Q4 Revenues at Rs. 37.6 billion

(YoY decline of 3%)

Q4 EBITDA at Rs. 4.8 billion

(12.8% of the revenues)

Q4 Adjusted EBITDA* at Rs. 9.0 billion

(24.0% of the revenues)

FY16 Revenues at Rs. 154.7 billion

(YoY growth of 4%)

FY16 EBITDA at Rs. 36.3 billion

(23.4% of the revenues)

FY16 Adjusted EBITDA* at Rs. 41.2 billion

(26.7% of the revenues)

HYDERABAD, India--(BUSINESS WIRE)-- Dr. Reddy’s Laboratories Ltd. (NYSE: RDY | BSE: 500124 | NSE: DRREDDY) today announced its consolidated financial results for the fourth quarter and full year ended March 31, 2016 under International Financial Reporting Standards (IFRS).

FY16: Key Highlights

• Received two final approvals and one tentative approval of the NDAs filed by the Proprietary Products Business. Zembrace launched in April 2016.
• Consolidated revenues at Rs. 154.7 billion, year-on-year growth of 4%.
• Gross Profit Margin at 59.6%, improved by ~200 bps over last year.
• Research & Development (R&D) spend at Rs. 17.8 billion, 11.5% of revenues. Continued focus on building complex generics and differentiated products pipeline.
• EBITDA at Rs. 36.3 billion, 23.4% of revenues. Adjusted* EBITDA at 26.7% of revenues, year-on-year growth of 11%.
• Profit after tax at Rs. 20.0 billion. Diluted EPS at Rs. 117.

Q4 FY16: Key Highlights

• Consolidated revenues at Rs. 37.6 billion, year-on-year decline of 3%
• EBITDA at Rs. 4.8 billion, 12.8% of revenues. Adjusted* EBITDA at 24.0% of revenues.

Commenting on the company’s fourth quarter results, Co-chairman and CEO, G V Prasad said, "It’s been a challenging quarter for Dr. Reddy’s. While there has been a marginal decline in revenues, there has been a greater impact on profitability. This is mainly due to the provision, made as a matter of abundant precaution, to write down our outstanding receivables from Venezuela. We will continue to actively engage with the Venezuelan Government to provide affordable medicine to fulfill the need of people of the country, subject to repatriation of funds.

"Our Bio-similars business is gaining traction, as we have started to receive approvals and build partnerships for our products in the emerging markets. Our topmost priority continues to be the strengthening of our quality management processes across the organisation.”

* Adjusted for impact of devaluation and translation, on certain monetary assets and liabilities of our Venezuela subsidiary

All amounts in millions, except EPS			All US dollar amounts based on convenience translation rate of 1 USD = Rs. 66.25
Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement
Particulars			FY 16												FY 15												Growth %
			($)				(Rs.)				%				($)				(Rs.)				%
Revenues			2,335				1,54,708				100.0				2,237				1,48,189				100.0				4
Cost of revenues			942				62,427				40.4				948				62,786				42.4				(1	)
Gross profit			1,393				92,281				59.6				1,289				85,403				57.6				8
Operating Expenses
Selling, general & administrative expenses			690				45,702				29.5				643				42,585				28.7				7
Research and development expenses			269				17,834				11.5				263				17,449				11.8				2
Other operating expense / (income)			(13	)			(874	)			(0.6	)			(14	)			(917	)			(0.6	)			(5	)
Results from operating activities			447				29,619				19.1				397				26,286				17.7				13
Finance expense / (income), net			41				2,708				1.8				(25	)			(1,682	)			(1.1	)			NM
Share of (profit) of equity accounted investees, net of income tax			(3	)			(229	)			(0.1	)			(3	)			(195	)			(0.1	)			18
Profit before income tax			410				27,140				17.5				425				28,163				19.0				(4	)
Income tax expense			108				7,127				4.6				90				5,984				4.0				19
Profit for the period			302				20,013				12.9				335				22,179				15.0				(10	)
Diluted EPS			1.77				117								1.96				130								(10	)

