Type Traded as Industry Founded Headquarters Key people

Public NSE:DRREDDY BSE:500124 NYSE: RDY Pharmaceuticals 1984 Hyderabad (India) Anji Reddy, Chairman GV Prasad, CEO

Revenue Net Income Employees Website

Satish Reddy, (MD & Chief Operating Officer) $2.1 billion $ 300 million 16,617 www.drreddys.com

Background & Highlights First steps 1984 Established by Dr. K Anji Reddy with an initial capital outlay of 25 lakhs. 1986 Goes public with listing in Bombay Stock Exchange Enters international markets with exports of methyldopa 1987

 Obtains its first US FDA approval for ibuprofen API Starts its formulations operations

Expansion and Innovations 1991 Formulation exports to Russia commences 1993 Establishes Dr. Reddys Research Foundation. Drug Discoveryprogram starts 1995 Dr. Reddys Research Foundation files first patent in the US 1999 Acquires American Remedies in India 2000 Cheminor Drugs (a group company) merges with Dr. Reddys 2006 Acquires Betapharm in Germany Becomes an AG partner for Mercks Proscar and Zocor in the US 2009 Enters into a strategic alliance with GSK for emerging markets 2010 Launches darbepoetinalfa in India under the brand name Cresp -worlds first generic darbepoetinalfa and the only one in India 2011 GlaxoSmithKline and Dr. Reddys agrees to the sale of US penicillinfacility and products FUJIFILM and Dr. Reddys establishes an exclusive joint venture fordeveloping, manufacturing and promoting generic drugs in Japan Expands its R&D centre in Cambridge, United Kingdom The first Indian company to celebrate its 10-year Anniversary at the NYSE on 15 April 2011

2012 Crosses USD 2 billion in revenues and is the fastest in Indian pharmacyto reach this milestone. 2013

Dr Reddy lined up investments worth around Rs 1,600 crore over the next two years for capacity expansion and building new capabilities.

Balance Sheet

Particulars SOURCES OF FUNDS : Share Capital Reserves Total Total Shareholders Funds Minority Interest Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS : Gross Block Less: Accumulated Depreciation Less: Impairment of Assets Net Block Lease Adjustment Capital Work in Progress Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less : Current Liabilities and Provisions

Mar-12 84.8 4,904.20 4,989.00 0 33.8 3,200.10 3,233.90 8,222.90

Mar-11 84.6 3,947.30 4,031.90 0 28.3 2,342.40 2,370.70 6,402.60

Mar-10 84.4 3,692.40 3,776.80 0 26.9 1,457.10 1,484.00 5,260.80

8,842.30 7,975.10 6,446.80 5,430.60 4,589.60 4,094.60 0 0 0 3,411.70 3,385.50 2,352.20 0 0 0 708.5 575.2 762.2 207.9 0.9 358 1,943.30 1,599.20 1,339.40 2,536.80 1,761.10 1,159.90 1,606.10 575.1 660 705.8 879.6 660.9 6,792.00 4,815.00 3,820.20

Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Total Assets Contingent Liabilities

2,502.60 1,961.80 1,674.60 496.8 413.2 350.2 2,999.40 2,375.00 2,024.80 3,792.60 2,440.00 1,795.40 0 0 0 245.7 147.8 107.4 130.8 125.3 114.4 114.9 22.5 -7 8,235.60 6,424.10 5,260.80 178.7 139.3 90.1

PROFIT & LOSS A/C

Particulars INCOME : Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income EXPENDITURE : Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses Less: Pre-operative Expenses Capitalised Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Fringe Benefit Tax Deferred Tax Net Profit before Minority Interest Minority Interest Mar-12 Mar-11 Mar-10

9,855.00 7,532.50 7,062.60 93.9 97.3 31.6 9,761.10 7,435.20 7,031.00 132.3 52.3 101.4 152.6 164.5 -24.7 10,046.00 7,652.00 7,107.70 2,667.50 2,193.90 2,037.00 225.9 183.3 141.5 1,591.20 1,278.00 1,163.40 641.8 478.2 591.1 2,138.40 1,731.60 1,477.60 344.6 173.8 627.2 0 7,609.40 2,436.60 114.1 2,322.50 518.1 1,804.40 524.8 0 -21.3 1,300.90 0 0 0 6,038.80 6,037.80 1,613.20 1,069.90 32.3 38.5 1,580.90 1,031.40 398.1 413.1 1,182.80 618.3 210.6 325.2 0 -2.4 -26.7 -56 998.9 351.5 0 0

Net Profit after Minority Interest Extraordinary Items Adjusted Net Profit Adjst. below Net Profit P & L Balance brought forward Statutory Appropriations Appropriations P & L Balance carried down Dividend Preference Dividend Equity Dividend (%) EPS before Minority Interest (Unit Curr.) EPS after Minority Interest (Unit Curr.) Book Value (Unit Curr.)

