Dr. Reddy’s Laboratories, workforce reduction, corporate restructuring, pharmaceutical industry,
In a bold move to streamline its operations, pharmaceutical giant Dr. Reddy’s Laboratories is reportedly cutting its workforce by 25%. This significant restructuring effort comes as part of a company-wide cost-cutting initiative that targets various levels of employees, with a special emphasis on those in the high-salary brackets.
In a bold move to streamline its operations, pharmaceutical giant Dr. Reddy’s Laboratories is reportedly cutting its workforce by 25%. This significant restructuring effort comes as part of a company-wide cost-cutting initiative that targets various levels of employees, with a special emphasis on those in the high-salary brackets.
According to a report by Business Standard, Dr. Reddy’s is shedding jobs across multiple departments, including senior executives and employees earning upwards of ₹1 crore annually. The restructuring is expected to affect long-serving employees, particularly those in the 50-55 age group, many of whom are employed in the company’s Research & Development (R&D) division. These employees are being offered voluntary retirement packages as part of the company’s cost-cutting measures.
The cost-cutting drive has been viewed as one of the most aggressive corporate restructurings in India’s pharmaceutical sector in recent years, and it highlights the company’s ongoing efforts to optimize operations. However, the news has raised concerns about the impact on the company’s workforce, especially long-serving and senior-level employees who may be forced to part ways with the organization.
In the midst of this restructuring, Dr. Reddy’s Laboratories also faces scrutiny from the tax authorities. The company recently received a show-cause notice from the Income Tax Department, with a proposed demand exceeding ₹2,395 crore. The notice pertains to the merger of Dr. Reddy’s Holding Ltd (DRHL) into Dr. Reddy’s Laboratories Ltd (DRL). The tax department is questioning the assessment of income allegedly escaped from tax following the merger, which had been approved by the National Company Law Tribunal (NCLT), Hyderabad, in April 2022.
Despite the corporate restructuring and the tax controversy, Dr. Reddy’s Laboratories continues to perform strongly in the financial sector. In its recent quarterly earnings report, the company posted a 2% increase in consolidated net profit, reaching ₹1,413 crore for the third quarter ending December 31, 2024. This was driven by robust performance across various markets. The company’s revenue also saw an increase, rising to ₹8,359 crore from ₹7,215 crore during the same period in the previous fiscal year.
The cost-cutting measures at Dr. Reddy’s come at a time when the pharmaceutical industry faces increased pressures from both regulatory challenges and a need for innovation. As the company navigates these changes, it remains to be seen how the restructuring will affect its overall performance and reputation in the market.
Sources By Agencies
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