EBITDA Computation
Particulars			FY 16								FY 15
			($)				(Rs.)				($)				(Rs.)
Profit before tax			410				27,140				425				28,163
Interest (income) / expense net*			(22	)			(1,425	)			(11	)			(724	)
Depreciation			104				6,874				86				5,719
Amortization			52				3,469				36				2,381
Impairment			2.9				194				9.5				629
EBITDA			547				36,252				546				36,168
EBITDA (% to sales)							23.4								24.4
Adjusted** EBITDA (% to sales)							26.7								25.0

* Includes income from investments

**Venezuela adjustmentThe Company has not received approvals from the Venezuelan government to repatriate any amount beyond USD 4 million already received during the year. The Company believes that in the interim, it is appropriate to use the DICOM rate (i.e. 272.5 VEF per USD) instead of official ‘preferential’ rate (i.e. 10 VEF per USD) for translating the monetary assets and liabilities of the Venezuelan subsidiary as at 31 March 2016. Accordingly, the resultant impact for Q4 FY 16 and Fiscal 2016 is Rs. 4,309 million and Rs. 5,085 million respectively. Similar charge on account of translation of net monetary assets was Rs. 843 million accrued in Q4 FY 15.

All amounts in millions, except EPS			All US dollar amounts based on convenience translation rate of 1 USD = Rs. 66.25
Key Balance Sheet Items
Particulars			As on 31st Mar 16							As on 31st Mar 15
			($)				(Rs.)			($)				(Rs.)
Cash and cash equivalents and Other current Investments			603				39,955			599				39,654
Trade receivables			623				41,306			615				40,755
Inventories			386				25,578			385				25,529
Property, plant and equipment			815				53,961			726				48,090
Goodwill and Other Intangible assets			372				24,644			248				16,430
Loans and borrowings (current & non-current)			506				33,513			651				43,125
Trade payables			186				12,300			161				10,660
Equity			1,937				1,28,336			1,680				1,11,302

Revenue Mix by Segment
Particulars			FY 16										FY 15										Growth %
			($)				(Rs.)			%			($)				(Rs.)			%
Global Generics			1,933				1,28,062			83			1,802				1,19,397			81			7
North America							75,445										63,564						19
Europe*							7,732										6,482						19
India							21,293										17,870						19
Emerging Markets#							23,592										31,482						-25
PSAI			338				22,379			14			384				25,456			17			-12
North America							3,052										4,605						-34
Europe							9,313										10,507						-11
India							2,618										3,288						-20
Rest of World							7,396										7,056						5
Proprietary Products & Others			64				4,267			3			50				3,336			2			28
Total			2,335				1,54,708			100			2,237				1,48,189			100			4

* Europe primarily includes Germany, UK and out licensing sales business# Emerging Markets refers to Russia, other CIS countries, Romania and Rest of the World markets including Venezuela

Note: Effective Q1 FY 16, there was a change in the monitoring of performance of one product from Global Generics to Proprietary Products. Consequently, revenues and related costs of this product for the previous periods have been reclassified to conform to such change.

Segmental Analysis

Global Generics

Revenues from Global Generics segment for FY16 are at Rs. 128.1 billion, year-on-year growth of 7%; primarily driven by North America, Europe and India.

