In terms of Section 134(5) of the Act, your Directors state that:
1. Applicable accounting standards have been followed in the
preparation of the annual accounts and that no material departures have been made from the
same;
2. Accounting policies have been selected and applied consistently.
Judgments and estimates made are reasonable and prudent, so as to give a true and fair
view of the state of affairs of the Company at the end of the FY2024 and of the profit of
the Company for that period;
3. Proper and sufficient care has been taken to maintain adequate
accounting records in accordance with the provisions of the Act for safeguarding the
assets of the Company and for preventing and detecting fraud and other irregularities;
4. Annual accounts have been prepared on a going concern basis;
5. Adequate internal financialcontrols for the Company to follow have
been laid down and these are operating effectively; and
6. Proper and adequate systems have been devised to ensure compliance
with the provisions of all applicable laws and these systems are operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROL SYSTEMS
The Company has in place adequate internal financial controls with
reference to its financial statements.
These controls ensure the accuracy and completeness of the accounting
records and the preparation of reliable financial statements
ENTERPRISE RISK MANAGEMENT ("ERM")
The Company has a Risk Management Committee of the Board, consisting
entirely of Independent Directors. Details of the Committee and its terms of reference are
set out in the chapter on Corporate Governance.
The Audit Committee and Risk Management Committee review key risk
elements of the Company's business, finance, operations and compliance, and their
respective mitigation strategies. The Risk Management Committee reviews strategic,
business, compliance and operational risks whereas the Audit Committee reviews issues
around ethics and fraud, internal control over financial reporting (ICOFR), as well as
process risks and their mitigation.
The Company's Executive Risk Management Committee operates under the
Company's Risk Management Policy and focuses on risks associated with the Company's
business and compliance matters. This Committee periodically reviews matters pertaining to
risk management. Additionally, the Enterprise wide Risk Management (ERM) function helps
the Board and the Management to prioritise, review and measure business risks against a
pre-determined risk appetite, and their suitable response, depending on whether such risks
are internal, strategic or external.
During FY2024, focus areas of Risk Management
Committee included review of risks and mitigations related to cyber
security, data privacy, data governance, ethics and compliance risk, quality, supply chain
management, geo-political risks and business continuity, foreign exchange risk,
pharmacovigilance and environmental risk.
RELATED PARTY TRANSACTIONS
In line with the requirements of the Act and the SEBI Listing
Regulations, your Company has a Policy on Materiality of Related Party Transactions and
Dealing with Related Party Transactions, which is also available on the Company's website
https://www.drreddys.com/ investor#governance#policies-and-documents. The Policy intends
to ensure that proper reporting, approval and disclosure processes are in place for all
transactions between the Company and related parties.
In accordance with Section 134(3)(h) of the Act, and Rule 8(2) of the
Companies (Accounts) Rules, 2014, the particulars of the contracts or arrangements with
related parties referred to in Section 188(1) of the Act, in Form AOC-2 is attached as Annexure
II to this Board's Report. All related party transactions and subsequent modifications
are placed before the Audit Committee for review and approval. Prior omnibus approval is
obtained for related party transactions on a quarterly basis for transactions which are of
repetitive nature and/ or entered in the ordinary course of business and are at arm's
length. All contracts and arrangements with related parties were at arm's length and in
the ordinary course of business of the Company. Details of related party disclosures form
part of the notes to the financial statements provided in the Integrated Annual Report.
VIGIL MECHANISM/ WHISTLE-BLOWER/ OMBUDSPERSON POLICY
The Company has an Ombudsperson Policy (Whistle-Blower/ Vigil
mechanism) to report concerns. Reporting channels under the vigil mechanism include an
independent hotline, a web based reporting site (drreddys.ethicspoint. com) and a
dedicated e-mail to Chief Compliance Officer.
The Ombudsperson Policy also safeguards against retaliation of those
who use this mechanism. The Audit Committee Chairperson is the Chief Ombudsperson. The
Policy also provides for raising concerns directly to the Chief Ombudsperson. Details of
the Policy are available on the Company's website: https://www.drreddys.com/cms/cms/sites/
default/files/2021-12/Ombudsperson.pdf
STATUTORY AUDITORS
M/s. S.R. Batliboi & Associates LLP, Chartered Accountants
(Firm Registration No. 101049W/E300004) were re-appointed as Statutory
Auditors of the Company at the 37th AGM held on July 28, 2021, for a period of five years
till the conclusion of the 42nd AGM to be held in the year 2026.
SECRETARIAL AUDITOR
Pursuant to Section 204 of the Act, and the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, M/s. Makarand M. Joshi & Co.,
Practicing
Company Secretaries (Certificate of Practice No.
3662), Mumbai, India, were appointed as Secretarial
Auditors of the Company for FY2024. The Secretarial Audit Report for
FY2024 is annexed as Annexure III to this Report.
Further, in compliance with Regulation 24A of SEBI Listing
Regulations, the Annual Secretarial Compliance Report issued by the
Secretarial Auditor, will be submitted to the stock exchanges within the statutory
timelines.
Based on the consent received from M/s. Makarand M.
Joshi & Co., Practicing Company Secretaries (Certificate of
Practice No. 3662), Mumbai, India and on the recommendation of the Audit Committee, the
Board has approved their appointment as the Secretarial Auditor of the Company for FY2025.
They have confirmed their eligibility for the said re appointment.
COST AUDITOR
Pursuant to Section 148(1) of the Act, read with the relevant Rules
made thereunder, the Company maintains the cost records in respect of its
'pharmaceuticals' business.
On the recommendation of the Audit Committee, the Board has appointed
M/s. Sagar & Associates, Cost
Accountants (Firm Registration No. 000118) as Cost Auditor of the
Company for FY2025 at a remuneration of
Rs 9,00,000 (Rupees Nine Lakhs only) plus reimbursement of
out-of-pocket expenses at actuals and applicable taxes.
M/s. Sagar & Associates have confirmed that they are free from
disqualification specified under Section 141(3) and proviso to Section 148(3) read with
Section 141(4) of the Act and that the appointment meets the requirements of the Act. They
have further confirmed their independent status and an arm's length relationship with the
Company.
The provisions of the Act also require that the remuneration of the
Cost Auditors be ratified by the members and therefore, the same is recommended for
approval of the members at the forthcoming 40th AGM. As a matter of record, relevant Cost
Audit Reports for FY2023 were filed with the Central Government on August 22, 2023, within
the stipulated timeline.
The Cost Audit Report for FY2024 will also be filed within the
timeline.
AUDITORS' QUALIFICATIONS, RESERVATIONS, ADVERSE REMARKS OR DISCLAIMERS
There are no qualifications, reservations, adverse remarks or
disclaimers by the Statutory Auditors in their report, or by the Practicing Company
Secretary in the Secretarial Audit Report. During the year, there were no instances of
frauds reported by Auditors under Section 143(12) of the Act.
SECRETARIAL STANDARDS
In terms of Section 118(10) of the Act, the Company complies with
Secretarial Standards 1 and 2, relating to the 'Meetings of the Board of Directors' and
'General Meetings', respectively as issued by the Institute of Company Secretaries of
India ("ICSI") and approved by the Central Government.
The Company has also voluntarily adopted the recommendatory Secretarial
Standards 3 on 'Dividend' and Secretarial Standards 4 on 'Report of the Board of
Directors' issued by the ICSI.
SIGNIFICANT/ MATERIAL ORDERS PASSED BY
COURTS/ REGULATORS/ TRIBUNALS
During FY2024, there was no significant or material orders passed by
the Courts or Regulators or Tribunals impacting the going concern status and operations of
the Company in the future.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT,2013
The Company has a Policy to ensure prevention, prohibition and
redressal of sexual harassment at the workplace. It has an Apex Committee and an Internal
Complaints Committee in compliance with the provisions of the Sexual Harassment of Women
at Workplace (Prevention, Prohibition and Redressal) Act, 2013, which operate under a
defined framework for complaints pertaining to sexual harassment at workplace. The details
are available in the Principle 5 of the Business Responsibility and Sustainability Report
as well as in the Corporate Governance Report forming part of this Integrated Annual
Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
As per Section 135 of the Act, the Company has a Board-level Committee.
namely, Sustainability and Corporate Social Responsibility (SCSR) Committee. As on March
31, 2024, the Committee consists of Dr. K P Krishnan (Chairman), Ms. Kalpana Morparia, Mr.
Sanjiv Mehta, Mr. G V Prasad and Mr. K Satish Reddy as members. Based on the
recommendation of the said Committee, the Board has adopted a CSR policy that provides
guiding principles for selection, implementation and monitoring of CSR activities and
formulation of the annual action plan. During the year, the Committee monitored the CSR
activities undertaken by the Company including the expenditure incurred thereon as well as
implementation and adherence to the CSR policy. An impact assessment of the eligible
projects has been carried by an independent agency and the report of such impact
assessment was noted by the SCSR Committee and the Board. Details of the CSR Policy and
initiatives taken by the Company during the year are available on the Company's website:
www.drreddys.com. The report on CSR activities as well as executive summary of the impact
assessment report are attached as Annexure IV to this Board's Report.
INTEGRATED REPORT
Your Company has adopted the Integrated Annual Report for FY2024, which
includes both financial and non-financial information. The reporting weaves together our
purpose, values, strategy, governance, performance and future outlook, all of which
influence the material aspects of our business.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORT (BRSR)
The Business Responsibility and Sustainability Report for
FY2024 as mentioned under Regulation 34 of the SEBI
Listing Regulations, is given as a separate chapter in this Integrated
Annual Report.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(ESG)
Providing cures and reducing the disease burden are central to our
purpose as a leading pharma company. We believe that society and the environment are
interdependent, and truly being sustainable supports human health and well-being, a
sustainable planet, and a well-integrated society. In 2022, building on our incremental
work in sustainability, we launched our sustainability vision for 2030 and published our
renewed ESG goals and targets. Our sustainability goals span across diverse areas we care
about - from environmental and social sustainability to stronger governance, from greater
access and affordability of medicines to public health issues, from greater economic
equity and accountability to acceptance of greater social parity. They reveal our bold
vision for the future and what we collectively strive to achieve every day.
The Company has a Board Committee, namely, Sustainability and Corporate
Social Responsibility (SCSR) Committee, as the nodal committee to review the ESG and
sustainability goals of the Company, its implementation, progress and other related
matters as per its terms of reference.
The ESG details are available in the initial section and Business
Responsibility and Sustainability Report of this Integrated Annual Report.
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO THE INVESTOR EDUCATION AND
PROTECTION FUND (IEPF)
Pursuant to the provisions of the Act, read with IEPF Authority
(Accounting, Audit, Transfer and Refund) Rules, 2016, as amended,
declared dividends which remained unpaid or unclaimed for a period of seven years have
been transferred by the Company to the IEPF, which has been established by the Central
Government.
The above Rules also mandate transfer of shares on which dividends are
lying unpaid and unclaimed for a period of seven consecutive years to IEPF. The Company
has issued individual notices to the members whose dividend is unclaimed and unpaid and
advising them to claim their dividend. The details of transfer of unpaid and unclaimed
amounts to IEPF are given in the chapter on Additional Shareholders Information.
EMPLOYEES STOCK OPTION SCHEMES
The Company has three employee stock option schemes namely, 'Dr.
Reddy's Employees Stock Option Scheme, 2002', 'Dr. Reddy's Employees ADR Stock Option
Scheme, 2007', and 'Dr. Reddy's Employees Stock Option Scheme. 2018' (the
"Schemes"). The term of Dr. Reddy's Employees Stock Option Scheme, 2002. ended
on January 28, 2022. However, the options already granted under the 2002 Scheme are
eligible for exercise, in terms of the Scheme. There are no other changes in the said
schemes during the year. The Schemes are in compliance with the SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021. The details of Company's
stock option Schemes as required under
Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021, are available on the Company's website:
https://www.drreddys.com/investors/
governance/policies-and-documents/#governance#policies-a nddocuments
The Company's Secretarial Auditors, M/s. Makarand M.
Joshi & Co., Practicing Company Secretaries, have certified that
the Employee Stock Option Schemes of your Company have been implemented in accordance with
the Regulations and the resolutions passed by the Members in this regard.
The details also form part of Note 2.25 of the notes to accounts of the
standalone financial statements.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, are attached as Annexure V to
this Board's Report.
In terms of Section 197(12) of the Act, read with Rule 5(2) and 5(3) of
the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a
statement showing the names and other particulars of the employees drawing remuneration in
excess of limits set out in the said rules forms part of the Integrated Annual Report.
Considering the provisions of Section 136 of the Act, the Integrated
Annual Report, excluding the aforesaid information, is being sent to the members of the
Company and others entitled thereto. The said information is available for inspection at
the registered office of the Company or through electronic mode, during business hours on
working days up to the date of the forthcoming 40th AGM, by members. Any member interested
in obtaining a copy thereof may write to the Company Secretary in this regard.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Particulars as prescribed under Section 134(3)(m) of the Act, read with
Rule 8(3) of the Companies (Accounts) Rules, 2014, are attached as Annexure VI to
this Board's Report.
ANNUAL RETURN
The Annual Return of the Company as on March 31, 2024, in terms of the
provisions of Section 134(3)(a) of the Act, is available on the Company's website:
https://www.drreddys. com/investors/reports-and-filings/ annual-reports/
ACKNOWLEDGMENT
Your Directors place on record their sincere appreciation for the
significant contribution made by your Company's employees through their dedication, hard
work and commitment, as also for the trust reposed in your Company by the medical
fraternity and patients. The Board of Directors also acknowledges the support extended by
the analysts, bankers, Government of India and various countries and other government
agencies, media, customers, business partners, members and investors at large.
The Board looks forward to your continued support in the Company's
endeavour to accelerate access to innovative and affordable medicines, because "Good
Health Can't Wait".
For and on behalf of the Board of Directors
| K Satish Reddy |
| Chairman |
| DIN: 00129701 |
| Place: Hyderabad |
| Date: May 7, 2024 |