MIRA INFORM REPORT

Report Date :

14^TH June, 2006

IDENTIFICATION DETAILS

Name :	DR REDDY’S LABORATORIES LIMITED
Registered Office :	7-1-27, Ameerpet, Hyderabad – 500 016, Andhra Pradesh, India
Country :	India
Financials (as on) :	31.03.2005
Date of Incorporation :	24.02. 1984
Com. Reg. No.:	01-4507
CIN No.: [Company Identification No.]	L85195AP1984PLC004507
TAN No.: [Tax Deduction & Collection Account No.]	HYDD00080D
Legal Form :	Public limited liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers and Sellers of Bulk Drugs, Formulations and Diagnostic Reagents and Kits.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 80000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
0Comments :	Subject is an old, well-established and reputed company engaged in manufacturing and marketing of pharmaceuticals. The company manufactures wide range of pharmaceutical products in India and overseas. The company is making satisfactory progress in its business and profitability. Directors are well-experienced and resourceful businessmen. Their trade relations are fair. Payments are usually correct and as per commitments. It can be considered good for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	7-1-27, Ameerpet, Hyderabad – 500 016, Andhra Pradesh, India
Tel. No.:	91-40-23731946/23731397/26511723
Fax No.:	91-40-23731955/23734504
E-Mail :	drl@hd1.vsnl.net.in, corpcom@drreddys.com vasudevan@drreddys.com
Website :	http://www.drreddys.com
Corporate Office :	7-1-27, Ameerpet, Hyderabad – 500 016, Andhra Pradesh, India
Tel. No.:	91-40-23731946
Fax No.:	91-40-23731955
Website	http://www.drreddys.com
Plants (In India) :	Bulk Drugs – I, II, III and IV v Plot Nos. 137, 138 & 146, IDA Bollarum, Jinnaram Mandal, Medak District - 502 320, Andhra Pradesh v Plot Nos. 110 & 111, IDA Bollarum, Jinnaram Mandal, Medak District - 502 320, Andhra Pradesh v Plot Nos. 116, IDA Bollarum, Jinnaram Mandal, Medak District - 502 320, Andhra Pradesh v Plot No. 9/A, Phase III, IDA Jeedimetla Ranga Reddy District – 500 055, Andhra Pradesh Bulk Drugs – V v Peddadevulapally, Tripuraram Mandal, Nalgonda District – 508207, Andhra Pradesh, India Bulk Drugs – VI v IDA Pydibheemavaram, Ransthal Mandal, Srikakulam District – 532409, Andhra Pradesh Formulations I – IDA Bollaram Jinnaram Mandal, Medak District – 502320, Andhra Pradesh, India II- Survey No. 42, Bachupally Quthbullapur Mandal, Ranga Reddy District – 500123, Andhra Pradesh, India III – R S No. 63/3 and 63/4, Thiruvandarkoil Mannvipet, Pondicherry – 605102, Tamil Nadu, India IV – Ward – F, Block –4, Adavipolam, Yanam, Pondicherry – 533465, Tamil Nadu, India V – Plot No. A-3 to A-6, Phase 1-A, Verna Industiral Estate, Verna, Goa – 403722 Generics Survey No. 41, Bachupally Quthbullapur Mandal, Ranga Reddy District – 500043, Andhra Pradesh, India Boitech/Critical Care/Diagnostics Survey No.47, Bachupally Quthbullapur Mandal, Ranga Reddy District – 500043, Andhra Pradesh, India Custom Chemical Services/Discovery Research Bollaram Road, Miyapure, Hyderabad – 500050, Andhra Pradesh, India
Plants (Outside India) :	v Dr. Reddy’s Laboratories (UK) Limited Riverview Road, Beverly, East Yorkshire, HU 17 Old, United Kingdom. v Kunshan Rotam Reddy Pharmaceuticals Company Limited Huangpujiangzhonglu Kunshan Economic and Technological Development Zone, Jiangsu province, China v Dr. Reddy’s Laboratories (UK) Limited 208-214, York road, Battersea, London, SW11 3SD, United Kingdom
Overseas Offices :	v Riverview Road, Beverly, East Yorkshire, HU 17 Old United Kingdom v Huangpujiangzhonglu Kunshan Economic and Technologica Development Zone, Jiangsu Province, China v 208-214, York Road, Battersea, London, SW 11-3SD, United Kingdom

