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Report of the month

February 2010
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Dr. Reddy's

Hyderabad, India



Report Facts

Company name: Dr. Reddy’s Laboratories
Fiscal year end: March 31
Report title: 25 years of innovation and affordability
Chairman: Dr. K. Anji Reddy
Vice Chairman and CEO: G V Prasad
Number of books: One
Report length: 200 pages
Auditors: B S R & Co.
Production and design: N/A
E-mail: kedaru@drreddys.com

Report Rating

3.5/5

(Rating scale below)

Profile-Products (Excerpts, as from the report)

Twenty-five years since our inception, we at Dr. Reddy’s Laboratories continue our efforts to provide affordable and innovative medicines to patients across the world, either directly... or indirectly... Our strategy is to leverage research and development... to be a leading global pharmaceutical company.
(Italics are own company’s words excerpted from the annual report)

Key Figures

Total revenues: RS 69,441 million
Operating income: RS (2,834 million)
Net income: RS (5,168 million)
Earnings per share: RS (30.69)
Dividend per share: RS 6.25
Gross margin: 53%
Current ratio: 1.5
Debt to equity: 0.5
(Source: 2009 figures and ratios as shown in the report)

Some Competitors

  • Ranbaxy Laboratories
  • Sun Pharmaceutical
  • Teva Pharmaceuticals
  • Mylan
  • Sanofi-Aventis
  • Daaichi Sankyo
  • Getz Pharma
  • ...
 

Triple A

> Company’s DNA charts the course (literally too, as shown on the selected page hereafter). The symbol is effectively used as a visual thread for the anniversary celebration.
> An illustrated timeline helps get milestones, key market achievements and other salient facts. This puts last year’s decreasing figures (at least at some levels) in broader and longer strategic perspective.
 

Double A

> Overall readability and layout ahead of a large majority of Indian annuals, with special mentions for the well-made tables of contents, modern typography, the clearness of tables.
> Share information, dividend history, distribution of shareholdings, and a recap of Shareholder Queries and Requests.
> Relatively well-structured and well-supported MD&A.
> Five Years at a Glance and the following five-year Ratio Analysis are well structured and include classic plus less often encountered indicators, such as Fixed Assets Turnover, Working Capital Turnover, Inventory Turnover, Current Ratio...
 

Simple A

> Chairman’s message puts the strategy and operations in a medium-term perspective but is far from sufficiently developed as regards last year underperformance.
> Good level of disclosure and transparency on governance and leadership.
 

B Sides

> 200 pages: not the lightest volume. And it takes some time to get some key information, such as a real profile or business description, major ratios, etc.
> Financial highlights should have been more explicit, especially about last year poor result performance.
> Risk analysis not up to general and industry requirements.
 

How does the company report in key areas? What are the main report pluses and minuses? The Report Scan gives an overview of strengths and weaknesses, and scores each item.
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Selected Page

(p 5 of Dr. Reddy’s Laboratories Annual Report 2009)
p 5 of Dr. Reddy’s Laboratories Annual Report 2009
Rating Scale
5
First-Rate
4.5
Excellent
4
Very good
3.5
Sound
3
Average
2.5
Uneven
2
Common
1.5
Substandard
1
Poor
0.5
Uncompetitive
The rating is based on ReportWatch internal desk research and does not take into account the independent Rating Panel’s judgment.