Your Directors are pleased to present the 41^st Annual Report, highlighting the Business Performance along with the Audited Financial Statements for the financial year ended March 31, 2025. 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 FY2025 (i.e. from April 1, 2024 to March 31, 2025) compared to the previous financial year.

The Company's consolidated total income for the year was ' 337.4 billion, which was up by 17% over the previous year. Profit before tax (PBT) was ' 76.8 billion, representing an increase of 7% over the previous year.

The Company's standalone total income for the year was ' 241.2 billion, which was up by 19% over the previous year. PBT was ' 72.4 billion, which was higher by 25% 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 18% and stood at ' 289.8 billion. All geographies, i.e. North America, Europe, India and Emerging Markets, contributed towards the growth, which was further augmented by the contributions from the recently acquired Consumer Healthcare business in Nicotine Replacement Therapy ('NRT').

Revenues from North America stood at ' 145.2 billion, registering a year on year growth of 12%. This was largely

on account of increase in volumes for some of our existing products, partially offset by price erosion in some of our products. During the year, the Company filed ten Abbreviated New Drug Applications ('ANDAs') in the United States (US).

As of March 31, 2025, there were 76 generic filings awaiting approval with the US Food and Drug Administration (USFDA), comprising 73 ANDAs and three New Drug Applications filed under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act.

Revenues from Emerging Markets were ' 54.8 billion, a year-on-year growth of 13%. The growth was attributable to higher base business volumes, new launches, partially offset by adverse forex.

Revenues from India stood at ' 53.7 billion, a year-on-year growth of 16%. Growth was driven by revenues from the vaccine portfolio in-licensed from Sanofi India, new product launches and price increases, partially offset by lower volumes.

Revenues from Europe were ' 35.9 billion, a year-on-year growth of 75%. The growth was primarily on account of revenues from the acquired NRT business, momentum in the base business volumes and new product launches, partially offset by price erosion.

Revenues from Pharmaceutical Services and Active Ingredients (PSAI) stood at ' 34.5 billion, which was higher by 14% compared to previous year. Growth was due to increase in Active Pharmaceutical Ingredients ('API') volumes, new launches of API products, partially offset by lower prices.

This was further augmented by growth in the pharmaceutical services business. During the year, the Company filed 111 Drug Master Files (DMFs) worldwide, including 14 filings in the US.

Sub-Division/ Split of Equity Shares

During the period under review, the Board of Directors of your Company approved the sub-division/split of equity shares. Consequently, each equity share bearing a face value of ? 5.00 (Rupees Five only) each, fully paid-up, was sub-divided into five (5) equity shares with a face value of ?1.00 (Rupee One only) each, fully paid-up.

Furthermore, the shareholders, through a resolution passed via postal ballot on September 12, 2024, approved the aforementioned sub-division/split of equity shares and the consequential alteration in the existing Capital Clause of the Memorandum of Association (MOA) of your Company.

After the requisite approvals of the Stock Exchanges i.e.

BSE and NSE and the depositories i.e. NSDL and CDSL, new ISIN (INE089A01031) was allotted to your Company.

The effect of change in face value of the share was reflected in the share price at the Stock Exchanges where your Company is listed (BSE and NSE) effective from October 28, 2024 i.e. record date for the purpose of sub-division/ split of equity shares of your Company.

As a result of the sub-division/ split of equity shares of your Company, it has become more affordable. This move has been positively received by the retail shareholders, giving them an opportunity to be a part of the Company's value creation journey.

Accordingly, the capital structure of your Company pre and post sub-division as set out below as on October 28, 2024:

Note:1. The difference between issued and paid-up capital is due to forfeiture of 200 shares of ' 5/- each, pre sub-division, resulting in 1000 shares of ' 1/- each, post sub-division.

2. /4s on March 31, 2025, Authorised share capital:' 1,45,00,00,000/-divided into 1,45,00,00,000 equity shares of ' 1/- each Issued share capital: ' 83,44,56,365/- divided into 83,44,56,365 equity shares of ' 1/- each

Subscribed and paid up capital: ' 83,44,55,365/- divided into 83,44,55,365 equity shares of ' 1/- each

The details of dematerialization of shares, Demat Suspense Account/ Unclaimed Suspense Account are provided in the Corporate Governance Report, as annexed to this report.

Share Capital

The paid-up share capital of your Company increased by ' 364,035 from ' 834,091,330 to ' 834,455,365 in FY2025 due to allotment of 364,035 equity shares of ' 1/- each, on 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.

