##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 For the transition period from  to
 Commission File Number: 1-15182
 DR. REDDYS LABORATORIES LIMITED
  Not Applicable
    
    ANDHRA PRADESH, INDIA(Translation of Registrants name
    
    (Jurisdiction of incorporation orinto English)
    
    organization)
 8-2-337, Road No. 3, Banjara Hills
Hyderabad, Andhra Pradesh 500 034, India
+91-40-49002900
 Chief Financial Officer,
  Title of Each Class
    
    Name of Each Exchange on which RegisteredAmerican depositary shares, each 
representing one equity share
    
    New York Stock ExchangeEquity Shares*
 *
    
    Not for trading, but only in connection with the registration of American depositary shares,
pursuant to the requirements of the Securities and Exchange Commission.    169,252,732 Equity Shares
  þ o
  o þ
   þ o
  o þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  U.S. GAAP o
    
    International Financial Reporting Standards as issued þ
    
    Other oby the International Accounting Standards Board
  o o
  o þ




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Currency of Presentation and Certain Defined Terms
 
  
   Forward-Looking and Cautionary Statement
   2




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TABLE OF CONTENTS
 PART IITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
    
    
    4ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
    
    
    4ITEM 3. KEY INFORMATION
    
    
    4ITEM 4. INFORMATION ON THE COMPANY
    
    
    23ITEM 4A. UNRESOLVED STAFF COMMENTS
    
    
    56ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    
    
    56ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
    
    
    93ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
    
    
    109ITEM 8. FINANCIAL INFORMATION
    
    
    112ITEM 9. THE OFFER AND LISTING
    
    
    120ITEM 10. ADDITIONAL INFORMATION
    
    
    121ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    132ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
    
    
    133PART IIITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
    
    
    136ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
    
    
    136ITEM 15. CONTROLS AND PROCEDURES
    
    
    137ITEM 16. [RESERVED]
    
    
    140ITEM 16.A. AUDIT COMMITTEE FINANCIAL EXPERT
    
    
    140ITEM 16.B. CODE OF ETHICS
    
    
    140ITEM 16.C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    140ITEM 16.D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
    
    
    141ITEM 16.E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
    
    
    141ITEM 16.F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
    
    
    141ITEM 16.G. CORPORATE GOVERNANCE
    
    
    141PART IIIITEM 17. FINANCIAL STATEMENTS
    
    
    144ITEM 18. FINANCIAL STATEMENTS
    
    
    144ITEM 19. EXHIBITS
    
    
    145SIGNATURES
    
    
    146Exhibit 1.5Exhibit 2.2Exhibit 2.3Exhibit 2.4Exhibit 2.5Exhibit 8Exhibit 23.1Exhibit 99.1Exhibit 99.2Exhibit 99.3Exhibit 99.4
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PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 3.A. Selected financial data
   Income Statement Data
 For the Year Ended March 31,2011
    
    
    2011
    
    
    2010
    
    
    2009
    
    
    2008((IMAGE) in millions, U.S.$ in millions except share and per share data)Conveniencetranslation intoU.S.$Revenues
    
    U.S.$
    1,677
    
    
    (IMAGE)
    74,693
    
    
    (IMAGE)
    70,277
    
    
    (IMAGE)
    69,441
    
    
    (IMAGE)
    50,006Cost of revenues
    
    
    773
    
    
    
    34,430
    
    
    
    33,937
    
    
    
    32,941
    
    
    
    24,598Gross profit
    
    U.S.$
    904
    
    
    (IMAGE)
    40,263
    
    
    
    36,340
    
    
    
    36,500
    
    
    
    25,408Selling, general and administrative
expenses
    
    
    532
    
    
    
    23,689
    
    
    
    22,505
    
    
    
    21,020
    
    
    
    16,835Research and development expenses
    
    
    114
    
    
    
    5,060
    
    
    
    3,793
    
    
    
    4,037
    
    
    
    3,533Impairment loss on other intangible assets
    
    
    
    
    
    
    
    
    
    
    3,456
    
    
    
    3,167
    
    
    
    3,011Impairment loss on goodwill
    
    
    
    
    
    
    
    
    
    
    5,147
    
    
    
    10,856
    
    
    
    90Other (income)/expense, net
    
    
    (25
    )
    
    
    (1,115
    )
    
    
    (569
    )
    
    
    254
    
    
    
    (402
    )Results from operating activities
    
    U.S.$
    284
    
    
    (IMAGE)
    12,629
    
    
    
    2,008
    
    
    
    (2,834
    )
    
    
    2,341Finance (expense)/income, net
    
    
    (4
    )
    
    
    (189
    )
    
    
    (3
    )
    
    
    (1,186
    )
    
    
    521Share of profit of equity accounted
investees, net of income tax
    
    
    
    
    
    
    3
    
    
    
    48
    
    
    
    24
    
    
    
    2Profit/(loss) before income tax
    
    
    279
    
    
    
    12,443
    
    
    
    2,053
    
    
    
    (3,996
    )
    
    
    2,864Income tax (expense)/benefit
    
    
    (31
    )
    
    
    (1,403
    )
    
    
    (985
    )
    
    
    (1,172
    )
    
    
    972
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For the Year Ended March 31,2011
    
    
    2011
    
    
    2010
    
    
    2009
    
    
    2008((IMAGE) in millions, U.S.$ in millions except share and per share data)Conveniencetranslation intoU.S.$Profit/(loss) for the year
    
    U.S.$
    248
    
    
    (IMAGE)
    11,040
    
    
    (IMAGE)
    1,068
    
    
    (IMAGE)
    (5,168
    )
    
    (IMAGE)
    3,836Earnings/(loss) per shareBasic
    
    U.S.$
    1.47
    
    
    (IMAGE)
    65.28
    
    
    (IMAGE)
    6.33
    
    
    (IMAGE)
    (30.69
    )
    
    (IMAGE)
    22.88Diluted
    
    U.S.$
    1.46
    
    
    (IMAGE)
    64.95
    
    
    (IMAGE)
    6.30
    
    
    (IMAGE)
    (30.69
    )
    
    (IMAGE)
    22.80Weighted average number of equity shares
used in computing earnings/(loss) per
equity share*Basic
    
    
    
    
    
    
    169,128,649
    
    
    
    168,706,977
    
    
    
    168,349,139
    
    
    
    168,075,840Diluted
    
    
    
    
    
    
    169,965,282
    
    
    
    169,615,943
    
    
    
    168,349,139
    
    
    
    168,690,774Cash dividend per equity share ((IMAGE))**
    
    
    
    
    
    
    11.25
    
    
    
    6.25
    
    
    
    3.75
    
    
    
    3.75
 
 *
    
    Each ADR represents one equity share.**
    
    Excludes corporate dividend tax Statement of Financial Position Data
 As of March 31,2011
    
    
    2011
    
    
    2010((IMAGE) in millions, U.S.$ in millions)Convenience translationinto U.S.$Cash and cash equivalents
    
    U.S.$
    129
    
    
    (IMAGE)
    5,729
    
    
    (IMAGE)
    6,584Total assets
    
    
    2,133
    
    
    
    95,005
    
    
    
    80,330Total long term debt, excluding current portion
    
    
    118
    
    
    
    5,271
    
    
    
    5,385Total equity
    
    U.S.$
    1,033
    
    
    (IMAGE)
    45,990
    
    
    (IMAGE)
    42,915
 Convenience translation
 
 Exchange Rates
  Year EndedMarch 31,
    
    Period End
    
    
    Average
    
    
    High
    
    
    Low2008
    
    
    40.02
    
    
    
    40.00
    
    
    
    43.05
    
    
    
    38.482009
    
    
    50.87
    
    
    
    46.32
    
    
    
    51.96
    
    
    
    39.732010
    
    
    44.95
    
    
    
    47.36
    
    
    
    50.48
    
    
    
    44.942011
    
    
    44.54
    
    
    
    45.49
    
    
    
    47.49
    
    
    
    43.90
  Month
    
    High
    
    
    LowOctober 2010
    
    
    44.55
    
    
    
    44.05November 2010
    
    
    45.83
    
    
    
    43.90December 2010
    
    
    45.54
    
    
    
    44.70January 2011
    
    
    45.92
    
    
    
    44.59February 2011
    
    
    45.66
    
    
    
    45.06March 2011
    
    
    45.24
    
    
    
    44.54
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3.B. Capitalization and indebtedness
  3.C. Reasons for the offer and use of proceeds
  3.D. Risk factors
  RISKS RELATING TO OUR COMPANY AND OUR BUSINESS
 Failure of our research and development efforts may restrict introduction of new products, which is
critical to our business.
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If we fail to comply fully with government regulations or to maintain continuing regulatory
oversight applicable to our research and development activities or regarding the manufacture of our
products, it may delay or prevent us from developing or manufacturing our products.
   
   There has been a trend of increased regulatory review of over-the-counter products for safety and
efficacy questions, which could potentially affect our over-the-counter products business.
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Risks from operations in certain countries susceptible to political or economic instability.
     If we are sued by consumers for defects in our products, it could harm our reputation and thus our
profits.
    8




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If we cannot respond adequately to the increased competition we expect to face in the future, we
will lose market share and our profits will go down.
     If we cannot maintain our position in the Indian pharmaceutical industry in the future, we may not
be able to attract co-development, outsourcing or licensing partners and may lose market share.
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Reforms in the health care industry and the uncertainty associated with pharmaceutical pricing,
reimbursement and related matters could adversely affect the marketing, pricing and demand for our
products.
   
    
    The PPACA imposes on pharmaceutical manufacturers a variety of additional rebates,
discounts and fees. Among other things, the PPACA includes annual, non-deductible fees for
entities that manufacture or import certain prescription drugs and biologics. The first
year for which the fee will apply is calendar year 2011, and the fee will first due by
September 30 of the following calendar year (i.e., 2012). This fee will be calculated based
upon each organizations percentage share of total branded prescription drug and biologics
sales to U.S. government programs (such as Medicare, Medicaid and Veterans Affairs and
Public Health Service discount programs), and authorized generic products would generally be
treated as branded products. In addition, the PPACA changed the computations used to
determine Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program by
redefining the average manufacturers price (AMP), effective October 1, 2010, and by using
23.1% instead of 15% of AMP for most branded drugs and 13% instead of 11% of AMP for generic
drugs, effective January 1, 2010. The PPACA also increased the number of healthcare
entities eligible for discounts under the Public Health Service pharmaceutical pricing
program.
 
    
    The PPACA has pro-generic provisions that could increase competition in the generic
pharmaceutical industry and therefore adversely impact our selling prices or costs and
reduce our profit margins. Among other things, the PPACA creates an abbreviated pathway to
U.S. FDA approval of biosimilar biological products and allows the first interchangeable
bio-similar biological product 18 months of exclusivity, which could increase competition
for our bio-generics business. Conversely, the PPACA has some anti-generic provisions that
could adversely affect our bio-generics business, including provisions granting the
innovator of a biological drug product 12 years of exclusive use before generic drugs can be
approved based on being biosimilar.
 
    
    The PPACA makes several important changes to the federal anti-kickback statute, false
claims laws, and health care fraud statutes  that may make it easier for the government or
whistleblowers to pursue such fraud and abuse violations. In addition, the PPACA increases
penalties for fraud and abuse violations. If our past, present or future operations are
found to be in violation of any of the laws described above or other similar governmental
regulations to which we are subject, we may be subject to the applicable penalty associated
with the violation which could adversely affect our ability to operate our business and our
financial results.
 
    
    To further facilitate the governments efforts to coordinate and develop comparative
clinical effectiveness research, the PPACA establishes a new Patient-Centered Outcomes
Research Institute to oversee and identify priorities in such research. The manner in which
the comparative research results would be used by third-party payors is uncertain.
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If a regulatory agency amends or withdraws existing approvals to market our products, this may
cause our revenues to decline.
  If we are unable to patent new products and processes or to protect our intellectual property
rights or proprietary information, or if we infringe on the patents of others, our business may be
materially and adversely impacted.
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Changes in the regulatory environment may prevent us from utilizing the exclusivity periods that
are important to the success of our generic products.
    If pharmaceutical companies are successful in limiting the use of generics through their
legislative, regulatory and other efforts, our sales of generic products may suffer.
  
    
    pursuing new patents for existing products which may be granted just before the
expiration of earlier patents, which could extend patent protection for additional years or
otherwise delay the launch of generics;
 
    
    selling the brand product as an authorized generic, either by the brand company
directly, through an affiliate or by a marketing partner;
 
    
    using the Citizen Petition process to request amendments to U.S. FDA standards or
otherwise delay generic drug approvals;
 
    
    seeking changes to U.S. Pharmacopeia, an organization which publishes industry
recognized compendia of drug standards;
 
    
    attaching patent extension amendments to non-related federal legislation;
 
    
    engaging in state-by-state initiatives to enact legislation that restricts the
substitution of some generic drugs, which could have an impact on products that we are
developing; and
 
    
    seeking patents on methods of manufacturing certain active pharmaceutical ingredients.
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If competitors are successful in limiting competition for certain authorized generic products
through their legislative, regulatory and litigation efforts, our sales of certain generic products
may suffer.
  If we are unable to defend ourselves in patent challenges, we could be subject to injunctions
preventing us from selling our products, resulting in a decrease in revenues, or we could be
subject to substantial liabilities that would lower our profits.
   If we elect to sell a generic product prior to the final resolution of outstanding patent
litigation, we could be subject to liabilities for damages.
  ®  ®
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If we do not maintain and increase our arrangements for overseas distribution of our products, our
revenues and net income could decrease.
  If we fail to comply with environmental and climate change laws and regulations, or face
environmental litigation, our costs may increase or our revenues may decrease.
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Our equity shares and our ADSs may be subject to market price volatility, and the market price of
our equity shares and ADSs may decline disproportionately in response to adverse developments that
are unrelated to our operating performance.
  
    
    general market conditions,
    
    speculative trading in our shares and ADSs, and
    
    developments relating to our peer companies in the pharmaceutical industry.
 If the world economy is affected due to terrorism, wars or epidemics, it may adversely affect our
business and results of operations.
   If we have difficulty in identifying acquisition candidates or consummating acquisitions, our
competitiveness and our growth prospects may be harmed.
  If we acquire other companies, our business may be harmed by difficulties in integration and
employee retention, unidentified liabilities of the acquired companies, or obligations incurred in
connection with acquisition financings.
  
    
    We may fail to successfully integrate our acquisitions in accordance with our business
strategy.
 
    
    The initial rationale for the acquisition may not remain viable due to a variety of
factors, including unforeseen regulatory changes and market dynamics after the acquisition,
and this may result in a significant delay and/or reduction in the profitability of the
acquisition.
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
    
    Integration of acquisitions may divert managements attention away from our primary
product offerings, resulting in the loss of key customers and/or personnel, and may expose
us to unanticipated liabilities.
 
    
    We may not be able to retain the skilled employees and experienced management that may be
necessary to operate the businesses we acquire. If we cannot retain such personnel, we may
not be able to locate or hire new skilled employees and experienced management to replace
them.
 
    
    We may purchase a company that has contingent liabilities that include, among others,
known or unknown patent or product liability claims.
 
    
    Our acquisition strategy may require us to obtain additional debt or equity financing,
resulting in additional leverage, or increased debt obligations as compared to equity, and
dilution of ownership.
 
    
    We may purchase companies located in jurisdictions where we do not have operations and as
a result we may not be able to anticipate local regulations and the impact such regulations
have on our business.
  Our principal shareholders have significant control over us and, if they take actions that are not
in the best interests of our minority shareholders, the value of their investment in our ADSs may
be harmed.
  If we improperly handle any of the dangerous materials used in our business and accidents result,
we could face significant liabilities that would lower our profits.
  If there is delay and/or failure in supplies of materials, services and finished goods from third
parties or failure of finished goods from our key manufacturing sites, it may adversely affect our
business and results of operations.
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If, as we expand into new international markets, we fail to adequately understand and comply with
the local laws and customs, these operations may incur losses or otherwise adversely affect our
business and results of operations.
  Fluctuations in exchange rates and interest rate movements may adversely affect our business and
results of operations.
   Our success depends on our ability to retain and attract key qualified personnel and, if we are not
able to retain them or recruit additional qualified personnel, we may be unable to successfully
develop our business.
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We operate in a highly competitive and rapidly consolidating industry .
  We have grown at a very rapid pace. Our inability to properly manage or support this growth may
have a material adverse effect on our business.
  Fluctuations in our quarterly revenues, operating results and cash flows may adversely affect the
trading price of our shares and ADSs.
  
    
    changes in demand for our products;
 
    
    the impact of seasons (weather severity, length and timing) on the price and availability
of raw materials which we depend on;
 
    
    the timing of regulatory approvals and of launches of new products by us and our
competitors, particularly where we obtain the 180-day period of market exclusivity in the
United States provided under the Hatch-Waxman Act of 1984;
 
    
    changes in our pricing policies or those of our competitors;
 
    
    the magnitude and timing of our research and development investments;
 
    
    changes in the level of inventories maintained by our customers;
 
    
    the geographical mix of our sales and currency exchange rate fluctuations;
 
    
    adverse market events leading to impairment of any of our assets; and
 
    
    timing of our retailers promotional programs.
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Significant disruptions of information technology systems could adversely affect our business.
   Increasing use of social media could give rise to liability or breaches of data security.
  A relatively small group of products may represent a significant portion of our net revenues, gross
profit or net earnings from time to time.
  If our intercompany arrangements are challenged and determined to be inappropriate, our tax
liabilities could increase.
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We enter into various agreements in the normal course of business which periodically incorporate
provisions whereby we indemnify the other party to the agreement.
  Current economic conditions may adversely affect our industry, financial position and results of
operations.
   We are subject to the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery
laws, which impose restrictions and may carry substantial penalties.
   Certain natural disasters, such as drought, floods, earthquakes or volcanic eruptions, could
adversely affect our production operations or result in disruptions in distribution channels or
supply chains, and cause our revenues to decline.
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RISKS RELATING TO INVESTMENTS IN INDIAN COMPANIES
  A slowdown in economic growth in India may adversely affect our business and results of operations.
  If communal disturbances or riots erupt in India, or if regional hostilities increase, this would
adversely affect the Indian economy, which our business depends upon.
    If wage costs or inflation rise in India, it may adversely affect our competitive advantages over
higher cost countries and our profits may decline.
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Stringent labor laws may adversely affect our ability to have flexible human resource policies;
labor union problems could negatively affect our production capacity and overall profitability.
  Indian law imposes certain restrictions that limit a holders ability to transfer the equity shares
obtained upon conversion of ADSs and repatriate the proceeds of such transfer, which may cause our
ADSs to trade at a premium or discount to the market price of our equity shares.
  There are limits and conditions to the deposit of shares into the ADS facility.
  There may be less company information available in Indian securities markets than securities
markets in developed countries.
  Indian stock exchange closures, broker defaults, settlement delays, and Indian Government
regulations on stock market operations could affect the market price and liquidity of our equity
shares.
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Financial instability in other countries, particularly emerging market countries in Asia, could
affect our business and the price and liquidity of our shares and our ADSs.
  If U.S. investors in our ADSs are unable to exercise preemptive rights available to our non-U.S.
shareholders due to the registration requirements of U.S. securities laws, the investment of such
U.S. investors in our ADSs may be diluted.
  If there is a change in tax regulations, it may increase our tax liabilities and thus adversely
affect our financial results.
  We operate in jurisdictions that impose transfer pricing and other tax-related regulations on us,
and any failure to comply could materially and adversely affect our profitability.
  
 ITEM 4. INFORMATION ON THE COMPANY
 4.A. History and development of the company
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Key business developments:
 ®
 ®
  ® ® ®
 ®
  ®
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®
 ®
  
 ®
 ® ® ®
 ® ® ® ®
  
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4.B. Business overview
  
    
    our Global Generics segment, which includes branded and unbranded prescription and
over-the-counter (OTC) drug products business;
 
    
    our Pharmaceutical Services and Active Ingredients (PSAI) segment, which consists of
our Active Pharmaceutical Ingredients business and our Custom Pharmaceutical Services
business; and
 
    
    our Proprietary Products segment, which consists of our Generic Biopharmaceuticals
business, our New Chemical Entities (NCEs) business, our Differentiated Formulations
business and our dermatology focused specialty business operated through Promius Pharma.
  OUR STRATEGY
  
    
    Strengths in Science and Technology
  
    
    Product Offerings
 a)
    
    Global Generics: Through our branded and unbranded Global Generics
segment, we offer lower-cost alternatives to highly-priced innovator brands, both
directly and through key partnerships.
 
    
    Branded Generics: We seek to have a portfolio that is strongly differentiated and
offers compelling advantages to doctors and patients.
 
    
    Unbranded Generics: We aim to ensure that we deliver first to market products to
our customers, including pharmacy chains and distributors, and that they have high
product availability from us combined with low inventories, resulting in superior
inventory turns while addressing the customers needs.
  b)
    
    Pharmaceutical Services and Active Ingredients: Our Pharmaceutical
Services and Active Ingredients (PSAI) business is comprised of our Active
Pharmaceutical Ingredients (API) business and our Custom Pharmaceutical Services
(CPS) business.
 
    
    Our product offerings in our API business are geared to offer intellectual
property and technology-advantaged products to enable launches ahead of others at
competitive prices.
 
    
    In our CPS business, we aim to offer niche product service capabilities,
technology platforms, and competitive cost structures to innovator companies.
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c)
    
    Proprietary Products: Our Proprietary Products business is comprised of
our Differentiated Formulations business and our New Chemical Entity (NCE) research
business.
 
    
    Differentiated Formulations: Our emerging Differentiated Formulations portfolio,
which consists of new, synergistic combinations as well as technologies that improve
safety and/or efficacy by modifying pharmacokinetics of existing medicines, is
focused on significant clinically unmet needs. We are also investigating new
indications for existing medicines.
 
    
    New Chemical Entities (NCEs): We are also focused in the discovery, development
and commercialization of novel small molecule agents in therapeutic areas such as
bacterial infections, metabolic disorders and pain and inflammation.
 
    
    Execution Excellence (Building Blocks)
  
    
    Lean Manufacturing  Eliminating waste and reducing cycle time, with a
focus on capacity constrained resources.
 
    
    Quality by Design Building quality into all processes and using quality
tools to eliminate process risks.
 
    
    Principles of the Theory of Constraints  We apply these principles
primarily in supply chain and product development. This ensures high availability with
low inventory through a pull-based logistics system. It also ensures speed in product
development through critical chain project management.
 
    
    Leadership Development  Developing leaders, as well as enhancing leadership
behavior across the organization.
 OUR PRINCIPAL AREAS OF OPERATIONS
  (  in millions, U.S.$ in millions)
 Year Ended March 31,Segment
    
    2009
    
    
    2010
    
    
    2011Global Generics
    
    (IMAGE)
    49,790
    
    
    
    72
    %
    
    (IMAGE)
    48,606
    
    
    
    69
    %
    
    (IMAGE)
    53,340
    
    
    
    71
    %
    
    U.S. $
    1,198Pharmaceutical
Services and Active
Ingredients
    
    
    18,758
    
    
    
    27
    %
    
    
    20,404
    
    
    
    29
    %
    
    
    19,648
    
    
    
    26
    %
    
    
    441Proprietary Products
    
    
    294
    
    
    
    
    
    
    
    513
    
    
    
    1
    %
    
    
    532
    
    
    
    1
    %
    
    
    12Others
    
    
    599
    
    
    
    1
    %
    
    
    754
    
    
    
    1
    %
    
    
    1,173
    
    
    
    2
    %
    
    
    26Total Revenues
    
    (IMAGE)
    69,441
    
    
    
    100
    %
    
    (IMAGE)
    70,277
    
    
    
    100
    %
    
    (IMAGE)
    74,693
    
    
    
    100
    %
    
    U.S. $
    1,677
 Global Generics Segment
   27




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India
 ® ® ® ® ® ® ® ® ® ® ®
   28




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##### Table of Contents



Year Ended March 31,2009
    
    
    2010
    
    
    2011Revenues in
    
    
    
    
    
    
    Revenues in
    
    
    
    
    
    
    Revenues inBRAND
    
    millions
    
    
    % Total(1)
    
    
    millions
    
    
    % Total(1)
    
    
    millions
    
    
    % Total(1)Omez
    
    (IMAGE)
    776
    
    
    
    9
    %
    
    (IMAGE)
    928
    
    
    
    9
    %
    
    (IMAGE)
    1,065
    
    
    
    9
    %Nise
    
    
    605
    
    
    
    7
    %
    
    
    690
    
    
    
    7
    %
    
    
    700
    
    
    
    6
    %Stamlo
    
    
    422
    
    
    
    5
    %
    
    
    473
    
    
    
    5
    %
    
    
    507
    
    
    
    4
    %Reditux
    
    
    199
    
    
    
    2
    %
    
    
    232
    
    
    
    2
    %
    
    
    405
    
    
    
    3
    %Omez-DSR
    
    
    210
    
    
    
    2
    %
    
    
    310
    
    
    
    3
    %
    
    
    377
    
    
    
    3
    %Stamlo Beta
    
    
    301
    
    
    
    4
    %
    
    
    326
    
    
    
    3
    %
    
    
    328
    
    
    
    3
    %Razo
    
    
    214
    
    
    
    3
    %
    
    
    247
    
    
    
    2
    %
    
    
    285
    
    
    
    2
    %Atocor
    
    
    269
    
    
    
    3
    %
    
    
    274
    
    
    
    3
    %
    
    
    278
    
    
    
    2
    %Mintop
    
    
    172
    
    
    
    2
    %
    
    
    196
    
    
    
    2
    %
    
    
    209
    
    
    
    2
    %Razo  D
    
    
    138
    
    
    
    2
    %
    
    
    169
    
    
    
    2
    %
    
    
    200
    
    
    
    2
    %Others
    
    
    5,172
    
    
    
    61
    %
    
    
    6,313
    
    
    
    62
    %
    
    
    7,336
    
    
    
    64
    %Total
    
    (IMAGE)
    8,478
    
    
    
    100
    %
    
    (IMAGE)
    10,158
    
    
    
    100
    %
    
    (IMAGE)
    11,690
    
    
    
    100
    %
 
 (1)
    
    Refers to the brands revenues from sales in India expressed as a percentage of our total
revenues from sales in all of our therapeutic categories in India. Sales, marketing and distribution network
   Competition
   
    
    The Indian pharmaceutical market registered a growth of 15.3% during the year ended March
31, 2011.
 
    
    New products launched in the preceding 24 months accounted for 6.5% of total Indian
pharmaceutical growth during the year ended March 31, 2011.
 
    
    The top 300 existing brands grew at a rate of 17%, which was marginally higher than the
Indian pharmaceutical markets overall average, and continued to account for 33% of the
markets total sales.
 
    
    Legacy brands are performing better than new molecules.
 
    
    There was an increasing emergence of bio-similar products to address the needs of
patients in the oncology therapeutic area.
  29




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Government regulations
  
    
    The Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945;
 
    
    The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954;
 
    
    The Narcotic Drugs and Psychotropic Substances Act, 1985;
 
    
    The Drugs (Price Control) Order, 1995, read in conjunction with the Essential
Commodities Act, 1955; and
 
    
    The Medicinal and Toilet Preparations (Excise Duties) Act, 1955.
        30




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Russia and Other Countries of the former Soviet Union
 Russia
   2009
    
    
    2010
    
    
    2011Revenues in
    
    
    
    
    
    
    Revenues in
    
    
    
    
    
    
    Revenues inBrand
    
    millions
    
    
    % Total(1)
    
    
    millions
    
    
    % Total(1)
    
    
    millions
    
    
    % Total(1)Nise
    
    (IMAGE)
    1,249
    
    
    
    21
    %
    
    (IMAGE)
    1,862
    
    
    
    26
    %
    
    (IMAGE)
    2,311
    
    
    
    26
    %Omez
    
    
    1,281
    
    
    
    21
    %
    
    
    1,458
    
    
    
    20
    %
    
    
    1,554
    
    
    
    18
    %Ketorol
    
    
    1,078
    
    
    
    18
    %
    
    
    1,287
    
    
    
    18
    %
    
    
    1,376
    
    
    
    16
    %Ciprolet
    
    
    701
    
    
    
    12
    %
    
    
    760
    
    
    
    11
    %
    
    
    778
    
    
    
    9
    %Senade
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
    
    
    598
    
    
    
    7
    %Cetrine
    
    
    339
    
    
    
    6
    %
    
    
    408
    
    
    
    6
    %
    
    
    590
    
    
    
    7
    %Enam
    
    
    315
    
    
    
    5
    %
    
    
    337
    
    
    
    5
    %
    
    
    299
    
    
    
    3
    %Exifine
    
    
    210
    
    
    
    4
    %
    
    
    220
    
    
    
    3
    %
    
    
    217
    
    
    
    2
    %Bion
    
    
    171
    
    
    
    3
    %
    
    
    165
    
    
    
    2
    %
    
    
    201
    
    
    
    2
    %Mitotax
    
    
    148
    
    
    
    2
    %
    
    
    107
    
    
    
    1
    %
    
    
    120
    
    
    
    1
    %Others
    
    
    311
    
    
    
    8
    %
    
    
    628
    
    
    
    8
    %
    
    
    898
    
    
    
    9
    %Total
    
    (IMAGE)
    5,803
    
    
    
    100
    %
    
    (IMAGE)
    7,232
    
    
    
    100
    %
    
    (IMAGE)
    8,942
    
    
    
    100
    %
 
 (1)
    
    Refers to the brands revenues from sales in Russia expressed as a percentage of our total
revenues from all sales in Russia.     31




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##### Table of Contents



Other Countries of the former Soviet Union
 
 Sales, marketing and distribution network
      Healthcare reforms and reference pricing
     32




---



##### Table of Contents



North America (the United States and Canada)
    
    33




---



##### Table of Contents



Sales, Marketing and Distribution Network
   
 
 Global Generics Manufacturing and Raw Materials
 Augmentin® Amoxil® ®
 Competition
    34




---



##### Table of Contents



Government regulations
 U.S. Regulatory Environment
    Approved Drug Products with Therapeutic Equivalence
Evaluations
    35




---



##### Table of Contents



United States Healthcare Reform  Patient Protection and Affordable Care Act
  
    
    The PPACA is anticipated to expand healthcare coverage to tens of millions of U.S.
citizens, mostly those employed in smaller companies and the unemployed. The PPACA also
reduces certain co-payments for Medicaid, a joint federal and state health insurance
program for the poor. These changes should provide opportunities for us to increase our
pharmaceutical products sales volumes in the long term.
 
    
    The PPACA also imposes new rules regarding insurance regulation and access. For
example, there will be new regulations governing the insurance industry that will
prohibit the denial of coverage due to pre-existing diseases, and ban placing lifetime
value limits on insurance policy coverages. Indirectly, these reforms should also provide
opportunities for us to improve our pharmaceutical products sales volumes in the long
term.
  36




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##### Table of Contents




    
    In addition, the PPACA set forth new regulations relating to biological drugs.
Among other things, the PPACA creates an abbreviated pathway to U.S. FDA approval of
bio-similar biological products and allows the first interchangeable bio-similar
product 18 months of exclusivity. These pro-generic provisions may provide
increased opportunities for our bio-generics business, but also could increase competition
in that field and thus adversely impact the selling prices, costs and/or profit margins
for our bio-generics business. Conversely, the PPACA also has some anti-generic
provisions, including provisions granting the innovator of a biological drug product 12
years of exclusive use before generic drugs can be approved based on being bio-similar.
 
    
    The PPACA imposes on pharmaceutical manufacturers a variety of additional rebates,
discounts and fees. Among other things, the PPACA includes annual, non-deductible fees
that go into effect in 2011 for entities that manufacture or import certain prescription
drugs and biologics. This fee will be calculated based upon each organizations
percentage share of total branded prescription drug sales to U.S. government programs
(such as Medicare, Medicaid and Veterans Affairs and Public Health Service discount
programs), provided that the manufacturer must have at least $5 million in sales of
branded prescription drugs (as defined in the PPACA) or biologics in order to be subject
to the fee. Authorized generic products would generally be treated as branded
products.The manufacturers fee for calendar year 2011 is based upon our
sales of branded prescription drugs and biologics for the calendar year 2009, which were
below the $5 million threshold, and thus we are not subject to the fee for calendar year
2011. In addition, the PPACA changes the computations used to determine
Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program by
redefining the average manufacturers price (AMP), effective October 1, 2010, and by
using 23.1% instead of 15% of AMP for most branded drugs and 13% instead of 11% of AMP
for generic drugs, effective January 1, 2010. The impact of the Medicaid rebate changes
has been accounted for in our consolidated financial statements, but it was not material
to our U.S. revenues. The PPACA also increases the number of healthcare entities eligible
for discounts under the Public Health Service pharmaceutical pricing program.
 
    
    The PPACA makes several important changes to the federal anti-kickback statute,
false claims laws, and health care fraud statutes that may make it easier for the
government or whistleblowers to pursue such fraud and abuse violations. In addition, the
PPACA increases penalties for fraud and abuse violations.
 
    
    To further facilitate the governments efforts to coordinate and develop
comparative clinical effectiveness research, the PPACA establishes a new Patient-Centered
Outcomes Research Institute to oversee and identify priorities in such research. The
manner in which the comparative research results would be used by third-party payors is
uncertain.
  Canada Regulatory Environment
  Europe
   37




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##### Table of Contents



Sales, Marketing and Distribution Network
 Germany
      United Kingdom and other Countries within Europe
  
   38




---



##### Table of Contents



Competition
   Government regulations
 European Union Regulatory Environment
      39




---



##### Table of Contents



Arzneimittel Marktes Neuordnungs Gesetz,
 
    
    Historically, the pharmaceutical companies had been free to set the initial asking price
for drugs in the German public health system, subject to certain mandatory rebates. Under
this new law, a pharmaceutical company will determine the price for a new drug or new
therapeutic indication for the first year after launch, but must submit to the Joint
Federal Committee (the Gemeinsamer Bundesausschuss or G-BA) a benefit assessment dossier
on the drug at or prior to its launch. The G-BA will analyze whether the drug shows an
additional clinical benefit in comparison to a corresponding established drug (the
appropriate comparator therapy).
 
    
    If an additional benefit is established, the pharmaceutical company must
negotiate the price of the drug with the Federal Association of the health insurance
funds. If no agreement is reached in the negotiation, then the price will be
determined pursuant to an arbitration procedure. There must be a minimum term of
one year.
 
    
    If no additional benefit is established, the drug is immediately included
into a group of drugs with comparable pharmaceutical and therapeutic
characteristics, for which maximum reimbursement prices have already been set. If
this is not possible due to the drugs novelty, then the pharmaceutical company must
negotiate a reimbursement price with the Federal Association of the health insurance
funds that may not exceed the costs of the appropriate comparator therapy.
 
    
    The prices determined pursuant to the above procedures will also apply to
private insurance agencies, privately insured persons and self-payers, although they
may negotiate further discounts.
 
    
    For drugs developed specifically to treat rare medical conditions that
are designated as orphan drugs, the orphan drug will be presumed to have an
additional benefit under certain circumstances.
 
    
    A new regulation for packaging size to be fully implemented by 2013. Standard sizes
will be based upon the duration of therapies, instead of based on fixed quantity. Three
different types of package sizes are now allowed: N1-packages for treatment periods of 10
days; N2-packages for treatment periods of 30 days; and N3-packages for treatment periods
of 100 days. During the transition period, discrepancies of 20%, 10% and 5% will be
respectively accepted for N1, N2 and N3 packages.
 
