Exemption Order under Regulation 11 of SEBI (SAST) Regulations, 2011 in the matter of Dr. Reddy's Laboratories Limited.

WTM/ASB/CFD/16/2024-25

SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under sections 11(1) and 11(2)(h) of the Securities and Exchange Board of India Act, 1992 read with regulation 11(5) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

In the matter of Proposed Acquisition of Shares and Voting Rights in – TARGET COMPANY PROPOSED ACQUIRERS 1. VSD Family Trust Dr. Reddy’s Laboratories Limited 2. GVP Family Trust

Background – 1. Dr. Reddy’s Laboratories Limited (hereinafter referred to as the “Target Company”) is a company incorporated under the Companies Act, 1956 on February 24, 1984, having its registered office at 8-2-337, Road No-3, Banjara Hills, Hyderabad-500034. The equity shares of the Target Company are listed on the BSE Ltd. (“BSE”) and National Stock Exchange of India Ltd. (“NSE”).

2. An Application dated August 30, 2024 along with emails dated October 17, 2024, October 22, 2024, October 23, 2024, October 24, 2024, November 22, 2024, November 29 and December 31, 2024 (together referred to as “Application”) was received by SEBI seeking exemption from the applicability of regulation 3(1) read with regulation 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations, 2011”) in the matter of proposed direct acquisition of shares and voting rights in the Target Company by VSD Family Trust (Acquirer Trust 1) and GVP Family Trust (Acquirer Trust 2), (hereinafter collectively referred to as “Acquirer Trusts” or “Proposed Acquirers” or “Applicant Trusts”).

Exemption Order in the matter of Dr. Reddy’s Laboratories Limited

Details of the proposed acquisitions: 3. The Acquirer Trusts vide the Application have submitted the following: (a) The issued, subscribed and paid up equity share capital of the Target Company is Rs. 83,43,84,730 divided into 16,68,76,946 equity shares having face value of Rs.5/- each. The shareholding pattern of the Target Company, as on September 30, 2024, as appearing on BSE Website, is as under:

Shareholding in the Target Company Sr. No Name No. of Shares % shareholding A. Promoter/Promoter Group 1. Samrajyam Reddy Kallam 11,20,499 0.67 2. Satish Reddy Kallam 1,60,27,126 9.60 3. K Satish Reddy (HUF) 55,23,677 3.31 4. K Deepti Reddy 5,140 0.00 5. K Shravya Reddy 0 0.00 6. K Vishal Reddy 0 0.00 7. Gunupati Venkateswara 25,43,418 1.52 Prasad (HUF) 8. Anuradha Gunupati 9,205 0.01 9. Gunupati Venkateswara 1,92,19,184 11.52 Prasad 10. Sharathchandra Reddy 2,600 0.00 Gunupati 11. G Mallika Reddy 5,139 0.00 12. G.Vani Sanjana Reddy 5,140 0.00 13. VSD Holdings & Advisory 0 0.00 LLP 14. APS Trust 0 0.00 Total Promoter Shareholding 4,44,61,128 26.64 B. Public shareholding 12,21,48,104 73.20 C. Non Promoter-Non Public 2,67,714 0.16 (shares held by Employee Trust) Total Shareholding 16,68,76,946 100 (b) The Promoter and Promoter Group of the Target Company, which includes Shri Satish Reddy Kallam and Shri Gunapati Venkateswara Prasad, collectively holds 4,44,61,128 equity shares in the Target Company amounting to 26.64 % of the total paid-up equity capital and voting rights of the Target Company.

(c) VSD Family Trust, registered vide trust deed dated July 15, 2023 read with amendment deed dated November 21, 2023 and supplementary trust deed dated August 23, 2024, is a revocable private trust. GVP Family Trust, registered vide trust deed dated July 19, 2023 read with amendment deed dated November 15, 2023 and supplementary trust deed dated August 23, 2024 is an irrevocable discretionary private trust. The Acquirer Trusts are settled under the provisions of the Indian Trusts Act, 1882. The details of the Settlors, Trustees and beneficiaries of the aforementioned Acquirer Trusts are tabulated below: VSD Family Trust (Acquirer Trust 1) Status Name Relationship Settlor Mr. Satish Reddy Kallam Self Mrs. Deepti Reddy Kallam Wife Trustee(s) Mr. Satish Reddy Kallam Self Mrs. Deepti Reddy Kallam Wife Mr. Satish Reddy Kallam Self Mrs. Deepti Reddy Kallam Wife Beneficiaries Ms. K. Shravya Reddy and her Daughter and her lineal lineal descendants descendants Mr. K. Vishal Reddy and his Son and his lineal lineal descendants descendants