DIRECTORS

Dr. K. Anji Reddy	Executive Chairman
Mr. G. V. Prasad	Executive Vice-Chairman & Chief Executive Officer
Mr. Satish Reddy	Managing Director & Chief Operating Officer
Dr. P. Satyanarayana Rao	Director
Dr. V. Mohan	Director
Dr. Omkar Goswami	Director
Mr. Ravi Bhoothalingam	Director
Mr. P. N. Devarajan	Director
Dr. A. Venkateswarlu	Director
Mr. Krishna G. Palepu	Additional Director
Mr. Anupam Puri	Non –executive director
OTHER PERSONNEL:-
Mr. Santosh Kumar Nair	Company Secretary
MANAGEMENT
Dr. K. Anij Reddy	Executive Director
Mr. G. V. Prasad	Executive Vice Chairman & CEO
Mr. K. Satish Reddy	Managing Director and Chief Operation Officer
Mr. V. S. Vasudevan	Chief Financial Officer
Dr. R. Rajagopalan	President
Mr. Arun Sawhney	President
Mr. Abhijit Mukherjee	President
Mr. K. B. Sankara Rao	Executive Vice President
Mr. Saumen Chakraborthy	Executive Vice President
Mr. S. Venkatraman	Senior Vice President
Mr. Vilas M. Dholye	Senior Vice President
Mr. Ashwani Kumar Malhotra	Senior Vice President
Mr. C. V. Narayana Rao	Vice President
Mr. Ranjan Chakraborthy	Vice President
Dr. N. R. Srinivas	Vice President
Dr. Javed Iqbal	Distinguish Research Scientist
Mr. Jaspal Singh Bajwa	President
Dr. Jayaram Chigurupati	Executive Vice President
Dr. G. Om Reddy	Senior Vice President
Mr. B. R. Reddy	Senior Vice President
MR. Arvind Vasudeva	Vice President
Dr. M. Satyanarayana Reddy	Vice President
Dr. R. Buchi Reddy	General Manager

KEY EXECUTIVES

Name	Mr. K. Satish Reddy
Designation	Managing Director & Chief Operating Officer
Age	33 years
Qualification	B. Tech., M. S.
Experience	9 years
Date of Joining	18^th January, 1993
Previous Employment	Director – Globe Organics Limited
Other Directorships	1. Diana Hotels Limited 2. DRL Investments Limited 3. Compact Electric Limited 4. Cheminor Investments Limited

Name	Dr. K. Anji Reddy
Designation	Executive Chairman
Age	61 years
Qualification	B. Sc. (Tech.), Ph. D.
Experience	31 years
Date of Joining	1^st September, 1986
Previous Employment	Managing Director – Standard Organics Limited
Other Directorships	1. Diana Hotels Limited 2. ICICI Venture Funds 3. Deccan Hospitals Corporation Limited 4. Biotech Consortium India Limited 5. Viral Therapeutic, Inc.

Brief Profile of Dr. K. Anji Reddy:

He is the founder and the Executive Chairman of Dr. Reddy’s Laboratories Limited. He is also the founder of the Dr. Reddy’s Group, Dr. Reddy’s Research Foundation and Dr. Reddy’s Foundation for Human and Social Development. He is the chairman of the Academy of Human Resources Development and chairman of the Research and Development Committee of the Federation of Indian Chamber of Commerce and Industry (FICCI). He is a member of both the Board of Trade and the Task Force on pharmaceuticals and knowledge-based industries, which was instituted by the Prime Minister. He has been recently honoured with the Padmashree by the Government of India, for his distinguished service in the field of trade and commerce.

MAJOR SHAREHOLDERS

Category	No. of shares	% of shareholding
promoters' holdings
Individuals	2246894	2.94
Companies	17461730	22.82
Directors	700	--
Sub Total	19709324	25.76
Indian Financial Institutions	5785844	7.56
Banks	89458	0.12
Mutual funds	2061063	2.69
Foreign Holdings
Foreign Institutional Investors	15964503	20.86
NRIs	1933438	2.53
GDRs/ADSs	20490993	26.78
Others	850000	--
Indian Public and Corporates	10483226	13.70
Sub Total	76518949	100.00
Indian Public and Corporate	11912687	15.57
Grand Total	76515948	100.00

