DRIVIN G ROWTH - Dr. Reddy's

66
management discussion
and analysis
and loss account under Indian GAAP.
Because the Company did not prepare the
consolidated accounts earlier, there is no
comparison with similar results for 2000-01.
CONSOLIDATED FINANCIALS
UNDER US GAAP
SINCE DR. REDDY’S is listed on the
NYSE, it has to prepare its financials
according to US GAAP. These are given
separately in this annual report. Table 10
below gives the abbreviated consolidated
statements of operations under US GAAP.
As can be seen from Table 10, the excellent
results of Dr. Reddy’s for 2001-02 reflects
Table 10
|
Abbreviated consolidated statement of operations
prepared according to US GAAP
IN MILLION
20 01-02 2000-01 RATE OF GROWTH
US$ Rs. US$ Rs. US$ Rs.
Net product sales 336 16,409 234 10,975 43% 50%
License fees 3 125 – –
Others 2 89 – –
Total revenue 341 16,623 234 10,975 45% 51%
Cost of revenues 141 6,869 122 5,736
Gross profit 200 9,754 112 5,239 79% 86%
Total operating expenses 96 4,688 80 3,748
Operating income 104 5,066 32 1,491 225% 240%
Equity in loss of affiliates (3) (131) (1) (32)
Other expenses/(income) net
Income before income
3 154 (8) (387)
taxes and minority interest 104 5,090 23 1,072 352% 375%
Income tax benefit / (expense) (3) (154) (7) (321)
Minority interest (–) (15) (–) (9)
Net income 101 4,921 16 742 531% 564%
EPS basic (Rs.) 64.73 11.74
EPS basic (US$) 1.33 0.25
equally well under US-GAAP. The differences in
the growth rates — depending upon whether
the base currency is the rupee or the dollar — is
wholly attributable to exchange rate effects.
internal control systems and
their adequacy
AN EFFECTIVE SYSTEM of internal
controls forms one of the key-stones
necessary to building, maintaining and
improving shareholder value. It helps to
avoid nasty surprises, assures the adequacy of
process performance, performs jobs more
efficiently, and improves the overall quality
of the business.
Internal audit at Dr. Reddy’s is an
independent activity aimed to add value to
the Group’s operations. The objective of the
internal audit department is to assist
management in effective discharge of its
responsibilities by furnishing it with analysis,
appraisals, recommendations and pertinent
comments concerning the activities reviewed.
Every entity faces a variety of risks from
external and internal sources that must be
assessed, and then managed. The vision of
Dr. Reddy’s internal audit department is to
facilitate each business in identifying,
quantifying and managing risk, and doing so
through sustainable and ethical means.
The scope of internal audit involves
examination and evaluation of the adequacy
and effectiveness of Dr. Reddy’s system of
DR. REDDY’S LABORATORIES LTD. | MANAGEMENT DISCUSSION AND ANALYSIS | ANNUAL REPORT 2001-2002