GVP Family Trust (Acquirer Trust 2) Status Name Relationship Mr. Gunupati Venkateswara Self Settlor Prasad Mr. Gunupati Venkateswara Self Trustee(s) Prasad Mrs. G. Anuradha Wife Mrs. G. Anuradha Wife Ms. G. Vani Sanjana and her lineal Daughter and her lineal Beneficiaries descendants descendants Ms. G. Mallika and her lineal Daughter and her lineal descendants descendants Mr. G. Sharathchandra and his Son and his lineal lineal descendants descendants (d) The Acquirer Trusts propose to acquire direct interest in the Target Company from the promoters of the Target Company. Pursuant to the proposed acquisition of shares and voting rights, the Acquirer Trusts shall directly have control over the Target Company.

(e) The direct acquisition of equity shares and voting rights in the Target Company by the Acquirer Trusts is proposed to take place in the following manner:

(i) Satish Reddy Kallam (who is part of the Promoter and Promoter Group of the Target Company) proposes to transfer 1,51,26,124 equity shares of the Target Company held by him to VSD Family Trust.

(ii) Mr. Gunupati Venkateswara Prasad (who is part of the Promoter and Promoter Group of the Target Company) proposes to transfer 1,92,19,184 equity shares of the Target company held by him to GVP Family Trust.

(f) The abovementioned proposed direct transfers of equity shares from the promoter entities to the Acquirer Trusts are tabulated below:

NUMBER OF SR. NO. TRANSFEROR ACQUIRER PERCENTAGE SHARES 1. Mr. Satish Reddy VSD Family 1,51,26,124 9.07 Kallam Trust 2. Mr. Gunupati GVP Family 1,92,19,184 11.52 Venkateswara Prasad Trust TOTAL 3,43,45,308 20.59% (g) Pursuant to the proposed direct acquisitions of shares and voting rights by Acquirer Trusts, the Acquirer Trusts along with other Promoters and members of the Promoter Group shall directly acquire control over the Target Company.

(h) There would be no alteration in total equity share capital of the Target Company as a result of the proposed acquisitions. The shareholding pattern of the Target Company before and after the proposed acquisitions will be as under:

Particulars Shareholding before the Proposed Shareholding after the proposed acquisition transaction proposed acquisition

Number of % of Number of % of Number of % of shares shares shares shares shares shares Promoters & Promoter Group (other than Acquirers) Samrajyam 11,20,499 0.67 - - 11,20,499 0.67 Reddy Kallam Satish Reddy 1,60,27,126 9.60 (1,51,26,124) (9.07) 9,01,002 0.54 Kallam K Satish Reddy 55,23,677 3.31 - - 55,23,677 3.31 (HUF) K Deepti Reddy 5,140 0.00 - - 5,140 0.00 K Shravya Reddy 0 0.00 - - 0 0.00 K Vishal Reddy 0 0.00 - - 0 0.00 Gunupati 25,43,418 1.52 - - 25,43,418 1.52 Venkateswara Prasad (HUF) Anuradha 9,205 0.01 - - 9,205 0.01 Gunupati Gunupati 1,92,19,184 11.52 (1,92,19,184) (11.52) 0 0.00 Venkateswara Prasad Sharathchandra 2,600 0.00 - - 2,600 0.00 Reddy Gunupati G Mallika Reddy 5,139 0.00 - - 5,139 0.00 G.V. Sanjana 5,140 0.00 - - 5,140 0.00 Reddy VSD Holdings & 0 0.00 - - 0 0.00 Advisory LLP Total (A) 44,461,128 26.64 10,115,820 6.06 Promoters & Promoter Group - Acquirers and PAC VSD Family Trust Nil Nil 1,51,26,124 9.07 1,51,26,124 9.07 (Acquirer 1) APS Trust 0 0.00 - - 0 0.00 GVP Family Trust Nil Nil 1,92,19,184 11.52 1,92,19,184 11.52 (Acquirer 2) Total (B) 0 0.00 3,43,45,308 20.58 Total (A+B) 4,44,61,128 26.64 4,44,61,128 26.64

Public (as on September 30, 2024) Public 12,21,48,104 73.20 - - 12,21,48,104 73.20 shareholding (C) Non-promoter & Non-public (as on September 30, 2024) Non-Promoter 2,67,714 0.16 - - 2,67,714 0.16 Non-Public (D) Total 16,68,76,946 100.00 16,68,76,946 100.00 A+B+C+C+D (i) The abovementioned direct acquisition of shares and voting rights by the Acquirer Trusts in the Target Company would attract the applicability of the provisions of regulation 3(1) read with regulation 4 of the Takeover Regulations, 2011. Vide the Application, the Acquirer Trusts have sought exemption from SEBI in respect of the same.

