Financial Outlook on Dr. Reddy’s Laboratories

International Finance Project On Financial outlook on Dr. Reddys Laboratories Ltd. Submitted to Prof. S. K. Gupta Submitted by Date 31 Dec. 2011 SOURAV KUMAR 2K10IB30 PGDM IB 2010-2012 ASIA PACIFIC INSTITUTE OF focussing 3 & 4, Institutional Area, Jasola, forward-looking Delhi 110025 INTRODUCTIONEstablished in 1984, Dr. Reddys Laboratories Ltd. (NYSE RDY) is an combine global pharmaceutical telephoner, committed to providing affordable and innovative medicines for healthier lives. by its deuce-ace channeles pharmaceutical ope deem and bustling Ingredients, international Generics and Proprietary Products Dr. Reddys offers a portfolio of harvest-homes and run including Active Pharmaceutical Ingredients (APIs), Custom Pharmaceutical operation (CPS), generics, biosimilars, differentiated formulations and News chemical substance Entities (NCEs). PURPOSE & VALUES Providing Affordable MedicinesOur international Generics business helps reduce drug bes for individuals and g everyplacenments by manner of speaking generic drugs to securities industry as early as possible, and making them available to as many patients as possible. We marketplace both generic small-molecule drugs and generic biopharmaceuticals. In markets with guidelines for approval, our Biologics business offers more than affordable and equally effective generic biopharmaceuticals or biosimilars. We supply pharmaceutical ingredients to other generic companies through the API arm of our PSAI business, which breaks to our finale of providing affordable edicine. We leave alone continue to promote affordability in significant ship canal and work to expand our product offering of generics, focusing on change magnitude access to products with significant barriers to entry. We provide continue to look for saucily opportunities to pick out generics to more patients, in collaboration with other companies. Developing Innovative Medicines dis observe the salient advances of che ckup science, there ar still many unmet medical needs. Our Proprietary Products businesses address some of these unmet medical needs, by developing and bringing to market parvenu drugs.Through innovation in science and technology, combine with a deep understanding of underlying disease pathways, we develop and alter brand-new formulations of approved products. We also develop new chemical entities with alter and well-characterised safety and efficacy profiles. We focus our research on the therapeutic argonas of pain, anti-bacterials and metabolous disorders. Our Custom Pharmaceutical work arm of our PSAI business helps innovator companies rule their proprietary medicines to patients faster, by providing a range of technology platforms and services. ABOUT THE crinkleThe healthc ar needs of people worldwide cannot be met by ane fellowship alone. Collectively however we can bring new drugs to the market in a fast and efficient manner and provide the building blocks of affo rdable medicines. Through our PSAI business, which comprises the Active Pharmaceutical Ingredients (API) and Custom Pharmaceutical Services (CPS) businesses, we offer IP advantaged, speedy product development and cost-effective manufacturing services to our customers generic companies and innovators. This allows us to help make good medicines available to more people around the world.The core strengths of our PSAI business be the state-of-the-art infrastructure, resources and skills we are able to offer to our customers Large and diverse product portfolio Eight FDA-inspected plants and three technology centimeers World class chemistry expertise Robust, large-scale manufacturing capabilities adroit Property (IP) driven product development for freedom to operate fare, unseamed supply chain management PARTNERSHIP PHILOSPHY At the core of individually successful federation is a great relationship based on devote and mutual respect. As we work towards