New Delhi, April 14 - Pharmaceutical major Dr Reddy’s Laboratories has firmly denied media reports suggesting that the company is planning a 25 percent reduction in workforce costs, including layoffs of high-earning employees. In a statement issued on April 14, the company labeled the information as "factually incorrect" and categorically dismissed the claims made in the report.
"We wish to clarify that the said news is factually incorrect. We categorically deny the claim of a 25 percent workforce cost reduction and the other claims mentioned in the said news article," Dr Reddy’s stated in a stock exchange filing. The company also emphasized that it does not comment on market speculation, asserting that there is currently no event or information that requires disclosure under Regulation 30 of the SEBI Listing Regulations.
The controversy began when a report by Business Standard alleged that Dr Reddy’s had initiated a significant cost-cutting drive, instructing several senior executives—particularly those earning over ₹1 crore annually—to resign. The report also suggested that employees aged 50-55 in the company's research and development division were offered voluntary retirement, potentially affecting 300 to 400 employees.
According to the Business Standard report, the internal directive aimed to reduce manpower-related expenses by approximately 25 percent. This drastic measure, if true, would align with the company's efforts to enhance operational efficiency, especially as it expands into new areas such as nutraceuticals through a joint venture with Nestle and digital therapeutics.
However, Dr Reddy’s maintains that no such layoffs or targeted cost-cutting measures have been implemented. Instead, the company has been actively hiring in recent years to support its expansion into new business segments. In FY24, Dr Reddy’s employed 26,343 individuals globally, with 21,757 permanent employees as of March 31, 2024. The company also hired 6,281 new employees in the same financial year.
Financially, Dr Reddy’s Laboratories has reported a consolidated net profit of ₹1,413 crore for the quarter ending December 2024, reflecting a modest 2 percent year-on-year growth from ₹1,379 crore during the same period last year. Revenue from operations for the December quarter stood at ₹8,359 crore, a 16 percent increase from ₹7,215 crore in the corresponding quarter of the previous financial year.
Sequentially, the bottom line rose 13 percent from ₹1,255 crore in Q2 FY25, while revenue increased by 4 percent from ₹8,016 crore reported in the July-September quarter. The company’s median remuneration was reported at ₹6 lakh, and it spent ₹5,030 crore on employee benefits, alongside investing ₹39.2 crore in training and development.
Interestingly, 92 percent of the workforce underwent skill upgrades during the fiscal year, indicating a commitment to employee development rather than downsizing. Analysts suggest that trimming 25 percent of manpower-related expenses could save Dr Reddy’s approximately ₹1,300 crore annually, but the company’s recent hiring trends contradict such drastic cuts.
In addition to the workforce rumors, Dr Reddy’s Laboratories recently received a ₹2,395 crore show-cause notice from the Income Tax department. This notice, dated April 4, 2025, pertains to the reassessment of returns for the Assessment Year 2020-21, following the merger of Dr Reddy's Holding Ltd with itself, which was approved by the National Company Law Tribunal in April 2022.
In response to the tax notice, Dr Reddy’s assured stakeholders that based on their assessment, there is no material impact on the company’s financials, operations, or other activities at this stage. The company reiterated its commitment to transparency, stating, "In compliance with Regulation 30 of the SEBI Listing Regulations, the Company makes prompt disclosure of any event or information, as and when any event or information is considered material or warrants such disclosure under the said Regulation."
Despite the swirling rumors and the tax notice, Dr Reddy’s Laboratories appears to be maintaining a positive outlook on its financial health and operational strategy. The company’s recent performance, including a 2 percent increase in profit and a significant rise in revenue, suggests resilience amid the challenges faced by the pharmaceutical industry.
In summary, while speculation about workforce reductions and cost-cutting measures has made headlines, Dr Reddy’s Laboratories has firmly rejected these claims, emphasizing its ongoing commitment to hiring and employee development. As the company navigates its expansion into new markets and addresses regulatory challenges, it remains focused on sustaining its growth trajectory.