Grounds for seeking exemption - 4. Vide the Application, the Acquirer Trusts have, inter-alia, provided the following grounds for seeking exemption:

(a) Mr. Satish Reddy Kallam and Mr. Gunupati Venkateswara Prasad, keeping in view of their respective age and health, decided to institute a succession plan for their shares, out of their natural love and affection for their respective children.

(b) The proposed acquisition is only a part of the internal re-alignment of holdings of the promoters and is non-commercial. Therefore, it will not prejudice the interests of the public shareholders of the Target Company.

(c) Both Mr. Satish Reddy Kallam and Mr. Gunupati Venkateswara Prasad, who are part of the Promoter and Promoter Group of the Target Company are the managing trustees of the respective Acquirer Trusts to which they propose to transfer the abovementioned quantity of equity shares of the Target Company. They would continue to be directly in control of the Target Company, hence, there will be no change in control and management of the Target Company after the proposed acquisition by the Acquirer Trusts.

(d) Pursuant to the proposed acquisition of the shares by the abovementioned Acquirer Trusts, there will be no change in the overall promoter shareholding nor any change in the control and management of the Target Company.

(e) The Acquirer Trusts have also provided undertakings regarding compliance with the conditions stipulated in Chapter 8 of SEBI Master Circular No. SEBI/HO/CFD/PoD-1/P/CIR/2023/31 dated February 16, 2023.

Consideration- 5. I have considered the Application submitted by the Acquirer Trusts and other material available on record. Before I proceed further, I deem it fit to draw reference to the provisions of regulations 3(1) and 4 of the Takeover Regulations, 2011, which state as under – “Substantial acquisition of shares or voting rights. 3(1): No acquirer shall acquire shares or voting rights in a target company which taken together with shares or voting rights, if any, held by him and by persons acting in concert with him in such target company, entitle them to exercise twenty-five per cent or more of the voting rights in such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations.

Acquisition of control. 4: Irrespective of acquisition or holding of shares or voting rights in a target company, no acquirer shall acquire, directly or indirectly, control over such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations.”

6. Without reiterating the facts as stated above, I note the following:

(a) The Application submitted is in respect of the proposed direct acquisition of shares and voting rights in the Target Company, i.e., Dr. Reddy’s Laboratories Limited. The proposed acquisitions as detailed above, which are to be made by the Acquirer Trusts, will lead to direct acquisition of control of the Target Company and will attract the provisions of regulation 3(1) read with regulation 4 of the Takeover Regulations, 2011.

(b) The proposed acquisitions are in furtherance of an internal reorganization within the Promoter Family and are intended to streamline succession and promote welfare of Promoter Family. The proposed direct acquisitions would be non-commercial transactions which would not affect or prejudice the interests of the public shareholders of the Target Company in any manner.

(c) The trustees and the beneficial owners of the Acquirer Trusts are either individual promoters, or their immediate relatives or lineal descendants.

(d) There will be no change in control of the Target Company pursuant to the proposed acquisitions, as stipulated under the Chapter 8 of SEBI Master Circular No. SEBI/HO/CFD/PoD-1/P/CIR/2023/31 dated February 16, 2023.

(e) The pre–acquisition and post–acquisition shareholding of the Promoters and Promoter Group in the Target Company will remain the same.

(f) There will be no change in the public shareholding of the Target Company.

(g) The Target Company shall continue to be in compliance with the Minimum Public Shareholding requirements under the Securities Contracts Regulation Rules, 1957 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

(h) The Acquirer Trusts have confirmed that they are in compliance with the conditions outlined in Chapter 8 of the SEBI Master Circular No. SEBI/HO/CFD/PoD-1/P/CIR/2023/31 dated February 16, 2023 which contain the following clauses:

(i) The Acquirer Trusts are in substance, only a mirror image of the promoters’ holdings and consequently, there is no change of ownership or control of the shares or voting rights in the Target Company. (ii) Only individual promoters or their immediate relatives or lineal descendants are Trustees and beneficiaries of the Acquirer Trusts. (iii) The beneficial interest of the beneficiaries of the Acquirer Trusts has not been and will not in the future, be transferred, assigned or encumbered in any manner including by way of pledge / mortgage. (iv) In case of dissolution of the Acquirer Trusts, the assets will be distributed only to the beneficiaries of the trust or to their legal heirs. (v) The Trustees will not be entitled to transfer or delegate any of their powers to any person other than one or more of themselves. (vi) Any change in the trustees / beneficiaries and any change in ownership or control of shares or voting rights held by the Acquirer Trusts shall be disclosed within 2 days to the concerned stock exchanges with a copy endorsed to SEBI for its record. (vii) As far as the provisions of the SEBI Act, 1992 and the regulations framed thereunder are concerned, the ownership or control of shares or voting rights will be treated as vesting not only with the Trustees but also indirectly with the beneficiaries. (viii) The liabilities and obligations of individual transferors under the SEBI Act, 1992 and the regulations framed thereunder will not change or get diluted due to transfers to the Acquirer Trusts. (ix) The Acquirer Trusts shall confirm, on an annual basis, that they are in compliance with the exemption order passed by SEBI. The said confirmation shall be furnished to the Target Company which it shall disclose prominently as a note to the shareholding pattern filed for the quarter ending March 31 each year, under regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. (x) The Acquirer Trusts shall get their compliance status certified from an independent auditor annually and furnish the certificate to the Stock Exchanges for public disclosure with a copy endorsed to SEBI for its records.

(xi) The proposed acquisitions are in accordance with the provisions of the Companies Act, 2013 and other applicable laws. (xii) The transferors are disclosed as promoters in the shareholding pattern filed with the Stock Exchanges for a period of at least 3 years prior to the proposed acquisition. (xiii) There is no layering in terms of trustees / beneficiaries in case of the Acquirer Trusts. (xiv) The Trust Deeds do not contain any limitation of liability of the trustees / beneficiaries in relation to the provisions of the SEBI Act, 1992 and all regulations framed thereunder.

7. Considering the aforementioned, I am of the view that exemption as sought for in the Application (read with further submissions) may be granted to the Proposed Acquirers, subject to certain conditions as ordered herein below.

Order - 8. I, in exercise of the powers conferred upon me under section 19 read with sections 11(1) and 11(2)(h) of the SEBI Act, 1992 and regulation 11(5) of the Takeover Regulations 2011, hereby grant exemption to the Proposed Acquirers, viz., VSD Family Trust and GVP Family Trust, from complying with the requirements of regulation 3(1) read with Regulation 4 of the Takeover Regulations, 2011 with respect to the proposed direct acquisition in the Target Company, viz., Dr. Reddy’s Laboratories Limited, by way of proposed transaction as mentioned in the Application.

9. The exemption so granted is subject to the following conditions:

(a) The proposed acquisitions shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws. (b) On completion of the proposed acquisition, the Proposed Acquirers shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the Takeover Regulations, 2011.

(c) The statements / averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirers are true and correct. (d) The Proposed Acquirers shall ensure compliance with the statements, disclosures and undertakings made in the Application. The Proposed Acquirers shall also ensure compliance with the provisions of the SEBI Circular. (e) The Proposed Acquirers shall also ensure that the covenants in the Trust Deeds are not contrary to the above conditions. In such case, the Trust Deeds shall be suitably modified and expeditiously reported to SEBI.

10. The exemption granted above is limited to the requirements of making open offer under the Takeover Regulations, 2011 and shall not be construed as exemption from the disclosure requirements under Chapter V of the aforesaid Regulations; compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015, Listing Agreement / SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any other applicable Acts, Rules and Regulations.

11. The exemption granted above from making an open offer in respect of the Proposed Acquisitions shall remain valid for a period of one (1) year from the date of this Order and the Applicants shall complete the implementation of the Proposed Acquisitions within such period, failing which the granted exemption shall lapse and cease to exist.

12. The Application dated August 30, 2024 read with other submissions, filed by VSD Family Trust and GVP Family Trust is accordingly disposed of.

PLACE: MUMBAI ASHWANI BHATIA DATE: DECEMBER 31, 2024 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA