %
Revenue            613       33,400       100       488       26,584       100       26
Cost of            304      16,554      50       231      12,614      47       31
revenues
Gross profit       309      16,846      50       256      13,970      53       21
Operating
Expenses
Selling,
general &          160       8,722        26        132       7,217        27        21
administrative
expenses
Research and
development        43        2,326        7         32        1,741        7         34
expenses
Write down of
intangible         0         0            0         19        1,040        4
assets
Other
operating          (30 )     (1,631 )     (5  )     (4  )     (199   )     (1  )     720
income
Results from
operating          136      7,427       22       77       4,172       16       78
activities
Net finance        (7  )     (397   )     (1  )     (1  )     (82    )     (0  )     386
income
Share of
profit of
equity             (0  )     (26    )     (0  )     (0  )     (11    )     (0  )     131
accounted
investees
Profit before      144      7,850       24       78       4,265       16       84
income tax
Income tax         39       2,141       6        15       838         3        156
expense
Profit for the     105      5,709       17       63       3,427       13       67
period
                                                                                     
Diluted EPS        0.6      33.51                0.4      20.09                67
                                                                                     
                                                                                     

Appendix 4: Q4 FY13 Profit Computation

Particulars    Q4 FY13             Q4 FY12
                 ($)     (Rs.)       ($)     (Rs.)
PBT              144       7,850       78        4,265
Interest         (1  )     (52   )     2         89
Depreciation     19        1,049       19        1,021
Amortization     8         446         7         383
Impairment       0        0          19       1,040
EBITDA           170      9,293      125      6,798
                                                 

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 and differentiated
formulations. Major therapeutic focus is on gastro-intestinal, cardiovascular,
diabetology, oncology, pain management and anti-infective. Major markets
include India, USA, Russia-CIS and Europe apart from other select geographies
within Emerging Markets.

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

Note: All discussions in this release are based on audited 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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