The pharmaceutical major Dr Reddy’s Laboratories on Tuesday reported a 1 per cent decline in the consolidated net profit to Rs 571 crore in the first quarter of the financial year 2021-2022. The company had posted Rs 579 crore in the same period a year ago (Q1FY21).

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While the revenue of Nifty heavyweight grew by 11 per cent to Rs 4919.4 crore in the June-ended quarter of FY22, as compared to Rs 4417.5 crore in the same period a year ago. The company said, it has received a subpoena from the US market regulator SEC (Securities and Exchange Commission) for the production of documents with respect to Commonwealth of Independent States (CIS) geographies. 

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The probability of such actions and outcomes is not reasonably ascertainable currently, the company further said in its filing to exchanges. 

Dr Reddy's shares declined almost 8 per cent to Rs 4982 per share, a day’s low level, on the BSE intraday trade today after missing street’s expectations and subpoena from SEC for production of documents for ClS Geographies that may result in government enforcement actions against the company in the US and foreign jurisdictions.

Dr Reddy’s Co-chairman and Managing Director GV Prasad in a management commentary said, “The financial performance of the quarter has been driven by healthy sales growth. I am confident about improving our margins in the upcoming quarters, which will be led by the scale-up of recent launches, new product launches and productivity.”

The drugmaker’s consolidated operating margin in the quarter sank 560 basis points year-on-year to 20.7 per cent from 26.3 per cent as expenses rose considerably. The scrip slipped to a three-month low after Q1 results.

The company’s topline performance was mainly led by domestic and European operations. Sales in India jumped 69 per cent YoY to Rs 1,060 crore in Q1 helped by the low base of the year-ago period.