Dividend

Your Directors are pleased to recommend a final dividend of ?8/- (800%) on every equity share of ?1/-, for FY2025. 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 41^st 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, 2025. The total dividend pay-out will be approximately ' 668 Cr resulting in a pay-out of 8.8% of the consolidated cash profit for the financial year ended March 31, 2025. Such dividend will be taxable in the hands of the members in terms of the provisions of the Income Tax Act, 1961.

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.drreddys. com/cms/cms/sites/default/files/2022-09/Dividend%20 distribution%20policy.pdf

Transfer to Reserve

The Company has not proposed to transfer any amount to the general reserve for the year ended March 31, 2025.

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 the date of this report.

Subsidiaries and Associates

The Company has 44 overseas subsidiary companies (including step down subsidiaries), 10 subsidiary companies (including step-down subsidiary) in India and 1 joint venture company and 2 associate companies as on March 31, 2025.

Changes during the FY2025 were as follows:

• Dr. Reddy's Nutraceuticals Limited, was incorporated as a wholly-owned subsidiary in India on March 14,

2024, It was later renamed as Dr. Reddy's and Nestle Health Science Limited on June 13, 2024. Subsequently, on July 24, 2024, Dr. Reddy's transferred 49% stake

to Nestle India. Consequently, the said entity became subsidiary of the Company;

• Clean Renewable Energy KK 2A Private Limited became associate company of Aurigene Oncology Limited (a wholly owned subsidiary) with effect from July 31, 2024;

• Dr. Reddy's Laboratories SA, wholly owned subsidiary of the Company entered into a Share Purchase Agreement for the acquisition of Nicotinell® and related brands

by way of acquisition of Northstar Switzerland SARL along with its wholly owned subsidiaries North Star OpCo Limited (United Kingdom) and North Star Sweden AB (Sweden). Consequently the said entities became wholly-owned step-down subsidiaries of the Company with effect from September 30, 2024;

• Dr. Reddy's Laboratories SA, wholly owned subsidiary of the Company incorporated 'Dr. Reddy's Denmark ApS', as a wholly owned subsidiary in Denmark on October 4, 2024, consequently the said entity became wholly-owned step-down subsidiary of the Company;

• Dr. Reddy's Laboratories SA, wholly owned subsidiary of the Company incorporated 'Dr. Reddy's Finland Oy', as a its wholly owned subsidiary in Finland on December 20, 2024, consequently the said entity became wholly-owned step-down subsidiary of the Company;

• Dr. Reddy's Venezuela, C.A., wholly owned step-down subsidiary of the Company in Venezuela was dissolved on June 5, 2024;

• Chirotech Technology Limited wholly owned step-down subsidiary of the Company in United Kingdom was dissolved on September 18, 2024;

• Imperial Owners and Land Possessions Private Limited, wholly owned subsidiary of the Company in India has approved its voluntary liquidation on October 10, 2024, and is currently under liquidation process;

• Dr. Reddy's Laboratories Louisiana LLC, ceased to be step down wholly owned subsidiary, effective from March 21, 2025, following its sale.

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 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 Form AOC-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: www.drreddys.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. Accordingly, the Company has four material overseas subsidiary companies as on March 31,2025, namely, Dr. Reddy's Laboratories Inc. (USA), Dr. Reddy's Laboratories SA (Switzerland),

Dr. Reddy's Laboratories LLC (Russia) and Reddy Holding GmbH (Germany).

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. 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 as a good governance practice, 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) on 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.

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.

Board of Directors and Key Managerial Personnel

Retirement

Ms. Kalpana Morparia (DIN: 00046081) retired as an Independent Director (Lead Independent Director) of the Company with effect from close of business hours on July 30, 2024, after completion of her second term of directorship which was from July 31, 2019 to July 30, 2024. Consequently, she also ceased to be the Chairperson of Nomination, Governance and Compensation Committee and the Stakeholders' Relationship Committee, and Member of the Audit Committee and the Sustainability & CSR Committee.

The Board placed on record its sense of deep appreciation for the services rendered by Ms. Morparia, as an Independent Director of the Company.

Retirement by Rotation

During the year, the members of the Company at its AGM held on July 29, 2024, approved the re-appointment of Mr. Satish Reddy, a director retire by rotation, designated as Chairman of the Company.

Mr. G V Prasad (DIN: 00057433), Co-Chairman and Managing Director, is liable to retire by rotation at the forthcoming 41^st AGM and being eligible, seeks re-appointment. The Board also approved re-appointment of Mr. G V Prasad, as a Whole-time director designated as Co-Chairman and Managing Director of the Company for a further period of five years with effect from January 30, 2026 to January 29, 2031, liable to retire by rotation. For reference of members, a brief profile of Mr. G V Prasad is given in the Notice convening the 41^st AGM forming part of this Integrated Report.

The Board recommends Mr. Prasad's re-appointment as Co-Chairman and Managing Director to the shareholders.

Changes in Key Managerial Personnel (KMP)

The Board at its meeting held on May 7, 2024 took note of the retirement of Mr. Parag Agarwal as the Chief Financial Officer of the Company, effective from close of working hours on July 31, 2024, consequent to his decision to expand his involvement in philanthropy for the cause of making a meaningful difference to the lives of the most vulnerable segment of the society- the voiceless animals. The Board also approved the appointment of Mr. M V Narasimham, as the Chief Financial Officer of the Company with effect from August 1, 2024.

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:

Declaration by Independent Directors

In accordance with Section 149(7) of the Act, each Independent Director has confirmed to the Company 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 and Regulation 16(1)(b) of the SEBI Listing Regulations. Further, each Independent Director has affirmed compliance to the Code of Conduct for Independent Directors as prescribed in Schedule IV of the Act. The Board has taken on record such declarations after due assessment of 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.

The recommendations were discussed with the Board and individual feedback was provided to the Directors.

Further, details of Board evaluation are given in the chapter on Corporate Governance forming part 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 criteria 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.

In accordance with Section 178(3) of the Act, Regulation 19(4) of the SEBI Listing Regulations and on recommendation of the Company's Nomination, Governance and Compensation

Committee, the Board amended the existing remuneration Policy with the Nomination, Governance and Compensation (NGC) Policy w.e.f. May 9, 2025. The NGC Policy outlines the role of NGCC, inter alia, determining the appointment and removal of Directors, KMPs, SMPs and other employees, remuneration for Directors, KMPs, SMPs and other employees, performance evaluation, succession planning and Board Governance. The sailent features of the Policy forms part of the chapter on Corporate Governance forming part 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 75^th 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. ' 552.33 mn each. However, the Board, on the recommendation of the NGCC approved a fair commission for the Executive Directors, i.e. ' 90 mn and ' 160 mn for Mr. K Satish Reddy and Mr. G V Prasad, respectively.

CEO Compensation

Our CEO compensation comprises of guaranteed cash, short term incentives in the form of variable pay, long-term incentives, retirals, and perquisites. 75% of our CEO pay is linked with the Company's performance in terms of balanced scorecard achievement against plan and Company stock performance.

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 FY2025, Mr. Erez Israeli, Chief Executive Officer, has received an increment of 4.7% on fixed compensation.

His fixed salary was ? 6.57 Crore, with a target variable pay of 100%, and long term incentives of value ? 14.19 Crore vesting at the end of 3 years.

Performance Management

Our current performance management follows a balanced scorecard approach comprising of current business performance, future business performance, digital, ESG, people, compliance and safety related metrics.

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 ESG 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. Non-financial parameters have a cap of 100% achievement while financial 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 FY2025

Fiscal Year 2025 was a defining year for the organization, marked by strong financial performance, strategic momentum,

and meaningful progress across our growth and sustainability pillars. We achieved record revenues exceeding $3.8 billion, with a 17% year-over-year increase, and surpassed $1 billion in EBITDA for the first time, representing a 28.3% margin.

Our Return on Capital Employed (ROCE) exceeded 27.7%, underscoring the strength of our operating model and disciplined capital deployment.

These outcomes reflect the strategic leadership and execution capabilities of our management team, which were central to:

• Successful product launches and portfolio expansion,

• Increased revenues from key U.S. generic products,

• Integration of the acquired Nicotine Replacement Therapy (NRT) business into our Consumer Healthcare vertical and

• Advancement of strategic partnerships to unlock new opportunities.

Beyond financial results, our leaders steered continued progress in enhancing access to innovative treatments, strengthening our healthcare ecosystem, and embedding resilience and readiness across global operations.

Our commitment to quality and regulatory compliance remained unwavering throughout the year.

We also advanced toward our 2030 environmental goals, including carbon neutrality and a full transition to renewable energy. These efforts reflect our broader ambition to create long-term, sustainable value for all stakeholders.

Management focus remains on reinforcing core businesses, expanding in consumer healthcare, biosimilars, and innovative therapies and pursuing inorganic growth through acquisitions and strategic alliances. The achievements of FY2025 position us well for sustained performance in the years to come.

A brief snapshot of our scorecard performance for FY2025 is given below

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.

The FY2025 balanced scorecard showed good financial results, including sales and operating income performance at target and most strategic objectives were achieved. Based on the overall assessment, the Board of Directors decided on an Annual Incentive payout for the CEO amounting to ' 10.10 Crore.

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 exercisable 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 eight 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 FY2025. Further details are mentioned in the chapter on Corporate Governance forming part of this Integrated Report.

Committees of the Board

As on March 31,2025, 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*

*During the year under review the committee’s name was changed from Banking and Authorisations Committee to 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 FY2025 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 Executive 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 FY2025, focus areas for risk assessment and mitigation included global trade policies, products, intellectual property, cyber security, data security and privacy, ethics and compliance, quality, safety, strategic and other key risks.

Related Party Transactions

In line with the requirements of the Act and the SEBI Listing Regulations, your Company has amended Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions, during the year which is also available on the Company's website at https://www.drreddys. com/cms/cms/sites/default/files/2025-04/Policy%20on%20 Materiality%20of%20Related%20Party%20Transactions%20 and%20Dealing%20with%20Related%20Party%20 Transactions.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.

subsequent years. Accordingly, approval of the members will be sought at the forthcoming 41^st AGM for appointment of Secretarial Auditors, through the resolution forming part of the Notice of the AGM.

Additional fees for statutory certifications and other professional services will be determined separately by the management, in consultation with M/s. Makarand M Joshi & Co., and will be subject to approval by the Board of Directors and/ or the Audit Committee.

The Report of the Secretarial Auditor for FY25 is annexed herewith as Annexure - III. The said Secretarial Audit Report does not contain any qualification, reservations, adverse remarks or disclaimer.

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 FY2026 at a remuneration of ?9,00,000 (Rupees Nine Lakhs only) plus reimbursement of out-ofpocket 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 41^st AGM. As a matter of record, relevant Cost Audit Reports for FY2024 were filed with the Central Government on August 22, 2024, within the stipulated timeline. The Cost Audit Report for FY2025 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, or by the Secretarial Auditor in the Secretarial Audit Report. During the year, there were no instances of frauds reported by Auditors under Section 143(12) of the Act.

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 FY2025, 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.

Information Required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,2013

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 details are available in the Principle 5 of the Business Responsibility and Sustainability Report as well as in the Corporate Governance Report forming part of this Integrated Annual Report.

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, 2025, the Committee consists of Dr. KP Krishnan (Chairman),

Mr. Sanjiv Mehta, Mr. G V Prasad and Mr. K Satish Reddy. Based on the recommendation of the said Committee, the Board has adopted a 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 www.drreddys.com. 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.

Integrated Report

Your Company has adopted the Integrated Annual Report for FY2025, 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.

Business Responsibility and Sustainability Report (BRSR)

The Business Responsibility and Sustainability Report for FY2025 as mentioned under Regulation 34 of the SEBI Listing Regulations, is given as a separate chapter forming part of this Integrated Report.

Environmental, Social and Governance (ESG)

Our ESG strategy prioritizes positive social impact for our patients, employees, communities, environmental sustainability, while ensuring responsible business practices to build trust with our stakeholders and drive long term sustainable growth. This year, we focused on integrating ESG principles across our operations, engaging with our stakeholders to assess the financial and impact materiality of topics most relevant to them, and advancing on our committed ESG goals.

Since FY 2023, we have been publishing an integrated report with our financial and non-financial information, including information on our ESG strategy, governance, and performance. We highlight progress against our ESG targets and describes how we create sustainable value for diverse stakeholders. Dr. Reddy's Sustainability and Corporate Social Responsibility (SCSR) Committee focuses on overseeing the company ESG goals performance, progress, and strategy implementation. The committee provides the board with information, analysis, and recommendations on ESG matters, helping the board make informed decisions.

ESG-related information is available in the initial section and the Business Responsibility and Sustainability Report forming part of this Integrated Annual Report.

Transfer of Unpaid and Unclaimed Amounts 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 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 Schem 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.drreddys.com/ investor#reports-and-filing#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 form: 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 at the registered office of the Company or through electronic mode, during business hours on working days up to the date of the forthcoming 41^st AGM, by members.

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, 2025, in terms of the provisions of Section 134(3)(a) of the Act, is available on the Company's website at https://www.drreddys. com/investor#reports-and-filing#annual-report

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 endeavour to accelerate access to innovative and affordable medicines, because “Good Health Can't Wait”.