Description
This report contains the financial aspects of Biocon pharmaceuticals , this will include Balace sheet , P&L a/c , Financial ratio.
comparison of balance sheet of 2013 & 2012
A PROJECT REPORT ON “FINANCIAL ANALYSIS OF BIOCON
LIMITED”
A Project report submitted in the partial fulfillment of the requirement for the degree of Master of Business Administration (MBA)
Submitted by: Satyajeet Kashyap Vaibhav Vaidya
Submitted to: Dr. Ashok Panigrah Panigrahi
Professor SVKM’s NMIMS
SVKM’s NMIMS SCHOOL OF PHARMACY AND TECHNOLOGY MANAGEMENT
CERTIFICATE
This is to certify that this project report entitled “Financial Analysis of Biocon Pharmaceuticals” submitted to SVKM’s Narsee Monjee Institute of Management Studies, is a bonafide record of work done by “Vaidya Vaibhav Sanjay” and “Kashyap Satyajeet Sunit” under my guidance and supervision.
Date:
Faculty signature Dr.Ashok Panigrahi Associate Professor, SPTM, NMIMS (Shirpur campus)
ACKNOWLEDGEMENT
I am very thankful to everyone who all supported me for I have completed my project effectively and moreover on time.
I would like to express my special thanks of gratitude to my professor “Dr. Ashok Panigrahi” who constantly guided and supported me. Last but not the least, I would like to thank my colleagues who helped me a lot in gathering different information, collecting data and guiding me from time to time in making this project unique.
Thanking you Vaibhav Vaidya & Satyajeet Kashyap MBA PharmaTech – IInd year
PREFACE
My project provides complete information on the topic "Financial Analysis of Biocon Pharmaceuticals" and maximum efforts have been taken to make the project more comprehensive and lucid to understand. My project covers a variety of sub topics like Company’s profile, History, Subsidiary companies, future plans, SWOT analysis, Buisness units, Annual reports, Financial and ratio analysis in detail including the ratio classification, findings and interpretation.
CONTENTS 1. Introduction
• Company profile • History • Missions • Subsidiary Companies • Milestone • Board of directors 2. Awards 3. SWOT Analysis 4. Strategic Implementations 5. STP and Competitors 6. Product Profile • Small Molecules • API’s • Branded Formulations 7. Research and Development 8. Annual Report (2012-2013) • Balance Sheet • Profit and loss sheet • Cash flow Statement
9. Financial Analysis • Introduction • Nature of financial analysis • Objective of financial analysis • Type of financial analysis 10. Ratio Analysis • Financial ratios • Utility of financial ratios • Advantages • Role of financial ratios 11. Classification of Ratios • Liquidity ratios • Leverage ratios • Turnover ratios • Profitability ratios • Profitability ratios based on investment
COMPANY PROFILE
Biocon Limited is an Indian biopharmaceutical company based in Banglore. Within biopharmaceuticals, the Company manufactures generic active pharmaceutical ingredients (APIs) that are sold in the developed markets of the United States and Europe. It also manufactures biosimilar Insulin, which are sold in India as branded formulations and in both bulk and formulation forms. In research services, Syngene International Limited (Syngene) is engaged in the business of custom research in drug discovery while the other fully owned subsidiary Clinigene International Limited (Clinigene) is in the clinical development space. In December 2009, Biocon acquired the Active Pharma Ingredients (API) undertaking from IDL Speciality Chemicals Ltd., a subsidiary of Gulf Oil Corporation Limited. Located with R & D in Banglore and API unit in Hyderabad, INDIA Biocon has two subsidiaries— Syngene , a custom research organisation, and Clinigene, a clinical research organisation. B Biocon’s presence straddles four main therapeutic areas—Diabetology, Cardiology, Nephrology and Oncology— and plans to introduce two new divisions, Comprehensive Care, and Immunotherapy, this year. Biocon, Syngene and Clinigene together employ approximately 4,500 personnel including biologists, chemists, medical practitioners, pharmacologists, engineers, finance/legal/marketing analysts, HR generalists and general administrators. Around 6% of its employees have PhD degrees, 45% have a master’s degree, and 33% are graduates. Biocon also collaborates with educational institutes to make courses more industry oriented.
HISTORY
Biocon was founded in 1978 with 10,000 as the initial capital, failing to find any financial institution for investment. The operations began out of the garage of a rented house with two employees. Biocon’s first product to go to market was peptinpapain, an enzyme found in papaya which is used to prevent beer from turning hazy. Unilever til 1983, the company blended enzymes and supplied them to brewing, textiles, biofuels, animal feed and other such industries across the world. In the mid-1980s 1980s with a loan ofUS$250,000 from ICICI Bank , Biocon was able to build a solid-state state fermentation plant which helped in the growth of its R&D. In 1989, the Irish Biocon was acquired by UnilIn the mid-1990s, 1990s, Kiran Mazumdar–Shaw Shaw decided to focus on biopharmaceuticals rather than enzymes. But Unilever, a major shareholder, did not want to be in the biopharmaceuticals business. At that time, John Shaw, the Scotsman whom Kiran Mazumdar– Mazumdar–Shaw had married in 1998, used his savings to reclaim the entire Biocon stake from Unilever. Biocon soon ventured entured into the lucrative biopharmaceutical segment. Foreseeing a great opportunity when branded drugs went off patent, they began to develop lovastatin lovastatin. Biocon eventually began making other forms of statins. The company’s revenue went up from 700 million in 1998, to 5 billion in 2004 when it went public. In 2007, Biocon made a strategic decision to divest its historic enzymes business to Novozymes A/S of Denmark. Today, Biocon has evolved from an enzyme company to a fully integrated biopharmaceutical l company. It now focuses its activities on its bio bio-pharma pharma business verticals that include APIs.
Missions
To be an integrated biotechnology enterprise of global distinction. Essential to this mission excellence in : Intellection asset creation through discovery , research and development. State of the art manufacturing capabilities. Internationally benchmarked quality and regulatory systems. New medical insight through disease specific clinical research. Customer relationship through outstanding products and services. Human resource development through training, mentoring and empowering. Management of research and business partnerships.
Subsidiary Companies
Syngene International Pvt Ltd Established in 1994, Syngene International Limited is Biocon’s custom research organisation offering pharmaceutical and biotechnology .
Clinigene
Clinigene International Limited is a subsidiary on Syngene offering international pharmaceutical majors Phase I-IV clinical trials .
BBPL
Anticipating the increasing importance of immunotherapy medicines of the future, Biocon established Biocon Biopharmaceuticals Pvt. Ltd. (BBPL) in 2003 .
NeoBiocon
Incorporated in January 2008 NeoBiocon FZ LLC is a research and marketing pharmaceutical company based in Abu Dhabi.
Biocon and IATRICa
In 2008, Biocon and IATRICa of the United States announced a strategic partnership to codevelop an exclusive new class of immunoconjugates
Biocon and Mylan
In 2009, Biocon signed a collaboration agreement with Mylan to develop and commercialise multiple, high-value generic biologics.
Biocon and Optimer
Biocon and Optimer Pharmaceuticals, a biopharmaceutical company focused on the treatment of serious infections such as Clostridium Difficile Infection (CDI).
Biocon and Vaccine:- Biocon is also developing fully human antibodies.
Awards and Achievement
2010: Bio-Excellence Award for Outstanding Achievement in the Healthcare Sector at Bangalore. 2009: – Among Top 20 Indian companies in Forbes ‘Best Under A Billion’ list – Bio-Excellence Award for Outstanding Achievement in the Healthcare Sector at Bangalore 2008: – Ranked among the top 20 global biotechnology companies (Source: Med Ad News, June 2008) – 7th largest biotech employer in the world (Source: Med Ad News, June 2008) 2007: ‘BioServices Company of the Year’ for Syngene, BIOMAb EGFR wins ‘Product of the Year’, BioSpectrum Awards. 2006: Best IT User Award in the Pharmaceutical Sector, NASSCOM 2004: – India's first and No. 1 biotech company with a global ranking of 16 (Source: Biospectrum, July 2004) – India's top 5 Life Sciences companies (at close of trade as on 30 July 2004) – Best Reinvention of HR Function Award, Indira Group, Mumbai – Best Employer of India Award, Hewitt. 2003: – Bio-Business Award for bio-entrepreneurship, Rabo India – Express Pharma Pulse Award for excellence in the pharmaceutical industry. 2001: – Biotech Product, Process Development and Commercialisation Award, Department of Biotechnology, Ministry of Science and Technology, Government of India.
First’s
1. Set up in 1978, Biocon is India's first biotech company.
2. First Indian biotech company to receive US funding for proprietary technologies (1989). 3. Sets up India's first clinical research organisation, Clinigene (2000). 4. First Indian company to be approved by US FDA for the manufacture of lovastatin, a cholesterol-lowering molecule (2001). 5. First company worldwide to develop human insulin on a Pichia expression system (2003). 6. Biocon enters the stock market with its IPO and becomes only the second Indian company to cross the $1-billion mark on the day of listing (2004). 7. Launches India’s first cancer drug, BIOMAb EGFR (2006). 8. First Indian company to manufacture and export enzymes to USA and Europe. 9. India’s largest producer and exporter of enzymes. 10.Releases country’s first 24-hour diabetes drug, Glargine (2009). 11. First biotech company to receive ISO 9001 certification in India. 12. Syngene is country’s first custom research company in drug discovery. .
Biocon’s milestone
29 November 1978—Biocon India is incorporated as a joint venture between Biocon Biochemicals Ltd. of Ireland and Kiran Mazumdar-Shaw. 1979—Becomes the first Indian company to manufacture and export enzymes to USA and Europe. 1989—Unilever plc. acquires Biocon Biochemicals Ltd. Biocon receives US funding for proprietary technologies. 1990—Scales up its in-house research program, based on a proprietary solid substrate fermentation technology, from pilot to plant level. 1993—Biocon's R&D and manufacturing facilities receive ISO 9001 certification from RWTUV, Germany. 1994—Establishes Syngene International Pvt. Ltd. as a Custom Research Company (CRC). 1996—The commercial success of Biocon's proprietary fermentation plant leads to a 3-fold expansion; enters biopharmaceuticals and statins. 1997—Spearheads initiatives in human healthcare through a dedicated manufacturing facility. 1998—Unilever agrees to sell its shareholding in Biocon to the Indian promoters. Biocon becomes an independent entity 2000—Commissions its first fully automated submerged fermentation plant ; establishes Clinigene, India's first Clinical Research Organisation (CRO). 2001—Becomes the first Indian company to be approved by USFDA for the manufacture of lovastatin; PlaFractor is granted a US 2001 and world-wide patent. 2002—Clinigene's clinical laboratory receives CAP accreditation. 2003—Biocon becomes the first company worldwide to develop human insulin on a Pichia expression system.
