Edgar Filing: DR REDDYS LABORATORIES LTD

DR. REDDY’S LABORATORIES LIMITED

(Registrant)

/s/ Sandeep Poddar

Date: May 13, 2014

Name: Sandeep Poddar

Title: Company Secretary

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

May 2014

Commission File Number – 1-15182

DR. REDDY’S LABORATORIES LIMITED

(Name of Registrant)

8-2-337, Road No. 3, Banjara Hills

Hyderabad, Andhra Pradesh 500 034, India

+91-40-4900-2900

(Address of Principal Executive Offices)

Indicate by check mark whether registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b):

Not applicable.

Table of Contents


(1)		Press Release, “Dr. Reddy’s Q4 & FY14 Financial Results”, May 13, 2014.		3


Press Release
		Dr. Reddy’s Laboratories Ltd.
		8-2-337, Road No. 3
		Banjara Hills, Hyderabad - 500 034
		Andhra Pradesh, India

		Tel: 91-40-4900-2900
		Fax: 91-40-4900-2999

		www.drreddys.com

Dr. Reddy’s Q4 & FY14 Financial Results

Q4 FY14 Revenues at Rs.34.8 billion

Q4 FY14 EBITDA at Rs.7.9 billion

Q4 FY14 PAT at Rs.4.8 billion

FY14 Revenues at Rs.132.2 billion

FY14 EBITDA at Rs.33.2 billion

FY14 PAT at Rs.21.5 billion

Hyderabad, India, May 13, 2014: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its consolidated financial results for the fourth quarter and full year ended March 31, 2014 under International Financial Reporting Standards (IFRS).

Key Highlights

•

Consolidated revenues for FY 14 at Rs.132.2 billion, year-on-year growth of 14%.

•

Consolidated revenues for Q4 FY14 at Rs.34.8 billion, year-on-year growth of 4%.

•

Gross Profit Margin for FY 14 at 57.4% versus 52.1% as in FY 13.

•

Gross Profit Margins for Q4 FY14 at 57.2% versus 50.4% as in Q4 FY 13.

•

Research & Development (R&D) expenses for FY 14 at Rs.12.4 billion, year-on-year increase of 62%. Expenses at 9.4% to revenues versus 6.6% to revenues as in FY13.

•

Research & Development (R&D) expenses for Q4 FY14 of Rs.4.0 billion.

•

Selling, general & administrative (SG&A) expenses for FY 14 at Rs.38.8 billion, year-on-year increase of 13%. Expenses at 29.3% to revenues versus 29.5% to revenues as in FY13.

•

Selling, general & administrative (SG&A) expenses for Q4 FY14 at Rs.10.3 billion.

•

EBITDA for FY 14 of Rs.33.2 billion, 25% of revenues; year-on-year growth of 19%.

•

EBITDA for Q4 FY14 of Rs.7.9 billion, 23% of revenues. Q4 FY 13 included one time settlement income of Rs.1.2 billion received from Nordian Inc (formerly MDS Inc).

•

Profit after tax for FY14 at Rs.21.5 billion, 16% of revenues; year-on-year growth of 28%

•

Profit after tax for Q4 FY14 at Rs.4.8 billion, 14% of revenues.

•

The company launched 54 new generic products, filed 51 new product registrations and 61 DMFs globally in FY 14.

•

The company launched 13 new generic products, filed 22 new product registrations and 29 DMFs globally in Q4 FY14.


All amounts in millions, except EPS		All US dollar amounts based on convenience translation rate of I USD = Rs.60.00

Dr. Reddy’s Laboratories Limited and Subsidiaries

Consolidated Income Statement


Particulars	FY14									FY13									Growth %
Particulars	($)			(Rs.)			%			($)			(Rs.)			%			Growth %
Revenues		2,203			132,170			100			1,938			116,266			100			14
Cost of revenues		939			56,369			42.6			928			55,687			47.9			1

Gross profit		1,263			75,802			57.4			1,010			60,579			52.1			25

Operating Expenses
Selling, general & administrative expenses		646			38,783			29.3			571			34,271			29.5			13
Research and development expenses		207			12,402			9.4			128			7,673			6.6			62
Other operating expense / (income)		(24	)		(1,416	)		(1	)		(41	)		(2,479	)		(2	)		(43	)

Results from operating activities		434			26,032			19.7			352			21,112			18.2			23

Net finance income		7			400			0			8			460			0			(13	)
Share of profit of equity accounted investees, net of income tax		3			174			0			2			104			0			67

