DR REDDYS Auditors Report

INDEPENDENT AUDITORS'''' REPORT

To the members of Dr. Reddy''''s Laboratories Limited Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Dr. Reddy''''s Laboratories Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss, including Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''''s Responsibility for the Standalone Financial Statements

The Company''''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'''' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'''' judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''''s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2017, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''''s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of subsection (11) of section 143 of the Act, we give in the Annexure 1, a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of written representations received from the directors as on 31 March 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017, from being appointed as a director in terms of section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure 2" to this report;

(g) With respect to the other matters to be included in the Auditor''''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements

- Refer note 2.36 to the standalone Ind AS financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and

iv. The Company has provided requisite disclosures in note 2.27 to these standalone Ind AS financial statements as to the holding of Specified Bank Notes on 8 November 2016 and 30 December 2016 as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management.

Other Matter

The comparative financial information of the Company for the year ended 31 March 2016 and the transition date opening balance sheet as at 1 April 2015 prepared in accordance with Ind AS, included in these standalone Ind AS financial statements, have been audited by the predecessor auditor who had audited the standalone financial statements for the relevant periods. The report of the predecessor auditor on the comparative financial information and the opening balance sheet dated 12 May 2017 expressed an unmodified opinion.

i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company.

ii. The Management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

iii. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

iv. In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors / to a company in which the director is interested to which, the provisions of section 185 of the Companies Act, 2013 apply and hence not commented upon. In our opinion and according to the information and explanations given to us, the Company has made investments and given guarantees / provided security which is in compliance with the provisions of section 186 of the Companies Act, 2013.

v. The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

vi. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

vii. (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'''' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'''' state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax and cess on account of any dispute, are as set out in Appendix 1.

viii. In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowings to a bank or government. There are no dues which are payable to financial institutions. The Company did not have any debenture holders during the year.

ix. In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way of term loans for the purposes for which they were raised. The Company has not raised any money by way of initial public offer / further public offer / debt instruments and hence, not commented upon.

x. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

xi. According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

xii. In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

xiii. According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

xv. According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.

xvi. According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Dr. Reddy''''s Laboratories Limited ("the Company") as of 31 March 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''''s Responsibility for Internal Financial Controls

The Company''''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'''' Responsibility

Our responsibility is to express an opinion on the Company''''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors'''' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Appendix 1 as referred to in paragraph vii (b) of Annexure 1 to the Independent Auditors'''' Report

Name of the Statute	Nature of the dues	Disputed amount in '''' million	Amount paid under protest in '''' million	Period to which the amount relates	Forum where	dispute is pending
		1,632		2001-2017	Appellate Authority	- upto Commissioners
	Excise duty	306		1998-2016	CESTAT
Central Excise Act, 1944		40	265	2002-2008	High Court
		142		2004-2016	CESTAT
		4		2001-2002	High Court
Customs Act, 1962		37		2003-2014	Appellate Authority	- upto Commissioners
	Custom duty	6		2010-2011	High Court
	CENVAT credit of	588		2005-2016	CESTAT
	Service Tax	103		2005-2016	Appellate Authority	- upto Commissioners
	Service Tax	109		2010-2015	CESTAT
Finance Act, 1994		340	143	2005-2016	CESTAT
	Penalty	25		2005-2016	Appellate Authority	- upto Commissioners
		1		2005-2016	CESTAT
	Interest	12		2005-2016	Appellate Authority	- upto Commissioners
		177		2005-2017	Appellate Authority	- upto Commissioners
Central Sales Tax Act and	Sales Tax	119		2002-2013	Sales Tax Appellate "	Tribunal
Sales Tax Acts of various		9	236	2006-2014	High Court
States		42		2007-2014	Appellate Authority	- upto Commissioners
	Penalty	13		2005-2011	Sales Tax Appellate "	Tribunal
				2008-2009,
Income tax Act, 1961	Income tax	1,263	-	2009-2010, 2012-2013	Commissioner of Income Tax (Appeals)
		1	-	2002-2003	Income Tax Appellate Tribunal

for S.R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 101049W/E300004

per Kaustav Ghose

Partner

Membership Number : 57828

Place : Hyderabad

Date : 12 May 2017

We have audited the accompanying standalone financial statements of
Dr. Reddy''''s Laboratories Limited ("the Company"), which comprise the
Balance Sheet as at 31 March 2016, the Statement of Profit and Loss
and the Cash Flow Statement for the year then ended, and a summary of
the significant accounting policies and other explanatory information.

Management''''s Responsibility for the Standalone Financial Statements

The Company''''s Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these standalone financial statements that give
a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the accounting
principles generally accepted in India, including the Accounting
Standards specified under Section 133 of the Act, read with Rule 7 of
the Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair
view and are free from material misstatement, whether due to fraud or
error.