    
    The law increases the choice to patients by the use of co-payment as an option for
patients opting for a non-rebated generic drug.
  40




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##### Table of Contents



Impairment
   
  
   Other markets of our Global Generics segment
    41




---



##### Table of Contents



GSK Alliance
  Global Generics Manufacturing and Raw Materials
    42




---



##### Table of Contents



Product Transfers and Capacity Expansion
  Shreveport Expansion
   43




---



##### Table of Contents



Pharmaceutical Services and Active Ingredients Segment (PSAI)
    Sales, Marketing and Distribution
 Emerging Markets.
  
  44




---



##### Table of Contents



Developed Markets.
    Manufacturing and Raw Materials
  India
    45




---



##### Table of Contents



Mexico
   Competition
    46




---



##### Table of Contents



Government regulations
     Proprietary Products Segment
   Proprietary Products business
  
    
    metabolic disorders;
 
    
    cardiovascular disorders;
 
    
    bacterial infections;
 
    
    dermatological indications; and
 
    
    pain and inflammation.
  47




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##### Table of Contents



Alliances and Partnerships
      Compound
    
    Therapeutic Area
    
    Status
    
    RemarksNew Chemical Entities (NCEs)DRF 2593
    
    Metabolic disorders
    
    Phase III
    
    In Phase III clinical testing for Type 2 diabetes partnered with Nordic BiosciencesDRL 17822
    
    Metabolic disorders/ Cardiovascular disorders
    
    Phase II
    
    Targeting dyslipidemia / atherosclerosisDifferentiated and Specialty FormulationsDRL-NAB-P2
    
    Onchomycosis
    
    Phase III
    
    In Phase III clinical testing for OnchomycosisDRL-NAB-P5
    
    Psoriasis
    
    Clinical
    
    Targeting PsoriasisDRL-NAB-P6
    
    Psoriasis
    
    Clinical
    
    Targeting PsoriasisDFA-02
    
    Anti-Infectives
    
    Clinical
    
    Targeting bacterial infectionsDFP-02
    
    Migraine
    
    Clinical
    
    Targeting Migraines
  48




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##### Table of Contents



Patents
 USPTO(1)
    
    
    USPTO(1)
    
    
    PCT(2)
    
    
    India
    
    
    IndiaCategory
    
    (Filed)
    
    
    (Granted)
    
    
    (Filed)
    
    
    (Filed)
    
    
    (Granted)Anti-diabetic
    
    
    85
    
    
    
    15
    
    
    
    62
    
    
    
    117
    
    
    
    45Anti-cancer
    
    
    18
    
    
    
    10
    
    
    
    14
    
    
    
    45
    
    
    
    15Anti-bacterial
    
    
    8
    
    
    
    6
    
    
    
    10
    
    
    
    22
    
    
    
    4Anti-inflammation/Cardiovascular
    
    
    40
    
    
    
    20
    
    
    
    28
    
    
    
    21
    
    
    
    2Anti-ulcerant
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    Miscellaneous
    
    
    4
    
    
    
    1
    
    
    
    3
    
    
    
    23
    
    
    
    8Differentiated formulations
    
    3 (provisional)
    
    
    
    
    
    
    4
    
    
    2 (provisional)
    
    
    TOTAL
    
    
    159
    
    
    
    53
    
    
    
    121
    
    
    
    231
    
    
    
    74
 (1)
    
    USPTO means the United States Patent and Trademark Office.(2)
    
    PCT means the Patent Cooperation Treaty, an international treaty that facilitates foreign
patent filings for residents of member countries when obtaining patents in other member
countries. Stages of Testing Development.
 Stage ofDevelopment
    
    DescriptionPreclinical
    
    Animal studies and laboratory tests to evaluate safety and efficacy,
demonstrate activity of a product candidate and identify its chemical and
physical properties.Phase I
    
    Clinical studies to test safety and pharmacokinetic profile of a drug in humans.Phase II
    
    Clinical studies conducted with groups of patients to determine preliminary
efficacy, dosage and expanded evidence of safety.Phase III
    
    Larger scale clinical studies conducted in patients to provide sufficient data
for statistical proof of efficacy and safety.
    49




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Competition
   Government regulations
       50




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##### Table of Contents



Promius Pharma
 ®
  ® ® ® ®  ®
  51




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##### Table of Contents



4.C. Organizational structure
  Percentage of Direct/Country of
    
    Indirect OwnershipName of Subsidiary
    
    Incorporation
    
    InterestDRL Investments Limited
    
    India
    
    
    100
    %Reddy Pharmaceuticals Hong Kong Limited
    
    Hong Kong
    
    
    100
    %OOO JV Reddy Biomed Limited
    
    Russia
    
    
    100
    %Reddy Antilles N.V.
    
    Netherlands
    
    
    100
    %Reddy Netherlands B.V.
    
    Netherlands
    
    
    100
    %(1)Reddy US Therapeutics, Inc.
    
    U.S.A.
    
    
    100
    %(1)Dr. Reddys Laboratories, Inc.
    
    U.S.A.
    
    
    100
    %(10)Dr. Reddys Farmaceutica do Brasil Ltda
    
    Brazil
    
    
    100
    %Cheminor Investments Limited
    
    India
    
    
    100
    %Aurigene Discovery Technologies Limited
    
    India
    
    
    100
    %Aurigene Discovery Technologies, Inc.
    
    U.S.A.
    
    
    100
    %(3)Kunshan Rotam Reddy Pharmaceutical Co. Limited
    
    China
    
    
    51.33
    %(4)Dr. Reddys Laboratories (EU) Limited
    
    United Kingdom
    
    
    100
    %(10)Dr. Reddys Laboratories (U.K.) Limited
    
    United Kingdom
    
    
    100
    %(5)Dr. Reddys Laboratories (Proprietary) Limited
    
    South Africa
    
    
    100
    %(12)Reddy Cheminor S.A.
    
    France
    
    
    100
    %(2)OOO Dr. Reddys Laboratories Limited
    
    Russia
    
    
    100
    %Dr. Reddys Bio-sciences Limited
    
    India
    
    
    100
    %Promius Pharma LLC (formerly Reddy Pharmaceuticals, LLC)
    
    U.S.A.
    
    
    100
    %(6)Trigenesis Therapeutics, Inc.
    
    U.S.A.
    
    
    100
    %Industrias Quimicas Falcon de Mexico, SA de CV
    
    Mexico
    
    
    100
    %Reddy Holding GmbH
    
    Germany
    
    
    100
    %(7)Lacock Holdings Limited
    
    Cyprus
    
    
    100
    %betapharm Arzneimittel GmbH
    
    Germany
    
    
    100
    %(8)beta Healthcare Solutions GmbH
    
    Germany
    
    
    100
    %(8)beta institut fur sozialmedizinische Forschung und
Entwicklung GmbH
    
    Germany
    
    
    100
    %(8)Reddy Pharma Iberia SA
    
    Spain
    
    
    100
    %Reddy Pharma Italia SPA
    
    Italy
    
    
    100
    %(7)Dr. Reddys Laboratories (Australia) Pty Ltd.
    
    Australia
    
    
    100
    %Dr. Reddys Laboratories SA
    
    Switzerland
    
    
    100
    %Eurobridge Consulting B.V.
    
    Netherlands
    
    
    100
    %(1)OOO DRS LLC
    
    Russia
    
    
    100
    %(9)Aurigene Discovery Technologies(Malaysia ) Sdn, Bhd
    
    Malaysia
    
    
    100
    %(3)Dr. Reddys New Zealand Limited (formerly Affordable
Healthcare Limited)
    
    New Zealand
    
    
    100
    %(10)Dr. Reddys Laboratories Ilac Ticaret Limited
    
    Turkey
    
    
    100
    %Dr. Reddys SRL (formerly Jet Generici SRL)
    
    Italy
    
    
    100
    %(11)Chirotech Technology Limited
    
    United Kingdom
    
    
    100
    %(5)Dr. Reddys Laboratories Louisiana LLC
    
    U.S.A.
    
    
    100
    %(6)Dr. Reddys Pharma SEZ Limited
    
    India
    
    
    100
    %Dr. Reddys Laboratories International SA
    
    Switzerland
    
    
    100
    %(8)Idea2Enterprises (India) Pvt. Limited
    
    India
    
    
    100
    %Dr. Reddys Laboratories Romania SRL
    
    Romania
    
    
    100
    %(10)I-Ven Pharma Capital Limited
    
    India
    
    
    100
    %(13)Dr. Reddys Venezuela, C.A
    
    Venezula
    
    
    100
    %(13)Dr. Reddys Laboratories Tennessee, LLC
    
    U.S.A
    
    
    100
    %(6)
 
 (1)
    
    Indirectly owned through Reddy Antilles N.V.  52




---



##### Table of Contents



(2)
    
    Subsidiary under liquidation.(3)
    
    Indirectly owned through Aurigene Discovery Technologies Limited.(4)
    
    Kunshan Rotam Reddy Pharmaceutical Co. Limited is a subsidiary as we hold a 51.33% stake;
However, we account for this investment by the equity method and do not consolidate it in our
financial statements.(5)
    
    Indirectly owned through Dr. Reddys Laboratories (EU) Limited.(6)
    
    Indirectly owned through Dr. Reddys Laboratories, Inc.(7)
    
    Indirectly owned through Lacock Holdings Limited.(8)
    
    Indirectly owned through Reddy Holding GmbH.(9)
    
    Indirectly owned through Eurobridge Consulting B.V.(10)
    
    Indirectly owned through Dr. Reddys Laboratories SA.(11)
    
    Indirectly owned through Reddy Pharma Italia SPA.(12)
    
    We acquired the 40% non-controlling interest in August 2010.(13)
    
    Indirectly owned through DRL Investments Limited   53




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4.D. Property, plant and equipment
  Approximate
    
    
    Built up
    
    
    
    
    Installed
    
    
    ActualLocation
    
    Area
    
    
    Area
    
    
    Certifications
    
    Capacity
    
    
    Production(Square feet)
    
    
    (Square feet)Pharmaceutical Services and Active Ingredients
    
    
    
    
    
    
    
    
    
    
    
    
    3,831
    (8)(11)
    
    
    3,267
    (8)(11)Bollaram, Andhra Pradesh, India
    
    
    734,013
    
    
    
    369,008
    
    
    U.S. FDA and EUGMP
    
    See above(11)
    
    See above(11)Bollaram, Andhra Pradesh, India
    
    
    648,173
    
    
    
    383,542
    
    
    U.S. FDA and EUGMP
    
    See above(11)
    
    See above(11)Bollaram, Andhra Pradesh, India
    
    
    715,610
    
    
    
    217,515
    
    
    U.S. FDA and EUGMP
    
    See above(11)
    
    See above(11)Jeedimetla, Andhra Pradesh, India
    
    
    228,033
    
    
    
    102,464
    
    
    U.S. FDA and EUGMP
    
    See above(11)
    
    See above(11)Miryalaguda, Andhra Pradesh, India
    
    
    3,402,907
    
    
    
    447,693
    
    
    U.S. FDA and EUGMP
    
    See above(11)
    
    See above(11)Pydibheemavaram, Andhra Pradesh, India
    
    
    2,668,465
    
    
    
    1,007,643
    
    
    U.S. FDA and EUGMP
    
    See above(11)
    
    See above(11)Pydibheemavaram, Andhra Pradesh, India
    
    
    792,786
    
    
    
    54,338
    
    
    
    
    See above(11)
    
    See above(11)Miyapur, Andhra Pradesh, India
    
    
    113,256
    
    
    
    85,736
    
    
    ISO 27001: 2005 Information Security Management System
    
    
    N/A
    
    
    
    N/AJeedimetla, Andhra Pradesh, India
    
    
    68,825
    
    
    
    23,538
    
    
    ISO 27001: 2005 Information Security Management System
    
    
    N/A
    
    
    
    N/A
 Approximate
    
    
    Built up
    
    
    
    
    Installed
    
    
    ActualLocation
    
    Area
    
    
    Area
    
    
    Certifications
    
    Capacity
    
    
    Production(Square feet)
    
    
    (Square feet)Cuernavaca, Mexico
    
    
    2,774,378
    
    
    
    1,345,488
    
    
    (1)
    
    
    3,500
    (8)
    
    
    2,000
    (8)Mirfield, United Kingdom
    
    
    1,785,960
    
    
    
    653,400
    
    
    ISO 9001:2008, MHRA (UK) and U.S. FDA
    
    
    (12)
    
    
    
    (12)Cambridge, United Kingdom(5)
    
    
    9,383
    
    
    
    9,383
    
    
    
    
    
    N/A
    
    
    
    N/AGlobal Generics
    
    
    
    
    
    
    
    
    
    
    
    
    5,581
    (6)(7)(13)
    
    
    4,282
    (6)(13)Bollaram, Andhra Pradesh, India
    
    
    217,729
    
    
    
    103,894
    
    
    (2)
    
    See above(13)
    
    See above(13)Bachupally, Andhra Pradesh, India
    
    
    1,306,372
    
    
    
    425,554
    
    
    (3)
    
    See above(13)
    
    See above(13)Yanam, Pondicherry, India
    
    
    457,000
    
    
    
    34,526
    
    
    
    
    See above(13)
    
    See above(13)Baddi, Himachal Pradesh, India
    
    
    786,261
    
    
    
    148,711
    
    
    
    
    See above(13)
    
    See above(13)Bachupally, Andhra Pradesh, India
    
    
    798,982
    
    
    
    105,924
    
    
    (2)
    
    
    13,852
    (9)
    
    
    6,951
    (9)Bachupally, Andhra Pradesh, India
    
    
    783,823
    
    
    
    496,201
    
    
    (4)
    
    
    11,727
    (6)(10)
    
    
    6,656
    (6)Duvvada, Andhra Pradesh, India
    
    
    691,322
    
    
    
    73,334
    
    
    
    
    
    N/A
    
    
    
    N/AVisakhapatnam, Andhra Pradesh, IndiaBeverley, East Yorkshire, United Kingdom
    
    
    81,000
    
    
    
    32,500
    
    
    U.K. Medicine Control Agency, British Retail Consortium
    
    
    N/A
    
    
    
    N/AShreveport, Lousiana, United States
    
    
    1,817,123
    
    
    
    335,000
    
    
    U.S. FDA
    
    
    5,875
    (6)(10)
    
    
    2,078
    (6)Bristol, TN, United States
    
    
    1,742,400
    
    
    
    390,000
    
    
    U.S. FDA
    
    
    2,460
    (6)(10)
    
    
    5
    (6)Proprietary Products(10)Miyapur, Andhra Pradesh, India
    
    
    445,401
    
    
    
    153,577
    
    
    
    
    
    N/A
    
    
    
    N/A
 
 (1)
    
    U.S. FDA; Therapeutic Goods Administration, Australia; Danish Medicines Agency, Denmark; U.S.
Prescription Drug Marketing Act; Ministry of Health, Labour and Welfare, Japan; Secretaría de
Salud y Asistencia, Mexico.(2)
    
    Ministry of Health, Uganda; Brazilian National Agency of Sanitary Surveillance (ANVISA),
Brazil; National Medicines Agency, Romania; Ministry of Health, Ukraine; Gulf Cooperation
Council (GCC) group of countries.(3)
    
    Medicine Control Council, Republic of South Africa; The State Company for Marketing Drugs and
Medical Appliances, Ministry of Health, Iraq; Sultanate of Oman, Ministry of Health, Muscat;
Ministry of Health, State of Bahrain; State Pharmaceutical Inspection, Republic of Latvia;
Pharmaceutical and Herbal Medicines, Registration and Control Administrations, Ministry of
Health, Kuwait. National Medicines Agency, Romania; Ministry of Health, Ukraine; Ministry of Health, Indonesia;
Health Authorities, Nigeria; Ministry of Health, Kirgystan; World Health Organization, cGMP;
ANVISA, Brazil; Medicines and Health Care Products Regulatory Agencies (MHRA), U.K., British
Retail Consortium; Danish Medicines Agency.
 (4)
    
    U.S. FDA; Medicines and Healthcare Products Regulatory Agency, U.K.; Ministry of Health, UAE;
Medicines Control Council, South Africa; ANVISA, Brazil; National Medicines Agency, Romania;
Danish Medicines Agency, Environmental Management System ISO 14001; Occupational Health and
Safety Management System  OHSAS 18001; Quality Management System-ISO 9001:2000.
  54




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(5)
    
    Leased facilities.(6)
    
    Million units.(7)
    
    On a single shift basis.(8)
    
    Tons.(9)
    
    Grams.(10)
    
    Three shift basis(11)
    
    Represents the aggregate capacity and production for the first seven facilities listed in this table under PSAI.(12)
    
    Capacity and production at this facility is not separately tracked.(13)
    
    Represents the aggregate capacity and production for the first four facilities listed in this table under Global Generics.
  Global Generics
    Pharmaceutical Services and Active Ingredients
    55




---



##### Table of Contents



ITEM 4A.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 5.
    
    OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 Overview
   
    
    Global Generics;
 
    
    Pharmaceutical Services and
Active Ingredients (PSAI); and
 
    
    Proprietary Products.
 Global Generics:
 Pharmaceutical Services and Active Ingredients (PSAI):
 Proprietary Products:
  Critical Accounting Policies
   56




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##### Table of Contents



Accounting estimates and judgments
   
    
    Assessment of functional currency for foreign operations;
 
    
    Financial instruments;
 
    
    Measurement of recoverable amounts of cash-generating units;
 
    
    Provisions and contingencies;
 
    
    Sales returns, rebates and charge back provisions;
 
    
    Evaluation of recoverability of deferred tax assets;
 
    
    Business combinations; and
 
    
    Contingencies.
 Revenue
 Sale of goods
      57




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
    
    Chargebacks. Chargebacks are issued to wholesalers for the difference between
our invoice price to the wholesaler and the contract price through which the product is
resold in the retail part of the supply chain. The information that we consider for
establishing a chargeback accrual includes the historical average chargeback rate over a
period of time, current contract prices with wholesalers and other customers, and estimated
inventory holding by the
wholesaler. With this methodology, we believe that the results are more realistic and
closest to the potential chargeback claims that may be received in the future period
relating to inventory on which a claim is yet to be received as at the end of the reporting
period. In addition, as part of our books closure process, a chargeback validation is
performed in which we track and reconcile the volume of sold inventory for which we should
carry an appropriate provision for chargeback. We procure the inventory holding statements
and data through an electronic data interface with our wholesalers (representing
approximately 90% of the total sales volumes on which chargebacks are applicable) as part of
this reconciliation. On the basis of this volume reconciliation, chargeback accrual is
validated. For the chargeback rate computation, we consider different contract prices for
each product across our customer base. This chargeback rate is adjusted (if necessary) on a
periodic basis for expected future price reductions.
  58




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
    
    Rebates. Rebates (direct and indirect) are generally provided to customers as an
incentive to stock and sell our products. Rebate amounts are based on a customers
purchases made during an applicable period. Rebates are paid to wholesalers, chain drug
stores, health maintenance organizations or pharmacy buying groups under a contract with
us. We determine our estimates of rebate accruals primarily based on the contracts entered
into with our wholesalers and other direct customers and the information received from them
for secondary sales made by them. For direct rebates, liability is accrued whenever we
invoice to direct customers. For indirect rebates, the accruals are based on a
representative weighted average percentage of the contracted rebate amount applied to
inventory sold and delivered by us to wholesalers or other direct customers.
 
    
    Sales Return Allowances. We account for sales returns by recording a provision
based on our estimate of expected sales returns. We deal in various products and operate in
various markets. Accordingly, our estimate of sales returns is determined primarily by our
experience in these markets. In respect of established products, we determine an estimate
of sales returns provision primarily based on historical experience of such sales returns.
Additionally, other factors that we consider in determining the estimate include levels of
inventory in the distribution channel, estimated shelf life, product discontinuances, price
changes of competitive products, and introduction of competitive new products, to the
extent each of these factors impact our business and markets. We consider all of these
factors and adjust the sales return provision to reflect our actual experience. With
respect to new products introduced by us, those have historically been either extensions of
an existing product line where we have historical experience or in a general therapeutic
category where established products exist and are sold either by us or our competitors.
 We have not yet introduced products in a new therapeutic category where the sales returns
experience of such products by us or our competitors (as we understand based on industry
publications) is not known. The amount of sales returns for our newly launched products have
not historically differed significantly from sales returns experience of the then current
products marketed by us or our competitors (as we understand based on industry
publications). Accordingly, we do not expect sales returns for new products to be
significantly different from expected sales returns of current products. We evaluate sales
returns of all our products at the end of each reporting period and record necessary
adjustments, if any.
 
    
    Medicaid Payments. We estimate the portion of our sales that may get dispensed
to customers covered under Medicaid programs based on the proportion of units sold in the
previous two quarters for which a Medicaid claim could be received as compared to the total
number of units sold in the previous two quarters. The proportion is based on an analysis
of the actual Medicaid claims received for the preceding four quarters. In addition, we
also apply the same percentage on the derived estimated inventory sold and delivered by us
to our wholesalers and other direct customers to arrive at the potential volume of products
on which a Medicaid claim could be received. We use this approach because we believe that
it corresponds to the approximate six month time period it takes for us to receive claims
from the various Medicaid programs. After estimating the number of units on which a
Medicaid claim is to be paid, we use the latest available Medicaid reimbursement rate per
unit to calculate the Medicaid accrual. In the case of new products, accruals are done
based on specific inputs from our marketing team or data from the publications of IMS
Health, a company which provides information on the pharmaceutical industry.
 
    
    Shelf Stock Adjustments. Shelf stock adjustments, which are common in our
industry, are given to compensate our customers for falling prices due to additional
competitive products. These take the form of contractually agreed price protection or
shelf stock adjustment clauses in our agreements with direct customers. Such shelf stock
adjustments
are accrued and paid when the prices of certain products decline as a result of increased
competition upon the expiration of limited competition or exclusivity periods.
 
    
    Cash Discounts. We offer cash discounts to our customers, generally at 2% of the
gross sales price, as an incentive for paying within invoice terms, which generally range
from 45 to 90 days. Accruals for such cash discounts do not involve any significant
variables, and the estimates are based on the gross sales price and agreed cash discount
percentage at the time of invoicing.
  59




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(a)
    
    Estimated inventory  Inventory volumes on which a chargeback claim
that is expected to be received in the future are determined using the validation
process and methodology described above (see Chargebacks above). When such a
validation process is performed, we note that the difference represents an immaterial
variation. Therefore, we believe that our estimation process in regard to this variable
is reasonable.
 (b)
    
    Unit pricing rate  As at any point in time, inventory volumes on
which we carry our chargeback accrual represents approximately 1.5 months of sales
volumes. Therefore, the sensitivity of price changes on our chargeback accrual relates
to only such volumes. Assuming that the chargebacks were processed within such period,
we analyzed the impact of changes of prices for the periods beginning April 1, 2011,
2010 and 2009, respectively, and ended March 31, 2011, 2010 and 2009, respectively, on
our estimated inventory levels computed based on the methodology mentioned above (see
Chargebacks above). We noted that the impact on net sales on account of such price
variation was negligible.
    All Values in U.S.$ Millions
 Particulars
    
    Chargebacks
    
    
    Rebates
    
    
    Medicaid
    
    
    Sales ReturnBeginning balance: April 1, 2008
    
    
    59
    
    
    
    26
    
    
    
    4
    
    
    
    6Current provisions relating to
sales in current year
    
    
    440
    
    
    
    47
    
    
    
    4
    
    
    
    5Provisions and adjustments
relating to sales in prior
years
    
    
    *
    
    
    
    (5
    )
    
    
    2
    
    
    
    Credits and payments**
    
    
    (441
    )
    
    
    (38
    )
    
    
    (4
    )
    
    
    (3
    )Ending balance: March 31, 2009
    
    
    58
    
    
    
    30
    
    
    
    6
    
    
    
    8Beginning Balance: April 1, 2009
    
    
    58
    
    
    
    30
    
    
    
    6
    
    
    
    8Current provisions relating to
sales in current year
    
    
    578
    
    
    
    57
    
    
    
    9
    
    
    
    5
  60




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Particulars
    
    Chargebacks
    
    
    Rebates
    
    
    Medicaid
    
    
    Sales ReturnProvisions and adjustments
relating to sales in prior
years
    
    
    *
    
    
    
    2
    
    
    
    (3
    )
    
    
    (1
    )Credits and payments**
    
    
    (580
    )
    
    
    (68
    )
    
    
    (9
    )
    
    
    (4
    )Ending Balance: March 31, 2010
    
    
    56
    
    
    
    21
    
    
    
    3
    
    
    
    8Beginning Balance: April 1, 2010
    
    
    56
    
    
    
    21
    
    
    
    3
    
    
    
    8Current provisions relating to
sales in current year
    
    
    644
    
    
    
    104
    
    
    
    6
    
    
    
    6Provisions and adjustments
relating to sales in prior
years
    
    
    *
    
    
    
    2
    
    
    
    1
    
    
    
    Credits and payments**
    
    
    (620
    )
    
    
    (87
    )
    
    
    (6
    )
    
    
    (5
    )Ending Balance: March 31, 2011
    
    
    80
    
    
    
    40
    
    
    
    4
    
    
    
    9
 *
    
    Currently, we do not separately track provisions and adjustments, in each case to the
extent relating to prior years for chargebacks. However, the adjustments are expected to be
non-material. The volumes used to calculate the closing balance of chargebacks represent an
average 1.5 months equivalent of sales, which corresponds to the pending chargeback claims
yet to be processed.**
    
    Currently, we do not separately track the credits and payments, in each case to the extent
relating to prior years for chargebacks, rebates, medicaid payments or sales returns. Services
  Export entitlements
  Financial instruments
 Non-derivative financial instruments
  Non-derivative financial assets
  Cash and cash equivalents
   61




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##### Table of Contents



Held-to-maturity investments
  Available-for-sale financial assets
  Financial assets at fair value through profit or loss
  Trade payables
  Trade receivables
  Others
    Non-derivative financial liabilities
     62




---



##### Table of Contents



Derivative financial instruments
  Cash flow hedges
   Accounting policy on foreign currency risk
  Economic hedges
 Financial Instruments  Disclosure
  63




---



##### Table of Contents



Foreign currency
 Functional currency
    Foreign currency transactions
  Foreign operations
    Business combinations
   64




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##### Table of Contents



Intangible assets
 Goodwill
  Acquisitions of non-controlling interests
  Subsequent measurement
  Research and development
  
    
    development costs can be measured reliably,
 
    
    the product or process is technically and commercially feasible,
 
    
    future economic benefits are probable and ascertainable, and
 
    
    we intend to complete development and to use or sell the asset, and have sufficient
resources to do so.
  
  65




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##### Table of Contents



(a)
    
    it is expected to account for more than 10% of our total research and development costs;
and(b)
    
    the costs and efforts to develop the project can be reasonably estimated and
the product resulting from the project has a high probability of launch.
  
      66




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De-recognition of intangible assets
  Other intangible assets
  Amortization
  Impairment
 Financial assets
     Non-financial assets
    67




---



##### Table of Contents



Income tax
    Litigations
    68




---



##### Table of Contents



Other provisions
  Restructuring
  Onerous contracts
  Reimbursement rights
   69




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##### Table of Contents



5.A. Operating results
  ((IMAGE) in millions)For the Year Ended March 31,2009
    
    
    2010
    
    
    2011Revenues
    
    
    
    
    
    
    Revenues
    
    
    
    
    
    
    Revenues% to
    
    
    
    
    
    
    % to
    
    
    
    
    
    
    % toRevenues
    
    
    total
    
    
    Revenues
    
    
    total
    
    
    Revenues
    
    
    totalGlobal Generics
    
    (IMAGE)
    49,790
    
    
    
    72
    
    
    (IMAGE)
    48,606
    
    
    
    69
    
    
    (IMAGE)
    53,340
    
    
    
    71Pharmaceutical Services and Active Ingredients
    
    
    18,758
    
    
    
    27
    
    
    
    20,404
    
    
    
    29
    
    
    
    19,648
    
    
    
    26Proprietary Products
    
    
    294
    
    
    
    
    
    
    
    513
    
    
    
    1
    
    
    
    532
    
    
    
    1Others
    
    
    599
    
    
    
    1
    
    
    
    754
    
    
    
    1
    
    
    
    1,173
    
    
    
    2Total
    
    (IMAGE)
    69,441
    
    
    
    100
    
    
    (IMAGE)
    70,277
    
    
    
    100
    
    
    (IMAGE)
    74,693
    
    
    
    100
  ((IMAGE) in millions)For the Year Ended March 31,2009
    
    
    2010
    
    
    2011Gross profit
    
    
    
    
    
    
    Gross profit
    
    
    
    
    
    
    Gross profit% to
    
    
    
    
    
    
    % to
    
    
    
    
    
    
    % toGross profit
    
    
    Revenue
    
    
    Gross profit
    
    
    Revenue
    
    
    Gross profit
    
    
    RevenueGlobal Generics
    
    (IMAGE)
    30,448
    
    
    
    61
    
    
    (IMAGE)
    29,146
    
    
    
    60
    
    
    (IMAGE)
    34,499
    
    
    
    65Pharmaceutical Services and Active Ingredients
    
    
    5,595
    
    
    
    30
    
    
    
    6,660
    
    
    
    33
    
    
    
    5,105
    
    
    
    26Proprietary Products
    
    
    196
    
    
    
    67
    
    
    
    396
    
    
    
    77
    
    
    
    382
    
    
    
    72Others
    
    
    261
    
    
    
    44
    
    
    
    138
    
    
    
    18
    
    
    
    277
    
    
    
    24Total
    
    (IMAGE)
    36,500
    
    
    
    53
    
    
    (IMAGE)
    36,340
    
    
    
    52
    
    
    (IMAGE)
    40,263
    
    
    
    54
  Percentage of Sales
    
    
    Percentage Increase/(Decrease)For the Year Ended March 31,
    
    
    For the Year Ended March 31,2009
    
    
    2010
    
    
    2011
    
    
    2009 to 2010
    
    
    2010 to 2011Revenues
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    1
    
    
    
    6Gross profit
    
    
    53
    
    
    
    52
    
    
    
    54
    
    
    
    
    
    
    
    Selling, general and administrative expenses
    
    
    30
    
    
    
    32
    
    
    
    32
    
    
    
    7
    
    
    
    5Research and development expenses
    
    
    6
    
    
    
    5
    
    
    
    7
    
    
    
    (6
    )
    
    
    33Impairment loss on other intangible assets
    
    
    5
    
    
    
    5
    
    
    
    0
    
    
    
    9
    
    
    
    NCImpairment loss on goodwill
    
    
    16
    
    
    
    7
    
    
    
    0
    
    
    
    NC
    
    
    
    NCOther (income)/expense, net
    
    
    
    
    
    
    (1
    )
    
    
    (2
    )
    
    
    NC
    

    
    
    NCResults from operating activities
    
    
    (4
    )
    
    
    4
    
    
    
    17
    
    
    
    NC
    
    
    
    NCFinance income/(expense), net
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    NC
    

    
    
    NCProfit/(loss) before income taxes
    
    
    (6
    )
    
    
    4
    
    
    
    17
    
    
    
    NC
    

    
    
    NCIncome tax (expense)/benefit, net
    
    
    (2
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    NC
    

    
    
    NCProfit/(loss) for the period
    
    
    (8
    )
    
    
    3
    
    
    
    15
    
    
    
    NC
    

    
    
    NC
 
 NC =
    
    Not comparable  70




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##### Table of Contents



Fiscal Year Ended March 31, 2011 Compared to Fiscal Year Ended March 31, 2010
 Revenues
 
    
    Our overall consolidated revenues were (IMAGE)74,693 million for the year ended March 31, 2011, an
increase of 6% as compared to (IMAGE)70,277 million for the year ended March 31, 2010. Revenue
growth for the year ended March 31, 2011 was largely driven by our Global Generics segment.
  ((IMAGE)in millions)For the Year Ended March 31,2009
    
    
    2010
    
    
    2011Revenues
    
    
    
    
    
    
    Revenues
    
    
    
    
    
    
    Revenues% to
    
    
    
    
    
    
    % to
    
    
    
    
    
    
    % toRevenues
    
    
    total
    
    
    Revenues
    
    
    total
    
    
    Revenues
    
    
    totalNorth America
(the United States
and Canada)
    
    (IMAGE)
    24,012
    
    
    
    35
    
    
    (IMAGE)
    21,269
    
    
    
    30
    
    
    (IMAGE)
    23,260
    
    
    
    31Europe
    
    
    18,047
    
    
    
    26
    
    
    
    16,779
    
    
    
    24
    
    
    
    16,058
    
    
    
    21Russia and other
countries of the
former Soviet Union
    
    
    7,623
    
    
    
    11
    
    
    
    9,119
    
    
    
    13
    
    
    
    10,858
    
    
    
    15India
    
    
    11,460
    
    
    
    16
    
    
    
    12,808
    
    
    
    18
    
    
    
    14,314
    
    
    
    19Others
    
    
    8,299
    
    
    
    12
    
    
    
    10,302
    
    
    
    15
    
    
    
    10,203
    
    
    
    14Total
    
    (IMAGE)
    69,441
    
    
    
    100
    
    
    (IMAGE)
    70,277
    
    
    
    100
    
    
    (IMAGE)
    74,693
    
    
    
    100
 
    
    Revenues from our Global Generics segment were (IMAGE)53,340 million for the year ended March 31,
2011, an increase of 10% as compared to (IMAGE)48,606 million for the year ended March 31, 2010.
North America (the United States and Canada), Germany, India and Russia were the four key
markets for our Global Generics segment, contributing approximately 85% of the revenues of
this segment for the year ended March 31, 2011.
 
    
    Revenues from our PSAI segment were (IMAGE)19,648 million for the year ended March 31, 2011,
representing a decrease of 4% from this segments revenues for the year ended March 31, 2010.
 
    
    During the year ended March 31, 2011, the average Indian rupee/U.S.$ exchange rate and the
average Indian Rupee/Euro exchange rate appreciated by approximately 4% and 10%, respectively,
compared to the average exchange rates in the year ended March 31, 2010. This change in the
exchange rates resulted in lower reported revenue growth rates because of the decrease in
rupee realization from sales in U.S. dollars and Euros.
 
    
    Our provision for sales returns during the year ended March 31, 2011 was (IMAGE)731 million, as
compared to (IMAGE)932 million during the year ended March 31, 2010. This decrease in our provision
was primarily due to lower sales returns processed by us during the year ended March 31, 2011,
as compared to our earlier estimates. Consistent with our accounting policy for creating
provisions for sales returns (discussed in Note 3.1 of our consolidated financial statements),
we periodically assess the adequacy of our allowance for sales returns based on the criteria
discussed in our Critical Accounting Policies, as well as sales returns actually processed
during the year. As we progressed through the year ended March 31, 2011, we noted a decrease
in our returns and, accordingly, reevaluated our estimate. The decrease in sales returns was
partly attributed to a one-time return in the U.S. market due to a product odor issue during
the year ended March 31, 2010 which did not re-occur during the year ended March 31, 2011. For
further information regarding our sales return provisions, see Note 22 to our consolidated
financial statements.
  71




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Revenues Segment analysis
 Global Generics
 
 North America (the United States and Canada).
   India  ® ® ®
 Russia.
 Other Countries of the former Soviet Union.
  72




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Germany
 Other Markets.
 Pharmaceutical Services and Active Ingredients (PSAI)
 
 Gross Margin
 
 
 Global Generics
   73




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Pharmaceutical Services and Active Ingredients
  Selling, general and administrative expenses
 
 
 Research and development expenses
 
 Impairment loss on other intangible assets and goodwill
     
    
    (IMAGE)2,112 million for product related intangibles;
 
    
    (IMAGE)5,147 million towards the carrying value of goodwill; and
    
    (IMAGE)1,211 million towards our trademark/brand  beta, which forms a significant portion of
the intangible asset value of the betapharm cash generating unit.
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Other (income)/expense, net
 
 Results from operating activities
 
 Finance (expense)/income, net
 
 
 
 
 Profit/(loss) before income taxes
 
 Income tax expense
 
  
    
    A tax benefit that arose for the year ended March 31, 2010 in our German operations
(primarily on account of the significant reversal of deferred tax liability on intangibles
corresponding to the impairment charge recorded in betapharm) did not exist during the year
ended March 31, 2011.
 