BUSINESS DETAILS

Line of Business :	Manufacturers and Sellers of Bulk Drugs, Formulations and Diagnostic Reagents and Kits.
Products :	Item Code No. [ITC Code] 29419003 Product Description Ciprofloxacin Hydrochloride Item Code No. [ITC Code] 29420001 Product Description Norfloxacin Item Code No. [ITC Code] 30049038 Product Description Omerprazole

PRODUCTION STATUS

Class of Goods	Unit	Licensed Capacity	Installed Capacity	Actual Production
Formulations	Million Units	2806.95	2806.95	2117.72
Active Pharmaceutical ingredients and intermediates [API]	Tones	6941	4068	3153
Generics	Million Units	5550	5550	1285.28
Diagnostic reagents and kits	Units	600000	600000	10667
Biotechnology – on single shift basis	Grams	370	340	14.79

GENERAL INFORMATION

No. of Employees :	1449
Bankers :	v Allahabad Bank, Industrial Finance Branch, Secunderabad, Andhra Pradesh, India v Bank of Baroda, Khairatabad Branch, Hyderabad, Andhra Pradesh, India v Canara Bank, Basheerbagh, Hyderabad, Andhra Pradesh, India v Citibank, Hyderabad, Andhra Pradesh, India v Global Trust Bank, Secunderabad, Andhra Pradesh, India v HDFC Bank, Hyderabad, Andhra Pradesh, India v The Hongkong & Shanghai Banking Corporation Limited, Hyderabad, Andhra Pradesh, India v State Bank of Hyderabad, Overseas Branch, Hyderabad, Andhra Pradesh, India v State Bank of India, Industrial Finance Branch, Hyderabad, Andhra Pradesh, India v State Bank of Mysore, Industrial Finance Branch, Hyderabad, Andhra Pradesh, India v Standard Chartered Grindlays Bank Limited, Hyderabad, Andhra Pradesh, India
Facilities :	Secured loan Others Cash Credit 319.394 Loan from Indian Renewable Energy Development Agency Limited 36.985 356.379 Unsecured loan Foreign currency loan notes 146.738 Sales Tax Deferment Loan from the Government of Andhra Pradesh (Interest Free) 79.108 Short – term loans from Banks Overdraft -- Total 225.846

Banking Relations :	Good
Auditors :	Bharat S. Raut & Company Chartered Accountants
Associates :	v Pathnet India Private Limited v Aurantis Farmaceutica Ltda v Compact Electric Limited v APR LLC v Standard Organics Limited v Dr. Reddy’s Exports Limited v Sol Pharmaceuticals Limited
Subsidiaries :	v OOO JV Reddy Biomed Limited, Russia v Reddy Pharmaceuticals Hong Kong Limited, Hong Kong v Dr. Reddy’s Laboratories Inc., USA v Reddy’s Cheminor S.A., France v Reddy Antilles N.V. v Aurigene Discovery Technologies Limited, India v Dr. Reddy’s Laboratories {EU} Limited, UK [Formerly known as BMS Laboratories Limited, UK] v Dr. Reddy’s Laboratories {EU} Limited, UK [Formerly known as Meridian Healthcare, UK] v Chemnior Investments Limited, India v DRL Investments Limited, India v OOO Dr. Reddy’s Laboratories Limited v Dr. Reddy’s Laboratories [Proprietory] Limited, South Africa v Dr. Reddy’s Biosciences Limited v Reddy Netherlands B.V. , Netherlands v Reddy Pharmaceuticals Singapore Pte. Limited, Singapore v Reddy US Therapeutics Inc., USA v AMPNH Inc. v Zenovus Biotech Private Limited, India v Compact Electric Limited, India v Dr. Reddy’s Pharmaceutical Do Brasil LTDA v Kunshan Rotam Reddy Pharmaceutical Company Limited v Globe Enterprises [a partnership firm in India] v BMU Laboratories Limited v Meridian Healthcare (U.K.) Limited
Membership :	Confederation of Indian Industry