fulfilling our core purpos e we sell your aspirations.We recognize and embrace the fact that our partners are a core contribution of this strategy. We understand that partnerships are successful when benefits accrue to both parties. They are create on a dish outd vision with well-defined and agreed-upon goals. We also notice that that the partners thinking and enlivens may not always be identical, but that we share the same goala successful product. Our shared partnership successes are at the very heart of our business. From our starting time meeting through product launch and beyond, we stand behind our belief in true partnership thereby combining our strengths and sharing our successes.Dr. Reddys firmly believes that the well(p) alliances can contribute significantly to the success of our partners as well as to our own strategy and sustainable harvest-festival. At Dr. Reddys we aim to foster a culture of building fair, effective, and mutually beneficialwinningcollaborations. The importance that we place on building winning collaborations is evidenced partly by the early and hearty involvement of senior management. In this way, we achieve quick decision-making and the allocation of demand resources to achieve success. G V Prasad Vice Chairman and CEO cobwebby and Simple process Clarity of thought, Speed of execution, Flexibility, creativity, and transparency are exact components of our dialogue and transaction process. As no two deals are the same, we work with potential partners to structure deals through customized approaches that allow both partners to leverage anomalous capabilities and assets in order to achieve common goals. A simple and silken process to progress our partnering discussions and a flat organizational structure facilitates fast decision making from initial screening to execution.As a ac companion that evaluates 100+ business development opportunities in any given course (many of which come to closure), we value the time and resources our potenti al partners commit to explore and tell apart any potential partnership. Dr. Reddys emphasizes a transparent and collaborative negotiation process and prompt decision making. We bring a re seatation for acting swiftly and being flexible. We will work with you to reach an agreement with which you will be comfortable and that will head us in the right direction toward shared success. Sustained relationship based on trust and mutual respectOur robust alliance management principles and practices allow successful execution of joint initiatives. Dr. Reddys is committed to ensuring that our partnerships succeed and flourish. quarterly Results Quarterly Results of Dr Reddys Laboratories- in Rs. Cr. - Sep 11Jun 11Mar 11Dec 10Sep 10 Sales Turnoer1,646. 981,696. 961,329. 161,389. 761,296. 88 other(a) Income13. 0555. 5429. 1137. 2152. 35 arrive Income1,660. 031,752. 501,358. 271,426. 971,349. 23 native Expenses1,390. 181,085. 201,113. 741,046. 631,022. 98 Operating improvement256. 80611. 76215. 42343. 13273. 0 bring in On Sale Of Assets- salary On Sale Of Investments- Gain/Loss On outside(prenominal) Exchange- VRS valuation circular- other oerlookional Income/Expenses- come up Extraordinary Income/Expenses- assess On Extraordinary Items- force out Extra Ordinary Income/Expenses- piggish clear269. 85667. 30244. 53380. 34326. 25 sake15. 7815. 244. 250. 540. 13 PBDT254. 07652. 06257. 78379. 80326. 12 dispraise73. 4068. 9365. 5063. 8961. 35 Depreciation On followup Of Assets- PBT180. 67583. 13192. 28315. 91264. 77 Tax42. 17129. 0826. 4153. 1444. 57Net Profit138. 50454. 05165. 87262. 77220. 20 Prior Years Income/Expenses- Depreciation for Previous Years Written Back/ Provided- Dividend- Dividend Tax- Dividend (%)- Earnings Per Share8. 1726. 799. 8015. 5313. 01 day go for Value- Equity84. 7684. 7484. 6384. 6184. 60 Reserves- Face Value5. 005. 005. 005. 005. 00 ___________________________________________ Balance Sheet of the confederacy (annually) - In Rs . Cr. DescriptionMar-11Mar-10Mar-09Mar-08 SOURCES OF FUNDS Share dandy84. 