DRIVIN G ROWTH - Dr. Reddy's

schedule to the balance sheet and profit and loss account
11.EMPLOYEE STOCK OPTION SCHEME
Employees Stock Option Plan-2002 (the 2002 Plan): The Company instituted the 2002 Plan for all eligible employees in pursuance
of the special resolution approved by the shareholders in the Annual General Meeting held on September 24, 2001. The Scheme
covers all employees of DRL and employees of all its subsidiaries. Under the Scheme, the Compensation Committee of the Board
(‘the Committee’) shall administer the Scheme and grant stock options to eligible employees of the Company and its subsidiaries.
The Committee shall determine the employees eligible for receiving the options, the number of options to be granted, the
exercise price, the vesting period and the exercise period. The vesting period is determined for the options issued on the date of
the grant.
The Scheme further provides that in no case shall the Per Share Exercise Price of an Option be less than the Fair Market Value on
the date of grant. The fair market value of a share on each grant date is defined as the weighted average closing price for 30 days
prior to the grant, in the stock exchange where there is highest trading volume during that period. Notwithstanding the foregoing,
the Committee may, after getting the approval of the members in general meeting, grant Options with a Per Share Exercise Price
lesser than the Fair Market Value.
In the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not
been exercised can be exercised within the time prescribed under each option agreement by the Committee or if no time limit is
prescribed, within three years of the date of employment termination, failing which they would stand cancelled.
During the current year the Company under this scheme has issued 124,500 options to three employees of its subsidiaries. The
vesting period for the options granted varies from 12 to 36 months. The exercise price determined by the Committee is Rs. 977.30
per option, being the fair value (weighted average closing price for 30 days prior to the grant).
The market price of the shares of the Company on the date of the grant was Rs. 949.85. As the market price of shares, at the
date of grant of options is lower than the exercise price, no compensation cost is set-up. The movement in the options during the
year ended March 31, 2002 is set out below:
For the year ended
March 31, 2002
Options outstanding at the beginning of the year –
Issued 124,500
Forfeited –
Converted into equity shares –
Options outstanding at the end of the year 124,500
12.EMPLOYEE SEPARATION COSTS
During the year the Company announced a Voluntary Retirement Scheme (“the Scheme”) for workmen. In accordance with the
Scheme, the Company has incurred an amount of Rs. 20,464 thousand, which has been expensed as incurred, in accordance with
the Company policy.
13.LONG-TERM DEPOSITS
Long-term deposits represent advances against the consideration payable for brands acquired and are amortised over a period of
ten years in accordance with the terms of the agreements.
DR. REDDY’S LABORATORIES LTD. | FINANCIALS | ANNUAL REPORT 2001-2002
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