Dr. Reddyas Revenues Cross $2 Billion Milestone* in FY12

HYDERABAD, India--([ BUSINESS WIRE ])--Dr. Reddyas Laboratories Ltd. (NYSE: RDY) today announced its audited consolidated financial results for the quarter and full year ended March 31, 2012 under International Financial Reporting Standards (IFRS).

Key Highlights

Consolidated revenues at Rs. 96.7 billion in FY12, year-on-year growth of 30%, driven by key markets of North America and Russia in Global Generics segment and Pharmaceutical Services and Active Ingredients segment.
- Consolidated revenues of Rs. 26.6 billion in Q4 FY12, year-on-year growth of 32%.
EBITDA of Rs. 25.4 billion in FY12, 26% of revenues and recorded year-on-year growth of 51%.
- EBITDA of Rs. 6.8 billion in Q4 FY12, 26% of revenues and recorded year-on-year growth of 34%.
Profit after Tax** in FY12 of Rs. 15.3 billion, year-on-year growth of 42%.
- Profit after Tax** of Rs. 4.2 billion in Q4 FY12, year-on-year growth of 38%.
During the year, the company launched 141 new generic products, filed 88 new product registrations and filed 68 DMFs globally.
The Board of Directors of the Company has proposed a dividend of Rs. 13.75 (275%) per equity share of Rs. 5/- face value, subject to the approval of shareholders.

* Revenues based on the average billed dollar rate of 47.91

**Note: PATadjusted for a) interest on bonus debentures, b) Impairment of intangibles, and c) corresponding tax adjustment

All figures in millions, except EPS	All US dollar figures based on convenience translation rate of 1USD = Rs. 50.89

Dr. Reddyas Laboratories Limited and Subsidiaries
Audited Consolidated Income Statement

Particulars	FY12						FY11
Particulars	($)		(Rs.)		%		($)		(Rs.)		%		Growth %
Revenue	1,901		96,737		100		1,468		74,693		100		30
Cost of revenues	853		43,432		45		677		34,430		46		26
Gross profit	1,048		53,305		55		791		40,263		54		32
Operating Expenses
Selling, general and administrative expenses	567		28,868		30		466		23,690		32		22
Research and development expenses	116		5,911		6		99		5,060		7		17
Write down of intangible assets	20		1,040		1		-		-		-		-
Other operating (income) / expense	(15	)	(765	)	(1	)	(22	)	(1,115	)	(1	)	(31	)
Results from operating activities	360		18,252		19		248		12,628		17		45
Net finance (income) / expense	(3	)	(160	)	(0	)	4		188				(185	)
Share of (profit) / loss of equity accounted investees	(1	)	(54	)	(0	)	(0	)	(3	)	(0	)	1700
Profit / (loss) before income tax	364		18,466		19		244		12,443		17		48
Income tax (benefit) / expense	83		4204		4		28		1,403		2		200
Profit / (loss) for the period	281		14,262		15		216		11,040		15		29

Diluted EPS	1.6		83.8				1.3		65.0				29

Profit Computation:
EBITDA Computation	FY12				FY11
EBITDA Computation	($)		(Rs.)		($)		(Rs.)
PBT	363		18,466		245		12,443
Interest	14		690		4		199
Depreciation	71		3,628		58		2,961
Amortization and Impairment	52		2,626		23		1,186
Reported EBITDA	500		25,409		330		16,789
Adjustments of exceptional items:
Profit on sale of land and negative goodwill	-		-		(7	)	(365	)
Adjusted EBITDA	500		25,409		323		16,424


PAT Computation	FY12				FY11
PAT Computation	($)		(Rs.)		($)		(Rs.)
PAT	280		14,262		217		11,040
Adjustments of exceptional items:
Interest on Bonus Debentures	9		470		-		-
Profit on sale of land and negative goodwill	-		-		(7	)	(365	)
Impairment	20		1,040		-		-
Tax adjustment	(9	)	(466	)	2		88
Adjusted PAT	300		15,306		212		10,763

Key Balance Sheet Items	(in millions)
Particulars	As on 31st Mar 12		As on 31st Mar 11
Particulars	($)	(Rs.)	($)	(Rs.)
Cash, cash equivalents and other investments	357	18,152	113	5,831
Trade receivables	498	25,339	346	17,615
Inventories	380	19,352	316	16,059
Property, plant and equipment	653	33,246	582	29,642
Goodwill and Other Intangible assets	265	13,529	300	15,246
Loans and borrowings (current and non current)	633	32,210	463	23,503
Trade payables	187	9,503	167	8,480
Equity	1,129	57,443	904	45,990