684. 484. 284. Share Warrants & Outstanding39. 333. 935. 532. 5 positive Reserves5896. 35796. 35139. 44695. 2 Shareholders Funds6020. 25914. 65259. 14811. 8 Secured Loans0. 70. 82. 63. 4 Unsecured Loans1444. 1562. 4637. 7458. 9 Total Debts1444. 8563. 2640. 3462. 3 Total Liabilities74656477. 85899. 45274. 1 APPLICATION OF FUNDS Gross Block30252425. 72157. 31750. 2 Less accumulated Depreciation13341110. 1946. 5762. 8 Less Impairment of Assets Net Block16911315. 61210. 8987. 4 Lease Adjustment A/c Capital Work in Progress570. 4745. 4411. 2246. 5 Pre-operative Expenses pending Assets in transit Investments24622555. 1703. 81930. 6 Current Assets, Loans & Advances Inventories1063. 2897. 4735. 1640. 9 Sundry Debtors1770. 51060. 51419. 7897. 7 Cash and Bank66. 2368384. 4536. 7 Other Current Assets1. 80. 62. 8 Loans and Advances2606. 42048. 718401250. 6 Total Current Assets5506. 34376. 44379. 83328. 7 Less Current Liabilities and Provisions Current Liabilities1440. 71447. 51050. 2680. 9 Provisions1223. 2992. 2665. 6451. 3 Total Current Liabilities2663. 92439. 71715. 81132. 2 Net Current Assets2842. 41936. 726642196. 5 Miscellaneous Expenses not written off Deferred Tax Assets / Liabilities-100. 8-75-90. 4-86. 9Total Assets74656477. 85899. 45274. 1 Contingent Liabilities2488. 22412. 21977. 93325. 8 Book Value353. 481087348. 382701310. 190024284. 143876 set Book Value353. 481087348. 382701310. 19284. 1439 Profit & Loss Statement of the company (annually) - in Rs. Cr. DescriptionMar-11Mar-10Mar-09Mar-08 No of Months12121212 INCOME Gross Sales5284. 74543. 84239. 83449. 7 Less Inter divisional transfers Less Sales Returns Less attain Duty97. 37480. 984. 5 Net Sales5187. 44469. 84158. 93365. 2 EXPENDITURE Increase/Decrease in Stock-79-117. 3-64. 1-93. Raw actual Consumed1396. 413461177. 61146. 1 Power & Fuel price144. 6104. 19077. 1 Employee Cost701. 2510413. 3368. 6 Other Manufacturing Exp enses1053. 9793. 3894698. 2 General and Administration Expenses288. 7195. 6228193. 9 Selling and statistical distribution Expenses477443. 8448. 7375. 4 Miscellaneous Expenses113. 991. 6121. 930 Less Expenses Capitalised Total Expenditure4096. 73367. 13309. 42795. 4 Operating Profit (Excl OI)1090. 71102. 7849. 5569. 8 Other Income219220. 5101. 1191. 1 Operating Profit1309. 71323. 2950. 6760. 9 Interest9. 91627. 414. 7 PBDT1299. 81307. 2923. 2746. 2 Depreciation247. 9222. 4193. 162 Profit Before Taxation & Exceptional Items1051. 91084. 8729. 5584. 2 Exceptional Income / Expenses Profit Before Tax1051. 91084. 8729. 5584. 2 Provision for Tax158. 5238. 7168. 6108. 9 Profit After Tax893. 4846. 1560. 9475. 3 Extra items Adjustments to rap music597. 2-24. 8-1. 5 Profit Balance B/F2554. 12039. 11657. 51305. 1 Appropriations4044. 72860. 42218. 41778. 9 Equity Dividend %22522512575 Earnings Per Share52. 801418450. 124407633. 307628. 258 familiarized EPS52. 801418450. 124407633. 307628. 258 F orex and External commercial borrowings - in Rs. Cr. DescriptionMar-11Mar-10Mar-09Mar-08 EXPORTS Total Inflow In unknown bullion3747. 73161. 43123. 32366. 8362 Exports FOB Value3671. 83013. 82892. 52259. 9061 Revenue in Forex75. 9147. 6230. 8106. 9301 Frieght & indemnification Technology transfer fees Service Fees31111. 1197. 959. 2134 Commision Earned2. 4 Dividend received Interest Earnings33. 635. 13236. 8753 Other Exports8. 91. 40. 910. 8414 Capital Inflow Other Deemed Exports IMPORTS Total Outflow In Foreign Currency1321. 31021. 41180. 91071. 0232 Imports CIF Value533. 7486. 4553. 8658. 4784 Raw Materials533. 7486. 4553. 8658. 4784 Traded GoodsStores & spares Other Imports Total Capital Outflow277. 3110. 7135. 577. 1814 Capital Goods277. 3110. 7135. 577. 1814 Other Capital Expenditures Repayments of Loans Investment In contrasted Currency Expenditure in Foreign Currency510. 3424. 3491. 6335. 3634 Travelling Expenses5. 16109. 385 Interest Expenditure7. 5 Legal Expenses113. 166. 652. 355. 1145 Royalty Technical Fees Commision nonrecreational Others384. 6351. 7429. 3270. 8639 Dividend Paid Deemed Imports Raw Materials consumed Material import in Amt456. 6334. 2357231. 2115 Material trade in %43303926. 37 Material Indigenous in Amt609. 8766. 3564. 2645. 144 Material Indigenous in %57706173. 63 Stores and spares consumed Spare Imported in Amt52. 433. 230. 121. 2313 Spares Imported in %1513811 Spare Indigenous in Amt300. 7220. 3326. 3180. 0892 Spares Indigenous in %85879289 Dr Reddys Laboratories in News Dr Reddys Laboratories Higher capacity, New products to pump up harvest-feast Kiran Kabtta Somvanshi, ET office staff Dec 26, 2011, 05. 20am IST Tags Sun Pharma Russia Germany generics Dr Reddys Laboratories, the abet-largest pharma company (by sales) in India, is at an inflexion point. Its robust performance in the US and Russia is driving its step-up.The second half of the fiscal is likely to be better for the company than the first one characteri sed by more product launches and development in market share. Its probably the right time for investors to consider this line of descent. BUSINESS The company is set-aside(p) in generics, bulk drugs & custom services and proprietary products. The genericsbusiness contributes oer 70% to its check revenues, which stood at $1. 7 gazillion in FY11. DRL has focussed on four key regions mating America, India, Russia/CIS and atomic number 63 with an objective to achieve particular mass in the base business.North America is the companys largest and strongest market, contributing onethird of the companys revenues. New product launches, limited competition products and improved market share has helped the company post a strong performance in the region. DRLs German business remains its sore point, pulling down the growth rates for the European region. The pricing pressure brought about by the tender-based business structure has waywardly affected its profitability. The Indian busine ss has been a laggard since the last some(prenominal) quarters, but the sequential improvement in its performance in the kinfolk quarter is encouraging.Its biosimilars portfolio has done very well and has logged a growth of 22% y-o-y, hinting at a better period in the coming months. The Russian business, though not a large contributor, has proved to be as yet another growth driver for the company. The OTC business, in particular, is doing well in the region. GROWTH DRIVERS DRL has targeted revenues of $3 one million million million and a RoCE of 25% in FY13. The company has a strong pipeline with 76 pending ANDAs (17 tentative approvals). It has 40 Para IV filings of which 11 have first to file opportunities.The company is focussing on scaling up manufacturing and having a high pleat of US generics in total global generics. In Germany, the company has undertaken cost control measures, and has commenced supplies to AOK tenders and launched new products outside the scope of tend ers. Its effect would be viewable from the current quarter. DRL has a tie-up with GSK to develop and market select products across emerging markets outside India. FINANCIALS While its gain have been erratic over the years, the companys revenues have grown at a CAGR of around 21% over the last decade. DRL has restructured operations at its German and Mexican units.It has capped uncivilised and expensive R by pulling out research in therapies like diabetes and cardiovascular. Instead, it is now channelising its R efforts towards development of limited competition products, biosimilars and new chemical entities in areas like pain management, anti-infectives and dermatology. CONCERNS Forging growth in its Indian business and profitability in its European operations is a major trouble for the company. Its future growth depends on the success of its efforts in these areas. The company has raised 1,077-crore debt in the current quarter to meet functional