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
100000000	Equity Shares	Rs. 5/- each	Rs. 500.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
76519149	Equity Shares	Rs. 5/- each	Rs. 382.596 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2005	31.03.2004	31.03.2003
SHAREHOLDERS FUNDS
1] Share Capital	382.600	382.595	382.580
2] Reserves & Surplus	20358.200	20087.566	17686.622
NETWORTH	20740.800	20470.161	18069.202
LOAN FUNDS
1] Secured Loans	32.700	356.379	42.905
2] Unsecured Loans	2699.700	225.846	244.654
TOTAL BORROWING	2732.400	582.225	287.559
DEFERRED TAX LIABILITIES	0.000	422.582	423.468
GRAND TOTAL	23473.200	21474.968	18780.229
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	5625.400	4580.983	3957.636
Capital work-in-progress	601.300	1052.469	514.067
INVESTMENTS	3584.600	6120.511	1566.374
CURRENT ASSETS, LOANS & ADVANCES
Inventories	3038.100	2580.110	2401.168
Sundry Debtors	4176.400	4440.462	4324.515
Cash & Bank Balances	8917.200	4080.832	6884.002
Loans & Advances	2679.000	2114.856	1868.143
Total Current Assets	18810.700	13216.260	15477.828
Less :
Current Liabilities	4515.000	2913.942	2183.378
Provisions	633.800	581.313	552.298
Total Current Liabilities	5148.800	3495.255	2735.676
Net Current Assets	13661.900	9721.005	12742.152
MISCELLANEOUS EXPENSES	0.000	0.000	0.000
GRAND TOTAL	23473.200	21474.968	18780.229

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Sales Turnover [including other income]	17299.700	17423.711	15750.606
Profit/(Loss) Before Tax	443.600	3033.438	4311.603
Provision for Taxation	(211.000)	201.475	390.677
Profit/(Loss) After Tax	654.600	2831.960	3920.926
Export Value	NA	9854.318	9252.582
Import Value	NA	2186.677	1634.434
Total Expenditure	16424.100	14390.273	11436.003

SUMMARISED RESULTS

Particulars	31.03.2006 Full Year
Sales Turnover	20058.500
Other Income	1230.700
Total Income	21289.200
Total Expenditure	17324.000
Operating Profit	3965.200
Interest	214.200
Gross Profit	3751.000
Depreciation	1113.300
Tax	207.100
Reported PAT	2111.300

KEY RATIOS

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Debt Equity Ratio	0.08	0.02	0.01
Long Term Debt Equity Ratio	0.01	0.01	0.01
Current Ratio	2.64	3.73	4.86
TURNOVER RATIOS
Fixed Assets	1.79	2.33	2.55
Inventory	5.79	6.99	7.44
Debtors	3.78	3.97	3.64
Interest Cover Ratio	4.48	72.71	72.27
Operating Profit Margin (%)	9.19	21.80	31.16
Profit Before Interest and Tax Margin (%)	3.51	17.67	27.35
Cash Profit Margin (%)	9.71	20.40	28.34
Adjusted Net Profit Margin (%)	4.02	16.27	24.53
Return on Capital Employed (%)	2.56	15.61	26.44
Return on Net Worth (%)	3.18	14.70	24.02

STOCK PRICES

Face Value	Rs. 5.00
High	Rs. 929.00
Low	Rs. 922.00

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company was incorporated on 24^th February 1984 as a Private Limited Liability Company at Hyderabad in Andhra Pradesh having Company Registration Number 4507 and was converted into a Public Limited Liability Company on 2^nd November 1985.

Subject is a leading Indian pharmaceutical company with vertically integrated operations. The company develops, manufactures and markets a wide range of pharmaceutical products in India and overseas. It produces finished dosage forms, active pharmaceutical ingredients, diagnostic kits, critical care and biotechnology products. The company has over 190 finished dosage brands and 60 active pharmaceutical ingredients currently in production.

The company actively pursues a basic research programme under the aegis of Dr. Reddy’s Research Foundation (DRF). DRF focuses on cancer, diabetes, bacterial infections and pain management. The company has several pharmaceutical products in development, three of which are in clinical trials and two had completed pre-clinical testing.

The merger with Cheminor Drugs (the swap ratio at nine shares of company for 25 shares of Cheminor), had made DRL the third largest pharmaceutical company in India with participation in every element of the value chain. DRL is a major player in the domestic finished dosages market and many of its brands are leaders. The company has a formidable presence in the highly regulated markets of the U.S.A., the Europe and Japan and it exports its’ products to 60 countries.

The company has two US-FDA approved plants. It has been exporting its products to the UK, Switzerland, Germany, Spain, Italy and The Netherlands. It also started exporting its formulations in a big way to Russia and has set up an office there. DRL has signed a joint venture agreement with the Khetan Group, Nepal, for setting up a joint venture for the manufacture and marketing of finished formulations in Nepal and other neighbouring countries. It also signed a marketing and distribution agreement with Organics, Israel, for a wide range of sophisticated diagnostic kits. The products are recognised by World Health Organisation and other leading organisations in the healthcare industry.

In May 2002, DRL has completed phase I clinical trials on its anti-cancer compound DRF-1042. This is company’s first new chemical entity (NCE) in the cancer area.

The company issued 4,301,076 GDSs representing 4,301,076 equity shares of the company, par value Rs.10 ("Shares"), in a private placement in 1994 pursuant to Regulation S and Rule 144A under the Securities Act of 1933 (the "Securities Act"). The GDSs are listed on the Luxembourg Stock Exchange and each GDS represents one Share. As of May 4, 2001, there were 1,789,285 GDSs outstanding representing 1,789,285 Shares.

The company entered the global generic market with exports of Ranitidine-75 mg and Fluoxetine to North America.

The company has entered into an exclusive co-marketing and development agreement with Par Pharmaceuticals Inc. covering fourteen generic pharmaceutical products. This will strengthen the company's position in the US generic market and it will get a substantial cost advantage on account of its vertical integration capabilities. The company unveiled its new corporate identity and philosophy - "Life, Research, Hope"- reinforcing its commitment of bringing hope to life through research. Its new identity also highlights the company's ethos - a caring organisation that leverages its expertise in research for a healthier life.

In April 2001, as a first step towards taking its molecules through clinical development on its own, the company had selected Simbec Research Limited, a well-known U.K.-based Clinical Research Organization (CRO), for conducting clinical trials of DRF 4832. DRF 4832 was a PPAR against for treatment of cardiovascular complications.

In April 2001, the company began trading on the New York Stock Exchange (code : RDY). The price to the public per ADS was $ 10.04. Total amount raised (net) was $ 124 million.

In May 2001, Novartis Pharma AG and the company announced that they had entered a licensing agreement for a novel anti-diabetes agent. Under terms of the agreement, the company will grant Novartis worldwide exclusive right to development and commercialisation of their insulin sensitiser DRF 4158 in type 2 diabetes, in return for upto USD 55 million in upfront and milestone payments for specific clinical and regulatory end points, as well as royalties. The Company would have co-promotion rights for DRF 4158 in India. The agreement has received US regulatory clearance and had become effective from July 30, 2001. This event had triggered an upfront payment of 5 millions US$ from Novarties. The company had received this payment.

The company’s 9 products were awaiting USFDA approval with brandmarket value of US$ 10.4 billion and it plans to file 11 ANDAs in FY 02 with brand market value of $ 8.9 billion. In May 2002, The company has completed phase I clinical trials on its anti-cancer compound DRF-1042. This was companies first new chemical entity (NCE) in the cancer area.

With the approval of shareholders the face value of the company shares has been reduced to Rs. 5/- per share. The scheme of merger with erstwhile American Remedies Limited was fully completed and shares were exchanged for one share of the company for every 12 shares in erstwhile ARL.

The company has expanded the installed capacity of formulations, bulk drugs and generics during the year 2002-03 by 1.3 million units, 546 tonnes and 1950 million (units), respectively. With this expansion the total capacity had been risen to 2137.3 million (units), 3859 tonnes, 5550 million (units) respectively.

The year 2003 was significant to the company as it was poured by Awards. The company has got many awards during the year which includes the National Award for best presented accounts in Annual Reports for the financial year 2001-02 from ICAI.

The company has expanded the installed capacity of Formulations and Bulk Drugs during the year 2003-04 by 669650000 (Nos) and 209 Tonnes respectively. Consequent of this expansion the total capacity has risen to 2806950000 (Nos) in respect of Formulations and 4068 Tonnes in respect of Bulk Drugs.