FY12 Revenue Mix by Segment				(in millions)
	FY12			FY11			Growth %
	($)	(Rs.)	%	($)	(Rs.)	%	Growth %
Global Generics	1,380	70,243	73	1,048	53,340	71	32
North America		31,889	45		18,996	36	68
Europe		8,259	12		8,431	16	(2	)
India		12,931	18		11,690	22	11
Russia and Other CIS		13,260	19		10,858	20	22
RoW		3,904	6		3,366	6	16
PSAI	468	23,812	25	386	19,648	26	21
North America		4,272	18		3,170	16	35
Europe		8,424	35		7,020	36	20
India		3,586	15		2,619	13	37
RoW		7,531	32		6,838	35	10
Proprietary Products and Others	53	2,682	3	34	1,705	2	57
Total	1,901	96,737	100	1,468	74,693	100	30

Segmental Analysis

Global Generics

Revenues from Global Generics segment at Rs. 70.2 billion in FY12, year-on-year growth of 32% driven by key markets of North America and Russia.

Revenues from North America at Rs. 31.9 billion in FY12 grew by 62% in local currency over previous year. Revenues in Q4 FY12 at Rs. 8.7 billion represented year-on-year growth of 36% in local currency. In Q4 FY12, revenue share of olanzapine was below $2 million due to lower generic substitution and shelf stock adjustment.
- Growth was largely driven by new product launches of ziprasidone, fondaparinux, amoxicillin clavulanic acid, products from Shreveport facility and market share expansion in existing products of lansoprazole and omeprazole Mg OTC.
- 16 new products were launched during the year.
- 26 products of prescription portfolio feature among the Top 3 ranks in market shares (Source: IMS Health Volumes February 2012).
- During the year, 17 ANDAs were filed. Cumulatively 80 ANDAs are pending for approval with the USFDA of which 41 are Para IVs and 7 are with FTF status.
Revenues in Russia and Other CIS markets at Rs. 13.3 billion in FY12 represented year-on-year growth of 22%.
- Revenues in Russia at Rs. 11.0 billion in FY12 represented year-on-year growth of 15% in local currency. Revenues in Q4 FY12 at Rs. 2.9 billion represented year-on-year growth of 23% in local currency.
  - Growth driven by volume increase across key brands and OTC portfolio.
  - OTC portfolio grew by 32% over previous year.
  - Based on market research, Dr. Reddyas year-on-year rouble growth at 21% versus industryas growth of 17%; Dr. Reddyas is ranked 13th by market share (Source: Pharmexpert March 2012)
- Revenues in Other CIS markets at Rs. 2.2 billion in FY12 grew by 17% over previous year.
Revenues in India at Rs. 12.9 billion in FY12 grew by 11% over previous year. Revenues in Q4 FY12 at Rs. 3.2 billion represented year-on-year growth of 16%.
- Growth driven by volume increase across key brands and oncology portfolio.
- Biosimilars portfolio grew by 33% over previous year.
- 23 new products were launched during the year.
Revenues from Europe at Rs. 8.3 billion in FY12 declined by 2% over previous year.
- Revenues from Germany at Rs. 5.1 billion in FY12 declined by 15% in local currency over previous year. This decline was largely due to the continued tenderization of the German market.

Pharmaceutical Services and Active Ingredients (PSAI)

Revenues from PSAI are at Rs. 23.8 billion in FY12, year-on-year growth of 21%. Revenues in Q4 FY12 at Rs. 7.5 billion represented year-on-year growth of 35%.
- The growth in Active Ingredients business was led by sales to generic customers to support their generic product launches in line with patent expiries in the near term.
- The growth in Pharmaceutical Services business was led by new customer orders.
- During the year, 68 DMFs were filed globally, with 14 each in the US and Europe. The cumulative DMF filings as of 31^st March 2012 are 543.

