BOARD'S REPORT
Dear Members,
Your Directors are pleased to present the 42nd Annual Report, highlighting
the Business Performance along with the Audited Financial Statements for the financial
year ended March 31, 2026. This report epitomizes our commitment to transparency,
accountability, and the highest standards of corporate governance.
Financial Highlights and Company Affairs Table 1 gives the consolidated and
standalone financial highlights of the Company based on Indian Accounting Standards (Ind
AS) for Financial year 2026 (i.e. from April 1, 2025 to March 31, 2026) compared to the
previous financial year.
The Company's consolidated total income for the year was Rs. 350.6 billion, which was
up by 4% over the previous year. Profit before tax (PBT) was Rs. 53.9 billion,
representing a decline of 30% over the previous year.
The Company's standalone total income for the year was Rs. 222.2 billion, which was
down by 8% over the previous year. PBT was Rs. 42.5 billion, which was lower by 41% over
the previous year.
Revenues from lines of business and geographies given below are from the Company's IFRS
results.
Revenues from Global Generics were up by 3% and stood at Rs. 299.0 billion. All
geographies except North America, i.e. Europe, India and Emerging Markets, contributed
towards the growth, which was further augmented by the contributions from the acquired
Consumer Healthcare business in Nicotine Replacement Therapy (‘NRT') and favourable
foreign exchange rate movements.
Revenues from North America stood at Rs. 113.7 billion, reported a year-on-year decline
of 22%. This was largely on account of lower revenues from lenalidomide. During the year,
the Company filed 15 Abbreviated New Drug Applications (‘ANDAs') in the United States
(US). As of March 31,2026, there were 77 generic filings awaiting approval with the US
Food and Drug Administration (USFDA), comprising 75 ANDAs and two New Drug Applications
filed under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act.
Revenues from Emerging Markets were Rs. 67.6 billion, a year-on-year growth of 23%. The
growth was attributable to new launches across markets and higher volumes, further
supported by favourable foreign exchange movements.
Revenues from India stood at Rs. 62.2 billion, a year-on-year growth of 16%. Growth was
driven by revenues from new brand launches, including our innovation portfolio, price
increases and higher volumes.
Revenues from Europe were Rs. 55.5 billion, a year-on-year growth of 55%. The growth
was primarily on account of revenues from the acquired NRT business and new generic
product launches, momentum in the base business volumes and favourable foreign exchange
movements, partially offset by price erosion in generics.
Revenues from Pharmaceutical Services and Active Ingredients (PSAI) stood at Rs. 34.8
billion, which was higher by 3% compared to previous year. Growth was due to revenues from
new launches of Active Pharmaceutical Ingredient (‘API') products, momentum in the
pharmaceutical services business and favourable foreign exchange movements, offset by
lower API prices. During the year, the Company filed 128 Drug Master Files (DMFs)
worldwide, including 16 filings in the US.
FINANCIAL HIGHLIGHTS
The Company's financial performance (standalone and consolidated) for the year ended
March 31, 2026 is summarised below:
|
|
|
|
|
|
(Rs. Million) |
|
CONSOLIDATED |
STANDALONE |
|
FY2026 |
FY2025 |
Growth (%) |
FY2026 |
FY2025 |
Growth (%) |
Total Income |
350,586 |
337,412 |
4 |
222,224 |
241,188 |
(8) |
Profit before depreciation, amortization, impairment and tax |
77,899 |
95,308 |
(18) |
55,992 |
83,789 |
(33) |
Depreciation and Amortization |
20,588 |
17,037 |
21 |
12,074 |
10,394 |
16 |
Impairment of non-current assets |
3,518 |
1,693 |
108 |
1,405 |
1,036 |
36 |
Profit before tax and before share of equity accounted investees |
53,793 |
76,578 |
(30) |
42,513 |
72,359 |
(41) |
Share of profit of equity accounted investees, net of tax |
134 |
217 |
(38) |
- |
- |
- |
Profit before tax |
53,927 |
76,795 |
(30) |
42,513 |
72,359 |
(41) |
Tax Expense |
12,351 |
19,543 |
(37) |
10,316 |
18,865 |
(45) |
Net Profit for the year |
41,576 |
57,252 |
(27) |
32,197 |
53,494 |
(40) |
Opening balance of retained earnings |
300,522 |
249,980 |
20 |
259,539 |
212,054 |
22 |
Net profit for the year |
41,960 |
56,551 |
(26) |
32,197 |
53,494 |
(40) |
Dividend paid during the year |
(6,659) |
(6,662) |
0.05 |
(6,659) |
(6,662) |
0.05 |
Transfer from SEZ re-investment Reserve, net |
- |
653 |
(100) |
- |
653 |
(100) |
Closing balance of retained earnings |
335,823 |
300,522 |
12% |
285,077 |
259,539 |
10% |
Share Capital
During the reporting year; there's no change in Authorised Share Capital of the
Company.
The paid-up share capital of your Company increased by 7 201,605 from Rs. 834,455,365
to 7 834,656,970 in FY2026 due to allotment of 201,605 equity shares of 7 1/- each, upon
exercise of stock options by eligible employees through the 'Dr. Reddy's Employees Stock
Option Scheme, 2002' and 'Dr. Reddy's Employees ADR Stock Option Scheme, 2007'. The equity
shares issued pursuant to the above Employee Stock Option Schemes rank pari-passu with the
existing equity shares of the Company.