Auditors''''Responsibility

Our responsibility is to express an opinion on these standalone
financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
thereunder.

We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company''''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''''s Directors, as well as
evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements.

Opinion

In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of
affairs of the Company as at 31 March 2016 and its profit and its cash
flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''''s Report) Order, 2016 ("the
Order"), issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure A,
a statement on the matters specified in paragraph 3 and 4 of the
Order, to the extent applicable.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit;

(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books;

(c) The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account;

(d) In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133 of
the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of the written representations received from the
directors as on 31 March 2016 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March 2016
from being appointed as a director in terms of Section 164 (2) of the
Act;

(f) With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating
effectiveness of such controls, refer to our separate report in
"Annexure B"; and

(g) With respect to the other matters to be included in the
Auditors''''Report in accordance with Rule 11 of the Companies (Audit and
Auditors) Rules, 2014, in our opinion and to the best of our
information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements ? Refer Note 2.25 to
the financial statements;

ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
including derivative contracts; and

iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.

The Annexure A referred to in the independent auditors''''report of even
date to the members of Dr. Reddy''''s Laboratories Limited ("the Company")
on the standalone financial statements as of and for the year ended 31
March 2016, we report that:

i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fi xed
assets.

(b) The fixed assets are physically verified by the Management
according to a phased programme designed to cover all the items over a
period of three years which, in our opinion, is reasonable having
regard to the size of the Company and nature of its assets. Pursuant to
the programme, a portion of the fixed assets has been physically
verified by the Management during the year and no material
discrepancies have been noticed on such verification.

(c) According to the information and explanations given to us and on
the basis of our examination of the records of the Company, the title
deeds of immovable properties as disclosed in Note 2.7 to these
standalone financial statements, are held in the name of the Company.

ii. The physical verification of inventory, excluding stocks lying
with third parties, have been conducted at reasonable intervals by the
Management during the year. In respect of inventories lying with third
parties, these have substantially been confirmed by them. The
discrepancies noticed on physical verification of inventory, as
compared to book records were not material.

iii. The Company has granted unsecured loans to one company and two
body corporates covered in the register maintained under Section 189 of
the Companies Act, 2013 ("the Act"). There are no firms, Limited
Liability Partnerships and other parties covered in the register
maintained under Section 189 of the Act.

(a) In respect of the aforesaid loans, the terms and conditions under
which such loans were granted are not prejudicial to Company''''s
interest.

(b) In respect of the aforesaid loans, no schedule for repayment of
principal and payment of interest has been stipulated by the Company.
Therefore, in the absence of stipulation of repayment terms, we don''''t
make any comment on the regularity of repayment of principal and
payment of interest.

(c) In respect of the aforesaid loans, there is no amount which is
overdue for more than ninety days.

iv. In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Section
185 and 186 of the Act, with respect to the loans and investments made
and guarantees and securities provided by it.

v. The Company has not accepted any deposits from the public within the
meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed
thereunder to the extent notified.

vi. We have broadly reviewed cost records maintained by the Company
pursuant to the Rules prescribed by the Central Government under
Section 148(1) of the Act, and are of the opinion that, prima facie,
the prescribed accounts and records have been made and maintained.
However, we have not made a detailed examination of the records with a
view to determine whether they are accurate or complete.

vii. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is generally regular in depositing undisputed statutory dues in respect
of provident fund, employees''''state insurance, income-tax, sales-tax,
service tax, duty of customs, duty of excise, value added tax, cess and
other material statutory dues, as applicable, with appropriate
authorities.

According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund,
employees''''state insurance, income-tax, sales-tax, wealth tax, service
tax, duty of customs, duty of excise, value added tax, cess and other
material statutory dues were in arrears as at 31 March 2016 for a
period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the
records of the Company examined by us, the dues set out in Appendix - 1
in respect of income tax, sales tax, service tax, duty of customs, duty
of excise and value added tax have not been deposited, with the
appropriate authorities, on account of disputes.

viii. According to the records of the Company examined by us and the
information and explanations given to us, the Company has not defaulted
in repayment of loans and borrowings to its bankers. The Company did
not have any debenture holders during the year.

ix. The Company has not raised any monies by way of initial public
offer, further public offer (including debt instruments) and term loans
during the year. Accordingly, the provisions of clause 3(ix) of the
Order are not applicable to the Company.

x. During the course of our examination of the books and records of the
Company, carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations
given to us, we have neither come across any instance of material fraud
by the Company or on the Company by its officers or employees, noticed
or reported during the year, nor have we been informed of any such case
by the Management.

xi. According to the information and explanations given to us and based
on our examination of the records of the Company, the Company has paid/
provided for managerial remuneration in accordance with the requisite
approvals mandated by the provisions of Section 197 read with Schedule
V of the Act.

xii. In our opinion and according to the information and explanation
given to us, the Company is not a Nidhi Company and the Nidhi Rules,
2014 are not applicable to it. Accordingly, provisions of clause 3(xii)
of the Order are not applicable.

xiii. The Company has entered into transactions with related parties in
compliance with the provisions of section 177 and 188 of the Act. The
details of such related party transactions have been disclosed in the
financial statements as required under Accounting Standard 18, Related
Party Disclosures specified under section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.

xiv. According to the information and explanations given to us and
based on our examination of the records of the Company, the Company has
not made any preferential allotment or private placement of shares or
fully or partly convertible debentures during the year.

xv. According to the information and explanation given to us and based
on our examination of the records of the Company, the Company has not
entered into any non-cash transactions with the directors or persons
connected with him. Accordingly, the provisions of clause 3(xv) of the
Order are not applicable.

xvi. The Company is not required to be registered under Section 45-IA
of the Reserve Bank of India Act 1934. Accordingly, the provisions of
the clause 3(xvi) of the Order are not applicable to the Company.

Appendix 1 as referred to in paragraph vii (b) of Annexure A to the
Independent Auditors''''Report

Amount in Period to
which the
Name of the
Statute Nature of dues Forum where the
dispute is pending

Rs.Million amount
relates

1 Commissioner
Appeals 2002-2003

Income Tax
Act, 1961 Income Tax 1 Income Tax
Appellate
Tribunal 1992-1993

9 High Court 1991-1994

1,703 Appellate
Authority - upto
Commissioners 2003-2015
Duty 193
CESTAT 1998-2014

40 High Court 2002-2008

Central
Excise Act,
1944 Interest 7 CESTAT 2006-2012

1 Appellate
Authority - upto
Commissioners 2009-2015

Penalty 74 CESTAT 2004-2014

4 High Court 2002-2008

24 Appellate
Authority - upto
Commissioners 1993-2015

Duty

Customs
Act,1962 6 CESTAT 2009-2010

Penalty - CESTAT 2009-2010

504 CESTAT 2006-2015

CENVAT Credit
of Service Tax 218 Appellate
Authority - upto
Commissioners 2006-2015

- High Court 2005-2008

Finance
Act, 1994 259 CESTAT 2006-2015

Penalty

3 Appellate
Authority - upto
Commissioners 2006-2015

Interest 1 CESTAT 2006-2015

142 Sales Tax
Appellate Tribunal 2002-2013

Tax 501 Appellate
Authority - upto
Commissioners 2002-2016

Central
Sales Tax
Act and 2 High Court 2006-2008
Sales Tax
Acts of
various 43 Appellate
Authority - upto
Commissioners 2002-2016
states
Penalty 13 Sales Tax
Tribunal 2002-2013

- High Court 2006-2008

Out of the total disputed dues, an amount of Rs.336 million has been
paid under protest for sales tax related matters, Rs.130 million has
been paid under protest for service tax related matters and Rs.13
million has been paid for excise related matters.



for B S R & Co. LLP

Chartered Accountants

Firm Registration No.: 101248W/W-100022

Supreet Sachdev

Partner

Membership No.: 205385

Place : Hyderabad

Date : 12 May 2016

We have audited the accompanying standalone financial statements of Dr.
Reddy''s Laboratories Limited ("the Company"), which comprise the
balance sheet as at 31 March 2015, the statement of profit and loss and
the cash flow statement for the year then ended, and a summary of the
significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these standalone
financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
thereunder.

We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''s Directors, as well as
evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements.

Opinion

In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at 31 March 2015 and its profit and its cash flows for the year ended
on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2015 ("the
Order"), issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in paragraph 3 and 4 of the Order,
to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit;

(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books;

(c) The balance sheet, the statement of profit and loss and the cash
flow statement dealt with by this Report are in agreement with the
books of account;

(d) In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of the written representations received from the
directors as on 31 March 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March 2015
from being appointed as a director in terms of Section 164(2) of the
Act; and

(f) With respect to the other matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 2.25 to the
financial statements;

ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long term contracts including derivative contracts; and

iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.

The Annexure referred to in the independent auditors'' report of even
date to the members of Dr. Reddy''s Laboratories Limited ("the Company")
on the standalone financial statements for the year ended 31 March
2015, we report that:

i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.

(b) The Company has a regular programme of physical verification of its
fixed assets by which all the fixed assets are verified in a phased
manner over a period of 3 years. In our opinion, the periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. No material discrepancies were
noticed on such verification.

ii. (a) Inventories, except goods-in-transit and stocks lying with
third parties have been physically verified by the management during
the year. In our opinion, the frequency of such verification is
reasonable. For stocks lying with third parties at the year-end,
written confirmations have been obtained.