Income Statement Highlights:

Gross profit margin at 55% in FY12 marginally improved versus 54% in FY11. Gross profit margin for Global Generics and PSAI business segments were at 63% and 32% respectively.
Selling, General and Administration (SG&A) expenses including amortization at Rs. 28.9 billion increased by 22% over previous year. This increase is on account of higher manpower and distribution costs and the effect of rupee depreciation against multiple currencies.
In Q4 FY12, there were triggering events in the German market relating to reduction in the reference prices and additional tenders at low bid prices. As a result, a non-cash impairment charge, related to product intangibles, of Rs. 1,040 million was recorded in the books. Impairment charge after effecting the corresponding tax benefit was Rs. 730 million.
Net Finance income was at Rs. 160 million in FY12 versus net Finance expense of Rs. 188 million in FY11. The change is on account of:
- Net forex gain of Rs. 689 million in FY12 versus net forex loss of Rs. 57 million in FY11.
- Net interest expense of Rs. 690 million in FY12 versus Rs. 199 million in FY11. This increase is largely on account of the interest on bonus debentures of Rs. 470 million recorded in FY12.
- Profit on sale of investments of Rs. 161 million in FY12 versus Rs. 68 million in FY11.
EBITDA of Rs. 25.4 billion in FY12, 26% of revenues and recorded year-on-year growth of 51%.
Profit after Tax*** in FY12 of Rs. 15.3 billion recorded year-on-year growth of 42%.
Earnings*** per share in FY12 were Rs. 89.9.
Capital expenditure in FY12 was Rs. 8.6 billion.

*** Note: Adjusted for: a) interest on bonus debentures, b) Impairment of intangibles, and c) corresponding tax adjustment

Q4 FY12 Consolidated Income Statement

All figures in millions, except EPS	All US dollar figures based on convenience translation rate of 1USD = Rs. 50.89
Particulars	Q4 FY12						Q4 FY11
Particulars	($)		(Rs.)		%		($)		(Rs.)		%		Growth %
Revenue	522		26,584		100		396		20,173		100		32
Cost of revenues	248		12,613		47		181		9,224		46		37
Gross profit	274		13,971		53		215		10,949		54		28
Operating Expenses
Selling, general and administrative expenses	142		7,217		27		120		6,127		30		18
Research and development expenses	34		1,741		7		29		1,491		7		17
Write down of intangible assets	20		1,040		4		-		-		-		-
Other operating (income) / expense	(4	)	(198	)	(1	)	(10	)	(512	)	(3	)	(61	)
Results from operating activities	82		4,171		16		76		3,843		19		9
Net finance (income) / expense	(2	)	(82	)	(0	)	(1	)	(74	)	(0	)	14
Share of (profit) / loss of equity accounted investees	(0	)	(12	)	(0	)			4				-
Profit / (loss) before income tax	84		4,265		16		77		3,913		19		9
Income tax (benefit) / expense	16		838		3		11		567		3		48
Profit / (loss) for the period	68		3,427		13		66		3,346		17		2

Diluted EPS	0.4		20.1				0.4		19.7				2

Q4 FY12 Profit Computation
	(in millions)
EBITDA Computation	Q4 FY12				Q4 FY11
EBITDA Computation	($)		(Rs.)		($)		(Rs.)
PBT	84		4,265		77		3,913
Interest	2		88		2		104
Depreciation	20		1,020		15		787
Amortization and Impairment	28		1,424		5		274
EBITDA	134		6,797		99		5,078
Adjustments of exceptional items:
Profit on sale of land and negative goodwill	-		-		(7	)	(365	)
Adjusted EBITDA	134		6,797		92		4,713


PAT Computation	Q4 FY12				Q4 FY11
PAT Computation	($)		(Rs.)		($)		(Rs.)
PAT	67		3,427		66		3,346
Adjustments of exceptional items:
Interest on Bonus Debentures	2		116
Profit on sale of land and negative goodwill					(7	)	(365	)
Impairment	20		1,040
Tax adjustment	(7	)	(349	)	2		88
Adjusted PAT	82		4,234		61		3,069

About Dr. Reddy's

Dr. Reddyas Laboratories Ltd. (NYSE: RDY) is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three business segments - Pharmaceutical Services and Active Ingredients, Global Generics and Proprietary Products a" Dr. Reddyas 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. Focus markets include India, USA, Russia and CIS, Germany, UK, Venezuela, S. Africa, Romania, Australia and New Zealand.

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

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.

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

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Dr. Reddyas Revenues Cross $2 Billion Milestone* in FY12