It is in trade terms with :-

v Godavari Plasto Containers Private Limited

v Super Olefins (Private) Limited

v Murthy’s Lab Glass Works

v Ability Engineering Equipments

v Vinayak Metal Labs

v Hyderabad Security and Offset Printers

v Lisa Ampoules and Vials (Private) Limited

v Tirumula Comprints Private Limited

v Secunderabad Printed Cartons

v Vivala Cartons Private Limited

v Apex Drugs and Intermediates Limited

v Paper Pack Industries

v Walnut Packaging Private Limited

v Regal Packaging

v Sigachi Chloro Chemicals Private Limited

v PCR Metacaps

v Sree Deepti Packaging Industries

v Susheel Enterprises

v Milan Art Printers

v Temple Packaging (Private) Limited

v Madhavi Engineering Company

v Nagoor Services

v Sree Industrial Services

v Veer Chemi And Aromatics

v Tarus Chemicals

v Surya Industrial Equipments

v Sree Deepthi Packing Industries

v Class Packaging

v Dakshin Packaging Private Limited

v Indras Agencies Limited

v Srikals Graphics

v Esjay Polyproducts Private Limited

The company has joint venture with :-

v Kunshan rotam Reddy Pharmaceutical Company Limited

The company’s fixed assets of important value include Land, Factory Buildings, Leasehold Buildings, Plant & Machinery, Electrical Equipments, Laboratory Equipments, Furniture & Fixtures, Patents & Trademarks, Vehicles and Library.

PRESS RELEASES:

Hyderabad, India, November 8, 2005

Dr. Reddy’s signs definitive agreement to acquire Roche’s API business at it’s Mexico facility

Hyderabad, India, November 8, 2005: Dr. Reddy’s Laboratories Limited (NYSE: RDY) announced today that the Company has entered into a definitive agreement to acquire Roche’s API business at the state-of-the-art manufacturing site in Cuernavaca, Mexico including all employees and business supply contracts. The total investment outlay is about USD 59 million including working capital.

This business involves the manufacture and sale of APIs including intermediates to Roche and other Innovator Companies. The product portfolio currently comprises about 18 products including mature APIs and a range of intermediates and steroids. This acquisition also adds unique steroids manufacturing capabilities to Dr. Reddy’s. The Cuernavaca site at Mexico currently employs nearly 340 people and has been inspected by the U.S.FDA and other international regulatory agencies.

Commenting on the acquisition, GV Prasad, CEO, Dr. Reddy's Laboratories, said, “With the acquisition of Roche’s API business at the Mexico site, Dr. Reddy’s will emerge as a leading player in Custom Pharmaceutical Services (CPS) business and position itself as a partner of choice for Innovator Companies across the globe with service offerings spanning the entire value chain of pharmaceutical services. This strategic acquisition provides an opportunity for their CPS business to grow from the current base of USD10 million to USD100 million over the next 18 months. The integration of these businesses - people and technology; the expertise of the management team and distinctive manufacturing capability at the Mexico site, with that of Dr. Reddy’s strengths in process chemistry and world class research capabilities will provide a strong foundation to drive the next wave of growth in their CPS business.

The acquisition is expected to be completed by end of December 2005. The Company expects the acquisition to be EPS accretive to Dr. Reddy’s and the full year financial impact of the acquisition will be realized from the year 2006-07 onwards.

About Dr. Reddy’s

Established in 1984, Dr. Reddy's Laboratories (NYSE: RDY) is an emerging global pharmaceutical company with proven research capabilities. The Company is vertically integrated with a presence across the pharmaceutical value chain. It produces finished dosage forms, active pharmaceutical ingredients and biotechnology products and markets them globally, with focus on India, US, Europe and Russia. The Company conducts research in the areas of diabetes, cardiovascular, anti-infectives, inflammation and cancer.

About Roche

Headquartered in Basel, Switzerland, Roche is one of the world’s leading research-focused healthcare groups in the fields of pharmaceuticals and diagnostics. As a supplier of innovative products and services for the early detection, prevention, diagnosis and treatment of disease, the Group contributes on a broad range of fronts to improving people’s health and quality of life. Roche is a world leader in diagnostics, the leading supplier of medicines for cancer and transplantation and a market leader in virology. In 2004 sales by the Pharmaceuticals Division totalled 21.7 billion Swiss francs, while the Diagnostics Division posted sales of 7.8 billion Swiss francs. Roche employs roughly 65,000 people in 150 countries and has R&D agreements and strategic alliances with numerous partners, including majority ownership interests in Genentech and Chugai. Additional information about the Roche Group is available on the Internet (www.roche.com).

Disclaimer

This press release includes forward-looking statements, as defined in the U.S. Private Securities Litigation Reform Act of 1995. They have based these forward-looking statements on their current expectations and projections about future events. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such factors include, but are not limited to, changes in local and global economic conditions, their ability to successfully implement their strategy, the market acceptance of and demand for their products, their growth and expansion, technological change and their exposure to market risks. By their nature, these expectations and projections are only estimates and could be materially different from actual results in the future.

Hyderabad, India, October 29, 2005

Dr. Reddy’s reports Q2 FY06 revenue of Rs. 5,803 million; YoY growth of 7%
Net income increases by 72% to Rs. 890 million

Hyderabad, India, October 29, 2005: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited financial results for the second quarter ended September 30, 2005.

Key highlights

• Revenues at Rs 5.8 billion, a growth of 7% over Q2 FY05. Highest revenue base in the previous sixteen quarters.
• Net profit increases by 72% to Rs 890 million. This translates to a diluted EPS of Rs 11.61 as against Rs 6.75 in Q2 FY05.
• Overall revenue growth driven by increase in revenues from all businesses excluding North America Generics
• Revenues from Active Pharmaceutical Ingredients (API) business increase by 17% to Rs 2,130 million. This increase was driven by the 22% growth in international segment led by higher sales from sertraline & terbinafine.
• Revenues from Branded Formulations business increase by 11% to Rs 2,576 million. Revenues in India increase by 12% to Rs 1,507 million. Revenues in International segment increase by 10% to Rs 1,069 million, driven by 39% growth in Other CIS markets.
• Revenues from Europe generics finished dosage segment increase by 46% to Rs 473 million led by higher price realizations for key products of omeprazole and amlodipine maleate as well as the launch of terbinafine.
• The pricing pressure in the U.S. Generics market continued in the second quarter. As a result of the intense competition,  revenues from fluoxetine and tizanidine declined sharply leading to an overall decline in revenues from North America  generics segment to Rs 299 million in Q2 FY06 from Rs 715 million in Q2 FY05.
• Revenues in the high margin Custom Pharmaceutical Services business increase by 24% to Rs 121 million in Q2 FY06.

INCOME STATEMENT FOR THE QUARTER ENDED SEPTEMBER 30, 2005

All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = Rs 43.94

EXTRACT FROM THE UNAUDITED INCOME STATEMENT

(1) Reduction of Rs 155 million under the Generics R&D partnership deal with ICICI Venture

Active Pharmaceutical Ingredients (API)

· Revenues increase by 17% to Rs 2,130 million as against Rs 1,821 million in Q2 FY05.

· Revenues in India increase by 5% to Rs 578 million as against Rs 553 million in Q2 FY05.

· Revenues outside India increase by 22% to Rs 1.6 billion. Contributes 73% to overall segment revenues as against 70% in Q2 FY05.

· Sales from Europe increase by 55% to Rs 338 million. This growth was primarily driven by launch of terbinafine contributing to sales of Rs 65 million.

· Sales from North America decline by 6% to Rs 490 million from Rs 523 million in Q2 FY05. This decrease was on account of decline in sales of key products offset by higher sales of sertraline.

· Sales from other international markets (excluding North America and Europe) increase by 37% to Rs 724 million. This increase was driven by higher sales of sertraline and terbinafine partially offset by decrease in sales of amlodipine maleate.

· The Company filed 1 US DMF during the quarter taking the total filings to 78. In addition to this, the Company filed 2 Europe DMF’s and 4 Canada PMF’s

Generic Finished Dosages

· Revenues in this segment at Rs 773 million as against Rs 1,043 million in Q2 FY05.

· Europe contributed 61% to the total revenues and North America contributed the balance 39%.

· Revenues in Europe increase by 46% to Rs 473 million as against Rs 324 million in Q2 FY05. The growth was primarily driven by higher price realizations for omeprazole and amlodipine maleate as well as launch of terbinafine. Combined revenues from omeprazole and amlodipine maleate at Rs 295 million as against Rs 148 million in Q2 FY05. Launch sales of terbinafine at Rs 65 million.

· Revenues in North America at Rs 299 million as against Rs 715 million in Q2 FY05. On account of the intense competition, combined revenues from fluoxetine capsules and tizanidine tablets declined to Rs 93 million from Rs 436 million in Q2 FY05. Products launched after September 2004 contributed revenues of Rs 34 million.

· During the quarter, the Company filed 5 ANDAs. The Company also received approval for two ANDAs during the quarter. This takes the total ANDAs pending at the USFDA to 50.

Branded Finished Dosages - International

· Revenues at Rs 1.1 billion, an increase of 10% over Q2 FY05. This increase was primarily driven by growth in Russia & CIS markets.