(b) In our opinion, the procedures of physical verification of
inventories followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.

iii. (a) The Company has granted unsecured loans to seven subsidiary
companies covered in the register maintained under Section 189 of the
Companies Act, 2013 ("the Act").

(b) In the case of the loans granted to the companies listed in the
register maintained under Section 189 of the Act, the borrowers have
been regular in repaying the principal amounts as stipulated and in the
payment of interest, wherever applicable.

(c) There are no overdue amounts of more than rupees one lakh in
respect of the loans granted to any of the companies, firms and other
parties covered in the register maintained under section 189 of the
Act.

iv. In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories are for the Company''s specialized
requirements and similarly certain goods sold are for the specialized
requirements of the buyers and suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business with regard to purchase of inventories and
fixed assets and with regard to the sale of goods and services. We have
not observed any major weakness in the internal control system during
the course of the audit.

v. The Company has not accepted any deposits from the public.

vi. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
the maintenance of cost records under Section 148(1) of the Act, and
are of the opinion that prima facie the prescribed accounts and records
have been made and maintained. However, we have not made a detailed
examination of the records.

vii. (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/ accrued in the books of account in respect of undisputed
statutory dues including provident fund, employees'' state insurance,
income tax, sales tax, wealth tax, service tax, duty of customs, duty
of excise, value added tax, cess and other material statutory dues have
been generally regularly deposited during the year by the Company with
the appropriate authorities.

According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, employees''
state insurance, income tax, sales tax, wealth tax, service tax, duty
of customs, duty of excise, value added tax, cess and other material
statutory dues were in arrears as at 31 March 2015 for a period of more
than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues
set out in Appendix - 1 in respect of income tax, sales tax, service
tax, duty of customs, duty of excise and value added tax have not been
deposited with the appropriate authorities on account of disputes. As
explained to us, the Company did not have any disputed dues on account
of wealth tax and cess.

(c) According to the information and explanations given to us, the
amounts which were required to be transferred to the investor education
and protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules there under has been
transferred to such fund within time.

viii. The Company does not have any accumulated losses at the end of
the financial year and has not incurred cash losses in the financial
year and in the immediately preceding financial year.

ix. In our opinion and according to the information and explanations
given to us, the Company, has not defaulted in repayment of dues to its
bankers or to any financial institutions, or to debenture holders
during the year.

x. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by others from banks or financial
institutions are not prejudicial to the interests of the Company.

xi. In our opinion and according to the information and explanations
given to us by the management, term loans availed by the Company were
applied for the purposes for which the loans were obtained.

xii. According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.



Name ot the Statute Nature ot dues Amount in
Rs Million

Income Tax Act, 1961 Income Tax 166

9

Central Excise Act, 1944 1,497

Duty 268

35

Interest 7

Penalty 8

Customs Act,1962 , 26

Duty 18


Penalty 16

Interest 1

Finance Act, 1994 271

CENVAT Credit of 317
Service Tax

13

Penalty 206

Central Sales Tax Act and 143
Sales Tax Acts of various
states Tax 152

5

Penalty 45

13

Interest 1

Name of the Statute Forum where the dispute Period to
is pending which the
amount relates

Income Tax Act, 1961 Commissioner Appeals 2002-2006

Income Tax Appellate Tribunal 1992-2009

High Court 1990-1994

Central Excise Act, 1944 Appellate Authority - upto 2004-2015
Commissioners

CESTAT 1998-2013

High court 2002-2010

CESTAT 2004-2008

CESTAT 2004-2008

Customs Act,1962 Appellate Authority - upto 2003-2014
Commissioners

Supreme Court 1992-1999

Supreme Court 1992-1999

Appellate Authority - upto 2014-2015
Commissioners

Finance Act, 1994 CESTAT 2006-2013

Appellate Authority - upto 2006-2015
Commissioners

High Court 2005-2008

CESTAT 2006-2012

Appellate Authority - upto 2011-2014
Commissioners

Central Sales Tax Act and Sales Tax Appellate Tribunal 2008-2009
Sales Tax Acts of various
states Appellate Authority - upto 2004-2013
Commissioners

High Court 2006-2013

Appellate Authority - upto 2008-2013
Commissioners

Sales Tax Tribunal 2005-2011

Appellate Authority - upto 2007-2013
Commissioners

Out of total dues, an amount of Rs. 336 million has been paid under
protest for sales tax related matters, Rs. 117 million has been paid
under protest for service tax related matters, Rs. 18 million has been
paid for custom related matters and Rs. 9 million has been paid for
excise related matters.

for B S R & Co. LLP
Chartered Accountants
Firm Registration No.: 101248W/W-100022

Supreet Sachdev
Partner
Membership No.: 205385
Place : Hyderabad
Date : 12 May 2015