1,300.90 -91.13 1,392.03 0 807.3 0 450.5 1,657.70 233.1 0 275 74.48 74.48 294.16

998.9 19.55 979.35 0 116.2 0 307.8 807.3 190.4 0 225 57.21 57.21 238.29

351.5 -218.39 569.89 -32.6 103.6 0 306.3 116.2 190 0 225 18.95 18.95 223.74

HORIZONTAL ANALYSIS
20120 3 (12) INCOME : Sales Turnover Excise Duty Net Sales Other Income 9855 93.9 9761.1 132.3 20110 3 (12) 7532.5 97.3 7435.2 52.3 Increa se 2322.5 -3.4 2325.9 80 YOY Chan ge % 31% -3% 31% 153%

Stock Adjustments Total Income EXPENDITURE : Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Deferred Tax Net Profit

152.6 10046

164.5 7652

-11.9 2394

-7% 31%

2667.5 225.9 1550.9 641.8 2138.4 384.9 7609.4 2436.6 114.1 2322.5 518.1 1804.4 524.8 -21.3 1300.9

2193.9 183.3 1278 478.2 1731.6 173.8 6038.8 1613.2 32.3 1580.9 398.1 1182.8 210.6 -26.7 998.9

473.6 42.6 272.9 163.6 406.8 211.1 1570.6 823.4 81.8 741.6 120 621.6 314.2 5.4 302

22% 23% 21% 34% 23% 121% 26% 51% 253% 47% 30% 53% 149% -20% 30%

VERTICAL ANALYSIS 201203 (12) INCOME : Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income 98% 1% 97% 1% 2% 100% 201103 (12) 98% 1% 97% 1% 2% 100% 201003 (12) 99% 0% 99% 1% 0% 100%

EXPENDITURE : Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Fringe Benefit Tax Deferred Tax Net Profit

27% 2% 15% 6% 21% 4% 76% 24% 1% 23% 5% 18% 5% 0% 0% 13%

29% 2% 17% 6% 23% 2% 79% 21% 0% 21% 5% 15% 3% 0% 0% 13%

29% 2% 16% 8% 21% 9% 85% 15% 1% 15% 6% 9% 5% 0% -1% 5%

120% 100% 80% 60% 40% 20% 0% -20% 201203 (12) 201103 (12) 201003 (12)

Trend Analysis
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH
Income Statement Total Income Operating Expense Net Profit Trend Analysis Total Income Operating Expense Net Profit 400% 300% 200% 100% 0% 2008 -100% -200% -300% 2009 2010 2011 2012 Total Income Operating Expense Net Profit 2008 5399.1 4350 437.3 2008 100% 100% 100% 2009 7095.4 7145.9 -917.2 2009 131% 164% -210% 2010 7107.7 6037.8 351.5 2010 132% 139% 80% 2011 7652 6038.8 998.9 2011 142% 139% 228% 2012 10046 7609.4 1300.9 2012 186% 175% 297%

Ratios
Liquidity Ratio Mar '12 Mar '11 Mar '10 Comment - Current ratio is highly fluctuate in March 10 shows 1.89 problem in working capital - it slightly decreases in March 2012 -In March 2012 it is greater than previous year which is good indication for 0.90 company as it shows how quicky they can pay liabilities This ratio represents the percentage of net assets 0.35 which is invested in net working capital. This is the reservoir of funds.

Current Ratio(in times)

1.52

1.14

Quick Ratio(in times)

0.95

0.56

Net working capital ratio

0.96

0.78

3 2.5 2 1.5 1 0.5 0 Mar '12 Mar '11 Mar '10 Mar '09 Mar '08 CURRENT RATIO QUICK RATIO NET WORKING CAPITAL RATIO

2)Coverage
coverage ratio(Units) Formula Mar '12 Mar '11 Mar '10 Comment -it shows a fluctuating trend and suddenly drop down in the Mar 12 .it indicates how many times interest payment can made from current earnings.

Interest EBIT/interest Coverage Ratio(in payable times)

18.09

49.08

20.82

INTEREST COVERAGE RATIO

120 100 80 60 40 20 0 Mar '12 Mar '11 Mar '10 Mar '09 Mar '08 INTEREST COVERAGE RATIO

3) Leverage Ratio
Leverage Ratio Formula Mar '12 Mar '11 Mar '10 Comment

Debt Ratio(in times)

total debt/capital employed

0.26

0.15

- it shows zig zag trend from Mar 08 to Mar 12. -compare to Mar 11 in Mar 12 it is 0.29 less, shows that company sucessfully manage to minimize debt. -it shows a fluctuating trend from Mar 08 to 0.41 Mar 12. it shows a the company debts are greater than the equity. -it is more than 1 which shows 1.09 balancing between owners and lenders fund -this ratio is lower the better but the in Mar 12 it is 0.37 increasing which is not better shows liabilities are more than assets.

