Cash Flow Analysis of Dr.

Reddy’s Laboratories Limited

Cash Flow from Operating Activities

By analysing the cash flow of the year ended, 31st March 2019, we can interpret a lot of
detail. Starting with the change in foreign exchange gain/loss, the company faced a loss of
2455 million over the year. This was because, there was an 8% rise in the revenue from
global generics. There was also a sale of API manufacturing unit(plant) which resulted in a
gain of 400 million which included a current assets and liabilities of that unit.

There has also been a decrease in the trade payables. This was due a decrease in the trade
payables to micro, small and medium enterprises and even the other parties. Reddy’s has
also paid a significant amount in tax this year.

Due to various increase in income sources, the company has increased its operating income
by about 80% from last year.

Cash Flow from Investing Activities

As mentioned above, there was sale of a manufacturing business unit to Therapiva Private
Limited, a Hyderabad based company. In this deal there was a sale of plant, machinery and
property.

Dr. Reddy’s invested in various channels of investments. But the change this year from the
last year was due to, increased investments in mutual funds. Also, there was an increase of
28% in term deposits bonds and commercial papers which were done at amortization costs.

This year the subsidiaries such as Dr. Reddy’s Bio-sciences Limited, India and Dr. Reddy’s
Laboratories SA, Switzerland repaid 1800 million of their loans and advances. This also includes
a considered doubtful debt from Reddy Antilles N.V., Netherlands.

Cash Flow from Financial Activities

Dr. Reddy’s had issued stocks under the employee stock exchange plan. But this year the
company did not issue any additional stocks. The company had also bought back shares
worth of 535 million which can be seen as treasury shares. This has resulted in outflow of
cash, as is an additional key to the huge decrease in cash from financing activities.

But the biggest factor in financing activities that has resulted in such drastic decrease cash
flow from financing activities is the repayment of short-term loans and borrowings. This is
due to, repayment of its pre-shipment debts, because of which the pre-shipment debts have
decreased by 73%.
Conclusion

The company has faced a decrease in cash and cash equivalents by 119 million over the
year, due to the decrease in the financing activities. With this we can conclude that the
company has increased its investments and paid of many loans and borrowings.

Aniket Dubey

1901010