As on March 31, 2026, the Company's Share Capital stands at:
Share Capital |
Amount (in Rs.) |
Authorised Share Capital |
1,45,00,00,000 |
Paid-up Share Capital |
83,46,56,970 |
Dividend
Your Directors are pleased to recommend a final dividend of 78/- (800%) on every equity
share of 71/-, each fully paid-up for FY2026 subject to the approval of the members of the
Company at this 42nd Annual General Meeting ("AGM"). As per the
Dividend Distribution Policy of the Company, the amount of maximum dividend pay-out
(including interim dividend) can be up to 20% of the cash profit under consolidated
financial statement prepared under Indian Accounting Standards (IND-AS).
The recommended dividend is in line with the provision of the said policy. The
dividend, if approved at the 42nd Annual General Meeting ("AGM") will
be paid to those members whose names appear on the register of members of the Company as
of end of the day on July 10, 2026. The total dividend pay-out will be approximately 7 668
Crores resulting in a pay-out of 10.2% of the consolidated cash profit for the financial
year ended March 31, 2026. Such dividend will be taxable in the hands of the members in
terms of the provisions of the Income Tax Act, 2025.
In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the Dividend
Distribution Policy, is available on the Company's website on https:www.drreddvs.
com/cms/cms/sites/default/files/2022-09/Dividend%20 distribution%20policy.pdf
Transfer to Reserve
The Company has not transfered any amount to the general reserve for the year ended
March 31, 2026.
Public Deposit
The Company has not accepted any deposits covered under Chapter V of the Companies Act,
2013 (the "Act").
Change in the Nature of Business, If Any
During the year, there was no change in the nature of business of the Company. Further,
there was no Significant change in the nature of business carried on by its subsidiaries.
Material changes and commitments affecting the financial position between the end of
the financial year and date of the report
There have been no material changes and commitments affecting the financial position of
the Company which have occurred between the end of the financial year of the Company to
which the financial statements relate and as on the date of this report.
Subsidiaries, Joint Ventures and Associates
The Company has overall 57 entities, comprising 45 overseas subsidiary companies
(including step-down subsidiaries),
9 subsidiary companies (including step-down subsidiary) in India and 3 joint venture
and associate companies as on March 31, 2026. Changes during the FY2026 were as follows:
• Dr. Reddy's Laboratories SA, wholly owned subsidiary of the Company incorporated
‘Dr. Reddy's Laboratories (Vietnam) Company Limited, as a wholly owned subsidiary in
Vietnam on May 9, 2025, consequently the said entity became wholly-owned step-down
subsidiary of the Company.
• Imperial Owners and Land Possessions Private Limited (Formerly Imperial Credit
Private Limited), wholly owned subsidiary of the Company liquidated and stands dissolved
with effect from August 5, 2025.
Further, the Company sold its entire shareholding in Svaas Wellness Limited
("Svaas"), consequently effective from April 7, 2026, Svaas ceased to be wholly
owned subsidiary of the Company.
Section 129(3) of the Act, states that where the Company has one or more subsidiaries
or associate companies, it shall, in addition to its financial statements, prepare a
consolidated financial statements of the Company and of all its subsidiaries and associate
companies in the same form and manner as that of its own and also attach along with its
financial statements, a separate statement containing the salient features of the
financial statements of its subsidiaries and associates.
Hence, the consolidated financial statements of the Company and all its subsidiaries
and associates, prepared in accordance with Ind AS 110 and AS 111 as specified in the
Companies (Indian Accounting Standards) Rules, 2015, forms part of the Integrated Annual
Report. Moreover, a statement containing the salient features of the financial statements
of the Company's subsidiaries and joint ventures in the prescribed FormAOC-1, is attached
as Annexure I to this Board's Report. This statement also provides details of the
performance and financial position of each subsidiary and joint venture. In accordance
with Section 136 of the Act, the audited financial statements and related information of
the Company and its subsidiaries, wherever applicable, are available on the Company's
website: https://www.drreddvs. com/. These are also available for inspection during
regular business hours at our registered office in Hyderabad, India and/or in electronic
mode
Material Subsidiaries
In terms of Regulation 16(1 )(c) of the SEBI Listing Regulations, Material Subsidiary
shall mean a subsidiary, whose turnover or net worth exceeds ten percent of the
consolidated turnover or net worth, respectively, of the Company and its subsidiaries in
the immediately preceding accounting year and the listed entity shall formulate a policy
for determining its ‘material' subsidiary.
Accordingly, the Company has three material overseas subsidiary companies as on March
31, 2026, namely,
Dr. Reddy's Laboratories Inc. (USA), Dr. Reddy's Laboratories SA (Switzerland),
Northstar Switzerland SARL.
The Policy for determining Material Subsidiaries is available on the Company's website
and can be accessed at: https://www.drreddvs.com/cms/sites/default/files/media-librarv/
Policv%20for%20determinina%20of%20material%20 subsidiaries%20%282%29.pdf
Further, in terms of Regulation 24(1) of the SEBI Listing Regulations, at least one
Independent Director on the Board of the Company shall be a Director on the Board of an
unlisted material subsidiary, i.e. a subsidiary, whose turnover or net worth exceeds
twenty percent of the consolidated turnover or net worth respectively, of the Company and
its subsidiaries in the immediately preceding accounting year, whether incorporated in
India or not.
In compliance with the said provisions, Mr. Arun M Kumar (DIN: 09665138), Independent
Director of the Company, was appointed as a Director on the Board of Dr. Reddy's
Laboratories Inc. (USA) w.e.f. September 21, 2022 and Dr. Claudio Albrecht (DIN:
10109819), Independent Director of the Company, was appointed as a Director on the Board
of Dr. Reddy's Laboratories SA (Switzerland) w.e.f July 6, 2023.
