DRIVIN G ROWTH - Dr. Reddy's

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schedule to the consolidated balance sheet and profit and loss account
13.PUBLIC OFFERING IN THE UNITED STATES OF AMERICA
In April 2001, the Company made a public offering of its American Depositary Shares (ADS) to international investors. The offering
consisted of 13,225,000 ADS’s representing 13,225,000 equity shares having face value of Rs. 5 each (adjusted for share split), at
an offering price of US$ 10.04 per ADS. Consequently, the share capital has increased by Rs. 66,125 thousand and share premium
account has increased by Rs. 5,716,600 thousand net of share issue expenses amounting to Rs. 463,893 thousand. The equity
shares represented by the ADS carry equivalent rights with respect to voting and dividends as the ordinary equity shares.
14.EMPLOYEE STOCK OPTION SCHEME
Dr. Reddy’s Laboratories Limited
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 2002 Plan
covers all employees of DRL and employees of all its subsidiaries. Under the 2002 Plan, the Compensation Committee of the Board
(“the Committee”) shall administer the 2002 Plan 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 2002 Plan 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 the 2002 Plan 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 / Cancelled –
Converted into equity shares –
Options outstanding at the end of the year 124,500
Reddy US Therapeutics Inc.
During the year ended March 31, 2001, Reddy US, a consolidated subsidiary, adopted the Reddy US Therapeutics Inc. 2000 Equity
Ownership Plan (“the Plan”) to provide for issuance of stock options to its employees and certain related non-employees. When
the plan was established, Reddy US reserved 500,000 shares for issuance. Under the Plan, stock options may be granted at a price
per share not less than the fair market value of the underlying equity shares on the date of grant.
During the previous year ended March 31, 2001, Reddy US issued stock options to employees to purchase 186,000 equity shares
of Reddy US at an exercise price of US$ 0.18 per share. The options vest in a graded manner over a period of 4 years from the
date of the grant with 25% of the options vesting at the end of each year.
During the current year, the Reddy US has under this scheme, issued additional 109,500 options vested and exercisable at
US$ 0.18 per share.
CONSOLIDATED FINANCIALS | FINANCIALS | ANNUAL REPORT 2001-2002