• Revenues from North America for FY16 at Rs. 75.4 billion, year-on-year growth of 19%. Growth primarily on account of sustained performance of the injectable franchise and market share gains in key molecules. Habitrol integration in line with the expectation and focus is on expanding the franchise.14 new generics filings in the US during the year (13 ANDAs and 1 NDA). Cumulatively, 82 generic filings are pending for approval with the USFDA (79 ANDAs and 3 NDAs under 505(b)(2) route). Of these 79 ANDAs, 52 are Para IVs out of which we believe 18 have ‘First to File’ status.
• Revenues from Emerging Markets for FY16 at Rs. 23.6 billion, year-on-year decline of 25%.
  • Revenues from Russia at Rs. 10.6 billion, year-on-year decline of 29% primarily on account of depreciation of rouble. In constant currency revenues grew by 1% year-on-year.
  • Revenues from other CIS countries and Romania market at Rs. 3.5 billion, year-on-year growth of 1%.
  • Revenues from Rest of World (RoW) territories at Rs. 9.4 billion, year-on-year decline of 28% primarily on account of calibrated sales in Venezuela.
• Revenues from India for FY16 at Rs. 21.3 billion, year-on-year growth of 19%.
  • Continued momentum of mega brands.
  • Portfolio acquired from UCB well-integrated and performance inline with expectations. Normalizing for contribution from the UCB portfolio, growth of the base business during the year is healthy.
• Revenues from Europe for FY16 at Rs. 7.7 billion, year-on-year growth of 19%. Growth was primarily driven by aripiprazole and pregabalin.

Pharmaceutical Services and Active Ingredients (PSAI)

• Revenues from PSAI at Rs. 22.4 billion, year-on-year decline of 12%.
• During the year, 50 DMFs were filed globally of which 8 were in the US. The cumulative number of DMF filings as of March 31, 2016 was 768.

Income Statement Highlights:

• Gross profit margin at 59.6% and improved by ~200 bps over that of previous year. Gross profit margin for Global Generics (GG) and PSAI business segments are at 65.9% and 22.0% respectively.
• SG&A expenses at Rs. 45.7 billion, year-on-year growth of 7%. This increase is largely due to the ongoing remediation activities related to the USFDA’s observations, settlement of patent litigation on zoledronic acid, launch related activities of the Proprietary Products business and certain routine items related to manpower and other spends.
• Research & development expenses at Rs. 17.8 billion. 11.5% of revenues in FY16 as compared to 11.8% in FY15. Continued focus on building complex generics and differentiated products pipeline.
• Net Finance expense at Rs. 2,708 million in FY 16 compared to the net finance income of Rs. 1,681 million in FY15. The incremental charge of Rs. 4,389 million is on account of:
  • Increase in the net interest income by Rs. 701 million
  • Net foreign exchange loss of Rs. 4,133 million in FY 16 vs net foreign exchange gain of Rs. 958 million in FY 15. Current year’s foreign exchange loss is primarily on account of Venezuela related adjustments as detailed above.
• Profit after Tax at Rs. 20.0 billion.
• Diluted earnings per share is at Rs. 117.
• Capital expenditure is at Rs. 11.9 billion.

The board has recommended payment of a dividend of Rs. 20 per equity share of face value Rs. 5/- each (400% of face value) for the year ended March 31, 2016 subject to approval of members.

All amounts in millions, except EPS			All US dollar amounts based on convenience translation rate of 1 USD = Rs. 66.25
Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement
Particulars			Q4 FY 16											Q4 FY 15											Growth %
			($)				(Rs.)			%				($)				(Rs.)			%
Revenues			567				37,562			100.0				584				38,704			100.0				(3	)
Cost of revenues			246				16,286			43.4				264				17,483			45.2				(7	)
Gross profit			321				21,276			56.6				320				21,221			54.8				0
Operating Expenses
Selling, general & administrative expenses			176				11,632			31.0				152				10,082			26.0				15
Research and development expenses			74				4,879			13.0				78				5,144			13.3				(5	)
Other operating expense / (income)			-5				-307			(0.8	)			-2				-125			(0.3	)			145
Results from operating activities			77				5,072			13.5				92				6,120			15.8				(17	)
Finance expense / (income), net			40				2,646			7.0				4				233			0.6				NM
Share of (profit) of equity accounted investees, net of income tax			-1				-59			(0.2	)			-1				-43			(0.1	)			36
Profit before income tax			38				2,485			6.6				90				5,930			15.3				(58	)
Income tax expense			26				1,739			4.6				11				742			1.9				134
Profit for the period			11				746			2.0				78				5,188			13.4				(86	)
Diluted EPS			0.07				4.4							0.46				30.4							(86	)

EBITDA Computation
Particulars			Q4 FY 16								Q4 FY 15
			($)				(Rs.)				($)				(Rs.)
Profit before tax			38				2,485				90				5,930
Interest (income) / expense net*			(11	)			(713	)			(3	)			(194	)
Depreciation			31				2,062				23				1,530
Amortization			15				970				11				699
Impairment			-				-				1.4				95
EBITDA			73				4,804				122				8,061
EBITDA (% to sales)							12.8								20.8
Adjusted** EBITDA (% to sales)							24.0								23.0

* Includes income from investments**Venezuela adjustment for current and previous period as explained in details above

All amounts in millions, except EPS			All US dollar amounts based on convenience translation rate of 1 USD = Rs. 66.25
Particulars			Q4 FY 16										Q4 FY 15										Growth %
			($)				(Rs.)			%			($)				(Rs.)			%
Global Generics			465				30,774			82			464				30,717			80			0
North America							18,950										16,879						12
Europe*							1,759										2,145						-18
India							5,267										4,744						11
Emerging Markets#							4,799										6,949						-31
PSAI			87				5,766			15			112				7,415			19			-22
North America							742										1,866						-60
Europe							2,585										2,639						-2
India							603										669						-10
Rest of World							1,835										2,241						-18
Proprietary Products & Others			15				1,022			3			8				572			1			79
Total			567				37,562			100			584				38,704			100			-3

Earnings Call Details (06.30 pm IST, May 12, 2016)

The Company will host an earnings call at 06.30 pm IST on May 12, 2016, to discuss the performance and answer any questions from participants. This call will be accessible through an audio dial-in and a web-cast.

Audio conference Participants can dial-in on the numbers below

Primary number:				91 22 3960 0616
Secondary number:				91 22 6746 5826
International Toll Free Number		USA		18667462133
		UK		08081011573
		Singapore		8001012045
		Hong Kong		800964448
Playback of call:		91 22 3065 2322, 91 22 6181 3322
Conference ID:		375#
Web-cast		More details will be provided through our website, www.drreddys.com

Transcript of the event will be available at www.drreddys.com. Playback will be available for a few days.

About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) is an integrated pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesses – Pharmaceutical Services & 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. Our major therapeutic areas of focus are gastro-intestinal, cardiovascular, diabetology, oncology, pain management and anti-infectives. Dr. Reddy’s operates in markets across the globe. Our major markets include – USA, Russia & CIS, Venezuela and India. For more information, log on to: www.drreddys.com

Disclaimer: This press release may include statements of future expectations and other forward-looking statements that are based on the management’s current views and assumptions and involve known or unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words "may," "will," "should," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to without limitation, (i) general economic conditions such as performance of financial markets, credit defaults, currency exchange rates, interest rates, persistency levels and frequency/severity of insured loss events, (ii) mortality and morbidity levels and trends, (iii) changing levels of competition and general competitive factors, (iv) changes in laws and regulations and in the policies of central banks and/or governments, and (v) the impact of acquisitions or reorganisation, including related integration issues.

The company assumes no obligation to update any information contained herein.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160512005578/en/

Dr. Reddy’s Laboratories Ltd.

INVESTOR RELATIONS:

Kedar Upadhye

+91-40-66834297

[email protected]

or

MEDIA RELATIONS:

Calvin Printer

+91-40-49002121

[email protected]

Source: Dr. Reddy’s Laboratories Ltd.

Press Releases

Dr. Reddys Labs (RDY) Reports Q4 EPS of $0.07May 12, 2016 9:19 AM