    
    A higher proportion of our profits for the year ended March 31, 2011 were taxed in
jurisdictions with higher tax rates as compared to the year ended March 31, 2010.
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Profit/(loss) for the period
 
 Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
 Revenues
 
    
    Our overall revenues increased by 1% to (IMAGE)70,277 million for the year ended March 31, 2010, as
compared to (IMAGE)69,441 million for the year ended March 31, 2009. Excluding revenues from
sumatriptan (the authorized generic version of Imitrex®, for which we had exclusivity in the
market for four months during the year ended March 31, 2009), our total revenues grew by 9% to
(IMAGE)67,734 million in the year ended March 31, 2010, as compared to (IMAGE)62,253 million in the year
ended March 31, 2009. For the year ended March 31, 2010, 82% of our total revenue was derived
from markets outside of India, with 18% of our total revenue derived from India. The
allocation of revenues among geographies changed considerably from the year ended March 31,
2009 to the year ended March 31, 2010, primarily due to decreased revenues from sales of
sumatriptan in the United States. As a result, North America (the United States and Canada)
accounted for 30% of our total revenues in the year ended March 31, 2010, as compared to 35%
of our total revenues in the year ended March 31, 2009. Europe accounted for 24% of our total
revenues for the year ended March 31, 2010, as compared to 26% for the year ended March 31,
2009. Russia and other countries of the former Soviet Union accounted for 13% of our total
revenues for the year ended March 31, 2010, as compared to 11% for the year ended March 31,
2009. India accounted for
18% of our total revenues during the year ended March 31, 2010, as compared to 17% during the
year ended March 31, 2009.
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
    
    Revenues from our Global Generics segment were (IMAGE)48,606 million for the year ended March 31,
2010, as compared to (IMAGE)49,790 million for the year ended March 31, 2009. This decrease was
primarily due to a decrease in revenues from sales of sumatriptan in the United States, from
(IMAGE)7,188 million for the year ended March 31, 2009 to (IMAGE)2,543 million for the year ended March
31, 2010. This decrease in sumatriptan revenues was partially offset by increased revenues
from our other markets, including India and Russia.
 
    
    Revenues from our Pharmaceutical Services and Active Ingredients segment increased by 9% to
(IMAGE)20,404 million during the year ended March 31, 2010, as compared to (IMAGE)18,758 million during
the year ended March 31, 2009. The increase primarily resulted from growth in revenues from
Europe by 8% and from our Rest of the World markets (i.e., all markets other than North
America, Europe, Russia and other countries of the former Soviet Union and India) by 17%.
 
    
    For the year ended March 31, 2010, on an average basis, the Indian rupee depreciated by
approximately 3% against the U.S. dollar compared to the average exchange rate for the year
ended March 31, 2009. Excluding the impact of changes in foreign currency exchange rates and
changes in the mark to market value of cash-flow hedges (i.e., derivative contracts to hedge
against foreign currency risks), our total revenues fell by 1% to (IMAGE)69,968 million for the year
ended March 31, 2010, as compared to (IMAGE)70,896 million for the year ended March 31, 2009.
 
    
    Our provision for sales returns during the year ended March 31, 2010 was (IMAGE)932 million, as
compared to (IMAGE)663 million during the year ended March 31, 2009. This increase in our provision
was primarily due to greater than expected returns processed by us during the year ended March
31, 2010, as compared to our earlier estimates. Consistent with our accounting policy for
creating provisions for sales returns (discussed in Note 3.l. of our consolidated financial
statements), we periodically assess the adequacy of our allowance for sales returns based on
the criteria discussed in our Critical Accounting Policies, as well as sales returns actually
processed during the year ended March 31, 2010. As we progressed through the year ended March
31, 2010, we noted an increase in our returns and, accordingly, reevaluated our estimate. The
increase in sales returns was partly attributed to a one-time return in the U.S. market due to
a product odor issue. In addition, the increase in sales returns was also significantly due
to growth in our sales volumes and revenues. There was a 9% increase in our total revenues for
the year ended March 31, 2010 over the year ended March 31, 2009, excluding the sales of
sumatriptan. This increase in returns is reflected both in our higher incremental provision
created and higher actual returns processed in the year ended March 31, 2010 as compared to
the year ended March 31, 2009. For further information regarding our sales return provisions,
see Note 22 to our consolidated financial statements.
 Revenues Segment analysis
 Global Generics
 
 ®
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Pharmaceutical Services and Active Ingredients (PSAI)
 
 
 
 
 
  78




---



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Gross Margin
 
 Global Generics
 ®
 Pharmaceutical Services and Active Ingredients
  Selling, general and administrative expenses
 
 
 Research and development expenses
 
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Impairment loss on other intangible assets and goodwill
   
   
    
    (IMAGE)2,112 million for product related intangibles;
 
    
    (IMAGE)5,147 million towards the carrying value of goodwill; and
 
    
    (IMAGE)1,211 million towards our trademark/brand  beta, which forms a significant portion
of the intangible asset value of the betapharm cash generating unit.
 
 De-recognition of intangible assets
 
 Other (income)/expense, net
 
  80




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Results from operating activities
 
 Finance (expense)/income, net
 
 
 
 Profit/(loss) before income taxes
 
 Income tax expense
 
  
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Profit/(loss) for the period
 
 Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
  Revenues
 
    
    Our overall revenues increased by 39% to (IMAGE)69,441 million in the year ended March 31, 2009,
from (IMAGE)50,006 million in the year ended March 31, 2008. Excluding revenues from a unit of the
Dow Chemical Company associated with its United Kingdom sites in Mirfield and Cambridge
(hereinafter referred to as the Dow Pharma Unit), BASFs manufacturing facility in
Shreveport, Louisiana in the United States of America and related pharmaceutical contract
manufacturing business (hereinafter referred to as the Shreveport facility) and Jet Generici
SRL (hereinafter referred to as Jet Generici), each of which was acquired in April 2008,
revenues grew by 33% to (IMAGE)66,644 million during the year ended March 31, 2009. During the year
ended March 31, 2009, we launched sumatriptan (an authorized generic version of Imitrex®) in
the United States, which accounted for (IMAGE)7,188 million of our consolidated revenues. Excluding
the revenues from sumatriptan and revenues from the Dow Pharma Unit, the Shreveport facility
and Jet Generici, our revenues increased by 19% to (IMAGE)59,456 million during the year ended March
31, 2009.
 
    
    Revenues from our Global Generics segment increased by 51% to (IMAGE)49,790 million during the year
ended March 31, 2009, from (IMAGE)32,872 million in the year ended March 31, 2008. The increase
primarily resulted from an increase in revenues from North America (the United States and
Canada), Russia and our rest of the world markets. Excluding revenues of (IMAGE)1,684 million from
the Shreveport facility and (IMAGE)92 million from Jet Generici, each of which was acquired in April
2008, revenues from our Global Generics segment increased by 46% to (IMAGE)48,014 million during the
year ended March 31, 2009. During the year ended March 31, 2009, we launched sumatriptan (an
authorized generic version of Imitrex®) in the United States, which accounted for (IMAGE)7,188
million of our consolidated revenues. Excluding the revenues from sumatriptan sales and
revenues from the Shreveport facility and Jet Generici, our Global Generics revenues grew by
24% to (IMAGE)40,826 million during the year ended March 31, 2009.
 
    
    Revenues from our Pharmaceutical Services and Active Ingredients segment increased by 13% to
(IMAGE)18,758 million during the year ended March 31, 2009, from (IMAGE)16,623 million during the year
ended March 31, 2008. Excluding revenues from the Dow Pharma Unit acquired in April 2008 of
(IMAGE)1,021 million, revenues from this segment increased by 7% compared to the year ended March
31, 2008. The increase primarily resulted from growth in revenues from our rest of the world
markets (i.e., all markets other than North America, Europe, Russia and other countries of the
former Soviet Union and India) by 20% and from North America (the United States and Canada) by
16%.
 
    
    For the year ended March 31, 2009, we received 35% of our total revenues from North America
(the United States and Canada), 26% of our revenues from Europe, 17% of our revenues from
India, 11% of our revenues from Russia and other countries of the former Soviet Union and 11%
of our revenues from other countries.
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
    
    For the year ended March 31, 2009, on an average basis, the Indian rupee depreciated by
approximately 14% against the U.S. dollar compared to the average exchange rate for the year
ended March 31, 2008. This depreciation had a positive impact on our sales because of the
increase in rupee realization from sales denominated in U.S. dollaers. However, this positive
impact was partially offset due to mark to market losses upon maturity of foreign currency
derivative contracts, which were acquired to mitigate the risks of foreign currency
volatility. The foregoing mark to market losses on foreign currency derivative contracts
resulted in a net decrease in our revenues by (IMAGE)1,455 million during the year ended March 31,
2009. Excluding the impact of such mark to market losses, our total revenues grew by 42% to
(IMAGE)70,896 million for the year ended March 31, 2009 from (IMAGE)50,006 million for the year ended
March 31, 2008.
 Revenues Segment analysis
 Global Generics
 
 ®
 
 
 
 
 
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Pharmaceutical Services and Active Ingredients (PSAI)
 
 
 
 
 
 
 Gross Margin
 
 Global Generics
 ®
  84




---



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Pharmaceutical Services and Active Ingredients
 
 Selling, general and administrative expenses
 
 
 Research and development expenses
 
 Impairment loss on other Intangible Assets and Goodwill
  
 
  85




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Other (income)/expense, net
 
 Results from operating activities
 
 Finance income/(expense), net
 
 
 
 Profit/(loss) before income taxes
 
 Income tax expense
 
 Profit/(loss) for the period
 
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Recent Accounting Pronouncements
 Standards issued but not yet effective and not yet adopted
 Financial instruments
 Extinguishing Financial Liabilities with Equity
Instruments
  
    
    IFRS 10, Consolidated financial statements.
 
    
    IFRS 11, Joint arrangements.
 
    
    IFRS 12, Disclosure of interests in other entities.
 
    
    IAS 27 (Revised 2011), Consolidated and separate financial statements, which has
been amended for the issuance of IFRS 10 but retains the current guidance on separate
financial statements.
 
    
    IAS 28 (Revised 2011), Investments in associates, which has been amended for
conforming changes on the basis of the issuance of IFRS 10 and IFRS 11.
  Employee benefits
 
    
    It requires recognition of changes in the net defined benefit liability/(asset),
including immediate recognition of defined benefit cost, disaggregation of defined
benefit cost into components, recognition of re-measurements in other comprehensive
income, plan amendments, curtailments and settlements.
 
    
    It introduced enhanced disclosures about defined benefit plans.
 
    
    It modified accounting for termination benefits, including distinguishing benefits
provided in exchange for services from benefits provided in exchange for the
termination of employment, and it affected the recognition and measurement of
termination benefits.
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
    
    It provided clarification regarding various issues, including the classification of
employee benefits, current estimates of mortality rates, tax and administration costs
and risk-sharing and conditional indexation features.
 
    
    It incorporated, without change, the IFRS Interpretations Committees requirements
set forth in IFRIC 14 IAS 19The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction.
  5.B. Liquidity and capital resources
 Liquidity
   
 Year Ended March 31,2011
    
    
    2010
    
    
    2009(IMAGE) in millionsNet cash provided by/(used in):Operating activities
    
    (IMAGE)
    8,009
    
    
    (IMAGE)
    13,226
    
    
    (IMAGE)
    4,505Investing activities
    
    
    (8,658
    )
    
    
    (6,998
    )
    
    
    (3,472
    )Financing activities
    
    
    (377
    )
    
    
    (5,307
    )
    
    
    (2,527
    )Net increase/(decrease) in cash and cash
equivalents
    
    (IMAGE)
    (1,026
    )
    
    (IMAGE)
    921
    
    
    (IMAGE)
    (1,494
    )Effect of exchange rate changes on cash
    
    (IMAGE)
    141
    
    
    (IMAGE)
    246
    
    
    (IMAGE)
    (114
    )
 
 Cash Flow from Operating Activities
 
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---



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
    
    A number of new products were launched in the year ended March 31, 2011, which required
significant cash outflows. As a result of increased accounts receivable and inventory from
these launches, our working capital balance increased during such period, but the resulting
cash inflows were not fully realized during such period.
  
    
    Our business performance improved during the year ended March 31, 2010, resulting in
earnings before interest expense, tax expense, depreciation, impairment and amortization of
(IMAGE)14,939 million, as compared to (IMAGE)14,529 million and (IMAGE)9,656 million for the years ended
March 31, 2009 and 2008, respectively.
 
    
    During the year ended March 31, 2010, our accounts receivables collections improved and
we collected accounts receivable due from sales of sumatriptan, which had been outstanding
as at March 31, 2009. As a result, our accounts receivable balance as at March 31, 2010
was (IMAGE)900 million less than the balance as at March 31, 2009. In contrast, our accounts
receivable balance as at March 31, 2009 was (IMAGE)7,348 million higher than the balance as at
March 31, 2008.
 
    
    There was a smaller increase in our inventory during the year ended March 31, 2010 as
compared to the year ended March 31, 2009.
 Cash Flow from Investing Activities
 
  
    
    Cash paid for our acquisition from GlaxoSmithKline plc (GSK) of its penicillin-based
antibiotics manufacturing facility in Bristol, Tennessee, United States, the product rights
for the Augmentin® (branded and generic) and Amoxil® brands of oral penicillin-based
antibiotics in the United States (GSK retained the existing rights for these brands outside
the United States), certain raw material and finished goods inventory associated with
Augmentin®, and certain transitional services from GSK, all for a total consideration of
(IMAGE)1,169 million. There were no expenditures for business acquisitions during the year ended
March 31, 2010.
 
    
    Cash outflows for investments in property, plant and equipment for the year ended March
31, 2011 were (IMAGE)9,066 million, an increase of (IMAGE)4,937 million as compared to our investments
in the year ended March 31, 2010. Increased investments in property, plant and equipment
during the year ended March 31, 2011 was in line with our capacity expansion plans and
establishment of new production facilities.
 
    
    The cash payment of (IMAGE)2,530 million to the beneficial owners of I-VEN Pharma Capital
Limited (I-VEN) for settlement of the payment due in respect of our exercise of the
portfolio termination value option under our research and development agreement with I-VEN
(as further described in Note 21 in the consolidated financial statements).
 
    
    The above mentioned cash outflows were partially offset by an increased cash inflow on
account of sale of investments amounting to (IMAGE)6,651 million.
  
    
    Net cash outflow on purchases of investment securities which were (IMAGE)3,009 million for
the year ended March 31, 2010, as compared to net cash inflows of (IMAGE)4,377 million from sales
of investment securities for the year ended March
31, 2009.
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
    
    There were no cash outflows for acquisition of businesses during the year ended March
31, 2010, while we spent (IMAGE)3,089 million during the year ended March 31, 2009 to acquire: a
unit of the Dow Chemical Company associated with its United Kingdom sites in Mirfield and
Cambridge; BASFs manufacturing facility in Shreveport, Louisiana, U.S.A. and related
pharmaceutical contract manufacturing business; and Jet Generici SRL.
 
    
    Our cash outflows for investment in property, plant and equipment for the year ended
March 31, 2010 were (IMAGE)4,129 million and were lower by (IMAGE)378 million as compared to our
investments in the year ended March 31, 2009.
 Cash Flows from Financing Activities
 
  
    
    A
(IMAGE)12,541 million increase in short term borrowings during the year ended March 31,
2011, as compared to a decrease of
(IMAGE)83 million during the year
ended March 31, 2010. The increase in short term borrowings was for our working capital needs and for
re-payment of a loan taken to fund the acquisition of betapharm in Germany in the year
ended March 31, 2006 (for further details, please refer to note 18 of the consolidated
financial statements).
 
    
    Such increase in short term borrowings was offset by increases in cash outflow due to
the repayment of long term debt of (IMAGE)5,463 million (a loan taken to fund the acquisition of
betapharm in Germany in the year ended March 31, 2006).
 
    
    A cash amount of (IMAGE)525 million paid to acquire the remaining 40% non-controlling
interest in our subsidiary, Dr. Reddys Laboratories (Proprietary) Limited, during the year
ended March 31, 2011.
 
 Principal obligations
  Payments due by period((IMAGE) in millions)MoreLess than
    
    
    
    
    
    
    thanFinancial Contractual Obligations
    
    Total
    
    
    1 year
    
    
    1-5 years
    
    
    5 yearsShort-term borrowings from banks
    
    (IMAGE)
    18,289
    
    
    (IMAGE)
    18,289
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    Long term debtBonus debentures
    
    
    5,078
    
    
    
    
    
    
    
    5,078
    
    
    
    Total obligations
    
    (IMAGE)
    23,367
    
    
    (IMAGE)
    18,289
    
    
    (IMAGE)
    5,078
    
    
    (IMAGE)
    
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Annual rate of interest
 Short term borrowings
 (All amounts in (IMAGE) millions)As at March 31, 2011Weighted average
    
    
    Average amount
    
    
    Maximum amountOutstanding balance
    
    
    interest rate
    
    
    outstanding
    
    
    outstandingRupee borrowings
    
    
    950
    
    
    8.75%
    
    
    
    238
    
    
    
    950Borrowings on transfer of receivables
    
    
    825
    
    
    LIBOR+75-100 bps
    
    
    
    387
    
    
    
    978Other foreign currency borrowings
    
    
    16,514
    
    
    LIBOR+ 50 - 175  bps 
5% to 8%
    
    
    
    12,022
    
    
    
    17,071(All amounts in (IMAGE) millions)As at March 31, 2010Weighted average
    
    
    Average amount
    
    
    Maximum amountOutstanding balance
    
    
    interest rate
    
    
    outstanding
    
    
    outstandingRupee borrowings
    
    
    42
    
    
    
    5%
    
    


    2,102
    
    
    
    3,940Borrowings on
transfer of
receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other foreign
currency borrowings
    
    
    5,562
    
    
    LIBOR+ 40 - 75  bps
    
    
    
    1,693
    
    
    
    5,562
 Long term borrowings
 As at March 31, 2011Bonus debentures
    
    
    9.25
    %
    
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5.C. Research and development, patents and licenses, etc.
 Research and Development
  
    
    Global Generics, where our research and development activities are directed at the
development of product formulations, process validation, bioequivalence testing and other data
needed to prepare a growing list of drugs that are equivalent to numerous brand name products
for sale in the emerging markets or whose patents and regulatory exclusivity periods have
expired or are nearing expiration in the highly regulated markets of the United States and
Europe. Global Generics also include our biologics business, where research and development
activities are directed at the development of biologics products for the emerging as well as
highly regulated markets. Our new biologics research and development facility caters to the
highest development standards, including cGMP, Good Laboratory Practices and bio-safety level
IIA.
 
    
    Pharmaceutical Services and Active Ingredients, where our research and development activities
concentrate on development of chemical processes for the synthesis of active pharmaceutical
ingredients and intermediates (API) for use in our Global Generics segment and for sales in
the emerging and developed markets to third parties. Our research and development activities
also support our custom pharmaceutical line of business, where we continue to leverage the
strength of our process chemistry and finished dosage development expertise to target
innovator as well as emerging pharmaceutical companies. The research and development is
directed toward providing services to support the entire pharmaceutical value chain  from
discovery all the way to the market.
 
    
    Proprietary Products, where we are actively pursuing discovery and development of new
molecules, sometimes referred to as a new chemical entity or NCE, and differentiated
formulations. Our research programs focus on the following therapeutic areas:
 
    
    Metabolic disorders
 
    
    Cardiovascular disorders
 
    
    Bacterial infections
 
    
    Pain and inflammation
 
    
    In the years ended March 31, 2011, 2010 and 2009, we expended (IMAGE)5,060 million, (IMAGE)3,793 million
and (IMAGE)4,037 million, respectively, on research and development activities.
 Patents, Trademarks and Licenses
  5.D. Trend Information
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##### Table of Contents



5.E. Off-balance sheet arrangements
  5.F. Tabular Disclosure of Contractual Obligations
  Payments Due by Period((IMAGE) in millions)Less than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsOperating lease obligations
    
    (IMAGE)
    631
    
    
    (IMAGE)
    216
    
    
    (IMAGE)
    285
    
    
    (IMAGE)
    130
    
    
    
    Capital lease obligations
    
    
    256
    
    
    
    12
    
    
    
    20
    
    
    
    31
    
    
    (IMAGE)
    193Purchase obligationsAgreements to purchase property and equipment
and other capital commitments(1)
    
    
    3,459
    
    
    
    3,459
    
    
    
    
    
    
    
    
    
    
    
    Borrowings from banks
    
    
    18,289
    
    
    
    18,289
    
    
    
    
    
    
    
    
    
    
    
    Long term debt obligations
    
    
    5,078
    
    
    
    
    
    
    
    5,078
    
    
    
    
    
    
    
    Estimated interest payable on long-term debt(2)
    
    
    1,399
    
    
    
    470
    
    
    
    929
    
    
    
    
    
    
    
    Post retirement benefits obligations (3)
    
    
    1,339
    
    
    
    105
    
    
    
    205
    
    
    
    256
    
    
    
    773Total contractual obligations
    
    (IMAGE)
    30,451
    
    
    (IMAGE)
    22,551
    
    
    (IMAGE)
    6,517
    
    
    (IMAGE)
    417
    
    
    (IMAGE)
    966
 
 (1)
    
    These amounts are net of capital advances paid in respect of such purchases and are expected
to be funded from internally generated funds.(2)
    
    Disclosure of estimated interest payments for future periods is only with respect to our long
term debt obligations, as the projected interest payments with respect to our short term
borrowings and other obligations cannot be reasonably estimated because they are subject to
fluctuation in actual utilization of borrowings depending on our daily funding requirements.
The estimated interest costs are based on March 31, 2011 applicable benchmark rates and are
subject to fluctuation in the future.(3)
    
    Post retirement benefits obligations in the More than 5 years column are estimated for a
maximum of 10 years 5.G. Safe harbor
  
 ITEM 6.
    
    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 6.A. Directors and senior management
  Directors
 Name(1)
    
    Age (in yrs)
    
    
    PositionDr. K. Anji Reddy(2)
    
    
    72
    
    
    ChairmanMr. G.V. Prasad(2),(3)
    
    
    51
    
    
    Chief Executive Officer and Vice ChairmanMr. Satish Reddy(2),(4)
    
    
    44
    
    
    Chief Operating Officer and Managing DirectorMr. Anupam Puri
    
    
    65
    
    
    DirectorDr. J.P. Moreau
    
    
    63
    
    
    DirectorMs. Kalpana Morparia
    
    
    62
    
    
    DirectorDr. Omkar Goswami
    
    
    54
    
    
    DirectorMr. Ravi Bhoothalingam
    
    
    65
    
    
    DirectorDr. Bruce L. A. Carter
    
    
    68
    
    
    DirectorDr. Ashok S. Ganguly
    
    
    76
    
    
    Director
 
 (1)
    
    Except for Dr. K. Anji Reddy, Mr. G.V. Prasad and Mr. Satish Reddy, all of the directors are
independent directors under the corporate governance rules of the New York Stock Exchange.(2)
    
    Full-time director.(3)
    
    Son-in-law of Dr. K. Anji Reddy.(4)
    
    Son of Dr. K. Anji Reddy.  93




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Executive Officers
  Date ofEducation/
    
    
    
    Experience in
    
    commencement of
    
    Particulars of lastName and Designation
    
    Degrees Held
    
    Age
    
    years
    
    employment
    
    employmentG.V.
Prasad(1)
Vice Chairman and Chief Executive Officer
    
    B. Sc.(Chem. Eng.),
M.S. (Indl. Admn.)
    
    51
    
    27
    
    June 30, 1990
    
    Promoter Director,
Benzex Labs Private
LimitedSatish Reddy
(2)
    
    B. Tech., M.S.
    
    44
    
    19
    
    January 18, 1993
    
    Director, GlobeManaging Director and Chief Operating Officer
    
    (Medicinal
Chemistry)

    
    
    
    
    
    
    
    Organics LimitedAbhijit Mukherjee 
President  Global
Generics
    
    B. Tech. (Chem.)
    
    53
    
    31
    
    January 15, 2003
    
    President, Atul LimitedAmit Patel

Senior Vice
President  North
America Generics
    
    B.A.S, BS (Eco), MBA
    
    36
    
    13
    
    August 6, 2003
    
    V P Corporate
Development, CTIS IncDr. Cartikeya Reddy 
Senior Vice President and Head of Biologics
    
    B. Tech, M.S., Ph.D.
    
    41
    
    20
    
    July 20, 2004
    
    Senior Engineer,
 Genetech Inc.K. B. Sankara Rao

Executive Vice
President  Integrated
    
    M. Pharma
    
    57
    
    33
    
    September 29, 1986
    
    Production Executive, Cipla LimitedProduct DevelopmentSaumen Chakraborty
    
    B.Sc. (H), PGDM
    
    50
    
    27
    
    July 2, 2001
    
    Vice President,President and Global
    
    
    
    
    
    
    
    
    
    Tecumseh ProductsHead  Quality, HR and IT
    
    
    
    
    
    
    
    
    
    India Private LimitedUmang Vohra

Chief Financial Officer
    
    B.E., MBA
    
    40
    
    16
    
    February 18, 2002
    
    Manager, Pepsico IndiaVilas Dholye

Executive Vice
President Formulations Manufacturing
    
    B. Tech. (Chem.)
    
    62
    
    37
    
    December 18, 2000
    
    Vice President, Pidilite Industries LimitedDr. Raghav Chari 
Senior Vice President
 Proprietary Products
    
    M.S. (Physics), Ph.D.
    
    41
    
    14
    
    September 25, 2006
    
    Head Corporate Strategy, NPS Pharmaceuticals LimitedDr. R. Ananthanarayanan 
President,
Pharmaceutical
Services and Active
Ingredients
    
    B.Pharm, Ph.D.
    
    46
    
    23
    
    August 6, 2010
    
    President, Aurosource, USA
 
 (1)
    
    Son-in-law of Dr. K. Anji Reddy.(2)
    
    Son of Dr. K. Anji Reddy.  94




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Biographies
 Directors
 Dr. K. Anji Reddy
 Mr. G.V. Prasad
 Mr. Satish Reddy
 Mr. Anupam Puri
  95




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##### Table of Contents



Dr. Omkar Goswami
 Mr. Ravi Bhoothalingam
 Dr. J.P. Moreau
 Ms. Kalpana Morparia
 Dr. Bruce L.A. Carter
  96




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##### Table of Contents



Dr. Ashok S. Ganguly
 Executive Officers
 Mr. Abhijit Mukherjee
 Mr. Amit Patel
 Dr. Cartikeya Reddy
 Mr. K.B. Sankara Rao
  97




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Mr. Saumen Chakraborty
 Mr. Umang Vohra
 Mr. Vilas Dholye
 Dr. Raghav Chari
 Dr. R Ananthanarayanan
  98




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##### Table of Contents



6.B. Compensation
 Directors compensation
 Full-Time Directors
  Non-Full Time Directors.
  Amounts (IMAGE) in millions, except number of stock options)
 Number ofName of the Director
    
    Attendance fees
    
    
    Commission
    
    
    Salary
    
    
    Perquisites
    
    
    Total
    
    
    Stock Options(1)Dr. K. Anji Reddy
    
    (IMAGE)
    
    
    
    (IMAGE)
    100
    
    
    (IMAGE)
    5
    
    
    (IMAGE)
    1
    
    
    (IMAGE)
    106
    
    
    
    Mr. G.V. Prasad
    
    
    
    
    
    
    73
    
    
    
    4
    
    
    
    1
    
    
    
    78
    
    
    
    Mr. Satish Reddy
    
    
    
    
    
    
    73
    
    
    
    4
    
    
    
    1
    
    
    
    78
    
    
    
    Mr. Anupam Puri
    
    
    *
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2,400Dr. J.P. Moreau
    
    
    *
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2,400Ms. Kalpana Morparia
    
    
    *
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2,400Dr. Omkar Goswami
    
    
    *
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2,400Mr. Ravi Bhoothalingam
    
    
    *
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2,400Dr. Bruce L. A. Carter
    
    
    *
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2,400Dr. Ashok S. Ganguly
    
    
    *
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2,400
 
 *
    
    Attendance fees were paid only to non-full time directors and ranged from (IMAGE)25 thousand to (IMAGE)95
thousand, depending upon their attendance in Board and committee meetings. As a result of
rounding to the nearest million, such attendance fees do not appear in the above table.(1)
    
    The options granted to non-full time directors during the year ended March 31,
2011 have an exercise price of (IMAGE)5 per
option, vest in one year, and expire five years from the date of vesting.  99




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Executive officers compensation
     Compensation for Executive Officers
 ExpirationCompensation
    
    
    No. of
    
    
    Fiscal Year
    
    
    Exercise
    
    
    DateName
    

((IMAGE) in millions)
    
    
    Options held
    
    
    of Grant
    
    
    Price ((IMAGE))
    
    
    (See note no.)Abhijit Mukherjee
    
    
    20.7
    
    
    
    2,000
    
    
    
    2008
    
    
    
    5
    
    
    
    (1)2,000
    
    
    
    2009
    
    
    
    5
    
    
    
    (1)2,000
    
    
    
    2009
    
    
    
    5
    
    
    
    (2)2,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (1)2,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (2)2,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (3)2,000
    
    
    
    2011
    
    
    
    5
    
    
    
    (1)2,000
    
    
    
    2011
    
    
    
    5
    
    
    
    (2)2,000
    
    
    
    2011
    
    
    
    5
    
    
    
    (3)2,000
    
    
    
    2011
    
    
    
    5
    
    
    
    (4)Amit Patel
    
    
    20.75
    
    
    
    1,375
    
    
    
    2008
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2009
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2009
    
    
    
    5
    
    
    
    (2)1,500
    
    
    
    2010
    
    
    
    5
    
    
    
    (1)1,500
    
    
    
    2010
    
    
    
    5
    
    
    
    (2)1,500
    
    
    
    2010
    
    
    
    5
    
    
    
    (3)1,250
    
    
    
    2011
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2011
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2011
    
    
    
    5
    
    
    
    (3)1,250
    
    
    
    2011
    
    
    
    5
    
    
    
    (4)Cartikeya Reddy
    
    
    12.07
    
    
    
    1,000
    
    
    
    2008
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2009
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2009
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (3)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (1)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (2)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (3)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (4)
  100




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ExpirationCompensation
    
    
    No. of
    
    
    Fiscal Year
    
    
    Exercise
    
    
    DateName
    

((IMAGE) in millions)
    
    
    Options held
    
    
    of Grant
    
    
    Price ((IMAGE))
    
    
    (See note no.)K. B. Sankara Rao
    
    
    12.52
    
    
    
    1,500
    
    
    
    2008
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2009
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2009
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (3)875
    
    
    
    2011
    
    
    
    5
    
    
    
    (1)875
    
    
    
    2011
    
    
    
    5
    
    
    
    (2)875
    
    
    
    2011
    
    
    
    5
    
    
    
    (3)875
    
    
    
    2011
    
    
    
    5
    
    
    
    (4)Saumen Chakraborty
    
    
    18.57
    
    
    
    2,000
    
    
    
    2008
    
    
    
    5
    
    
    
    (1)2,000
    
    
    
    2009
    
    
    
    5
    
    
    
    (1)2,000
    
    
    
    2009
    
    
    
    5
    
    
    
    (2)2,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (1)2,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (2)2,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (3)1,625
    
    
    
    2011
    
    
    
    5
    
    
    
    (1)1,625
    
    
    
    2011
    
    
    
    5
    
    
    
    (2)1,625
    
    
    
    2011
    
    
    
    5
    
    
    
    (3)1,625
    
    
    
    2011
    
    
    
    5
    
    
    
    (4)Umang Vohra
    
    
    11.42
    
    
    
    750
    
    
    
    2008
    
    
    
    5
    
    
    
    (1)875
    
    
    
    2009
    
    
    
    5
    
    
    
    (1)875
    
    
    
    2009
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (3)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (1)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (2)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (3)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (4)Vilas M. Dholye
    
    
    11.27
    
    
    
    700
    
    
    
    2008
    
    
    
    5
    
    
    
    (1)400
    
    
    
    2009
    
    
    
    5
    
    
    
    (1)400
    
    
    
    2009
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (1)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (2)1,250
    
    
    
    2010
    
    
    
    5
    
    
    
    (3)875
    
    
    
    2011
    
    
    
    5
    
    
    
    (1)875
    
    
    
    2011
    
    
    
    5
    
    
    
    (2)875
    
    
    
    2011
    
    
    
    5
    
    
    
    (3)875
    
    
    
    2011
    
    
    
    5
    
    
    
    (4)Dr. Raghav Chari
    
    
    19.25
    
    
    
    500
    
    
    
    2008
    
    
    
    5
    
    
    
    (1)750
    
    
    
    2009
    
    
    
    5
    
    
    
    (1)750
    
    
    
    2009
    
    
    
    5
    
    
    
    (2)1,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (1)1,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (2)1,000
    
    
    
    2010
    
    
    
    5
    
    
    
    (3)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (1)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (2)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (3)1,125
    
    
    
    2011
    
    
    
    5
    
    
    
    (4)Dr. Ananthnarayanan
    
    
    9.93
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    The expiration date is five years from the date of vesting. The options vest in one year.(2)
    
    The expiration date is five years from the date of vesting. The options vest in two years.(3)
    
    The expiration date is five years from the date of vesting. The options vest in three years.(4)
    
    The expiration date is five years from the date of vesting. The options vest in four years.  101




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Retirement benefits.
  Gratuity benefits:
 
 Superannuation benefits.
 Provident fund benefits.
 4 01(k) retirement savings plans.
 National Insurance contributions
  102




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##### Table of Contents



Pension plans
 Long service benefit recognition.
 6.C. Board practices
    Expiration ofCurrentName
    
    Term of Office
    
    Term of Office
    
    Period of ServiceDr. K. Anji Reddy (1)(4)
    
    July 12, 2016
    
    5 years
    
    27 yearsMr. Satish Reddy (1)
    
    September 30, 2012
    
    5 years
    
    18 yearsMr. G.V. Prasad (1)(4)
    
    January 29, 2016
    
    5 years
    
    25 yearsMr. Anupam Puri (2)
    
    Retirement by rotation
    
    Due for retirement by rotation in 2011
    
    9 yearsDr. J. P. Moreau(2)(3)
    
    Retirement by rotation
    
    Due for retirement by rotation in 2013
    
    4 yearsMs. Kalpana Morparia(2)(3)
    
    Retirement by rotation
    
    Due for retirement by rotation in 2014
    
    4 yearsDr. Omkar Goswami(2)
    
    Retirement by rotation
    
    Due for retirement by rotation in 2012
    
    10.5 yearsMr. Ravi Bhoothalingam(2)
    
    Retirement by rotation
    
    Due for retirement by rotation in 2012
    
    10.5 yearsDr. Bruce L. A. Carter(2)
    
    Retirement by rotation
    
    Due for retirement by rotation in 2011
    
    3 yearsDr. Ashok S. Ganguly(2)
    
    Retirement by rotation
    
    Due for retirement by rotation in 2013
    
    1.5 year
 
 (1)
    
    Full time director.(2)
    
    Non-full time independent director.(3)
    
    Reappointed at the 26th Annual General Meeting of Shareholders held on July 23, 2010.(4)
    
    Reappointed by the Board of Directors at their meeting held on January 25, 2011 for a further
period of five years, subject to approval by our shareholders at their next annual general meeting
scheduled on July 21, 2011.   103




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##### Table of Contents



Committees of the Board
  
    
    Audit Committee.
    