2004—Day 1 on the bourses closes with a market value of $1.11 billion ; Syngene establishes new research centre;
2005—Signs a commercial agreement for supply of insulin API to Asia, Africa and the Middle East. 2006—Inaugurates Biocon Biopharmaceuticals ; Biocon launches India's first anti-cancer drug, BIOMAb EGFR. 2007—Biocon and Neopharma sign an MOU to establish a JV to manufacture and market a range of biopharmaceuticals for the GCC countries. 2008—Biocon acquires a 70% stake in German pharmaceutical company, Biocon ranked among the top 20 global biotechnology companies (Med Ad News); Biocon is the 7th largest biotech employer in the world (Med Ad News). 2009— Bristol-Myers Squibb and Syngene open new R&D facility at Biocon Park; Biocon launches BASALOGTM – long lasting basal insulin for Type 1 & Type 2 Diabetics; 2010-Biocon explores investment in Malaysia in partnership with BiotechCorp. 2011-Biocon divests its stake in its German subsidiary, Biocon launches INSUPen®, a convenient and affordable reusable insulin delivery device 2012-Biocon announced Positive Results from its Global Phase 3 study with Recombinant Human Insulin. 2013-Biocon received Marketing Authorization from the Drugs Controller General of India (DCGI) for its Novel Biologic Itolizumab, anti CD6 molecule, for the treatment of chronic plaque Psoriasis 2014 - Biocon launched CANMAb, a new injectable drug for the treatment of a highly prevalent HER2-positive breast cancer..
BOARD OF DIRECTORS Ms. Kiran Mazumdar-Shaw
- Chairman & Managing Director, Biocon - First generation entrepreneur with more than 36 years experience in biotechnology and industrial enzymes - Master Brewer, Ballarat University, Australia - Awarded the Padmabhushan, one of India’s highest civilian awards for her pioneering efforts in Biotechnology, 2005
Mr. John Shaw
- Vice Chairman, Biocon - Served in senior corporate positions at various locations around the world - Former Chairman, Madura Coats Ltd.
Dr. Bala S. Manian
- Chairman and Founder, Reametrix Inc. - Co-founder, Quantum Dot Corporation and Surromed Corporation, USA - Expert in the design of electro-optical systems - Authored several peer-reviewed scientific publications and holder of many patents - Recognised through numerous awards for contributions as educator, inventor and entrepreneur, including Technical Academy Award in Digital chromatography.
Prof. Charles L. Cooney
- Professor, Chemical & Biochemical Engineering, MIT, USA - Director - Intelligen Inc., Bioscale Inc., and LS9 Inc., - Recipient of prestigious awards, including Gold Medal of the Institute of Biotechnology Studies and Distinguished Service Award from the American Chemical Society
Mr. Daniel M. Bradbury
- Non-Executive Board Member of Biocon Limited - Managing Member of BioBrit, LLC, a Life Sciences Consulting and Investment Firm - Life Sciences Executive with over 30 years of experience in creating and implementing strategies that transform businesses, bring novel medicines to market.
Ms. Mary Harney
- Non-Executive Board Member of Biocon Limited - Served as Tánaiste (Deputy Prime Minister) of the Irish Republic from 1997 2006 - Held the position of Minister for Health and Children (2004-2011) in the Irish government - Initiated far reaching health care reforms during her illustrious political career
Prof. Ravi Mazumdar
- University Research Chair Professor, Department of Electrical and Computer Engineering, University of Waterloo, Canada - Fellow of the Institute of Electrical and Electronics Engineers (IEEE) and Fellow of the Royal Statistical Society
Mr. Russell Walls
- Director, Biocon - Director, Aviva Plc - Director, Signet Jewelers Ltd - Trustee and Treasurer – The British Red Cross Society - Former, Group Finance Director – BAA Plc, Wellcome Plc, Coats Viyella Plc - Former, Director - Stagecoach Group plc, Hilton Group plc, Delphic Diagnostics Limited and Mersey Docks and Harbour Company
Mr. Suresh Talwar
- Partner, Talwar Thakore & Associates - Director L&T Ltd., Birla Sun Life Insurance Co. Ltd., Blue Star Ltd., and other leading companies - Area of professional specialisation includes corporate law and related fields - Legal counsel to numerous Indian companies, multinational corporations and Indian/foreign banks
Prof. Catherine Rosenberg
- Director on the Board of Syngene - University Research Chair Professor and Chairman, Department of Electrical and Computer Engineering, University of Waterloo, Canada - Since June 2010, she holds the Tier 1 Canada Research Chair in the Future of Internet - She was elected for an IEEE (The Institute of Electrical and Electronics Engineers) Fellow in 2011 and a Fellow of the Canadian Academy of Engineering
SWOT ANALYSIS
Segment , Target and Positioning
Segments :-
Diabetes
Oncology
!egments
Nephrology Cardiology
Anti- diabetic Agents Anti- Inflammatory Agents Anti-Oxidants Cadivascular Agents Anti-Obesity Agents Digestive Aid Enzymes Hepatoprotective Immunosupressants Gastro Intestinal Agents Hemostatic eutraceuticals
Target Market:Aging Korean population demanding affordable therapy for diabetes , cancer and cardiovascular diseases. Large pool of patients. Prevalence of diabetes-8% , Incidence of disease-0.4% per year. Insulin Therapy. Huge demand for affordable products. Non small cell lung cancer drug market Majority of patients in stage III or IV at time of Diagnosis. Health care professionals . Pharmacists
Positioning:-
Commodity
Differentiated
&ayer Driven Acute '%EA'#E ' &rice driven $o(er ris) of immunogenic reactions *ully understood mode of action
"IO!I#I$A%!
C+ronic treatment $imited competition Hig+er ris) of immunogenic reactions , #ode of actions not clear Influenced by multiple sta)e +olders,
COMPETITORS:-
-oc)+ardt $imited
"IOCO
!un &+armaceuticals
STRATEGIC IMPLEMENTATIONS
&roduct
Human Insulin Insulin Lispro Monolonal antibodies Oncology Product Speciality and primary care product
&rice
Lower cost Biosimilar product Value based pricing Payer Strategy
&romotion
Tailor go-to-market-approach To local dynamics ,both in term of sales forces model and marketing offerings Target therapy areas Build trust and network development
&lace
South Korea Export dug to drug to Asia and doveloped countries,
Product Profile
“Biocon’s impressive range of products and partnered services continue to build a robust pipeline of biosimilar and discovery-led biologicals programs in oncology, nephrology, diabetes and autoimmune diseases.” - Sandeep Rao, Vice President, Business Development
Over the years, we have systematically leveraged our technology platforms from enzymes to small molecules to recombinant proteins and antibodies. Through partnerships and alliances, Biocon has strategically moved up the value chain from supplying pharmaceutical bulk actives to developing proprietary molecules and our own branded formulations. In the areas of custom and clinical research services, collaborative partnerships with complementary biotechnology and pharmaceutical companies are yielding rich results. We believe these partnerships will positively impact any and all phases of our discovery portfolio.
Small Molecules:Our Small Molecules business comprising APIs continued to gain momentum during the year driven by strong sales of Fidaxomicin, Immunosuppressants and Statins. Emerging markets business was driven by a strong performance in territories like CIS and Africa. Sales in the regulated markets gained further traction, driven by Fidaxomicin and other key products. We have expanded into new geographies and our business currently spans 85 countries. Biocon has been reaping rich rewards from its Small Molecules business which comprises a robust portfolio of Active pharmaceutical Ingredients (APIs), including generics like Statins, Immunosuppressants and Proprietary Products like Fidaxomicin. Biocon's Small Molecules strategy, driven by its Active Pharmaceutical Ingredients (APIs) business, has reached an inflection point. Investments in technology platforms to create a differentiated API portfolio are yielding rich rewards.
API’s
Cardiovascular Agents:
Rosuvastatin Pravastatin Lovastatin Fluvastatin
Immunosuppressants:
Mycophenolate Mofetil Mycophenolic Acid Sod Tacrolimus Temsirolimus
Opthalmics
Latanoprost Travoprost Bimatoprost Dorzolamide Brinzolamide
Oral Anti-Diabetic Agents:
Acarbose Pioglitazone Repaglinide Rosiglitazone Montelucast
Other Products:
Alpha Lipoic Acid L-Carnitine Urso Ethamsylate Tranexamic Acid
Hepatoprotective Agents:
L-Ornithine L-Aspartate Deoxy Cholic Acid
Probiotics
Chondroitin Sulphate Glucosamine Sulphate Iron Polymaltose Complex
Branded Formulations
The Branded Formulations business recorded an impressive performance in FY13, with revenues growing by 34% to ` 3,474 million. Diabetology, Oncology, Bioproducts and Comprehensive Care divisions contributed significantly to the overall performance of the Branded Formulations (India) business. In keeping with the Company’s aim of educating patients about the importance of preventive health measures, many of the business divisions conducted patient awareness programs all over India during the year. These programs not only helped educate patients in disease prevention, detection and cure but also helped in building value of Brand Biocon.
Diabetology
Diabetology became the first therapeutic division of Biocon to cross themilestone of ` 1,000 million in sales this year.
Oncotherapeutics
Biocon’s Oncotherapeutics division remains committed to unlocking value of its anti-cancer portfolio to provide patients in India and emerging markets access to the benefits of affordable and differentiated anti-cancer therapies. Evertor™, the first and the only global generic of Everolimus for the treatment of progressive neuro-endocrine tumors of pancreatic origin, completed two years of launch in FY13.
Cardiology
Biocon Cardiology, which is focused on providing differentiated and affordable therapies to patients suffering from cardiovascular diseases, reported strong growth this year. MYOKINASE® (Streptokinase) and CLOTIDE® (Eptifibatide) continued to be among the Top 3 brands in their respective segments. STATIX® (Atorvastatin) also reported a substantial prescription growth.
Research and Development
We aim to develop novel biopharmaceuticals by leveraging our exceptional scientific talent pool and developmental capabilities. Biocon’s discovery-led R&D focuses on the entire drug development pathway - from process development, to non-clinical and clinical research. The depth and breadth of our technological and scientific expertise enables us to develop new and affordable therapeutics for the world’s most debilitating diseases. R&D’s ability to leverage frontier science, to develop solutions for small molecules to biosimilars to novel molecules, continues to advance Biocon’s reputation as an emerging global biopharma focusing on delivering affordable innovation. Our R&D team can boast of outstanding scientists from the best institutes around the world. The high quality scientific talent pool is engaged in continuous interaction with international thought leaders and participation in technical programs to enable knowledge creation, and the positioning of Biocon’s R&D for challenging biopharmaceutical development.