Debt to equity Ratio(in times)

total debt/networth

0.35

0.18

Capital Employed to Net Worth(in times)

capital employed/networth

1.22

1.23

Total Liabilities to total assets(in times)

CA+ tatal debt/total asset

0.44

0.43

1.4 1.2 1 0.8 0.6 0.4 0.2 0 Mar '12 Mar '11 Mar '10 Mar '09 Mar '08 Capital Employed to Net Worth(in times) Total Liabilities to total assets(in times) DEBT RATIO Debt to equity Ratio(in times)

4) PROFITABILITY RATIO
profitability ratio(Units) Formula Mar '12 Mar '11 Mar '10 Comment

gross profit margin(in %)

(G.P/sales)* 100

49.52365 46.20218

- it is increasing shows that 45.6775 operational cost management is very good. - increasing shows operational efficency for 24.7634 company in mar 12 except in Mar 11

operating profit ratio(in%)

(O.P/sales)*100

27.8435

23.5039

net profit margin(in %)

(N.P/sales) *100

From Mar 11 it is decresing 13.64581 17.21885 19.24879 shows some issues in operation, marrketing.

operating expense ratio(in %)

(O.E/sales) *100

ROI(in %)

(EBIDTA/Total asset )* 100

- ROI is fluctuating which means return is not fix over the 20.23706 17.90355 20.72463 period. -for Mar 12 it is greaer than previous year

ROA(in %)

(EBIT*(1-t)/total asset)*100

11.61152

- it is increasing (except in Mar 11) shows 10.2079 12.10396 operating and marketing team efficiency

ROE(in%)

(PAT-preference dividend)/networth

-it is higher the better -for March 12 it is decresing 13.58183 14.84004 14.30528 compare to previous shows decreasing in performance. -it shows the earning 53.80986 52.78488 50.11105 power which is increasing for Mar 12 -it shows how much 13.74735 11.24943 11.25292 dividend paid per share at face value -it shows how much 25.54801 21.31184 22.45597 dividend paid out of earnings. 19000

EPS(in Rs.)

(PAT-preference dividend)/no equity shares o/s

DPS(in Rs.)

dividend/no equity shares o/s

dividend payout ratio(in%)

DPS/EPS

MPS(in Rs.) dividend yield(in %) earning yield(in %) DPS/MPS

0.072354

EPS/MPS

0.28321

PE ratio(in times) Growth Rate Ratio(in %)

MPS/EPS

353.0951

Retaintion ratio/ROE

-187.104

-142.61

-155.977

100

50 gross profit margin(in %) operating profit ratio(in%) 0 Mar '12 Mar '11 Mar '10 Mar '09 Mar '08 net profit margin(in %) ROI(in %) -50 ROA(in %) ROE(in%) EPS(in Rs.) -100 DPS(in Rs.) dividend payout ratio(in%) Growth Rate Ratio(in %) -150

-200

5) ACTIVITY RATIO
Activity ratio(Units) Inventory Turnover Ratio(in times) Formula Mar '12 Mar '11 Mar '10 Comments

COGS/AVG Inventory

- from Mar 10 it is decreasing shows 2.824386 2.847394 2.925329 that working capital is not used properly -lower the better (short inventory) -for Mar 10 129.2316 128.1874 124.7723 onwards it increasing show issues in operation team -at the bgining it is higher then again drops down. -In Mar 12 it is again falls slightly 3.600592 3.665489 3.544553 compare to revious year which is not good indication.(debtors are paying with delay)

Inventory Days(in days)

365/Inventory turnover ratio

Debtors Turnover Ratio(in times)

credit sales/Avg.debtors

Creditors Turnover Ratio(in times)

credit 0.438226 0.691858 purchase/avg.creditors

- In mar 12 it is minimum means Dr. Reddy paying to their vendors with more credit period which is good for company -Creditors days higher, shows they are getting huge credit period.which helping them to increase cash flow.

Creditors Days(in days)

365/creditors turnover ratio

832.903 527.5651

Asset Turnover Ratio(in times)

sales/avg.total asset

- it is improving over period.shows 0.810343 0.695044 0.678564 marketing and operational team efficency -it is higher the better but it is 3.88739 9.514286 decreasing means sales is not happening. -299.8

Working Capital Turnover(in times)

sales/net working capital

3.655714

Cash Cycle

opearting cycle/creaditors days

-602.299

Debtors Days

365/debtors turnover ratio

- this trend is zig zag, means they are not getting paid by debtors 101.3722 99.57743 102.9749 with constant interval which is not good indications.

10 9 8 7 6 5 4 3 2 1 0 Mar '12 Mar '11 Mar '10 Mar '09 Mar '08 Inventory Turnover Ratio(in times) Debtors Turnover Ratio(in times) Creditors Turnover Ratio(in times) Asset Turnover Ratio(in times) Working Capital Turnover(in times)

DUPONT ANALYSIS
FY 201203 Net Profit Margin Asset Turnover Ratio Equity Multiplier Return On Equity (ROE) 13% 1.0 2.25 29% FY 201103 13% 0.9 2.09 26%