Good Health Can’t Wait.

Good Health Can’t Wait.
Dr. Reddy’s Laboratories Limited
ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
As stated in Para 1 ‘Report on Other Legal and Regulatory Requirements’ in our Auditors’ report of even date, the following statement is based on the
comments in the Auditors’ reports on the standalone financial statements of the Holding Company, subsidiary companies and jointly controlled company
incorporated in India.
i. (a) The Holding Company, subsidiary companies and jointly controlled company incorporated in India has maintained proper records showing full
particulars, including quantitative details and situation of fixed assets.
(b) The Holding Company, subsidiary companies and jointly controlled company incorporated in India has a regular programme of physical
verification of its fixed assets by which all the fixed assets are verified in a phased manner over a period of 3 years. In our opinion, the periodicity
of physical verification is reasonable having regard to the size of the Holding Company, subsidiary companies and jointly controlled company
incorporated in India and the nature of its assets. No material discrepancies were noticed on such verification.
ii.
(a) Inventories, except goods-in-transit and stocks lying with third parties have been physically verified by the respective management of the Holding
Company, subsidiary companies and jointly controlled company incorporated in India during the year. In our opinion, the frequency of such
verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.
(b) In our opinion, the procedures of physical verification of inventories followed by the management as referred to above are reasonable and
adequate in relation to the size of the respective Company and the nature of its business.
(c) The Holding Company, subsidiary companies and jointly controlled company incorporated in India are maintaining proper records of inventory.
The discrepancies noticed on verification between the physical stocks and the book records were not material.
iii. (a) The Holding Company has granted unsecured loans to seven subsidiary companies covered in the register maintained under Section 189 of the
Companies Act, 2013 (“the Act”).
The subsidiary company incorporated in India has granted unsecured interest free loans to two body corporates covered in the register
maintained under section 189 of the Companies Act, 2013. The jointly controlled company incorporated in India has not granted any loans,
secured or unsecured, to companies, firms or other parties covered in the register maintained by it under section 189 of the Act.
(b) In the case of the loans granted by the Holding Company to the companies listed in the register maintained under Section 189 of the Act, the
borrowers have been regular in repaying the principal amounts as stipulated and in the payment of interest, wherever applicable.
In respect of the loans granted by the subsidiary company to the body corporates covered in the register maintained under Section 189 of the
Act, the terms of the arrangement do not stipulate any repayment schedule and the loans were repayable on demand. During the year, entire
amount of loan has been repaid by the borrower and accordingly paragraph 3(iii)(b) is not applicable to the subsidiary company.
(c) There are no overdue amounts of more than rupees one lakh in respect of the loans granted to any of the companies, firms and other parties
covered in the register maintained under section 189 of the Act.
iv. In our opinion and according to the information and explanations obtained by the statutory auditors of the Holding Company, subsidiary companies
and jointly controlled company incorporated in India, and having regard to the explanation that purchases of certain items of inventories are for the
Holding Company’s specialized requirements, certain goods sold in the Holding Company are for the specialized requirements of the buyers, sale of
certain services in Subsidiary Company are for the specialized requirements of the buyers and suitable alternative sources are not available to obtain
comparable quotations, there is an adequate internal control system commensurate with the size of the each Company and the nature of its business
with regard to purchase of inventories, fixed assets and sale of goods and services. The activities of the subsidiary companies and jointly controlled
company incorporated in India did not involve sale of goods. We have not observed any major weakness in the internal control system during the
course of the audit.
v. The Holding Company, subsidiary companies and jointly controlled company incorporated in India has not accepted any deposits from the public.
vi. The statutory auditors of the Holding Company have broadly reviewed the books of account maintained by the Holding Company pursuant to the
rules prescribed by the Central Government for the maintenance of cost records under Section 148 (1) of the Act, and are of the opinion that prima
facie the prescribed accounts and records have been made and maintained. However, the statutory auditors of the Holding Company have not made
a detailed examination of the records.
For subsidiary companies and jointly controlled company incorporated in India, the Central Government has not prescribed the maintenance of cost
records under sub-section 1 of Section 148 of the Companies Act, 2013, for any of its services rendered.
vii. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Holding Company, subsidiary
companies and jointly controlled company incorporated in India, amounts deducted/accrued in the books of account in respect of undisputed
statutory dues including provident fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise,
value added tax, cess and other material statutory dues have been generally regularly deposited during the year by the Company with the
appropriate authorities.
According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state
insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues
were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.
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