Highlights:2013 Biocon Enhances Partnership with Mylan through Strategic Collaboration for Insulin Products Biocon Receives Marketing Authorization for its Novel Biologic Itolizumab for Psoriasis 2012 Biocon enters into an agreement with Bristol-Myers Squibb for its IN-105, an Oral Insulin drug Biocon announced Positive Results from its Global Phase 3 study with Recombinant Human Insulin 2010 Biocon announces preliminary data on its novel oral insulin drug candidate Biocon initiates Phase 3 clinical trials in Psoriasis 2009 Biocon completes Phase 2 clinical trials in Psoriasis and Rheumatoid Arthritis. Biocon initiates IN-105 Phase 3 study in Type 2 diabetes.
2008 Biocon initiates Phase 2 studies using T1h in Psoriasis patients Biocon completes Phase 1 clinical trial using IN-105 in NHV in Europe 2007 Biocon unveils five renal therapy drugs Biocon gets regulatory approval for GCSF 2006 Biocon files PCT for novel process of manufacturing of Oral Insulin Biocon completes phase-IV trials of INSUGEN® 2005 Biocon and Karolinska Institute sign a MoU to collaborate in research and research education initiatives 2004 Biocon and Vaccinex partner to discover and develop therapeutic antibodies Biocon launches INSUGEN®, the world's first recombinant human (r-DNA) insulin using a unique Pichia expression system 2003 Biocon files its 100th patent application 2002 Biocon ranks 3rd among Indian companies for filing PCT applications Biocon files PCT application for patent on 'Methods of producing esters of Mycophenolate' 2001 US patent office grants a patent on PlaFractor™, Biocon's revolutionary bioreactor
BIOCON PHARMACEUTICALS ANNUAL REPORT (2012-2013)
Balance Sheet of Biocon
------------------- in Rs. Cr. ------------------Mar '13 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Init. Contribution Settler Preference Share Application Money Employee Stock Opiton Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Minority Interest Policy Holders Funds Group Share in Joint Venture Total Liabilities 100.00 100.00 0.00 0.00 0.00 0.00 0.00 2,594.60 0.00 2,694.60 154.20 94.60 248.80 65.30 0.00 0.00 3,008.70 Mar '13 12 mths 100.00 100.00 0.00 0.00 0.00 0.00 0.00 2,172.40 0.00 2,272.40 90.40 166.70 257.10 3.80 0.00 0.00 2,533.30 Mar '12 12 mths Mar '12 12 mths
Consolidated Balance Sheet of Biocon
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions 2,584.60 967.20 1,617.40 205.40 586.60 398.40 509.70 672.90 1,581.00 425.70 0.00 2,006.70 0.00 1,156.90 250.50 1,407.40 2,158.90 785.20 1,373.70 286.30 556.30 378.30 491.70 523.30 1,393.30 335.40 0.00 1,728.70 0.00 1,200.20 211.50 1,411.70
Net Current Assets
599.30
317.00
Minority Interest Group Share in Joint Venture Miscellaneous Expenses Total Assets
0.00 0.00 0.00 3,008.70
0.00 0.00 0.00 2,533.30
Biocon
Consolidated Profit & Loss account Mar '13 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised 1,111.20 142.60 389.40 23.70 0.00 301.90 0.00 933.80 97.20 307.60 22.40 0.00 252.20 0.00 2,530.60 45.30 2,485.30 254.60 26.50 2,766.40 2,136.00 50.00 2,086.00 64.50 44.50 2,195.00 ------------------- in Rs. Cr. ------------------Mar '12 12 mths
Total Expenses
1,968.80
1,613.20
Mar '13
Mar '12
12 mths Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Minority Interest Share Of P/L Of Associates Net P/L After Minority Interest & Share Of Associates Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 2,000.00 25.64 0.00 134.73 543.00 797.60 8.10 789.50 179.30 0.00 610.20 0.00 610.20 97.50 512.70 3.80 0.00 307.00 857.60 0.00 150.00 25.50
12 mths 517.30 581.80 12.20 569.60 174.40 0.00 395.20 0.00 395.20 55.90 339.30 0.90 0.00 335.70 679.40 0.00 100.00 16.20
2,000.00 16.97 0.00 113.62
FINANCIAL ANALYSIS Introduction:
• Financial Analysis is the process of determining the operating & financial characteristics of a firm from accounting data & financial statement. The goal of such analysis is to determine efficiency & performance of the firm management, as reflected in the financial records and reports. Its main aim is to measure the firm?s liquidity, profitability and other indications that business is conducted in a rational and orderly way. • The basic financial statement – Of the various reports that the companies issue to their shareholder, the annual report is by far the most important. Two types of information are given in this report, first there is a text that describes the firms operating results during the past year and discusses new development that will affect future operations. Second there are few basic financial statements –the income statement, the balance sheet, the statement of retained earnings and the sources and uses of funds statements. The financial statement taken together give an accounting picture of the firm?s operation and financial positions.
• “Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statements, and a study of • trends of these factors as shown in a series of statements” --- John N. Myer • “The analysis and interpretation of financial statement are an attempt to determine the significance and meaning of the financial statement data so that the forecast may be made of the prospects for future earnings, ability to pay interest and debt maturities (both current & long term) and profitability of a sound dividend policy” --- R.D. and S. % Mc Muller • Thus, analysis of financial statement means such a treatment of the information contained in the financial statement as to afford a full diagnosis of the profitability and financial position of the firm concerned.
• According to the American institute of certified public accountants “……………… financial statement reflected a combination of recorded facts, accounting conventions and personal judgments.
Nature of financial statement:
Objective of financial analysis:
• The number and types of people interested in financial statements have changed radically over a period of time. They need varied information and fortunately such information may be classified as relating to profitability, liquidity and solvency. • The Project “ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS” is undertaken to fulfill the following objectives. To estimate the earning capacity To gouge the financial position and financial performance of the firm To determine the long terms liquidity of the funds as well as solvency To determine the debt capacity of the firm To decide about the future prospective of the firm
Types of Financial Analysis
• Financial analysis may be classified into different categories dependency upon The material used The method of operation followed in the analysis
Graphical representation
*inancial Analysis
'+e material used
t+e met+od of operation follo(ed in t+e analysis
Internal Analysis
External Analysis
Horizontal Analysis
Vertical Analysis
Ratio Analysis
Financial ratio:
A ratio may be defined as a fixed relationship in degree or number between two numbers. In finance, ratios are used to point out relationship that is not obvious from the row data. Some uses financial ratios are following: (1) To Compare Different Companies in Some Industry: ratio can high light the factors association with successful and unsuccessful firms. They can reveal strong firms and weak firms, overvalued undervalued firms. (2) To Compare Different Industries: Every industry has its own unique set of operating and financial characteristics. These can be identified with the help of ratios. (3) To Compare Performance In The Different Time Periods: Over a period of years, a firm or a industry develop certain forms that may indicate future success or failure. If relationship changes in firms data over different time periods, the ratio may provide clues and trends of future problems.
Utility of Financial Analysis:
• • • • • • • Following are the advantages of Financial Analysis : With the help of ratios we can determine the ability of the firms to meet its currentobligation. Overall operating efficiency and performance of the firm. Efficiency with which firms is utilizing its various assets in generating sales Revenue. Ratios help in inter-firm and intra-firm comparison. They help in determining the financial strength by highlighting the liquidity. They are useful in comparison of performance. They are also useful in forecasting purpose.
Advantages Of Ratios:
• The ratio analysis is one of the most powerful tools of financial analysis. It is use as a device to analysis and interprets the financial health of enterprise. Just like a doctor examines his conclusion regarding the illness and before giving his treatment, a financial analyst analyses the financial statement with various tools of analysis before commenting upon the financial bearlth or weakness of an enterprise. „A ratio is known as a symptom like blood pressure, the pulse rate or the temperature of the individual?. It is with help of ratios that the financial statements can be analyzed and decision made from such analysis.
• HELPS IN DIVISION MAKING: Financial statements are prepared primarily for decision making, but the information provided in financial statements is not an end in itself and no meaningful conclusions can be drawn from these statements alone. Ratio analysis helps in making decisions from the information provided in these financial statements. • HELPS IN FINANCIAL FORCASTING AND PLANNING: Ratios analysis is of much help in financial forecasting and planning. Planning is looking ahead and the ratios calculated for a number of year?s work as a guide for the future. Meaningful conclusions can be drawn for future from these ratios. Thus, ratio analysis helps in forecasting and planning. • HELPS IN COMMUNICATING: The financial strength and weakness of a firm are communicated in a more easy and understandable manner by the use of ratios the information contained in a financial statements conveyed in a meaningful manner to the one for the whom it is meant. Thus, ratios help in communicating and enhance the value of financial statements. • HELPS IN COORDINATION: Ratios even helps in coordinating, which is utmost important in effective business management. Better communication of efficiency and weakness of an enterprise results in better coordination in the enterprise. • HELPS IN CONTROL: Ratio analysis even helps in making effective control of the business. Standard ratios can be based upon Performa Financial Statements and variance or deviations, if any, can be founded by comparing the actual with the standards so as to take corrective action at the right time. The weakness or otherwise, if any, come to the knowledge of the management which helps in effective control of the business.
Role Of Financial Ratio:
•
Aid in financial forecasting: Ratio analysis is very helpful in financial forecasting. Ratio relating to the past sales, profits & financial position from the basis for setting future trends. • Aid in comparison: With the help of ratio analysis ideal ratio can be composed & they can be used for comparing a firm progress & performance. Inter firm comparison with the industry averages is made possible by ratio analysis. • Financial solvency of the firm: Ratio analysis indicates the trend in financial solvency of the firm. Solvency has to dimensions: Long-term Solvency Short-term Solvency Long term solvency refers to the financial viability of the firm while Short-term solvency is the liquidity position of the firm.
• Communication values: Different financial ratios communicate the strength & financial standing of the firm to the internal & the external parties. They indicate overall profitability of the firm
•
Other uses: Financial ratios are very helpful in the diagnosis & financial health of a firm. They highlight the liquidity, solvency, profitability & capital gearing etc. of the firm. They are useful tools of analysis of financial performances.