    Nomination, Governance and Compensation Committee.
    
    Science, Technology and Operations Committee.
    
    Risk Management Committee.
    
    Shareholders Grievance Committee.
    
    Management Committee.
    
    Investment Committee.
   Audit Committee .
  
    
    Dr. Omkar Goswami (Chairman);
    
    Ms. Kalpana Morparia; and
    
    Mr. Ravi Bhoothalingam.
   104




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##### Table of Contents




    
    Supervise the financial reporting process;
 
    
    Review our financial results, along with the related public filings, before recommending
them to the Board;
 
    
    Review the adequacy of our internal controls, including the plan, scope and performance
of our internal audit function;
 
    
    Discuss with management our major policies with respect to risk assessment and risk
management;
 
    
    Hold discussions with our independent registered public accounting firm on the nature and
scope of audits, and any views that they have about the financial control and reporting
processes;
 
    
    Ensure compliance with accounting standards, and with listing requirements with respect
to the financial statements;
 
    
    Recommend the appointment and removal of our independent registered public accounting
firm and their fees;
 
    
    Review the independence of our independent registered public accounting firm;
 
    
    Ensure that adequate safeguards have been taken for legal compliance both for us and for
our Indian and foreign subsidiaries;
 
    
    Review related party transactions;
 
    
    Review the functioning of our whistle blower policies and procedures; and
 
    
    Implement compliance with all applicable provisions of the Sarbanes-Oxley Act of 2002.
 Governance and Compensation Committee .
  
    
    Mr. Anupam Puri (Chairman);
 
    
    Dr. Bruce Carter;
 
    
    Dr. J.P. Moreau;
    
    Ms. Kalpana Morparia;
    
    Dr. Omkar Goswami; and
    
    Mr. Ravi Bhoothalingam.
   105




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##### Table of Contents



Nomination, Governance and Compensation Committee.
 
    
    Examine the structure, composition and functioning of the Board, and recommend changes,
as necessary, to improve the Boards effectiveness;
 
    
    Assess our policies and processes in key areas of corporate governance, other than those
explicitly assigned to other Board Committees, with a view to ensuring that we are at the
forefront of good corporate governance; and
 
    
    Regularly examine ways to strengthen our organizational health, by improving the hiring,
retention, motivation, development, deployment and behavior of management and other
employees. In this context, the Committee also reviews the framework and processes for
motivating and rewarding performance at all levels of the organization, the
resulting compensation awards, and make appropriate proposals for Board approval. In
particular, it recommends all forms of compensation to be granted to our directors, executive
officers and senior management employees.
  
    
    Mr. Anupam Puri (Chairman);
    
    Dr. Ashok S. Ganguly;
    
    Ms. Kalpana Morparia; and
    
    Mr. Ravi Bhoothalingam.
  Science, Technology and Operations Committee.
  
    
    Advise the Board and our management on scientific, medical and technical matters and
operations involving our development and discovery programs (generic and proprietary),
including major internal projects, business development opportunities, interaction with
academic and other outside research organizations;
 
    
    Assist the Board and our management to stay abreast of novel scientific and technologies
developments and innovations and anticipate emerging concepts and trends in therapeutic
research and development, to help assure that we make well-informed choices in committing
our resources;
 
    
    Assist the Board and our management in creation of valuable intellectual property;
 
    
    Review the status of non-infringement patent challenges; and
 
    
    Assist the Board and our management in building and nurturing science in our organization
in accordance with our business strategy.
  106




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##### Table of Contents




    
    Dr. Ashok S. Ganguly (Chairman);
    
    Mr. Anupam Puri;
    
    Dr. Bruce L.A. Carter; and
    
    Dr. J.P. Moreau
  Risk Management Committee.
  
    
    Ensure that it is apprised of the most significant risks along with the action management
is taking and how it is ensuring effective Enterprise Risk Management;
 
    
    Discuss with senior management our Enterprise Risk Management and provide oversight as
may be needed; and
 
    
    Review risk disclosure statements in any public documents or disclosures.
  
    
    Dr. Bruce L.A. Carter (Chairman);
    
    Dr. J.P. Moreau; and
    
    Dr. Omkar Goswami
  6.D. Employees
  As at March 31, 2011
 Rest of theNorth America
    
    
    Europe
    
    
    World
    
    
    TotalManufacturing(1)
    
    
    232
    
    
    
    74
    
    
    
    5,992
    
    
    
    6,298Sales and Marketing(2)
    
    
    119
    
    
    
    88
    
    
    
    4,640
    
    
    
    4,847Research and Development
    
    
    8
    
    
    
    30
    
    
    
    1,890
    
    
    
    1,928Others(3)
    
    
    61
    
    
    
    159
    
    
    
    1,630
    
    
    
    1,850Total
    
    
    420
    
    
    
    351
    
    
    
    14,152
    
    
    
    14,923
 As at March 31, 2010
 Rest of theNorth America
    
    
    Europe
    
    
    World
    
    
    TotalManufacturing(1)
    
    
    163
    
    
    
    53
    
    
    
    5,524
    
    
    
    5,740Sales and Marketing(2)
    
    
    102
    
    
    
    88
    
    
    
    3,873
    
    
    
    4,063Research and Development
    
    
    6
    
    
    
    27
    
    
    
    1,753
    
    
    
    1,786Others(3)
    
    
    44
    
    
    
    231
    
    
    
    1,591
    
    
    
    1,866Total
    
    
    315
    
    
    
    399
    
    
    
    12,741
    
    
    
    13,455
  107




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##### Table of Contents



As at March 31, 2009
 Rest of theNorth America
    
    
    Europe
    
    
    World
    
    
    TotalManufacturing(1)
    
    
    105
    
    
    
    89
    
    
    
    3,686
    
    
    
    3,880Sales and Marketing(2)
    
    
    85
    
    
    
    235
    
    
    
    3,594
    
    
    
    3,914Research and Development
    
    
    18
    
    
    
    24
    
    
    
    1,455
    
    
    
    1,497Others(3)
    
    
    121
    
    
    
    197
    
    
    
    1,619
    
    
    
    1,937Total
    
    
    329
    
    
    
    545
    
    
    
    10,354
    
    
    
    11,228
 (1)
    
    Includes quality, technical services and warehouse.(2)
    
    Includes business development.(3)
    
    Includes shared services, corporate business development and the intellectual
property management team.  6.E. Share ownership
  No. of Shares
    
    
    % of Outstanding
    
    
    No. of OptionsName
    
    Held (1), (3)
    
    
    Capital
    
    
    HeldDr. K. Anji Reddy (2),(4)
    
    
    600,956
    
    
    
    0.36
    %
    
    
    Mr. G.V. Prasad (4)
    
    
    1,365,840
    
    
    
    0.81
    %
    
    
    Mr. Satish Reddy (4)
    
    
    1,205,832
    
    
    
    0.71
    %
    
    
    Mr. Anupam Puri (ADRs)(5)
    
    
    16,498
    
    
    
    0.01
    %
    
    
    2,402Dr. J.P.Moreau (ADRs)(5)
    
    
    6,000
    
    
    
    
    
    
    
    2,400Dr. Omkar Goswami(5)
    
    
    18,000
    
    
    
    0.01
    %
    
    
    2,400Ms. Kalpana Morparia(5)
    
    
    6,000
    
    
    
    
    
    
    
    2,400Mr. Ravi Bhoothalingam(5)
    
    
    18,000
    
    
    
    0.01
    %
    
    
    2,400Dr. Bruce L.A. Carter (ADRs)(5)
    
    
    7,000
    
    
    
    
    
    
    
    2,400Dr. Ashok S. Ganguly(5)
    
    
    
    
    
    
    
    
    
    
    2,400Abhijit Mukherjee
    
    
    28,093
    
    
    
    0.01
    %
    
    
    20,000Amit Patel
    
    
    
    
    
    
    
    
    
    
    13,375Cartikeya Reddy
    
    
    5,575
    
    
    
    
    
    
    
    11,750K. B. Sankara Rao
    
    
    64,438
    
    
    
    0.04
    %
    
    
    11,250R. Ananthanarayanan
    
    
    
    
    
    
    
    
    
    
    Saumen Chakraborty
    
    
    24,500
    
    
    
    0.02
    %
    
    
    18,500Umang Vohra
    
    
    5,990
    
    
    
    
    
    
    
    10,750Vilas M. Dholye
    
    
    1,910
    
    
    
    
    
    
    
    8,750Dr. Raghav Chari
    
    
    
    
    
    
    
    
    
    
    9,500
 
 (1)
    
    Shares held in their individual name only.(2)
    
    Does not include shares held beneficially. See Item 7.A. for beneficial ownership of shares
by this individual.(3)
    
    All shares have voting rights.(4)
    
    Not eligible for grant of Stock Options.(5)
    
    These options were granted in the years ended March 31, 2010 and 2011 with an exercise price
of (IMAGE)5 each. These options vests at the end of one year from the date of grant and expire at
the end of five years from the date of vesting.  108




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Employee Stock Incentive Plans
 
 
 
  
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 7.A. Major shareholders
  
    
    Dr. K. Anji Reddy (Chairman),
    
    Mr. G.V. Prasad (Vice Chairman and Chief Executive Officer),
    
    Mr. Satish Reddy (Managing Director and Chief Operating Officer),
    
    Mrs. K. Samrajyam, wife of Dr. K. Anji Reddy, and Mrs. G. Anuradha, wife of Mr. G.V.
Prasad (hereafter collectively referred as the Family Members), and
    
    Dr. Reddys Holdings Limited (formerly known as Dr. Reddys Holdings Private Limited) (a
company in which Dr. K. Anji Reddy owns 40% of the equity and the remainder is held by Mr.
G.V. Prasad, Mr. Satish Reddy and the Family Members).
  109




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Equity Shares Beneficially Owned (1)Number
    
    
    PercentageName
    
    of Shares
    
    
    of SharesDr. K. Anji Reddy (2)
    
    
    39,729,284
    
    
    
    23.47
    %Mr. G.V. Prasad
    
    
    1,365,840
    
    
    
    0.81
    %Mr. Satish Reddy
    
    
    1,205,832
    
    
    
    0.71
    %Family Members
    
    
    1,116,856
    
    
    
    0.66
    %Subtotal
    
    
    43,417,812
    
    
    
    25.65
    %Others/public float
    
    
    125,834,920
    
    
    
    74.35
    %Total number of shares outstanding
    
    
    169,252,732
    
    
    
    100.00
    %
 (1)
    
    Beneficial ownership is determined in accordance with rules of the U.S. Securities and
Exchange Commission, which provides that shares are beneficially owned by any person who has
or shares voting or investment power with respect to the shares. All information with respect
to the beneficial ownership of any principal shareholder has been furnished by that
shareholder and, unless otherwise indicated below, we believe that persons named in the table
have sole voting and sole investment power with respect to all shares shown as beneficially
owned, subject to community property laws where applicable.(2)
    
    Dr. Reddys Holdings Limited owns 39,128,328 of our equity shares. Dr. K. Anji Reddy owns 40%
of Dr. Reddys Holdings Limited. The remainder is owned by Mr. G.V. Prasad, Mr. Satish Reddy
and the Family Members. The entire amount beneficially owned by Dr. Reddys Holdings Limited
is included in the amount shown as beneficially owned by Dr. K. Anji Reddy. An aggregate of
2,100,000 of such equity shares held by Dr. Reddys Holdings Limited were pledged as on March
31, 2011.   March 31, 2011
    
    
    March 31, 2010
    
    
    March 31, 2009No. of equity
    
    
    % of equity
    
    
    No. of equity
    
    
    % of equity
    
    
    No. of equity
    
    
    % of equityName
    
    shares held
    
    
    shares held
    
    
    shares held
    
    
    shares held
    
    
    shares held
    
    
    shares heldDr. Reddys
Holdings Limited
    
    
    39,128,328
    
    
    
    23.12
    
    
    
    39,128,328
    
    
    
    23.17
    
    
    
    39,978,328
    
    
    
    23.74Life Insurance
Corporation of
India and its
associates
    
    
    13,579,378
    
    
    
    8.02
    
    
    
    18,871,794
    
    
    
    11.18
    
    
    
    21,723,498
    
    
    
    12.89
 
 7.B. Related party transactions
  
    
    Green Park Hotel and Resorts Limited (formerly known as Diana Hotels Limited) for hotel
services;
 
    
    A.R. Life Sciences Private Limited for processing services of raw materials and
intermediates;
 
    
    Dr. Reddys Holdings Limited for the purchase and sale of active pharmaceutical
ingredients;
  110




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
    
    Dr. Reddys Foundation for Human and Social Development towards contributions for social
development;
 
    
    Institute of Life Science towards contributions for social development;
    
    K.K. Enterprises for packaging services for formulation products;
    
    SR Enterprises for transportation services; and
    
    Dr. Reddys Laboratories Gratuity Fund.
    (Amounts in (IMAGE) millions)Year Ended March 31,2011
    
    
    2010
    
    
    2009Purchases from significant interest entities in the ordinary course
    
    (IMAGE)
    486
    
    
    (IMAGE)
    275
    
    
    (IMAGE)
    290Sales to significant interest entities in the ordinary course
    
    
    391
    
    
    
    156
    
    
    
    135Services to significant interest entities
    
    
    
    
    
    
    4
    
    
    
    Contribution to a significant interest entity towards social development and
research and development
    
    
    125
    
    
    
    151
    
    
    
    124Hotel expenses paid to significant interest entities
    
    
    20
    
    
    
    13
    
    
    
    13Advances paid to significant interest entities for purchase of land (1)
    
    
    
    
    
    
    367
    
    
    
    400Short term loan taken from and repaid to significant interest entities
    
    
    
    
    
    
    
    
    
    
    60Interest paid on loan taken from significant interest entities
    
    
    
    
    
    
    
    
    
    
    2Compensation paid to key management personnel
    
    
    494
    
    
    
    511
    
    
    
    460Lease rental paid under cancellable operating leases to directors and their relatives
    
    
    29
    
    
    
    27
    
    
    
    26
 (1)
    
    This does not include amounts paid as at March 31, 2011, 2010 and 2009 of (IMAGE)0
million, (IMAGE)1,447 million and (IMAGE)1,080 million, respectively, as advances towards the purchase of
land from significant interest entities, which has been recorded under capital
work-in-progress in our statement of financial position.  
    
    During the year ended March 31, 2010, we exchanged a parcel of land owned by us for
another parcel of land of equivalent size that adjoins our research facility, owned by
our key management personnel. We concluded that this exchange transaction lacks
commercial substance and have accordingly recorded the land acquired at the carrying
amount of the land transferred, with no profit or loss being recorded.
 
    
    During the year ended March 31, 2010, we purchased land from a significant interest
entity for a purchase price of (IMAGE)21 million.
  (Amounts in (IMAGE) millions)As at March 31,2011
    
    
    2010Significant interest entities
    
    (IMAGE)
    114
    
    
    (IMAGE)
    44Key management personnel
    
    
    5
    
    
    
    5
  111




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##### Table of Contents



(Amounts in (IMAGE) millions)As at March 31,2011
    
    
    2010Significant interest entities
    
    (IMAGE)
    81
    
    
    (IMAGE)
    20
 7.C. Interests of experts and counsel
  
 ITEM 8. FINANCIAL INFORMATION
 8.A. Consolidated statements and other financial information
  
    
    Report of Independent Registered Public Accounting Firm
    
    Consolidated statement of financial position as of March 31, 2011 and 2010
    
    Consolidated income statement for the years ended March 31, 2011, 2010 and 2009
    
    Consolidated statement of
comprehensive income/(loss) for the years ended March 31, 2011, 2010
and 2009
    
    Consolidated statement of changes in equity for the years ended March 31, 2011, 2010 and
2009
    
    Consolidated cash flow statement for the years ended March 31, 2011, 2010 and 2009
    
    Notes to the consolidated financial statements
  Amount of Export Sales
 
  112




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Legal Proceedings
     Product and patent related matters
 Norfloxacin litigation
  
  113




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##### Table of Contents



Fexofenadine United States litigation
 ® ®
 ® ® ® ®
 ® ®
 ® ®  ®
 Alendronate Sodium, Germany litigation
 ®
   114




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® ®
  Oxycodon, Germany litigation
     Olanzapine, Canada litigation
 ® ®
  115




---



##### Table of Contents



®
 Ceragenix Bankruptcy Litigation
 ®
 ® ®
 Styptovit-K litigation
  Environmental matter
 
 Indirect taxes related matter
 
  116




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Regulatory matters
  Other
  Dividend Policy
 
  Bonus Debentures
  
    
    Fully paid up bonus debentures carrying a face value of (IMAGE)5 each were issued to our
shareholders in the ratio of 6 bonus debentures for each equity share held by such
shareholder on March 18, 2011.
 
    
    The bonus debentures are unsecured and are not convertible into our equity shares.
  117




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##### Table of Contents




    
    We delivered cash in the aggregate value of the bonus debentures into an escrow account
of a merchant banker in India appointed by our Board of Directors. The merchant banker
received such amount for and on behalf of and in trust for the shareholders who are
entitled to receive bonus debentures. Upon receipt of such amount, the merchant banker paid
the amount to us, for and on behalf of the shareholders as consideration for the allotment
of debentures to them.
 
    
    These bonus debentures have a maturity of 36 months, at which time we must redeem them
for cash in an amount equal to the face value of
(IMAGE)5 each, plus unpaid interest, if any.
 
    
    These bonus debentures carry
an interest rate of 9.25% per annum,  payable at the end of every
12, 24 and 36 months from the date of issue.
 
    
    These bonus debentures are listed on stock exchanges in India so as to provide liquidity
for the holders.
 
    
    Issuance of these bonus debentures will be treated as a deemed dividend under section
2 (22) (b) of the Indian Income Tax Act, 1961 and accordingly, we will be required to pay a
dividend distribution tax.
 
    
    Under Indian Corporate Law and as per the terms of the approved bonus debenture scheme,
we have created a statutory reserve (the Debenture Redemption Reserve) in which we are
required to deposit a portion of our profits made during each year prior to the maturity
date of the bonus debentures until the aggregate amount retained in such reserve equals 50%
of the face value of the debentures then issued and outstanding. The funds in the
Debenture Redemption Reserve shall be used only to redeem the debentures for so long as
they are issued and outstanding.
 
 
   118




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8.B. Significant changes
 Alendronate Sodium, Germany litigation
 Legal Proceedings  Product and patent related matters  Alendronate Sodium, Germany
litigation
 Ceragenix Bankruptcy Litigation
 ® Legal Proceedings  Product and patent related
matters  Ceragenix Bankruptcy Litigation
 Voluntary retirement scheme
 
 Letter from the U.S. Food and Drug Administration
    119




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Approval for Fondaparinux Sodium Injection
 ®
 
 ITEM 9. THE OFFER AND LISTING
 9.A. Offer and listing details
 Information Regarding Price History
  BSE
    
    
    NYSEYear
    
    Price Per Equity Share(1)
    
    
    Price Per ADS(1)Ended March 31,
    
    High ((IMAGE))
    
    
    Low ((IMAGE))
    
    
    High (U.S.$)
    
    
    Low (U.S.$)2011
    
    
    1855.00
    
    
    
    1160.00
    
    
    
    41.80
    
    
    
    24.172010
    
    
    1,317.90
    
    
    
    476.10
    
    
    
    29.23
    
    
    
    9.172009
    
    
    739.00
    
    
    
    357.00
    
    
    
    16.95
    
    
    
    7.272008
    
    
    760.00
    
    
    
    501.00
    
    
    
    18.66
    
    
    
    13.072007
    
    
    877.00
    
    
    
    608.00
    
    
    
    19.06
    
    
    
    12.31
 BSE
    
    
    NYSEPrice Per Equity Share
    
    
    Price Per ADSQuarter Ended
    
    High ((IMAGE))
    
    
    Low ((IMAGE))
    
    
    High (U.S.$)
    
    
    Low (U.S.$)June 30, 2009
    
    
    800.00
    
    
    
    476.10
    
    
    
    16.98
    
    
    
    9.17September 30, 2009
    
    
    1,018.50
    
    
    
    696.00
    
    
    
    20.88
    
    
    
    15.12December 31, 2009
    
    
    1,241.90
    
    
    
    891.50
    
    
    
    26.54
    
    
    
    18.55March 31, 2010
    
    
    1,317.90
    
    
    
    1,051.20
    
    
    
    29.23
    
    
    
    23.13June 30, 2010
    
    
    1,515.00
    
    
    
    1,160.00
    
    
    
    33.14
    
    
    
    24.17September 30, 2010
    
    
    1,558.00
    
    
    
    1,304.50
    
    
    
    33.59
    
    
    
    27.55December 31, 2010
    
    
    1,855.00
    
    
    
    1,445.00
    
    
    
    41.80
    
    
    
    32.92March 31, 2011
    
    
    1,728.90
    
    
    
    1,451.25
    
    
    
    38.10
    
    
    
    32.58
 BSE
    
    
    NYSEPrice Per Equity Share(1)
    
    
    Price Per ADS(1)Month Ended
    
    High ((IMAGE))
    
    
    Low ((IMAGE))
    
    
    High (U.S.$)
    
    
    Low (U.S.$)October 31, 2010
    
    
    1,670.00
    
    
    
    1,445.00
    
    
    
    38.06
    
    
    
    32.92November 30, 2010
    
    
    1,814.00
    
    
    
    1,666.05
    
    
    
    40.25
    
    
    
    37.73December 31, 2010
    
    
    1,855.00
    
    
    
    1,618.00
    
    
    
    41.80
    
    
    
    34.85January 31, 2011
    
    
    1,728.90
    
    
    
    1,526.00
    
    
    
    38.10
    
    
    
    33.93February 28, 2011
    
    
    1,640.00
    
    
    
    1,451.25
    
    
    
    35.64
    
    
    
    32.58March 31, 2011
    
    
    1,675.00
    
    
    
    1,492.00
    
    
    
    37.53
    
    
    
    33.52
  9.B. Plan of distribution
   120




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9.C. Markets
 Markets on Which Our Shares Trade
  Markets on Which Our Debentures Trade
  9.D. Selling shareholders
  9.E. Dilution
  9.F. Expenses of the issue
  
 ITEM 10. ADDITIONAL INFORMATION
 10.A. Share capital
  10.B. Memorandum and articles of association
    121




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10.C. Material contracts
  10.D. Exchange controls
  Foreign Direct Investment
       122




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##### Table of Contents



Portfolio Investment Scheme
  Portfolio Investments by NRIs
   Portfolio Investments by FIIs
  Ownership restrictions
     123




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##### Table of Contents



Subsequent transfer of shares
  (i)
    
    A person resident outside India, not being a NRI or an OCB, may transfer by way of sale
or gift the shares or convertible debentures held by him or it to any person resident
outside India;
 (ii)
    
    A NRI may transfer by way of sale or gift, the shares or convertible debentures held by
that person to another NRI only; provided that the person to whom the shares are being
transferred has obtained prior permission of the Government of India to acquire the shares
if he has a previous venture or tie up in India through an investment in shares or
debentures or a technical collaboration or a trade mark agreement or investment by whatever
name called in the same field or allied field in which the Indian company whose shares are
being transferred is engaged. Provided further that the restriction in clauses (i) and (ii)
shall not apply to the transfer of shares to international financial institutions such as
Asian Development Bank (ADB), International Finance Corporation (IFC), Commonwealth
Development Corporation (CDC), Deutsche Entwicklungs Gesselschaft (DEG) and transfer of
 shares of an Indian company engaged in the Information Technology sector.
  124




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(iii)
    
    A person resident outside India holding the shares or convertible debentures of an
Indian company in accordance with the said Regulations, (a) may transfer the same to a
person resident in India by way of gift; or (b) may sell the same on a recognized Stock
Exchange in India through a registered broker.
  ADS guidelines
  Fungibility of ADSs
  (i)
    
    the shares are purchased on a recognized stock exchange;
 (ii)
    
    the shares are purchased with the permission of the Custodian to the ADS offering of the
Indian company and are deposited with the Custodian;
 (iii)
    
    The custodian has been authorized to accept shares from non-resident investors for
reissuance of ADSs;
 (iv)
    
    the shares purchased for conversion into ADSs do not exceed the number of shares that
were released by the Custodian pursuant to conversions of ADSs into equity shares under the
Depositary Agreement; and
 (v)
    
    a non-resident investor, broker, the Custodian and the Depositary comply with the
provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(through Depositary Receipt Mechanism) Scheme, 1993 and the related guidelines issued by the
Central Government from time to time.
 Transfer of ADSs
   125




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10.E. Taxation
 Indian Taxation
 General.
 Each prospective investor should consult tax advisors with respect to
taxation in India or their respective locations on acquisition, ownership or disposing of equity
shares or ADSs.
 Residence.
 
    
    a period or periods of at least 182 days; or
 
    
    at least 60 days and, within the four preceding fiscal years has been in India for a
period or periods amounting to at least 365 days.
   Taxation of Distributions.
 a)
  Taxation of Capital Gains. You should consult your own tax advisor concerning the tax consequences of your particular
situation.
  126




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##### Table of Contents




    
    gains from a sale of ADSs outside India by a non-resident to another non-resident are not
taxable in India;
 
    
    long-term capital gains realized by a resident from the transfer of the ADSs will be
subject to tax at the rate of 10%, plus the applicable surcharge and education cess;
short-term capital gains on such a transfer will be taxed at graduated rates with a maximum
of 30%, plus the applicable surcharge and education cess;
 
    
    long-term capital gains realized by a non-resident upon the sale of equity shares
obtained from the conversion of ADSs are subject to tax at a rate of 10%, excluding the
applicable surcharge and education cess; and short-term capital gains on such a transfer
will be taxed at the maximum marginal rate of tax applicable to the seller, excluding
surcharges and education cess, if the sale of such equity shares is settled outside of a
recognized stock exchange in India;
 
    
    long-term capital gain realized by a non-resident upon the sale of equity shares obtained
from the conversion of ADSs is exempt from tax and any short term capital gain is taxed at
15%, plus the applicable surcharge and education cess, if the sale of such equity shares is
settled on a recognized stock exchange and securities transaction tax (STT) is paid on
such sale.
       127




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Withholding Tax on Capital Gains.
 Buy-back of Securities.
 Stamp Duty and Transfer Tax.
 Wealth Tax.
 Gift Tax and Estate Duty.
 Service Tax.
 United States Federal Taxation
   128




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Ownership of ADSs
 Dividends
   129




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Sale or exchange of equity shares or ADSs
 Estate taxes
 Backup withholding tax and information reporting requirements
  Passive foreign investment company
 
 
  130




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
 
 
   10.F. Dividends and paying agents
  10.G. Statements by experts
  10.H. Documents on display
 www.sec.gov
  10.I. Subsidiary information
   131




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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    Components of Market Risk
 Foreign Exchange Rate Risk
   Sensitivity Analysis of Exchange Rate Risk.
 
  Commodity Rate Risk
    132




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Interest Rate Risk
 
 Interest Rate Profile
  For the Year Ended March 31,2011
    
    
    2010
    
    2009Foreign Currency Loans
    
    
    
    
    
    Euribor +70bps and
Libor +70 bps
    
    Euribor +70bps or
Libor +70 bpsRupee Term Loans*
    
    
    
    
    
    
    2
    %
    
    
    2
    %Bonus Debentures
    
    
    9.25
    %
    
    
    
    
    
    
 
 *
    
    Loan received at a subsidized rate of interest from Indian Renewable Energy Development
Agency Limited promoting use of alternative sources of energy. Maturity profile
  
 Maturing in the
    
    
    
    
    
    Foreign
    
    
    Obligationyear ending
    
    Rupee term
    
    
    currency
    
    
    under financeMarch 31,
    
    loan
    
    
    loan
    
    
    lease
    
    
    Debentures
    
    
    Total2012
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    122013
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    102014
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    5,078
    
    
    
    5,0882015
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    102016
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Thereafter
    
    
    
    
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    204(IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    256
    
    
    (IMAGE)
    5,078
    
    
    (IMAGE)
    5,334
 Counter-Party Risk
  
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 A. Debt Securities.
 
  133




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##### Table of Contents



Dividend Policy  Bonus
Debentures
 B. Warrants and Rights.
  C. Other Securities.
  D. American Depositary Shares.
 Fees and Charges for Holders of American Depositary Shares
  Category(as defined by SEC)
    
    Depositary actions
    
    Associated Fee(a) Depositing or substituting the 
underlying shares
    
    Issuing ADSs upon deposits of shares,
including deposits and issuances in respect of
share distributions, stock splits, rights,
mergers, exchanges of securities or any other
transaction or event or other distribution
affecting the ADSs or the deposited shares.
    
    U.S.$5.00 for each 100 ADSs (or
portion thereof) evidenced by
the new shares deposited.(b) Receiving or distributing 
dividends
    
    Distribution of dividends.
    
    U.S.$0.02 or less per ADSs
(U.S.$2.00 per 100 ADSs).(c) Selling or exercising rights
    
    Distribution or sale of securities.
    
    U.S.$5.00 for each 100 ADSs (or
portion thereof), the fee being
in an amount equal to the fee
for the execution and delivery
of ADSs which would have been
charged as a result of the
deposit of such securities.
  134




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##### Table of Contents



Category(as defined by SEC)
    
    Depositary actions
    
    Associated Fee(d) Withdrawing an underlying 
security
    
    Acceptance of ADSs surrendered for withdrawal
of deposited shares.
    
    U.S.$5.00 for each 100 ADSs (or
portion thereof) evidenced by the
shares withdrawn.(e) Transferring, splitting or 
grouping receipts
    
    Transfers, combining or grouping of depositary
receipts.
    
    U.S.$1.50 per ADS.(f) General depositary services,
particularly those charged on an
annual basis.
    
    Other services performed by the depositary in
administering the ADSs.
    
    U.S.$0.02 per ADS (or portion
thereof) not more than once each
calendar year.(g) Other
    
    Expenses incurred on behalf of holders in
connection with:
    
    The amount of such expenses
incurred by the Depositary.     compliance with foreign exchange
control
regulations or any law or regulation relating
to foreign investment;     the depositarys or its
custodians
compliance with applicable law, rule or
regulation;     stock transfer or other
taxes and other
governmental charges;     cable, telex,
facsimile
transmission/delivery;     expenses of the depositary
in connection
with the conversion of foreign currency into
U.S. dollars (which are paid out of such
foreign currency); or     any other charge payable
by depositary or
its agents.
  Fees made by Depositary to us
 Direct Payments
   135




---



##### Table of Contents



Amount Reimbursed duringCategory of Expenses
    
    the Year Ended March 31, 2011Legal and accounting fees incurred in
connection with preparation of Form 20-F and
ongoing SEC compliance and listing
requirements
    
    
    U.S.$547,082Listing fees
    
    NoneInvestor relations
    
    NoneAdvertising and public relations
    
    NoneBroker reimbursements (1)
    
    None
 (1)
    
    Broker reimbursements are fees payable to Broadridge Financial
Solutions, Inc. and other service providers for the distribution of hard copy
materials to beneficial ADS holders in the Depositary Trust Company. Corporate
material includes information related to shareholders meetings and related
voting instruction cards. Indirect Payments
  Category Expenses
    
    Amount Reimbursed during the Year Ended March 31, 2011Third-party expenses paid directly
    
    U.S.$38,000 towards NYSE listing fee and U.S.$102,206 towards
broker reimbursements, postage, printing and Depositary
Trust Company report feesFees waived
    
    Up to U.S.$300,000 per year.
 
 PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
 Modification in the rights of security holders
   136




---



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Use of Proceeds
 
 
 
 
 ITEM 15. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Managements Annual Report on Internal Control Over Financial Reporting
     137




---



##### Table of Contents



/s/ G. V. Prasad

Vice-Chairman and Chief Executive Officer
    
    
    
    /s/ Umang Vohra

Chief Financial Officer
  138




---



##### Table of Contents



Attestation Report of the Registered Public Accounting Firm.
 Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated
Framework
    Internal Control  Integrated Framework
 
      139




---



##### Table of Contents



ITEM 16. [RESERVED]
 
 ITEM 16.A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16.B. CODE OF ETHICS
 http://www.drreddys.com/investors/pdf/cobe-booklet-2011.pdf
 
 ITEM 16.C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Year EndedType of Service
    
    March 31, 2011
    
    
    March 31, 2010
    
    
    March 31, 2009
    
    
    Description of Services((IMAGE) in millions)Audit fees
    
    (IMAGE)
    61.36
    
    
    (IMAGE)
    58.60
    
    
    (IMAGE)
    57.28
    
    
    Audit and review of financial statementsAudit related fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    Financial and tax due diligence servicesTax fees
    
    
    2.93
    
    
    
    5.05
    
    
    
    1.46
    
    
    Tax returns filing and transfer pricing related servicesAll other fees
    
    
    1.45
    
    
    
    2.37
    
    
    
    0.11
    
    
    Statutory certifications, subscription to databases, etc.Total
    
    (IMAGE)
    65.74
    
    
    (IMAGE)
    66.02
    
    
    (IMAGE)
    58.85
   140




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##### Table of Contents



ITEM 16.D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  
 ITEM 16.E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  
 ITEM 16.F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
  
 ITEM
16.G. CORPORATE GOVERNANCE
  (i)
    
    establish an independent audit committee that has specified responsibilities;(ii)
    
    provide prompt certification by its chief executive officer of any non-compliance with any
corporate governance rules;(iii)
    
    provide periodic written affirmations to the NYSE with respect to its corporate governance
practices; and(iv)
    
    provide a brief description of significant differences between its corporate governance
practices and those followed by U.S. companies.
  Standard for U.S. NYSE Listed Companies
    
    Our practiceListed companies must have a majority of independent
directors, as defined by the NYSE.
    
    We comply with this standard. Seven of our ten directors
are independent directors, as defined by the NYSE.The non-management directors of each listed company must
meet at regularly scheduled executive sessions without
management.
    
    We comply with this standard. Our non-management
directors meet periodically without management directors
in scheduled executive sessions.Listed companies must have a nominating/corporate
governance committee composed entirely of independent
directors. The nominating/corporate governance committee
must have a written charter that is made available on
the listed companys website and that addresses the
committees purpose and responsibilities, subject to the
minimum purpose and responsibilities established by the
NYSE, and an annual evaluation of the committee.
    
    We have a Nomination, Governance and Compensation
Committee composed entirely of independent directors
which meets these requirements. The committee has a
written charter that meets these requirements. We do not
have a practice of evaluating the performance of the
Nomination, Governance and Compensation Committee.Listed companies must have a compensation committee
composed entirely of independent directors. The
compensation committee must have a written charter that
is made available on the listed companys website and
that addresses the committees purpose and
responsibilities, subject to the minimum purpose and
responsibilities established by the NYSE, and an annual
evaluation of the committee.
    
    We have a Nomination, Governance and Compensation
Committee composed entirely of independent directors
which meets these requirements. The committee has a
written charter that meets these requirements. We do not
have a practice of evaluating the performance of our
Nomination, Governance and Compensation Committee.
  141




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Standard for U.S. NYSE Listed Companies
    
    Our practiceListed companies must have an audit committee that
satisfies the requirements of Rule 10A-3 under the
Exchange Act
    
    Our Audit Committee satisfies the requirements of Rule
10A-3 under the Exchange Act.The audit committee must have a minimum of three members
all being independent directors. The audit committee
must have a written charter that is made available on
the listed companys website and that addresses the
committees purpose and responsibilities, subject to the
minimum purpose and responsibilities established by the
NYSE, and an annual evaluation of the committee.
    
    We have an Audit Committee composed of three members,
all being independent directors. The committee has a
written charter that meets these requirements. We also
have an internal audit function. We do not have a
practice of evaluating the performance of our Audit
Committee.Each listed company must have an internal audit function.
    
    We have an internal audit function.Shareholders must be given the opportunity to vote on
all equity-compensation plans and material revisions
thereto, with limited exceptions.
    
    We comply with this standard. Our Employee Stock Option
Plans were approved by our shareholders.Listed companies must adopt and disclose corporate
governance guidelines.
    
    We have not adopted corporate governance guidelines.All listed companies, U.S. and foreign, must adopt and
disclose a code of business conduct and ethics for
directors, officers and employees that is made available
on the listed companys website and, and promptly
disclose any waivers of the code for directors or
executive officers.
    
    We comply with this standard. More details on our Code
of Business Conduct and Ethics are given under Item
16.B.Listed foreign private issuers must disclose any
significant ways in which their corporate governance
practices differ from those followed by domestic
companies under NYSE listing standards.
    
    This requirement is being addressed by way of this table.Each listed company CEO must certify to the NYSE each
year that he or she is not aware of any violation by the
company of NYSE corporate governance listing standards,
qualifying the certification to the extent necessary.
    
    We do not have such a practice.Each listed company CEO must promptly notify the NYSE in
writing after any executive officer or director of the
listed company becomes aware of any non-compliance with
any applicable provisions of this Section 303A.
    
    There have been no such instances.
  142




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##### Table of Contents



Standard for U.S. NYSE Listed Companies
    
    Our practiceEach listed company must submit an executed Written
Affirmation annually to the NYSE. In addition, each
listed company must submit an interim Written
Affirmation each time that any of the following occurs:
    
    We filed our most recent annual written affirmation, in
the form specified by NYSE on September 28, 2010.     an audit committee member who
was deemed independent
is no longer independent;     a member has been added to the
audit committee;     the listed company or a member of
its audit committee
is eligible to rely on and is choosing to rely on a
Securities Exchange Act Rule 10A-3 (Rule 10A-3)
exemption;     the listed company or a member
of its audit committee
is no longer eligible to rely on or is choosing
to no
longer rely on a previously applicable Rule 10A-3
exemption;     a member has been removed from the
listed companys
audit committee resulting in the company no longer
having a Rule 10A-3 compliant audit
committee; or     the listed company determined
that it no longer
qualifies as a foreign private issuer and will be
considered a domestic company under
Section 303A.The annual and interim Written Affirmations
must be in
the form specified by the NYSE.
  143




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##### Table of Contents



PART III
 
 ITEM 17.
    
    FINANCIAL STATEMENTS
  
 ITEM 18.
    
    FINANCIAL STATEMENTS
  Report of Independent Registered Public Accounting Firm
    
    
    F - 1Consolidated statement of financial position as of March 31, 2011 and 2010
    
    
    F - 2Consolidated income statements for the years ended March 31, 2011, 2010 and 2009
    
    
    F - 4Consolidated statement of comprehensive income/(loss) for the years ended March 31, 2011, 2010 and 2009
    
    
    F - 5Consolidated statements of changes in equity for the years ended March 31, 2011, 2010 and 2009
    
    
    F - 6Consolidated cash flow statements for the years ended March 31, 2011, 2010 and 2009
    
    
    F - 8Notes to the consolidated financial statements
    
    
    F  10
  144




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal
Control - Integrated Framework
     F-1




---



##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 (in millions, except share and per share data)
 As ofParticulars
    
    Note
    
    March 31, 2011
    
    
    March 31, 2011
    
    
    March 31, 2010Unauditedconveniencetranslation intoU.S.$ (See Note 2.d)ASSETSCurrent assetsCash and cash equivalents
    
    15
    
    U.S.$
    129
    
    
    (IMAGE)
    5,729
    
    
    (IMAGE)
    6,584Other investments
    
    11
    
    
    1
    
    
    
    33
    
    
    
    3,600Trade receivables, net
    
    13
    
    
    395
    
    
    
    17,615
    
    
    
    11,960Inventories
    
    12
    
    
    361
    
    
    
    16,059
    
    
    
    13,371Derivative financial instruments
    
    31
    
    
    18
    
    
    
    784
    
    
    
    573Current tax assets
    
    
    
    
    10
    
    
    
    442
    
    
    
    530Other current assets
    
    14
    
    
    156
    
    
    
    6,931
    
    
    
    5,445Total current assets
    
    
    
    U.S.$
    1,069
    
    
    (IMAGE)
    47,593
    
    
    (IMAGE)
    42,063Non-current assetsProperty, plant and equipment
    
    7
    
    
    666
    
    
    
    29,642
    
    
    
    22,459Goodwill
    
    8
    
    
    49
    
    
    
    2,180
    
    
    
    2,174Other intangible assets
    
    9
    
    
    293
    
    
    
    13,066
    
    
    
    11,799Investment in equity accounted investees
    
    10
    
    
    7
    
    
    
    313
    
    
    
    310Deferred income tax assets
    
    28
    
    
    43
    
    
    
    1,935
    
    
    
    1,282Other non-current assets
    
    14
    
    
    6
    
    
    
    276
    
    
    
    243Total non-current assets
    
    
    
    U.S.$
    1,064
    
    
    (IMAGE)
    47,412
    
    
    (IMAGE)
    38,267Total assets
    
    
    
    U.S.$
    2,133
    
    
    (IMAGE)
    95,005
    
    
    (IMAGE)
    80,330LIABILITIES AND EQUITYCurrent liabilitiesTrade payables
    
    23
    
    U.S.$
    190
    
    
    (IMAGE)
    8,480
    
    
    (IMAGE)
    9,322Current income tax liabilities
    
    
    
    
    28
    
    
    
    1,231
    
    
    
    1,432Bank overdraft
    
    15
    
    
    2
    
    
    
    69
    
    
    
    39Short-term borrowings
    
    18
    
    
    409
    
    
    
    18,220
    
    
    
    5,565Long-term borrowings, current portion
    
    18
    
    
    
    
    
    
    12
    
    
    
    3,706Provisions
    
    22
    
    
    29
    
    
    
    1,314
    
    
    
    1,094Other current liabilities
    
    24
    
    
    262
    
    
    
    11,689
    
    
    
    7,864Total current liabilities
    
    
    
    U.S.$
    921
    
    
    (IMAGE)
    41,015
    
    
    (IMAGE)
    29,022Non-current liabilitiesLong-term loans and borrowings, excluding
current portion
    
    18
    
    U.S.$
    118
    
    
    (IMAGE)
    5,271
    
    
    (IMAGE)
    5,385Provisions
    
    22
    
    
    1
    
    
    
    41
    
    
    
    39Deferred tax liabilities
    
    28
    
    
    45
    
    
    
    2,022
    
    
    
    2,720Other liabilities
    
    24
    
    
    15
    
    
    
    666
    
    
    
    249Total non-current liabilities
    
    
    
    U.S.$
    180
    
    
    (IMAGE)
    8,000
    
    
    (IMAGE)
    8,393Total liabilities
    
    
    
    U.S.$
    1,100
    
    
    (IMAGE)
    49,015
    
    
    (IMAGE)
    37,415
   F-2




---



##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in millions, except share and per share data)
 As ofParticulars
    
    Note
    
    March 31, 2011
    
    
    March 31, 2011
    
    
    March 31, 2010Unauditedconveniencetranslation intoU.S.$ (See Note 2.d)EquityShare capital
    
    16
    
    U.S.$
    19
    
    
    (IMAGE)
    846
    
    
    (IMAGE)
    844Share premium
    
    
    
    
    464
    
    
    
    20,683
    
    
    
    20,429Other components of equity
    
    
    
    
    75
    
    
    
    3,326
    
    
    
    2,920Share based payment reserve
    
    
    
    
    16
    
    
    
    730
    
    
    
    692Equity shares held by controlled trust
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (5
    )Retained earnings
    
    
    
    
    458
    
    
    
    20,391
    
    
    
    18,035Debenture redemption reserve
    
    
    
    
    
    
    
    
    19
    
    
    
    Total equity attributable to:Equity holders of the Company
    
    
    
    U.S.$
    1,033
    
    
    (IMAGE)
    45,990
    
    
    (IMAGE)
    42,915Non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    Total equity
    
    
    
    U.S.$
    1,033
    
    
    (IMAGE)
    45,990
    
    
    (IMAGE)
    42,915Total liabilities and equity
    
    
    
    U.S.$
    2,133
    
    
    (IMAGE)
    95,005
    
    
    (IMAGE)
    80,330
   F-3




---



##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED INCOME STATEMENT
 (in millions, except share and per share data)
 For the year ended March 31,Particulars
    
    Note
    
    2011
    
    
    2011
    
    
    2010
    
    
    2009UnauditedConvenienceTranslationinto U.S.$(See Note 2.d.)Revenues
    
    25
    
    U.S.$
    1,677
    
    
    (IMAGE)
    74,693
    
    
    (IMAGE)
    70,277
    
    
    (IMAGE)
    69,441Cost of revenues
    
    
    
    
    773
    
    
    
    34,430
    
    
    
    33,937
    
    
    
    32,941Gross profit
    
    
    
    U.S.$
    904
    
    
    (IMAGE)
    40,263
    
    
    (IMAGE)
    36,340
    
    
    (IMAGE)
    36,500Selling, general and administrative expenses
    
    
    
    
    532
    
    
    
    23,689
    
    
    
    22,505
    
    
    
    21,020Research and development expenses
    
    
    
    
    114
    
    
    
    5,060
    
    
    
    3,793
    
    
    
    4,037Impairment loss on other intangible assets
    
    9
    
    
    
    
    
    
    
    
    
    
    3,456
    
    
    
    3,167Impairment loss on goodwill
    
    8
    
    
    
    
    
    
    
    
    
    
    5,147
    
    
    
    10,856Other (income)/expense, net
    
    26
    
    
    (25
    )
    
    
    (1,115
    )
    
    
    (569
    )
    
    
    254Total operating expenses, net
    
    
    
    U.S.$
    620
    
    
    (IMAGE)
    27,634
    
    
    (IMAGE)
    34,332
    
    
    (IMAGE)
    39,334Results from operating activities
    
    
    
    
    284
    
    
    
    12,629
    
    
    
    2,008
    
    
    
    (2,834
    )Finance expense
    
    27
    
    
    (8
    )
    
    
    (362
    )
    
    
    (372
    )
    
    
    (1,668
    )Finance income
    
    27
    
    
    4
    
    
    
    173
    
    
    
    369
    
    
    
    482Finance (expense)/income, net
    
    
    
    
    (4
    )
    
    
    (189
    )
    
    
    (3
    )
    
    
    (1,186
    )Share of profit of equity accounted investees, net of income tax
    
    10
    
    
    
    
    
    
    3
    
    
    
    48
    
    
    
    24Profit/(loss) before income tax
    
    
    
    
    279
    
    
    
    12,443
    
    
    
    2,053
    
    
    
    (3,996
    )Income tax (expense)/benefit
    
    28
    
    
    (31
    )
    
    
    (1,403
    )
    
    
    (985
    )
    
    
    (1,172
    )Profit/(loss) for the year
    
    
    
    
    248
    
    
    (IMAGE)
    11,040
    
    
    (IMAGE)
    1,068
    
    
    (IMAGE)
    (5,168
    )Attributable to:Equity holders of the Company
    
    
    
    
    248
    
    
    
    11,040
    
    
    
    1,068
    
    
    
    (5,168
    )Non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Profit/(loss) for the year
    
    
    
    
    248
    
    
    (IMAGE)
    11,040
    
    
    (IMAGE)
    1,068
    
    
    (IMAGE)
    (5,168
    )Earnings/(loss) per share
    
    17Basic
    
    
    
    U.S.$
    1.47
    
    
    (IMAGE)
    65.28
    
    
    (IMAGE)
    6.33
    
    
    (IMAGE)
    (30.69
    )Diluted
    
    
    
    U.S.$
    1.46
    
    
    (IMAGE)
    64.95
    
    
    (IMAGE)
    6.30
    
    
    (IMAGE)
    (30.69
    )Weighted average number of equity shares used in computing
earnings/(loss) per equity share
    
    17Basic
    
    
    
    
    
    
    
    
    169,128,649
    
    
    
    168,706,977
    
    
    
    168,349,139Diluted
    
    
    
    
    
    
    
    
    169,965,282
    
    
    
    169,615,943
    
    
    
    168,349,139
   F-4




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 (in millions, except share and per share data)
 For the year ended March 31,Particulars
    
    2011
    
    
    2011
    
    
    2010
    
    
    2009UnauditedConvenienceTranslationinto U.S.$(See Note2.d.)Profit/(loss) for the year
    
    U.S.$
    248
    
    
    (IMAGE)
    11,040
    
    
    (IMAGE)
    1,068
    
    
    (IMAGE)
    (5,168
    )Other comprehensive income/(loss)Changes in fair value of available for sale financial instruments
    
    U.S.$
    
    
    
    (IMAGE)
    7
    
    
    (IMAGE)
    13
    
    
    (IMAGE)
    18Foreign currency translation adjustments
    
    
    9
    
    
    
    421
    
    
    
    241
    
    
    
    642Effective portion of changes in fair value of cash flow hedges, net
    
    
    1
    
    
    
    37
    
    
    
    745
    
    
    
    (227
    )Income tax on other comprehensive income
    
    
    (1
    )
    
    
    (59
    )
    
    
    (102
    )
    
    
    32Other comprehensive income/(loss) for the year, net of income tax
    
    U.S.$
    9
    
    
    (IMAGE)
    406
    
    
    (IMAGE)
    897
    
    
    (IMAGE)
    465Total comprehensive income/(loss) for the year
    
    U.S.$
    257
    
    
    (IMAGE)
    11,446
    
    
    (IMAGE)
    1,965
    
    
    (IMAGE)
    (4,703
    )Attributable to:Equity holders of the Company
    
    
    257
    
    
    
    11,446
    
    
    
    1,965
    
    
    
    (4,703
    )Non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total comprehensive income/(loss) for the year
    
    U.S.$
    257
    
    
    (IMAGE)
    11,446
    
    
    (IMAGE)
    1,965
    
    
    (IMAGE)
    (4,703
    )
   F-5




---



##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 (in millions, except share and per share data)
 ForeignShare
    
    
    
    
    
    currencyShare capital
    
    
    premium
    
    
    Fair value
    
    
    translation
    
    
    HedgingParticulars
    
    Shares
    
    
    Amount
    
    
    Amount
    
    
    reserve
    
    
    reserve
    
    
    reserveBalance as of April 1, 2008
    
    
    168,172,746
    
    
    (IMAGE)
    841
    
    
    (IMAGE)
    20,036
    
    
    (IMAGE)
    (2
    )
    
    (IMAGE)
    1,567
    
    
    
    (7
    )Issue of equity shares on exercise of options
    
    
    296,031
    
    
    
    1
    
    
    
    168
    
    
    
    
    
    
    
    
    
    
    
    Net change in fair value of other investments, net of tax expense of (IMAGE)5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    Foreign currency translation differences, net of tax expense of (IMAGE)41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    601
    
    
    
    Effective portion of changes in fair value of cash flow hedges, net of
tax benefit of (IMAGE)78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (149
    )Share based payment expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividend paid (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Profit/(loss) for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquisition of non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of bonus debentures (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debenture Redemption Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of March 31, 2009
    
    
    168,468,777
    
    
    (IMAGE)
    842
    
    
    (IMAGE)
    20,204
    
    
    (IMAGE)
    11
    
    
    (IMAGE)
    2,168
    
    
    (IMAGE)
    (156
    )Balance as of April 1, 2009
    
    
    
    
    
    (IMAGE)
    842
    
    
    (IMAGE)
    20,204
    
    
    (IMAGE)
    11
    
    
    (IMAGE)
    2,168
    
    
    (IMAGE)
    (156
    )Issue of equity share on exercise of options
    
    
    168,468,777
    
    
    
    2
    
    
    
    225Net change in fair value of other investments, net of tax expense of (IMAGE)
    
    
    376,608
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    Foreign currency translation differences, net of tax benefit of (IMAGE)150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    391
    
    
    
    Effective portion of changes in fair value of cash flow hedges, net of
tax benefit of (IMAGE)252
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    493Share based payment expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividend paid (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Profit/(loss) for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquisition of non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of bonus debentures (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debenture Redemption Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of March 31, 2010
    
    
    168,845,385
    
    
    (IMAGE)
    844
    
    
    (IMAGE)
    20,429
    
    
    (IMAGE)
    24
    
    
    (IMAGE)
    2,559
    
    
    (IMAGE)
    337Balance as of April 1, 2010
    
    
    168,845,385
    
    
    (IMAGE)
    844
    
    
    (IMAGE)
    20,429
    
    
    (IMAGE)
    24
    
    
    (IMAGE)
    2,559
    
    
    (IMAGE)
    337Issue of equity shares on exercise of options
    
    
    407,347
    
    
    
    2
    
    
    
    254
    
    
    
    
    
    
    
    
    
    
    
    Net change in fair value of other investments, net of tax expense of (IMAGE)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    Foreign currency translation differences, net of tax expense of (IMAGE)59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    362
    
    
    
    Effective portion of changes in fair value of cash flow hedges, net of
tax expense of (IMAGE)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37Share based payment expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividend paid (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Profit/(loss) for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquisition of non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of bonus debentures (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debenture Redemption Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of March 31, 2011
    
    
    169,252,732
    
    
    (IMAGE)
    846
    
    
    (IMAGE)
    20,683
    
    
    (IMAGE)
    31
    
    
    (IMAGE)
    2,921
    
    
    (IMAGE)
    374Convenience translation into U.S. $
    
    
    
    
    
    
    19
    
    
    
    464
    
    
    
    1
    
    
    
    66
    
    
    
    8
   F-6




---



##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in millions, except share and per share data)
  Equity sharesShare based
    
    
    held by a
    
    
    
    
    
    
    Debenture
    
    
    Non-payment
    
    
    controlled
    
    
    
    
    
    
    Redemption
    
    
    controllingreserve
    
    
    trust*
    
    
    Retained earnings
    
    
    reserve
    
    
    interests
    
    
    TotalParticulars
    
    Amount
    
    
    Amount
    
    
    Amount
    
    
    Amount
    
    
    Amount
    
    
    AmountBalance as of April 1, 2008
    
    (IMAGE)
    709
    
    
    (IMAGE)
    (5
    )
    
    (IMAGE)
    24,211
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    47,350Issue of equity shares on exercise of options
    
    
    (164
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Net change in fair value of other investments, net of tax
expense of (IMAGE)5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Foreign currency translation differences, net of tax expense
of (IMAGE)41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    601Effective portion of changes in fair value of cash flow
hedges, net of tax benefit of (IMAGE)78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (149
    )Share based payment expense
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131Dividend paid (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    (738
    )
    
    
    
    
    
    
    
    
    
    
    (738
    )Profit/(loss) for the period
    
    
    
    
    
    
    
    
    
    
    (5,168
    )
    
    
    
    
    
    
    
    
    
    
    (5,168
    )Acquisition of non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of bonus debentures (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debenture Redemption Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of March 31, 2009
    
    (IMAGE)
    676
    
    
    (IMAGE)
    (5
    )
    
    (IMAGE)
    18,305
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    42,045Balance as of April 1, 2009
    
    (IMAGE)
    676
    
    
    (IMAGE)
    (5
    )
    
    (IMAGE)
    18,305
    
    
    (IMAGE)
    
    
    
    
    
    
    
    (IMAGE)
    42,045Issue of equity share on exercise of options
    
    
    (210
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17Net change in fair value of other investments, net of tax
expense of (IMAGE)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Foreign currency translation differences, net of tax expense
of (IMAGE)150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    391Effective portion of changes in fair value of cash flow
hedges, net of tax benefit of (IMAGE)252
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    493Share based payment expense
    
    
    226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226Dividend paid (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    (1,233
    )
    
    
    
    
    
    
    
    
    
    
    (1,233
    )Profit/(loss) for the period
    
    
    
    
    
    
    
    
    
    
    1,068
    
    
    
    
    
    
    
    
    
    
    
    1,068Acquisition of non-controlling interests
    
    
    
    
    
    
    
    
    
    
    (105
    )
    
    
    
    
    
    
    
    
    
    
    (105
    )Issuance of bonus debentures (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debenture Redemption Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as of March 31, 2010
    
    (IMAGE)
    692
    
    
    (IMAGE)
    (5
    )
    
    (IMAGE)
    18,035
    
    
    (IMAGE)
    
    
    
    
    
    
    
    (IMAGE)
    42,915Balance as of April 1, 2010
    
    (IMAGE)
    692
    
    
    (IMAGE)
    (5
    )
    
    (IMAGE)
    18,035
    
    
    (IMAGE)
    
    
    
    
    
    
    
    (IMAGE)
    42,915Issue of equity shares on exercise of options
    
    
    (227
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29Net change in fair value of other investments, net of tax
expense of (IMAGE)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7Foreign currency translation differences, net of tax expense
of (IMAGE)59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    362Effective portion of changes in fair value of cash flow
hedges, net of tax expense of (IMAGE)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37Share based payment expense
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265Dividend paid (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    (2,219
    )
    
    
    
    
    
    
    
    
    
    
    (2,219
    )Profit/(loss) for the period
    
    
    
    
    
    
    
    
    
    
    11,040
    
    
    
    
    
    
    
    
    
    
    
    11,040Acquisition of non-controlling interests
    
    
    
    
    
    
    
    
    
    
    (525
    )
    
    
    
    
    
    
    
    
    
    
    (525
    )Issuance of bonus debentures (including corporate dividend tax)
    
    
    
    
    
    
    
    
    
    
    (5,921
    )
    
    
    
    
    
    
    
    
    
    
    (5,921
    )Debenture Redemption Reserve
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    19
    
    
    
    
    
    
    
    Balance as of March 31, 2011
    
    (IMAGE)
    730
    
    
    (IMAGE)
    (5
    )
    
    (IMAGE)
    20,391
    
    
    (IMAGE)
    19
    
    
    
    
    
    
    (IMAGE)
    45,990Convenience translation into U.S. $
    
    
    16
    
    
    
    
    
    
    
    458
    
    
    
    
    
    
    
    
    
    
    
    1,033
 *
    
    The number of equity shares held by a controlled trust as of April 1, 2008, March 31, 2009, April 1, 2009, March 31, 2010, April 1, 2010 and
March 31, 2011.   F-7




---



##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 (in millions, except share and per share data)
 For the year ended March 31,2011
    
    
    2011
    
    
    2010
    
    
    2009UnauditedConveniencetranslation intoU.S.$ (See Note2.d.)Cash flows from/(used in) operating activities:Profit/(loss) for the year
    
    U.S.$
    248
    
    
    (IMAGE)
    11,040
    
    
    (IMAGE)
    1,068
    
    
    (IMAGE)
    (5,168
    )Adjustments for:Income tax expense/(benefit)
    
    
    31
    
    
    
    1,403
    
    
    
    985
    
    
    
    1,172Dividend and profit on sale of investments
    
    
    (2
    )
    
    
    (68
    )
    
    
    (48
    )
    
    
    (136
    )Depreciation and amortization
    
    
    93
    
    
    
    4,148
    
    
    
    4,160
    
    
    
    3,814Impairment loss on other intangible assets
    
    
    
    
    
    
    
    
    
    
    3,456
    
    
    
    3,167Impairment loss on goodwill
    
    
    
    
    
    
    
    
    
    
    5,147
    
    
    
    10,856Inventory write-downs
    
    
    28
    
    
    
    1,237
    
    
    
    1,011
    
    
    
    833Allowance for doubtful trade receivables
    
    
    4
    
    
    
    162
    
    
    
    169
    
    
    
    148Loss/(Profit) on sale of property, plant and equipment, net
    
    
    (6
    )
    
    
    (271
    )
    
    
    24
    
    
    
    (15
    )Provision for sales returns
    
    
    16
    
    
    
    731
    
    
    
    932
    
    
    
    663Share of profit of equity accounted investees
    
    
    
    
    
    
    (3
    )
    
    
    (48
    )
    
    
    (24
    )Unrealized exchange (gain)/loss, net
    
    
    (24
    )
    
    
    (1,072
    )
    
    
    399
    
    
    
    (416
    )Interest expense, net
    
    
    4
    
    
    
    200
    
    
    
    123
    
    
    
    688Share based payment expense
    
    
    6
    
    
    
    265
    
    
    
    226
    
    
    
    131Negative goodwill on acquisition of business
    
    
    (2
    )
    
    
    (73
    )
    
    
    
    
    
    
    (150
    )Changes in operating assets and liabilities:Trade receivables
    
    
    (103
    )
    
    
    (4,579
    )
    
    
    900
    
    
    
    (7,348
    )Inventories
    
    
    (81
    )
    
    
    (3,624
    )
    
    
    (1,593
    )
    
    
    (1,939
    )Other assets
    
    
    
    
    
    
    (19
    )
    
    
    (2,130
    )
    
    
    1,051Trade payables
    
    
    26
    
    
    
    1,154
    
    
    
    1,251
    
    
    
    (223
    )Other liabilities and provisions
    
    
    7
    
    
    
    330
    
    
    
    25
    
    
    
    192Income tax paid
    
    
    (66
    )
    
    
    (2,952
    )
    
    
    (2,831
    )
    
    
    (2,791
    )Net cash from operating activities
    
    U.S.$
    180
    
    
    (IMAGE)
    8,009
    
    
    (IMAGE)
    13,226
    
    
    (IMAGE)
    4,505Cash flows from/(used in) investing activities:Expenditures on property, plant and equipment
    
    
    (204
    )
    
    
    (9,066
    )
    
    
    (4,129
    )
    
    
    (4,507
    )Proceeds from sale of property, plant and equipment
    
    
    8
    
    
    
    348
    
    
    
    61
    
    
    
    81Purchase of other investments
    
    
    (201
    )
    
    
    (8,960
    )
    
    
    (24,111
    )
    
    
    (12,021
    )Proceeds from sale of other investments
    
    
    283
    
    
    
    12,602
    
    
    
    21,102
    
    
    
    16,398Expenditure on other intangible assets
    
    
    (57
    )
    
    
    (2,540
    )
    
    
    (154
    )
    
    
    (254
    )Payment of contingent consideration for acquisition of business
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83
    )Cash paid for acquisition of business, net of cash acquired
    
    
    (26
    )
    
    
    (1,169
    )
    
    
    
    
    
    
    (3,089
    )Cash paid for acquisition of equity accounted investee, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (372
    )Interest received
    
    
    3
    
    
    
    127
    
    
    
    233
    
    
    
    375Net cash used in investing activities
    
    U.S.$
    (194
    )
    
    (IMAGE)
    (8,658
    )
    
    (IMAGE)
    (6,998
    )
    
    (IMAGE)
    (3,472
    )Cash flows from/(used in) financing activities:Interest paid
    
    
    (8
    )
    
    
    (366
    )
    
    
    (449
    )
    
    
    (1,132
    )Proceeds from issuance of equity shares
    
    
    1
    
    
    
    29
    
    
    
    17
    
    
    
    5Proceeds from short term loans and borrowings, net
    
    
    281
    
    
    
    12,541
    
    
    
    (83
    )
    
    
    1,263Repayment of long term loans and borrowings
    
    
    (201
    )
    
    
    (8,942
    )
    
    
    (3,479
    )
    
    
    (1,925
    )Dividend paid (including corporate dividend tax)(1)
    
    
    (69
    )
    
    
    (3,063
    )
    
    
    (1,233
    )
    
    
    (738
    )Transfers into escrow account for issuance of bonus debentures (1)
    
    
    (114
    )
    
    
    (5,078
    )
    
    
    
    
    
    
    Proceeds from issuance of bonus debentures(1)
    
    
    114
    
    
    
    5,078Costs of issuance of bonus debentures(1)
    
    
    (1
    )
    
    
    (51
    )
    
    
    
    
    
    
    Cash paid for acquisition of non-controlling interests
    
    
    (12
    )
    
    
    (525
    )
    
    
    (80
    )
    
    
    Net cash used in financing activities
    
    U.S.$
    (8
    )
    
    (IMAGE)
    (377
    )
    
    (IMAGE)
    (5,307
    )
    
    (IMAGE)
    (2,527
    )Net increase/(decrease) in cash and cash equivalents
    
    
    (23
    )
    
    
    (1,026
    )
    
    
    921
    
    
    
    (1,494
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    3
    
    
    
    141
    
    
    
    246
    
    
    
    (114
    )Cash and cash equivalents at the beginning of the period
    
    
    147
    
    
    
    6,545
    
    
    
    5,378
    
    
    
    6,986Cash and cash equivalents at the end of the period
    
    U.S.$
    127
    
    
    (IMAGE)
    5,660
    
    
    (IMAGE)
    6,545
    
    
    (IMAGE)
    5,378
  (1)
    
    Refer to Note 34 below for further details on the bonus debentures scheme.   F-8




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions, except share and per share data)
 Supplemental schedule of non-cash investing and financing activities:
 Year Ended March 31,2011
    
    
    2011
    
    
    2010
    
    
    2009UnauditedConveniencetranslation intoU.S.$ (See Note2.d.)Property, plant and
equipment and
intangibles
purchased on credit
during the year,
including
contingent
consideration on
purchase of
intangibles
    
    U.S.$
    46
    
    
    (IMAGE)
    2,055
    
    
    (IMAGE)
    2,990
    
    
    (IMAGE)
    427Property, plant and
equipment purchased
under capital lease
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    Contingent
consideration
payable on
acquisition of
non-controlling
interests
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
   F-9




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 1. Reporting entity
  2. Basis of preparation of financial statements
 a. Statement of compliance
   b. Basis of measurement
  
    
    derivative financial instruments that are measured at fair value;
 
    
    financial instruments that are designated as being at fair value through profit or loss
account upon initial recognition are measured at fair value;
 
    
    available-for-sale financial assets are measured at fair value;
 
    
    employee defined benefit assets are recognized as the net total of the fair value of plan
assets, plus unrecognized past service cost and unrecognized actuarial losses, less
unrecognized actuarial gains and the present value of the defined benefit obligation; and
 
    
    long term borrowings, except obligations under finance leases that are measured at amortized
cost using the effective interest rate method.
 c. Functional and presentation currency
    d. Convenience translation (unaudited)
 
 e. Use of estimates and judgments
   F-10




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 2. Basis of preparation of financial statements (continued)
 e. Use of estimates and judgments (continued)
  
    
    Note 3(b)  Assessment of functional currency for foreign operations
    
    Note 3(c) and 31  Financial instruments
    
    Notes 3(f) and 8  Measurement of recoverable amounts of cash-generating units
    
    Note 3(k)  Provisions and contingencies
    
    Note 3(l)  Sales returns, rebates and charge back provisions
    
    Note 3(n)  Evaluation of recoverability of deferred tax assets
    
    Note 6  Business combinations
    
    Note 37  Contingencies
 3. Significant accounting policies
 a. Basis of consolidation
 Subsidiaries
  Special purpose entities
  Associates and jointly controlled entities (equity accounted investees)
   Transactions eliminated on consolidation
  Acquisition of non-controlling interests
   F-11




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 a. Basis of consolidation (continued)
 Loss of Control
  b. Foreign currency
 Foreign currency transactions
   Foreign operations
   c. Financial instruments
 Non-derivative financial instruments
  Non-derivative financial assets
  Cash and cash equivalents
  Held-to-maturity investments
  Available-for-sale financial assets
   F-12




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 c. Financial instruments (continued)
 Financial assets at fair value through profit or loss
  Trade payables
  Trade receivables
  Others
    Non-derivative financial liabilities
    Non-derivative hedging instruments
     F-13




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 c. Financial instruments (continued)
 Derivative financial instruments
  Cash flow hedges
   Accounting policy on foreign currency risk
   Economic hedges
   Share capital
 Ordinary shares
  d. Business combinations
   F-14




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 d. Business combinations (continued)
  e. Property, plant and equipment
 Recognition and measurement
      Depreciation
   Buildings- Factory and administrative buildings
    
    25 - 50 years- Ancillary structures
    
    3 - 15 yearsPlant and equipment
    
    3 - 15 yearsFurniture, fixtures and office equipment
    
    4 - 10 yearsVehicles
    
    4 - 5 yearsComputer equipment
    
    3 - 5 years
     F-15




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 f. Intangible assets
  Acquisitions of non-controlling interests
  Subsequent measurement
  Research and development
   
    
    development costs can be measured reliably,
 
    
    the product or process is technically and commercially feasible,
 
    
    future economic benefits are probable and ascertainable, and
 
    
    the Company intends to and has sufficient resources to complete development and to use
or sell the asset.
   (a)
    
    it is expected to account for more than 10% of the Companys total research and
development costs; and(b)
    
    the costs and efforts to develop the project can be reasonably estimated and the
product resulting from the project has a high probability of launch.
     De-recognition of intangible assets
   F-16




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 f. Intangible assets (continued)
 Other intangible assets
   Amortization
  Trademarks
    
    3 - 12 yearsProduct related intangibles
    
    6 - 15 yearsBeneficial toll manufacturing contract
    
    2 yearsNon-competition arrangements
    
    1.5 - 10 yearsMarketing rights
    
    3 - 16 yearsCustomer-related intangibles
    
    2 - 11 yearsTechnology related intangibles
    
    3 - 13 yearsOther intangibles
    
    5 - 15 years
 g. Leases
  Finance leases
  Operating leases
  h. Inventories
     F-17




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 i. Impairment
 Financial assets
     Non-financial assets
    j. Employee benefits
 Defined contribution plan
  Defined benefit plans
    F-18




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 j. Employee benefits (continued)
  Termination benefits
  Short-term benefits
   Other long term benefits
  Compensated leave of absence
  Share-based payment transactions
  k. Provisions
  Restructuring
  Onerous contracts
  Reimbursement rights
   F-19




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 l. Revenue
 Sale of goods
           F-20




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 l. Revenue (continued)
 Services
  Export entitlements
  m. Finance income and expense
    n. Income tax
     o. Earnings per share
  p. Government grants
   F-21




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 3. Significant accounting policies (continued)
 q. Segment Reporting
  r. Recent accounting pronouncements
 Standards issued but not yet effective and not early adopted by the Company
 
    
    In November 2009, the IASB issued IFRS 9, Financial instruments, to introduce certain new
requirements for classifying and measuring financial assets. IFRS 9 divides all financial
assets that are currently in the scope of IAS 39 into two classifications  those measured at
amortized cost and those measured at fair value. The standard, along with proposed expansion
of IFRS 9 for classifying and measuring financial liabilities, de-recognition of financial
instruments, impairment, and hedge accounting, will be applicable for annual periods beginning
on or after January 1, 2013, although entities are permitted to adopt earlier. The Company is
evaluating the impact which this new standard will have on the Companys consolidated
financial statements.
 