Profit before income tax		443			26,606			20.1			361			21,676			18.6			23

Income tax expense		85			5,094			3.9			82			4,900			4.2			4

Profit for the year		359			21,512			16.3			280			16,776			14.4			28

Diluted EPS		2.10			126.04						1.64			98.4						28

EBITDA Computation


Particulars	FY14						FY13
Particulars	($)			(Rs.)			($)			(Rs.)
Profit before income tax		443			26,606			361			21,676
Interest income		(0	)		(24	)		(2	)		(94	)
Depreciation		80			4,804			64			3,859
Amortization & Impairment		30			1,794			40			2,378

EBITDA		553			33,180			464			27,819

Note:

Selling, general & administrative expenses, as above, includes an impairment reversal of Rs.497 million [FY 14] and impairment charge of Rs.688 million [FY 13]


All amounts in millions, except EPS		All US dollar amounts based on convenience translation rate of I USD = Rs.60.00

Appendix 1: Key Balance Sheet Items


Particulars	As on 31st March 14				As on 31st March 13
Particulars	($)		(Rs.)		($)		(Rs.)
Cash and cash equivalents and Other Investment		559		33,534		368		22,099
Trade receivables		551		33,037		533		31,972
Inventories		400		23,992		360		21,600
Property, plant and equipment		740		44,424		630		37,814
Goodwill and Other Intangible assets		245		14,697		234		14,021
Loans and borrowings (current & non-current)		746		44,742		613		36,760
Trade payables		175		10,503		198		11,862
Equity		1,513		90,801		1,213		72,785

Appendix 2: Revenue Mix by Segment


Particulars	FY14						FY13						Growth %
Particulars	($)		(Rs.)		%		($)		(Rs.)		%		Growth %
Global Generics		1,753		105,164		80		1,376		82,563		71		27
North America				55,303		53				37,846		46		46
Europe				6,970		7				7,716		9		(10	)
India				15,713		15				14,560		18		8
Russia & Other CIS				19,819		19				16,908		20		17
Rest of World				7,359		7				5,533		7		33
PSAI		400		23,974		18		512		30,702		26		(22	)
North America				4,354		18				5,744		19		(24	)
Europe				8,770		37				12,007		39		(27	)
India				3,787		16				4,638		15		(18	)
Rest of World				7,063		29				8,313		27		(15	)
Proprietary Products & Others		51		3,032		2		50		3,001		3		1

Total		2,203		132,170		100		1,938		116,266		100		14

SEGMENTAL ANALYSIS

Global Generics

Revenues from Global Generics segment for FY14 are at Rs.105.2 billion, year-on-year growth of 27%, primarily driven by North America and Emerging Markets.

•

Revenues from North America for FY14 at Rs.55.3 billion, year-on-year growth of 46%.

•

Growth was largely driven by key launches in limited competition space. 9 new products were launched during the year, major being azacitidine, decitabine, zoledronic acid, donepezil 23mg and divalproex ER.

•

Progress on market share expansion of key molecules namely metoprolol succinate and atorvastatin.

•

13 product filings in the US during the year. Cumulatively, 62 ANDAs are pending for approval with the USFDA of which 39 are Para IVs out of which 9 to have ‘First To File’ status.

•

Revenues from Emerging Markets for FY14 at Rs.27.2 billion, year-on-year growth of 21%.

•

Revenues from Russia at Rs.16.3 billion, year-on-year growth of 16%, largely driven by higher volumes of the top brands and the OTC portfolio.

•

Revenues from CIS markets at Rs.3.5 billion, year-on-year growth of 22%. Continuing momentum in existing products coupled with select launches from in-licensed portfolio.

•

Revenues from Rest of World (RoW) territories at Rs.7.4 billion recorded year-on-year growth of 33%. Of this Venezuela has shown strong growth despite currency devaluation in FY14.

•

Revenues from India for FY14 at Rs.15.7 billion, year-on-year growth of 8%.

•

Growth driven by brands in chronic therapy, volume increase across NLEM covered portfolio and new product launches.

•

IMS Mar ’14, Dr Reddy’s MAT Gr% 12.27% versus IPM MAT Gr% of 9.9%. (Source: IMS).

•

Biosimilars portfolio stable at Rs.1.13 billion in FY14

Pharmaceutical Services and Active Ingredients (PSAI)

•

Revenues from PSAI for FY14 at Rs.24 billion, year-on-year decline of 22%.

•

Challenging year on the external market front due to lower demand from key customers coupled with lesser number of launches as compared to the previous year.

•

During the year, 61 DMFs were filed globally, including 12 in the US and 13 in Europe. The cumulative number of DMF filings as of March 31, 2014 is 631.

INCOME STATEMENT HIGHLIGHTS:

•

Gross profit margin at 57.4% in FY14 registered strong 530 basis points improvement over the last year. Gross profit margin for Global Generics (GG) and PSAI business segments are at 65.8% and 20.2% respectively for FY14.

GG gross margin improvement primarily on account improved mix of high margin new product launches in North America.

•

Selling, General and Administration (SG&A) expenses at Rs.38.8 billion, year-on-year increase of 13%. The increase is primarily on account of annual increments, additional manpower deployment in select areas, sales & marketing spend for events specific to the year and the effect of rupee depreciation against multiple currencies.

•

Research & development expenses at Rs.12.4 billion, year-on-year growth of 62%. 9.4% of revenues in FY14 as compared to 6.6% of revenues in FY13. The increase is in line with our planned scale-up in development activities.

•

Net Finance income at Rs.400 million compared to Rs.460 million in FY13. The change is on account of :

•

Net incremental forex benefit of Rs.7 million

•

Incremental net interest expense of Rs.71 million

•

EBITDA for FY14 at Rs.33.2 billion, year-on-year growth of 19%; 25% of revenues.

•

Profit after Tax in FY14 at Rs.21.5 billion, year-on-year growth of 28%; 16% of revenues.

•

Diluted earnings per share in FY 14 at Rs.126.04

•

Capital expenditure for FY14 is Rs.10.2 billion.

The Board has recommended payment of a dividend of Rs. 18 per equity share of face value Rs. 5/- each (360% of face value) for the year ended March 31, 2014, subject to approval of members.

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate as on 31^st March, 2014 USD = Rs.60.00

Appendix 3: Q4 FY4 Consolidated Income Statement


Particulars	Q4 FY14									Q4 FY13									Growth %
Particulars	($)			(Rs.)			%			($)			(Rs.)			%			Growth %
Revenues		580			34,809			100.0			557			33,400			100.0			4
Cost of revenues		248			14,887			42.8			276			16,554			49.6			(10	)

Gross profit		332			19,922			57.2			281			16,846			50.4			18

Operating Expenses
Selling, general & administrative expenses		172			10,307			29.6			145			8,722			26.1			18
Research and development expenses		66			3,985			11.4			39			2,326			7.0			71
Other operating expense / (income)		(4	)		(226	)		(0.7	)		(27	)		(1,631	)		(4.9	)		(86	)

Results from operating activities		98			5,857			16.8			124			7,427			22.2			(21	)

Net finance income		3			163			0.5			7			397			1.2			(59	)
Share of profit of equity accounted investees		1			48			0.1			0			26			0.1			91

Profit before income tax		101			6,068			17.4			131			7,850			23.5			(23	)

Income tax expense		21			1,252			3.6			36			2,141			6.4			(42	)

Profit for the period		80			4,816			13.8			95			5,709			17.1			(16	)

Diluted EPS		0.47			28.22						0.56			33.51						(16	)

Appendix 4: EBITDA Computation


Particulars	Q4 FY14						Q4 FY13
Particulars	($)			(Rs.)			($)			(Rs.)
Profit before income tax		101			6,068			131			7,851
Interest income		(1	)		(82	)		(1	)		(52	)
Depreciation		22			1,308			17			1,049
Amortization		11			648			7			446

EBITDA		132			7,942			155			9,292

Appendix 5: Revenue Mix by Segment


	Q4 FY14						Q4 FY13						Growth %
	($)		(Rs.)		%		($)		(Rs.)		%		Growth %
Global Generics		455		27,318		78		376		22,566		68		21
North America				14,964		55				11,413		51		31
Europe				1,774		6				1,831		8		(3	)
India				4,101		15				3,481		15		18
Russia & Other CIS				4,519		17				4,519		20		(0	)
Rest of World				1,960		7				1,322		6		48
PSAI		111		6,641		19		170		10,173		30		(35	)
North America				1,538		23				2,061		20		(25	)
Europe				2,370		36				4,396		43		(46	)
India				979		15				1,612		16		(39	)
Rest of World				1,754		26				2,105		21		(17	)
Proprietary Products & Others		14		851		2		11		661		2		29

Total		580		34,809		100		557		33,400		100		4

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

Contact Information

Investors and Financial Analysts:

Kedar Upadhye at kedaru@drreddys.com / +91-40-66834297

Saunak Savla at saunaks@drreddys.com / +91-40-49002135

Milan Kalawadia (USA) at mkalawadia@drreddys.com / +1 908-203-4931

Media:

SVS Chowdary at chowdaryl@drreddys.com / +91-40-49002448

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

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.