PRE FEASIBILITY REPORT

DR. REDDY S LABORATORIES LTD. CHEMICAL TECHOPS II PLOT NO.75A, 75B, 1, 110,111 & 112, S.V. CO OP. IND. ESTATE, BOLLARAM VILLAGE, JINNARAM MANDAL, MEDAK DISTRICT, TELANGANA PRE FEASIBILITY REPORT DR. REDDY S LABORATORIES LTD. Regd. Office : 8 2 337, Road No.3, Banjara Hills, Hyderabad 500 034. Phone: 040 4900 2900 Fax: 040 4900 2999 E mail: narasingaraoch@drreddys.com, pkirankumar@drreddys.com SUBMITTED TO MINISTRY OF ENVIRONMENT AND FORESTS, GOVERNMENT OF INDIA INDIRA PARYAVARAN BHAWAN, JOR BAGH ROAD, NEW DELHI

Pre Feasibility Report Dr. Reddy s Laboratories Ltd, Chemical Tech Ops II Plot. Nos. 75A, 75B, 1, 110,111 & 112, S.V. Cooperative Industrial Estate, IDA, Bollaram, Jinnaram Mandal, Medak District, Telangana 1. Executive Summary M/s. Dr. Reddy s Laboratories Ltd, Chemical Tech Ops II proposed to expand its existing API s manufacturing facility from 21.9 TPM to 68.76 TPM located at Plot. Nos. 75A, 75B, 1, 110,111 & 112, S.V. Cooperative Industrial Estate, IDA, Bollaram, Jinnaram Mandal, Medak District, Telangana. The expansion entails a capital cost of Rs. 40 crores towards modernization of zero liquid discharge facility, debottlenecking by way of incorporating the advanced technology and state of the art equipment, provision of solvent recovery system, additional boiler. The proposed expansion does not involve any additional civil construction for manufacturing blocks except utility and pollution control related works. The company has about 16.81 acres (existing 13.27 acres and additional land acquired 3.54acres) of land at Plot. Nos. 75A, 75B, 1, 110,111 & 112, S.V. Cooperative Industrial Estate, IDA, Bollaram. The site is having a longitude 78 0 21 05 (E) and latitude 17 0 32 27 (N). The plant is surrounded by road in internal IDA road in north, south, west directions and open plot in east directions. The nearest human settlement from the site is Bollaram village located at distance of 0.95 km from the site in Northeast direction. There are no ecologically sensitive areas like national parks, sanctuaries within 10 km radius of the site. 2. Introduction of the Project / Background Information: 2.1 Identification of Project and Project Proponent: The objective of this pre-feasibility study is to provide information for the manufacturing of Active Pharmaceuticals Ingredients unit with production capacity of 68.76 TPM with a proposal to manufacture 39 products, R&D products and installation of solvent recovery system at Plot. Nos. 75A, 75B, 1, 110,111 & 112, S.V. Cooperative Industrial Estate, IDA, Bollaram, Jinnaram Mandal, Medak District, Telangana in an area of about 16.81 acres. 1 P age

The project proponent Mr. Ramesh Mathamsetti, Director & Location Head CTO 2, M.Tech Chemical Engineering having 22 years experience 2.2 Brief Description of Nature of the Project: The synthetic organic chemicals manufacturing will involve series of chemical reactions to get the final Product. The products of reaction are purified, filtered and dried before packing the final product. The Chemical reactions require various supporting services like Heating, Cooling and Agitation etc. 2.3 Need for the project and its importance to the country and or region: World population is growing at an alarming rate. In the Indian sub continent population growth is more than that of developed countries. To meet the needs and comforts of ever-growing population industrialization became inevitable. For the growing population the needs of health care substitutes are also increasing. 2.4 Demands-Supply Gap: The project is envisaged to meet the demand supply gap in both domestic market and export market, as API demand is increasing day by day. 2.5 Imports Vs. Indigenous Production: Since the site is already got US FDA, Australian TGA, WHO GMP, NAMMD Romania, EDQM Europe & ISO 9001 Certifications and supplying the products to cater the needs of national and international markets. The project shall reduce imports in some of the intermediate & finished products and also enhance the foreign exchange reserves in view of the proposed exports of few products to regulatory markets. 2.6 Domestic/export Markets: The products shall cater to both domestic and export markets. 2.7 Employment Generation (Direct and Indirect) due to the project: The present project for manufacturing of Synthetic Organic Chemicals requires substantial handling of raw materials, goods in process and finished goods. The proposed expansion shall increase the employment potential. 3. Project Description 3.1 Type of Project including interlinked and interdependent projects, if any: M/s. Dr. Reddy s Laboratories Ltd, Chemical Tech Ops II proposed to expand its existing API s manufacturing facility from 21.9 TPM to 68.76 TPM located at Plot. Nos. 75A, 75B, 1, 110,111 & 112, S.V. Cooperative Industrial Estate, IDA, Bollaram, Jinnaram 2 P age

Mandal, Medak District, Telangana. The expansion entails a capital cost of Rs. 40 crores towards modernization of zero liquid discharge facility, debottlenecking by way of incorporating the advanced technology and state of the art equipment, provision of solvent recovery system, additional boiler. 3.2 Size or magnitude of operation: List of products and manufacturing capacity Manufacturing Capacity After Expansion S.No Name of the Product CAS No. Capacity TPM Kg/day 1 Atorvastatin 134523-00-5 11.275 375.83 2 Ciprofloxacin HCl 86393-32-0 16 533.33 3 Ciprofloxacin Base 86483-48-9 5.3 176.67 4 Ciprofloxacin Lactate 97867-33-9 1 33.33 5 Telmisartan 144701-48-4 3 100.00 6 Aripiprazole 129722-12-9 0.01 0.33 7 Tadalafil 171596-29-5 0.1 3.33 8 Zonisamide 68291-97-4 0.001 0.03 9 Rizatriptan Benzoate 145202-66-0 0.04 1.33 10 Rocuronium Bromide 119302-91-9 0.001 0.03 11 Levofloxacin 100986-85-4 6 200 12 Clopidogrel Premix 113665-84-2 5 166.67 13 Ketorolac 74103-06-3 2 66.67 14 Glimepiride 93479-97-1 0.4 13.33 15 Moxifloxacin 354812-41-2 3.5 116.67 16 Finasteride 98319-26-7 0.3 10 17 Tacrolimus 104987-11-3 0.15 5 18 Ezitimibe 163222-33-1 0.1 3.33 19 Vardenafil 224785-90-4 0.1 3.33 20 Fondaparinux Sodium 114870-03-0 0.01 0.33 21 Anastrazole 120511-73-1 0.025 0.83 22 Bicalutamide 90357-06-5 0.001 0.03 23 Amlodipine Besylate ( Ethyl 4 [2-88150-75-8 3 100 (pthalamide)ethoxy] aceto acetate (TDM-2) 24 Amlodipine Besylate 111470-99-6 1 33.33 25 Raloxifene 84449-90-1 1 33.33 26 Metoprolol Succinate 98418-47-4 8 266.67 27 Candesartan 139481-59-7 0.2 6.67 28 Repaglinide 135062-02-1 0.2 6.67 29 Rosiglitazone 122320-73-4 0.1 3.33 30 Mesylamine 89-57-6 0.001 0.03 31 Dutasteride 164656-23-9 0.1 3.33 32 Memantine HCl 41100-52-1 0.1 3.33 3 P age

33 Letrozole 112809-51-5 0.001 0.03 34 Galantamine 357-70-0 0.001 0.03 35 Bivalirudin 128270-60-0 0.001 0.03 36 paroxetine HCl 78246-49-8 0.001 0.03 37 Revastigmine 123441-03-2 0.2 6.67 38 Cetrizine 83881-51-0 0.5 16.67 39 Diluted Everolimus 5% 159351-69-6 0.01 0.33 40 R&D Products 0.03 1 Total 68.76 2291.93 3.3 Process Description with process details (a schematic diagram/flow chart) Typical process description with process details is presented in Annexure I of FORM I Application. 3.4 Raw material required along with estimated quantity likely source, marketing area of final product/s, mode of transport of raw material and finished product. All the raw materials required for manufacturing mostly available in India or from abroad. There are no banned chemicals or products which are proposed to be used. 3.5 Availability of water its source, energy/power requirement and source should be given The total water requirement shall increased from 302 KLD to 762.2 KLD after expansion out of which 489.2 KLD shall be drawn from APIIC (Industrial water supply) and balance shall be recycled water. The total water balance is presented table below. Total Water requirement After Expansion (Tentative) Purpose INPUT (KLD) OUTPUT (KLD) Fresh Water Recycled Water Loss Effluent Process 121.2 125.3* Washings 10 10 Scrubber 10 10 R& D 5 5 Boiler Feed 150 137 13 Cooling Tower 80 273 314 39 Additional water required for 38 38 pretreatment of water in RO/DM Plant Domestic 45 2.5 42.5 Gardening 30 30 Gross Total 489.2 273 483.5 282.8 Total 762.2 766.3 * Process effluents contain soluble raw materials, byproducts, solvents etc. 4 P age

3.5.1 Electricity: The requirement of power will be 9560HP. Further, due to the nature of the reactions and requirement of continuous power, the management proposes to put in place 100% self generation of power by DG sets of 2 x 500 kva, 2x1450 KVA and 1x750 KVA capacity. Therefore no delay or difficulty is foreseen on the power front 3.6 Quantity of wastes to be generated (liquid and solid) and Scheme for their Management/disposal Quantity of Effluent Generated and Mode of Treatment After Expansion (Tentative) S.No Description Quantity (KLD) Treatment/Disposal 1 Process Effluent 123.1 Waste water recycling facility (WWRF at 2 Washings Effluent 10 CTO II) having Stripper, Multiple Effect 3 Scrubber Effluent 10 Evaporator followed by ATFD and 4 R & D Effluent 5 condensate to biological treatment. RO is 5 DM/RO Rejects from pretreatment 38 provided for tertiary treatment. of raw water Total HTDS - I 186 6 Boiler Blow Down 13 Waste water recycling facility (WWRF at 7 Cooling tower Blowdown 39 CTO II) having Reverse Osmosis System 8 Domestic Effluent 42.5 and Multiple Effect Evaporator System Total HTDS - I 94.5 Grand Total (I+II) 280.6 Solid Wastes and Disposal After Expansion (Tentative) S.No Name of the Hazardous waste Units Quantity Disposal 1 Solvent Residue TPD 3.68 TSDF, Dundigal (V), Rangareddy 2 Process Organic residue TPD District for Incineration / 3 Spent Carbon TPD 1.48 Authorized cement plants for co - processing. 4 5 Spent Solvents Spent Piperazine KLD KL/Month 90 450 Recovered within the plant premises / Sold to Authorized third parties. 6 Spent Lye Kg/day 666.66 7 Spent Mixed Solvents (Non-recoverable) KLD Sent to authorized recovery units/cement plants for coincineration 8 Inorganic residue TPD 3.02 TSDF, Dundigal (V), Rangareddy 9 Evaporation salts TPD District for land filling. 10 ETP Sludge TPD 2.5 5 P age

11 Chemical Sludge TPD 3.5 12 Catalyst Kg/day 1 Sent to manufacturers for recovery. 13 Ash from Boiler TPD Sold to Brick manufactures 14 Detoxified Containers and container liners of HW & hazardous chemicals Shall be disposed after complete detoxification. HDPE Drums no.s/month 1500 Plastic Bags Kg/Month 1500 Glass Bottles Kg/Month 3000 Carboys no.s/month 5000 15 Waste oil LPM 3000 Authorized Reprocessors / Recyclers. 16 Used batteries No.s/Year 30 Authorized Reprocessors / Recyclers. 4. Site Analysis 4.1 Plant Location M/s. Dr. Reddy s Laboratories Ltd, Chemical Tech Ops II proposed to expand its existing API s manufacturing facility from 21.9 TPM to 68.76 TPM located at Plot. Nos. 75A, 75B, 1, 110,111 & 112, S.V. Cooperative Industrial Estate, IDA, Bollaram, Jinnaram Mandal, Medak District, Telangana. The expansion entails a capital cost of Rs. 40 crores towards modernization of zero liquid discharge facility, debottlenecking by way of incorporating the advanced technology and state of the art equipment, provision of solvent recovery system, additional boiler. The proposed expansion does not involve any additional civil construction for manufacturing blocks except utility and pollution control related works. The company has about 16.81 acres (existing 13.27 acres and additional land acquired 3.54 acres) of land at Plot. Nos. 75A, 75B, 1, 110,111 & 112, S.V. Cooperative Industrial Estate, IDA, Bollaram. The site is having a longitude 78 0 20 43.67 (E) and latitude 17 0 32 32.65 (N). The plant is surrounded by road in internal IDA road in north, south, west directions and open plot in east directions. The nearest human settlement from the site is Bollaram village located at distance of 0.95 km from the site in Northeast direction. There are no ecologically sensitive areas like national parks, sanctuaries within 10 km radius of the site. 5. Planning Brief: The project is envisages to be completed by December 2015, and the production shall be initiated thereon. Consultants are identified for preparing the detailed project report. 6 P age

6. Proposed Infrastructure: 6.1 Power Requirement and Supply/Source The total power requirement is 9560HP. 6.2 Utilities List of Utilities S.No Utility Permitted Proposed After Expansion 1 Coal Fired Boiler 8 TPH 2 TPH 12 TPH 1 x 12 TPH 1 x 8 TPH 1 x 2 TPH 2 Oil Fired Boiler 6 TPH 1 x 6 TPH* 3 Thermic Fluid Heater --- 2x 1Lac K.Cal/hr 2x 1Lac K.Cal/hr 4 DG Set* 750 KVA 2x500 KVA * Shall be kept as Standby. 2 x 1450 KVA 2 x 1450 KVA 1 x 750 KVA 2 x 500 KVA Equipments The basic technology involved in the manufacturing of Bulk drugs is the process Kettles, Heat Exchangers, Centrifuges, and Storage Tanks. To support the process equipment Boilers, Chilling plants, Cooling Towers Etc. are required. All the above equipment can be sourced indigenously and the lead time to supply the equipment will not exceed 20 weeks. 6.3 Waste management Liquid Effluents The main sources of effluent generation from the plant are process, washings, Scrubber, blow downs from utilities like cooling tower, boiler & domestic effluents. The process effluents are segregated on the basis on TDS and COD loads and treated in Effluent treatment system. Air Pollution The sources of air pollution in the plant are from the existing 6TPH Oil fired boiler, which shall be kept as standby, 8 TPH and 2 TPH Coal fired boilers and proposed 12TPH coal fired boiler and 2 x 1 Lac K.cal/hr thermic fluid heater. Backup DG sets of 750 KVA, 2 x 500 kva existing and 2 x 1450KVA capacity proposed. The proposed air pollution control equipment for coal fired boiler is Bag filters. DG sets shall be provided with stack heights based on the CPCB formula for effective stack height. 7 P age

Solid waste Solid wastes are generated from the process, solvent distillation, distillate from stripper, salts from ATFD, sledges from ETP (primary & secondary), waste oil from DG sets, used batteries from DG sets. The stripper distillate, process residue and solvent residue are sent to TSDF/cement plants for co-incineration. The evaporation salts are sent to TSDF. Filter media like spent carbon, catalyst and hyflow are sent to TSDF/authorized recyclers. Waste oil and used batteries from the DG sets are sent to authorized recyclers. The sludge from effluent treatment plant is considered hazardous and the same is sent to TSDF. The ash from boiler is sold to brick manufacturers. The other solid wastes expected from the unit are containers, empty drums which are returned to the product seller or sold to authorize buyers after detoxification. 7. Rehabilitation and Resettlement (R&R) Plan Not applicable as the land area is only 16.81 acres already acquired. 8. Project Schedule & Cost Estimates 8.1 Likely date of start of construction and likely date of completion (Time schedule for the project to be given) December 2015 8.2 Estimated project cost along with analysis in terms of economic viability of the project The estimated cost of the project is approximately Rs. 40 Crores. Project Cost Rs. In Crores Plant& machinery 18.0 Civil buildings 8.0 Structures 3.0 Total 29.0 Pipe lines & insulation 20% on plant & machinery 3.6 Electricals & instrumentation 10% on plant & machinery 1.8 Erection & commissioning & painting 8% on plant & machinery 1.68 Land & development 0.5 Material handling equipment charges 0.5 Laboratory equipment 0.5 Safety Equipment 0.5 Furniture, fixtures, computers, lighting etc 1.0 Total 10.08 Contingencies & pre-operative expenses 5% on the above 0.504 Project Cost 40 8 P age