Good Health Can’t Wait.

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Good Health Can’t Wait. Dr. Reddy’s Laboratories Limited NAME DESIGNATION RATIO OF REMUNERATION OF EACH DIRECTOR TO THE MEDIAN REMUNERATION OF EMPLOYEES % INCREASE IN REMUNERATION DURING FY2015 COMPARISON OF THE REMUNERATION OF EACH KMPs (1) AGAINST THE PERFORMANCE OF THE COMPANY Dr. Bruce L A Carter Independent Director 28 -2% Dr. Ashok S Ganguly Independent Director 26 -4% Mr. Sridar Iyengar Independent Director 29 -2% Mr. Saumen Chakraborty (3) Chief Financial Officer (CFO) NA -31% (4) Compared to FY2014, the revenue in FY2015 Mr. Sandeep Poddar (3) Company Secretary (CS) NA 15% grew by 4% and EBITDA decreased by 10% (1) KMPs includes our Chairman, Co-Chairman & CEO, CFO and CS. (2) Includes commission, salary and perquisites. (3) Includes fixed pay, actual variable pay, gratuity, fuel & maintenance on actuals and does not include value of stock options. (4) Previous year amount included long term incentive, payable once in 4 years. (ii) The median remuneration of employees increased by 0.5% in FY2015. (iii) The number of permanent employees on the rolls of the Company as on 31 March 2015 is 19,857. (iv) The average increase in remuneration paid to employees is 16% for FY2015 as compared to FY2014. Compared to FY2014, the revenue in FY2015 grew by 4% and EBITDA decreased by 10%. The remuneration philosophy of the Company is to provide market competitive compensation which drives a high performance culture. Every year, the salary increases are based on benchmarking with similar profiled organisations and market competitiveness. The variable component is paid out to an employee on the basis of performance of the Company, the corresponding business unit or function and his/her own performance. (v) The total remuneration of KMPs decreased by 3% while the revenue in FY2015 grew by 4% and EBITDA decreased by 10%. (vi) PARTICULARS 31 MARCH 2015 31 MARCH 2014 a) Market Capitalization ` 59,442 crores ` 43,614 crores b) Price Earnings Ratio 26.9 20.3 c) The closing price of the Company’s equity shares on the NSE and BSE as on 31 March 2015 was ` 3,488.75 and ` 3,487.45 respectively. As on 31 March 2015, the value of portfolio of an Indian investor who invested ` 1,000 in Company’s IPO in August, 1986 and ` 1,250 in rights issue in August, 1989 and held on to these till date would have been ` 18.84 million (adjusted for bonuses and sub-division). This is excluding the value of dividend pay-outs and bonus debentures. (vii) Average percentage increase in the salaries of employees other than KMPs for FY2015 was 16% as compared to FY2014. There was a decrease of 3% in the total remuneration of KMPs for the same period. (viii) Key parameters for variable component of remuneration availed by the directors: Each Executive Director is entitled to receive a commission of up to 0.75% of the Company’s net profit (calculated under the Companies Act). The Nomination, Governance and Compensation Committee recommends the commission payable to the Executive Directors after considering their achievements on financial and non-financial metrics and other evaluation criteria fixed by the Committee. Non-executive Directors are entitled to receive an overall maximum commission of up to 0.50% of the Company’s net profit (calculated under the Companies Act). The commission payable to Non-executive Directors is determined on the basis of their level of engagement and participation, time spent and their contribution in enhancing the Board’s effectiveness. The commission is also determined by keeping in view the industry benchmarks. (ix) None of the employees (who are not directors) receive remuneration in excess of the highest paid director. (x) It is hereby affirmed that the remuneration paid during FY2015 is as per the remuneration policy of the Company. K Satish Reddy Chairman 98
Statutory Reports • Board’s Report Annual Report 2014 - 15 ANNEXURE – VII CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO (A) Conservation of energy - During the year, the Company has implemented energy conservation projects across its various business units and accrued savings of approximately ` 187.70 million. Major categories of such investments are: 1. Installation of Energy efficient equipment: Major projects in this category include replacement of water ring vacuum pumps with oil ring vacuum pumps, adopting energy efficient technologies in HVAC systems, replacing single equipment for filtration and drying operations instead of separate equipment, replacement of old inefficient pumps, air compressors, HVAC blowers etc. with new ones which are energy economical. 2. Optimization of processes consuming energy: Major initiatives in the category include setting up side stream filtration systems for cooling towers (which would avoid scaling & corrosion of equipment thereby increasing the life and energy of cooling towers), brine utility optimization, bag house for boiler efficiency, optimizing steam and water distribution, installation of VFDs, optimizing furnace oil usage, reusing ETP water for gardening, better usage of day light, and introducing dynamic parameter controls through instrumentation. 3. Identifying cheaper power sources both in-house and external: Major initiatives include investing in dedicated feeder lines for purchasing open access power in place of DG sets during power holidays, building in-house Co-Gen plant to meet steam and power requirements, switching to Tata Power, introducing voltage stabilizers etc. 4. Utilizing the alternate sources of energy: Company has signed long term power supply contracts with solar power developers for supply of 22 MW solar power, out of which 11 MW is already operational and supplied with 14 million units during FY2015, which is 4.7% of total FY2015 power consumption. Additional 11 MW will add on during FY2016 and the total solar power supply will become 33 million units, which is 10% of total power consumption. 5. Steps in progress for increasing the utilization of alternate sources of energy: Work in progress to set up 15 MW captive solar power plants with joint venture partners. Further, the Company is planning to sign additional 23 MW long term power supply contracts with solar power developers. Overall the utilization of alternate sources of energy to become 25% of total power consumption. (B) Technology absorption i. Efforts made towards technology absorption The Company has a full-fledged R&D division continuously engaged in research on new products and process improvement on existing products as part of continuous improvement. As a part of technology absorption and adoption, once technology is developed for a product, it is tested in a Pilot Plant and thereafter commercial production is performed. Innovation is embarked on by an incremental approach towards cost, time, quality and complex product development by adopting cutting edge technology and our philosophy is to continuously upgrade the technology. ii. iii. Benefits derived like product improvement, cost reduction, product development or import substitution. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - a) Details of technology imported b) Year of import c) Whether the technology been fully absorbed d) If not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and Successful development of complex generics products accomplished through Innovation and science. Improved quality by adopting Quality by Design concept. Technology adoption yielded improvement in robustness, and cost. No imported technology. iv. the expenditure incurred on R&D FY2015 FY2014 a) Capital (` million) 689 724 b) Recurring (` million) 11,230 9,982 c) Total (` million) 11,919 10,706 Total R&D expenditure as a percentage of total turnover 12.00% 11.10% (C) Foreign exchange earnings and outgo Please refer information given in the note nos. 2.33 and 2.34 – Notes to the accounts. K Satish Reddy Chairman 99
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ANNUAL REPORT 2014-15 Good Health C
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Our Brand We are in the business of
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Notice Annual Report 2014 - 15 NOTI
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E-Voting Annual Report 2014 - 15 IN
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Dr. Reddy’s Laboratories Limited
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The future belongs, not to those wh
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