Particulars of Loans, Guarantees or Investments
The Company makes investments or extends loans/ guarantees to its subsidiaries for
their business purposes. Details of loans, guarantees and investments covered under
Section 186 of the Act, along with the purpose for which such loan or guarantee was
proposed to be utilized by the recipient, form part of the notes 2.24, 2.6 A, and 2.6 C to
the standalone financial statements provided in this Integrated Annual Report.
Integrated Report
Your Company has adopted the Integrated Annual Report for FY2026, which includes both
financial and non-financial information. The reporting weaves together our purpose,
values, strategy, governance, performance and future outlook, all of which influence the
material aspects of our business.
Corporate Governance and Additional Shareholders' Information
A detailed report on the Corporate Governance systems and practices of the Company is
given in a separate chapter of this Integrated Report. Similarly, other information for
shareholders is provided in the chapter on Additional Shareholders' Information. The
Company has also formulated a Group Governance Policy to monitor governance of its
unlisted subsidiaries across the globe
A certificate from M/s. S.R. Batliboi & Associates LLP, Statutory Auditors of the
Company, confirming compliance with the conditions of corporate governance is attached to
the chapter on Corporate Governance forming part of this Integrated Report.
Management Discussion and Analysis A detailed report on the Management Discussions
and Analysis in terms of Regulation 34 of the SEBI Listing Regulations is provided as a
separate chapter forming part of this Integrated Annual Report
Business Responsibility and Sustainability Report (BRSR)
The BRSR for FY2026 as mentioned under Regulation 34 of the SEBI Listing Regulations,
is given as a separate chapter forming part of this Integrated Report.
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the BRSR Core
parameters for the financial year ended March 31, 2026 have been assured on a limited and
reasonable basis by DNV Assurance Private Limited, as disclosed in the BRSR forming part
of this Integrated Report.
Board of Directors and Key Managerial Personnel (KMP)
Appointment of Independent Director
The Board of Directors, at their meeting held on May 12, 2026, approved the appointment
of Mr. Srikanth Velamakanni (DIN: 01722758) as an Additional Director in the category of
an Independent Director of the Company, for a term of five consecutive years commencing
from July 1, 2026 up to June 30, 2031, not liable to retire by rotation, subject to
approval of the shareholders at the ensuing 42nd Annual General Meeting
The Company has received necessary declarations and confirmations from Mr. Velamakanni
confirming that he meets the criteria of independence as prescribed under the Companies
Act, 2013 and the SEBI Listing Regulations and that he is not disqualified from being
appointed as a Director.
Further, Mr. Velamakanni is not related to any Director or Key Managerial Personnel of
the Company and has not been debarred from holding the office of Director by virtue of any
order of the Securities and Exchange Board of India or any other authority. In the opinion
of the Board, the aforesaid Directors are persons of integrity and possess relevant
expertise, experience and proficiency required to effectively contribute to the affairs of
the Company.
A brief profile of Mr. Velamakanni is provided in the Notice convening the 42nd
AGM for the information of the shareholders.
Re-appointment of Independent Director
Dr. K P Krishnan (DIN: 01099097) an independent Director of the Company is going to
complete his first term as an Independent Director on January 6, 2027. Based on the
recommendation of the Nomination, Governance and Compensation Committee, the Board of
Directors, at their meeting held on May 12, 2026 approved the re-appointment of Dr.
Krishnan, as an Independent Director of the Company for a second term of five consecutive
years from January 7, 2027 to January 6, 2032, subject to the approval of shareholders at
the ensuing 42nd AGM
A brief profile of Dr. Krishnan is provided in the Notice convening the 42nd
AGM for the information of the shareholders.
Retirement by Rotation
During the year, the shareholders at the 41st Annual General Meeting held on
July 24, 2025, approved the re-appointment of Mr. G V Prasad as a whole-time Director,
designated as Co-Chairman and Managing Director of the Company fora further period of five
years with effect from January 30, 2026 to January 29, 2031, liable to retire by rotation.
Mr. KSatish Reddy (DIN: 00129701), Whole-time Director, designated as Chairman, is
liable to retire by rotation at the forthcoming 42nd AGM and being eligible,
seeks re-appointment. The shareholders had approved re-appointment of Mr. K Satish Reddy,
Whole-time Director, designated as Chairman of the Company fora period of five years
effective from October 1,2022 to September 30, 2027.
A brief profile of Mr. K Satish Reddy is provided in the Notice convening the 42nd
Annual General Meeting forming part of this Integrated Report.
Changes in Key Managerial Personnel (KMP)
During the year under review, there were no changes in the Key Managerial Personnel of
the Company. As on the date of this report, the Company has the following Key Managerial
Personnel as per Section 2(51) and Section 203 of the Act:
SI. No |
Name of KMP |
Designation |
1 |
Mr. G V Prasad |
Co-Chairman and Managing Director |
2 |
Mr. Erez Israeli |
Chief Executive Officer |
3 |
Mr. M V Narasimham |
Chief Financial Officer |
4 |
Mr. K Randhir Singh |
Company Secretary, Compliance Officer & Head-CSR |
Declaration by Independent Directors
In accordance with Section 149(7) of the Companies Act, 2013, each Independent Director
has confirmed that he or she meets the criteria of independence laid down in Section
149(6) of the Act and is in compliance with Rule 6(3) of the Companies (Appointment and
Qualifications of Directors) Rules, 2014 as well as Regulation 16( 1 )(b) of the SEBI
Listing Regulations. Furthermore, each Independent Director has affirmed adherence to the
Code of Conduct for Independent Directors prescribed in Schedule IV of the Act, and the
Board has duly taken these declarations on record after assessing their veracity.
Board Evaluation
Pursuant to the provisions of the Act, and the SEBI Listing Regulations, the Board has
carried out performance evaluation of its own performance, the Directors (including the
Chairman and Co-Chairman) individually, as well as the evaluation of the working of the
Committees. An independent external agency, EgonZehnder, a leadership advisory firm on
board matters, was engaged to conduct the Board evaluation for FY2026. The recommendations
were discussed with the Board and individual feedback was provided to the Directors
Further details of Board evaluation are provided in the Corporate Governance chapter of
this Integrated Report.
Appointment of Directors and Nomination, Governance and Compensation Policy
Assessment and appointment of members to the Board are based on a combination of
criterias that includes ethics, personal and professional stature, domain expertise,
gender diversity and specific qualifications required for the position. For appointment of
an Independent Director, the independence criteria defined in Section 149(6) of the Act,
and Regulation 16(1 )(b) of the SEBI Listing Regulations are also considered
Pursuant to Section 178(3) of the Act and Regulation 19(4) of the SEBI Listing
Regulations, and based on the recommendation of the Nomination, Governance and
Compensation Committee (NGCC), the Board has adopted a Nomination, Governance and
Compensation Policy applicable to Directors, KMP, Senior Management and other employees.
The Policy, inter alia, sets out the role of the NGCC, including matters relating to
appointment and removal, remuneration, performance evaluation, succession planning and
Board governance. The Policy is available on the Company's website at
https://www.drreddvs.com/cms/sites/default/
files/2025-07/Nomination%2C%20Governance%20%26%20 Compensation%20Policv.pdf
The salient features of the Policy forms part of the chapter on Corporate Governance of
this Integrated Report.
Executive Remuneration Overview and Philosophy
Our executive compensation program supports attracting, motivating, and encouraging
continuity of relevant leaders who advance our critical business objectives and promote
the creation of shareholders' value over the long-term
The key tenets are:
a) Attract highly talented individuals from within and across industries drawing from a
diverse pool of global talent
b) Provide long term and short-term incentives that advance the interests of
shareholders and deliver levels of pay commensurate with performance.
Approach to Pay Benchmarking
The three principal components of the compensation package include, base salary, annual
cash-based variable pay, and equity-based long-term incentives. In making decisions with
respect to each element of compensation, the competitive market for executives and
compensation levels of the comparable companies are considered. Pay practices at companies
with which Dr. Reddy's competes for talent, including those engaged in similar activities
are reviewed from time to time. Our approach is to be market aware and not market driven.
We believe that information regarding pay practices at other companies is useful to assess
the reasonableness and competitiveness of our own.
We generally target executive pay to be within range of 75th percentile of
pay packages for executives in similar positions, responsibilities and/or experience in
similar companies of comparable size.
We identify certain roles that are fungible across multiple industries where our
comparative pool is not limited to peer generic pharmaceutical organisations. In such
cases a wider sample is selected comprising of non-pharma marquee organisations operating
in the country with whom Dr. Reddy's competes for talent.
Review and Increments
Executive compensation is reviewed annually.
Executive increment percentages approach is lesser than the Company average, while the
frontline receiving the highest increase. A higher increase may be made in the event of a
role change, promotion. The Company's performance, affordability, individual performance
and compensation history are other considerations, while deciding on compensation.
Executive Director Compensation
Our executive directors' compensation comprises of a fixed monthly component and a
profit based annual commission based on standalone net profits of the Company. The total
remuneration to be paid to the executive directors is within the limits prescribed under
the provisions of the Companies Act, 2013.
While recommending such a commission, the NGCC also takes into account the overall
corporate performance in a given year in terms of balanced scorecard achievement and the
Key Performance Indicators (KPIs). The considerations include but are not limited to:
Financial metrics covering growth in return on capital employed (RoCE) and profitability;
Non-financial metrics covering aspects such as health, brand building, compliance, quality
and sustainability of operations of the organization, as may be agreed upon from time to
time with the Company.
Perquisites and retirement benefits are paid in accordance with the Company's
compensation policies, as applicable to all employees. The Company, in compliance with
Section 197 of the Act and the SEBI Listing Regulations, does not grant any stock options
to the Executive Directors. No severance fee is payable to them.
In terms of the approval given by the members of the Company, each of the Executive
Directors was entitled to get 0.75% of the net profits of the Company, i.e. Rs. 291.91 Mn
each. However, the Board, on the recommendation of the NGCC approved a fair commission for
the Executive Directors, i.e. Rs. 73.80 Mn and Rs. 131.20 Mn for Mr. K Satish Reddy and
Mr. G V Prasad, respectively.
CEO Compensation
Our CEO compensation comprises of guaranteed cash, shortterm incentives in the form of
variable pay, long-term incentives, retirals, and perquisites. 75% of our CEO's pay is
linked with the Company's performance in terms of balanced scorecard achievement against
plan and long-term incentives from ESOPs. Short Term incentives are tied to the Company
performance against the balanced scorecard and individual performance of the CEO as
determined by the Board of Directors
During the FY2026, Mr. Erez Israeli, Chief Executive Officer, has received an increment
of 5.3% on fixed compensation.
His fixed salary was Rs. 7.3 Cr, with a target variable pay of 100%, and long-term
incentives of value Rs. 15.30 Cr vesting at the end of 3 years.
Performance Management
Our current performance management follows a balanced scorecard approach comprising of
current business performance, Building the future and Health of the Business. The Board of
Directors uses a stringent process to set ambitious financial targets in line with the
strategy of the Company. In addition to the financial targets, the scorecard also has
ambitious strategic objectives across key priority areas, including targets related to
Compliances and Safety matters. The scorecard is proposed by management council to the
Board of Directors for approval before the start of the financial year. Each parameter is
devised into a metric, financial or otherwise and is measured quarterly.
All parameters are scored based on a predetermined grid. Additional considerations such
as wind-falls, impairments and one-offs are measured separately. Our performance
management process is specifically adapted to different employee cohorts based on their
specific needs, the overall principles remain the same across all the models.
Performance evaluation of Management Council ("MC") member's focuses on
achievement of their Business Unit Scorecard. Individual MC evaluation focusses on
achievement of:
a) The BU (Business Unit) scorecard for the year that contributes to the delivery of
the overall Company's strategy
b) Demonstration of desired leadership behaviours and aligned to the overall Company
values
Balanced scorecard performance is measured in constant currencies to reflect
operational performance that can be influenced.
Company Performance for FY2026
Fiscal Year 2026 reflected a resilient performance despite product specific headwinds
and several on-off impacts.
These were mitigated by strong double-digit growth in the underlying base business,
supported by favourable foreign exchange movements and incremental revenues from the
acquired consumer health portfolio in Nicotine Replacement Therapy. We delivered annual
revenues exceeding US$3.58 billion, representing a 3.2% year-over-year growth and US$0.8
billion in EBITDA, with a margin of 22.8%.
These outcomes reflect the strategic leadership and execution capabilities of our
management team, which enabled consistent delivery across key priorities, namely, scaling
the base business, advancing key pipeline programs, pursuing targeted inorganic
initiatives to complement the Company's organic growth ambitions, while continuing to
enhance efficiencies across operations.
Further, our leaders continued to build long-term franchises in biosimilars, consumer
healthcare, and innovation, through disciplined capital allocation and focused
organizational structures
Our commitment to quality, regulatory compliance and sustainability remained unwavering
through the year
Our two-pronged strategy of strengthening the base business, while investing in our
future growth drivers positions us to build a high-performance organisation that delivers
sustainable growth and creates long-term value for our stakeholders.
A brief snapshot of our scorecard performance for FY2026 is given below:
Pillar |
Wt |
Achievement |
Current Business Performance |
45% |
Below Plan |
Building the Future |
35% |
In-line Plan |
Operational Excellence |
20% |
Above Plan |
Overall Evaluation: Performance remained within acceptable levels, though marginally
below stretch targets.
Variable Pay for CEO
Variable Pay is paid based on annual performance target achievements as cash in the
first quarter of the next financial year. The payout range for individual performance is
between 0% to 150%. Overall payout is capped at 300% of target.
FY26 reflected a resilient operating performance, delivering highest ever annual
revenues, amid product-specific headwinds and certain one-time impacts. The underlying
base business continued to deliver double-digit growth. Based on the overall assessment,
the Board of Directors decided on an Annual Incentive payout for the CEO amounting to Rs.
7.28 Cr.
Long Term Incentive Plan for CEO
Majority of the grants are ESOPs granted at fair market value, a small portion is in
the form of Performance modified phantom shares that allows for multiplicative upside
basis performance against defined metrics.
Grants are made annually and they cliff Vesting at the end of 3 years. ESOPs are
exercised at fair market value (at the time of grant) and the Phantom Shares are payable
in cash upon vesting.
Malus and Clawback
Any performance linked compensation paid to Management Committee members is subject to
malus and clawback rules. This means that the NGCC may decide - subject to applicable
law-to retain any unpaid or unvested incentive compensation (malus), or to recover
incentive compensation that has been paid or vested in the past (clawback).
This applies in cases where the payout has resulted from a violation of laws or
conflicts with internal management standards, including Company and accounting policies.
This principle applies to both the short-term Annual Incentive and Long-Term Incentive
(LTI) plans.
Number of Board Meetings
The Board of Directors met six times during the year.
In addition, an annual Board retreat was held to discuss strategic matters. The
intervening gap between the meetings was within the period prescribed under the Act and
the SEBI Listing Regulations. Details of Board meetings and the Board retreat are given in
the chapter on Corporate Governance forming part of this Integrated Report.
Separate Meeting of Independent Directors In terms of requirements under Schedule
IV of the Act and Regulation 25(3) of the SEBI Listing Regulations, four separate meetings
of the Independent Directors were held during FY2026. Further details are mentioned in the
chapter on Corporate Governance forming part of this Integrated Report.
Committees of the Board
As on March 31, 2026, the Board has the following Committees:
i) Audit Committee;
ii) Stakeholders' Relationship Committee;
iii) Nomination, Governance and Compensation Committee;
iv) Sustainability and Corporate Social Responsibility Committee;
v) Risk Management Committee;
vi) Science, Technology and Operations Committee; and
vii) Banking, Authorisations and Allotment Committee
All the recommendations made by the Board committees, including the Audit Committee,
were accepted by the Board. The details of the above Committees are given in the Chapter
on Corporate Governance forming part of this Integrated Report.
Directors' Responsibility Statement
In terms of Section 134(5) of the Act, your Directors state that:
1. Applicable accounting standards have been followed in the preparation of the annual
accounts and that no material departures have been made from the same;
2. Accounting policies have been selected and applied consistently. Judgments and
estimates made are reasonable and prudent, so as to give a true and fair view of the state
of affairs of the Company at the end of the FY2026 and of the profit of the Company for
that period;
3. Proper and sufficient care has been taken to maintain adequate accounting records in
accordance with the provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
4. Annual accounts have been prepared on a going concern basis;
5. Adequate internal financial controls for the Company to follow have been laid down
and these are operating effectively; and
6. Proper and adequate systems have been devised to ensure compliance with the
provisions of all applicable laws and these systems are operating effectively.
Adequacy of Internal Financial Control Systems The Company has in place adequate
internal financial controls with reference to its financial statements.
These controls ensure the accuracy and completeness of the accounting records and the
preparation of reliable financial statements
Enterprise Risk Management ("ERM")
The Company has a Risk Management Committee of the Board, consisting entirely of
Independent Directors. Details of the Committee and its terms of reference are set out in
the chapter on Corporate Governance forming part of this Integrated Report.
The Audit Committee and Risk Management Committee review key risk elements of the
Company's business, finance, operations and compliance, and their respective mitigation
strategies. The Risk Management Committee reviews strategic, business, compliance and
operational risks whereas the Audit Committee reviews issues around ethics and fraud,
internal control over financial reporting (ICOFR), as well as process risks and their
mitigation.
The Company's Risk Management Committee operates under the Company's Risk Management
Policy and focuses on risks associated with the Company's business and compliance matters.
This Committee periodically reviews matters pertaining to risk management. Additionally,
the Enterprise Risk Management (ERM) function helps the Board and the Management to
prioritize, review and measure business risks against a pre-determined risk appetite, and
their suitable response depending on whether such risks are internal, strategic or
external.
During FY2026, focus areas for risk assessment and mitigation included geo-political
risks, inventory, assets, products, cyber security, data security & privacy, ethics
& compliance, quality & regulatory, safety, country, strategic and other key
operating risks.
Related Party Transactions
All related party transactions entered into during the financial year ended March
31,2026 were in the ordinary course of business and on an arm's length basis and were
carried out in compliance with Section 188 of the Companies Act, 2013 and Regulation 23
read with Schedule XII of the SEBI Listing Regulations, as amended.
All related party transactions, including any modifications, are placed before the
Audit Committee for review and approval. Annual omnibus approval is obtained for
repetitive transactions entered into in the ordinary course of business at arm's length
and not material under the SEBI Listing Regulations, and a quarterly statement of such
transactions is placed before the Audit Committee and the Board of Directors for review
and approval. Disclosures relating to related party transactions form part of the notes to
the financial statements included in this Integrated Annual Report.
In line with the requirements of the Act and the SEBI Listing Regulations, your Company
has a Policy on Materiality of Related Party Transactions and Dealing with Related Party
Transactions, which is also available on the Company's website
https://www.drreddvs.com/cms/sites/default/files/
media-librarv/Policv%20on%20Materialitv%20of%20
Related%20Partv%20Transactions%20and%20Dealina%20
with%20Related%20Partv%20Transactions%20%281%29. pdf. The Policy intends to ensure that
proper reporting, approval and disclosure processes are in place for all transactions
between the Company and related parties
In accordance with Section 134(3)(h) of the Act, and Rule 8(2) of the Companies
(Accounts) Rules, 2014, the particulars of the material contracts or arrangements with
related parties referred to in Section 188(1) of the Act, in FormAOC-2 is attached as Annexure
- II to this Board's Report.
Vigil Mechanism/Whistle-Blower/ Ombudsperson Policy
The Company has an Ombudsperson Policy (Whistle-Blower/ Vigil mechanism) to report
concerns. Reporting channels underthe vigil mechanism include an independent hotline, a
web-based reporting site (drreddvs.ethicspoint. coml and a dedicated e-mail to Chief
Compliance Officer.
In addition, concerns may also be submitted in writing by post or courier to the
offices of the Chief Compliance Officer. The Ombudsperson Policy also safeguards against
retaliation of those who use this mechanism. The Audit Committee Chairperson is the Chief
Ombudsperson. The Policy also provides for raising concerns directly to the Chief
Ombudsperson. Details of the Policy are available on the Company's website at:
https://www.drreddvs.com/cms/cms/ sites/default/files/2021-12/Qmbudsperson.pdf
Statutory Auditors
M/s. S.R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No.
101049W/E300004), will complete their second consecutive term as Statutory Auditors at the
conclusion of the 42nd AGM and shall cease to hold office thereafter. The Board
of Directors places on record its deep appreciation for their professional services and
contribution to the Company during their tenure.
Accordingly, based on the recommendation of the Audit Committee, the Board of Directors
has recommended the appointment of M/s Deloitte Haskins & Sells LLP, Chartered
Accountants (Firm Registration No. 117366W/W100018), as the Statutory Auditors of the
Company for a term of five consecutive years, commencing from the conclusion of the 42nd
AGM up to the conclusion of the 47th AGM, subject to approval of the
shareholders. Details relating to their appointment, including proposed remuneration for
FY 2026-27, are set out in the Notice convening the 42nd AGM forming part of
this Integrated Report.
M/s Deloitte Haskins & Sells LLP have confirmed their eligibility and that they
satisfy the criteria prescribed under Section 141 of the Companies Act, 2013, and that
their appointment, if approved, will be in accordance with the applicable provisions of
the Act and the rules made thereunder. They have also confirmed that they have subjected
themselves to the peer review process of the Institute of Chartered Accountants of India
("ICAI") and hold a valid certificate issued by the ‘Peer Review Board of
ICAI'.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 and amended Regulation 24A of the SEBI
Listing Regulations, members at the 41st AGM held on July 24, 2025, appointed
M/s. Makarand M Joshi & Co. Company Secretaries (FRN: P2009MH007000), as the
Secretarial Auditors of the Company, for a term of five consecutive years from April 1,
2025 to March 31, 2030.
In compliance with Regulation 24Aof the SEBI Listing Regulations, the Annual
Secretarial Compliance Report issued by the Secretarial Auditor was submitted to the Stock
Exchanges within the statutory timelines. The Report of the Secretarial Auditor for FY26
is annexed herewith as Annexure - III.
Cost Auditor
Pursuant to Section 148(1) of the Act, read with the relevant Rules made thereunder,
the Company maintains the cost records in respect of its ‘pharmaceuticals' business.
On the recommendation of the Audit Committee, the Board has appointed M/s. Sagar &
Associates, Cost Accountants (Firm Registration No. 000118) as Cost Auditor of the Company
for FY2027 at a remuneration of Rs.9,00,000 (Rupees Nine Lakhs only) plus reimbursement of
out-of- pocket expenses at actuals and applicable taxes. M/s. Sagar & Associates have
confirmed that they are free from disqualification specified under Section 141(3) and
proviso to Section 148(3) read with Section 141(4) of the Act and that the appointment
meets the requirements of the Act.
They have further confirmed their independent status and an arm's length relationship
with the Company.
The provisions of the Act also require that the remuneration of the Cost Auditors be
ratified by the members and therefore, the same is recommended for approval of the members
at the forthcoming 42nd AGM. As a matter of record, relevant Cost Audit Reports
for FY2025 were filed with the Registrar of Companies on August 18, 2025, within the
stipulated timeline. The Cost Audit Report for FY2026 will also be filed within the
timeline.
Auditors' Qualifications, Reservations, Adverse Remarks or Disclaimers
There are no qualifications, reservations, adverse remarks or disclaimers by the
Statutory Auditors in their report, by the Secretarial Auditor in the Secretarial Audit
Report or by the Cost Auditor in the Cost Auditor Report. During the year, there were no
instances of fraud reported by the Statutory Auditors under Section 143(12) of the Act,
other than the instance reported to the Central Government.
Further, the Statutory Auditors have filed a report under sub-section (12) of section
143 of the Companies Act, 2013, in formADT -4 as prescribed under Rule 13 of Companies
(Audit and Auditors) Rules, 2014 with the Central Government relating to misappropriation
of inventory (valued at Rs. ~ 1.96 Crore) which was not material to the financial
statements
Secretarial Standards
In terms of Section 118(10) of the Act, the Company complies with Secretarial Standards
1 and 2, relating to the 'Meetings of the Board of Directors' and ‘General Meetings',
respectively as issued by the Institute of Company Secretaries of India
("ICSI").
The Company has also voluntarily adopted the recommendatory Secretarial Standards 3 on
‘Dividend'.
Significant/ Material Orders Passed by Courts/ Regulators/ Tribunals
During FY2026, there were no significant or material orders passed by the Courts or
Regulators or Tribunals impacting the going concern status and operations of the Company
in the future.
Prevention of Sexual Harassment of Women at Workplace
The Company has a Policy to ensure prevention, prohibition and redressal of sexual
harassment at the workplace. It has an Apex Committee and an Internal Complaints Committee
in compliance with the provisions of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, which operate under a defined framework
for complaints pertaining to sexual harassment at workplace.
The same is available on the Company's website at https://
www.drreddvs.com/cms/sites/default/files/2025-07/PQSI-l%20 Policy.pdf
During the year under review, following is the status of complaints:
Particulars |
Number |
Number of complaints received during FY 2025-26 |
21 |
Number of complaints disposed of during the year |
19 |
Number of cases pending for more than 90 days |
1 |
Corporate Social Responsibility (CSR) Initiatives
As per Section 135 of the Act, the Company has a Board-level Committee namely,
Sustainability and Corporate Social Responsibility (SCSR) Committee. As on March 31, 2026,
the Committee consists of Dr. K P Krishnan (Chairman),
Mr. Sanjiv Mehta, Mr. G V Prasad and Mr. K Satish Reddy.
Based on the recommendation of the SCSR Committee, the Board has adopted a Corporate
Social Responsibility (CSR) Policy that provides guiding principles for selection,
implementation and monitoring of CSR activities and formulation of the annual action plan.
During the year, the Committee monitored the CSR activities undertaken by the Company
including the expenditure incurred thereon as well as implementation and adherence to the
CSR policy.
An impact assessment of the eligible projects has been carried by an independent agency
and the report of such impact assessment was noted by the SCSR Committee and the Board.
Details of the CSR Policy and initiatives taken by the Company during the year are
available on the Company's website at https://www.drreddvs.com/cms/sites/default/
files/2025-07/CSR%20Policv.pdf. The report on CSR activities as well as executive summary
of the impact assessment report are attached as Annexure IV to this Board's Report.
Environmental, Social and Governance (ESG)
We continue to prioritise social impact, delivering positive health outcomes for
patients worldwide by enabling access to affordable and innovative medicines, fostering
diversity, equity, and inclusion in our work environment, integrating environmental
considerations into our operations, and ensuring responsible business practices.