· Revenues in other CIS markets increase by 39% to Rs 203 million as against Rs 146 million in Q2 FY05. This growth was primarily driven by Ukraine and Kazakhstan.

· Revenues in Russia increase by 10% to Rs 644 million as against Rs 587 million in Q2 FY05. This growth was driven by the performance of key brands of Nise, Ketorol and Omez.

· Revenues in Central Eastern Europe increase by 19% to Rs 51 million as against Rs 43 million in Q2 FY05. This increase was mainly on account of growth in Romania partially offset by decline in revenues from Albania.

· Revenues in other international markets decrease by 12% to Rs 171 million as against Rs 195 million in Q2 FY05. This was primarily on account of decrease in sales from Venezuela and United Arab Emirates.

Branded Finished Dosages- India

· Revenues at Rs 1.5 billion, an increase of 12% over Q2 FY05.

· This growth was led by the performance of key brands of Stamlo Beta, Atocor and Razo as well as revenues from new products launched during the quarter.

· During the quarter, the Company launched eight new products contributing revenues of Rs 12 million.

Other Businesses

· Revenues from Custom Pharmaceutical Services business increase by 24% to Rs 121 million from Rs 98 million in Q2 FY05.

· Revenues in the Oncology segment increase by 56% to Rs 203 million.

Income Statement Highlights

· Gross profit margins for Q2 FY06 at 52% are comparable with the gross profit margins in Q1 FY06. However, compared to Q2 FY05, gross profit margins on total revenues at 52% as against 55% in Q2 FY05. This decline in gross margins is on account of decrease in contribution of revenues from North America Generics to the total revenues.

· Investments in R&D at 8% of total revenues as against 12% in Q2 FY05. R&D investments for Q2 FY06 decrease by 29% to Rs 444 million from Rs 627 million in Q2 FY05. During the quarter, the Company recognized Rs 155 million as income under the R&D partnership deal with ICICI Venture. Excluding this benefit, R&D investments decreased by Rs 28 million. This decrease is on account of lower bio-study expenses in Generics.

· Selling, General & Administration (SG&A) expenses increased by 2% to Rs 1,768 million. As a % to revenues, SG&A expenses are at 30% of total revenues as against 32% in Q2 FY05.

· Other income (net) increased to Rs 169 million from Rs 137 million in Q2 FY05. This includes net interest income of Rs 140 million.

· Depreciation for the quarter was at Rs 279 million as against Rs 238 million for Q2 FY05.

· Net income at Rs 890 million (15% of total revenues) as against Rs 517 million (10% of total revenues) in Q2 FY05. This translates to a diluted EPS of Rs 11.61 as against Rs 6.75 in Q2 FY05.

About Dr. Reddy’s

Established in 1984, Dr. Reddy's Laboratories (NYSE: RDY) is an emerging global pharmaceutical company with proven research capabilities. The Company is vertically integrated with a presence across the pharmaceutical value chain. It produces finished dosage forms, active pharmaceutical ingredients and biotechnology products and markets them globally, with focus on India, US, Europe and Russia. The Company conducts research in the areas of diabetes, cardiovascular, anti-infectives, inflammation and cancer.

Disclaimer

This press release includes forward-looking statements, as defined in the U.S. Private Securities Litigation Reform Act of 1995. They have based these forward-looking statements on their current expectations and projections about future events. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such factors include, but are not limited to, changes in local and global economic conditions, their ability to successfully implement their strategy, the market acceptance of and demand for their products, their growth and expansion, technological change and their exposure to market risks. By their nature, these expectations and projections are only estimates and could be materially different from actual results in the future.

Contact Information

Investors and Financial Analysts:

Nikhil Shah at nikhilshah@drreddys.com or on +91-40-55511532

Media

M Mythili at mythilim@drreddys.com or on +91-40-55511620

Notes

1. In line with global disclosure standards, the company commenced reporting its financials on a consolidated basis since Q2      FY03.

2. Current quarter financial discussions below are on a consolidated basis as per the US GAAP.

3. Detailed analysis of the financials is available on the Company’s website at www.drreddys.com

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 45.89
UK Pound	1	Rs. 84.65
Euro	1	Rs. 57.78

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	6
--RESERVES	1~10	8
--CREDIT LINES	1~10	7
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		60

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions