Good Health Can’t Wait.

Good Health Can’t Wait.
Dr. Reddy’s Laboratories Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in Indian Rupees millions, except share data and where otherwise stated)
Defined contribution plan
The Company’s contributions to defined contribution plans are recognized in the statement of profit and loss as and when the services are received
from the employees.
Termination benefits
Termination benefits are recognized as an expense when the Company is demonstrably committed, without realistic possibility of withdrawal, to a
formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made
to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Company has made an offer
encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Compensated leave of absence
The Company provides for accumulation of compensated absences by certain categories of its employees. These employees can carry forward a
portion of the unutilized compensated absences and utilize it in future periods or receive cash in lieu thereof as per Company policy. The Company
records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The
measurement of such obligation is based on actuarial valuation as at the balance sheet date carried out by a qualified actuary.
Employee stock option schemes
In accordance with the SEBI guidelines, the cost calculated based on intrinsic value method i.e. the excess of the market price of shares, at the date
prior to the day of grant of options under the Employee stock option schemes, over the exercise price is treated as employee compensation and
amortised over the vesting period.
l) Foreign currency transactions, balances and translation of financial statements of foreign operations
Foreign currency transactions
Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences
arising on foreign currency transactions settled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are reported using the foreign exchange rates as at
the balance sheet date. The resultant exchange differences are recognised in the statement of profit and loss. Non-monetary assets and liabilities are
carried at the rates prevailing on the date of transaction.
Exchange differences arising on a monetary item that, in substance, forms part of Company’s net investment in a non-integral foreign operation
are accumulated in a foreign currency translation reserve in the Company’s financial statements. Such exchange differences are recognized in the
statement of profit and loss in the event of disposal of the net investment.
Foreign operations
The financial statements of the foreign integral subsidiaries, representative offices and branches collectively referred to as the ‘foreign integral
operations’ are translated into Indian rupees as follows:
• Items of income and expenditure are translated at the respective monthly average rates;
• Monetary items are translated using the closing rate;
• Non-monetary items are translated using the monthly average rate which is expected to approximate the actual rate on the date of transaction;
and
• The net exchange difference resulting from the translation of items in the financial statements of foreign integral operations is recognised in the
statement of profit and loss as foreign exchange gain/loss.
In the circumstances where there are several exchange rates available within a country, or where the closing exchange rate does not reflect the
amount that is likely to be realized, then the relevant monetary items are translated using a rate that best represents the amount which is likely to
be realized from, or required to disburse, such item at the balance sheet date.
The financial statements of non-integral foreign operations are translated into Indian rupees as follows:
• All assets and liabilities, both monetary and non-monetary, are translated using the closing rate;
• Items of income and expenditure are translated at the respective monthly average rates; and
• The resulting net exchange difference are recognized in foreign currency translation reserve account forming part of Company’s reserves and
surplus.
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