    
    In November 2009, the IASB issued IFRIC 19, Extinguishing Financial Liabilities with
Equity Instruments; to introduce requirements when an entity renegotiates the terms of a
financial liability with its creditor and the creditor agrees to accept the entitys shares
and other equity instruments to settle the financial liability fully or partially. This
interpretation is effective from annual periods beginning on or after July 1, 2010.
 
    
    In May 2011, the IASB issued new standards and amendments on consolidated financial
statements and joint arrangements. The following are new standards and amendments:
 
    
    IFRS 10, Consolidated financial statements.
    
    IFRS 11, Joint arrangements.
    
    IFRS 12, Disclosure of interests in other entities.
    
    IAS 27 (Revised 2011), Consolidated and separate financial statements,
which has been amended for the issuance of IFRS 10 but retains the current guidance on
separate financial statements.
    
    IAS 28 (Revised 2011), Investments in associates, which has been amended
for conforming changes on the basis of the issuance of IFRS 10 and IFRS 11.
 All the standards mentioned above are effective for annual periods beginning on or after January
1, 2013; earlier application is permitted as long as each of the other standards in this group
is also early applied. The Company is in the process of determining the impact of these
amendments on its consolidated financial statements.
 
    
    On June 16, 2011 the IASB issued an amendment to IAS-19 Employee benefits,which amended
the standard as follows:
 
    
    It requires recognition of changes in the net defined benefit
liability/(asset), including immediate recognition of defined benefit cost,
disaggregation of defined benefit cost into components, recognition of re-measurements
in other comprehensive income, plan amendments, curtailments and settlements.
 
    
    It introduce enhanced disclosures about defined benefit plans.
 
    
    It modified accounting for termination benefits, including distinguishing
benefits provided in exchange for services from benefits provided in exchange for the
termination of employment, and it affected the recognition and measurement of
termination benefits.
 
    
    It provided clarification regarding various issues, including the
classification of employee benefits, current estimates of mortality rates, tax and
administration costs and risk-sharing and conditional indexation features.
 
    
    It incorporated, without change, the IFRS Interpretations Committees
requirements set forth in IFRIC 14 IAS 19The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction.
 These amendments are effective for annual periods beginning on or after January 1, 2013; earlier
application is permitted. The Company is in the process of determining the impact of these
amendments on its consolidated financial statements.
  F-22




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 4. Determination of fair values
  (i) Property, plant and equipment
  (ii) Intangible assets
  (iii) Inventories
  (iv) Investments in equity and debt securities and units of mutual funds
    (v) Derivatives
  (vi) Non-derivative financial liabilities
  (vii) Share-based payment transactions
   F-23




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 5. Segment reporting
  
    
    Pharmaceutical Services and Active Ingredients (PSAI);
 
    
    Global Generics; and
 
    
    Proprietary Products.
 Pharmaceutical Services and Active Ingredients (PSAI):
 Global Generics:
 Proprietary Products:
   For the years ended March 31,ProprietaryInformation about segments:
    
    PSAI
    
    
    Global Generics
    
    
    ProductsReportable segments
    
    2011
    
    
    2010
    
    
    2009
    
    
    2011
    
    
    2010
    
    
    2009
    
    
    2011
    
    
    2010
    
    
    2009Segment revenue(1)
    
    (IMAGE)
    19,648
    
    
    (IMAGE)
    20,404
    
    
    (IMAGE)
    18,758
    
    
    (IMAGE)
    53,340
    
    
    (IMAGE)
    48,606
    
    
    (IMAGE)
    49,790
    
    
    (IMAGE)
    532
    
    
    (IMAGE)
    513
    
    
    (IMAGE)
    294Gross profit
    
    (IMAGE)
    5,105
    
    
    (IMAGE)
    6,660
    
    
    (IMAGE)
    5,595
    
    
    (IMAGE)
    34,499
    
    
    (IMAGE)
    29,146
    
    
    (IMAGE)
    30,448
    
    
    (IMAGE)
    382
    
    
    (IMAGE)
    396
    
    
    (IMAGE)
    196Selling, general and administrative expensesResearch and development expensesImpairment loss on other intangible assetsImpairment loss on goodwillOther (income)/expense, netResults from operating activitiesFinance expense/(income), netShare of profit of equity accounted
investees, net of income taxProfit/(loss) before income taxIncome tax (expense)/benefitProfit/(loss) for the year
  F-24




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 5. Segment reporting (continued)
  For the years ended March 31,Information about segments:
    
    Others
    
    
    TotalReportable segments
    
    2011
    
    
    2010
    
    
    2009
    
    
    2011
    
    
    2010
    
    
    2009Segment revenue(1)
    
    (IMAGE)
    1,173
    
    
    (IMAGE)
    754
    
    
    (IMAGE)
    599
    
    
    (IMAGE)
    74,693
    
    
    (IMAGE)
    70,277
    
    
    (IMAGE)
    69,441Gross profit
    
    (IMAGE)
    277
    
    
    (IMAGE)
    138
    
    
    (IMAGE)
    261
    
    
    (IMAGE)
    40,263
    
    
    (IMAGE)
    36,340
    
    
    (IMAGE)
    36,500Selling, general and administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,689
    
    
    
    22,505
    
    
    
    21,020Research and development expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,060
    
    
    
    3,793
    
    
    
    4,037Impairment loss on other intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,456
    
    
    
    3,167Impairment loss on goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,147
    
    
    
    10,856Other expense/(income), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,115
    )
    
    
    (569
    )
    
    
    254Results from operating activities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,629
    
    
    
    2,008
    
    
    
    (2,834
    )Finance (expense)/income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (189
    )
    
    
    (3
    )
    
    
    (1,186
    )Share of profit of equity accounted
investees, net of income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    48
    
    
    
    24Profit/(loss) before income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,443
    
    
    
    2,053
    
    
    
    (3,996
    )Income tax(expense)/benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,403
    )
    
    
    (985
    )
    
    
    (1,172
    )Profit/(loss) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    (IMAGE)
    11,040
    
    
    (IMAGE)
    1,068
    
    
    (IMAGE)
    (5,168
    )
 (1)
    
    Segment revenue for the year ended March 31, 2011 does not include inter-segment revenues from
PSAI to Global Generics which is accounted for at a cost of (IMAGE)3,146 (as compared to (IMAGE)2,780 and
(IMAGE)2,371 for the years ended March 31, 2010 and 2009, respectively) and inter-segment revenues from
Global Generics to PSAI which is accounted for at a cost of (IMAGE)9 (as compared to (IMAGE)17 and (IMAGE)18 for the
years ended March 31, 2010 and 2009, respectively). Analysis of revenue by geography within the Global Generics Segment:
  For the year ended March 31,2011
    
    
    2010
    
    
    2009India
    
    (IMAGE)
    11,690
    
    
    (IMAGE)
    10,158
    
    
    (IMAGE)
    8,478North America
    
    
    18,996
    
    
    
    16,817
    
    
    
    19,843Russia and other countries of the former Soviet Union
    
    
    10,858
    
    
    
    9,119
    
    
    
    7,623Europe
    
    
    8,431
    
    
    
    9,643
    
    
    
    11,886Others
    
    
    3,365
    
    
    
    2,869
    
    
    
    1,960(IMAGE)
    53,340
    
    
    (IMAGE)
    48,606
    
    
    (IMAGE)
    49,790
  F-25




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 5. Segment reporting (continued)
 Analysis of depreciation and amortization by reportable segments:
 For the year ended March 31,2011
    
    
    2010
    
    
    2009PSAI
    
    (IMAGE)
    1,413
    
    
    (IMAGE)
    1,360
    
    
    (IMAGE)
    1,138Global Generics
    
    
    2,437
    
    
    
    2,476
    
    
    
    2,399Proprietary Products
    
    
    109
    
    
    
    141
    
    
    
    139Others
    
    
    189
    
    
    
    183
    
    
    
    138(IMAGE)
    4,148
    
    
    (IMAGE)
    4,160
    
    
    (IMAGE)
    3,814
 
 Analysis of property, plant and equipment and other intangible assets acquired by
reportable segments:
 For the year ended March 31,2011
    
    
    2010PSAI
    
    (IMAGE)
    3,940
    
    
    (IMAGE)
    1,652Global Generics
    
    
    5,944
    
    
    
    5,033Proprietary Products
    
    
    1,831
    
    
    
    15Others
    
    
    556
    
    
    
    623(IMAGE)
    12,271
    
    
    (IMAGE)
    7,323
 Analysis of revenue by geography:
  For the year ended March 31,2011
    
    
    2010
    
    
    2009India
    
    (IMAGE)
    14,314
    
    
    (IMAGE)
    12,808
    
    
    (IMAGE)
    11,460North America
    
    
    23,260
    
    
    
    21,269
    
    
    
    24,012Russia and other countries of the former Soviet Union
    
    
    10,858
    
    
    
    9,119
    
    
    
    7,623Europe
    
    
    16,058
    
    
    
    16,779
    
    
    
    18,047Others
    
    
    10,203
    
    
    
    10,302
    
    
    
    8,299(IMAGE)
    74,693
    
    
    (IMAGE)
    70,277
    
    
    (IMAGE)
    69,441
 Analysis of assets by geography:
  As of March 31,2011
    
    
    2010India
    
    (IMAGE)
    52,056
    
    
    (IMAGE)
    46,994North America
    
    
    20,222
    
    
    
    12,090Russia and other countries of the former Soviet Union
    
    
    4,824
    
    
    
    3,608Europe
    
    
    17,051
    
    
    
    16,871Others
    
    
    852
    
    
    
    767(IMAGE)
    95,005
    
    
    (IMAGE)
    80,330
  F-26




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 5. Segment reporting (continued)
 Analysis of property, plant and equipment and other intangible assets acquired by
geography:
  For the year ended March 31,2011
    
    
    2010India
    
    (IMAGE)
    8,875
    
    
    (IMAGE)
    6,866North America
    
    
    3,249
    
    
    
    258Russia and other countries of the former Soviet Union
    
    
    12
    
    
    
    11Europe
    
    
    111
    
    
    
    169Others
    
    
    24
    
    
    
    19(IMAGE)
    12,271
    
    
    (IMAGE)
    7,323
  For the year ended March 31,2011
    
    
    2010
    
    
    2009Clopidogrel
    
    (IMAGE)
    1,458
    
    
    (IMAGE)
    1,118
    
    
    (IMAGE)
    1,143Atorvastatin
    
    
    1,371
    
    
    
    292
    
    
    
    208Naproxen
    
    
    1,194
    
    
    
    490
    
    
    
    1,068Gemcitabine
    
    
    991
    
    
    
    1,224
    
    
    
    697Ciprofloxacin
    
    
    853
    
    
    
    1,054
    
    
    
    1,031Finasteride
    
    
    750
    
    
    
    1,204
    
    
    
    1,127Ramipril
    
    
    662
    
    
    
    559
    
    
    
    815Escitalopram Oxalate
    
    
    627
    
    
    
    224
    
    
    
    121Ranitidine
    
    
    568
    
    
    
    487
    
    
    
    355Rabeprazole
    
    
    528
    
    
    
    717
    
    
    
    419Others
    
    
    10,646
    
    
    
    13,035
    
    
    
    11,774Total
    
    (IMAGE)
    19,648
    
    
    (IMAGE)
    20,404
    
    
    (IMAGE)
    18,758
  For the year ended March 31,2011
    
    
    2010
    
    
    2009Omeprazole
    
    (IMAGE)
    8,501
    
    
    (IMAGE)
    6,289
    
    
    (IMAGE)
    5,231Nimesulide
    
    
    3,543
    
    
    
    2,874
    
    
    
    2,165Fexofenadine (hcl and pseudoephedrine)
    
    
    2,432
    
    
    
    1,673
    
    
    
    2,855Ciprofloxacin
    
    
    2,302
    
    
    
    2,178
    
    
    
    1,572Ketorolac
    
    
    1,811
    
    
    
    1,593
    
    
    
    1,297Tacrolimus
    
    
    1,739
    
    
    
    
    
    
    
    Simvastatin
    
    
    1,361
    
    
    
    2,047
    
    
    
    2,350Ranitidine
    
    
    1,298
    
    
    
    1,157
    
    
    
    809Ibuprofen
    
    
    1,194
    
    
    
    1,100
    
    
    
    1,000Ceterizine
    
    
    1,096
    
    
    
    730
    
    
    
    638Others
    
    
    28,063
    
    
    
    28,981
    
    
    
    31,873Total
    
    (IMAGE)
    53,340
    
    
    (IMAGE)
    48,606
    
    
    (IMAGE)
    49,790
  F-27




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 6. Business combination and other acquisitions
 a. Acquisition of GSKs manufacturing facility in Bristol, Tennessee, U.S.A and product rights
 ® ® ®
 Recognized values onParticulars
    
    acquisitionProperty, plant and equipment
    
    (IMAGE)
    688Intangible assets
    
    
    321Inventories
    
    
    146Other assets
    
    
    132Deferred tax liability
    
    
    (45
    )Net identifiable assets and liabilities
    
    (IMAGE)
    1,242Negative goodwill recognized in other
expense/(income), net(1)
    
    
    (73
    )Consideration paid in cash
    
    (IMAGE)
    1,169
 (1)
    
    The negative goodwill on acquisition is attributable mainly to lower amounts paid towards
intangible and other assets.  b. Acquisition of the entire equity interest of Perlecan Pharma Private Limited
 
 Investments
in Associates
  F-28




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 6. Business combination and other acquisitions (continued)
 
 
 
 Business Combinations
 Recognized values onParticulars
    
    acquisitionCurrent assets, net (includes (IMAGE)386 of cash and cash equivalents)
    
    (IMAGE)
    408Intangible assets
    
    
    82Deferred tax asset
    
    
    268Total consideration paid
    
    (IMAGE)
    758
 
 
  F-29




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 7. Property, plant and equipment
  Furniture,fixtures andPlant and
    
    
    Computer
    
    
    officeLand
    
    
    Buildings
    
    
    equipment
    
    
    equipment
    
    
    equipment
    
    
    Vehicles
    
    
    TotalBalance as at April 1, 2009
    
    (IMAGE)
    1,937
    
    
    (IMAGE)
    5,581
    
    
    (IMAGE)
    16,459
    
    
    (IMAGE)
    1,115
    
    
    (IMAGE)
    910
    
    
    (IMAGE)
    489
    
    
    (IMAGE)
    26,491Additions through business combination
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other additions
    
    
    98
    
    
    
    579
    
    
    
    2,866
    
    
    
    186
    
    
    
    83
    
    
    
    92
    
    
    
    3,904Disposals
    
    
    
    
    
    
    (20
    )
    
    
    (219
    )
    
    
    (127
    )
    
    
    (25
    )
    
    
    (89
    )
    
    
    (480
    )Effect of changes in foreign exchange
rates
    
    
    (15
    )
    
    
    (173
    )
    
    
    (33
    )
    
    
    (33
    )
    
    
    17
    
    
    
    1
    
    
    
    (236
    )Balance as at March 31, 2010
    
    (IMAGE)
    2,020
    
    
    (IMAGE)
    5,967
    
    
    (IMAGE)
    19,073
    
    
    (IMAGE)
    1,141
    
    
    (IMAGE)
    985
    
    
    (IMAGE)
    493
    
    
    (IMAGE)
    29,679Balance as at April 1, 2010
    
    (IMAGE)
    2,020
    
    
    (IMAGE)
    5,967
    
    
    (IMAGE)
    19,073
    
    
    (IMAGE)
    1,141
    
    
    (IMAGE)
    985
    
    
    (IMAGE)
    493
    
    
    (IMAGE)
    29,679Additions through business combination
    
    
    56
    
    
    
    435
    
    
    
    170
    
    
    
    10
    
    
    
    6
    
    
    
    
    
    
    
    677Other additions
    
    
    1,542
    
    
    
    1,513
    
    
    
    4,569
    
    
    
    213
    
    
    
    307
    
    
    
    194
    
    
    
    8,338Disposals
    
    
    (33
    )
    
    
    (26
    )
    
    
    (154
    )
    
    
    (115
    )
    
    
    (24
    )
    
    
    (98
    )
    
    
    (450
    )Effect of changes in foreign exchange
rates
    
    
    13
    
    
    
    20
    
    
    
    68
    
    
    
    10
    
    
    
    4
    
    
    
    
    
    
    
    115Balance as at March 31, 2011
    
    (IMAGE)
    3,598
    
    
    (IMAGE)
    7,909
    
    
    (IMAGE)
    23,726
    
    
    (IMAGE)
    1,259
    
    
    (IMAGE)
    1,278
    
    
    (IMAGE)
    589
    
    
    (IMAGE)
    38,359DepreciationBalance as at April 1, 2009
    
    (IMAGE)
    
    
    
    (IMAGE)
    839
    
    
    (IMAGE)
    7,366
    
    
    (IMAGE)
    561
    
    
    (IMAGE)
    856
    
    
    (IMAGE)
    266
    
    
    (IMAGE)
    9,888Depreciation for the year
    
    
    
    
    
    
    236
    
    
    
    1,990
    
    
    
    232
    
    
    
    120
    
    
    
    103
    
    
    
    2,681Disposals
    
    
    
    
    
    
    (10
    )
    
    
    (152
    )
    
    
    (130
    )
    
    
    (22
    )
    
    
    (81
    )
    
    
    (395
    )Effect of changes in foreign exchange
rates
    
    
    
    
    
    
    (14
    )
    
    
    (15
    )
    
    
    (21
    )
    
    
    (36
    )
    
    
    (1
    )
    
    
    (87
    )Balance as at March 31, 2010
    
    (IMAGE)
    
    
    
    (IMAGE)
    1,051
    
    
    (IMAGE)
    9,189
    
    
    (IMAGE)
    642
    
    
    (IMAGE)
    918
    
    
    (IMAGE)
    287
    
    
    (IMAGE)
    12,087Balance as at April 1, 2010
    
    (IMAGE)
    
    
    
    (IMAGE)
    1,051
    
    
    (IMAGE)
    9,189
    
    
    (IMAGE)
    642
    
    
    (IMAGE)
    918
    
    
    (IMAGE)
    287
    
    
    (IMAGE)
    12,087Depreciation for the year
    
    
    
    
    
    
    271
    
    
    
    2,229
    
    
    
    225
    
    
    
    125
    
    
    
    112
    
    
    
    2,962Disposals
    
    
    
    
    
    
    (18
    )
    
    
    (135
    )
    
    
    (113
    )
    
    
    (23
    )
    
    
    (84
    )
    
    
    (373
    )Effect of changes in foreign exchange
rates
    
    
    
    
    
    
    6
    
    
    
    18
    
    
    
    11
    
    
    
    4
    
    
    
    (1
    )
    
    
    38Balance as at March 31, 2011
    
    (IMAGE)
    
    
    
    (IMAGE)
    1,310
    
    
    (IMAGE)
    11,301
    
    
    (IMAGE)
    765
    
    
    (IMAGE)
    1,024
    
    
    (IMAGE)
    314
    
    
    (IMAGE)
    14,714Net carrying valueAs at April 1, 2009
    
    
    1,937
    
    
    
    4,742
    
    
    
    9,093
    
    
    
    554
    
    
    
    54
    
    
    
    223
    
    
    
    16,603As at March 31, 2010
    
    
    2,020
    
    
    
    4,916
    
    
    
    9,884
    
    
    
    499
    
    
    
    67
    
    
    
    206
    
    
    
    17,592Add: Capital-work-in progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,86722,459As at March 31, 2011
    
    (IMAGE)
    3,598
    
    
    (IMAGE)
    6,599
    
    
    (IMAGE)
    12,425
    
    
    (IMAGE)
    494
    
    
    (IMAGE)
    254
    
    
    (IMAGE)
    275
    
    
    (IMAGE)
    23,645Add: Capital-work-in progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (IMAGE)
    5,997(IMAGE)
    29,642
 (1)
    
    Capital-work-in progress as on March 31, 2011 includes (IMAGE)11 acquired through business combination.  F-30




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 7. Property, plant and equipment (continued)
 Government grants
 
 Capital commitments
 
 Interest capitalization
 
 Assets acquired under finance leases
 
 8. Goodwill
   As of March 31,2011
    
    
    2010Opening balance (1)
    
    (IMAGE)
    18,267
    
    
    (IMAGE)
    18,246Goodwill arising on business combinations
    
    
    
    
    
    
    Effect of translation adjustments
    
    
    6
    
    
    
    21Closing balance(1)
    
    (IMAGE)
    18,273
    
    
    (IMAGE)
    18,267Less: Impairment loss (2)
    
    
    (16,093
    )
    
    
    (16,093
    )(IMAGE)
    2,180
    
    
    (IMAGE)
    2,174
 (1)
    
    This does not include goodwill arising upon investment in associate of (IMAGE)181, as at March 31,
2011 and 2010, which is included in the carrying value of the investment in the equity
accounted investees.(2)
    
    The impairment loss includes (IMAGE)0 and (IMAGE)5,147 for the years ended March 31, 2011 and 2010,
respectively, which relates to the Companys German subsidiary, betapharm, which is part of
the Global Generics segment (refer to Note 9 for details).  
    
    PSAI- Active Pharmaceutical operations
    
    Global Generics- North America Operations
    
    Global Generics- Italy Operations
    
    Global Generics- Branded Formulations
    
    Global Generics- European Operations
    
    Global Generics- betapharm CGU
    
    Global Generics- Shreveport Operations
  F-31




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 8. Goodwill (continued)
  As of March 31,2011
    
    
    2010PSAI- Active Pharmaceutical operations
    
    (IMAGE)
    997
    
    
    (IMAGE)
    997Global Generics- North America Operations
    
    
    731
    
    
    
    731Global Generics- Italy Operations
    
    
    157
    
    
    
    157Global Generics- Branded Formulations
    
    
    168
    
    
    
    168Others
    
    
    127
    
    
    
    121(IMAGE)
    2,180
    
    
    (IMAGE)
    2,174
  a)
    
    Estimated cash flows for five years based on formal/approved internal management
budgets.
 b)
    
    Terminal value arrived by extrapolating last forecasted year cash flows to perpetuity,
using a constant long-term growth rate of 0%. This long-term growth rate takes into
consideration external macroeconomic sources of data. Such long-term growth rate considered
does not exceed that of the relevant business and industry sector.
 c)
    
    The post-tax discount rates used are based on the Companys weighted average cost of
capital.
 d)
    
    Value-in-use is calculated using after tax assumptions. The use of after tax
assumptions does not result in a value-in-use that is materially different from the
value-in-use that would result if the calculation was performed using before tax
assumptions. The after tax discount rate used is 11%. The before tax discount rate,
determined based on the value-in-use derived from the use of after tax assumptions, is 12%.
   F-32




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 9. Other intangible assets
  Trademarks
    
    
    Product
    
    
    Beneficial tollwith finite
    
    
    related
    
    
    manufacturing
    
    
    Technologyuseful life
    
    
    intangibles
    
    
    contracts
    
    
    related intangiblesGross carrying value/costBalance as at April 1, 2009
    
    (IMAGE)
    9,489
    
    
    (IMAGE)
    15,971
    
    
    (IMAGE)
    776
    
    
    (IMAGE)
    657Additions through business
combinations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other additions
    
    
    
    
    
    
    2,701
    
    
    
    
    
    
    
    Effect of changes in
foreign exchange rates
    
    
    (719
    )
    
    
    (1,317
    )
    
    
    (80
    )
    
    
    (41
    )Balance as at March 31, 2010
    
    (IMAGE)
    8,770
    
    
    (IMAGE)
    17,355
    
    
    (IMAGE)
    696
    
    
    (IMAGE)
    616Balance as at April 1, 2010
    
    (IMAGE)
    8,770
    
    
    (IMAGE)
    17,355
    
    
    (IMAGE)
    696
    
    
    (IMAGE)
    616Additions through business
combinations
    
    
    
    
    
    
    321
    
    
    
    
    
    
    
    Other additions
    
    
    
    
    
    
    1,777
    
    
    
    
    
    
    
    14Deletions
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    Effect of changes in
foreign exchange rates
    
    
    301
    
    
    
    550
    
    
    
    34
    
    
    
    116Balance as at March 31, 2011
    
    (IMAGE)
    9,071
    
    
    (IMAGE)
    20,000
    
    
    (IMAGE)
    730
    
    
    (IMAGE)
    746Amortization/Impairment lossBalance as at April 1, 2009
    
    (IMAGE)
    2,558
    
    
    (IMAGE)
    9,267
    
    
    (IMAGE)
    776
    
    
    (IMAGE)
    83Amortization for the year
    
    
    577
    
    
    
    596
    
    
    
    
    
    
    
    97Impairment loss
    
    
    1,211
    
    
    
    2,112
    
    
    
    
    
    
    
    Effect of changes in
foreign exchange rates
    
    
    (174
    )
    
    
    (948
    )
    
    
    (80
    )
    
    
    (14
    )Balance as at March 31, 2010
    
    (IMAGE)
    4,172
    
    
    (IMAGE)
    11,027
    
    
    (IMAGE)
    696
    
    
    (IMAGE)
    166Balance as at April 1, 2010
    
    (IMAGE)
    4,172
    
    
    (IMAGE)
    11,027
    
    
    (IMAGE)
    696
    
    
    (IMAGE)
    166Amortization for the year
    
    
    418
    
    
    
    573
    
    
    
    
    
    
    
    84Impairment loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effect of changes in
foreign exchange rates
    
    
    100
    
    
    
    405
    
    
    
    34
    
    
    
    5Balance as at March 31, 2011
    
    (IMAGE)
    4,690
    
    
    (IMAGE)
    12,005
    
    
    (IMAGE)
    730
    
    
    (IMAGE)
    255Net carrying amountAs at April 1, 2009
    
    
    6,931
    
    
    
    6,704
    
    
    
    
    
    
    
    574As at March 31, 2010
    
    
    4,598
    
    
    
    6,328
    
    
    
    
    
    
    
    450As at March 31, 2011
    
    (IMAGE)
    4,381
    
    
    (IMAGE)
    7,995
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    491
  F-33




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 9. Other intangible assets (continued)
  Customerrelatedintangibles
    
    
    Others
    
    
    TotalGross carrying value/costBalance as at April 1, 2009
    
    (IMAGE)
    707
    
    
    (IMAGE)
    387
    
    
    (IMAGE)
    27,987Additions through business combinations
    
    
    
    
    
    
    
    
    
    
    Other additions
    
    
    12
    
    
    
    118
    
    
    
    2,831Effect of changes in foreign exchange
rates
    
    
    (51
    )
    
    
    (8
    )
    
    
    (2,216
    )Balance as at March 31, 2010
    
    (IMAGE)
    668
    
    
    (IMAGE)
    497
    
    
    (IMAGE)
    28,602Balance as at April 1, 2010
    
    (IMAGE)
    668
    
    
    (IMAGE)
    497
    
    
    (IMAGE)
    28,602Additions through business combinations
    
    
    
    
    
    
    
    
    
    
    321Other additions
    
    
    13
    
    
    
    
    
    
    
    1,804Deletions
    
    
    
    
    
    
    (50
    )
    
    
    (53
    )Effect of changes in foreign exchange
rates
    
    
    5
    
    
    
    (78
    )
    
    
    928Balance as at March 31, 2011
    
    (IMAGE)
    686
    
    
    (IMAGE)
    369
    
    
    (IMAGE)
    31,602Amortization/Impairment lossBalance as at April 1, 2009
    
    (IMAGE)
    227
    
    
    (IMAGE)
    197
    
    
    (IMAGE)
    13,108Amortization for the year
    
    
    155
    
    
    
    54
    
    
    
    1,479Impairment loss
    
    
    133
    
    
    
    
    
    
    
    3,456Effect of changes in foreign exchange
rates
    
    
    (21
    )
    
    
    (3
    )
    
    
    (1,240
    )Balance as at March 31, 2010
    
    (IMAGE)
    494
    
    
    (IMAGE)
    248
    
    
    (IMAGE)
    16,803Balance as at April 1, 2010
    
    (IMAGE)
    494
    
    
    (IMAGE)
    248
    
    
    (IMAGE)
    16,803Amortization for the year
    
    
    66
    
    
    
    45
    
    
    
    1,186Impairment loss
    
    
    
    
    
    
    
    
    
    
    Effect of changes in foreign exchange
rates
    
    
    2
    
    
    
    1
    
    
    
    547Balance as at March 31, 2011
    
    (IMAGE)
    562
    
    
    (IMAGE)
    294
    
    
    (IMAGE)
    18,536Net carrying amountAs at April 1, 2009
    
    
    480
    
    
    
    190
    
    
    
    14,879As at March 31, 2010
    
    
    174
    
    
    
    249
    
    
    
    11,799As at March 31, 2011
    
    (IMAGE)
    124
    
    
    (IMAGE)
    75
    
    
    (IMAGE)
    13,066
 
 ® ® ® ®  ®
 
  F-34




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 9. Other intangible assets (continued)
 
 Impairment losses recorded during the year ended March 31, 2009
 
 
 Impairment losses recorded during the year ended March 31, 2010
  
   
    
    Revenue projections are based on the approved revised budgets for the fiscal year
ended March 31, 2011, based on managements analysis of current orders booked and the
actual performance of Betapharm during recent months. These projections take into
account the expected long term growth rate in the German generics industry.
Accordingly, based on the industry reports and other information, the Company projects
a constant 1% decline in revenue on a year-on-year basis for betapharms existing
products.
 
    
    The net cash flows have been discounted based on a post-tax discounting tax rate
ranging from 7.44% to 9.34%.
   F-35




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 9. Other intangible assets (continued)
 Change in estimated useful life of indefinite life trademark/brand beta
 
 De-recognition of intangible assets
 
 10. Investment in equity accounted investees
 
 Reddy Kunshan (Joint venture)
   As of/for the year ended March 31,2011
    
    
    2010
    
    
    2009Ownership
    
    
    51.3
    %
    
    
    51.3
    %
    
    
    51.3
    %Total current assets
    
    (IMAGE)
    548
    
    
    (IMAGE)
    428
    
    
    (IMAGE)
    427Total non-current assets
    
    
    190
    
    
    
    191
    
    
    
    217Total assets
    
    (IMAGE)
    738
    
    
    (IMAGE)
    619
    
    
    (IMAGE)
    644Equity
    
    (IMAGE)
    379
    
    
    (IMAGE)
    373
    
    
    (IMAGE)
    298Total current liabilities
    
    
    359
    
    
    
    245
    
    
    
    345Total non-current liabilities
    
    
    
    
    
    
    1
    
    
    
    1Total liabilities
    
    (IMAGE)
    359
    
    
    (IMAGE)
    246
    
    
    (IMAGE)
    346Revenues
    
    (IMAGE)
    818
    
    
    (IMAGE)
    791
    
    
    (IMAGE)
    611Expenses
    
    
    812
    
    
    
    697
    
    
    
    563Profit for the year
    
    (IMAGE)
    6
    
    
    (IMAGE)
    94
    
    
    (IMAGE)
    48
 
  F-36




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 11. Other investments
  Gain/(loss)recognizeddirectly inCost
    
    
    equity
    
    
    Fair valueInvestment in units of mutual funds
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    Investment in equity securities
    
    
    3
    
    
    
    30
    
    
    
    33Investment in certificate of deposits
    
    
    
    
    
    
    
    
    
    
    (IMAGE)
    3
    
    
    (IMAGE)
    30
    
    
    (IMAGE)
    33
  Gain/(loss)recognizeddirectly inCost
    
    
    equity
    
    
    Fair valueInvestments in units of mutual funds
    
    (IMAGE)
    3,276
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    3,276Investment in equity securities
    
    
    3
    
    
    
    22
    
    
    
    25Investment in certificate of deposits
    
    
    298
    
    
    
    1
    
    
    
    299(IMAGE)
    3,577
    
    
    (IMAGE)
    23
    
    
    (IMAGE)
    3,600
 12. Inventories
  As of March 31,2011
    
    
    2010Raw materials
    
    (IMAGE)
    4,777
    
    
    (IMAGE)
    4,000Packing materials, stores and spares
    
    
    1,115
    
    
    
    979Work-in-progress
    
    
    4,220
    
    
    
    3,883Finished goods
    
    
    5,947
    
    
    
    4,509Total inventories
    
    (IMAGE)
    16,059
    
    
    (IMAGE)
    13,371
 
 
  F-37




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 13. Trade receivables
 As of March 31,2011
    
    
    2010Trade receivables due from related parties
    
    (IMAGE)
    101
    
    
    (IMAGE)
    44Other trade receivables
    
    
    17,973
    
    
    
    12,332(IMAGE)
    18,074
    
    
    (IMAGE)
    12,376Less: Allowance for doubtful trade receivables
    
    
    (459
    )
    
    
    (416
    )Trade receivables, net
    
    (IMAGE)
    17,615
    
    
    (IMAGE)
    11,960
  Year Ended March 31,2011
    
    
    2010Balance at the beginning of the year
    
    (IMAGE)
    416
    
    
    (IMAGE)
    342Provision for doubtful trade receivables
    
    
    162
    
    
    
    169Trade receivables written off and charged to allowance
    
    
    (119
    )
    
    
    (95
    )Balance at the end of the year
    
    (IMAGE)
    459
    
    
    (IMAGE)
    416
 14. Other assets
  As of March 31,2011
    
    
    2010CurrentPrepaid expenses
    
    (IMAGE)
    512
    
    
    (IMAGE)
    270Advance payments to vendors
    
    
    491
    
    
    
    586Balances and receivables from statutory authorities (1)
    
    
    3,228
    
    
    
    2,727Due from related parties
    
    
    
    
    
    
    5Deposits
    
    
    118
    
    
    
    118Advance to employees
    
    
    44
    
    
    
    46Export benefits receivable (2)
    
    
    1,156
    
    
    
    571Others
    
    
    1,382
    
    
    
    1,1226,931
    
    
    
    5,445Non-currentDeposits
    
    
    228
    
    
    
    197Others
    
    
    48
    
    
    
    46276
    
    
    
    243(IMAGE)
    7,207
    
    
    (IMAGE)
    5,688
 (1)
    
    Balances and receivables from statutory authorities primarily consist of amounts deposited
with the excise authorities of India and the unutilized excise input credits on purchases.
These are regularly utilized to offset the Indian excise and service tax liability on goods
produced by and services provided by the Company. Accordingly, these balances have been
classified as current assets.(2)
    
    Refer to Note 3.l. for details regarding export entitlements.  F-38




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 15. Cash and cash equivalents
  As of March 31,2011
    
    
    2010Cash balances
    
    (IMAGE)
    10
    
    
    (IMAGE)
    9Balances with banks
    
    
    5,247
    
    
    
    3,296Time deposit balances with banks
    
    
    472
    
    
    
    3,279Cash and cash equivalents on the statements of financial position
    
    
    5,729
    
    
    
    6,584Bank overdrafts used for cash management purposes
    
    
    (69
    )
    
    
    (39
    )Cash and cash equivalents in the cash flow statement
    
    (IMAGE)
    5,660
    
    
    (IMAGE)
    6,545
 
 
    
    (IMAGE)20 and (IMAGE)19 as of March 31, 2011 and 2010, respectively, representing amounts in the
Companys unclaimed dividend account, which are therefore restricted;
 
    
    (IMAGE)150 million as of March 31, 2011, representing amounts in an escrow account for settlement
of the payment due in respect of the Companys exercise of the portfolio termination value
option under its research and development agreement with I-VEN Pharma Capital Limited (Refer
to Note 21 for details); and
 
    
    (IMAGE)83 as of March 31, 2011, representing amounts deposited as security for a bond executed for
an environmental liability relating to the Companys site in Mirfield, United Kingdom (Refer
to Note 22 for details).
 16. Equity
 Year Ended March 31,2011
    
    
    2010Par value per share
    
    (IMAGE)
    5
    
    
    (IMAGE)
    5Authorized share capital
    
    
    1,200
    
    
    
    1,200Fully paid up capitalAs at April 1
    
    
    844
    
    
    
    842Add: Shares issued on exercise of stock options
    
    
    2
    
    
    
    2As at March 31
    
    (IMAGE)
    846
    
    
    (IMAGE)
    844
 
   
 
  F-39




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 17. Earnings/(loss) per share
 Basic earnings/(loss) per share
 
 Basic earnings/(loss) per share
 Year Ended March 31,2011
    
    
    2010
    
    
    2009Issued equity shares as of April 1
    
    
    168,845,385
    
    
    
    168,468,777
    
    
    
    168,172,746Effect of shares issued on exercise of stock options
    
    
    283,264
    
    
    
    238,200
    
    
    
    176,393Weighted average number of equity shares as of March 31
    
    
    169,128,649
    
    
    
    168,706,977
    
    
    
    168,349,139
 Diluted earnings/(loss) per share
 
 Year Ended March 31,2011
    
    
    2010
    
    
    2009Weighted average number of equity shares (Basic)
    
    
    169,128,649
    
    
    
    168,706,977
    
    
    
    168,349,139Dilutive effect of outstanding stock options
    
    
    836,633
    
    
    
    908,966
    
    
    
    Weighted average number of equity shares (Diluted)
    
    
    169,965,282
    
    
    
    169,615,943
    
    
    
    168,349,139
  18. Loans and borrowings
 Short term loans and borrowings
 
  As atMarch 31, 2011
    
    
    March 31, 2010Rupee borrowings
    
    
    8.75
    %
    
    
    5.00
    %Borrowings on transfer of receivables
    
    LIBOR+75-100
    bps
    
    
    Foreign currency borrowings
    
    LIBOR+ 50 - 175
    bps
    
    LIBOR+ 40 -75
    bpsEURIBOR+50-100
    bps5% to 8
    %
  Transfer of financial asset
 
  F-40




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in millions, except share and per share data and where otherwise stated)
 18.
    
