Good Health Can’t Wait.

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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) 2.27: CONTINGENT LIABILITIES AND COMMITMENTS (CONTINUED) Additionally, the Company is in receipt of various show cause notices from the Indian Sales Tax authorities. The disputed amount is ` 43. The Company has responded to such show cause notices and believes that the chances of any liability arising from such notices are less than probable. Accordingly, no provision is made in the Company’s consolidated financial statements as at 31 March 2015. (o) Direct taxes related matters During the year ended 31 March 2014, the Indian Income Tax authorities disallowed for tax purposes certain business transactions entered into by the parent company with its wholly-owned subsidiaries. The associated tax impact is ` 570. The Company believes that such business transactions are allowed for tax deduction under Indian Income Tax laws and has accordingly filed an appeal with the Income Tax Appellate Authorities. The Company further believes that the probability of succeeding in this matter is more likely than not and therefore no provision was made in the Company’s consolidated financial statements as of 31 March 2015. Additionally, the Company is contesting various other disallowances by the Indian Income Tax authorities. The associated tax impact is ` 611. The Company believes that the chances of an unfavorable outcome in each of such disallowances are less than probable and accordingly, no provision is made in the Company’s financial statements as of 31 March 2015. (p) Additionally, the Company is involved in other disputes, lawsuits, claims, governmental and/or regulatory inspections, inquiries, investigations and proceedings, including patent and commercial matters that arise from time to time in the ordinary course of business. Except as discussed above, the Company does not believe that there are any such contingent liabilities that are expected to have any material adverse effect on its financial statements. (B) Commitments: Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 4,177 2,925 2.28: ACCOUNTING FOR INTEREST IN A JOINT VENTURE (JV) Kunshan Rotam Reddy Pharmaceuticals Company Limited (“KRRP”) The Company has 51.33 % interest in KRRP, a joint venture (JV) in China. KRRP is engaged in manufacturing and marketing of active pharmaceutical ingredients and intermediates and formulations in China. The contractual arrangement between shareholders of KRRP indicates joint control as the minority shareholders, along with the Company, have significant participating rights such that they jointly control the financial and operating policies of KRRP in the ordinary course of business. The Company has, in accordance with Accounting Standard27 “Financial Reporting of Interests in Joint Ventures”, accounted for its 51.33% interest in the JV by the proportionate consolidation method. Thus the Company’s statement of profit and loss, balance sheet and cash flow statement incorporate the Company’s share of income, expenses, assets, liabilities and cash flows of the JV on a line-by-line basis. The aggregate amount of the assets, liabilities, income and expenses related to the Company’s share in the JV included in these financial statements as at and for the year ended 31March2015 and 31 March 2014 are given below: Balance Sheet (extract) PARTICULARS AS AT 31 MARCH 2015 AS AT 31 MARCH 2014 Fixed assets, net 188 157 Deferred tax assets, net 1 2 Inventories 171 195 Trade receivables 258 216 Cash and bank balances 496 271 Short term loans and advances 152 223 Trade payables 180 273 Other current liabilities 235 189 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 4 5 200
Consolidated Financial Statements Annual Report 2014 - 15 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All amounts in Indian Rupees millions, except share data and where otherwise stated) 2.28: ACCOUNTING FOR INTEREST IN A JOINT VENTURE (JV) (CONTINUED) Statement of Profit and Loss PARTICULARS FOR THE YEAR ENDED 31 MARCH 2015 FOR THE YEAR ENDED 31 MARCH 2014 Income Sales 1,723 1,428 Other income 10 9 Expenditure Material costs 381 359 Employee benefits expense 425 316 Operating and other expenses 652 502 Depreciation and amortisation 25 20 Profit before taxation 250 240 Provision for taxation - Current tax expense 33 34 - Deferred tax expense 1 6 Profit after taxation 216 200 2.29: AUDITOR’S REMUNERATION PARTICULARS FOR THE YEAR ENDED 31 MARCH 2015 FOR THE YEAR ENDED 31 MARCH 2014 a) Audit fees 12 11 b) Other charges Taxation matters* 1 - Other matters 1 1 c) Reimbursement of out of pocket expenses 1 2 15 14 * Represents amount of ` 600 thousands (previous year: ` 400 thousands), rounded off in millions above. 2.30: RELATED PARTY DISCLOSURES a. Related parties with whom transactions have taken place during the current and/or previous year: NAME OF THE RELATED PARTY NATURE OF RELATIONSHIP Dr. Reddy’s Institute of Life Sciences Enterprise over which whole-time directors have significant influence Ecologic Chemicals Limited Enterprise controlled by whole-time directors Stamlo Hotels Private Limited Enterprise controlled by whole-time directors Green Park Hotels and Resorts Limited Enterprise controlled by relative of a whole-time director K Samrajyam Mother of Chairman G Anuradha Spouse of Chief Executive Officer Deepti Reddy Spouse of Chairman G Mallika Reddy Daughter of Chief Executive Officer G V Sanjana Reddy Daughter of Chief Executive Officer Dr. Reddy’s Foundation Enterprise over which whole-time directors and their relatives have significant influence Pudami Educational Society Enterprise over which whole-time directors and their relatives have significant influence 201
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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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Corporate Overview Annual Report 20
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