capital requirements and also to refinance old loans.This brings its total debt to over 4,200 crore. VALUATIONS The companys stock is trading at 23 times its consolidated annual earnings. These valuations are lower than its better-performing peers like Sun Pharma and Cipla. Pharma cos with capacious FCCBs may not get hit as their export earnings remaining high Sanjay Pingle, Mumbai Monday, December 19, 2011, 0800 Hrs IST Steady depreciation of rupee against US Dollar and Euro may not have any major wedge on Indian pharmaceutical industry despite many pharma companies have huge exposure to foreign currency loans and bonds.To a great extend, such adverse rates will be offset by the sizable export earnings of Indian pharma companies. Continuous depreciation of Indian Rupee against US Dollar and Euro is a great concern for Indian manufacturers having Foreign Currency Loans (FCLs) and Foreign Currency Convertible Bonds (FCCBs). nevertheless the exports of these companies are likely to shoot up in 2011-12 with dep reciation of rupee in terms of foreign currencies. Indian pharma companies have record export earnings of more than 50 per cent of their revenues to US and Europe during 2010-11 and with depreciation of Rupee export earnings are likely to go up significantly.This will reduce the adverse effect on butt line likely with the current unfavorable foreign exchange rates. disbelief in Euro region and recessionary conditions worldwide is making Dollar more firm against several currencies. At present, the exchange rate of Indian Rupee against dollar is moving near to Rs. 55 and that of Euro is moving over Rs. 71 as against Rs. 45. 87 per Dollar and Rs. 61. 13 per Euro year ago. The Dollar apprehended nearly by 20 per cent and Euro by almost 17 per cent within one year making FCL and Foreign Currency Convertible Bonds (FCCBs) payments costlier for Indian companies.The pharma industry has already incurred huge foreign currency loss during the first half of 2011-12 and these are likely to in crease in the remaining part of the FY12 with adverse exchange fluctuations. Though the Indian pharmaceutical companies have created strong networth position in the past, the volatile and adverse change in foreign exchange rates may put pressure on bottom line. The borrowings of Pharmabiz sample of leading 35 companies shows that the total borrowings, including secured and non-secured loan went up by 18. 3 per cent to Rs. 37,709 crore during 2010-11 from Rs. 1,899 crore in the precedent year. The secured loans, including foreign currency loans and FCCBs, of 35 companies increase by 19. 8 per cent to Rs. 21,899 crore from Rs. 18,278 crore. As against these borrowings, the net worth, equity capital plus reserves & surplus, of these companies stood at Rs. 68,201 crore as compared toRs. 48,811 crore in the preceding(prenominal) year, representing a strong growth of 39. 7 per cent in 2010-11. Out of 35 companies, 23 companies availed FCL or issued FCCBs and the join measurement work ed out to Rs. 9,560 crore in 2010-11 as compared to Rs. 10,765 crore.Thus, FCL and FCCBs comprised of 25 per cent in 2010-11 of aggregate borrowings as compared to 34 per cent in the last year. The reducing is in general due to redemption of FCCBs by few companies and repayment of pricey FCLs. The aggregate amount of FCCBs issued by these companies reduced by 12 per cent to Rs. 5,382 crore from Rs. 6,118 crore and foreign currency loans by 10. 1 per cent to Rs. 4,178 crore from Rs. 4,647 crore. Ranbaxy Laboratories has large FCCBs aggregating to US$ 440 million as at the end of December 2010. The company has shown Rs. 1,967 crore as unsecured loan for FCCBs as compared to Rs. ,048 crore in the previous(prenominal) year. Orchid Chemicals and Pharmaceuticals has outstanding FCCBs of Rs. 523. 58 crore as against Rs. 607. 74 crore in the 2009-10. Jubilant Lifesciences has reduced its FCCBs amount to Rs. 633. 70 crore from Rs. 861 crore in the previous year. hike up, Strides Arcolab has reduced its FCCBs loan to Rs. 457. 28 crore from Rs. 634. 15 crore and Aurobindo Pharma toRs. 620. 76 crore from Rs. 767. 71 crore. Wockhardts FCCB liabilities increased slightly to Rs. 458. 82 crore from Rs. 446. 40 crore and that of Plethico Pharmas to Rs. 425. 12 crore from Rs. 411. 91 crore.The foreign currency loans (FCLs) of Jubilant Lifesciences went up to Rs. 1755. 71 crore from Rs. 1580. 48 crore and that of Cadilas to Rs. 737. 70 crore from Rs. 722. 80 crore. Biocon has successfully reduced its FCLs to Rs. 189. 94 crore from Rs. 220. 72 crore. Dr Reddys Laboratories has repaid its FCLs ofRs. 889. 90 crore during 2010-11 through three new short-term borrowings. However, FCL of Lupin went up sharply to Rs 306. 54 crore from Rs. 181. 99 crore in the previous year. Further, FCL of Orchid Chemical went up to Rs. 325. 22 crore from Rs. 250. 02 crore and that of Panacea Biotec to Rs. 359. 4 crore from Rs. 293. 74 crore. Ipca Laboratories FCLs also jumped to Rs. 183. 15 crore from Rs. 125. 52 crore. The sample of Pharmabiz 35 companies have managed to reduce their liabilities in respect of FCCBs and FCLs during 2010-11 and likely to reduce risk of depreciation of Rupee against Dollar and Euro. Further rise in interest rates by RBI will also put additional burden on the sector in 2011-12. However, higher exports may assist to reduce adverse impact on working. Dr. Reddys Q2 FY12 Financial Results Q2 FY12 Revenues at ? 22. 7 jillion ($462 million), YoY growth of 21% Q2 FY12 adjust* EBITDA at ? 5. billion ($104 million), YoY growth of 20% Q2 FY12 familiarised** water faucet at ? 3. 1 billion ($63 million), YoY growth of 8% Hyderabad, India, October 25, 2011 Dr. Reddys Laboratories Ltd. (NYSE RDY) right away announced its unaudited consolidated financial results for the quarter ended kinsfolk 30, 2011 under International Financial Reporting Standards (IFRS). Key Highlights Consolidated revenues are at ? 22. 7 billion ($462 million) in Q2 FY12 versus ? 18. 7 billion ($381 million) in Q2 FY11, year-on-year growth of 21%. Consolidated revenues for H1 FY12 is at ? 42. 5 billion ($866 million). oRevenues from Global Generics for Q2 FY12 are at ? 6. 1 billion ($329 million). Year-on-year growth of 18% mainly driven by North America and Russia. oRevenues from PSAI are at ? 5. 9 billion ($121 million) in Q2 FY12, growth of 28% over previous year. Adjusted* EBITDA of ? 5. 1 billion ($104 million) in Q2 FY12, is at 23% of revenues recording year-on-year growth of 20%. Consolidated adjusted EBITDA for H1 FY12 is at ? 9. 4 billion ($193 million). Adjusted** Profit after Tax for Q2 FY12 is at ? 3. 1 billion ($63 million), is at 14% of revenues with year-on-year growth of 8%. Consolidated adjusted PAT for H1 FY12 is at ? 5. 6 billion ($115 million). During the quarter, the company launched 28 new generic products, filed 17 new product registrations and filed 11 DMFs globally. Dr. Reddys today announced the final approval of its olanzapine 20 m g tablets, the generic version of Eli Lillys Zyprexafrom the USFDA. *Note Adjustments include benefit from a part reversion of provision booked in Q1 for Voluntary retreat Scheme (VRS) floated by the company. **Note Adjustments include a) interest on bonus debentures and b) benefit from a part reversal of provision booked in Q1 on account of Voluntary Retirement Scheme (VRS) floated by the company. each figures in millions, except EPSAll dollar figures based on convenience translation rate of 1USD = ? 49. 05 Dr. Reddys Laboratories Limited and Subsidiaries Unaudited Consolidated Income Statement popicularsQ2 FY12Q2 FY11Growth % ($)(? )%($)(? )(%) Revenue46222,67910038118,70410021 Cost of revenues21410,473461788,7184720 Gross profit24912,206542049,9865322 Operating Expenses Selling, general & administrative expenses1477,216321165,7093126 Research and development expenses301,4596261,270715 Other operating (income) / expense(4)(215)(1)(4)(218)(1)(2) Results from operating activitie s763,74517663,2251716 Net finance (income) / expense1500135042Share of (profit) / loss of equity accounted investees(0)(13)(0)(0)(3)(0)- Profit / (loss) before income value763,70916653,1941716 Income tax (benefit) / expense1363137327293 Profit / (loss) for the period633,07814582,867157 Diluted EPS0. 418. 1 0. 316. 9 Profit Reconciliation Adjusted EBITDA ReconciliationQ2 FY12Q2 FY11 ($)(? )($)(? ) PBT763,709653,194 Interest522506 Depreciation1887915731 Amortization83896317 EBITDA1065,203874,248 Adjustments Part reversal of provision booked in Q1 for Voluntary Retirement Scheme(2)(94) Adjusted EBITDA1045,109874,248 Adjusted PAT ReconciliationQ2 FY12Q2 FY11 ($)(? ($)(? ) PAT633,078582,867 Adjustments Interest on Bonus Debentures2118 Part reversal of provision booked in Q1 for Voluntary Retirement Scheme(2)(94) Tax normalizing adjustment(0)(4) Adjusted PAT633,099582,867 Segmental Analysis Global Generics Revenues from Global Generics segment are at ? 16. 1 billion ($329 million) in Q2 FY12 registering growth of 18% over previous year. Revenues from North America at ? 6. 3 billion in Q2 FY12 versus ? 4. 4 billion in Q2 FY11. Growth in USD terms of 45% was led by new product launches in the last cardinal months and market share improvement in key products. 5 new products launched during the quarter, including limited competition products such as fondaparinux and fexofenadine pseudoephedrine D24 OTC. o24 products of our prescription portfolio feature among the altitude 3 rank in market share (Source IMS Sales Volumes July 2011). oDuring the quarter, 4 ANDAs were filed. The cumulative ANDA filings as of 30th family, 2011 are 177. A total of 76 ANDAs are pending for approval with the USFDA of which 40 are Para IVs and 11 are FTFs. Revenues in Russia & Other CIS markets at ? 3. 4 billion in Q2 FY12 versus ? 2. 8 billion in Q2 FY11, year-on-year growth of 23%. Revenues in Russia at ? 2. 9 billion in Q2 FY12 versus ? 2. 3 billion in Q2 FY11, year-on-year growth in USD terms of 30%, largely driven by tidy sum growth in key brands. ?OTC portfolio growth of 33% over previous year OTC sales at 25% of boilers suit Russia sales. ?Dr. Reddys year-on-year secondary prescription sales growth at 20% versus industrys growth of 10%. (Source Pharmexpert August 2011). Dr. Reddys is graded 12th in market share. oRevenues in Other CIS markets remained flat at ? 477 million in Q2 FY12. Revenues in India increased by 9% to ? 3. 5 billion in Q2 FY12 versus ? . 2 billion in Q2 FY11. o3 new products launched during the quarter. oBiosimilar portfolio growth of 22% over previous year represents 6% to sales. Revenues from Europe at ? 2. 1 billion in Q2 FY12, declined by 10% over previous year. oRevenues from Germany declined by 27% to ? 1. 2 billion in Q2 FY12 due to continue impact of tenders. oRevenues from Rest of Europe grew by 26% to ? 933 million in Q2 FY12 driven by new launches in UK and growth in out-licensing business. Pharmaceutical Services and Active I ngredients (PSAI) Revenues from PSAI are at ? 5. billion in Q2 FY 12 versus ? 4. 6 billion in Q2 FY11, year-on-year increase of 28%. oGrowth in Active Ingredients business led by new product launches in Europe. oPharmaceutical Services business grew on account of improved customer order book status. oDuring the quarter, 11 DMFs were filed globally, with 2 in US, 2 in Europe, 1 in Canada and 6 in rest of the markets. The cumulative DMF filings as of 30th September 2011 are 506. Income Statement Highlights Gross profit at ? 12. 2 billion ($249 million) in Q2 FY12, margin of 54% to revenues, marginal increase over previous year. Selling, General & Administration (SG&A) expenses including amortization at ? 7. 2 billion ($147 million) increased by 26% over Q2 FY11. This increase is on account of a) higher freight cost both on account of increase in sales volumes as well as rate increases, b) inflation and year-on-year increments cerebrate increase in manpower costs across businesses, c) incremental costs at Bristol and Shreveport manufacturing facilities in the US and d) the increase in the OTC-related selling and trade costs in Russia and other CIS markets as compared to previous year. R&D expenses at ? 1. 5 billion ($30 million) in Q2 FY12, increase of 15% over Q2 FY11. Net Finance costs are at ? 50 million ($1 million) in Q2 FY 12 versus ? 35 million ($0. 7 million) in Q2 FY11 The change is on account of oNet forex gain of ? 151 million ($3 million) versus net forex loss of ? 49 million ($1 million) in Q2 FY11. oNet interest expense of ? 225 million ($5 million) in Q2 FY12 versus ? 5 million ($0. 1 million) in Q2 FY11. oProfit on sale of investments of ? 25 million ($0. 5 million) in Q2 FY12 versus ? 19 million ($0. 4 million) in Q2 FY11. Adjusted EBITDA of ? 5. 1 billion ($104 million) in Q2 FY12, is at 23% of revenues with year-on-year growth of 20%. Adjusted Profit after Tax for Q2 FY12 is at ? 3. 1 billion ($63 million), is at 14% of revenues with year-on -year growth of 8%. Adjusted EPS for Q2 FY 12 is at ? 18. 2 ($0. 4) versus ? 16. 9 ($0. 3) in Q2 FY11. Capital expenditure for H1 FY12 is at ? 3. 6 billion ($73 million). accessory 1 Q2 FY12 Key Balance Sheet Items (In millions) ParticularsAs on 30th Sep 11As on 30th Jun 11 $)(? )($)(? ) Cash and immediate payment equivalents1557,5961115,468 Trade receivables41920,56834917,136 Inventories37918,59235517,401 Property, plant and equipment64131,45062230,524 Goodwill and other intangible assets30815,11530414,921 Loans and borrowings (current & non-current)63831,30348823,940 Trade payables1828,9401728,433 Equity98048,08199748,902 vermiform appendix 2 Q2 FY12 Revenue mess up by Segment (In millions) Q2 FY12Q2 FY 11Growth % ($)(? )as a %($)(? )as a %Global Generics32916,1367127913,6677318 North America 6,28739 4,4163242 Europe 2,11713 2,36617(10) India 3,45921 3,160239 Russia & Other CIS 3,38021 2,7512023 RoW 8936 9747(8) PSAI1215,93326944,6172528 North America 1,06818 8141831 Europe 2, 30339 1,5513448 India 75213 6531415 RoW 1,81031 1,5993513 Others1261039420245 Total46222,67810038118,70410021 Appendix 3 Q2 FY12 Revenue Mix by Geography (In millions) Q2 FY12Q2FY 11Growth % ($)(? )as a %($)(? )as a % North America1597,777341115,4642942 Europe924,53620844,1022211 India864,21019783,8132010Russia & Other CIS693,38015562,7511523 Others572,77512522,573148 Total46222,67810018,70418,10021 Appendix 4 H1 FY12 Consolidated Income Statement All figures in millions, except EPS All dollar figures based on convenience translation rate of 1USD = ? 49. 05 ParticularsH1 FY12H1 FY11Growth % ($)(? )%($)(? )(%) Revenue86642,46210072435,53510019 Cost of revenues40219,7014633916,6354718 Gross profit46422,7615438518,9005320 Operating ExpensesSelling, general & administrative expenses28513,9723322811,1913125 Research and development expenses542,6566462,263617 Other operating (income) / expense(8)(401)(1)(8)(404)(1)(1) Results from operating activities1336,533151195,8501612 Net finance (i ncome) / expense296042121(55) Share of (profit) / loss of equity accounted investees(0)(17)(0)(0)(8)(0)113 Profit / (loss) before income tax1326,455151155,6471614 Income tax (benefit) / expense15751214684210 Profit / (loss) for the period1165,704131014,9631415 Diluted EPS0. 733. 6 0. 629. 2Appendix 5 H1 FY12 Profit Reconciliation (In millions) Adjusted EBITDA ReconciliationH1 FY12H1 FY11 ($)(? )($)(? ) PBT1326,4551155,647 Interest9446(0)(3) Depreciation351,708291,416 Amortization1679412605 Reported EBITDA1929,4041567,665 Adjustments One-time shift of Voluntary Retirement Scheme142 Adjusted EBITDA1939,4451567,665 Adjusted PAT ReconciliationH1 FY12H1 FY11 ($)(? )($)(? ) Reported PAT1165,7041014,963 Adjustments Interest on Bonus Debentures5236 One-time charge of Voluntary Retirement Scheme142 Tax normalizing adjustment(7)(364) Adjusted PAT1155,6181014,963