Classification of ratios:
Ratio analysis Liquidity ratio Current ratio Leverage ratio Debt equity Ratio total assets to debt Proprietary ratio Turnover ratio Stock Debtors Creditors turnover Fixed assets turnover working capital turnover Capital Gearing Interest coverage Liquid ratio
Turnover turnover
Profitability ratio Gross profits operating ratio Net profit ratio Profitability ratio based on investment Return on capital employed Return on shareholder fund Return on equity shareholder fund Earning per share
1. LIQUIDITY RATIOS: Liquidity refers to the ability of the firm to meet its obligations inventory the short-run, usually one year. Liquidity ratios are generally based on the relationship between current assets and current liabilities (the sources for meeting short-term obligations). Example: Current ratio, Acid test ratio. I. Current ratio: also known as working capital ratio,this is used to evaluate short term financial position of the business concern. It indicates the ability of the firm to meet its short term obligations. It compares the current assets and current liabilities of the firm. Current assets are those which are either in the form of cash or cash equivalent.current Liabilities are those which are to be discharged during the accounting period Current ratio = current assets current liabilities Significance: Ideal current ratio is 2:1. A very high ratio indicates availability of idle cash and is not a good sign. II. Quick ratio: it is very useful in measuring liquidity position of a firm. It measures the firm’s capacity to pay off current obligations. It is used as complimentary ratio to the current ratio. Quick ratio = liquid assets current liabilities. Significance: Liquid ratio of 1;1 is considered satisfactory. If quick assets are equal to current liabilities, then the concerm maybe able to meet its short term obligations. 2. LEVERAGE RATIOS: Leverage ratios analyze the long term solvency that help us judge the ability of a firm to pay the interest regularly as well as repay the principal when due to debenture holders, long term lenders.
I.
Debt equity ratio: shows a relationship between long term debt and shareholder’s fund. This ratio indicates the relation between outsider’s fund and shareholder’s fund. Also called external internal equity ratio Debt equity ratio= debt or long term debt equity shareholder’s fund
Significance: A ratio of 1:1 is usually considered to be satisfactory. This ratio is calculated to know about the organzation’s repayment capacity of long term debts. II. Total asset to debt ratio: shows a relationship between total assets and the longterm debts. Total asset to debt ratio= total assets long term debts III. Proprietory ratio: this establishes the relationship between shareholder’s funds to assets of the firm. It is important for determining long term solvency of the term. Also known as euity ratio or net worth to total assets ratio. Proprietory ratio= equity total assets Significance: Higher the ratio, dependency on external sources and loans for working capital will be less and financial condition of the organization will be sound. IV. Capital gearing ratio: it shows relationship between equity capital ( including reserves and undistributed profits) and fixed cost bearing capital ( preference sharing capital, fixed interest bearing loans) Capital gearing ratio= equity share capital+ reserves+ P&L balance fixed cost bearing capital
Significance: A high gearing will be beneficial to equity shareholders when rate of interest/dividend payable on fixed cost bearing capital is lower than the rate of return on investment in business.
V.
Interest coverage ratio: also known as debt service ratio. This is calculated by dividing net profit before charging interest and income tax by ‘fixed interest charges’.
Interest coverage ratio= net profit before charging interest and income tax ‘fixed interest charges’ Significance: This shows how many times the interest charges are covered by profits available to pay interest charges. It is helpful in finding out whether the business will earn sufficient 3. Turnover ratios/Activity ratios: These ratios measures how well the resources at the disposal of concern are being utilized.they are known as turnover ratios as they indicate the rapidity with which the resources available to the concern are being used to produce sales. In other words, they measure the efficiency and rapidity of resources of the company like stock, debtors, fixed assets, working capital, etc. They are generally calculated on the basis of sales or cost of sales. I. Stock turnover ratio: a.k.a inventory ratio. This ratio indicates relationship between cost of goods sold during the year and average stock kept during that year. Stock turnover ratio= cost of goods sold Average stock Significance: This ratio indicates whether stock has been efficiently used or not. It shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the year. The higher the ratio, the better it is, since it indicates that stock is selling quickly. In business, where the STR is high, goods can be sold at a low margin of profit and even then, the profitability may be quite high. II. Debtors turnover ratio: a.k.a receivable turnover ratio. This ratio indicates relationship between credit sales and average debtors during the year. Debtors turnover ratio= net credit sales Average debtors + Average B/R Significance: This ratio indicates the speed with which the amount is collected from debtors. The higher the ratio, the better it is, since it indicates that the amount from debtors are being collected quickly. A lower DTR will indicate the inefficient credit sales policyof the management.
III.
Creditors turnover ratio: This ratio indicates relationship between credit purchases and average creditors during the year. Creditors turnover ratio= net credit purchases Average creditors + Average B/P
Significance: This ratio indicates the speed with which the amount is being paid to the creditors. The higher the ratio, the better it is, since it will indicate that the creditors are being paid more quickly which increases the credit worthiness of the firm. IV. Fixed assets turnover ratio: This ratio indicates relationship between cost of goods sold and fixed assets during a year. Fixed assets turnover ratio= cost of goods sold Net fixed assets Significance: This ratio reveals how efficiently the fixed assets are being utilized. If there is increase in ratio, it indicates that there is better utilization of fixed assets and vice versa. V. Working capital turnover ratio: This ratio indicates relationship between sales and working capital. Working capital turnover ratio=cost of goods sold or sales Working capital Significance: This ratio reveals how efficiently working capital has been utilized in making sales. In other words, it shows the number of times working capital has been rotated in producing sales. A high working turnover ratio shows efiicient use of working capital and quick turnover of current assets like stock and debtor.
4. Profitability ratios: These ratios measure the profit earning capacity of the company. Generally, profitability ratio is calculated in percentage (%). I. Gross profit ratio: It shows relationship between gross profit and sales. It shows margin of profit on sales. Gross profit ratio= gross profit X 100 Net sales
Significance: It reveals profit earning capacity of business w.r.t. its sales. Increase in gross profit ratio indicates reduction in cost while decrease in gross profit ratio will indicate increase in cost or sales at a lesser price.
II.
Operating ratio: This ratio indicates the proportion that the cost of goods sold bears to sales. Operating ratio= cost of goods sold + operating exp. X 100 Net sales11
Significance: It is the measure of efficiency and profitability of the business. The lesser is the ratio, the better it is because less operating ratio means higher net profit. III. Net profit ratio: This ratio indicates relationship between net profit and net sales Net profit ratio= Net profit X 100 Net sales
Significance: It shows the operational efficiency of the business. Decrease in the ratio indicates managerial inefficiency and excessive selling and distribution expenses. Increase in it shows better performance. 5. Profitability ratios based on Investment: These ratios reflect the true earning capacity of the resources employed in the enterprise. I. Return on capital employed: It reflects the overall profitability of the business. It is calculated by comparing the profit earned and the capital employed to earn it. Rate on capital = Profit before interest, tax and dividends X 100 Employed Capital employed Significance: This ratio is a barometer of the overall performance which measures how efficiently the capital employed in the business is being used.
II.
Return on total shareholder’s fund: To calculate this, net profit after interest and tax is divided by shareholder’s fund Return on total = net profit after interest and tax shareholder’s fund Total shareholder’s funds
Significance: It reveals how profitably the proprietor’s funds have been utilized by the firm
III.
Return on Equity Shareholder’s funds: This ratio measures the profitability of the funds belonging to the equity shareholders. Return on Equity Shareholders funds = Net profit (after interest, tax & preference dividend X 100 Equity Shareholders funds
Significance: It measures how efficiently the equity shareholders funds are being used in the business. The higher the ratio, the better it is, because in such case, equity shareholders may be given a higher dividend.
IV.
Earning per share: This ratio measures the profit available to the equity shareholders on per share basis. All profits left after payment of tax and preference dividend are available to equity shareholders. Earning per share= Net profit – Dividend on preference share Number of equity shares
Significance: It is helpful in the determination of the market price of the equity share of the company. It is also helpful in estimating the capacity of the company to declare dividends in equity shares.
Findings
Findings:
1. Current ratio: 2012 1728.7 = 1411.7 1.22 2006.7 1407.4 2013 = 1.43
Interpretation: ideal current ratio should be 2:1. So, we can say that the company’s financial position is not satisfactory but as compared to 2012, the current ratio of 2013 is more. Which means , Curent assets are less than current liabilities. 2. Quick ratio: 2012 1728.7 -378.3 = 0.95 1411.7 2013 2006.7-398.4 = 1.14 1407.4
Interpretation: ideally, it should be 1:1. So, it can be concluded that company’s financial position in 2013 is more sound compared to 2012. 3. Debt equity ratio: 2012 257.1 = 0.11 2272.4 2013 248.8 = 0.09 2694.6
Interpretation: ideally, it should be 1:1. So, it can be said that the organization’s repayment capacity of long-term debts is same for both the years which is not satisfactory. 4. Total assets to debt ratio: 2012
2013
2533.3 = 9.85 257.1
3008.7 = 12.09 248.8
Interpretation: Total assets in both the years is more than sufficient to repay in cash the total debts. 5. Proprietor’s ratio: 2012 2272.4 = 0.89 2533.3
2013 2694.6 = 0.89 3008.7
Interpretation: Since it is same for both the years, it can be concluded that the financial condition of the company is sound. 6. Capital gearing ratio: 2012 257.1 = 0.11 2272.4
2013 248.8 = 0.09 2694.6
Interpretation: A low gearing is not beneficial to equity shareholders when rate of interest/dividend payable on fixed cost bearing capital is higher than the rate of return on investment in business.
7. Interest coverage ratio: 2012 395.2 = 32.39 12.2
2013 610.2 = 75.33 8.1
Interpretation: from the findings, it can be said that the business will earn sufficiently.
8. Fixed assets turnover ratio: 2012 2086 = 0.96 2158.9
2013 2485.3 = 0.96 2584.6
Interpretation: it can be concluded that the fixed assets are being utilized properly as the ratio remain intact. 9. Working capital turnover ratio: 2012 2086 317 =6.58 2485.3 599.3
2013 = 4.14
Interpretation: since there is decrease in the ratio in 2013, it can be said that the working capital has not been utilized efficiently in making sales.
10. Net profit ratio: 2012 339.3 *100 = 16 2086
2013 512.7 *100 = 20 2485.3
Interpretation: the increase in ratio in 2013 implies managerial efficiency shows beeter performnce.
11. Return on capital employed: 2012 407.4 2529.5 *100 = 16 618.3 2943.4
2013 *100 = 21
Interpretation: the capital employed in the business is being utilized properly as there is a increase in the ratio in 2013.