    Loans and borrowings (continued)
 Short-term borrowings  hedging instruments
 
 Long term loans and borrowings
  As at March 31,2011
    
    
    2010Rupee term loan (1)
    
    (IMAGE)
    
    
    
    (IMAGE)
    1Foreign currency loan (2), (3)
    
    
    
    
    
    
    8,838Obligations under finance leases
    
    
    256
    
    
    
    252Bonus debentures
    
    
    5,027
    
    
    
    5,283
    
    
    
    9,091Less: Current portionRupee term loan (1)
    
    
    
    
    
    
    1Foreign currency loan (2), (3)
    
    
    
    
    
    
    3,690Obligations under finance leases
    
    
    12
    
    
    
    1512
    
    
    
    3,706Non-current portionRupee term loan (1)
    
    
    
    
    
    
    Foreign currency loan (2), (3)
    
    
    
    
    
    
    5,148Obligations under finance leases
    
    
    244
    
    
    
    237Bonus debentures
    
    
    5,027
    
    
    
    (IMAGE)
    5,271
    
    
    (IMAGE)
    5,385
 (1)
    
    Rupee term loan represents a loan from the Indian Renewable Energy Development Agency
Limited which is secured by way of hypothecation of specific movable assets pertaining to the
Companys solar grid interactive power plant located in Bachupally, Hyderabad. The outstanding
amount of such loan was fully re-paid during the year ended March 31, 2011. Consequently, the
financial liability has been derecognized during the current period.(2)
    
    Foreign currency loan represents the carrying amount of a Euro denominated loan originally
received from Citibank, N.A., Hong Kong in March 2006 to fund the acquisition of betapharm. As
part of the facility, the Company had incurred an amount of (IMAGE)429 as initial debt issuance
costs, which is being amortized over the debt period using the effective interest method. On
December 22, 2010, the Company repaid the loan prior to its maturity by making a payment of
(IMAGE)7,111. The Company obtained a release letter from Citibank for such loan satisfaction on
January 4, 2011. Accordingly, the loan liability has been derecognized from the consolidated
financial statements and the difference between the carrying amount of the loan (at amortized
cost) and the amount paid on the date of satisfaction amounting to (IMAGE)73 has been recognized as
loss on extinguishment of debt disclosed within finance cost in the consolidated statement of
income.With respect to this loan, the Company was required to comply with certain financial covenants,
which includes limits on capital expenditures and/maintenance of financial ratios (computed
based on the Companys Indian GAAP financial statements) as defined in the loan agreement. Such
financial ratio requirements include: (a) Consolidated Net Debt to Consolidated Earnings Before
Interest, Tax, Depreciation and Amortization (EBITDA) not to exceed 3.5:1, and (b)
Consolidated EBITDA to Consolidated Interest Expenses shall not be less than 3.75:1. The Company
was in compliance with such financial covenants up to the date of satisfaction of the loan. (3)
    
    During the year ended March 31, 2011, the Company repaid (IMAGE)8,926 of foreign currency loans
(consisting of Euro 141 and U.S.$8), (IMAGE)1 of Rupee term loans and (IMAGE)14 of obligations under
capital leases. During the year ended March 31, 2010, the Company repaid (IMAGE)3,457 of foreign
currency loans (consisting of Euro 50 and U.S.$3), (IMAGE)6 of rupee term loans and (IMAGE)16 of
obligations under finance leases.
  F-41




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 18. Loans and borrowings (continued)
 Issuance of bonus debentures
 March 31,2011
    
    
    2010Proceeds from issuance of bonus debentures
    
    
    5,078
    
    
    
    Issuance cost
    
    
    (51
    )
    
    
    Initial recognized amount
    
    
    5,027
    
    
    
    
 
  March 31,2011
    
    
    2010Rupee borrowings
    
    
    
    %
    
    
    2.00
    %Foreign currency borrowings
    
    
    
    %
    
    EURIBOR + 70 bps and LIBOR+70 bpsBonus debentures
    
    
    9.25
    %
    
    
    
  Foreign
    
    
    ObligationMaturing in the year ending
    
    Rupee term
    
    
    currency
    
    
    under financeMarch 31,
    
    loan
    
    
    loan
    
    
    lease
    
    
    Debentures
    
    
    Total2012
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    12
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    122013
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    102014
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    5,078
    
    
    
    5,0882015
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    102016
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Thereafter
    
    
    
    
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    204(IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    256
    
    
    (IMAGE)
    5,078
    
    
    (IMAGE)
    5,334
  ObligationMaturing in the year ending
    
    Rupee term
    
    
    Foreign
    
    
    under financeMarch 31,
    
    loan
    
    
    currency loan
    
    
    lease
    
    
    Total2011
    
    (IMAGE)
    1
    
    
    (IMAGE)
    3,690
    
    
    (IMAGE)
    15
    
    
    (IMAGE)
    3,7062012
    
    
    
    
    
    
    5,148
    
    
    
    8
    
    
    
    5,1562013
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    82014
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    82015
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9Thereafter
    
    
    
    
    
    
    
    
    
    
    204
    
    
    
    204(IMAGE)
    1
    
    
    (IMAGE)
    8,838
    
    
    (IMAGE)
    252
    
    
    (IMAGE)
    9,091
  F-42




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 18. Loans and borrowings (continued)
 Obligations under finance leases
  Present value ofminimum lease
    
    
    
    
    
    
    Future minimumParticulars
    
    payments
    
    
    Interest
    
    
    lease paymentsNot later than one year
    
    (IMAGE)
    12
    
    
    (IMAGE)
    2
    
    
    (IMAGE)
    14Between one and five years
    
    
    51
    
    
    
    6
    
    
    
    57More than five years
    
    
    193
    
    
    
    1
    
    
    
    194(IMAGE)
    256
    
    
    
    9
    
    
    (IMAGE)
    265
  Present value ofminimum lease
    
    
    
    
    
    
    Future minimumParticulars
    
    payments
    
    
    Interest
    
    
    lease paymentsNot later than one year
    
    (IMAGE)
    15
    
    
    (IMAGE)
    1
    
    
    (IMAGE)
    16Between one and five years
    
    
    33
    
    
    
    
    
    
    
    33More than five years
    
    
    204
    
    
    
    1
    
    
    
    205(IMAGE)
    252
    
    
    (IMAGE)
    2
    
    
    (IMAGE)
    254
 19. Employee benefits
 Gratuity benefits
   Year Ended March 31,2011
    
    
    2010
    
    
    2009Service cost
    
    (IMAGE)
    63
    
    
    (IMAGE)
    52
    
    
    (IMAGE)
    43Interest cost
    
    
    37
    
    
    
    30
    
    
    
    27Expected return on plan assets
    
    
    (33
    )
    
    
    (25
    )
    
    
    (22
    )Recognized net actuarial (gain)/loss
    
    
    2
    
    
    
    6
    
    
    
    Gratuity cost recognized in income statement
    
    (IMAGE)
    69
    
    
    (IMAGE)
    63
    
    
    (IMAGE)
    48
  F-43




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 19. Employee benefits (continued)
  As of March 31,2011
    
    
    2010Present value of unfunded obligations
    
    (IMAGE)
    25
    
    
    (IMAGE)
    21Present value of funded obligations
    
    
    585
    
    
    
    452Total present value of obligations
    
    
    610
    
    
    
    473Fair value of plan assets
    
    
    (490
    )
    
    
    (449
    )Present value of net obligations
    
    
    120
    
    
    
    24Unrecognized actuarial gains and (losses)
    
    
    (134
    )
    
    
    (60
    )Recognized (asset)/liability
    
    (IMAGE)
    (14
    )
    
    (IMAGE)
    (36
    )
  As of March 31,2011
    
    
    2010Defined benefit obligations at the beginning of the year
    
    (IMAGE)
    473
    
    
    (IMAGE)
    404Service cost
    
    
    63
    
    
    
    52Interest cost
    
    
    37
    
    
    
    30Actuarial (gain)/loss
    
    
    81
    
    
    
    18Benefits paid
    
    
    (44
    )
    
    
    (31
    )Defined benefit obligation at the end of the year
    
    (IMAGE)
    610
    
    
    (IMAGE)
    473
  As of March 31,2011
    
    
    2010Fair value of plan assets at the beginning of the year
    
    (IMAGE)
    449
    
    
    (IMAGE)
    334Expected return on plan assets
    
    
    33
    
    
    
    25Employer contributions
    
    
    47
    
    
    
    94Benefits paid
    
    
    (44
    )
    
    
    (31
    )Actuarial gain/(loss)
    
    
    5
    
    
    
    27Plan assets at the end of the year
    
    (IMAGE)
    490
    
    
    (IMAGE)
    449
  Year Ended March 31,2011
    
    
    2010
    
    
    2009
    
    
    2008Defined benefit obligation
    
    (IMAGE)
    610
    
    
    (IMAGE)
    473
    
    
    (IMAGE)
    404
    
    
    (IMAGE)
    322Plan assets
    
    
    490
    
    
    
    449
    
    
    
    334
    
    
    
    289Surplus/(deficit)
    
    
    (120
    )
    
    
    (24
    )
    
    
    (70
    )
    
    
    (33
    )Experience adjustments on plan liabilities
    
    
    28
    
    
    
    28
    
    
    
    18
    
    
    
    36Experience adjustments on plan assets
    
    
    5
    
    
    
    27
    
    
    
    (7
    )
    
    
    15
  F-44




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 19. Employee benefits (continued)
 Summary of the actuarial assumptions:
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Discount rate
    
    
    7.95
    %
    
    
    7.50
    %
    
    
    7.15
    %Rate of compensation increase
    
    9% per annum for first 2 years and 8% per annum thereafter
    
    
    8% per annum for first 2 years and 6% per annum thereafter
    
    
    8% per annum for first 3 years and 6% per annum thereafterExpected long-term return on plan assets
    
    
    7.50
    %
    
    
    7.50
    %
    
    
    7.50
    %
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Discount rate
    
    
    7.50
    %
    
    
    7.15
    %
    
    
    7.80
    %Rate of compensation increase
    
    8% per annum for first 2 years and 6% per annum thereafter
    
    
    8% per annum for first 3 years and 6% per annum thereafter
    
    
    8% to 10% per annum  for first 4 years and 6% per annum thereafterExpected long-term return on plan assets
    
    
    7.50
    %
    
    
    7.50
    %
    
    
    7.50
    %
 Contributions:
 Plan assets:
 As of  March 31,2011
    
    
    2010Debt securities
    
    
    
    
    
    
    1
    %Funds managed by insurers
    
    
    99
    %
    
    
    96
    %Others
    
    
    1
    %
    
    
    3
    %
 Pension plan
   Year Ended March 31,2011
    
    
    2010
    
    
    2009Service cost
    
    (IMAGE)
    16
    
    
    (IMAGE)
    14
    
    
    (IMAGE)
    12Interest cost
    
    
    25
    
    
    
    24
    
    
    
    18Expected return on plan assets
    
    
    (27
    )
    
    
    (20
    )
    
    
    (15
    )Actuarial (gain)/loss
    
    
    6
    
    
    
    8
    
    
    
    5Pension cost recognized in income statement
    
    (IMAGE)
    20
    
    
    (IMAGE)
    26
    
    
    (IMAGE)
    20
  F-45




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 19. Employee benefits (continued)
  As of March 31,2011
    
    
    2010Present value of unfunded obligations
    
    (IMAGE)
    27
    
    
    (IMAGE)
    26Present value of funded obligations
    
    
    332
    
    
    
    284Total present value of obligations
    
    
    359
    
    
    
    310Fair value of plan assets
    
    
    (259
    )
    
    
    (249
    )Present value of net obligations
    
    
    100
    
    
    
    61Unrecognized actuarial losses
    
    
    (127
    )
    
    
    (91
    )Recognized asset
    
    (IMAGE)
    (27
    )
    
    (IMAGE)
    (30
    )
  As of March 31,2011
    
    
    2010Defined benefit obligations at the beginning of the year
    
    (IMAGE)
    310
    
    
    (IMAGE)
    244Service cost
    
    
    16
    
    
    
    14Interest cost
    
    
    25
    
    
    
    24Actuarial (gain)/loss
    
    
    26
    
    
    
    34Benefits paid
    
    
    (18
    )
    
    
    (6
    )Defined benefit obligation at the end of the year
    
    (IMAGE)
    359
    
    
    (IMAGE)
    310
  As of March 31,2011
    
    
    2010Fair value of plan assets at the beginning of the year
    
    (IMAGE)
    249
    
    
    (IMAGE)
    176Expected return on plan assets
    
    
    27
    
    
    
    20Employer contributions
    
    
    17
    
    
    
    21Benefits paid
    
    
    (18
    )
    
    
    (6
    )Actuarial gain/(loss)
    
    
    (16
    )
    
    
    38Plan assets at the end of the year
    
    (IMAGE)
    259
    
    
    (IMAGE)
    249
  Year Ended March 31,2011
    
    
    2010
    
    
    2009
    
    
    2008Defined benefit obligation
    
    (IMAGE)
    359
    
    
    (IMAGE)
    310
    
    
    (IMAGE)
    244
    
    
    (IMAGE)
    253Plan assets
    
    
    259
    
    
    
    249
    
    
    
    176
    
    
    
    213Surplus/(deficit)
    
    
    (100
    )
    
    
    (61
    )
    
    
    (68
    )
    
    
    (40
    )Experience adjustments on plan liabilities
    
    
    12
    
    
    
    1
    
    
    
    80
    
    
    
    40Experience adjustments on plan assets
    
    
    (23
    )
    
    
    35
    
    
    
    (46
    )
    
    
    (21
    )
 Contributions:
  F-46




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 19. Employee benefits (continued)
 Pension plan (continued)
 Summary of the actuarial assumptions:
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Discount rate
    
    
    7.75
    %
    
    
    7.91
    %
    
    
    9.50
    %Rate of compensation increase
    
    
    4.50
    %
    
    
    4.50
    %
    
    
    4.50
    %Expected long-term return on plan assets
    
    
    9.75
    %
    
    
    10.50
    %
    
    
    10.50
    %
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Discount rate
    
    
    7.91
    %
    
    
    9.50
    %
    
    
    7.50
    %Rate of compensation increase
    
    
    4.50
    %
    
    
    4.50
    %
    
    
    4.50
    %Expected long-term return on plan assets
    
    
    10.50
    %
    
    
    10.50
    %
    
    
    10.50
    %
 Plan assets:
 As of  March 31,2011
    
    
    2010Equity
    
    
    51
    %
    
    
    51
    %Others
    
    
    49
    %
    
    
    49
    %
 Superannuation benefits
 
 Provident fund benefits
 
 Other contribution plans
 
  
 
 Long service benefit recognition
 
  F-47




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 19. Employee benefits (continued)
 Long service benefit recognition (continued)
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Service cost
    
    (IMAGE)
    6
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    Interest cost
    
    
    4
    
    
    
    
    
    
    
    Expected return on plan assets
    
    
    
    
    
    
    
    
    
    
    Actuarial (gain)/loss
    
    
    
    
    
    
    
    
    
    
    Past service cost
    
    
    
    
    
    
    53
    
    
    
    Pension cost recognized in income statement
    
    (IMAGE)
    10
    
    
    (IMAGE)
    53
    
    
    (IMAGE)
    
  As of March 31,2011
    
    
    2010Present value of unfunded obligations
    
    (IMAGE)
    69
    
    
    (IMAGE)
    53Present value of funded obligations
    
    
    
    
    
    
    Total present value of obligations
    
    
    69
    
    
    
    53Fair value of plan assets
    
    
    
    
    
    
    Present value of net obligations
    
    
    69
    
    
    
    53Unrecognized actuarial losses
    
    
    (8
    )
    
    
    Recognized Liability
    
    (IMAGE)
    61
    
    
    (IMAGE)
    53
  As of March 31,2011
    
    
    2010Defined benefit obligations at the beginning of the year
    
    (IMAGE)
    53
    
    
    (IMAGE)
    Service cost
    
    
    6
    
    
    
    Interest cost
    
    
    4
    
    
    
    Actuarial (gain)/loss
    
    
    8
    
    
    
    Past service cost
    
    
    
    
    
    
    53Benefits paid
    
    
    (2
    )
    
    
    Defined benefit obligation at the end of the year
    
    (IMAGE)
    69
    
    
    (IMAGE)
    53
   Year Ended March 31,2011
    
    
    2010
    
    
    2009
    
    
    2008Defined benefit obligation
    
    (IMAGE)
    69
    
    
    (IMAGE)
    53
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    Plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Surplus/(deficit)
    
    
    (69
    )
    
    
    (53
    )
    
    
    
    
    
    
    Experience adjustments on plan liabilities
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Experience adjustments on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Contributions:
  F-48




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 19. Employee benefits (continued)
 Long service benefit recognition (continued)
 Summary of the actuarial assumptions:
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Discount rate
    
    
    7.95
    %
    
    
    7.50
    %
    
    
    Rate of compensation increase
    
    9% per annum for first 2 years and 8% per annum thereafter
    
    
    8% per annum for first 2 years and 6% per annum thereafter
    
    
    
    Expected long-term return on
plan assets
    
    
    
    
    
    
    
    
    
    
    
  2011
    
    
    2010
    
    
    2009Discount rate
    
    
    7.50
    %
    
    
    7.50
    %
    
    
    Rate of compensation increase
    
    8% per annum for first 2 years and 6% per annum thereafter
    
    
    8% per annum for first 2 years and 6% per annum thereafter
    
    
    
    Expected long-term return on
plan assets
    
    
    
    
    
    
    
    
    
    
    
 Long term incentive plan
 
 Severance payments of German subsidiaries
  
  F-49




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 20. Employee stock incentive plans
 Dr. Reddys Employees Stock Option Plan -2002 (the DRL 2002 Plan):
   Category A
 Category B
  Category A
 Category B
   Number of
    
    
    Number ofOptions granted
    
    
    Options granted underParticulars
    
    under category A
    
    
    category B
    
    
    TotalOptions reserved under original Plan
    
    
    300,000
    
    
    
    1,995,478
    
    
    
    2,295,478Options exercised prior to stock dividend
date (A)
    
    
    94,061
    
    
    
    147,793
    
    
    
    241,854Balance of shares that can be allotted
exercise of options (B)
    
    
    205,939
    
    
    
    1,847,685
    
    
    
    2,053,624Options arising from stock dividend (C)
    
    
    205,939
    
    
    
    1,847,685
    
    
    
    2,053,624Options reserved after stock dividend (A+B+C)
    
    
    505,939
    
    
    
    3,843,163
    
    
    
    4,349,102
  F-50




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 20. Employee stock incentive plans (continued)
  Year Ended March 31, 2011Weighted-
    
    
    Weighted-averageShares arising
    
    
    Range of exercise
    
    
    average exercise
    
    
    remaining contractualCategory A  Fair Market Value Options
    
    out of options
    
    
    prices
    
    
    price
    
    
    life (months)Outstanding at the beginning of the period
    
    
    100,000
    
    
    (IMAGE)
    362.50-531.51
    
    
    (IMAGE)
    403.02
    
    
    
    38Granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired/forfeited during the period
    
    
    (9,000
    )
    
    
    373.50-531.51
    
    
    
    443.73
    
    
    
    Exercised during the period
    
    
    (70,000
    )
    
    
    362.50-442.50
    
    
    
    385.36
    
    
    
    Outstanding at the end of the period
    
    
    21,000
    
    
    (IMAGE)
    373.50-448
    
    
    (IMAGE)
    444.45
    
    
    
    67Exercisable at the end of the period
    
    
    11,000
    
    
    (IMAGE)
    373.50-448
    
    
    (IMAGE)
    441.23
    
    
    
    55
 Year Ended March 31, 2011Weighted-
    
    
    Weighted- averageShares arising
    
    
    Range of exercise
    
    
    average exercise
    
    
    remaining contractualCategory B  Par Value Options
    
    out of options
    
    
    prices
    
    
    price
    
    
    life (months)Outstanding at the beginning of the period
    
    
    785,007
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    72Granted during the period
    
    
    284,070
    
    
    
    5.00
    
    
    
    5.00
    
    
    
    91Expired/forfeited during the period
    
    
    (78,620
    )
    
    
    5.00
    
    
    
    5.00
    
    
    
    Exercised during the period
    
    
    (293,296
    )
    
    
    5.00
    
    
    
    5.00
    
    
    
    Outstanding at the end of the period
    
    
    697,161
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    72Exercisable at the end of the period
    
    
    52,106
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    41
 Year Ended March 31, 2010Weighted-
    
    
    Weighted-averageShares arising
    
    
    Range of exercise
    
    
    average exercise
    
    
    remaining contractualCategory A  Fair Market Value Options
    
    out of options
    
    
    prices
    
    
    price
    
    
    life (months)Outstanding at the beginning of the period
    
    
    136,410
    
    
    (IMAGE)
    362.50-531.51
    
    
    (IMAGE)
    417.51
    
    
    
    42Granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired/forfeited during the period
    
    
    (3,670
    )
    
    
    442.50- 531.51
    
    
    
    512.11
    
    
    
    Exercised during the period
    
    
    (32,740
    )
    
    
    373.50- 531.51
    
    
    
    451.17
    
    
    
    Outstanding at the end of the period
    
    
    100,000
    
    
    (IMAGE)
    362.50-531.51
    
    
    (IMAGE)
    403.02
    
    
    
    38Exercisable at the end of the period
    
    
    80,000
    
    
    (IMAGE)
    362.50-531.51
    
    
    (IMAGE)
    391.78
    
    
    
    27
 Year Ended March 31, 2010Weighted-
    
    
    Weighted- averageShares arising
    
    
    Range of exercise
    
    
    average exercise
    
    
    remaining contractualCategory B  Par Value Options
    
    out of options
    
    
    prices
    
    
    price
    
    
    life (months)Outstanding at the beginning of the period
    
    
    778,486
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    72Granted during the period
    
    
    359,840
    
    
    
    5.00
    
    
    
    5.00
    
    
    
    91Expired/forfeited during the period
    
    
    (83,608
    )
    
    
    5.00
    
    
    
    5.00
    
    
    
    Exercised during the period
    
    
    (269,711
    )
    
    
    5.00
    
    
    
    5.00
    
    
    
    Outstanding at the end of the period
    
    
    785,007
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    72Exercisable at the end of the period
    
    
    79,647
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    41
 
  F-51




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 20. Employee stock incentive plans (continued)
 Dr. Reddys Employees ADR Stock Option Scheme, 2007 (the DRL 2007 Plan):
   Category A
 Category B
 Year Ended March 31, 2011Weighted-
    
    
    Weighted-averageShares arising
    
    
    Range of exercise
    
    
    average exercise
    
    
    remaining contractualCategory B  Par Value Options
    
    out of options
    
    
    prices
    
    
    price
    
    
    life (months)Outstanding at the beginning of the period
    
    
    112,390
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    74Granted during the period
    
    
    58,660
    
    
    
    5.00
    
    
    
    5.00
    
    
    
    89Expired/forfeited during the period
    
    
    (2,440
    )
    
    
    5.00
    
    
    
    5.00
    
    
    
    Exercised during the period
    
    
    (44,051
    )
    
    
    5.00
    
    
    
    5.00
    
    
    
    Outstanding at the end of the period
    
    
    124,559
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    74Exercisable at the end of the period
    
    
    3,364
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    49
 Year Ended March 31, 2010Weighted-
    
    
    Weighted-averageShares arising
    
    
    Range of exercise
    
    
    average exercise
    
    
    remaining contractualCategory B  Par Value Options
    
    out of options
    
    
    prices
    
    
    price
    
    
    life (months)Outstanding at the beginning of the period
    
    
    156,577
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    71Granted during the period
    
    
    74,600
    
    
    
    5.00
    
    
    
    5.00
    
    
    
    91Expired/forfeited during the period
    
    
    (44,630
    )
    
    
    5.00
    
    
    
    5.00
    
    
    
    Exercised during the period
    
    
    (74,157
    )
    
    
    5.00
    
    
    
    5.00
    
    
    
    Outstanding at the end of the period
    
    
    112,390
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    74Exercisable at the end of the period
    
    
    2,250
    
    
    (IMAGE)
    5.00
    
    
    (IMAGE)
    5.00
    
    
    
    47
 
    F-52




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 20. Employee stock incentive plans (continued)
  
  Year Ended
    
    
    Year EndedMarch 31, 2011
    
    
    March 31, 2010Expected volatility
    
    
    34.34
    %
    
    
    36.45
    %Exercise price
    
    (IMAGE)
    5
    
    
    (IMAGE)
    5Option life
    
    2.43  years
    
    
    2.44  yearsRisk-free interest rate
    
    
    6.04
    %
    
    
    5.05
    %Expected dividends
    
    
    0.4
    %
    
    
    0.82
    %Grant date share price
    
    (IMAGE)
    1,242.55
    
    
    (IMAGE)
    612.95
 
  Aurigene Discovery Technologies Ltd. Employee Stock Option Plan 2003 (the Aurigene ESOP Plan):
   F-53




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 20. Employee stock incentive plans (continued)
  Year Ended March 31, 2011Weighted-
    
    
    Weighted-averageShares arising
    
    
    Range of exercise
    
    
    average exercise
    
    
    remaining contractualout of options
    
    
    prices
    
    
    price
    
    
    life (months)Outstanding at the beginning of the period
    
    
    1,012,331
    
    
    (IMAGE)
    10-14.99
    
    
    (IMAGE)
    11.95
    
    
    
    34Granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired/forfeited during the period
    
    
    (3,241
    )
    
    
    10-14.99
    
    
    
    11.63
    
    
    
    Outstanding at the end of the period
    
    
    1,009,090
    
    
    (IMAGE)
    10-14.99
    
    
    (IMAGE)
    11.94
    
    
    
    21Exercisable at the end of the period
    
    
    1,009,090
    
    
    (IMAGE)
    10-14.99
    
    
    (IMAGE)
    11.94
    
    
    
    21
 Year Ended March 31, 2010Weighted-
    
    
    Weighted-averageShares arising
    
    
    Range of exercise
    
    
    average exercise
    
    
    remaining contractualout of options
    
    
    prices
    
    
    price
    
    
    life (months)Outstanding at the beginning of the period
    
    
    2,916,263
    
    
    (IMAGE)
    10-14.99
    
    
    (IMAGE)
    13.99
    
    
    
    33Granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised during the year
    
    
    (1,899,943
    )
    
    
    10
    
    
    
    10
    
    
    
    Expired/forfeited during the period
    
    
    (3,989
    )
    
    
    10-14.99
    
    
    
    11.63Outstanding at the end of the period
    
    
    1,012,331
    
    
    (IMAGE)
    10-14.99
    
    
    (IMAGE)
    11.95
    
    
    
    34Exercisable at the end of the period
    
    
    850,237
    
    
    (IMAGE)
    10-14.99
    
    
    (IMAGE)
    11.36
    
    
    
    31
 
 Aurigene Discovery Technologies Limited, Management Group Stock Grant Plan (the Aurigene
Management Plan).
  
  F-54




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 21. Research and development arrangements
  
  
 
 
  F-55




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 22. Provisions
  As at March 31,2011
    
    
    2010Sales returns
    
    (IMAGE)
    980
    
    
    (IMAGE)
    839Environmental liability
    
    
    41
    
    
    
    39Legal
    
    
    334
    
    
    
    255(IMAGE)
    1,355
    
    
    (IMAGE)
    1,133
  Allowance for
    
    
    EnvironmentalParticulars
    
    sales return (1)
    
    
    Liability(2)
    
    
    Legal
    
    
    TotalBalance as at April 1, 2010
    
    (IMAGE)
    839
    
    
    (IMAGE)
    39
    
    
    (IMAGE)
    255
    
    
    (IMAGE)
    1,133Provision made during the year
    
    
    731
    
    
    
    2
    
    
    
    79
    
    
    
    812Provisions acquired in business combinations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision used during the year
    
    
    (590
    )
    
    
    
    
    
    
    
    
    
    
    (590
    )Balance as at March 31, 2011
    
    (IMAGE)
    980
    
    
    (IMAGE)
    41
    
    
    (IMAGE)
    334
    
    
    (IMAGE)
    1,355Current
    
    (IMAGE)
    980
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    334
    
    
    (IMAGE)
    1,314Non-current
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    41(IMAGE)
    980
    
    
    (IMAGE)
    41
    
    
    (IMAGE)
    334
    
    
    (IMAGE)
    1,355
 (1)
    
    Provision for sales returns is accounted by recording a provision based on the Companys
estimate of expected sales returns. See Note 3.k. for details.(2)
    
    As a result of the acquisition of a unit of The Dow Chemical Company, the Company assumed a
liability for contamination of the Mirfield site acquired amounting to (IMAGE)39. Because the
seller is required to indemnify the Company for this liability, a corresponding asset has also
been recorded in the statements of financial position. During the year ended March 31, 2011,
the Company was required to provide security for such environmental liabilities and,
accordingly, the Company has deposited (IMAGE)83 as additional security.  Allowance for
    
    
    EnvironmentalParticulars
    
    sales return
    
    
    Liability
    
    
    Legal
    
    
    TotalBalance as at April 1, 2009
    
    (IMAGE)
    815
    
    
    (IMAGE)
    42
    
    
    (IMAGE)
    1,113
    
    
    (IMAGE)
    1,970Provision made during the year
    
    
    932
    
    
    
    
    
    
    
    119
    
    
    
    1,051Provisions acquired in business combinations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision used during the year
    
    
    (908
    )
    
    
    (3
    )
    
    
    (977
    )
    
    
    (1,888
    )Balance as at March 31, 2010
    
    (IMAGE)
    839
    
    
    (IMAGE)
    39
    
    
    (IMAGE)
    255
    
    
    (IMAGE)
    1,133Current
    
    (IMAGE)
    839
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    255
    
    
    (IMAGE)
    1,094Non-current
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    39(IMAGE)
    839
    
    
    (IMAGE)
    39
    
    
    (IMAGE)
    255
    
    
    (IMAGE)
    1,133
  F-56




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 22. Provisions (continued)
  Allowance for
    
    
    EnvironmentalParticulars
    
    sales return
    
    
    Liability
    
    
    Legal
    
    
    TotalBalance as at April 1, 2008
    
    (IMAGE)
    627
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    123
    
    
    (IMAGE)
    750Provision made during the year
    
    
    663
    
    
    
    
    
    
    
    990
    
    
    
    1,653Provisions acquired in business combinations
    
    
    
    
    
    
    422
    
    
    
    
    
    
    
    42Provision utilized during the year
    
    
    (475
    )
    
    
    
    
    
    
    
    
    
    
    (475
    )Balance as at March 31, 2009
    
    
    815
    
    
    
    42
    
    
    
    1,113
    
    
    
    1,970Current
    
    
    815
    
    
    
    
    
    
    
    1,113
    
    
    
    1,928Non-current
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    42(IMAGE)
    815
    
    
    (IMAGE)
    42
    
    
    (IMAGE)
    1,113
    
    
    (IMAGE)
    1,970
 23. Trade payables
  As at March 31,2011
    
    
    2010Trade payables due to related parties
    
    (IMAGE)
    81
    
    
    (IMAGE)
    20Trade payables
    
    
    8,399
    
    
    
    9,302(IMAGE)
    8,480
    
    
    (IMAGE)
    9,322
 24. Other liabilities
  As at March 31,2011
    
    
    2010CurrentAdvance from customers
    
    (IMAGE)
    399
    
    
    (IMAGE)
    245Statutory dues payable
    
    
    235
    
    
    
    372Accrued expenses
    
    
    7,140
    
    
    
    5,743Deferred revenue
    
    
    104
    
    
    
    107Others
    
    
    3,811
    
    
    
    1,39711,689
    
    
    
    7,864Non-currentStatutory dues payable
    
    (IMAGE)
    45
    
    
    (IMAGE)
    48Deferred revenue
    
    
    328
    
    
    
    42Others
    
    
    293
    
    
    
    159666
    
    
    
    249(IMAGE)
    12,355
    
    
    (IMAGE)
    8,113
 25. Revenue
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Sales
    
    (IMAGE)
    72,952
    
    
    (IMAGE)
    68,616
    
    
    (IMAGE)
    68,381Services
    
    
    1,741
    
    
    
    1,661
    
    
    
    1,060(IMAGE)
    74,693
    
    
    (IMAGE)
    70,277
    
    
    (IMAGE)
    69,441
 
  F-57




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 26. Other (income)/expense, net
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Loss/(Profit) on sale of property, plant and equipment, net
    
    (IMAGE)
    (271
    )
    
    (IMAGE)
    24
    
    
    (IMAGE)
    (15
    )Sale of spent chemical
    
    
    (255
    )
    
    
    (209
    )
    
    
    (211
    )Negative goodwill on acquisition of business
    
    
    (73
    )
    
    
    
    
    
    
    (150
    )Miscellaneous income
    
    
    (596
    )
    
    
    (432
    )
    
    
    (286
    )Settlement of legal claim from innovator(1) (2)
    
    
    80
    
    
    
    48
    
    
    
    916(IMAGE)
    (1,115
    )
    
    (IMAGE)
    (569
    )
    
    (IMAGE)
    254
 (1)
    
    During the year ended March 31, 2008, Eli Lillys German patent covering olanzapine
was invalidated by the German Patent Court. Eli Lilly, the innovator, appealed this
decision before the German Federal Court of Justice. The Companys German subsidiary,
betapharm and certain other competitors had launched olanzapine products in Germany
pending the decision from the German Federal Court of Justice. Eli Lilly filed an
application for an interim order against betapharm claiming patent infringement at the
court in Düsseldorf, Germany. However, in August 2008, the court decided not to grant the
interim order due to lack of urgency. In December 2008, the Federal Court of Justice
overruled the German Patent Court and decided to maintain the olanzapine patent in favor
of Eli Lilly, the innovator. The Company subsequently stopped marketing this product in
the German market. As part of the litigation, Eli Lilly claimed damages resulting from the
sales of the Companys olanzapine product. In settlement of such claims, the Company
agreed to pay compensation to Eli Lilly the amount of (IMAGE)916. Accordingly, the Company has
recorded a liability towards this claim the amount of (IMAGE)916. During the year ended March
31, 2010, the Company paid such amount.(2)
    
    During the year ended March 31, 2011, the Company recorded an amount of (IMAGE)80 as its best
estimate of the probable liability arising out of the Companys olanzapine litigation in
Canada (Refer to Note 37 for details). The total provision as at March 31, 2011 on this
matter is (IMAGE)128. 27. Finance (expense)/income, net
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Interest income
    
    (IMAGE)
    105
    
    
    (IMAGE)
    249
    
    
    (IMAGE)
    346Dividend and profit on sale of investments, net
    
    
    68
    
    
    
    48
    
    
    
    136Foreign exchange gain, net
    
    
    
    
    
    
    72
    
    
    
    173
    
    
    
    369
    
    
    
    482Foreign exchange loss, net
    
    
    (57
    )
    
    
    
    
    
    
    (634
    )Interest expense on borrowings
    
    
    (232
    )
    
    
    (372
    )
    
    
    (1,034
    )Loss on extinguishment of debt
    
    
    (73
    )
    
    
    
    
    
    
    (362
    )
    
    
    (372
    )
    
    
    (1,668
    )(IMAGE)
    (189
    )
    
    (IMAGE)
    (3
    )
    
    (IMAGE)
    (1,186
    )
  F-58




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 28. Income taxes
 a. Income tax (expense)/benefit recognized in the income statement .
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Current tax (expense)Domestic
    
    (IMAGE)
    (2,253
    )
    
    (IMAGE)
    (2,552
    )
    
    (IMAGE)
    (1,549
    )Foreign
    
    
    (673
    )
    
    
    (684
    )
    
    
    (1,182
    )(2,926
    )
    
    
    (3,236
    )
    
    
    (2,731
    )Deferred tax (expense)/benefitDomestic
    
    
    698
    
    
    
    79
    
    
    
    (166
    )Foreign
    
    
    825
    
    
    
    2,172
    
    
    
    1,7251,523
    
    
    
    2,251
    
    
    
    1,559Total income tax (expense)/benefit in income statement
    
    (IMAGE)
    (1,403
    )
    
    (IMAGE)
    (985
    )
    
    (IMAGE)
    (1,172
    )
 b. Income tax (expense)/benefit recognized directly in equity
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Tax effect on changes in the fair value of other investments
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    (5
    )Tax effect on foreign currency translation differences
    
    
    (59
    )
    
    
    150
    
    
    
    (41
    )Tax effect on effective portion of change in fair value of cash flow hedges
    
    
    
    
    
    
    (252
    )
    
    
    78(IMAGE)
    (59
    )
    
    (IMAGE)
    (102
    )
    
    (IMAGE)
    32
 c. Reconciliation of effective tax rate
  2011
    
    
    2010
    
    
    2009Profit/(loss) before income taxes
    
    (IMAGE)
    12,443
    
    
    (IMAGE)
    2,053
    
    
    (IMAGE)
    (3,996
    )Enacted tax rates in India
    
    
    33.22
    %
    
    
    33.99
    %
    
    
    33.99
    %Computed expected tax (expense)/benefit
    
    
    (4,134
    )
    
    
    (698
    )
    
    
    1,359Effect of:Differences between Indian and foreign tax rates
    
    
    791
    
    
    
    562
    
    
    
    24Impairment of goodwill
    
    
    
    
    
    
    (1,598
    )
    
    
    (3,371
    )Unrecognized deferred tax assets
    
    
    (230
    )
    
    
    (134
    )
    
    
    (303
    )Expenses not deductible for tax purposes
    
    
    (207
    )
    
    
    (87
    )
    
    
    (119
    )Share-based payment expense not deductible for tax purposes
    
    
    (72
    )
    
    
    (55
    )
    
    
    (31
    )Interest expense not deductible for tax purposes
    
    
    (18
    )
    
    
    (32
    )
    
    
    (55
    )Income exempt from income taxes (1)
    
    
    714
    
    
    
    746
    
    
    
    831Foreign exchange differences
    
    
    105
    
    
    
    (142
    )
    
    
    30Incremental deduction allowed for research and development costs(2)
    
    
    1,422
    
    
    
    409
    
    
    
    510Effect of change in tax laws and rate
    
    
    103
    
    
    
    (77
    )
    
    
    29Others
    
    
    123
    
    
    
    121
    
    
    
    (76
    )Income tax (expense)/benefit
    
    (IMAGE)
    (1,403
    )
    
    (IMAGE)
    (985
    )
    
    (IMAGE)
    (1,172
    )
 (1)
    
    Income exempt from taxes above represents benefits from certain significant tax incentives
provided to export oriented units (i.e., a unit that exports its production to customers
outside India) and units located in certain specified less developed geographical areas under
the Indian tax laws. These incentives presently pertain to an exemption from payment of Indian
corporate income taxes for certain units of the Company for a specified eligible period
(referred to as the tax holiday period). These tax holiday periods for the Companys units
expire in various years ranging from the year ended March 31, 2011 through the year ending
March 31, 2016.(2)
    
    Incremental deduction allowed for research and development costs represents tax incentive
provided by the Government of India for carrying out such activities.  F-59




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 28. Income taxes (continued)
 
 
 
  d. Unrecognized deferred tax assets and liabilities
  As at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    
    
    
    
    
    
    
    
    As atApril 1,
    
    
    
    
    
    
    Expired/
    
    
    March 31,
    
    
    
    
    
    
    Expired/
    
    
    March 31,2009
    
    
    Additions
    
    
    Recognition
    
    
    2010
    
    
    Additions
    
    
    Recognition
    
    
    2011Deductible
temporary
differences, net
    
    
    183
    
    
    
    (53
    )
    
    
    (6
    )
    
    
    124
    
    
    
    10
    
    
    
    
    
    
    
    134Tax losses
    
    
    938
    
    
    
    206
    
    
    
    (13
    )
    
    
    1,131
    
    
    
    220
    
    
    
    (176
    )
    
    
    1,1751,121
    
    
    
    153
    
    
    
    (19
    )
    
    
    1,255
    
    
    
    230
    
    
    
    (176
    )
    
    
    1,309
 
 
 
  F-60




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 28. Income taxes (continued)
 e. Deferred tax assets and liabilities
  As of March 31,2011
    
    
    2010Deferred tax assetsInventories
    
    (IMAGE)
    819
    
    
    (IMAGE)
    602Trade receivables
    
    
    174
    
    
    
    233Operating tax loss carry-forward
    
    
    1,233
    
    
    
    950Other current liabilities
    
    
    137
    
    
    
    100Minimum alternate tax
    
    
    862
    
    
    
    Others
    
    
    286
    
    
    
    294Total deferred tax assets
    
    (IMAGE)
    3,511
    
    
    (IMAGE)
    2,179Deferred tax liabilitiesProperty, plant and equipment
    
    (IMAGE)
    (700
    )
    
    (IMAGE)
    (589
    )Other intangible assets
    
    
    (2,463
    )
    
    
    (2,464
    )Others
    
    
    (435
    )
    
    
    (564
    )Total deferred tax liabilities
    
    (IMAGE)
    (3,598
    )
    
    (IMAGE)
    (3,617
    )Net deferred tax asset/(liability)
    
    (IMAGE)
    (87
    )
    
    (IMAGE)
    (1,438
    )
   f. Movement in temporary differences during the years ended March 31, 2011 and 2010.
 As at
    
    
    
    
    
    
    Recognized in
    
    
    Acquired in business
    
    
    As atApril 1, 2009
    
    
    Movement (1)
    
    
    equity
    
    
    combination
    
    
    March 31, 2010Deferred tax assetsInventories
    
    (IMAGE)
    480
    
    
    (IMAGE)
    122
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    602Minimum alternate tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Trade receivables
    
    
    175
    
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    233Operating loss carry-forward
    
    
    1,126
    
    
    
    (176
    )
    
    
    
    
    
    
    
    
    
    
    950Other current liabilities
    
    
    201
    
    
    
    (101
    )
    
    
    
    
    
    
    
    
    
    
    100Others
    
    
    240
    
    
    
    (71
    )
    
    
    125
    
    
    
    
    
    
    
    294Total deferred tax assets
    
    (IMAGE)
    2,222
    
    
    (IMAGE)
    (168
    )
    
    (IMAGE)
    125
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    2,179Deferred tax liabilitiesProperty, plant and equipment
    
    
    (969
    )
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    (589
    )Other intangible assets
    
    
    (4,437
    )
    
    
    1,973
    
    
    
    
    
    
    
    
    
    
    
    (2,464
    )Others
    
    
    (227
    )
    
    
    (84
    )
    
    
    (253
    )
    
    
    
    
    
    
    (564
    )Total deferred tax liabilities
    
    (IMAGE)
    (5,633
    )
    
    (IMAGE)
    2,269
    
    
    (IMAGE)
    (253
    )
    
    (IMAGE)
    
    
    
    (IMAGE)
    (3,617
    )Net deferred tax assets/(liabilities)
    
    (IMAGE)
    (3,411
    )
    
    (IMAGE)
    2,101
    
    
    (IMAGE)
    (128
    )
    
    (IMAGE)
    
    
    
    (IMAGE)
    (1,438
    )
  F-61




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 28. Income taxes (continued)
  Acquired inRecognized in
    
    
    business
    
    
    As atMovement (1)
    
    
    equity
    
    
    combination
    
    
    March 31, 2011Deferred tax assetsInventories
    
    (IMAGE)
    217
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    819Minimum alternate tax
    
    
    862
    
    
    
    
    
    
    
    
    
    
    
    862Trade receivables
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    174Operating loss carry-forward(2)
    
    
    283
    
    
    
    
    
    
    
    
    
    
    
    1,233Other current liabilities
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    137Others
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    286Total deferred tax assets
    
    (IMAGE)
    1,332
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    3,511Deferred tax liabilitiesProperty, plant and equipment
    
    (IMAGE)
    (111
    )
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    (700
    )Other intangible assets
    
    
    46
    
    
    
    
    
    
    
    (45
    )
    
    
    (2,463
    )Others
    
    
    198
    
    
    
    (69
    )
    
    
    
    
    
    
    (435
    )Total deferred tax liabilities
    
    (IMAGE)
    133
    
    
    (IMAGE)
    (69
    )
    
    (IMAGE)
    (45
    )
    
    (IMAGE)
    (3,598
    )Net deferred tax assets/(liabilities)
    
    (IMAGE)
    1,465
    
    
    (IMAGE)
    (69
    )
    
    (IMAGE)
    (45
    )
    
    (IMAGE)
    (87
    )
 (1)
    
    Movement during the years ended March 31, 2011 and 2010 includes the amounts of (IMAGE)58 and
(IMAGE)150, respectively, which represent exchange differences arising due to foreign currency
translations.(2)
    
    The year ended March 31, 2010 included an adjustment of (IMAGE)268, relating to the legal
reorganization to amalgamate its wholly-owned subsidiary, Perlecan Pharma Private Limited, into the
Company as explained above in Note 6 of these consolidated financial statements.  
 29. Operating leases
 
  As of March 31,2011
    
    
    2010
    
    
    2009Less than one year
    
    (IMAGE)
    216
    
    
    (IMAGE)
    162
    
    
    (IMAGE)
    173Between one and five years
    
    
    415
    
    
    
    318
    
    
    
    345More than five years
    
    
    
    
    
    
    
    
    
    
    (IMAGE)
    631
    
    
    (IMAGE)
    480
    
    
    (IMAGE)
    518
 
  F-62




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 30. Related parties
  
    
    Green Park Hotel and Resorts Limited (formerly known as Diana Hotels Limited) for hotel services;
    
    A.R. Life Sciences Private Limited for availing processing services of raw materials and
intermediates;
    
    Dr. Reddys Holdings Limited for the purchase and sale of active pharmaceutical ingredients;
    
    Dr. Reddys Foundation for Human and Social Development towards contributions for social
development;
    
    Institute of Life Science towards contributions for social development;
    
    K.K Enterprises for availing packaging services for formulation products;
    
    SR Enterprises for transportation services; and
    
    Dr. Reddys Laboratories Gratuity Fund.
     Year Ended March 31,2011
    
    
    2010
    
    
    2009Purchases from significant interest entities
    
    (IMAGE)
    486
    
    
    (IMAGE)
    275
    
    
    (IMAGE)
    290Sales to significant interest entities
    
    
    391
    
    
    
    156
    
    
    
    135Services to significant interest entities
    
    
    
    
    
    
    4
    
    
    
    Contribution to a significant interest entity towards social
development and research and development
    
    
    125
    
    
    
    151
    
    
    
    124Hotel expenses paid to significant interest entities
    
    
    20
    
    
    
    13
    
    
    
    13Advances paid to significant interest entities for purchase of land
    
    
    
    
    
    
    367
    
    
    
    400Short term loan taken and repaid to significant interest entities
    
    
    
    
    
    
    
    
    
    
    60Interest paid on loan taken from significant interest entities
    
    
    
    
    
    
    
    
    
    
    2Lease rental paid to key management personnel and their relatives
    
    
    29
    
    
    
    27
    
    
    
    26
  
    
    During the year ended March 31, 2010, the Company exchanged a parcel of land owned by it
for another parcel of land of equivalent size that adjoins its research facility, owned by
the Companys key management personnel. The Company concluded that this exchange
transaction lacks commercial substance and has accordingly recorded the land acquired at
the carrying amount of the land transferred, with no profit or loss being recorded.
    
    During the year ended March 31, 2010, the Company purchased land from a significant
interest entity for a purchase price of (IMAGE)21.
  Year Ended March 31,2011
    
    
    2010
    
    
    2009Salaries and other benefits
    
    (IMAGE)
    161
    
    
    (IMAGE)
    228
    
    
    (IMAGE)
    260Contributions to defined contribution plans
    
    
    10
    
    
    
    7
    
    
    
    8Commission to directors
    
    
    267
    
    
    
    240
    
    
    
    174Share-based payments
    
    
    56
    
    
    
    36
    
    
    
    18Total
    
    (IMAGE)
    494
    
    
    (IMAGE)
    511
    
    
    (IMAGE)
    460
  F-63




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 30. Related parties (Continued)
   As at March 31,2011
    
    
    2010Significant interest entities
    
    
    114
    
    
    
    44Key management personnel
    
    
    5
    
    
    
    5
 
 
 
  As at March 31,2011
    
    
    2010Significant interest entities
    
    (IMAGE)
    81
    
    
    (IMAGE)
    20Key management personnel
    
    
    1
    
    
    
    
 31. Financial instruments
 Financial instruments by category
  Trade
    
    
    Derivate
    
    
    TotalLoans and
    
    
    Available
    
    
    and other
    
    
    financial
    
    
    carryingNote
    
    
    receivables
    
    
    for sale
    
    
    payables
    
    
    instruments
    
    
    value
    
    
    Total fair valueAssets:Cash and cash equivalents
    
    
    15
    
    
    (IMAGE)
    5,729
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    5,729
    
    
    (IMAGE)
    5,729Other investments
    
    
    11
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    33Trade receivables
    
    
    13
    
    
    
    17,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,615
    
    
    
    17,615Derivative financial asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    784
    
    
    
    784
    
    
    
    784Other assets
    
    
    14
    
    
    
    1,820
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,820
    
    
    
    1,820Total
    
    
    
    
    
    (IMAGE)
    25,164
    
    
    (IMAGE)
    33
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    784
    
    
    (IMAGE)
    25,981
    
    
    (IMAGE)
    25,981Liabilities:Trade payables
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    8,480
    
    
    
    
    
    
    
    8,480
    
    
    
    8,480Derivative financial liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term loans and borrowings
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    5,283
    
    
    
    
    
    
    
    5,283
    
    
    
    5,283Bank overdraft, short-term
loans and borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,289
    
    
    
    
    
    
    
    18,289
    
    
    
    18,289Other liabilities and
provisions
    
    
    22 & 24
    
    
    
    
    
    
    
    
    
    
    
    12,315
    
    
    
    
    
    
    
    12,315
    
    
    
    12,315Total
    
    
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    44,367
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    44,367
    
    
    (IMAGE)
    44,367
  F-64




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 31. Financial instruments(continued)
  Trade and
    
    
    DerivateLoans and
    
    
    Available
    
    
    other
    
    
    financial
    
    
    Total carrying
    
    
    Total fairNote
    
    
    receivables
    
    
    for sale
    
    
    payables
    
    
    instruments
    
    
    value
    
    
    valueAssets:Cash and cash equivalents
    
    
    15
    
    
    (IMAGE)
    6,584
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    6,584
    
    
    (IMAGE)
    6,584Other investments
    
    
    11
    
    
    
    
    
    
    
    3,600
    
    
    
    
    
    
    
    
    
    
    
    3,600
    
    
    
    3,600Trade receivables
    
    
    13
    
    
    
    11,960
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,960
    
    
    
    11,960Derivative financial asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    573
    
    
    
    573
    
    
    
    573Other assets
    
    
    14
    
    
    
    2,869
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,869
    
    
    
    2,869Total
    
    
    
    
    
    (IMAGE)
    21,413
    
    
    (IMAGE)
    3,600
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    573
    
    
    (IMAGE)
    25,586
    
    
    (IMAGE)
    25,586Liabilities:Trade payables
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    9,322
    
    
    
    
    
    
    
    9,322
    
    
    
    9,322Derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term loans and borrowings
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    9,091
    
    
    
    
    
    
    
    9,091
    
    
    
    9,091Bank overdraft, short-term loans
and borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,604
    
    
    
    
    
    
    
    5,604
    
    
    
    5,604Other liabilities and provisions
    
    
    22 & 24
    
    
    
    
    
    
    
    
    
    
    
    8,379
    
    
    
    
    
    
    
    8,379
    
    
    
    8,379Total
    
    
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    32,396
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    32,396
    
    
    (IMAGE)
    32,396
 Fair value hierarchy
 Level 1
 Level 2
 Level 3
  Particulars
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAvailable for sale 
Financial asset  Investments
in units of mutual funds
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    Available for sale 
Financial asset-Investment in
equity securities
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    33Available for sale 
Financial asset-Investment in
certificate of deposits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Derivative financial
instruments- gains on
outstanding foreign exchange
forward and option contracts
    
    
    
    
    
    
    784
    
    
    
    
    
    
    
    784
  F-65




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 31. Financial instruments (continued)
  Particulars
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAvailable for sale 
Financial asset -
Investments in units of
mutual funds
    
    (IMAGE)
    3,276
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    3,276Available for sale 
Financial
asset-Investment in
equity securities
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    25Available for sale 
Financial
asset-Investment in
certificate of deposits
    
    
    
    
    
    
    299
    
    
    
    
    
    
    
    299Derivative financial
instruments- gains on
outstanding foreign
exchange forward and
option contracts
    
    
    
    
    
    
    573
    
    
    
    
    
    
    
    573
 Derivative financial instruments
  As of March 31,2011
    
    
    2010Forward contractsIn U.S. Dollars (Sell)
    
    
    10,346
    
    
    
    7,453In U.S. Dollars (Buy)
    
    
    201
    
    
    
    In Euro (Sell )*
    
    
    317
    
    
    
    In GBP (Sell)*
    
    
    
    
    
    
    Option contractsIn U.S. Dollars
    
    
    15,385
    
    
    
    18,589
 *
    
    Represents currency exchange contracts for U.S. Dollars. 
 
 
  F-66




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 31. Financial instruments (continued)
  As of March 31,2011
    
    
    2010Sell:Not later than one month
    
    (IMAGE)
    6,382
    
    
    (IMAGE)
    8,980Later than one month and not later than three months
    
    
    7,180
    
    
    
    3,053Later than three months and not later than six months
    
    
    3,790
    
    
    
    4,580Later than six month and not later than one year
    
    
    8,696
    
    
    
    9,429Total
    
    (IMAGE)
    26,048
    
    
    (IMAGE)
    26,042Buy:Not later than one month
    
    
    201
    
    
    
    Later than one month and not later than three months
    
    
    
    
    
    
    Later than three months and not later than six months
    
    
    
    
    
    
    Later than six month and not later than one year
    
    
    
    
    
    
    Total
    
    (IMAGE)
    201
    
    
    (IMAGE)
    
 32. Financial risk management
  a. Credit risk
  Trade and other receivables
  Investments
  Financial assets that are neither past due nor impaired
 
  F-67




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DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 32. Financial risk management (continued)
 Financial assets that are past due but not impaired
  As of March 31,Period (in days)
    
    2011
    
    
    20101  90
    
    (IMAGE)
    3,218
    
    
    (IMAGE)
    2,60490  180
    
    
    275
    
    
    
    224More than 180
    
    
    130
    
    
    
    118Total
    
    (IMAGE)
    3,623
    
    
    (IMAGE)
    2,946
   b. Liquidity risk
  
 
  Particulars
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    TotalTrade payables
    
    (IMAGE)
    8,480
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    8,480Bank overdraft, short-term
loans and borrowings
    
    
    18,289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,289Other liabilities and provisions
    
    
    12,117
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293
    
    
    
    12,410
  Particulars
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    TotalTrade payables
    
    (IMAGE)
    9,322
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    9,322Bank overdraft, short-term
loans and borrowings
    
    
    5,604
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,604Other liabilities and provisions
    
    
    8,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159
    
    
    
    8,379
  F-68




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 32. Financial risk management (continued)
 c. Market risk
  Foreign exchange risk
    
    
    an approximately (IMAGE)1,592 increase/decrease in the Companys hedging reserve and an
approximately (IMAGE)1,057 increase/decrease in the Companys net profit as at March 31, 2011;
    
    an approximately (IMAGE)1,888 increase/decrease in the Companys hedging reserve and an
approximately (IMAGE)746 increase/decrease in the Companys net profit as at March 31, 2010; and
    
    an approximately (IMAGE)617 increase/decrease in the Companys hedging reserve and an
approximately (IMAGE)448 increase/decrease in the Companys net profit as at March 31, 2009.
 
 
  F-69




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 32. Financial risk management (continued)
 c. Market risk(continued)
  U.S. Dollars
    
    
    Euro
    
    
    Others (1)
    
    
    TotalAssets:Cash and cash equivalents
    
    (IMAGE)
    3,002
    
    
    (IMAGE)
    49
    
    
    (IMAGE)
    977
    
    
    (IMAGE)
    4,028Trade receivables
    
    
    8,136
    
    
    
    977
    
    
    
    4,410
    
    
    
    13,523Other assets
    
    
    68
    
    
    
    3
    
    
    
    200
    
    
    
    271Total
    
    (IMAGE)
    11,206
    
    
    (IMAGE)
    1,029
    
    
    (IMAGE)
    5,587
    
    
    (IMAGE)
    17,822Liabilities:Trade payables
    
    (IMAGE)
    303
    
    
    (IMAGE)
    2
    
    
    (IMAGE)
    275
    
    
    (IMAGE)
    580Long-term loans and borrowings
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    7Bank overdraft, short-term loans and borrowings
    
    
    12,613
    
    
    
    2,378
    
    
    
    2,271
    
    
    
    17,262Other liabilities and provisions
    
    
    1,031
    
    
    
    2
    
    
    
    1,295
    
    
    
    2,328Total
    
    (IMAGE)
    13,954
    
    
    (IMAGE)
    2,382
    
    
    (IMAGE)
    3,841
    
    
    (IMAGE)
    20,177
 (1)
    
    Others include currencies such as Russian roubles, British pound sterling, Swiss franc,
New Zealand dollars, Venezuela bolivar, etc.  U.S. Dollars
    
    
    Euro
    
    
    Others (1)
    
    
    TotalAssets:Cash and cash equivalents
    
    (IMAGE)
    515
    
    
    (IMAGE)
    
    
    
    (IMAGE)
    1,232
    
    
    (IMAGE)
    1,747Trade receivables
    
    
    4,591
    
    
    
    667
    
    
    
    3,662
    
    
    
    8,920Other assets
    
    
    154
    
    
    
    3
    
    
    
    175
    
    
    
    332Total
    
    (IMAGE)
    5,260
    
    
    (IMAGE)
    670
    
    
    (IMAGE)
    5,069
    
    
    (IMAGE)
    10,999Liabilities:Trade payables
    
    (IMAGE)
    996
    
    
    (IMAGE)
    76
    
    
    (IMAGE)
    166
    
    
    (IMAGE)
    1,238Long-term loans and borrowings
    
    
    354
    
    
    
    
    
    
    
    
    
    
    
    354Bank overdraft, short-term loans and borrowings
    
    
    4,580
    
    
    
    
    
    
    
    
    
    
    
    4,580Other liabilities and provisions
    
    
    1,634
    
    
    
    
    
    
    
    707
    
    
    
    2,341Total
    
    (IMAGE)
    7,564
    
    
    (IMAGE)
    76
    
    
    (IMAGE)
    873
    
    
    (IMAGE)
    8,513
 (1)
    
    Others include currencies such as Russian roubles, British pounds sterling, Swiss francs, New Zealand
dollars, Venezuela bolivar, etc. 
  F-70




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 32. Financial risk management (continued)
 Interest rate risk
 
    
 Commodity rate risk
  33. Acquistion of non-controlling interest
 Dr. Reddys Laboratories (Proprietary) Limited
 
  Aurigene Discovery Technologies Limited
  
 Dr. Reddys Laboratories (Australia) Pty. Limited
 
 
  F-71




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 34. Bonus Debentures
   No. ofinstruments
    
    
    
    
    
    
    
    
    
    
    Aggregate
    
    
    RedemptionParticulars
    
    issued
    
    
    Face value
    
    Currency
    
    Interest Rate
    
    Maturity
    
    Face Amount
    
    
    priceUnsecured,
non-convertible,
redeemable
debentures
    
    
    1,015,516,392
    
    
    (IMAGE)5 each
    
    (IMAGE)(Indian Rupee)
    
    9.25% per annum
    
    36 months
    
    (IMAGE)
    5,078
    
    
    (IMAGE)5 each (plus interest)
  
    
    Fully paid up bonus debentures carrying a face value of (IMAGE)5 each were issued to the
Companys shareholders in the ratio of 6 bonus debentures for each equity share held by
such shareholders on March 18, 2011.
    
    The bonus debentures are unsecured and are not convertible into equity shares of the
Company.
    
    The Company delivered cash in the aggregate value of the bonus debentures into an escrow
account of a merchant banker in India appointed by the Companys Board of Directors. The
merchant banker received such amount for and on behalf of and in trust for the shareholders
who are entitled to receive bonus debentures. Upon receipt of such amount, the merchant
banker paid the amount to the Company, for and on behalf of the shareholders as
consideration for the allotment of debentures to them.
    
    These bonus debentures have a maturity of 36 months, at which time the Company must
redeem them for cash in an amount equal to the face value of (IMAGE)5 each
plus unpaid interest, if any.
    
    These bonus debentures carry an interest rate of 9.25% per annum. The interest on the
debentures shall be paid at the end of every 12, 24, and 36 months from the date of issue.
    
    These bonus debentures are listed on stock exchanges in India so as to provide liquidity
for the holders.
    
    Issuance of these bonus debentures will be treated as a deemed dividend under section
2 (22) (b) of the Indian Income Tax Act, 1961 and accordingly, the Company will be required
to pay a dividend distribution tax.
    
    Under Indian Corporate Law and as per the terms of the approved bonus debenture scheme,
the Company has created a statutory reserve (the Debenture Redemption Reserve) in which
it is required to deposit a portion of its profits made during each year prior to the
maturity date of the bonus debentures until the aggregate amount retained in such reserve
equals 50% of the face value of the debentures then issued and outstanding. The funds in
the Debenture Redemption Reserve shall be used only to redeem the debentures for so long as
they are issued and outstanding.
 
 
 
  F-72




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 34. Bonus Debentures (continued)
  35. Change in currency translation rate in Venezuela
   
    
    For fund repatriation  to the extent the CADIVI has issued approvals in the form of
approvals of Autorización de Liquidación de Divisas (ALD) and which have been sent to and
received by the Banco Central de Venezuela by December 31, 2010; and
    
    For foreign currency acquisition  to the extent the CADIVI had issued an Authorization
of Foreign Currency Acquisition (AAD) by December 31, 2010 and the approval relates to
imports for the health and food sectors or certain other specified purposes.
  36. Restructuring activities
 North American operation  Charlotte
 
  F-73




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 37. Contingencies
 Litigations, etc.
   Product and patent related matters
 Norfloxacin litigation
  
 Styptovit-K litigation
   F-74




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 37. Contingencies (continued)
 Product and patent related matters (continued)
 Fexofenadine United States litigation
 ® ®
 ® ® ® ® ®
 ® ®
 ®
  F-75




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 37. Contingencies (continued)
 Product and patent related matters (continued)
 Alendronate Sodium, Germany litigation
 ®
    Oxycodon, Germany litigation
      F-76




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 37. Contingencies (continued)
 Product and patent related matters (continued)
 Olanzapine, Canada litigation
 ® ®
  Ceragenix Bankruptcy Litigation
  ®
 ®
 Environmental matter
 
  F-77




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 37. Contingencies (continued)
 Product and patent related matters (continued)
 Indirect taxes related matter
 
 Regulatory matters
  Other
   F-78




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 38. Nature of Expense
  For the year ended March 31, 2011Research andSelling, general and
    
    
    developmentParticulars
    
    Cost of revenues
    
    
    administrative expenses
    
    
    expenses
    
    
    TotalEmployee benefits
    
    (IMAGE)
    5,037
    
    
    (IMAGE)
    7,964
    
    
    (IMAGE)
    1,108
    
    
    (IMAGE)
    14,109Depreciation and amortization
    
    
    2,172
    
    
    
    1,635
    
    
    
    341
    
    
    
    4,148
 For the year ended March 31, 2010Research andSelling, general and
    
    
    developmentParticulars
    
    Cost of revenues
    
    
    administrative expenses
    
    
    expenses
    
    
    TotalEmployee benefits
    
    (IMAGE)
    4,162
    
    
    (IMAGE)
    7,840
    
    
    (IMAGE)
    841
    
    
    (IMAGE)
    12,843Depreciation and amortization
    
    
    1,878
    
    
    
    1,925
    
    
    
    357
    
    
    
    4,160
 For the year ended March 31, 2009Research andSelling, general and
    
    
    developmentParticulars
    
    Cost of revenues
    
    
    administrative expenses
    
    
    expenses
    
    
    TotalEmployee benefits
    
    (IMAGE)
    3,571
    
    
    (IMAGE)
    6,214
    
    
    (IMAGE)
    740
    
    
    (IMAGE)
    10,525Depreciation and amortization
    
    
    1,474
    
    
    
    1,887
    
    
    
    453
    
    
    
    3,814
 39. Subsequent events
 Alendronate Sodium, Germany litigation
  Ceragenix Bankruptcy Litigation
 ®
 Voluntary retirement scheme
 
  F-79




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##### Table of Contents



DR. REDDYS LABORATORIES LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
 39. Subsequent events (continued)
 Letter from the U.S. Food and Drug Administration
   Approval for Fondaparinux Sodium Injection
 ®
  F-80




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##### Table of Contents



Item 19.
    
    EXHIBITS
 Exhibit Number

    
    Description of Exhibits1.1.*/***/*****
    
    
    Memorandum and Articles of Association of the Registrant dated February 4, 1984.1.2.*/***
    
    
    Certificate of Incorporation of the Registrant dated February 24, 1984.1.3.*/***
    
    
    Amended Certificate of Incorporation of the Registrant dated December 6, 1985.1.4. *****
    
    
    Amendment to Memorandum and Articles of Association of the Registrant dated
June 12, 2009 (regarding an increase in our authorized share capital pursuant
to the amalgamation of Perlecan Pharma Private Limited into Dr. Reddys
Laboratories Limited, its parent company).1.5.
    
    
    Amendment to Memorandum and Articles of Association of the Registrant dated July 19, 2010.2.1.*
    
    
    Form of Deposit Agreement, including the form of American Depositary Receipt,
among Registrant, Morgan Guaranty Trust Company as Depositary, and holders from
time to time of American Depositary Receipts Issued there under, including the
form of American Depositary.2.2.
    
    
    Order of the Honbl High Court of Andhra Pradesh, India dated July 19, 2010
(regarding Amendment to Memorandum and Articles of Association of the Registrant and capitalization or utilization of undistributed profit or retained
earnings or security premium account or any other reserve or fund in connection
with our bonus debentures).2.3.
    
    
    Scheme of Arrangement between the Registrant and its members for issue of bonus
debentures, including Notice of Meeting of Members to approve same dated April
29, 2010 and Explanatory Statement dated April 29, 2010.2.4.
    
    
    Debenture Trust Deed dated March 16, 2011 between the Registrant and IDBI
Trusteeship Services Limited (regarding trustee services for our bonus
debentures).2.5.
    
    
    Liquidity Facility Services Agreement dated April 2, 2011 between the
Registrant and DSP Merill Lynch Capital Limited (regarding liquidity facility
for our bonus debentures).4.1.*
    
    
    Agreement by and between Dr. Reddys Laboratories Limited and Dr. Reddys
Research Foundation regarding the undertaking of research dated February 27,
1997.4.2.**
    
    
    Dr. Reddys Laboratories Limited Employee Stock Option Scheme, 2002.4.3****
    
    
    Sale and Purchase Agreement Regarding the Entire Share Capital of Beta Holding
GmbH dated February 15th/16th 20064.4.******
    
    
    Dr. Reddys Employees ADR Stock Option Scheme, 2007.8.
    
    
    List of subsidiaries of the Registrant.23.1
    
    
    Consent of Independent Registered Public Accounting Firm99.1
    
    
    Certification of Chief Executive Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.99.2
    
    
    Certification of Chief Financial Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.99.3
    
    
    Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.4
    
    
    Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Previously filed on March 26, 2001 with the SEC along with Form F-1**
    
    Previously filed on October 31, 2002 with the SEC along with Form S-8.***
    
    Previously filed with the Companys Form 20-F for the fiscal year ended March 31, 2003.****
    
    Previously filed with the Companys Form 20-F/A for the fiscal year ended March 31, 2006
pursuant to a request for confidential treatment.*****
    
    Previously filed with the Companys Form 20-F for the fiscal year ended March 31, 2006.******
    
    Previously filed with the Companys Form 20-F for the fiscal year ended March 31, 2010.*******
    
    Previously filed on March 5, 2007 with the SEC along with Form S-8.  145




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##### Table of Contents



SIGNATURES
  DR. REDDYS LABORATORIES LIMITEDBy:
    
    /s/ G.V. Prasad

G.V. PrasadVice Chairman and Chief Executive OfficerBy:
    
    /s/ Umang Vohra

Umang VohraChief Financial Officer
 
  146