DRIVIN G ROWTH - Dr. Reddy's

annexure to the auditors’ report
The Annexure referred to in paragraph 1 of the Auditors’ Report to the members of Dr. Reddy’s Laboratories Limited ("the Company")
for the year ended March 31, 2002.
We report as follows:
The matters contained in sub-paragraphs 4(D) of the Manufacturing and Other Companies (Auditor’s Report) Order, 1988, are not
applicable to the Company.
Internal controls
1. In our opinion and according to the information and explanations given to us by management, there are adequate internal control
procedures commensurate with the size of the Company and the nature of its business for the purchase of stores, raw materials
including components, plant and machinery, equipment and other assets, and for the sale of goods.
2. In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.
3. In our opinion and according to the information and explanations given to us by management, the service activities of the
Company during the year were such that it was not necessary to maintain a system of:
• allocating man-hours utilised to individual jobs; and
• authorisation and control over allocation of labour to individual jobs.
However, the Company has a reasonable system, commensurate with its size and nature of its business in respect of:
• recording receipts, issues and consumption of material and stores and allocating materials consumed to the relative jobs; and
• authorisation at proper levels, and an adequate system of internal control, on issue and allocation of stores to jobs.
Fixed assets
4. The Company has maintained proper records of fixed assets showing full particulars, including quantitative details and location.
The Company has a phased programme of physical verification of its fixed assets which, in our opinion, is reasonable having regard
to the size of the Company and the nature of its assets. In accordance with this programme, certain fixed assets were physically
verified by management and no material discrepancies were identified during such verification.
5. None of the fixed assets of the Company have been revalued during the year.
Inventories
6. The stock of finished goods, work-in-process, stores and spares, raw materials and components have been physically verified by
management at reasonable intervals during the year.
7. In our opinion, the procedures of physical verification of inventories followed by management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
8. The discrepancies noticed during the physical verification of inventories as compared to book records were not material and have
been properly dealt with in the books of account.
9. In our opinion and based on our examination, the valuation of inventories is fair and proper in accordance with the normally
accepted accounting principles and is on the same basis as in the previous year.
10. In our opinion, the Company has an adequate system for determination of unserviceable or damaged stores and spare parts, raw
materials including components and finished goods including trading goods. Adequate provision has been made at the year-end,
in the books of account, for the loss arising on such items.
11. We have broadly reviewed the books of account maintained by the Company pursuant to the Order made by the Central
Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion
that prima facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination
of the records with a view to determining whether they are accurate or complete.
12. In our opinion reasonable records have been maintained by the Company for the sale and disposal of realisable scrap. We were
informed by the management that the production process does not generate any by-products.
Loans and advances
13. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the register
maintained under section 301 of the Companies Act, 1956, or from companies under the same management as defined under
sub-section (1B) of section 370 of the Companies Act, 1956, the rate of interest and other terms and conditions of which are,
prima facie, prejudicial to the interest of the Company.
14. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register
maintained under section 301 of the Companies Act, 1956, or to companies under the same management as defined under subsection
(1B) of section 370 of the Companies Act, 1956, the rate of interest and other terms and conditions of which are, prima
facie, prejudicial to the interest of the Company.
15. The parties (including employees) to whom loans or advances in the nature of loans have been given by the Company are regular
in repaying the principal amounts as stipulated and interest where applicable.
DR. REDDY’S LABORATORIES LTD. | FINANCIALS | ANNUAL REPORT 2001-2002
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