In FY2026, we continued to make progress on our 12 stated ESG goals. During the year,
Science Based Targets initiative (SBTi) has validated our targets which includes:
• Near-term targets: Reduce absolute Scope 1 and 2 GHG emissions by 80% by
FY2030 from FY2023 base year. Reduce Scope 3 emissions by 51.6% per INR value added within
the same timeframe
• Long-term targets: Reduce absolute Scope 1, 2 and 3 GFIG emissions by 90% by
FY2045 from
FY 2023 base year.
• Net-Zero: Achieve net-zero greenhouse gas emissions across the value chain
by FY2045.
To read more about the mitigation strategy for our updated material risks and
opportunities, please refer to page 163 of our Business Responsibility and Sustainability
Report forms part of the Integrated Annual Report. To read more about our ESG progress,
programs, and impact, please refer to the Strategic Review section on Page 24 onwards of
our Integrated Report.
Transfer of Unpaid and Unclaimed Amounts and Shares to the Investor Education and
Protection Fund (IEPF)
Pursuant to the provisions of the Act, read with IEPF Authority (Accounting, Audit,
Transfer and Refund) Rules, 2016, as amended, declared dividends which remained unpaid or
unclaimed for a period of seven years have been transferred by the Company to the IEPF,
which has been established by the Central Government.
The above Rules also mandate transfer of shares on which dividends are lying unpaid and
unclaimed for a period of seven consecutive years to IEPF. The Company has issued
individual notices to the members whose dividend is unclaimed and unpaid and advising them
to claim their dividend. The details of transfer of unpaid and unclaimed amounts and
shares to IEPF are given in the chapter on Additional Shareholders Information forming
part of this Integrated Report.
Employees Stock Option Schemes The Company has three employee stock option schemes
namely, ‘Dr. Reddy's Employees Stock Option Scheme, 2002', ‘Dr. Reddy's
Employees ADR Stock Option Scheme, 2007', and ‘Dr. Reddy's Employees Stock Option
Scheme, 2018' (the "Schemes").
The term of Dr. Reddy's Employees Stock Option Scheme, 2002 ended on January 28, 2022.
However, the options already granted under the 2002 Scheme are eligible for exercise, in
terms of the Scheme. There are no other changes in the said schemes during the year. The
Schemes are in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021.
The details of Company's stock option Schemes as required under Regulation 14 of the
SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are available on
the Company's website at https://www.drreddvs.com/
investor#reports-and-filina#annual-report.
The Company's Secretarial Auditors, M/s. Makarand M. Joshi & Co., Company
Secretaries, have certified that the Employee Stock Option Schemes of your Company have
been implemented in accordance with the Regulations and the resolutions passed by the
Members in this regard.
The details also form part of note 2.25. of the notes to accounts of the standalone
financial statements.
Particulars of Employees
Disclosures pertaining to remuneration and other details as required under Section
197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, are attached as Annexure - V to this Board's
Report.
In terms of Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing
the names and other particulars of the employees drawing remuneration in excess of limits
set out in the said rules forms part of the Integrated Annual Report.
Considering the provisions of Section 136 of the Act, the Integrated Annual Report,
excluding the aforesaid information, is being sent to the members of the Company and
others entitled thereto. The said information is available for inspection by the members
at the registered office of the Company or through electronic mode, during business hours
on working days up to the date of the forthcoming 42nd AGM. Any member
interested in obtaining a copy thereof may write to the Company Secretary in this regard.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
Particulars as prescribed under Section 134(3)(m) of the Act, read with Rule 8(3) of
the Companies (Accounts) Rules, 2014, are attached as Annexure VI to this Board's
Report.
Annual Return
The Annual Return of the Company as on March 31, 2026, in terms of the provisions of
Section 134(3)(a) of the Act, is available on the Company's website at
https://www.drreddvs. com/investor#reports-and-filina#annual-report
Other Statutory Disclosures
• General Disclosure related to Compliance
The Board's Report has been prepared in accordance with Section 134 of the Companies
Act, 2013 and the Companies (Accounts) Rules, 2014, as amended by the Companies (Accounts)
Second Amendment Rules, 2025, effective July 14, 2025.
• Compliance with the Maternity Benefit Act, 1961
The Company has complied with the provisions of the Maternity Benefit Act, 1961 and the
rules made thereunder during the financial year under review
• Disclosure related to Insolvency and Bankruptcy
No application has been filed under the Insolvency and Bankruptcy Code. Consequently,
the requirement to disclose any applications filed or proceedings pending under the
Insolvency and Bankruptcy Code, 2016 during the year, along with their status at the close
of the financial year, is not applicable.
• Disclosure regarding one-time settlement
There was no instance of one-time settlement with any Bank or Financial Institution.
Acknowledgment
Your Directors place on record their sincere appreciation for the significant
contribution made by your Company's employees through their dedication, hard work and
commitment, as also for the trust reposed in your Company by the medical fraternity and
patients. The Board of Directors also acknowledges the support extended by the analysts,
bankers, Government of India and various countries and other government agencies, media,
customers, business partners, members and investors at large.
The Board looks forward to your continued support in the Company's endeavor to
accelerate access to innovative and affordable medicines, because "Good Health Can't
Wait".
For and on behalf of the Board of Directors
K Satish Reddy
Chairman
DIN: 00129701
Place: Hyderabad
Date: May 12, 2026.
|