Conclusions:In balance sheet:Net worth has increase substantially Total debt decreases following year. Total liabilities increase with relation to 2012. Current liabilities decreases. Current assets and Total assests both increases . In Profit/Loss a/c:Total Income increases. Total expenses increases. Net profit increases. Net sales increases.
doc_314138286.pdf
This report contains the financial aspects of Biocon pharmaceuticals , this will include Balace sheet , P&L a/c , Financial ratio.
comparison of balance sheet of 2013 & 2012
A PROJECT REPORT ON “FINANCIAL ANALYSIS OF BIOCON
LIMITED”
A Project report submitted in the partial fulfillment of the requirement for the degree of Master of Business Administration (MBA)
Submitted by: Satyajeet Kashyap Vaibhav Vaidya
Submitted to: Dr. Ashok Panigrah Panigrahi
Professor SVKM’s NMIMS
SVKM’s NMIMS SCHOOL OF PHARMACY AND TECHNOLOGY MANAGEMENT
CERTIFICATE
This is to certify that this project report entitled “Financial Analysis of Biocon Pharmaceuticals” submitted to SVKM’s Narsee Monjee Institute of Management Studies, is a bonafide record of work done by “Vaidya Vaibhav Sanjay” and “Kashyap Satyajeet Sunit” under my guidance and supervision.
Date:
Faculty signature Dr.Ashok Panigrahi Associate Professor, SPTM, NMIMS (Shirpur campus)
ACKNOWLEDGEMENT
I am very thankful to everyone who all supported me for I have completed my project effectively and moreover on time.
I would like to express my special thanks of gratitude to my professor “Dr. Ashok Panigrahi” who constantly guided and supported me. Last but not the least, I would like to thank my colleagues who helped me a lot in gathering different information, collecting data and guiding me from time to time in making this project unique.
Thanking you Vaibhav Vaidya & Satyajeet Kashyap MBA PharmaTech – IInd year
PREFACE
My project provides complete information on the topic "Financial Analysis of Biocon Pharmaceuticals" and maximum efforts have been taken to make the project more comprehensive and lucid to understand. My project covers a variety of sub topics like Company’s profile, History, Subsidiary companies, future plans, SWOT analysis, Buisness units, Annual reports, Financial and ratio analysis in detail including the ratio classification, findings and interpretation.
CONTENTS 1. Introduction
• Company profile • History • Missions • Subsidiary Companies • Milestone • Board of directors 2. Awards 3. SWOT Analysis 4. Strategic Implementations 5. STP and Competitors 6. Product Profile • Small Molecules • API’s • Branded Formulations 7. Research and Development 8. Annual Report (2012-2013) • Balance Sheet • Profit and loss sheet • Cash flow Statement
9. Financial Analysis • Introduction • Nature of financial analysis • Objective of financial analysis • Type of financial analysis 10. Ratio Analysis • Financial ratios • Utility of financial ratios • Advantages • Role of financial ratios 11. Classification of Ratios • Liquidity ratios • Leverage ratios • Turnover ratios • Profitability ratios • Profitability ratios based on investment
COMPANY PROFILE
Biocon Limited is an Indian biopharmaceutical company based in Banglore. Within biopharmaceuticals, the Company manufactures generic active pharmaceutical ingredients (APIs) that are sold in the developed markets of the United States and Europe. It also manufactures biosimilar Insulin, which are sold in India as branded formulations and in both bulk and formulation forms. In research services, Syngene International Limited (Syngene) is engaged in the business of custom research in drug discovery while the other fully owned subsidiary Clinigene International Limited (Clinigene) is in the clinical development space. In December 2009, Biocon acquired the Active Pharma Ingredients (API) undertaking from IDL Speciality Chemicals Ltd., a subsidiary of Gulf Oil Corporation Limited. Located with R & D in Banglore and API unit in Hyderabad, INDIA Biocon has two subsidiaries— Syngene , a custom research organisation, and Clinigene, a clinical research organisation. B Biocon’s presence straddles four main therapeutic areas—Diabetology, Cardiology, Nephrology and Oncology— and plans to introduce two new divisions, Comprehensive Care, and Immunotherapy, this year. Biocon, Syngene and Clinigene together employ approximately 4,500 personnel including biologists, chemists, medical practitioners, pharmacologists, engineers, finance/legal/marketing analysts, HR generalists and general administrators. Around 6% of its employees have PhD degrees, 45% have a master’s degree, and 33% are graduates. Biocon also collaborates with educational institutes to make courses more industry oriented.
HISTORY
Biocon was founded in 1978 with 10,000 as the initial capital, failing to find any financial institution for investment. The operations began out of the garage of a rented house with two employees. Biocon’s first product to go to market was peptinpapain, an enzyme found in papaya which is used to prevent beer from turning hazy. Unilever til 1983, the company blended enzymes and supplied them to brewing, textiles, biofuels, animal feed and other such industries across the world. In the mid-1980s 1980s with a loan ofUS$250,000 from ICICI Bank , Biocon was able to build a solid-state state fermentation plant which helped in the growth of its R&D. In 1989, the Irish Biocon was acquired by UnilIn the mid-1990s, 1990s, Kiran Mazumdar–Shaw Shaw decided to focus on biopharmaceuticals rather than enzymes. But Unilever, a major shareholder, did not want to be in the biopharmaceuticals business. At that time, John Shaw, the Scotsman whom Kiran Mazumdar– Mazumdar–Shaw had married in 1998, used his savings to reclaim the entire Biocon stake from Unilever. Biocon soon ventured entured into the lucrative biopharmaceutical segment. Foreseeing a great opportunity when branded drugs went off patent, they began to develop lovastatin lovastatin. Biocon eventually began making other forms of statins. The company’s revenue went up from 700 million in 1998, to 5 billion in 2004 when it went public. In 2007, Biocon made a strategic decision to divest its historic enzymes business to Novozymes A/S of Denmark. Today, Biocon has evolved from an enzyme company to a fully integrated biopharmaceutical l company. It now focuses its activities on its bio bio-pharma pharma business verticals that include APIs.
Missions
To be an integrated biotechnology enterprise of global distinction. Essential to this mission excellence in : Intellection asset creation through discovery , research and development. State of the art manufacturing capabilities. Internationally benchmarked quality and regulatory systems. New medical insight through disease specific clinical research. Customer relationship through outstanding products and services. Human resource development through training, mentoring and empowering. Management of research and business partnerships.
Subsidiary Companies
Syngene International Pvt Ltd Established in 1994, Syngene International Limited is Biocon’s custom research organisation offering pharmaceutical and biotechnology .
Clinigene
Clinigene International Limited is a subsidiary on Syngene offering international pharmaceutical majors Phase I-IV clinical trials .
BBPL
Anticipating the increasing importance of immunotherapy medicines of the future, Biocon established Biocon Biopharmaceuticals Pvt. Ltd. (BBPL) in 2003 .
NeoBiocon
Incorporated in January 2008 NeoBiocon FZ LLC is a research and marketing pharmaceutical company based in Abu Dhabi.
Biocon and IATRICa
In 2008, Biocon and IATRICa of the United States announced a strategic partnership to codevelop an exclusive new class of immunoconjugates
Biocon and Mylan
In 2009, Biocon signed a collaboration agreement with Mylan to develop and commercialise multiple, high-value generic biologics.
Biocon and Optimer
Biocon and Optimer Pharmaceuticals, a biopharmaceutical company focused on the treatment of serious infections such as Clostridium Difficile Infection (CDI).
Biocon and Vaccine:- Biocon is also developing fully human antibodies.
Awards and Achievement
2010: Bio-Excellence Award for Outstanding Achievement in the Healthcare Sector at Bangalore. 2009: – Among Top 20 Indian companies in Forbes ‘Best Under A Billion’ list – Bio-Excellence Award for Outstanding Achievement in the Healthcare Sector at Bangalore 2008: – Ranked among the top 20 global biotechnology companies (Source: Med Ad News, June 2008) – 7th largest biotech employer in the world (Source: Med Ad News, June 2008) 2007: ‘BioServices Company of the Year’ for Syngene, BIOMAb EGFR wins ‘Product of the Year’, BioSpectrum Awards. 2006: Best IT User Award in the Pharmaceutical Sector, NASSCOM 2004: – India's first and No. 1 biotech company with a global ranking of 16 (Source: Biospectrum, July 2004) – India's top 5 Life Sciences companies (at close of trade as on 30 July 2004) – Best Reinvention of HR Function Award, Indira Group, Mumbai – Best Employer of India Award, Hewitt. 2003: – Bio-Business Award for bio-entrepreneurship, Rabo India – Express Pharma Pulse Award for excellence in the pharmaceutical industry. 2001: – Biotech Product, Process Development and Commercialisation Award, Department of Biotechnology, Ministry of Science and Technology, Government of India.
First’s
1. Set up in 1978, Biocon is India's first biotech company.
2. First Indian biotech company to receive US funding for proprietary technologies (1989). 3. Sets up India's first clinical research organisation, Clinigene (2000). 4. First Indian company to be approved by US FDA for the manufacture of lovastatin, a cholesterol-lowering molecule (2001). 5. First company worldwide to develop human insulin on a Pichia expression system (2003). 6. Biocon enters the stock market with its IPO and becomes only the second Indian company to cross the $1-billion mark on the day of listing (2004). 7. Launches India’s first cancer drug, BIOMAb EGFR (2006). 8. First Indian company to manufacture and export enzymes to USA and Europe. 9. India’s largest producer and exporter of enzymes. 10.Releases country’s first 24-hour diabetes drug, Glargine (2009). 11. First biotech company to receive ISO 9001 certification in India. 12. Syngene is country’s first custom research company in drug discovery. .
Biocon’s milestone
29 November 1978—Biocon India is incorporated as a joint venture between Biocon Biochemicals Ltd. of Ireland and Kiran Mazumdar-Shaw. 1979—Becomes the first Indian company to manufacture and export enzymes to USA and Europe. 1989—Unilever plc. acquires Biocon Biochemicals Ltd. Biocon receives US funding for proprietary technologies. 1990—Scales up its in-house research program, based on a proprietary solid substrate fermentation technology, from pilot to plant level. 1993—Biocon's R&D and manufacturing facilities receive ISO 9001 certification from RWTUV, Germany. 1994—Establishes Syngene International Pvt. Ltd. as a Custom Research Company (CRC). 1996—The commercial success of Biocon's proprietary fermentation plant leads to a 3-fold expansion; enters biopharmaceuticals and statins. 1997—Spearheads initiatives in human healthcare through a dedicated manufacturing facility. 1998—Unilever agrees to sell its shareholding in Biocon to the Indian promoters. Biocon becomes an independent entity 2000—Commissions its first fully automated submerged fermentation plant ; establishes Clinigene, India's first Clinical Research Organisation (CRO). 2001—Becomes the first Indian company to be approved by USFDA for the manufacture of lovastatin; PlaFractor is granted a US 2001 and world-wide patent. 2002—Clinigene's clinical laboratory receives CAP accreditation. 2003—Biocon becomes the first company worldwide to develop human insulin on a Pichia expression system.
2004—Day 1 on the bourses closes with a market value of $1.11 billion ; Syngene establishes new research centre;
2005—Signs a commercial agreement for supply of insulin API to Asia, Africa and the Middle East. 2006—Inaugurates Biocon Biopharmaceuticals ; Biocon launches India's first anti-cancer drug, BIOMAb EGFR. 2007—Biocon and Neopharma sign an MOU to establish a JV to manufacture and market a range of biopharmaceuticals for the GCC countries. 2008—Biocon acquires a 70% stake in German pharmaceutical company, Biocon ranked among the top 20 global biotechnology companies (Med Ad News); Biocon is the 7th largest biotech employer in the world (Med Ad News). 2009— Bristol-Myers Squibb and Syngene open new R&D facility at Biocon Park; Biocon launches BASALOGTM – long lasting basal insulin for Type 1 & Type 2 Diabetics; 2010-Biocon explores investment in Malaysia in partnership with BiotechCorp. 2011-Biocon divests its stake in its German subsidiary, Biocon launches INSUPen®, a convenient and affordable reusable insulin delivery device 2012-Biocon announced Positive Results from its Global Phase 3 study with Recombinant Human Insulin. 2013-Biocon received Marketing Authorization from the Drugs Controller General of India (DCGI) for its Novel Biologic Itolizumab, anti CD6 molecule, for the treatment of chronic plaque Psoriasis 2014 - Biocon launched CANMAb, a new injectable drug for the treatment of a highly prevalent HER2-positive breast cancer..
BOARD OF DIRECTORS Ms. Kiran Mazumdar-Shaw
- Chairman & Managing Director, Biocon - First generation entrepreneur with more than 36 years experience in biotechnology and industrial enzymes - Master Brewer, Ballarat University, Australia - Awarded the Padmabhushan, one of India’s highest civilian awards for her pioneering efforts in Biotechnology, 2005
Mr. John Shaw
- Vice Chairman, Biocon - Served in senior corporate positions at various locations around the world - Former Chairman, Madura Coats Ltd.
Dr. Bala S. Manian
- Chairman and Founder, Reametrix Inc. - Co-founder, Quantum Dot Corporation and Surromed Corporation, USA - Expert in the design of electro-optical systems - Authored several peer-reviewed scientific publications and holder of many patents - Recognised through numerous awards for contributions as educator, inventor and entrepreneur, including Technical Academy Award in Digital chromatography.
Prof. Charles L. Cooney
- Professor, Chemical & Biochemical Engineering, MIT, USA - Director - Intelligen Inc., Bioscale Inc., and LS9 Inc., - Recipient of prestigious awards, including Gold Medal of the Institute of Biotechnology Studies and Distinguished Service Award from the American Chemical Society
Mr. Daniel M. Bradbury
- Non-Executive Board Member of Biocon Limited - Managing Member of BioBrit, LLC, a Life Sciences Consulting and Investment Firm - Life Sciences Executive with over 30 years of experience in creating and implementing strategies that transform businesses, bring novel medicines to market.
Ms. Mary Harney
- Non-Executive Board Member of Biocon Limited - Served as Tánaiste (Deputy Prime Minister) of the Irish Republic from 1997 2006 - Held the position of Minister for Health and Children (2004-2011) in the Irish government - Initiated far reaching health care reforms during her illustrious political career
Prof. Ravi Mazumdar
- University Research Chair Professor, Department of Electrical and Computer Engineering, University of Waterloo, Canada - Fellow of the Institute of Electrical and Electronics Engineers (IEEE) and Fellow of the Royal Statistical Society
Mr. Russell Walls
- Director, Biocon - Director, Aviva Plc - Director, Signet Jewelers Ltd - Trustee and Treasurer – The British Red Cross Society - Former, Group Finance Director – BAA Plc, Wellcome Plc, Coats Viyella Plc - Former, Director - Stagecoach Group plc, Hilton Group plc, Delphic Diagnostics Limited and Mersey Docks and Harbour Company
Mr. Suresh Talwar
- Partner, Talwar Thakore & Associates - Director L&T Ltd., Birla Sun Life Insurance Co. Ltd., Blue Star Ltd., and other leading companies - Area of professional specialisation includes corporate law and related fields - Legal counsel to numerous Indian companies, multinational corporations and Indian/foreign banks
Prof. Catherine Rosenberg
- Director on the Board of Syngene - University Research Chair Professor and Chairman, Department of Electrical and Computer Engineering, University of Waterloo, Canada - Since June 2010, she holds the Tier 1 Canada Research Chair in the Future of Internet - She was elected for an IEEE (The Institute of Electrical and Electronics Engineers) Fellow in 2011 and a Fellow of the Canadian Academy of Engineering
SWOT ANALYSIS
Segment , Target and Positioning
Segments :-
Diabetes
Oncology
!egments
Nephrology Cardiology
Anti- diabetic Agents Anti- Inflammatory Agents Anti-Oxidants Cadivascular Agents Anti-Obesity Agents Digestive Aid Enzymes Hepatoprotective Immunosupressants Gastro Intestinal Agents Hemostatic eutraceuticals
Target Market:Aging Korean population demanding affordable therapy for diabetes , cancer and cardiovascular diseases. Large pool of patients. Prevalence of diabetes-8% , Incidence of disease-0.4% per year. Insulin Therapy. Huge demand for affordable products. Non small cell lung cancer drug market Majority of patients in stage III or IV at time of Diagnosis. Health care professionals . Pharmacists
Positioning:-
Commodity
Differentiated
&ayer Driven Acute '%EA'#E ' &rice driven $o(er ris) of immunogenic reactions *ully understood mode of action
"IO!I#I$A%!
C+ronic treatment $imited competition Hig+er ris) of immunogenic reactions , #ode of actions not clear Influenced by multiple sta)e +olders,
COMPETITORS:-
-oc)+ardt $imited
"IOCO
!un &+armaceuticals
STRATEGIC IMPLEMENTATIONS
&roduct
Human Insulin Insulin Lispro Monolonal antibodies Oncology Product Speciality and primary care product
&rice
Lower cost Biosimilar product Value based pricing Payer Strategy
&romotion
Tailor go-to-market-approach To local dynamics ,both in term of sales forces model and marketing offerings Target therapy areas Build trust and network development
&lace
South Korea Export dug to drug to Asia and doveloped countries,
Product Profile
“Biocon’s impressive range of products and partnered services continue to build a robust pipeline of biosimilar and discovery-led biologicals programs in oncology, nephrology, diabetes and autoimmune diseases.” - Sandeep Rao, Vice President, Business Development
Over the years, we have systematically leveraged our technology platforms from enzymes to small molecules to recombinant proteins and antibodies. Through partnerships and alliances, Biocon has strategically moved up the value chain from supplying pharmaceutical bulk actives to developing proprietary molecules and our own branded formulations. In the areas of custom and clinical research services, collaborative partnerships with complementary biotechnology and pharmaceutical companies are yielding rich results. We believe these partnerships will positively impact any and all phases of our discovery portfolio.
Small Molecules:Our Small Molecules business comprising APIs continued to gain momentum during the year driven by strong sales of Fidaxomicin, Immunosuppressants and Statins. Emerging markets business was driven by a strong performance in territories like CIS and Africa. Sales in the regulated markets gained further traction, driven by Fidaxomicin and other key products. We have expanded into new geographies and our business currently spans 85 countries. Biocon has been reaping rich rewards from its Small Molecules business which comprises a robust portfolio of Active pharmaceutical Ingredients (APIs), including generics like Statins, Immunosuppressants and Proprietary Products like Fidaxomicin. Biocon's Small Molecules strategy, driven by its Active Pharmaceutical Ingredients (APIs) business, has reached an inflection point. Investments in technology platforms to create a differentiated API portfolio are yielding rich rewards.
API’s
Cardiovascular Agents:
Rosuvastatin Pravastatin Lovastatin Fluvastatin
Immunosuppressants:
Mycophenolate Mofetil Mycophenolic Acid Sod Tacrolimus Temsirolimus
Opthalmics
Latanoprost Travoprost Bimatoprost Dorzolamide Brinzolamide
Oral Anti-Diabetic Agents:
Acarbose Pioglitazone Repaglinide Rosiglitazone Montelucast
Other Products:
Alpha Lipoic Acid L-Carnitine Urso Ethamsylate Tranexamic Acid
Hepatoprotective Agents:
L-Ornithine L-Aspartate Deoxy Cholic Acid
Probiotics
Chondroitin Sulphate Glucosamine Sulphate Iron Polymaltose Complex
Branded Formulations
The Branded Formulations business recorded an impressive performance in FY13, with revenues growing by 34% to ` 3,474 million. Diabetology, Oncology, Bioproducts and Comprehensive Care divisions contributed significantly to the overall performance of the Branded Formulations (India) business. In keeping with the Company’s aim of educating patients about the importance of preventive health measures, many of the business divisions conducted patient awareness programs all over India during the year. These programs not only helped educate patients in disease prevention, detection and cure but also helped in building value of Brand Biocon.
Diabetology
Diabetology became the first therapeutic division of Biocon to cross themilestone of ` 1,000 million in sales this year.
Oncotherapeutics
Biocon’s Oncotherapeutics division remains committed to unlocking value of its anti-cancer portfolio to provide patients in India and emerging markets access to the benefits of affordable and differentiated anti-cancer therapies. Evertor™, the first and the only global generic of Everolimus for the treatment of progressive neuro-endocrine tumors of pancreatic origin, completed two years of launch in FY13.
Cardiology
Biocon Cardiology, which is focused on providing differentiated and affordable therapies to patients suffering from cardiovascular diseases, reported strong growth this year. MYOKINASE® (Streptokinase) and CLOTIDE® (Eptifibatide) continued to be among the Top 3 brands in their respective segments. STATIX® (Atorvastatin) also reported a substantial prescription growth.
Research and Development
We aim to develop novel biopharmaceuticals by leveraging our exceptional scientific talent pool and developmental capabilities. Biocon’s discovery-led R&D focuses on the entire drug development pathway - from process development, to non-clinical and clinical research. The depth and breadth of our technological and scientific expertise enables us to develop new and affordable therapeutics for the world’s most debilitating diseases. R&D’s ability to leverage frontier science, to develop solutions for small molecules to biosimilars to novel molecules, continues to advance Biocon’s reputation as an emerging global biopharma focusing on delivering affordable innovation. Our R&D team can boast of outstanding scientists from the best institutes around the world. The high quality scientific talent pool is engaged in continuous interaction with international thought leaders and participation in technical programs to enable knowledge creation, and the positioning of Biocon’s R&D for challenging biopharmaceutical development.
Highlights:2013 Biocon Enhances Partnership with Mylan through Strategic Collaboration for Insulin Products Biocon Receives Marketing Authorization for its Novel Biologic Itolizumab for Psoriasis 2012 Biocon enters into an agreement with Bristol-Myers Squibb for its IN-105, an Oral Insulin drug Biocon announced Positive Results from its Global Phase 3 study with Recombinant Human Insulin 2010 Biocon announces preliminary data on its novel oral insulin drug candidate Biocon initiates Phase 3 clinical trials in Psoriasis 2009 Biocon completes Phase 2 clinical trials in Psoriasis and Rheumatoid Arthritis. Biocon initiates IN-105 Phase 3 study in Type 2 diabetes.
2008 Biocon initiates Phase 2 studies using T1h in Psoriasis patients Biocon completes Phase 1 clinical trial using IN-105 in NHV in Europe 2007 Biocon unveils five renal therapy drugs Biocon gets regulatory approval for GCSF 2006 Biocon files PCT for novel process of manufacturing of Oral Insulin Biocon completes phase-IV trials of INSUGEN® 2005 Biocon and Karolinska Institute sign a MoU to collaborate in research and research education initiatives 2004 Biocon and Vaccinex partner to discover and develop therapeutic antibodies Biocon launches INSUGEN®, the world's first recombinant human (r-DNA) insulin using a unique Pichia expression system 2003 Biocon files its 100th patent application 2002 Biocon ranks 3rd among Indian companies for filing PCT applications Biocon files PCT application for patent on 'Methods of producing esters of Mycophenolate' 2001 US patent office grants a patent on PlaFractor™, Biocon's revolutionary bioreactor
BIOCON PHARMACEUTICALS ANNUAL REPORT (2012-2013)
Balance Sheet of Biocon
------------------- in Rs. Cr. ------------------Mar '13 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Init. Contribution Settler Preference Share Application Money Employee Stock Opiton Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Minority Interest Policy Holders Funds Group Share in Joint Venture Total Liabilities 100.00 100.00 0.00 0.00 0.00 0.00 0.00 2,594.60 0.00 2,694.60 154.20 94.60 248.80 65.30 0.00 0.00 3,008.70 Mar '13 12 mths 100.00 100.00 0.00 0.00 0.00 0.00 0.00 2,172.40 0.00 2,272.40 90.40 166.70 257.10 3.80 0.00 0.00 2,533.30 Mar '12 12 mths Mar '12 12 mths
Consolidated Balance Sheet of Biocon
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions 2,584.60 967.20 1,617.40 205.40 586.60 398.40 509.70 672.90 1,581.00 425.70 0.00 2,006.70 0.00 1,156.90 250.50 1,407.40 2,158.90 785.20 1,373.70 286.30 556.30 378.30 491.70 523.30 1,393.30 335.40 0.00 1,728.70 0.00 1,200.20 211.50 1,411.70
Net Current Assets
599.30
317.00
Minority Interest Group Share in Joint Venture Miscellaneous Expenses Total Assets
0.00 0.00 0.00 3,008.70
0.00 0.00 0.00 2,533.30
Biocon
Consolidated Profit & Loss account Mar '13 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised 1,111.20 142.60 389.40 23.70 0.00 301.90 0.00 933.80 97.20 307.60 22.40 0.00 252.20 0.00 2,530.60 45.30 2,485.30 254.60 26.50 2,766.40 2,136.00 50.00 2,086.00 64.50 44.50 2,195.00 ------------------- in Rs. Cr. ------------------Mar '12 12 mths
Total Expenses
1,968.80
1,613.20
Mar '13
Mar '12
12 mths Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Minority Interest Share Of P/L Of Associates Net P/L After Minority Interest & Share Of Associates Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 2,000.00 25.64 0.00 134.73 543.00 797.60 8.10 789.50 179.30 0.00 610.20 0.00 610.20 97.50 512.70 3.80 0.00 307.00 857.60 0.00 150.00 25.50
12 mths 517.30 581.80 12.20 569.60 174.40 0.00 395.20 0.00 395.20 55.90 339.30 0.90 0.00 335.70 679.40 0.00 100.00 16.20
2,000.00 16.97 0.00 113.62
FINANCIAL ANALYSIS Introduction:
• Financial Analysis is the process of determining the operating & financial characteristics of a firm from accounting data & financial statement. The goal of such analysis is to determine efficiency & performance of the firm management, as reflected in the financial records and reports. Its main aim is to measure the firm?s liquidity, profitability and other indications that business is conducted in a rational and orderly way. • The basic financial statement – Of the various reports that the companies issue to their shareholder, the annual report is by far the most important. Two types of information are given in this report, first there is a text that describes the firms operating results during the past year and discusses new development that will affect future operations. Second there are few basic financial statements –the income statement, the balance sheet, the statement of retained earnings and the sources and uses of funds statements. The financial statement taken together give an accounting picture of the firm?s operation and financial positions.
• “Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statements, and a study of • trends of these factors as shown in a series of statements” --- John N. Myer • “The analysis and interpretation of financial statement are an attempt to determine the significance and meaning of the financial statement data so that the forecast may be made of the prospects for future earnings, ability to pay interest and debt maturities (both current & long term) and profitability of a sound dividend policy” --- R.D. and S. % Mc Muller • Thus, analysis of financial statement means such a treatment of the information contained in the financial statement as to afford a full diagnosis of the profitability and financial position of the firm concerned.
• According to the American institute of certified public accountants “……………… financial statement reflected a combination of recorded facts, accounting conventions and personal judgments.
Nature of financial statement:
Objective of financial analysis:
• The number and types of people interested in financial statements have changed radically over a period of time. They need varied information and fortunately such information may be classified as relating to profitability, liquidity and solvency. • The Project “ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS” is undertaken to fulfill the following objectives. To estimate the earning capacity To gouge the financial position and financial performance of the firm To determine the long terms liquidity of the funds as well as solvency To determine the debt capacity of the firm To decide about the future prospective of the firm
Types of Financial Analysis
• Financial analysis may be classified into different categories dependency upon The material used The method of operation followed in the analysis
Graphical representation
*inancial Analysis
'+e material used
t+e met+od of operation follo(ed in t+e analysis
Internal Analysis
External Analysis
Horizontal Analysis
Vertical Analysis
Ratio Analysis
Financial ratio:
A ratio may be defined as a fixed relationship in degree or number between two numbers. In finance, ratios are used to point out relationship that is not obvious from the row data. Some uses financial ratios are following: (1) To Compare Different Companies in Some Industry: ratio can high light the factors association with successful and unsuccessful firms. They can reveal strong firms and weak firms, overvalued undervalued firms. (2) To Compare Different Industries: Every industry has its own unique set of operating and financial characteristics. These can be identified with the help of ratios. (3) To Compare Performance In The Different Time Periods: Over a period of years, a firm or a industry develop certain forms that may indicate future success or failure. If relationship changes in firms data over different time periods, the ratio may provide clues and trends of future problems.
Utility of Financial Analysis:
• • • • • • • Following are the advantages of Financial Analysis : With the help of ratios we can determine the ability of the firms to meet its currentobligation. Overall operating efficiency and performance of the firm. Efficiency with which firms is utilizing its various assets in generating sales Revenue. Ratios help in inter-firm and intra-firm comparison. They help in determining the financial strength by highlighting the liquidity. They are useful in comparison of performance. They are also useful in forecasting purpose.
Advantages Of Ratios:
• The ratio analysis is one of the most powerful tools of financial analysis. It is use as a device to analysis and interprets the financial health of enterprise. Just like a doctor examines his conclusion regarding the illness and before giving his treatment, a financial analyst analyses the financial statement with various tools of analysis before commenting upon the financial bearlth or weakness of an enterprise. „A ratio is known as a symptom like blood pressure, the pulse rate or the temperature of the individual?. It is with help of ratios that the financial statements can be analyzed and decision made from such analysis.
• HELPS IN DIVISION MAKING: Financial statements are prepared primarily for decision making, but the information provided in financial statements is not an end in itself and no meaningful conclusions can be drawn from these statements alone. Ratio analysis helps in making decisions from the information provided in these financial statements. • HELPS IN FINANCIAL FORCASTING AND PLANNING: Ratios analysis is of much help in financial forecasting and planning. Planning is looking ahead and the ratios calculated for a number of year?s work as a guide for the future. Meaningful conclusions can be drawn for future from these ratios. Thus, ratio analysis helps in forecasting and planning. • HELPS IN COMMUNICATING: The financial strength and weakness of a firm are communicated in a more easy and understandable manner by the use of ratios the information contained in a financial statements conveyed in a meaningful manner to the one for the whom it is meant. Thus, ratios help in communicating and enhance the value of financial statements. • HELPS IN COORDINATION: Ratios even helps in coordinating, which is utmost important in effective business management. Better communication of efficiency and weakness of an enterprise results in better coordination in the enterprise. • HELPS IN CONTROL: Ratio analysis even helps in making effective control of the business. Standard ratios can be based upon Performa Financial Statements and variance or deviations, if any, can be founded by comparing the actual with the standards so as to take corrective action at the right time. The weakness or otherwise, if any, come to the knowledge of the management which helps in effective control of the business.
Role Of Financial Ratio:
•
Aid in financial forecasting: Ratio analysis is very helpful in financial forecasting. Ratio relating to the past sales, profits & financial position from the basis for setting future trends. • Aid in comparison: With the help of ratio analysis ideal ratio can be composed & they can be used for comparing a firm progress & performance. Inter firm comparison with the industry averages is made possible by ratio analysis. • Financial solvency of the firm: Ratio analysis indicates the trend in financial solvency of the firm. Solvency has to dimensions: Long-term Solvency Short-term Solvency Long term solvency refers to the financial viability of the firm while Short-term solvency is the liquidity position of the firm.
• Communication values: Different financial ratios communicate the strength & financial standing of the firm to the internal & the external parties. They indicate overall profitability of the firm
•
Other uses: Financial ratios are very helpful in the diagnosis & financial health of a firm. They highlight the liquidity, solvency, profitability & capital gearing etc. of the firm. They are useful tools of analysis of financial performances.
Classification of ratios:
Ratio analysis Liquidity ratio Current ratio Leverage ratio Debt equity Ratio total assets to debt Proprietary ratio Turnover ratio Stock Debtors Creditors turnover Fixed assets turnover working capital turnover Capital Gearing Interest coverage Liquid ratio
Turnover turnover
Profitability ratio Gross profits operating ratio Net profit ratio Profitability ratio based on investment Return on capital employed Return on shareholder fund Return on equity shareholder fund Earning per share
1. LIQUIDITY RATIOS: Liquidity refers to the ability of the firm to meet its obligations inventory the short-run, usually one year. Liquidity ratios are generally based on the relationship between current assets and current liabilities (the sources for meeting short-term obligations). Example: Current ratio, Acid test ratio. I. Current ratio: also known as working capital ratio,this is used to evaluate short term financial position of the business concern. It indicates the ability of the firm to meet its short term obligations. It compares the current assets and current liabilities of the firm. Current assets are those which are either in the form of cash or cash equivalent.current Liabilities are those which are to be discharged during the accounting period Current ratio = current assets current liabilities Significance: Ideal current ratio is 2:1. A very high ratio indicates availability of idle cash and is not a good sign. II. Quick ratio: it is very useful in measuring liquidity position of a firm. It measures the firm’s capacity to pay off current obligations. It is used as complimentary ratio to the current ratio. Quick ratio = liquid assets current liabilities. Significance: Liquid ratio of 1;1 is considered satisfactory. If quick assets are equal to current liabilities, then the concerm maybe able to meet its short term obligations. 2. LEVERAGE RATIOS: Leverage ratios analyze the long term solvency that help us judge the ability of a firm to pay the interest regularly as well as repay the principal when due to debenture holders, long term lenders.
I.
Debt equity ratio: shows a relationship between long term debt and shareholder’s fund. This ratio indicates the relation between outsider’s fund and shareholder’s fund. Also called external internal equity ratio Debt equity ratio= debt or long term debt equity shareholder’s fund
Significance: A ratio of 1:1 is usually considered to be satisfactory. This ratio is calculated to know about the organzation’s repayment capacity of long term debts. II. Total asset to debt ratio: shows a relationship between total assets and the longterm debts. Total asset to debt ratio= total assets long term debts III. Proprietory ratio: this establishes the relationship between shareholder’s funds to assets of the firm. It is important for determining long term solvency of the term. Also known as euity ratio or net worth to total assets ratio. Proprietory ratio= equity total assets Significance: Higher the ratio, dependency on external sources and loans for working capital will be less and financial condition of the organization will be sound. IV. Capital gearing ratio: it shows relationship between equity capital ( including reserves and undistributed profits) and fixed cost bearing capital ( preference sharing capital, fixed interest bearing loans) Capital gearing ratio= equity share capital+ reserves+ P&L balance fixed cost bearing capital
Significance: A high gearing will be beneficial to equity shareholders when rate of interest/dividend payable on fixed cost bearing capital is lower than the rate of return on investment in business.
V.
Interest coverage ratio: also known as debt service ratio. This is calculated by dividing net profit before charging interest and income tax by ‘fixed interest charges’.
Interest coverage ratio= net profit before charging interest and income tax ‘fixed interest charges’ Significance: This shows how many times the interest charges are covered by profits available to pay interest charges. It is helpful in finding out whether the business will earn sufficient 3. Turnover ratios/Activity ratios: These ratios measures how well the resources at the disposal of concern are being utilized.they are known as turnover ratios as they indicate the rapidity with which the resources available to the concern are being used to produce sales. In other words, they measure the efficiency and rapidity of resources of the company like stock, debtors, fixed assets, working capital, etc. They are generally calculated on the basis of sales or cost of sales. I. Stock turnover ratio: a.k.a inventory ratio. This ratio indicates relationship between cost of goods sold during the year and average stock kept during that year. Stock turnover ratio= cost of goods sold Average stock Significance: This ratio indicates whether stock has been efficiently used or not. It shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the year. The higher the ratio, the better it is, since it indicates that stock is selling quickly. In business, where the STR is high, goods can be sold at a low margin of profit and even then, the profitability may be quite high. II. Debtors turnover ratio: a.k.a receivable turnover ratio. This ratio indicates relationship between credit sales and average debtors during the year. Debtors turnover ratio= net credit sales Average debtors + Average B/R Significance: This ratio indicates the speed with which the amount is collected from debtors. The higher the ratio, the better it is, since it indicates that the amount from debtors are being collected quickly. A lower DTR will indicate the inefficient credit sales policyof the management.
III.
Creditors turnover ratio: This ratio indicates relationship between credit purchases and average creditors during the year. Creditors turnover ratio= net credit purchases Average creditors + Average B/P
Significance: This ratio indicates the speed with which the amount is being paid to the creditors. The higher the ratio, the better it is, since it will indicate that the creditors are being paid more quickly which increases the credit worthiness of the firm. IV. Fixed assets turnover ratio: This ratio indicates relationship between cost of goods sold and fixed assets during a year. Fixed assets turnover ratio= cost of goods sold Net fixed assets Significance: This ratio reveals how efficiently the fixed assets are being utilized. If there is increase in ratio, it indicates that there is better utilization of fixed assets and vice versa. V. Working capital turnover ratio: This ratio indicates relationship between sales and working capital. Working capital turnover ratio=cost of goods sold or sales Working capital Significance: This ratio reveals how efficiently working capital has been utilized in making sales. In other words, it shows the number of times working capital has been rotated in producing sales. A high working turnover ratio shows efiicient use of working capital and quick turnover of current assets like stock and debtor.
4. Profitability ratios: These ratios measure the profit earning capacity of the company. Generally, profitability ratio is calculated in percentage (%). I. Gross profit ratio: It shows relationship between gross profit and sales. It shows margin of profit on sales. Gross profit ratio= gross profit X 100 Net sales
Significance: It reveals profit earning capacity of business w.r.t. its sales. Increase in gross profit ratio indicates reduction in cost while decrease in gross profit ratio will indicate increase in cost or sales at a lesser price.
II.
Operating ratio: This ratio indicates the proportion that the cost of goods sold bears to sales. Operating ratio= cost of goods sold + operating exp. X 100 Net sales11
Significance: It is the measure of efficiency and profitability of the business. The lesser is the ratio, the better it is because less operating ratio means higher net profit. III. Net profit ratio: This ratio indicates relationship between net profit and net sales Net profit ratio= Net profit X 100 Net sales
Significance: It shows the operational efficiency of the business. Decrease in the ratio indicates managerial inefficiency and excessive selling and distribution expenses. Increase in it shows better performance. 5. Profitability ratios based on Investment: These ratios reflect the true earning capacity of the resources employed in the enterprise. I. Return on capital employed: It reflects the overall profitability of the business. It is calculated by comparing the profit earned and the capital employed to earn it. Rate on capital = Profit before interest, tax and dividends X 100 Employed Capital employed Significance: This ratio is a barometer of the overall performance which measures how efficiently the capital employed in the business is being used.
II.
Return on total shareholder’s fund: To calculate this, net profit after interest and tax is divided by shareholder’s fund Return on total = net profit after interest and tax shareholder’s fund Total shareholder’s funds
Significance: It reveals how profitably the proprietor’s funds have been utilized by the firm
III.
Return on Equity Shareholder’s funds: This ratio measures the profitability of the funds belonging to the equity shareholders. Return on Equity Shareholders funds = Net profit (after interest, tax & preference dividend X 100 Equity Shareholders funds
Significance: It measures how efficiently the equity shareholders funds are being used in the business. The higher the ratio, the better it is, because in such case, equity shareholders may be given a higher dividend.
IV.
Earning per share: This ratio measures the profit available to the equity shareholders on per share basis. All profits left after payment of tax and preference dividend are available to equity shareholders. Earning per share= Net profit – Dividend on preference share Number of equity shares
Significance: It is helpful in the determination of the market price of the equity share of the company. It is also helpful in estimating the capacity of the company to declare dividends in equity shares.
Findings
Findings:
1. Current ratio: 2012 1728.7 = 1411.7 1.22 2006.7 1407.4 2013 = 1.43
Interpretation: ideal current ratio should be 2:1. So, we can say that the company’s financial position is not satisfactory but as compared to 2012, the current ratio of 2013 is more. Which means , Curent assets are less than current liabilities. 2. Quick ratio: 2012 1728.7 -378.3 = 0.95 1411.7 2013 2006.7-398.4 = 1.14 1407.4
Interpretation: ideally, it should be 1:1. So, it can be concluded that company’s financial position in 2013 is more sound compared to 2012. 3. Debt equity ratio: 2012 257.1 = 0.11 2272.4 2013 248.8 = 0.09 2694.6
Interpretation: ideally, it should be 1:1. So, it can be said that the organization’s repayment capacity of long-term debts is same for both the years which is not satisfactory. 4. Total assets to debt ratio: 2012
2013
2533.3 = 9.85 257.1
3008.7 = 12.09 248.8
Interpretation: Total assets in both the years is more than sufficient to repay in cash the total debts. 5. Proprietor’s ratio: 2012 2272.4 = 0.89 2533.3
2013 2694.6 = 0.89 3008.7
Interpretation: Since it is same for both the years, it can be concluded that the financial condition of the company is sound. 6. Capital gearing ratio: 2012 257.1 = 0.11 2272.4
2013 248.8 = 0.09 2694.6
Interpretation: A low gearing is not beneficial to equity shareholders when rate of interest/dividend payable on fixed cost bearing capital is higher than the rate of return on investment in business.
7. Interest coverage ratio: 2012 395.2 = 32.39 12.2
2013 610.2 = 75.33 8.1
Interpretation: from the findings, it can be said that the business will earn sufficiently.
8. Fixed assets turnover ratio: 2012 2086 = 0.96 2158.9
2013 2485.3 = 0.96 2584.6
Interpretation: it can be concluded that the fixed assets are being utilized properly as the ratio remain intact. 9. Working capital turnover ratio: 2012 2086 317 =6.58 2485.3 599.3
2013 = 4.14
Interpretation: since there is decrease in the ratio in 2013, it can be said that the working capital has not been utilized efficiently in making sales.
10. Net profit ratio: 2012 339.3 *100 = 16 2086
2013 512.7 *100 = 20 2485.3
Interpretation: the increase in ratio in 2013 implies managerial efficiency shows beeter performnce.
11. Return on capital employed: 2012 407.4 2529.5 *100 = 16 618.3 2943.4
2013 *100 = 21
Interpretation: the capital employed in the business is being utilized properly as there is a increase in the ratio in 2013.
Conclusions:In balance sheet:Net worth has increase substantially Total debt decreases following year. Total liabilities increase with relation to 2012. Current liabilities decreases. Current assets and Total assests both increases . In Profit/Loss a/c:Total Income increases. Total expenses increases. Net profit increases. Net sales increases.
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