TABLE OF CONTENTS
SL.No
Particulars Page numbers
1. Executive Summary
. !ntro"uction to t#e To$ic
%. Economic analysis
&. !n"ustrial Analysis
'. Com$any analysis o( )anbaxy
*. Com$any Analysis o( Ci$la
+. Com$arative )atio Table o( )anbaxy
,. Com$arative )atio Table o( Ci$la
-. Fin"ings
1.. Annexures an" Bibliogra$#y
Executive Summary
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!n t#e To$ "o/n a$$roac#0 (irst o( all t#e overall Economy is analy1e" to 2u"ge t#e general
"irection0 in /#ic# t#e economy is #ea"ing. T#e "irection in /#ic# t#e economy is #ea"ing
#as a bearing on t#e $er(ormance o( various in"ustries. T#ats /#y Economy analysis is
im$ortant. T#e out$ut o( t#e Economy analysis is a list o( in"ustries0 /#ic# s#oul" $er(orm
/ell0 given t#e general tren" o( t#e economy an" also an i"ea0 /#et#er to invest or not in t#e
given economic con"itions.
Fun"amental analysis is t#e analysis0 /#erein t#e investment "ecisions are ta3en on t#e basis
o( t#e (inancial strengt# o( t#e com$any. T#ere are t/o a$$roac#es to (un"amental analysis0
vi1.0 E4!4C analysis or t#e To$ 5o/n a$$roac# to Fun"amental analysis an" C4!4E analysis or
t#e Bottom u$ a$$roac#. !n t#e (ollo/ing section0 /e ex$lain bot# t#ese a$$roac#es.
T#e main ob2ective o( un"erta3ing t#e $ro2ect in E4!4C Analysis is 6
• 7easuring t#e $er(ormances o( t#e com$any by calculating relate" ratios.
Sub Ob2ectives 6
• Pre"icting t#e (uture Sales0 ex$ecte" EPS 0 etc o( t#e com$any.
• To measure t#e viability o( t#e t/o com$anies.
!ntro"uction to t#e Com$any64
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.!L8FS investsmart is !n"ia9s largest Financial 7ulti$lex.!t /as A/ar"e" as at#e best
Financial A"visor in retail segment by CNBC T: in ..*.
!L8FS !nvestsmart Limite" ;!!L< is an initiative in t#e (iel" o( Financial Services starte" by
!n(rastructure Leasing 8 Financial Services ;!L8FS<0 an institution 3no/n (or its innovative
an" $ioneering initiatives in t#e areas o( !n(rastructure0 Cor$orate Finance an" !nvestment
Ban3ing. !!L /as set u$ in October 1--+ an" began its retail o$erations in Se$tember 1--,
!L8FS !nvestsmart Limite" ;!!L< /as set u$ /it# t#e ob2ective o( becoming one o( t#e
lea"ing (ull service bro3erage #ouses in t#e country /it# a strong ex$ertise in /eb4base"
tec#nology as /ell as strengt#s in $#ysical "istribution. To"ay /it# a $resence in more t#an
-. cities across !n"ia t#roug# more t#an .. outlets0 !!L #as become one o( t#e most
$rominent $layers in t#e Financial Services !n"ustry /it# service o((erings across "i((erent
categories
Promoters an" S#are#ol"ers o( !L8FS !nvestsmart Limite"
As mentione" earlier !!L /#ic# /as $romote" by !L8FS in 1--+0 #as come a long /ay since
its ince$tion. !t is a matter o( great $ri"e (or !!L t#at some o( t#e /orl"=s biggest
organisations are becoming e>uity o/ners o( t#e com$any
T#e stoc3#ol"ing $attern as o( to"ay involves !L8FS /#ic# #ol"s %..*&? e>uity sta3e0
/#ile So(tban3 Asia !n(rastructure Fun" L.P. ;SA!F< an" E@T)A5E F!NANC!AL0 t#roug#
its /#olly o/ne" subsi"iary
)etail business64
T#e )etail Business 5ivision at !!L is involve" in "ealing /it# a range o( (inancial $ro"ucts
o((ere" to customers across !n"ia t#roug# multi$le locations. T#e retail business is (urt#er
categorise" into various business "ivisions catering to varie" nee"s o( our customers. T#ese
inclu"e "ivisions catering to customers (or !nvestment o$tions suc# as E>uity Tra"ing0
5erivatives Tra"ing0 Commo"ity Tra"ing0 !PO !nvestments0 Fixe" !ncome $ro"ucts0 7utual
Fun" !nvestments as /ell as !nsurance 8 Aome Loans A"visory services. !n a""ition /e also
o((er allie" services to (acilitate t#e investment $rocess0 li3e custo"ial an" "e$ository
services0 /#ic# are o((ere" t#roug# t#e !L8FS 5e$ository Services. !!L=s ex$ertise across all
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t#ese categories enable it to res$on" to t#e varying nee"s o( a "eman"ing clientele ensuring
t#at t#eir investment $lans are execute" as $er t#eir in"ivi"ual re>uirements
7erc#ant ban3ing "ivision
T#e 7erc#ant Ban3ing "ivision o((ers a com$lete range o( services /#ic# inclu"es
management o( !POs0 rig#ts issues0 buy bac3 o((ers0 o$en o((ers an" $rivate $lacements o(
e>uity. !ts extensive contact base an" strong relations#i$s "evelo$e" /it# :enture Ca$ital
Fun"s an" Private E>uity Fun"s (or e>uity $lacements0 contributes to an e((ective "elivery
$lat(orm (or its clients
!nstitutional E>uity Business 5ivision64
!nstitutional E>uity Business ;!EB< t#rives on strong relations#i$s it #as built among
"omestic mutual (un"s0 ban3s0 (inancial institutions0 insurance com$anies an" $rivate sector
(un"s over t#e $ast (e/ years. !EB also #as /ell4"evelo$e" relations#i$s among cor$orates0
leverage" (rom its institutional $e"igree. E((icient execution0 >uality researc# an" #ig#
"egree o( com$liance /it# stoc3 exc#ange regulations an" et#ical business stan"ar"s bac3
!EB9s services to institutional investors t#roug# !POs0 E>uities0 5erivatives an" 7utual
Fun"s. !EB is /ell $ositione" to o((er su$$ort to t#e com$lete range o( investment ban3ing
services to cor$orates
5ebt bro3ing "ivision64
T#e 5ebt "ivision #as an active $resence in t#e secon"ary an" $rimary "ebt $lacement
mar3ets. !t "eals in various $ro"ucts inclu"ing Bovernment Securities0 Treasury Bills0 Bon"s
an" 5ebentures0 State guarantee" $a$ers an" Commercial $a$ers. !t #as strong realtions#i$
/it# !nstitutional clients suc# as Ban3s0 Primary 5ealers0 7utual Fun"s0
Pro2ect Syn"ication "ivision64
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T#e Pro2ect Syn"ication "ivision #as been in#erite" (rom !L8FS. T#e syn"ication "es3 #as
so (ar /or3e" on 5ebt Syn"ication o( various large !n(rastructure Pro2ects in t#e country. T#e
man"ate inclu"es 5ebt structuring o( #ig#ly com$lex an" "i((icult $ro2ects. Pro2ect
Syn"ication (ocuses on t#e role o( an Arranger o( Pro2ect an" Structure" loans. C#ile (un"
mobilisation services are $rovi"e" across various areas0 in(rastructure sectors remain 3ey
(ocus areas (or syn"ication activity. T#e services un"er Pro2ect Syn"ication inclu"e $ro2ect
loan syn"ication0 structure" "ebt syn"ication an" "ebt restructuring. T#e syn"ication business
t#rives on its extensive contact base an" strong relations#i$s "evelo$e" over t#e years /it#
Ban3s an" Financial !nstitutions
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!ntro"uction o( to$ic.
To "etermine t#e intrinsic value o( an e>uity s#are t#e security analyst must (orecast
t#e earnings an" t#e "ivi"en"s ex$ecte" (rom t#e stoc3s an" c#oose a "iscount rate /#ic#
re(lects t#e ris3iness o( t#e stoc3. T#is is /#at involve" in t#e (un"amental analysis /#ic# is
t#e most $o$ular met#o" use" by t#e investments $ro(essionals.
T#e earnings $otential an" ris3iness o( t#e (irm are lin3e" to t#e $ros$ects o( t#e
in"ustry to /#ic# it belongs. So t#e $ros$ects o( t#e various in"ustries are largely in(luence"
by t#e "evelo$ments in t#e macro economy.
T#e researc#ers #ave (oun" t#at stoc3 $rice c#anges can be attribute" to t#e
(ollo/ing (actors6
? Economy /i"e (actors6 %.4%' $ercent.
? !n"ustry (actors6 1'4. $ercent.
? Com$any (actors 6 %.4%' $ercent
? Ot#er (actors6 1'4' $ercent
Base" on t#e above evi"ence0 a commonly a"vocate" $roce"ure o( t#e (un"amental analysis
involves a t#ree4 ste$ examination .T#ey are6
? Dn"erstan"ing o( t#e macro4economic environmental "evelo$ments.
? Analy1ing t#e $ros$ects o( t#e in"ustry to /#ic# t#e (irm belongs.
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? Assessing t#e $ro2ecte" in(ormation o( t#e com$any an" t#e intrinsic value o( its s#ares.
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T#e !n"ian P#armaceutical in"ustry is #ig#ly (ragmente" /it# about &0... $layers ;aroun"
%%. in t#e organise" sector<. T#e to$ ten com$anies ma3e u$ (or more t#an a t#ir" o( t#e
mar3et. T#e revenues generate" by t#e in"ustry are a$$roximately DSE + bn an" #ave gro/n
at an average rate o( 1.? over last (ive years. T#e !n"ian $#arma in"ustry accounts (or about
1? o( t#e /orl"=s $#arma in"ustry in value terms an" ,? in volume terms.
!n t#e recent $ast0 !n"ian com$anies #ave targete" international mar3ets an" #ave exten"e"
t#eir $resence t#ere. C#ile some com$anies are ex$orting bul3 "rugs0 ot#ers #ave move" u$
t#e value c#ain an" are ex$orting (ormulations an" generic $ro"ucts. !n"ia also o((ers
excellent ex$orts o$$ortunities (or clinical trials0 )850 custom synt#esis an" tec#nical
services li3e Bioin(ormatics.
T#e "rug $rice control or"er ;5PCO< continues to be a menace (or t#e in"ustry. T#ere are
t#ree tiers o( regulations F on bul3 "rugs0 on (ormulations an" on overall $ro(itability. T#is
#as ma"e t#e $ro(itability o( t#e sector susce$tible to t#e /#ims an" (ancies o( t#e $ricing
aut#ority. T#e ne/ P#armaceutical Policy ..*0 /#ic# $ro$oses to bring %'& essential "rugs
un"er $rice control #as not been o((icially $asse" as yet an" #as been sti((ly o$$ose" by t#e
$#armaceutical in"ustry.
C#ile t#e average )85 s$en"ing in !n"ia as a /#ole is a meager ? o( sales0 t#e s$en" o(
t#e to$ (ive com$anies is about '? to 1.?. 5es$ite gro/ing at a CAB) o( over '.? over
t#e last (our years0 t#e ratio is still /ay belo/ t#e global average o( 1'? to .? o( sales.
Ao/ever0 "es$ite t#e
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relatively lo/ )85 s$en"ing0 !n"ian com$anies are ste$$ing u$ t#eir researc# activities to
ma3e t#emselves more sel( su((icient in terms o( $ro"uct "evelo$ment0 no/ t#at t#e $ro"uct
$atent regime #as come into (orce.
Su$$ly64 Aig#er (or tra"itional t#era$eutic segments0 /#ic# is ty$ical o( a "evelo$ing mar3et.
)elatively lo/er (or li(estyle segment.
5eman"64 :ery #ig# (or certain t#era$eutic segments. Cill c#ange as li(e ex$ectancy0 literacy
increases.
Barriers to entry64 Licensing0 "istribution net/or30 $atents0 $lant a$$roval by regulatory
aut#ority.
Bargaining $o/er o( su$$liers64 5istributors are increasingly $us#ing generic $ro"ucts in a
bi" to earn #ig#er margins.
Bargaining $o/er o( customers64 Aig#0 a (ragmente" in"ustry #as ensure" t#at t#ere is
/i"es$rea" com$etition in almost all $ro"uct segments. ;Currently also $rotecte" by t#e
5PCO<.
Com$etition64 Aig# (ragmente" in"ustry /it# t#e to %.. ;o( &...
7anu(acturing units<$layers accor"ing (or ,'? o( sales value.Consoli"ation is li3e to
intensi(y
!m$act o( BD5BET 4..,6
Bu"get ..,4.-6 P#armaceuticals
T#e $ast year #as been tumultuous (or t#e $#arma in"ustry0 /#ic# #as #a" to conten" /it# a
stee$ly rising ru$ee0 severe $rice erosion an" regulatory c#anges in t#e global generics
mar3ets an" rise in ra/ material costs. Aaving sai" t#at0 some $ositive "evelo$ments also
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ensure" t#at t#e overall scenario /as not too ba". T#ese "evelo$ments inclu"e"
announcements by some ma2or "omestic $#arma ma2ors o( #iving o(( t#eir )85 units into
se$arate com$anies0 bagging out4licensing "eals /it# global innovators in return (or
milestone $ayments an" settling $atent la/suits /it# innovators to ensure a more stable an"
balance".
Bu"get 7easure
• !ncrease in allocation to t#e #ealt# sector by 1'? over ..+4.,.
• Allocation to t#e National )ural Aealt# 7ission ;N)A7< increase" to )s 10.'.
crore.
• Provision o( )s --% crore to t#e National Ai"s Control Programme an" allocation o(
)s 10.& crore (or t#e era"ication o( $olio /it# (ocus on #ig# ris3 "istricts in Dttar
Pra"es# an" Bi#ar.
• Customs "uty to be re"uce" (rom 1.? to '? on certain s$eci(ie" li(e saving "rugs
an" on bul3 "rugs use" (or t#eir manu(acture. T#ese "rugs are also exem$te" (rom
excise "uty or countervailing "uty.
• Excise "uty on all goo"s $ro"uce" in t#e $#armaceutical sector re"uce" (rom 1*? to
,?.
• Anti4A!5S "rug0 GAta1anavir90 as /ell as bul3 "rugs (or its manu(acture to be
exem$te" (rom excise "uty.
• !n or"er to $romote outsourcing o( researc#0 /eig#te" "e"uction o( 1'? on any
$ayment ma"e to com$anies engage" in )85.
BD5BET !7PACT
• !ncrease in allocation to t#e #ealt#care sector is a $ositive given t#e nee" to ram$ u$
t#e #ealt#care in(rastructure in t#e country an" im$rove t#e accessibility o( >uality
#ealt#care to a larger section o( t#e $o$ulation.
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• )e"uction o( excise "uty (rom 1*? to ,? is a $ositive (or all $#arma com$anies
enabling t#em to boost $ro(itability going (or/ar" given t#at t#e excise "uty is being
$ai" on 7)P.
• !ncrease" allocation o( (un"s (or era"ication o( A!:HA!5S an" $olio an" re"uction in
customs "uty on certain li(e saving "rugs (rom 1.? to '? is a $ositive (or com$anies
#aving $ro"uct $i$eline catering to t#ese segments.
• Ceig#te" "e"uction o( 1'? on $ayments ma"e (or outsourcing researc# services is a
$ositive (or t#e sector as a /#ole given t#at t#e em$#asis on )85 #as increase".
CO7PANI !7PACT6
)e"uction o( excise "uty (rom 1*? to ,? is a $ositive (or all $#arma com$anies namely
"omestic com$anies suc# as Ci$la0 )anbaxy an" t#e li3es an" 7NC $#arma com$anies suc#
as BSJ P#arma0 P(i1er an" Aventis.
Em$#asis on allocating (un"s (or t#e era"ication o( A!:HA!5S an" $olio is a $ositive (or
Ci$la ;/#ic# #as a strong $resence in t#e manu(acture o( anti4A!5S "rugs< an" Panacea
Biotec ;/#ic# largely manu(actures oral $olio vaccines<.
Ceig#te" "e"uction o( 1'? on $ayments ma"e (or outsourcing researc# services is a
$ositive (or )85 (ocuse" com$anies suc# as )anbaxy an" Nic#olas Piramal.
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!ntro"uction to )anbaxy6
)anbaxy Laboratories is >uite t#e rainma3er in !n"ia=s $#armaceutical business. T#e
com$any is !n"ia=s largest "rug "evelo$er an" manu(acturer0 /it# generics to$$ing its list o(
$ro"ucts. Anti4in(ectives CoAmoxyclav0 Amoxycillin0 Ce$#alexin0 Ci$ro(loxacin0 an"
Simvastatin are in )anbaxy=s to$ selling class o( me"icationsK all come in several
a"ministration (orms. Ot#er s$eci(ic "evelo$mental (ocuses inclu"e metabolic0 in(lammatory0
an" res$iratory illnesses. )anbaxy a""resses gastrointestinal0 car"iovascular0 an" central
nervous system "isor"ers0 as /ell as "iabetes0 $ain0 allergies0 an" A!:HA!5S. T#e com$any
also #as a groun"brea3ing anti4malarial can"i"ate in late4$#ase trials.
Aistory
)anbaxy Laboratories Lt". is t#e largest $#armaceutical com$any in !n"ia0 an" one o( t#e
/orl"=s to$ 1.. $#armaceutical com$anies. Long a s$ecialist in t#e $re$aration o( generic
"rugs0 )anbaxy is also one o( t#e /orl"=s to$ 1. in t#at $#armaceutical category as /ell. Iet0
/it# !n"ia=s agreement to a$$ly international $atent la/ at t#e beginning o( ..'0 )anbaxy
#as begun converting itsel( into a (ull4(le"ge" researc#4base" $#armaceutical com$any. A
ma2or $art o( t#is e((ort #as been t#e establis#ment o( t#e com$any=s o/n researc# an"
"evelo$ment center0 /#ic# #as enable" t#e com$any to begin to enter t#e ne/ c#emical
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entities ;NCE< an" novel "rug "elivery systems ;N55S< mar3ets. !n t#e mi"4...s0 t#e
com$any #a" a number o( NCEs in $rogress0 an" #a" alrea"y launc#e" its (irst N55S
$ro"uct0 a single "aily "osage (ormulation o( ci$ro(loxacin. )anbaxy is a truly global
o$eration0 $ro"ucing its $#armaceutical $re$arations in manu(acturing (acilities in seven
countries0 su$$orte" by sales an" mar3eting subsi"iaries in && countries0 reac#ing more t#an
1.. countries t#roug#out t#e /orl". T#e Dnite" States0 /#ic# alone accounts (or nearly #al(
o( all $#armaceutical sales in t#e /orl"0 is t#e com$any=s largest international mar3et0
re$resenting more t#an &. $ercent o( grou$ sales. !n Euro$e0 t#e com$any=s $urc#ase o( )PB
;Aventis< S.A. ma3es it t#e largest generics $ro"ucer in t#at mar3et. T#e com$any is also a
lea"ing generics $ro"ucer in t#e Dnite" Jing"om an" Bermany an" else/#ere in Euro$e.
Euro$ean sales a""e" 1* $ercent to t#e com$any=s sales in ..&. )anbaxy=s ot#er ma2or
mar3ets inclu"e Bra1il0 )ussia0 an" C#ina0 as /ell as !n"ia0 /#ic# toget#er a""e" * $ercent
to t#e grou$=s sales. )anbaxy $oste" revenues o( E1.1, billion in ..&. T#e com$any0 /#ic#
remains controlle" an" le" by t#e (oun"ing Sing# (amily0 is liste" on t#e National Stoc3
Exc#ange o( !n"ia in 7umbai.
)anbaxy Laboratories #a" its origins in t#e early 1-*.s /#en )an2it Sing# an" Burbux
Sing#0 t/o em$loyees o( a La$anese $#armaceutical com$any o$erating in !n"ia0 (orme"
t#eir o/n $#armaceutical $re$arations com$any in Amritsar0 in Pun2ab state. T#e t/o merge"
t#eir names to (orm t#e name (or t#eir com$any0 )anbaxy.
T#roug# t#e 1-*.s0 !n"ia=s $#armaceutical mar3et remaine" "ominate" by (oreign "rug
ma3ers. T#e "omestic $#armaceutical manu(acturing in"ustry /as limite" in large $art to t#e
"osage $re$aration0 $ac3aging0 an" "istribution o( existing (ormulations. Li3e many !n"ian
"rug com$anies o( t#is $erio"0 )anbaxy lin3e" u$ /it# a Euro$ean $#armaceutical com$any0
an" began $ro"uction in 1-*.
)anbaxy=s o/ners soug#t a""itional (inancing an" turne" to a local moneylen"er0 B#ai
7o#an Sing#. By 1-**0 t#e $air #a" built u$ "ebts to Sing# o( more t#an t#e e>uivalent o(
E1..0.... C#en Sing#0 a native o( Pa3istan /#o #a" arrive" in !n"ia at t#e beginning o( t#at
"eca"e0 came to collect0 t#e )anbaxy $artners o((ere" to turn over t#eir com$any to #im
instea".
BABASAB PATIL Page 13
Sing# agree" to t#e "eal an" launc#e" t#e )anbaxy (amily on t#e $at# to/ar" buil"ing one o(
!n"ia=s largest business em$ires. Dn"er B#ai 7o#an Sing#0 )anbaxy initially maintaine" its
course o( $re$aring an" $ac3ing existing bran"e" $#armaceutical $ro"ucts (or t#e !n"ian
mar3et. T#e entry o( Sing#=s el"est son0 Parvin"er0 into t#e com$any in 1-*+0 #o/ever0 set
t#e com$any on a ne/ course to become a (ully in"e$en"ent $#armaceutical com$any.
Parvin"er Sing# #a" 2ust gra"uate" /it# a P#5 in c#emistry (rom t#e Dniversity o(
7ic#igan. T#e younger Sing#=s bac3groun" in c#emistry com$lemente" #is (at#er=s business
(lair. Iet Parvin"er Sing# #imsel( >uic3ly "is$laye" a talent (or business an" /as cre"ite"0 in
large $art0 /it# gui"ing t#e com$any into t#e ran3s o( t#e global $#armaceutical lea"ers.
)anbaxy=s goo" (ortune came in 1-+.0 /#en t#e !n"ian government $asse" legislation t#at
e((ectively en"e" $atent $rotection in t#e $#armaceutical in"ustry. !n"ian $#armaceutical
manu(acturers /ere no/ able to $ro"uce lo/4cost0 generic versions o( $o$ular0 yet ex$ensive
"rugs0 revolutioni1ing t#e "rug in"ustry in !n"ia an" in muc# o( t#e /orl". T#e Sing#s
>uic3ly too3 a"vantage o( !n"ia=s large0 #ig#ly traine"0 yet inex$ensive /or3(orce0 buil"ing
u$ a strong sta(( o( c#emists an" c#emical engineers.
T#e com$any struc3 $ay "irt early on0 /#en it launc#e" Calm$ose0 a generic (ormulation o(
t#e #ugely $o$ular )oc#e "iscovery0 :alium. )elease" in 1-*-0 Calm$ose imme"iately
$lace" )anbaxy on !n"ia=s $#armaceutical ma$. T#e com$any ex$an"e" >uic3ly0 an" by
1-+%0 )anbaxy o$ene" a ne/ (actory0 in 7o#ali0 (or t#e $ro"uction o( active $rinci$al
ingre"ients ;AP!s<. T#is (acility enable" t#e com$any to ex$an" its range o( generic
me"ications an" ingre"ients. To (inance its gro/t#0 t#e com$any liste" on t#e !n"ian Stoc3
Exc#ange t#at year.
)anbaxy=s ability to $ro"uce generic me"ications at (ar lo/er cost t#an its bran"e"
com$etitors $lace" t#e com$any in a strong $osition (or international ex$ansion0 es$ecially in
less "evelo$e" mar3ets. T#e com$any began its internationali1ation early on0 launc#ing a
2oint venture in Nigeria. T#at o$eration o$ene" a $ro"uction (acility in Lagos in 1-++.
)anbaxy ex$an"e" its $ro"uction at #ome as /ell0 o$ening a ne/ state4o(4t#e4art "osage
$lant in 5e/as in 1-,%. !n 1-,+0 t#e com$any became !n"ia=s lea"ing antibiotic an"
BABASAB PATIL Page 14
antibacterial $ro"ucer /#en it com$lete" a ne/ AP! $lant in Toansa0 in Pun2ab0 t#at year. T#e
Toansa (acility bac3e" u$ )anbaxy=s $lans to enter t#e D.S. mar3et0 an" in 1-,,0 t#e Toansa
$lant receive" Foo" an" 5rug A"ministration ;F5A< a$$roval.
)anbaxy (ormulate" a ne/ strategy0 t#at o( becoming a (ull4(le"ge" $#armaceutical
com$any. T#e "riving (orce be#in" t#e com$any=s ne/ "irection /as Parvin"er Sing#0 /#o
/as name" t#e com$any=s managing "irector in 1-,. Nonet#eless0 B#ai 7o#an Sing#
remaine" in control o( t#e com$any.
As $art o( its ne/ strategy0 )anbaxy launc#e" its o/n researc# an" "evelo$ment center in
1-,'. T#e com$any also ste$$e" u$ its mar3eting e((orts0 launc#ing a ne/ "e"icate"
mar3eting subsi"iary0 Stancare0 t#at year. By 1--.0 t#e com$any #a" a ne/ $ro"uct to sell0
/#en )anbaxy /as grante" a D.S. $atent (or its "oxycycline antibiotic $re$aration. T#e
(ollo/ing year0 t#e com$any /as grante" a D.S. $atent (or its ce$#alos$orin $re$arations0
an" t#e com$any built a ne/ state4o(4t#e4art (acility (or t#eir $ro"uction in 7o#ali.
A ma2or milestone (or t#e com$any came in 1--0 /#en it reac#e" a mar3eting agreement
/it# Eli Lilly 8 Co. T#e com$anies set u$ a 2oint venture in !n"ia to $ro"uce an" mar3et
Lilly=s bran"e" $#armaceuticals (or t#e "omestic mar3et. At t#e same time0 Lilly agree" to
begin mar3eting )anbaxy=s generic me"ications in t#e Dnite" States. !n t#is /ay0 )anbaxy
gaine" /i"escale access0 bac3e" by t#e #ig#ly res$ecte" Lilly0 into t#e /orl"=s single largest
"rugs mar3et.
Parvin"er Sing# too3 over as #ea" o( t#e com$any44ousting #is (at#er in /#at /as "escribe"
as a (amily (eu"44in 1--. By t#en0 )anbaxy #a" gro/n into one o( !n"ia=s largest
$#armaceutical com$anies on t#e basis o( its generics $ro"uction. Iet as $ressure gre/ on
!n"ia to begin en(orcing international "rug $atents0 t#e com$any itsel( a$$eare" to #ave
reac#e" a crossroa"s44/#et#er to remain (ocuse" on co$ying generic molecules0 or to begin
"evelo$ing ne/ "rugs in4#ouse. T#e com$any c#ose t#e latter0 an" in 1--% a"o$te" a ne/
cor$orate mission to announce its re(ormulate" ambitions6 MTo become a researc#4base"
international com$any.M
BABASAB PATIL Page 15
)anbaxy ma"e goo" on its mission44by t#e mi""le o( t#e next "eca"e0 nearly ,. $ercent o( its
sales came (rom outsi"e o( !n"ia. As a (irst ste$0 t#e com$any launc#e" a ne/ 2oint venture0
in C#ina0 bac3ing its entry into t#at mar3et /it# a $ro"uction (acility in Buang1#ou. T#e
(ollo/ing year0 t#e com$any establis#e" subsi"iaries in Lon"on0 Englan"0 an" in )aleig#0
Nort# Carolina. !n 1--'0 t#e com$any ste$$e" u$ its D.S. $resence /it# t#e $urc#ase o( O#m
Laboratories !nc.0 /#ic# gave t#e com$any its (irst manu(acturing $lant in t#at mar3et.
)anbaxy t#en launc#e" construction o( a ne/ an" state4o(4t#e4art manu(acturing /ing0
/#ic#0 com$lete" t#at year0 gaine" F5A a$$roval.
T#is ne/ (acility enable" )anbaxy to ste$ u$ its $resence in t#e Dnite" States0 an" in 1--,
t#e com$any began mar3eting its generic $ro"ucts un"er its o/n bran" name. T#at year0 in
a""ition0 t#e com$any (ile" an a$$lication to begin P#ase ! clinical testing on its (irst in4
#ouse "evelo$e" NCE. T#e (ollo/ing year0 t#e com$any=s N55S e((orts $ai" o(( as /ell0
/#en Bayer ac>uire" t#e rig#ts to mar3et )anbaxy=s single "aily4"osage ci$ro(loxacin
(ormulation.
)anbaxy=s international ex$ansion continue" as /ell0 /it# t#e launc# o( mar3eting o$erations
in Bra1il. As t#e largest $#armaceuticals mar3et in Latin America0 t#at country /as t#e
cornerstone o( t#e com$any=s $lans to ex$an" t#roug#out t#e region. )anbaxy also ex$an"e"
in Euro$e0 /it# t#e agreement in ... to ac>uire Bayer=s Bermany4base" generics business0
Basics. T#e com$any also a""e" $ro"uction $lants in 7alaysia an" T#ailan".
Parvin"er Sing# "ie" in 1--- an" longtime rig#t#an" man 5.S. Brar too3 over as com$any
lea"er0 naming (amily outsi"er Brian Tem$est as com$any $resi"ent. T#e ne/ management
team continue" Sing#=s ex$ansion strategy0 o$ening a ne/ manu(acturing $lant in :ietnam in
..1.
)anbaxy also soug#t ne/ alliances0 an" in ..% t#e com$any reac#e" a global "rug
"iscovery an" "evelo$ment $artners#i$ /it# BlaxoSmit#Jline. T#at agreement calle" (or
Blaxo to #an"le t#e later4stage "evelo$ment $rocess (or )anbaxy create" molecules. T#e
com$any=s international ex$ansion also too3 a ma2or ste$ (or/ar" at t#e en" o( ..0 /#en it
agree" to ac>uire )PB ;Aventis< in France0 t#at country=s lea"ing generic "rugs $ro"ucer.
BABASAB PATIL Page 16
)anbaxy=s sales #a" by t#en to$$e" t#e E1 billion mar30 $lacing t#e com$any not only as t#e
lea"er in !n"ia=s $#armaceuticals in"ustry0 but also among t#e ran3s o( t#e /orl"=s to$ 1..
$#armaceuticals com$anies. )anbaxy also boaste" a $lace among t#e /orl"=s to$ ten generic
"rugs $ro"ucers. !n a""ition0 t#e com$any #a" a"vance" a gro/ing number o( its o/n NCE
an" N55S molecules into clinical testing. T#e com$any=s transition into researc#4base"
$ro"uct "evelo$ment /as seen as crucial as !n"ia announce" its intention to en(orce
international "rug $atents at t#e beginning o( ..'.
)anbaxy a$$eare" $re$are" to meet t#is c#allenge0 #o/ever0 an" con(i"ently set its sig#ts on
boosting its annual sales $ast E billion by ..+ an" to more t#an E' billion by t#e beginning
o( t#e next "eca"e. !nternational gro/t# remaine" an essential $art o( t#at strategy. T#e
com$any began negotiations (or a ma2or ac>uisition in Bermany at t#e en" o( ..&0 /#ic#
/as ex$ecte" to be com$lete" in ..'. T#e com$any also launc#e" construction o( a ne/
E1.. million $ro"uction (acility in Bra1il. 7ean/#ile0 )anbaxy continue" to increase its
researc# an" "evelo$ment bu"get0 /it# t#e goal o( generating as muc# as &. $ercent o( its
revenues (rom its in4#ouse innovations by t#e .1.s. )anbaxy ex$ecte" to remain !n"ia=s
"rug lea"er into t#e ne/ century.
Princi$al Subsi"iaries
Basics BmbA ;Bermany<K Bu(ic P#arma Lt". ;-,?<K O#m Laboratories !nc. ;Dnite" States<K
)anbaxy ;Aong Jong< Lt".K )anbaxy ;7alaysia< S"n. B#". ;'*.'?<K )anbaxy
;Net#erlan"s< B.:.K )anbaxy ;S.A.< Pro$rietary Lt".K )anbaxy ;DJ< Lt".K )anbaxy 5o Brasil
Lt"a.K )anbaxy 5rugs an" C#emicals Com$anyK )anbaxy 5rugs Lt".K )anbaxy Egy$t Lt".K
)anbaxy Euro$e Lt". ;Dnite" Jing"om<K )anbaxy Farmaceutica Lt"a. ;Bra1ilK +.?<K
)anbaxy Fine C#emicals Lt".K )anbaxy France SASK )anbaxy !relan" Lt".K )anbaxy Nigeria
Lt". ;,&.,-?<K )anbaxy Panama0 S.A.K )anbaxy P#armaceuticals !nc. ;Dnite" States<K
)anbaxy Polan" S$. 1.o.o.K )anbaxy P)P ;Peru< S.A.C.K )anbaxy Dnic#em Com$any Lt".
;T#ailan"K ,,.'*?<K )anbaxy DSA0 !nc.K )anbaxy :ietnam Com$any Lt".K )anbaxy
;Buang1#ou C#inaK ,%?<K )anbaxy0 !nc. ;Dnite" States<K )anc#em !nc. ;Dnite" States<K
)anlab !nc. ;Dnite" States<K )anP#arm !nc. ;Dnite" States<K )excel P#armaceuticals Lt".K
BABASAB PATIL Page 17
Solus P#armaceuticals Lt".K Dnic#em 5istributors ;T#ailan"K --.-*?<K :i"yut !nvestments
Lt".K :i"yut Travel Services Lt".
Princi$al Com$etitors
)PB Enter$risesK BlaxoSmit#Jline Consumer Aealt#care Lt".K East !n"ia P#armaceutical
Cor3s Lt".K 5r. )e""y=s Laboratories Lt".K Ci$la Lt".K Conce$t P#armaceuticals Lt".K
J#an"el/al Laboratories Lt".K 5abur !n"ia Lt".
BABASAB PATIL Page 18
BABASAB PATIL Page 19
1< Current )atios N Current assets
Current liabilities
Iear .. ..% ..& ..' ..*
)atios %.*.? &.1*? .++? %.11? %.&*?
!nter$retation64
T#e current ratio o( t#e
(irm measures t#e s#ort
term solvency 0t#at is its
ability to meet t#e s#ort
term obligations. !n t#e
(ollo/ing gra$# /e can
say t#at t#e (irm9s current ratio is increasing in (irst t/o years an" #as "ecrease" in t#ir" year
an" again increase in t#e subse>uent years . T#is s#o/s t#at t#e (irm #as t#e ability to meet
its current obligations.
T#is also means t#at t#e com$any is bloc3ing u$ t#e assets an" are not been utili1e" in t#e
ot#er investments.
BABASAB PATIL Page 20
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
Ratios
< Ouic3 ratiosN Ouic3 assets
Current liabilities
Iear .. ..% ..& ..' ..*
)atios 1.*& ..-- ..-, 1.* 10&-
!nter$retation64
Ouic3 ratios are use" to measure t#e (irm9s ability to service its s#ort term liabilities .(rom
t#e (ollo/ing gra$# /e can say t#at t#e (irm #as #ig# liability servicing ca$acity in t#e (irst
year 0.but it #as "ecrease" in next t/o years. An" t#ereby increase" in t#e subse>uent years.
T#is s#o/s t#at t#e com$any #as t#e ability to meet its liabilities.
%< !nventory turnover ratio N cost o( goo"s sol"
Average inventory
BABASAB PATIL Page 21
Iear .. ..% ..& ..' ..*
)atios &..% %.,& %.*+ %.*. %.+%
!nter$retation64
T#is means t#at t#e inventory in t#e (irst year is been sol" very (ast. An" t#ere is an "ecrease
in t#e movement o( t#e inventories but it slig#tly increase" in t#e last year. T#is may be a
goo" sign to t#e com$any t#at it may still increase t#e inventory movement in t#e next
subse>uent years.
&< Bross $ro(it 7argin N gross $ro(it
Sales
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 22
)atios '.,? ,.&1? 1-.-'? ,.--? 1&.-,?
!nter$retation64
T#e gross $ro(it measures t#e relation bet/een t#e sales an" $ro(its .As t#ere /as increase in
t#e gross $ro(its (rom .. to ..% it /as a goo" sign to t#e com$any 0but it "ecrease" in
t#e subse>uent years an" again increase" in t#e last year .it /as not muc# goo" as com$are"
to t#e $revious years.
'< Net $ro(it margin N $ro(it a(ter tax
Sales
Iear .. ..% ..& ..' ..*
)atios 11.%. .&- 1&.* *.% -.%+
BABASAB PATIL Page 23
!nter$retation64
T#e net $ro(it margin is t#e in"icative o( t#e managements ability to o$erate t#e business
/it# su((icient success. !n t#e (ollo/ing gra$# /e can see t#at t#e net $ro(it increase" (rom
.. to ..% .it /as normal in ..& .But at t#e subse>uent years t#e net $ro(it "ecrease" .
T#is is a goo" sign to t#e com$any as it can earn more return on investments i( it #as #ig#
rate inventory turn over.
*< O$erating $ro(it ratio N EB!T
Sales
Iear .. ..% ..& ..' ..*
)atios &.*,? +.**? 1+.%,? '.*-? 1..-1?
BABASAB PATIL Page 24
!nter$retation64
+< Cost o( goo"s sol" ratio N cost o( goo"s sol" @1..
Net sales
Iear .. ..% ..& ..' ..*
)atios
+-.--? +&.&%? ,.+1? -.? ,1.,%?
BABASAB PATIL Page 25
!nter$retation64
T#e cost o( goo"s sol" ratio s#o/s /#at $ercentage s#are o( sales is consume" by cost o(
goo"s sol" 0 an" /#at $ro$ortion is available (or meeting ex$enses .!n t#e (ollo/ing (igure
/e can se t#at t#e cost o( goo"s sol" ratio is continuously increasing .
,< )eturn on Assets N PATP !nterest @1..
Average (ixe" assets
Iear .. ..% ..& ..' ..*
)atios +.*&? -*..,? *,.1.? &..+? %%.%%?
BABASAB PATIL Page 26
!nter$retation64
T#e )OA measures t#e $ro(itability o( t#e total (un"s .#ere in t#e (ollo/ing (igure /e can
say t#at $ercentage o( return on assets is gra"ually "ecreasing year a(ter year.
-< )eturn on ca$ital em$loye" N Pro(it a(ter tax @1..
Average total ca$ital em$loye"
Iear .. ..% ..& ..' ..*
)atios %&.',? %+.''? 1.1'? +.%-? ,.'1?
BABASAB PATIL Page 27
!nter$retation64
T#e )OCE is similar to t#e )OA .Aere t#e $ro(its are relate" to t#e total ca$ital em$loye".
Aig#er t#e ratio0 more e((icient is t#e use o( ca$ital em$loye" .But in t#e (ollo/ing gra$#
/e can say t#at t#e ratio is gra"ually "ecreasing 0t#is means t#at t#e (irm is not utili1ing t#e
ca$ital e((iciently
1.< EPS N Net $ro(it available to t#e e>uity s#are#ol"ers @1..
Number o( or"inary s#ares outstan"ing
Iear .. ..% ..& ..' ..*
)atios %.&%? ..'&? &.++? 1.1,? 1.1?
BABASAB PATIL Page 28
!nter$retation64
T#e EPS in"icates t#e earnings o( a s#are .by t#e (ollo/ing gra$# it is clear t#at t#e EPS is
Totally "ecrease" (rom .. to ..% .But t#ere /as a "rastic rise in t#e EPS in ..& 0an"
again t#ere /as "ecrease in t#e subse>uent years.
11< 5HE )atio N Total "ebt
S#are#ol"ers e>uity
Iear .. ..% ..& ..' ..*
)atios &%.%%? &,.-+? '-.+%? -1.%+? 1,,.%'?
BABASAB PATIL Page 29
!nter$retation64
T#e "ebt e>uity ratio is t#e relations#i$ bet/een t#e borro/e" (un"s an" t#e o/ner9s
ca$ital. Aere in t#e (ollo/ing gra$# it is clear t#at t#e "ebt e>uity ratio is increasing .it means
t#at t#e cre"itors are $utting less money o( t#eir o/n an" #ence it is a "anger sign to t#e
com$any.
1< !nterest coverage N EB!T
!nterest
Iear .. ..% ..& ..' ..*
)atios %'.1%? &.'? *'.*+? 1..%? 1..&.?
BABASAB PATIL Page 30
!nter$retation64
T#is ratio measures t#e "ebt servicing ca$acity o( t#e (irm .(rom t#e (ollo/ing gra$# 0t#e
interest coverage ratio in more in t#e year .. but since t#en it /ent on gra"ually
"ecreasing. T#is coul" be a "anger sign (or t#e (irm t#at it is using excessive "ebt an" "oes
not #ave t#e ca$acity to assure $ayment o( t#e interest to t#e cre"itors .
1%< 5ivi"en" coverage N EAT
Pre(erence "ivi"en"
Iear .. ..% ..& ..' ..*
)atios %.',? .,'? 1.*+? ..+.? 1..?
BABASAB PATIL Page 31
!nter$retation64
T#is ratio measures t#e "ivi"en" $ayment ability o( t#e (irm /#ic# carry a state" rate o(
return to t#e s#are#ol"ers.Aig#er t#e ratio better /ill be to t#e s#are#ol"ers . but #ere t#e
"ivi"en" $ayment ability is "ecreasing gra"ually year a(ter year.
1&< 5ivi"en" $ayout ratio N 5ivi"en" $ai" @1..
EPS
Iear .. ..% ..& ..' ..*
)atios '..*? '.1'? *.*? .*,? .*1?
BABASAB PATIL Page 32
!nter$retation64
T#is states t#e (irms ability to $ay t#e "ivi"en"s to t#e s#are#ol"ers.Even #ere t#e $ayment
ratio is "ecreasing . T#e (irm #ere.is not able to $ay t#e "ivi"en"s .t#e $ayout ratio is
"ecreasing gra"ually every year.
1'< Total assets turnover ratio N cost o( goo"s sol" @1..
Average total assets
Iear .. ..% ..& ..' ..*
)atios .1,? .*? .-*? .,*? .+%?
BABASAB PATIL Page 33
!nter$retation64
T#e assets turnover ratio measures t#e e((iciency o( t#e (irm in in managing an" utili1ing
t#e assets. Aig#er t#e turnover more e((icient is t#e management. So (rom t#is gra$# /e can
say t#at t#e (irm is more e((icient in managing its assets as t#e ratio is increasing every year.
1*< Fixe" assets turnover ratio N cost o( goo"s sol" @1..
Average (ixe" assets
Iear .. ..% ..& ..' ..*
)atios .1&? %.'? .'? ..1? 1.+'?
BABASAB PATIL Page 34
!nter$retation64
As t#e (igure s#o/s0 t#ere is "ecrease in t#e ratio o( assets turn over .Aence t#e (irm is not
e((icient in managing an" utili1ing t#e (ixe" assets.
1+< Current assets turnover N cost o( goo"s sol" @1..
Average current assets
Iear .. ..% ..& ..' ..*
)atios 1.'-? .%,? 1.++? 1.+? 1.+.?
BABASAB PATIL Page 35
!nter$retation64
T#e current assets turnover ratio measures t#at #o/ >uic3ly t#e s#ort term obligations can be
met. Aig# t#e ratio 0more e((icient is t#e (irm9s ability to meet t#e s#ort term obligations. !n
t#e (ollo/ing gra$# it is s#o/n t#at t#ere is increase in t#e current assets turnover ratio.
1,< Ca$ital turnover ratio N cost o( goo"s sol"
Average ca$ital em$loye"
Iear .. ..% ..& ..' ..*
)atios ..+-? 1.,.? 1.'? 1.1*? ..-?
BABASAB PATIL Page 36
!nter$retation64
T#is ratio measures t#e relations#i$ bet/een cost o( goo"s sol" an" average ca$ital
em$loye". An" #o/ (ast is t#e utili1ation o( t#e ca$ital. t#is also measures /#at is t#e cost
o( goo"s sol"..From t#e gra$# /e can say t#at t#ere is "ecrease in t#e ratios 0so it is not a
goo" sign to t#e com$any. !t can still $er(orm better .
1-< 5ebtors turnover ratio N Total sales
5rs PBH)
Iear .. ..% ..& ..' ..*
)atios %.,%? +..%? &.&'? &.? %.-1?
BABASAB PATIL Page 37
!nter$retation64
T#e "ebtors turnover ratio measures t#e relation bet/een t#e total sales an" "ebtors.
!t means t#at t#e "ebtors are ex$ecte" to $ay /it#in t#e $rescribe" $erio" . #ig# t#e ratio
0more e((icient is t#e (irm in collecting t#e "ebt (rom t#e "ebtors. Aere in t#e (ollo/ing gra$#
/e can see t#at t#e ratio is #ig# in ..% an" gra"ually "ecrease" in t#e subse>uent years .
t#is is not goo" on t#e $art o( t#e com$any.
.< )etention ratio N )etaine" earnings
PAT
Iear .. ..% ..& ..' ..*
)atios +.1? *&.--? &..&? &1.&'? 1*.+*?
BABASAB PATIL Page 38
!nter$retation64
)etention ratio measures t#e $ercentage o( earnings retaine" by t#e com$any. Aig# t#e ratio0
more e((icient is t#e com$any is retaine" earnings. So (rom t#e (ollo/ing gra$# it is clear t#at
t#e retaine" earnings is "ecrease" (rom .. to ..* gra"ually . Aence t#e com$any is sai"
to be "istributing t#e "ivi"en"s /it#out retaining any reserves. !t is a"vantageous (rom t#e
$oint o( vie/ o( s#are#ol"ers.
1< )eturn on e>uity N PAT @1..
S#are#ol"ers (un"
Iear .. ..% ..& ..' ..*
)atios %*.-,? %&.*? 1..,? -.&1? 1*.1-?
BABASAB PATIL Page 39
!nter$retation 64
T#e )eturn on e>uity s#o/s #o/ muc# returns is being earne" .t#is is ma"e (rom t#e $oint
o( vie/ o( t#e s#are#ol"ers .i( t#e return on e>uity is more t#en it is sai" to be t#e most
"eman"e" s#ares in t#e mar3et.
But in t#e (ollo/ing gra$# t#ere /as "ecrease in t#e t#e ratio (rom .. to ..& . But t#ere
/as slig#t rise in t#e year ..*.
< Boo3 :alue N Net /ort#
No. o( s#ares oHs
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 40
)atios 1... 1.' 1.%& ..*% ..*%
!nter$retation64
T#e Boo3 value is too #ig# in t#e year ..&.!t #as increase" (rom .. to ..*.But t#ere
/as "ecrease in t#e year ..' an" ..*.Bot# t#e years #ave a constant ratio.
%< PE )atio; Pros$ective< N 7ar3et $rice
EPS
Iear .. ..% ..& ..' ..*
)atios '.'*? 11'.&,? 1-.+.? ,'.&-? %'.+%?
BABASAB PATIL Page 41
!nter$retation64
T#e PHE )atio ;Pros$ective< /as #ig# in t#e year ..% . an" in t#e year ..& t#ere /as a
"rastic c#ange to 1-.+.? . !t increase" in t#e ..' an" again "ecrease" in ..* .t#is is only
because o( t#e c#anges in t#e mar3et $rice every year.
&< PE )atio
etros$ective< N 7ar3et $rice
Boo3 value
Iear .. ..% ..& ..' ..*
)atios ,*.-? &-.,,? +..1%? 1*.? *,.*?
BABASAB PATIL Page 42
!nter$retation64
T#e PHE )atio ;retros$ective< is very #ig# in t#e year ..'. !t "ecrease" (rom year .. to
..% an" again increase" (rom ..& to ..' an" it "ecrease" in ..*.
CAB) ;sales< N ; Sales in .. <Q1H& @1..
Sales in ..*
BABASAB PATIL Page 43
N ,-&.% Q..' @1..
&-',+.1
N 1.,& .r 1,&?
CAB) ;EPS< N ;EPS in ..< Q1H&@1..
EPS in ..*
N ;%.&1<Q..'@1..
1.&1
N ..-'* or -.'*?
latility o( )OE N )ange o( )OE over a $erio" ..' to ..
Average o( )OE over a $erio"
N %*.-, F -.&1
%.',
N 1.1*
5ecom$ose )OE N PB!T @ SALES @ PBT @ PAT @ ASSETS
SALES ASSETS PB!T PBT NETCO)TA
BABASAB PATIL Page 44
N .1%.* @ %'%**.' @ .1%.* @ %+.. @ 11%..-*
%'%**.' 11%..-* .1%.* .1%.* %++..1-
N ...'*- @ %.1&% @ 1@ 1.11 @ ..&
N ...+%1 O) +.%1?
Average )etention ratio N )etention ratio in last % years
%
N ..&. P ..&1 P ..1*
%
N ..%%%
Average $ayout N 1 F ..%%%
N ..*+**
Ex$ecte" gro/t# rate o( 5ivi"en" N Average retention ratio @ Average return on e>uity
!n last % years in last % years
N ..&. P ..&1 P ..1* @ 1.., P-.&1 P 1*.1-
% %
BABASAB PATIL Page 45
N ..%%% @ 1'.'*
N '..%?
PE )atio as $er Constant 5ivi"en" 7o"el N
Average $ayout ratio
Average retention ratio F Ex$ecte" Bro/t# )ate o( 5ivi"en"
N ..*+**
..&** F ...'.%
N ..*+**
..&1'+
N 1.*
:alue Anc#or N Ex$ecte" EPS @ PE )atio
@ 1.*
BABASAB PATIL Page 46
!ntro"uction to Ci$la64
T#e com$any /as (oun"e" in 1-%' by J#/a2a Ab"ul Aamie"0 an" its c#airman to"ay is
Iusu( Aamie" ;b. 1-%*<0 t#e (oun"er=s el"est son. Ci$la0 originally (oun"e" as T#e C#emical0
!n"ustrial 8 P#armaceutical Laboratories is a $rominent !n"ian $#armaceutical com$any0
best43no/n outsi"e its #ome country (or $ro"ucing lo/4cost anti4A!5S "rugs (or A!:4
$ositive $atients in "evelo$ing countries. Ci$la ma3es "rugs to treat car"iovascular "isease0
art#ritis0 "iabetes0 /eig#t control0 "e$ression an" many ot#er #ealt# con"itions0 an" its
$ro"ucts are "istribute" in more t#an 1,. countries /orl"/i"e.
R1S
Among t#e #un"re"s o(
generic me"ications it $ro"uces (or international "istribution are atorvastatin0 amlo$i"ine0
(luoxetine0 venla(axine #y"roc#lori"e an" met(ormin.
To"ay ;..+<0 Ci$la is t#e /orl"=s largest manu(acturer o( antiretroviral "rugs ;A):s< to
(ig#t A!:HA!5S0 as measure" by units $ro"uce" an" "istribute" ;multinational bran"4name
BABASAB PATIL Page 47
"rugs are muc# more ex$ensive0 so in money terms Ci$la me"icines are $robably some/#ere
"o/n t#e list<. )oug#ly &.? o( A!:HA!5S $atients un"ergoing antiretroviral t#era$y
/orl"/i"e ta3e Ci$la "rugs. )an3e" t#ir" in Beneric mar3et s#are statistics in Sout# A(rican
Private Sector.
Because !n"ian la/ (rom 1-+ #as allo/e" no ;en"4$ro"uct< $atents on "rugs0 an" $rovi"e"
(or com$ulsory licensing0 Ci$la /as able to manu(acture me"icines /#ic# en2oy $atent
mono$oly in certain ot#er countries ;$articularly t#ose /#ere large0 multinational
$#armaceutical com$anies are base"<. By "oing so0 as /ell as by ma3ing
an executive "ecision not to ma3e $ro(its on A!5S me"ication0 Ci$la re"uce" t#e cost o(
$rovi"ing antiretrovirals to A!5S $atients (rom E10... an" beyon" ;mono$oly $rices
c#arge" by international $#arma conglomerates< "o/n to aroun" E%.. $er year. To"ay t#ey
are able to "o so (or un"er E1'. $er $atient $er year. C#ile t#is sum remains out o( reac# (or
many millions o( $eo$le in T#ir" Corl" countries0 government an" c#aritable sources o(ten
are in a $osition to ma3e u$ t#e "i((erence (or "estitute $atients.
T#e customary treatment o( A!5S consists o( a coc3tail o( t#ree "rugs. Ci$la $ro"uces an all4
in4one $ill calle" Triomune /#ic# contains all t#ree substances ;Lamivu"ine0 stavu"ine an"
Nevira$ine<0 somet#ing "i((icult else/#ere because t#e t#ree $atents are #el" by "i((erent
com$anies. One more $o$ular (ixe" "ose combination is t#ere0 /it# t#e name 5uovir4N. T#is
contains Lamivu"ine0 Ti"ovu"ine an" Nevira$ine
BABASAB PATIL Page 48
BABASAB PATIL Page 49
1< Current )atios N Current assets
Current liabilities
Iear .. ..% ..& ..' ..*
)atios 1.*.? 1.&-? .,+? .+'? .-+?
!nter$retation64
T#e current ratio o( t#e (irm measures t#e s#ort term solvency 0t#at is its ability to meet t#e
s#ort term obligations. !n t#e (ollo/ing gra$# /e can say t#at t#e (irm9s current is
increasing in (irst year an" #as increase" in t#ir" year an" again increase in t#e subse>uent
years . T#is s#o/s t#at t#e (irm #as t#e ability to meet its current obligations.
T#is s#o/s increase (rom ..& to ..* suse>uently.
T#is also means t#at t#e com$any is bloc3ing u$ t#e assets an" are not been utili1e" in t#e
ot#er investments.
BABASAB PATIL Page 50
< Ouic3 ratiosN Ouic3 assets
Current liabilities
Iear .. ..% ..& ..' ..*
)atios ..*1? ..*.? 1.%&? 1.1? 1.&&?
!nter$retation64
Ouic3 ratios are use" to measure t#e (irm9s ability to service its s#ort term liabilities .(rom
t#e (ollo/ing gra$# /e can say t#at t#e (irm #as lo/ liability servicing ca$acity in t#e (irst
year 0.but it #as increase" in next t/o years. An" t#ereby increase" in t#e subse>uent years.
T#is s#o/s t#at t#e com$any #as t#e ability to meet its liabilities.
%< !nventory turnover ratio N cost o( goo"s sol"
BABASAB PATIL Page 51
Average inventory
Iear .. ..% ..& ..' ..*
)atio ..%.? ..1? ..? ..1? ...?
!nter$retation64
T#is means t#at t#e inventory in t#e (irst year is been sol" very (ast. An" t#ere is an "ecrease
in t#e movement o( t#e inventories. T#is may be a ba" sign to t#e com$any inventory
movement in t#e next subse>uent years is very lo/.
&< Bross $ro(it 7argin N gross $ro(it
Sales
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 52
)atios -.&%? %&.1%? %,..-? &&...? &&.-?
!nter$retation64
T#e gross $ro(it measures t#e relation bet/een t#e sales an" $ro(its .As t#ere /as increase in
t#e gross $ro(its (rom .. to ..* it /as a goo" sign to t#e com$any because t#ere is
subse>uent increase in t#e gross $ro(it
7argin.
'< Net $ro(it margin N $ro(it a(ter sales
Sales
Iear .. ..% ..& ..' ..*
)atios 1*.&'? 1'.&-? 1&.**? 1*.&-? 1,.++?
BABASAB PATIL Page 53
!nte$retation64
T#e net $ro(it margin is t#e in"icative o( t#e managements ability to o$erate t#e business
/it# su((icient success. !n t#e (ollo/ing gra$# /e can see t#at t#e net $ro(it increase" (rom
.. to ..* .it /as normal in ..&.But at t#e subse>uent years t#e net $ro(it increase" .
T#is is a goo" sign to t#e com$any as it can earn more return on investments as it #as #ig#
rate inventory turn over.
*< O$erating $ro(it ratio N EB!T
Sales
Iear .. ..% ..& ..' ..*
)atios 1.*'? 1-.'&? 1-.%? ..+? 1.-%?
BABASAB PATIL Page 54
!nter$retation64
T#e o$erating $ro(it ratio s#o/s t#e relation bet/een EB!T an" Sales .Aere (rom t#e
(ollo/ing gra$# /e can say t#at t#e o$erating ratio is increase" (rom .. to ..*
subse>uently.t#is is a goo" sign to t#e com$any as it #as increase its o$erating $ro(it ratio
/#ic# is be(ore tax.
+< Cost o( goo"s sol" ratio N cost o( goo"s sol" @1..
Net sales
Iear .. ..% ..& ..' ..*
)atios +.-? +.%? +..? *.%? *.1?
BABASAB PATIL Page 55
!nter$retation64
T#e cost o( goo"s sol" ratio s#o/s /#at $ercentage s#are o( sales is consume" by cost o(
goo"s sol" 0 an" /#at $ro$ortion is available (or meeting ex$enses .!n t#e (ollo/ing (igure
/e can see t#at t#e cost o( goo"s sol" ratio is continuously "ecreasing . So t#is is a goo"
sign to t#e com$any as t#ere is lo/ cost incurre" (or sales.
,< )eturn on Assets N PATP !nterest @1..
Average (ixe" assets
Iear .. ..% ..& ..' ..*
)atios 1.*? ,,.? *-...? *&.,*? *,.-'?
BABASAB PATIL Page 56
!nter$retation64
T#e )OA measures t#e $ro(itability o( t#e total (un"s .#ere in t#e (ollo/ing (igure /e can
say t#at $ercentage o( return on assets is gra"ually "ecreasing year a(ter year.
-< )eturn on ca$ital em$loye" N Pro(it a(ter tax @1..
Average total ca$ital em$loye"
Iear .. ..% ..& ..' ..*
)atios '.&&? %.+? %.%? '.&1? ,.-?
BABASAB PATIL Page 57
!nter$retation64
T#e )OCE is similar to t#e )OA .Aere t#e $ro(its are relate" to t#e total ca$ital em$loye".
Aig#er t#e ratio0 more e((icient is t#e use o( ca$ital em$loye" .But in t#e (ollo/ing gra$#
/e can say t#at t#e ratio is gra"ually increasing 0t#is means t#at t#e (irm utili1ing t#e ca$ital
e((iciently
1.< EPS N Net $ro(it available to t#e e>uity s#are#ol"ers @1..
Number o( or"inary s#ares outstan"ing
Iear .. ..% ..& ..' ..*
)atios %.- &.1 '..- 1%.* ..1-
BABASAB PATIL Page 58
!nter$retation64
T#e EPS in"icates t#e earnings o( a s#are .by t#e (ollo/ing gra$# it is clear t#at t#e EPS is
Totally increase" (rom .. to ..* .But t#ere /as a "rastic rise in t#e EPS in ..* an" .
t#is s#o/s t#at t#e s#are#ol"ers earn better "ivi"en"s
11< 5HE )atio N Total "ebt
S#are#ol"ers e>uity
Iear .. ..% ..& ..' ..*
)atios '&.1.? *&.*.? +..&? *.**? +..%&?
BABASAB PATIL Page 59
!nter$retation64
T#e "ebt e>uity ratio is t#e relations#i$ bet/een t#e borro/e" (un"s an" t#e o/ner9s ca$ital.
Aere in t#e (ollo/ing gra$# it is clear t#at t#e "ebt e>uity ratio is increasing .it means t#at t#e
cre"itors are $utting less money o( t#eir o/n an" #ence it is a "anger sign to t#e com$any.
1< !nterest coverage N EB!T
!nterest
Iear .. ..% ..& ..' ..*
)atios 1&.+%? 1,..? %,.,+? *+.&1? *.1'?
BABASAB PATIL Page 60
!nter$retation64
T#is ratio measures t#e "ebt servicing ca$acity o( t#e (irm .(rom t#e (ollo/ing gra$# 0t#e
interest coverage ratio in more in t#e year .. but since t#en it /ent on gra"ually
increasing. T#is coul" be a goo" sign (or t#e (irm t#at it is not using excessive "ebt an" #ave
t#e ca$acity to assure $ayment o( t#e interest to t#e cre"itors .
1%< 5ivi"en" coverage N EAT
Pre(erence "ivi"en"
Iear .. ..% ..& ..' ..*
)atios 11.&*? +.&&? *.+%? '.+? *.+*?
BABASAB PATIL Page 61
!nter$retation64
T#is ratio measures t#e "ivi"en" $ayment ability o( t#e (irm /#ic# carry a state" rate o(
return to t#e s#are#ol"ers.Aig#er t#e ratio better /ill be to t#e s#are#ol"ers . but #ere t#e
"ivi"en" $ayment ability is "ecreasing gra"ually year a(ter year.
1&< 5ivi"en" $ayout ratio N 5ivi"en" $ai" @1..
EPS
Iear .. ..% ..& ..' ..*
)atios *.-? 1..1-? 11.+*? **..+? '1.-*?
BABASAB PATIL Page 62
!nter$retation64
T#is states t#e (irms ability to $ay t#e "ivi"en"s to t#e s#are#ol"ers.Aere t#e $ayment ratio is
increasing . T#e (irm #ere is able to $ay t#e "ivi"en"s .T#e $ayout ratio is increasing
gra"ually every year.
1'< Total assets turnover ratio N cost o( goo"s sol" @1..
Average total assets
Iear .. ..% ..& ..' ..*
)atios 1.1+? ..-*? ..-%? ..,? ..,1?
BABASAB PATIL Page 63
!nter$retation64
T#e assets turnover ratio measures t#e e((iciency o( t#e (irm in managing an" utili1ing t#e
assets. Aig#er t#e turnover more e((icient is t#e management. So (rom t#is gra$# /e can say
t#at t#e (irm is not e((icient in managing its assets as t#e ratio is "ecreasing every year.
1*< Fixe" assets turnover ratio N cost o( goo"s sol" @1..
Average (ixe" assets
Iear .. ..% ..& ..' ..*
)atios ..&1? ..%1? ..,? ..1? ..1-?
BABASAB PATIL Page 64
!nter$retation64
As t#e (igure s#o/s0 t#ere is "ecrease in t#e ratio o( assets turn over .Aence t#e (irm is not
e((icient in managing an" utili1ing t#e (ixe" assets.
!t is not a goo" sign to t#e com$any.
1+< Current assets turnover N cost o( goo"s sol" @1..
Average current assets
Iear .. ..% ..& ..' ..*
)atios ..1? ..1-? ..1? ..11? ..11?
BABASAB PATIL Page 65
!nter$retation64
T#e current assets turnover ratio measures t#at #o/ >uic3ly t#e s#ort term obligations can be
met. Aig# t#e ratio 0more e((icient is t#e (irm9s ability to meet t#e s#ort term obligations. !n
t#e (ollo/ing gra$# it is s#o/n t#at t#ere is "ecrease in t#e current assets turnover ratio. !n
t#e year .. to ..% t#ere increase in t#e ratios 0but t#ere is a "ecrease in t#e ratios (rom
..& on/ar"s.
1,< Ca$ital turnover ratio N cost o( goo"s sol"
Average ca$ital em$loye"
Iear .. ..% ..& ..' ..*
)atios 1...,? -.,.? ,.*? ,.&,? 1%.%*?
BABASAB PATIL Page 66
!nter$retation64
T#is ratio measures t#e relations#i$ bet/een cost o( goo"s sol" an" average ca$ital
em$loye". An" #o/ (ast is t#e utili1ation o( t#e ca$ital. t#is also measures /#at is t#e cost
o( goo"s sol"..From t#e gra$# /e can say t#at t#ere is increase in t#e ratios (rom .. to
..* 0so it is a goo" sign to t#e com$any. !t is $er(orming $er(orm better .
1-< 5ebtors turnover ratio N Total sales
5ebtors
Iear .. ..% ..& ..' ..*
)atios '.*.? &.&-? &.1-? &.? %.*-?
BABASAB PATIL Page 67
!nter$retation64
T#e "ebtors turnover ratio measures t#e relation bet/een t#e total sales an" "ebtors.
!t means t#at t#e "ebtors are ex$ecte" to $ay /it#in t#e $rescribe" $erio" . #ig# t#e ratio
0more e((icient is t#e (irm in collecting t#e "ebt (rom t#e "ebtors. Aere in t#e (ollo/ing gra$#
/e can see t#at t#e ratio is #ig# in .. an" gra"ually "ecrease" in t#e subse>uent years .
t#is is not goo" on t#e $art o( t#e com$any.
.< )etention ratio N )etaine" earnings
PAT
Iear .. ..% ..& ..' ..*
)atios ..,,? ..,%? ..,1? ..+,? ..,?
BABASAB PATIL Page 68
!nter$retation64
T#e retention ratio is increase" (rom .. to ..& an" "ecrease" in t#e year ..' .but t#ere
/as again rise in t#e ratio in ..* .t#is s#o/s t#at t#e com$any is stable in retaining t#e
earnings even a(ter $aying taxes.
1< )eturn on e>uity N PAT @1..
)etaine" earnings
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 69
)atios 1.-+? +.,%? &.*? *.%*? %..*%?
!nter$retation64
T#e )eturn on e>uity s#o/s #o/ muc# returns is being earne" .t#is is ma"e (rom t#e $oint
o( vie/ o( t#e s#are#ol"ers .i( t#e return on e>uity is more t#en it is sai" to be t#e most
"eman"e" s#ares in t#e mar3et.
But in t#e (ollo/ing gra$# t#ere /as increase in t#e ratio (rom .. to ..* .
< Boo3 :alue N Net /ort#
No. o( s#ares oHs
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 70
)atios 1&.+- 1+.,& 1..+ '.1* *.'
!nter$retation64
From t#e (ollo/ing gra$# it is clear t#at t#e boo3 value o( t#e s#ares is "ecrease" (rom ..
to ..' . an" t#ere /as a slig#t rise in t#e boo3 value.it is because o( t#e increase in t#e
number o( s#ares.(rom ..' on/ar"s.
%< PE )atio; Pros$ective< N 7ar3et $rice
EPS
Iear .. ..% ..& ..' ..*
)atios .*. 1.+% .%, 1.' .%*
BABASAB PATIL Page 71
!nter$retation64
T#e PHE )atio ;$ros$ective< "ecrease" (rom .. to ..% .!t increase" in ..& an" again
t#ere /as "ecrease in ..' .!n ..* t#e ratio again increase".T#is is because o( t#e c#anges
in t#e mar3et $rices.
&< PE )atioetros$ective< N 7ar3et $rice
Boo3 value
Iear .. ..% ..& ..' ..*
)atios *,.+, &...1 ''.+1 &-.'+ 1...&-
BABASAB PATIL Page 72
!nter$retation64
T#e PHE )atio ;$ros$ective< "ecrease" (rom .. to ..& .An" again t#ere /as "ecrease in
..' .!n ..* t#e ratio again increase".T#is is because o( t#e c#anges in t#e mar3et $rices.
CAB) ;sales< N ; Sales in ..+ <Q1H& 41 @1..
Sales in ..%<
N ;%+*%.+< Q..' 41@1..
1'--...
BABASAB PATIL Page 73
N %.,*?
CAB) ;EPS< N ;EPS in ..+< Q1H&41@1..
EPS in ..%<
N ;1.&-<Q..'41@1..
&.11
N %..%?
latility o( )OE N )ange o( )OE over a $erio" ..+to ..%
Average o( )OE over a $erio"
N 1.-+ 4*.%*
*.
N 4..1*
BABASAB PATIL Page 74
5ecom$ose )OE N PB!T @ SALES @ PBT @ PAT @ ASSETS
SALES ASSETS PB!T PBT NETCO)TA
N '1&*.1& @ &,.,+ @ '1&*.1& @ &.-*.& @ 1,%%.++
&,.,+ 1,%%.++ '1&*.1& '1&*.1& 1''*.*%
N .. @ 1.%' @ 1@ ..+- @ 1.1+
N &.-'?
Average )etention ratio N )etention ratio in last % years
%
N ..,1 P..+, P ..,
%
N ..,.%
Average $ayout N 1 F ..,.%
N ..1-+
BABASAB PATIL Page 75
Ex$ecte" gro/t# rate o( 5ivi"en"N Avg reten ratio @ Avg return on e>
!n last % years in last % years
N ..,1 P..+, P.., @ &.* P*.%* P%..*%
% %
N ..,.% @ +..,
N 1.+&?
PE )atio as $er Constant 5ivi"en" 7o"el N
Average $ayout ratio
Average retention ratio F Ex$ecte" Bro/t# )ate o( 5ivi"en"
BABASAB PATIL Page 76
N ..1-+
..,& F ..1+&
N ..1-+
..*.**
N %.%+?
:alue Anc#or N Ex$ecte" EPS @ PE )atio
N 1*&.-1@ %.&+
N '%.'& mar3et $rice
BABASAB PATIL Page 77
Consoli"ate" )atios o( )anbaxy
Iear
)atios .. ..% ..& ..' ..*
Current )atios
%.*.? &.1*? .++? %.11? %.&*?
Ouic3 )atios
1.*&? ..--? ..-,? 1.*? 1.&-?
!nventory T.O
)atios
&..%? %.,&? %.*+? %.*.? %.+%?
Bross $ro(it
margin
'.,? ,.&1? 1-.-'? ,.--? 1&.-,?
Net $ro(it
margin
11.%. .&- 1&.* *.% -.%+
O$erating $ro(it
margin
&.*,? +.**? 1+.%,? '.*-? 1..-1?
Cost o( goo"s
sol" ratio
+-.--? +&.&%? ,.+1? -.? ,1.,%?
)eturn on Assets
+.*&? -*..,? *,.1.? &..+? %%.%%?
)eturn on
ca$ital em$loye"
%&.',? %+.''? 1.1'? +.%-? ,.'1?
EPS
%.&%? ..'&? &.++? 1.1,? 1.1?
5HE )atio
&%.%%? &,.-+? '-.+%? -1.%+? 1,,.%'?
BABASAB PATIL Page 78
!nterest coverage
)atio
%'.1%? &.'? *'.*+? 1..%? 1..&.?
5ivi"en"
coverage )atio
%.',? .,'? 1.*+? ..+.? 1..?
5ivi"en" $ayout
)atio
'..*? '.1'? *.*? .*,? .*1?
Total assets
turnover )atio
.1,? .*? .-*? .,*? .+%?
Fixe" assets
turnover )atio
.1&? %.'? .'? ..1? 1.+'?
Current assets
turnover )atio
1.'-? .%,? 1.++? 1.+? 1.+.?
Ca$ital
turnover)atio
..+-? 1.,.? 1.'? 1.1*? ..-?
5ebtors
turnover )atio
%.,%? +..%? &.&'? &.? %.-1?
)etention )atio
+.1? *&.--? &..&? &1.&'? 1*.+*?
)eturn on
E>uity
%*.-,? %&.*? 1..,? -.&1? 1*.1-?
Boo3 :alue
1... 1.' 1.%& ..*% ..*%
PHE )atio
;$ros$ective<
'.'*? 11'.&,? 1-.+.? ,'.&-? %'.+%?
BABASAB PATIL Page 79
Consoli"ate" )atios o( Ci$la
Iear
)atios .. ..% ..& ..' ..*
Current )atios
1.*.? 1.&-? .,+? .+'? .-+?
Ouic3 )atios
..*1? ..*.? 1.%&? 1.1? 1.&&?
!nventory T.O
)atios
..%.? ..1? ..? ..1? ...?
Bross $ro(it
margin
-.&%? %&.1%? %,..-? &&...? &&.-?
Net $ro(it
margin
1*.&'? 1'.&-? 1&.**? 1*.&-? 1,.++?
O$erating $ro(it
margin
1.*'? 1-.'&? 1-.%? ..+? 1.-%?
Cost o( goo"s
sol" ratio
+.-? +.%? +..? *.%? *.1?
)eturn on
Assets
1.*? ,,.? *-...? *&.,*? *,.-'?
)eturn on
ca$ital
em$loye"
'.&&? %.+? %.%? '.&1? ,.-?
EPS
%.- &.1 '..- 1%.* ..1-
5HE )atio
'&.1.? *&.*.? +..&? *.**? +..%&?
!nterest
1&.+%? 1,..? %,.,+? *+.&1? *.1'?
BABASAB PATIL Page 80
coverage )atio
5ivi"en"
coverage )atio
11.&*? +.&&? *.+%? '.+? *.+*?
5ivi"en" $ayout
)atio
*.-? 1..1-? 11.+*? **..+? '1.-*?
Total assets
turnover )atio
1.1+? ..-*? ..-%? ..,? ..,1?
Fixe" assets
turnover )atio
..&1? ..%1? ..,? ..1? ..1-?
Current assets
turnover )atio
..1? ..1-? ..1? ..11? ..11?
Ca$ital
turnover)atio
1...,? -.,.? ,.*? ,.&,? 1%.%*?
5ebtors
turnover )atio
'.*.? &.&-? &.1-? &.? %.*-?
)etention )atio
..,,? ..,%? ..,1? ..+,? ..,?
)eturn on
E>uity
1.-+? +.,%? &.*? *.%*? %..*%?
Boo3 :alue
1&.+- 1+.,& 1..+ '.1* *.'
PHE )atio
;$ros$ective<
.*.? 1.+%? .%,? 1.'? .%*?
BABASAB PATIL Page 81
PHE )atio
;retros$ective< *,.+,? &...1? ''.+1? &-.'+? 1...&-?
Fin"ings64
? current ratio is increasing in (irst t/o years an" #as "ecrease" in t#ir" year an" again
increase in t#e subse>uent years . T#is s#o/s t#at t#e (irm #as t#e ability to meet its
current obligations.
? t#e (irm #as #ig# liability servicing ca$acity as it #as t#e ability to meet its
liabilities
? As t#ere /as increase in t#e gross $ro(its (rom .. to ..% it /as a goo" sign to
t#e com$any
? 5ecrease in t#e net $ro(it margin is a goo" sign to t#e com$any as it can earn more
return on investments i( it #as #ig# rate inventory turn over.
? T#e cost o( goo"s sol" ratio is continuously increasing in case o( )anbaxy.
? Percentage o( return on assets is gra"ually "ecreasing year a(ter year.
? t#e )OCE ratio is gra"ually "ecreasing 0t#is means t#at t#e (irm is not utili1ing t#e
ca$ital e((iciently
? T#ere /as a "rastic rise in t#e EPS in ..&0 an" again t#ere /as "ecrease in t#e
subse>uent years.
? T#e "ebt e>uity ratio is increasing .it means t#at t#e cre"itors are $utting less money
o( t#eir o/n an" #ence it is a "anger sign to t#e com$any.
BABASAB PATIL Page 82
? T#e interest coverage ratio in more in t#e year .. but since t#en it /ent on
gra"ually "ecreasing. T#is coul" be a "anger sign (or t#e (irm t#at it is using
excessive "ebt an" "oes not #ave t#e ca$acity to assure $ayment o( t#e interest to t#e
cre"itors .
? T#e "ivi"en" $ayment ability is "ecreasing gra"ually year a(ter year.
? T#e (irm #ere.is not able to $ay t#e "ivi"en"s .t#e $ayout ratio is "ecreasing
gra"ually every year
? more e((icient in managing its assets as t#e ratio is increasing every year.
? t#ere is "ecrease in t#e ratio o( assets turn over .Aence t#e (irm is not e((icient in
managing an" utili1ing t#e (ixe" assets.
? increase in t#e current assets turnover ratio /#ere t#e (irm can meet its current
obligations.
? "ecrease in t#e ca$ital turnover ratios 0so it is not a goo" sign to t#e com$any.
? "ecrease" in "ebtors turnover ratios t#e subse>uent years is not goo" on t#e $art o(
t#e com$any.
? com$any is sai" to be "istributing t#e "ivi"en"s /it#out retaining any reserves. !t is
a"vantageous (rom t#e $oint o( vie/ o( s#are#ol"ers.
? T#e PHE )atio ;Pros$ective< /as #ig# in t#e year ..% . an" in t#e year ..& t#ere
/as a "rastic c#ange to 1-.+.?
? T#e PHE )atio ;retros$ective< is very #ig# in t#e year ..'.
BABASAB PATIL Page 83
Fin"ings;Ci$la<64
? T#e (irm9s current is increasing in (irst year an" #as increase" in t#ir" year an" again
increase in t#e subse>uent years
? T#e (irm #as lo/ liability servicing ca$acity in t#e (irst year 0.but it #as increase" in
next t/o years. An" t#ereby increase" in t#e subse>uent years. T#is s#o/s t#at t#e
com$any #as t#e ability to meet its liabilities.
? t#ere is a "ecrease in t#e movement o( t#e inventories. T#is may be a ba" sign to t#e
com$any inventory movement in t#e next subse>uent years is very lo/.
? increase in t#e gross $ro(its (rom .. to ..* is /as a goo" sign to t#e com$any
? t#e net $ro(it increase" (rom .. to ..* .it /as normal in ..&.But at t#e
subse>uent years t#e net $ro(it increase" . T#is is a goo" sign to t#e com$any as it can
earn more return on investments as it #as #ig# rate inventory turn over
? t#e o$erating ratio is increase" (rom .. to ..* subse>uently.t#is is a goo" sign to
t#e com$any as it #as increase its o$erating $ro(it ratio /#ic# is be(ore tax.
? t#e cost o( goo"s sol" ratio is continuously "ecreasing
? $ercentage o( return on assets is gra"ually "ecreasing year a(ter year.
? T#e )OCE ratio is gra"ually increasing 0t#is means t#at t#e (irm utili1ing t#e ca$ital
e((iciently
? EPS is Totally increase" (rom .. to ..* .But t#ere /as a "rastic rise in t#e EPS in
..* an" . t#is s#o/s t#at t#e s#are#ol"ers earn better "ivi"en"s
BABASAB PATIL Page 84
? t#e "ebt e>uity ratio is increasing .it means t#at t#e cre"itors are $utting less money
o( t#eir o/n an" #ence it is a "anger sign to t#e com$any.
? t#e interest coverage ratio in more in t#e year .. but since t#en it /ent on gra"ually
increasing. T#is coul" be a goo" sign (or t#e (irm t#at it is not using excessive "ebt
an" #ave t#e ca$acity to assure $ayment o( t#e interest to t#e cre"itors .
? T#e "ivi"en" $ayment ability is "ecreasing gra"ually year a(ter year.
? T#e (irm is able to $ay t#e "ivi"en"s .T#e $ayout ratio is increasing gra"ually every
year.
? t#e (irm is not e((icient in managing its assets as t#e ratio is "ecreasing every year.it is
not a goo" sign to t#e com$any.
? t#ere is "ecrease in t#e current assets turnover ratio. !n t#e year .. to ..% t#ere
increase in t#e ratios 0but t#ere is a "ecrease in t#e ratios (rom ..& on/ar"s.
? t#ere is increase in t#e ca$ital turnover ratios (rom .. to ..* 0so it is a goo" sign
to t#e com$any. !t is $er(orming $er(orm better .
? t#e "ebtors turnover ratio is #ig# in .. an" gra"ually "ecrease" in t#e subse>uent
years . t#is is not goo" on t#e $art o( t#e com$any.
? T#e retention ratio is increase" (rom .. to ..& an" "ecrease" in t#e year ..' .but
t#ere /as again rise in t#e ratio in ..*
? But in t#e (ollo/ing gra$# t#ere /as increase in t#e return on e>uity ratio (rom ..
to ..* .
? t#e boo3 value o( t#e s#ares is "ecrease" (rom .. to ..' . an" t#ere /as a slig#t
rise in t#e boo3 value.it is because o( t#e increase in t#e number o( s#ares.(rom ..'
on/ar"s.
BABASAB PATIL Page 85
? T#e PHE )atio ;$ros$ective< "ecrease" (rom .. to ..% .!t increase" in ..& an"
again t#ere /as "ecrease in ..'
? T#e PHE )atio ;$ros$ective< "ecrease" (rom .. to ..& .An" again t#ere /as
"ecrease in ..' .!n ..* t#e ratio again increase".T#is is because o( t#e c#anges in
t#e mar3et $rices.
Bibliogra$#y64
nsein"ia.com
bsein"ia.com
)anbaxy.com
Ci$la.com
BABASAB PATIL Page 86
doc_847052108.doc
SL.No
Particulars Page numbers
1. Executive Summary
. !ntro"uction to t#e To$ic
%. Economic analysis
&. !n"ustrial Analysis
'. Com$any analysis o( )anbaxy
*. Com$any Analysis o( Ci$la
+. Com$arative )atio Table o( )anbaxy
,. Com$arative )atio Table o( Ci$la
-. Fin"ings
1.. Annexures an" Bibliogra$#y
Executive Summary
BABASAB PATIL Page 1
!n t#e To$ "o/n a$$roac#0 (irst o( all t#e overall Economy is analy1e" to 2u"ge t#e general
"irection0 in /#ic# t#e economy is #ea"ing. T#e "irection in /#ic# t#e economy is #ea"ing
#as a bearing on t#e $er(ormance o( various in"ustries. T#ats /#y Economy analysis is
im$ortant. T#e out$ut o( t#e Economy analysis is a list o( in"ustries0 /#ic# s#oul" $er(orm
/ell0 given t#e general tren" o( t#e economy an" also an i"ea0 /#et#er to invest or not in t#e
given economic con"itions.
Fun"amental analysis is t#e analysis0 /#erein t#e investment "ecisions are ta3en on t#e basis
o( t#e (inancial strengt# o( t#e com$any. T#ere are t/o a$$roac#es to (un"amental analysis0
vi1.0 E4!4C analysis or t#e To$ 5o/n a$$roac# to Fun"amental analysis an" C4!4E analysis or
t#e Bottom u$ a$$roac#. !n t#e (ollo/ing section0 /e ex$lain bot# t#ese a$$roac#es.
T#e main ob2ective o( un"erta3ing t#e $ro2ect in E4!4C Analysis is 6
• 7easuring t#e $er(ormances o( t#e com$any by calculating relate" ratios.
Sub Ob2ectives 6
• Pre"icting t#e (uture Sales0 ex$ecte" EPS 0 etc o( t#e com$any.
• To measure t#e viability o( t#e t/o com$anies.
!ntro"uction to t#e Com$any64
BABASAB PATIL Page 2
.!L8FS investsmart is !n"ia9s largest Financial 7ulti$lex.!t /as A/ar"e" as at#e best
Financial A"visor in retail segment by CNBC T: in ..*.
!L8FS !nvestsmart Limite" ;!!L< is an initiative in t#e (iel" o( Financial Services starte" by
!n(rastructure Leasing 8 Financial Services ;!L8FS<0 an institution 3no/n (or its innovative
an" $ioneering initiatives in t#e areas o( !n(rastructure0 Cor$orate Finance an" !nvestment
Ban3ing. !!L /as set u$ in October 1--+ an" began its retail o$erations in Se$tember 1--,
!L8FS !nvestsmart Limite" ;!!L< /as set u$ /it# t#e ob2ective o( becoming one o( t#e
lea"ing (ull service bro3erage #ouses in t#e country /it# a strong ex$ertise in /eb4base"
tec#nology as /ell as strengt#s in $#ysical "istribution. To"ay /it# a $resence in more t#an
-. cities across !n"ia t#roug# more t#an .. outlets0 !!L #as become one o( t#e most
$rominent $layers in t#e Financial Services !n"ustry /it# service o((erings across "i((erent
categories
Promoters an" S#are#ol"ers o( !L8FS !nvestsmart Limite"
As mentione" earlier !!L /#ic# /as $romote" by !L8FS in 1--+0 #as come a long /ay since
its ince$tion. !t is a matter o( great $ri"e (or !!L t#at some o( t#e /orl"=s biggest
organisations are becoming e>uity o/ners o( t#e com$any
T#e stoc3#ol"ing $attern as o( to"ay involves !L8FS /#ic# #ol"s %..*&? e>uity sta3e0
/#ile So(tban3 Asia !n(rastructure Fun" L.P. ;SA!F< an" E@T)A5E F!NANC!AL0 t#roug#
its /#olly o/ne" subsi"iary
)etail business64
T#e )etail Business 5ivision at !!L is involve" in "ealing /it# a range o( (inancial $ro"ucts
o((ere" to customers across !n"ia t#roug# multi$le locations. T#e retail business is (urt#er
categorise" into various business "ivisions catering to varie" nee"s o( our customers. T#ese
inclu"e "ivisions catering to customers (or !nvestment o$tions suc# as E>uity Tra"ing0
5erivatives Tra"ing0 Commo"ity Tra"ing0 !PO !nvestments0 Fixe" !ncome $ro"ucts0 7utual
Fun" !nvestments as /ell as !nsurance 8 Aome Loans A"visory services. !n a""ition /e also
o((er allie" services to (acilitate t#e investment $rocess0 li3e custo"ial an" "e$ository
services0 /#ic# are o((ere" t#roug# t#e !L8FS 5e$ository Services. !!L=s ex$ertise across all
BABASAB PATIL Page 3
t#ese categories enable it to res$on" to t#e varying nee"s o( a "eman"ing clientele ensuring
t#at t#eir investment $lans are execute" as $er t#eir in"ivi"ual re>uirements
7erc#ant ban3ing "ivision
T#e 7erc#ant Ban3ing "ivision o((ers a com$lete range o( services /#ic# inclu"es
management o( !POs0 rig#ts issues0 buy bac3 o((ers0 o$en o((ers an" $rivate $lacements o(
e>uity. !ts extensive contact base an" strong relations#i$s "evelo$e" /it# :enture Ca$ital
Fun"s an" Private E>uity Fun"s (or e>uity $lacements0 contributes to an e((ective "elivery
$lat(orm (or its clients
!nstitutional E>uity Business 5ivision64
!nstitutional E>uity Business ;!EB< t#rives on strong relations#i$s it #as built among
"omestic mutual (un"s0 ban3s0 (inancial institutions0 insurance com$anies an" $rivate sector
(un"s over t#e $ast (e/ years. !EB also #as /ell4"evelo$e" relations#i$s among cor$orates0
leverage" (rom its institutional $e"igree. E((icient execution0 >uality researc# an" #ig#
"egree o( com$liance /it# stoc3 exc#ange regulations an" et#ical business stan"ar"s bac3
!EB9s services to institutional investors t#roug# !POs0 E>uities0 5erivatives an" 7utual
Fun"s. !EB is /ell $ositione" to o((er su$$ort to t#e com$lete range o( investment ban3ing
services to cor$orates
5ebt bro3ing "ivision64
T#e 5ebt "ivision #as an active $resence in t#e secon"ary an" $rimary "ebt $lacement
mar3ets. !t "eals in various $ro"ucts inclu"ing Bovernment Securities0 Treasury Bills0 Bon"s
an" 5ebentures0 State guarantee" $a$ers an" Commercial $a$ers. !t #as strong realtions#i$
/it# !nstitutional clients suc# as Ban3s0 Primary 5ealers0 7utual Fun"s0
Pro2ect Syn"ication "ivision64
BABASAB PATIL Page 4
T#e Pro2ect Syn"ication "ivision #as been in#erite" (rom !L8FS. T#e syn"ication "es3 #as
so (ar /or3e" on 5ebt Syn"ication o( various large !n(rastructure Pro2ects in t#e country. T#e
man"ate inclu"es 5ebt structuring o( #ig#ly com$lex an" "i((icult $ro2ects. Pro2ect
Syn"ication (ocuses on t#e role o( an Arranger o( Pro2ect an" Structure" loans. C#ile (un"
mobilisation services are $rovi"e" across various areas0 in(rastructure sectors remain 3ey
(ocus areas (or syn"ication activity. T#e services un"er Pro2ect Syn"ication inclu"e $ro2ect
loan syn"ication0 structure" "ebt syn"ication an" "ebt restructuring. T#e syn"ication business
t#rives on its extensive contact base an" strong relations#i$s "evelo$e" over t#e years /it#
Ban3s an" Financial !nstitutions
BABASAB PATIL Page 5
!ntro"uction o( to$ic.
To "etermine t#e intrinsic value o( an e>uity s#are t#e security analyst must (orecast
t#e earnings an" t#e "ivi"en"s ex$ecte" (rom t#e stoc3s an" c#oose a "iscount rate /#ic#
re(lects t#e ris3iness o( t#e stoc3. T#is is /#at involve" in t#e (un"amental analysis /#ic# is
t#e most $o$ular met#o" use" by t#e investments $ro(essionals.
T#e earnings $otential an" ris3iness o( t#e (irm are lin3e" to t#e $ros$ects o( t#e
in"ustry to /#ic# it belongs. So t#e $ros$ects o( t#e various in"ustries are largely in(luence"
by t#e "evelo$ments in t#e macro economy.
T#e researc#ers #ave (oun" t#at stoc3 $rice c#anges can be attribute" to t#e
(ollo/ing (actors6
? Economy /i"e (actors6 %.4%' $ercent.
? !n"ustry (actors6 1'4. $ercent.
? Com$any (actors 6 %.4%' $ercent
? Ot#er (actors6 1'4' $ercent
Base" on t#e above evi"ence0 a commonly a"vocate" $roce"ure o( t#e (un"amental analysis
involves a t#ree4 ste$ examination .T#ey are6
? Dn"erstan"ing o( t#e macro4economic environmental "evelo$ments.
? Analy1ing t#e $ros$ects o( t#e in"ustry to /#ic# t#e (irm belongs.
BABASAB PATIL Page 6
? Assessing t#e $ro2ecte" in(ormation o( t#e com$any an" t#e intrinsic value o( its s#ares.
BABASAB PATIL Page 7
T#e !n"ian P#armaceutical in"ustry is #ig#ly (ragmente" /it# about &0... $layers ;aroun"
%%. in t#e organise" sector<. T#e to$ ten com$anies ma3e u$ (or more t#an a t#ir" o( t#e
mar3et. T#e revenues generate" by t#e in"ustry are a$$roximately DSE + bn an" #ave gro/n
at an average rate o( 1.? over last (ive years. T#e !n"ian $#arma in"ustry accounts (or about
1? o( t#e /orl"=s $#arma in"ustry in value terms an" ,? in volume terms.
!n t#e recent $ast0 !n"ian com$anies #ave targete" international mar3ets an" #ave exten"e"
t#eir $resence t#ere. C#ile some com$anies are ex$orting bul3 "rugs0 ot#ers #ave move" u$
t#e value c#ain an" are ex$orting (ormulations an" generic $ro"ucts. !n"ia also o((ers
excellent ex$orts o$$ortunities (or clinical trials0 )850 custom synt#esis an" tec#nical
services li3e Bioin(ormatics.
T#e "rug $rice control or"er ;5PCO< continues to be a menace (or t#e in"ustry. T#ere are
t#ree tiers o( regulations F on bul3 "rugs0 on (ormulations an" on overall $ro(itability. T#is
#as ma"e t#e $ro(itability o( t#e sector susce$tible to t#e /#ims an" (ancies o( t#e $ricing
aut#ority. T#e ne/ P#armaceutical Policy ..*0 /#ic# $ro$oses to bring %'& essential "rugs
un"er $rice control #as not been o((icially $asse" as yet an" #as been sti((ly o$$ose" by t#e
$#armaceutical in"ustry.
C#ile t#e average )85 s$en"ing in !n"ia as a /#ole is a meager ? o( sales0 t#e s$en" o(
t#e to$ (ive com$anies is about '? to 1.?. 5es$ite gro/ing at a CAB) o( over '.? over
t#e last (our years0 t#e ratio is still /ay belo/ t#e global average o( 1'? to .? o( sales.
Ao/ever0 "es$ite t#e
BABASAB PATIL Page 8
relatively lo/ )85 s$en"ing0 !n"ian com$anies are ste$$ing u$ t#eir researc# activities to
ma3e t#emselves more sel( su((icient in terms o( $ro"uct "evelo$ment0 no/ t#at t#e $ro"uct
$atent regime #as come into (orce.
Su$$ly64 Aig#er (or tra"itional t#era$eutic segments0 /#ic# is ty$ical o( a "evelo$ing mar3et.
)elatively lo/er (or li(estyle segment.
5eman"64 :ery #ig# (or certain t#era$eutic segments. Cill c#ange as li(e ex$ectancy0 literacy
increases.
Barriers to entry64 Licensing0 "istribution net/or30 $atents0 $lant a$$roval by regulatory
aut#ority.
Bargaining $o/er o( su$$liers64 5istributors are increasingly $us#ing generic $ro"ucts in a
bi" to earn #ig#er margins.
Bargaining $o/er o( customers64 Aig#0 a (ragmente" in"ustry #as ensure" t#at t#ere is
/i"es$rea" com$etition in almost all $ro"uct segments. ;Currently also $rotecte" by t#e
5PCO<.
Com$etition64 Aig# (ragmente" in"ustry /it# t#e to %.. ;o( &...
7anu(acturing units<$layers accor"ing (or ,'? o( sales value.Consoli"ation is li3e to
intensi(y
!m$act o( BD5BET 4..,6
Bu"get ..,4.-6 P#armaceuticals
T#e $ast year #as been tumultuous (or t#e $#arma in"ustry0 /#ic# #as #a" to conten" /it# a
stee$ly rising ru$ee0 severe $rice erosion an" regulatory c#anges in t#e global generics
mar3ets an" rise in ra/ material costs. Aaving sai" t#at0 some $ositive "evelo$ments also
BABASAB PATIL Page 9
ensure" t#at t#e overall scenario /as not too ba". T#ese "evelo$ments inclu"e"
announcements by some ma2or "omestic $#arma ma2ors o( #iving o(( t#eir )85 units into
se$arate com$anies0 bagging out4licensing "eals /it# global innovators in return (or
milestone $ayments an" settling $atent la/suits /it# innovators to ensure a more stable an"
balance".
Bu"get 7easure
• !ncrease in allocation to t#e #ealt# sector by 1'? over ..+4.,.
• Allocation to t#e National )ural Aealt# 7ission ;N)A7< increase" to )s 10.'.
crore.
• Provision o( )s --% crore to t#e National Ai"s Control Programme an" allocation o(
)s 10.& crore (or t#e era"ication o( $olio /it# (ocus on #ig# ris3 "istricts in Dttar
Pra"es# an" Bi#ar.
• Customs "uty to be re"uce" (rom 1.? to '? on certain s$eci(ie" li(e saving "rugs
an" on bul3 "rugs use" (or t#eir manu(acture. T#ese "rugs are also exem$te" (rom
excise "uty or countervailing "uty.
• Excise "uty on all goo"s $ro"uce" in t#e $#armaceutical sector re"uce" (rom 1*? to
,?.
• Anti4A!5S "rug0 GAta1anavir90 as /ell as bul3 "rugs (or its manu(acture to be
exem$te" (rom excise "uty.
• !n or"er to $romote outsourcing o( researc#0 /eig#te" "e"uction o( 1'? on any
$ayment ma"e to com$anies engage" in )85.
BD5BET !7PACT
• !ncrease in allocation to t#e #ealt#care sector is a $ositive given t#e nee" to ram$ u$
t#e #ealt#care in(rastructure in t#e country an" im$rove t#e accessibility o( >uality
#ealt#care to a larger section o( t#e $o$ulation.
BABASAB PATIL Page 10
• )e"uction o( excise "uty (rom 1*? to ,? is a $ositive (or all $#arma com$anies
enabling t#em to boost $ro(itability going (or/ar" given t#at t#e excise "uty is being
$ai" on 7)P.
• !ncrease" allocation o( (un"s (or era"ication o( A!:HA!5S an" $olio an" re"uction in
customs "uty on certain li(e saving "rugs (rom 1.? to '? is a $ositive (or com$anies
#aving $ro"uct $i$eline catering to t#ese segments.
• Ceig#te" "e"uction o( 1'? on $ayments ma"e (or outsourcing researc# services is a
$ositive (or t#e sector as a /#ole given t#at t#e em$#asis on )85 #as increase".
CO7PANI !7PACT6
)e"uction o( excise "uty (rom 1*? to ,? is a $ositive (or all $#arma com$anies namely
"omestic com$anies suc# as Ci$la0 )anbaxy an" t#e li3es an" 7NC $#arma com$anies suc#
as BSJ P#arma0 P(i1er an" Aventis.
Em$#asis on allocating (un"s (or t#e era"ication o( A!:HA!5S an" $olio is a $ositive (or
Ci$la ;/#ic# #as a strong $resence in t#e manu(acture o( anti4A!5S "rugs< an" Panacea
Biotec ;/#ic# largely manu(actures oral $olio vaccines<.
Ceig#te" "e"uction o( 1'? on $ayments ma"e (or outsourcing researc# services is a
$ositive (or )85 (ocuse" com$anies suc# as )anbaxy an" Nic#olas Piramal.
BABASAB PATIL Page 11
!ntro"uction to )anbaxy6
)anbaxy Laboratories is >uite t#e rainma3er in !n"ia=s $#armaceutical business. T#e
com$any is !n"ia=s largest "rug "evelo$er an" manu(acturer0 /it# generics to$$ing its list o(
$ro"ucts. Anti4in(ectives CoAmoxyclav0 Amoxycillin0 Ce$#alexin0 Ci$ro(loxacin0 an"
Simvastatin are in )anbaxy=s to$ selling class o( me"icationsK all come in several
a"ministration (orms. Ot#er s$eci(ic "evelo$mental (ocuses inclu"e metabolic0 in(lammatory0
an" res$iratory illnesses. )anbaxy a""resses gastrointestinal0 car"iovascular0 an" central
nervous system "isor"ers0 as /ell as "iabetes0 $ain0 allergies0 an" A!:HA!5S. T#e com$any
also #as a groun"brea3ing anti4malarial can"i"ate in late4$#ase trials.
Aistory
)anbaxy Laboratories Lt". is t#e largest $#armaceutical com$any in !n"ia0 an" one o( t#e
/orl"=s to$ 1.. $#armaceutical com$anies. Long a s$ecialist in t#e $re$aration o( generic
"rugs0 )anbaxy is also one o( t#e /orl"=s to$ 1. in t#at $#armaceutical category as /ell. Iet0
/it# !n"ia=s agreement to a$$ly international $atent la/ at t#e beginning o( ..'0 )anbaxy
#as begun converting itsel( into a (ull4(le"ge" researc#4base" $#armaceutical com$any. A
ma2or $art o( t#is e((ort #as been t#e establis#ment o( t#e com$any=s o/n researc# an"
"evelo$ment center0 /#ic# #as enable" t#e com$any to begin to enter t#e ne/ c#emical
BABASAB PATIL Page 12
entities ;NCE< an" novel "rug "elivery systems ;N55S< mar3ets. !n t#e mi"4...s0 t#e
com$any #a" a number o( NCEs in $rogress0 an" #a" alrea"y launc#e" its (irst N55S
$ro"uct0 a single "aily "osage (ormulation o( ci$ro(loxacin. )anbaxy is a truly global
o$eration0 $ro"ucing its $#armaceutical $re$arations in manu(acturing (acilities in seven
countries0 su$$orte" by sales an" mar3eting subsi"iaries in && countries0 reac#ing more t#an
1.. countries t#roug#out t#e /orl". T#e Dnite" States0 /#ic# alone accounts (or nearly #al(
o( all $#armaceutical sales in t#e /orl"0 is t#e com$any=s largest international mar3et0
re$resenting more t#an &. $ercent o( grou$ sales. !n Euro$e0 t#e com$any=s $urc#ase o( )PB
;Aventis< S.A. ma3es it t#e largest generics $ro"ucer in t#at mar3et. T#e com$any is also a
lea"ing generics $ro"ucer in t#e Dnite" Jing"om an" Bermany an" else/#ere in Euro$e.
Euro$ean sales a""e" 1* $ercent to t#e com$any=s sales in ..&. )anbaxy=s ot#er ma2or
mar3ets inclu"e Bra1il0 )ussia0 an" C#ina0 as /ell as !n"ia0 /#ic# toget#er a""e" * $ercent
to t#e grou$=s sales. )anbaxy $oste" revenues o( E1.1, billion in ..&. T#e com$any0 /#ic#
remains controlle" an" le" by t#e (oun"ing Sing# (amily0 is liste" on t#e National Stoc3
Exc#ange o( !n"ia in 7umbai.
)anbaxy Laboratories #a" its origins in t#e early 1-*.s /#en )an2it Sing# an" Burbux
Sing#0 t/o em$loyees o( a La$anese $#armaceutical com$any o$erating in !n"ia0 (orme"
t#eir o/n $#armaceutical $re$arations com$any in Amritsar0 in Pun2ab state. T#e t/o merge"
t#eir names to (orm t#e name (or t#eir com$any0 )anbaxy.
T#roug# t#e 1-*.s0 !n"ia=s $#armaceutical mar3et remaine" "ominate" by (oreign "rug
ma3ers. T#e "omestic $#armaceutical manu(acturing in"ustry /as limite" in large $art to t#e
"osage $re$aration0 $ac3aging0 an" "istribution o( existing (ormulations. Li3e many !n"ian
"rug com$anies o( t#is $erio"0 )anbaxy lin3e" u$ /it# a Euro$ean $#armaceutical com$any0
an" began $ro"uction in 1-*.
)anbaxy=s o/ners soug#t a""itional (inancing an" turne" to a local moneylen"er0 B#ai
7o#an Sing#. By 1-**0 t#e $air #a" built u$ "ebts to Sing# o( more t#an t#e e>uivalent o(
E1..0.... C#en Sing#0 a native o( Pa3istan /#o #a" arrive" in !n"ia at t#e beginning o( t#at
"eca"e0 came to collect0 t#e )anbaxy $artners o((ere" to turn over t#eir com$any to #im
instea".
BABASAB PATIL Page 13
Sing# agree" to t#e "eal an" launc#e" t#e )anbaxy (amily on t#e $at# to/ar" buil"ing one o(
!n"ia=s largest business em$ires. Dn"er B#ai 7o#an Sing#0 )anbaxy initially maintaine" its
course o( $re$aring an" $ac3ing existing bran"e" $#armaceutical $ro"ucts (or t#e !n"ian
mar3et. T#e entry o( Sing#=s el"est son0 Parvin"er0 into t#e com$any in 1-*+0 #o/ever0 set
t#e com$any on a ne/ course to become a (ully in"e$en"ent $#armaceutical com$any.
Parvin"er Sing# #a" 2ust gra"uate" /it# a P#5 in c#emistry (rom t#e Dniversity o(
7ic#igan. T#e younger Sing#=s bac3groun" in c#emistry com$lemente" #is (at#er=s business
(lair. Iet Parvin"er Sing# #imsel( >uic3ly "is$laye" a talent (or business an" /as cre"ite"0 in
large $art0 /it# gui"ing t#e com$any into t#e ran3s o( t#e global $#armaceutical lea"ers.
)anbaxy=s goo" (ortune came in 1-+.0 /#en t#e !n"ian government $asse" legislation t#at
e((ectively en"e" $atent $rotection in t#e $#armaceutical in"ustry. !n"ian $#armaceutical
manu(acturers /ere no/ able to $ro"uce lo/4cost0 generic versions o( $o$ular0 yet ex$ensive
"rugs0 revolutioni1ing t#e "rug in"ustry in !n"ia an" in muc# o( t#e /orl". T#e Sing#s
>uic3ly too3 a"vantage o( !n"ia=s large0 #ig#ly traine"0 yet inex$ensive /or3(orce0 buil"ing
u$ a strong sta(( o( c#emists an" c#emical engineers.
T#e com$any struc3 $ay "irt early on0 /#en it launc#e" Calm$ose0 a generic (ormulation o(
t#e #ugely $o$ular )oc#e "iscovery0 :alium. )elease" in 1-*-0 Calm$ose imme"iately
$lace" )anbaxy on !n"ia=s $#armaceutical ma$. T#e com$any ex$an"e" >uic3ly0 an" by
1-+%0 )anbaxy o$ene" a ne/ (actory0 in 7o#ali0 (or t#e $ro"uction o( active $rinci$al
ingre"ients ;AP!s<. T#is (acility enable" t#e com$any to ex$an" its range o( generic
me"ications an" ingre"ients. To (inance its gro/t#0 t#e com$any liste" on t#e !n"ian Stoc3
Exc#ange t#at year.
)anbaxy=s ability to $ro"uce generic me"ications at (ar lo/er cost t#an its bran"e"
com$etitors $lace" t#e com$any in a strong $osition (or international ex$ansion0 es$ecially in
less "evelo$e" mar3ets. T#e com$any began its internationali1ation early on0 launc#ing a
2oint venture in Nigeria. T#at o$eration o$ene" a $ro"uction (acility in Lagos in 1-++.
)anbaxy ex$an"e" its $ro"uction at #ome as /ell0 o$ening a ne/ state4o(4t#e4art "osage
$lant in 5e/as in 1-,%. !n 1-,+0 t#e com$any became !n"ia=s lea"ing antibiotic an"
BABASAB PATIL Page 14
antibacterial $ro"ucer /#en it com$lete" a ne/ AP! $lant in Toansa0 in Pun2ab0 t#at year. T#e
Toansa (acility bac3e" u$ )anbaxy=s $lans to enter t#e D.S. mar3et0 an" in 1-,,0 t#e Toansa
$lant receive" Foo" an" 5rug A"ministration ;F5A< a$$roval.
)anbaxy (ormulate" a ne/ strategy0 t#at o( becoming a (ull4(le"ge" $#armaceutical
com$any. T#e "riving (orce be#in" t#e com$any=s ne/ "irection /as Parvin"er Sing#0 /#o
/as name" t#e com$any=s managing "irector in 1-,. Nonet#eless0 B#ai 7o#an Sing#
remaine" in control o( t#e com$any.
As $art o( its ne/ strategy0 )anbaxy launc#e" its o/n researc# an" "evelo$ment center in
1-,'. T#e com$any also ste$$e" u$ its mar3eting e((orts0 launc#ing a ne/ "e"icate"
mar3eting subsi"iary0 Stancare0 t#at year. By 1--.0 t#e com$any #a" a ne/ $ro"uct to sell0
/#en )anbaxy /as grante" a D.S. $atent (or its "oxycycline antibiotic $re$aration. T#e
(ollo/ing year0 t#e com$any /as grante" a D.S. $atent (or its ce$#alos$orin $re$arations0
an" t#e com$any built a ne/ state4o(4t#e4art (acility (or t#eir $ro"uction in 7o#ali.
A ma2or milestone (or t#e com$any came in 1--0 /#en it reac#e" a mar3eting agreement
/it# Eli Lilly 8 Co. T#e com$anies set u$ a 2oint venture in !n"ia to $ro"uce an" mar3et
Lilly=s bran"e" $#armaceuticals (or t#e "omestic mar3et. At t#e same time0 Lilly agree" to
begin mar3eting )anbaxy=s generic me"ications in t#e Dnite" States. !n t#is /ay0 )anbaxy
gaine" /i"escale access0 bac3e" by t#e #ig#ly res$ecte" Lilly0 into t#e /orl"=s single largest
"rugs mar3et.
Parvin"er Sing# too3 over as #ea" o( t#e com$any44ousting #is (at#er in /#at /as "escribe"
as a (amily (eu"44in 1--. By t#en0 )anbaxy #a" gro/n into one o( !n"ia=s largest
$#armaceutical com$anies on t#e basis o( its generics $ro"uction. Iet as $ressure gre/ on
!n"ia to begin en(orcing international "rug $atents0 t#e com$any itsel( a$$eare" to #ave
reac#e" a crossroa"s44/#et#er to remain (ocuse" on co$ying generic molecules0 or to begin
"evelo$ing ne/ "rugs in4#ouse. T#e com$any c#ose t#e latter0 an" in 1--% a"o$te" a ne/
cor$orate mission to announce its re(ormulate" ambitions6 MTo become a researc#4base"
international com$any.M
BABASAB PATIL Page 15
)anbaxy ma"e goo" on its mission44by t#e mi""le o( t#e next "eca"e0 nearly ,. $ercent o( its
sales came (rom outsi"e o( !n"ia. As a (irst ste$0 t#e com$any launc#e" a ne/ 2oint venture0
in C#ina0 bac3ing its entry into t#at mar3et /it# a $ro"uction (acility in Buang1#ou. T#e
(ollo/ing year0 t#e com$any establis#e" subsi"iaries in Lon"on0 Englan"0 an" in )aleig#0
Nort# Carolina. !n 1--'0 t#e com$any ste$$e" u$ its D.S. $resence /it# t#e $urc#ase o( O#m
Laboratories !nc.0 /#ic# gave t#e com$any its (irst manu(acturing $lant in t#at mar3et.
)anbaxy t#en launc#e" construction o( a ne/ an" state4o(4t#e4art manu(acturing /ing0
/#ic#0 com$lete" t#at year0 gaine" F5A a$$roval.
T#is ne/ (acility enable" )anbaxy to ste$ u$ its $resence in t#e Dnite" States0 an" in 1--,
t#e com$any began mar3eting its generic $ro"ucts un"er its o/n bran" name. T#at year0 in
a""ition0 t#e com$any (ile" an a$$lication to begin P#ase ! clinical testing on its (irst in4
#ouse "evelo$e" NCE. T#e (ollo/ing year0 t#e com$any=s N55S e((orts $ai" o(( as /ell0
/#en Bayer ac>uire" t#e rig#ts to mar3et )anbaxy=s single "aily4"osage ci$ro(loxacin
(ormulation.
)anbaxy=s international ex$ansion continue" as /ell0 /it# t#e launc# o( mar3eting o$erations
in Bra1il. As t#e largest $#armaceuticals mar3et in Latin America0 t#at country /as t#e
cornerstone o( t#e com$any=s $lans to ex$an" t#roug#out t#e region. )anbaxy also ex$an"e"
in Euro$e0 /it# t#e agreement in ... to ac>uire Bayer=s Bermany4base" generics business0
Basics. T#e com$any also a""e" $ro"uction $lants in 7alaysia an" T#ailan".
Parvin"er Sing# "ie" in 1--- an" longtime rig#t#an" man 5.S. Brar too3 over as com$any
lea"er0 naming (amily outsi"er Brian Tem$est as com$any $resi"ent. T#e ne/ management
team continue" Sing#=s ex$ansion strategy0 o$ening a ne/ manu(acturing $lant in :ietnam in
..1.
)anbaxy also soug#t ne/ alliances0 an" in ..% t#e com$any reac#e" a global "rug
"iscovery an" "evelo$ment $artners#i$ /it# BlaxoSmit#Jline. T#at agreement calle" (or
Blaxo to #an"le t#e later4stage "evelo$ment $rocess (or )anbaxy create" molecules. T#e
com$any=s international ex$ansion also too3 a ma2or ste$ (or/ar" at t#e en" o( ..0 /#en it
agree" to ac>uire )PB ;Aventis< in France0 t#at country=s lea"ing generic "rugs $ro"ucer.
BABASAB PATIL Page 16
)anbaxy=s sales #a" by t#en to$$e" t#e E1 billion mar30 $lacing t#e com$any not only as t#e
lea"er in !n"ia=s $#armaceuticals in"ustry0 but also among t#e ran3s o( t#e /orl"=s to$ 1..
$#armaceuticals com$anies. )anbaxy also boaste" a $lace among t#e /orl"=s to$ ten generic
"rugs $ro"ucers. !n a""ition0 t#e com$any #a" a"vance" a gro/ing number o( its o/n NCE
an" N55S molecules into clinical testing. T#e com$any=s transition into researc#4base"
$ro"uct "evelo$ment /as seen as crucial as !n"ia announce" its intention to en(orce
international "rug $atents at t#e beginning o( ..'.
)anbaxy a$$eare" $re$are" to meet t#is c#allenge0 #o/ever0 an" con(i"ently set its sig#ts on
boosting its annual sales $ast E billion by ..+ an" to more t#an E' billion by t#e beginning
o( t#e next "eca"e. !nternational gro/t# remaine" an essential $art o( t#at strategy. T#e
com$any began negotiations (or a ma2or ac>uisition in Bermany at t#e en" o( ..&0 /#ic#
/as ex$ecte" to be com$lete" in ..'. T#e com$any also launc#e" construction o( a ne/
E1.. million $ro"uction (acility in Bra1il. 7ean/#ile0 )anbaxy continue" to increase its
researc# an" "evelo$ment bu"get0 /it# t#e goal o( generating as muc# as &. $ercent o( its
revenues (rom its in4#ouse innovations by t#e .1.s. )anbaxy ex$ecte" to remain !n"ia=s
"rug lea"er into t#e ne/ century.
Princi$al Subsi"iaries
Basics BmbA ;Bermany<K Bu(ic P#arma Lt". ;-,?<K O#m Laboratories !nc. ;Dnite" States<K
)anbaxy ;Aong Jong< Lt".K )anbaxy ;7alaysia< S"n. B#". ;'*.'?<K )anbaxy
;Net#erlan"s< B.:.K )anbaxy ;S.A.< Pro$rietary Lt".K )anbaxy ;DJ< Lt".K )anbaxy 5o Brasil
Lt"a.K )anbaxy 5rugs an" C#emicals Com$anyK )anbaxy 5rugs Lt".K )anbaxy Egy$t Lt".K
)anbaxy Euro$e Lt". ;Dnite" Jing"om<K )anbaxy Farmaceutica Lt"a. ;Bra1ilK +.?<K
)anbaxy Fine C#emicals Lt".K )anbaxy France SASK )anbaxy !relan" Lt".K )anbaxy Nigeria
Lt". ;,&.,-?<K )anbaxy Panama0 S.A.K )anbaxy P#armaceuticals !nc. ;Dnite" States<K
)anbaxy Polan" S$. 1.o.o.K )anbaxy P)P ;Peru< S.A.C.K )anbaxy Dnic#em Com$any Lt".
;T#ailan"K ,,.'*?<K )anbaxy DSA0 !nc.K )anbaxy :ietnam Com$any Lt".K )anbaxy
;Buang1#ou C#inaK ,%?<K )anbaxy0 !nc. ;Dnite" States<K )anc#em !nc. ;Dnite" States<K
)anlab !nc. ;Dnite" States<K )anP#arm !nc. ;Dnite" States<K )excel P#armaceuticals Lt".K
BABASAB PATIL Page 17
Solus P#armaceuticals Lt".K Dnic#em 5istributors ;T#ailan"K --.-*?<K :i"yut !nvestments
Lt".K :i"yut Travel Services Lt".
Princi$al Com$etitors
)PB Enter$risesK BlaxoSmit#Jline Consumer Aealt#care Lt".K East !n"ia P#armaceutical
Cor3s Lt".K 5r. )e""y=s Laboratories Lt".K Ci$la Lt".K Conce$t P#armaceuticals Lt".K
J#an"el/al Laboratories Lt".K 5abur !n"ia Lt".
BABASAB PATIL Page 18
BABASAB PATIL Page 19
1< Current )atios N Current assets
Current liabilities
Iear .. ..% ..& ..' ..*
)atios %.*.? &.1*? .++? %.11? %.&*?
!nter$retation64
T#e current ratio o( t#e
(irm measures t#e s#ort
term solvency 0t#at is its
ability to meet t#e s#ort
term obligations. !n t#e
(ollo/ing gra$# /e can
say t#at t#e (irm9s current ratio is increasing in (irst t/o years an" #as "ecrease" in t#ir" year
an" again increase in t#e subse>uent years . T#is s#o/s t#at t#e (irm #as t#e ability to meet
its current obligations.
T#is also means t#at t#e com$any is bloc3ing u$ t#e assets an" are not been utili1e" in t#e
ot#er investments.
BABASAB PATIL Page 20
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
Ratios
< Ouic3 ratiosN Ouic3 assets
Current liabilities
Iear .. ..% ..& ..' ..*
)atios 1.*& ..-- ..-, 1.* 10&-
!nter$retation64
Ouic3 ratios are use" to measure t#e (irm9s ability to service its s#ort term liabilities .(rom
t#e (ollo/ing gra$# /e can say t#at t#e (irm #as #ig# liability servicing ca$acity in t#e (irst
year 0.but it #as "ecrease" in next t/o years. An" t#ereby increase" in t#e subse>uent years.
T#is s#o/s t#at t#e com$any #as t#e ability to meet its liabilities.
%< !nventory turnover ratio N cost o( goo"s sol"
Average inventory
BABASAB PATIL Page 21
Iear .. ..% ..& ..' ..*
)atios &..% %.,& %.*+ %.*. %.+%
!nter$retation64
T#is means t#at t#e inventory in t#e (irst year is been sol" very (ast. An" t#ere is an "ecrease
in t#e movement o( t#e inventories but it slig#tly increase" in t#e last year. T#is may be a
goo" sign to t#e com$any t#at it may still increase t#e inventory movement in t#e next
subse>uent years.
&< Bross $ro(it 7argin N gross $ro(it
Sales
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 22
)atios '.,? ,.&1? 1-.-'? ,.--? 1&.-,?
!nter$retation64
T#e gross $ro(it measures t#e relation bet/een t#e sales an" $ro(its .As t#ere /as increase in
t#e gross $ro(its (rom .. to ..% it /as a goo" sign to t#e com$any 0but it "ecrease" in
t#e subse>uent years an" again increase" in t#e last year .it /as not muc# goo" as com$are"
to t#e $revious years.
'< Net $ro(it margin N $ro(it a(ter tax
Sales
Iear .. ..% ..& ..' ..*
)atios 11.%. .&- 1&.* *.% -.%+
BABASAB PATIL Page 23
!nter$retation64
T#e net $ro(it margin is t#e in"icative o( t#e managements ability to o$erate t#e business
/it# su((icient success. !n t#e (ollo/ing gra$# /e can see t#at t#e net $ro(it increase" (rom
.. to ..% .it /as normal in ..& .But at t#e subse>uent years t#e net $ro(it "ecrease" .
T#is is a goo" sign to t#e com$any as it can earn more return on investments i( it #as #ig#
rate inventory turn over.
*< O$erating $ro(it ratio N EB!T
Sales
Iear .. ..% ..& ..' ..*
)atios &.*,? +.**? 1+.%,? '.*-? 1..-1?
BABASAB PATIL Page 24
!nter$retation64
+< Cost o( goo"s sol" ratio N cost o( goo"s sol" @1..
Net sales
Iear .. ..% ..& ..' ..*
)atios
+-.--? +&.&%? ,.+1? -.? ,1.,%?
BABASAB PATIL Page 25
!nter$retation64
T#e cost o( goo"s sol" ratio s#o/s /#at $ercentage s#are o( sales is consume" by cost o(
goo"s sol" 0 an" /#at $ro$ortion is available (or meeting ex$enses .!n t#e (ollo/ing (igure
/e can se t#at t#e cost o( goo"s sol" ratio is continuously increasing .
,< )eturn on Assets N PATP !nterest @1..
Average (ixe" assets
Iear .. ..% ..& ..' ..*
)atios +.*&? -*..,? *,.1.? &..+? %%.%%?
BABASAB PATIL Page 26
!nter$retation64
T#e )OA measures t#e $ro(itability o( t#e total (un"s .#ere in t#e (ollo/ing (igure /e can
say t#at $ercentage o( return on assets is gra"ually "ecreasing year a(ter year.
-< )eturn on ca$ital em$loye" N Pro(it a(ter tax @1..
Average total ca$ital em$loye"
Iear .. ..% ..& ..' ..*
)atios %&.',? %+.''? 1.1'? +.%-? ,.'1?
BABASAB PATIL Page 27
!nter$retation64
T#e )OCE is similar to t#e )OA .Aere t#e $ro(its are relate" to t#e total ca$ital em$loye".
Aig#er t#e ratio0 more e((icient is t#e use o( ca$ital em$loye" .But in t#e (ollo/ing gra$#
/e can say t#at t#e ratio is gra"ually "ecreasing 0t#is means t#at t#e (irm is not utili1ing t#e
ca$ital e((iciently
1.< EPS N Net $ro(it available to t#e e>uity s#are#ol"ers @1..
Number o( or"inary s#ares outstan"ing
Iear .. ..% ..& ..' ..*
)atios %.&%? ..'&? &.++? 1.1,? 1.1?
BABASAB PATIL Page 28
!nter$retation64
T#e EPS in"icates t#e earnings o( a s#are .by t#e (ollo/ing gra$# it is clear t#at t#e EPS is
Totally "ecrease" (rom .. to ..% .But t#ere /as a "rastic rise in t#e EPS in ..& 0an"
again t#ere /as "ecrease in t#e subse>uent years.
11< 5HE )atio N Total "ebt
S#are#ol"ers e>uity
Iear .. ..% ..& ..' ..*
)atios &%.%%? &,.-+? '-.+%? -1.%+? 1,,.%'?
BABASAB PATIL Page 29
!nter$retation64
T#e "ebt e>uity ratio is t#e relations#i$ bet/een t#e borro/e" (un"s an" t#e o/ner9s
ca$ital. Aere in t#e (ollo/ing gra$# it is clear t#at t#e "ebt e>uity ratio is increasing .it means
t#at t#e cre"itors are $utting less money o( t#eir o/n an" #ence it is a "anger sign to t#e
com$any.
1< !nterest coverage N EB!T
!nterest
Iear .. ..% ..& ..' ..*
)atios %'.1%? &.'? *'.*+? 1..%? 1..&.?
BABASAB PATIL Page 30
!nter$retation64
T#is ratio measures t#e "ebt servicing ca$acity o( t#e (irm .(rom t#e (ollo/ing gra$# 0t#e
interest coverage ratio in more in t#e year .. but since t#en it /ent on gra"ually
"ecreasing. T#is coul" be a "anger sign (or t#e (irm t#at it is using excessive "ebt an" "oes
not #ave t#e ca$acity to assure $ayment o( t#e interest to t#e cre"itors .
1%< 5ivi"en" coverage N EAT
Pre(erence "ivi"en"
Iear .. ..% ..& ..' ..*
)atios %.',? .,'? 1.*+? ..+.? 1..?
BABASAB PATIL Page 31
!nter$retation64
T#is ratio measures t#e "ivi"en" $ayment ability o( t#e (irm /#ic# carry a state" rate o(
return to t#e s#are#ol"ers.Aig#er t#e ratio better /ill be to t#e s#are#ol"ers . but #ere t#e
"ivi"en" $ayment ability is "ecreasing gra"ually year a(ter year.
1&< 5ivi"en" $ayout ratio N 5ivi"en" $ai" @1..
EPS
Iear .. ..% ..& ..' ..*
)atios '..*? '.1'? *.*? .*,? .*1?
BABASAB PATIL Page 32
!nter$retation64
T#is states t#e (irms ability to $ay t#e "ivi"en"s to t#e s#are#ol"ers.Even #ere t#e $ayment
ratio is "ecreasing . T#e (irm #ere.is not able to $ay t#e "ivi"en"s .t#e $ayout ratio is
"ecreasing gra"ually every year.
1'< Total assets turnover ratio N cost o( goo"s sol" @1..
Average total assets
Iear .. ..% ..& ..' ..*
)atios .1,? .*? .-*? .,*? .+%?
BABASAB PATIL Page 33
!nter$retation64
T#e assets turnover ratio measures t#e e((iciency o( t#e (irm in in managing an" utili1ing
t#e assets. Aig#er t#e turnover more e((icient is t#e management. So (rom t#is gra$# /e can
say t#at t#e (irm is more e((icient in managing its assets as t#e ratio is increasing every year.
1*< Fixe" assets turnover ratio N cost o( goo"s sol" @1..
Average (ixe" assets
Iear .. ..% ..& ..' ..*
)atios .1&? %.'? .'? ..1? 1.+'?
BABASAB PATIL Page 34
!nter$retation64
As t#e (igure s#o/s0 t#ere is "ecrease in t#e ratio o( assets turn over .Aence t#e (irm is not
e((icient in managing an" utili1ing t#e (ixe" assets.
1+< Current assets turnover N cost o( goo"s sol" @1..
Average current assets
Iear .. ..% ..& ..' ..*
)atios 1.'-? .%,? 1.++? 1.+? 1.+.?
BABASAB PATIL Page 35
!nter$retation64
T#e current assets turnover ratio measures t#at #o/ >uic3ly t#e s#ort term obligations can be
met. Aig# t#e ratio 0more e((icient is t#e (irm9s ability to meet t#e s#ort term obligations. !n
t#e (ollo/ing gra$# it is s#o/n t#at t#ere is increase in t#e current assets turnover ratio.
1,< Ca$ital turnover ratio N cost o( goo"s sol"
Average ca$ital em$loye"
Iear .. ..% ..& ..' ..*
)atios ..+-? 1.,.? 1.'? 1.1*? ..-?
BABASAB PATIL Page 36
!nter$retation64
T#is ratio measures t#e relations#i$ bet/een cost o( goo"s sol" an" average ca$ital
em$loye". An" #o/ (ast is t#e utili1ation o( t#e ca$ital. t#is also measures /#at is t#e cost
o( goo"s sol"..From t#e gra$# /e can say t#at t#ere is "ecrease in t#e ratios 0so it is not a
goo" sign to t#e com$any. !t can still $er(orm better .
1-< 5ebtors turnover ratio N Total sales
5rs PBH)
Iear .. ..% ..& ..' ..*
)atios %.,%? +..%? &.&'? &.? %.-1?
BABASAB PATIL Page 37
!nter$retation64
T#e "ebtors turnover ratio measures t#e relation bet/een t#e total sales an" "ebtors.
!t means t#at t#e "ebtors are ex$ecte" to $ay /it#in t#e $rescribe" $erio" . #ig# t#e ratio
0more e((icient is t#e (irm in collecting t#e "ebt (rom t#e "ebtors. Aere in t#e (ollo/ing gra$#
/e can see t#at t#e ratio is #ig# in ..% an" gra"ually "ecrease" in t#e subse>uent years .
t#is is not goo" on t#e $art o( t#e com$any.
.< )etention ratio N )etaine" earnings
PAT
Iear .. ..% ..& ..' ..*
)atios +.1? *&.--? &..&? &1.&'? 1*.+*?
BABASAB PATIL Page 38
!nter$retation64
)etention ratio measures t#e $ercentage o( earnings retaine" by t#e com$any. Aig# t#e ratio0
more e((icient is t#e com$any is retaine" earnings. So (rom t#e (ollo/ing gra$# it is clear t#at
t#e retaine" earnings is "ecrease" (rom .. to ..* gra"ually . Aence t#e com$any is sai"
to be "istributing t#e "ivi"en"s /it#out retaining any reserves. !t is a"vantageous (rom t#e
$oint o( vie/ o( s#are#ol"ers.
1< )eturn on e>uity N PAT @1..
S#are#ol"ers (un"
Iear .. ..% ..& ..' ..*
)atios %*.-,? %&.*? 1..,? -.&1? 1*.1-?
BABASAB PATIL Page 39
!nter$retation 64
T#e )eturn on e>uity s#o/s #o/ muc# returns is being earne" .t#is is ma"e (rom t#e $oint
o( vie/ o( t#e s#are#ol"ers .i( t#e return on e>uity is more t#en it is sai" to be t#e most
"eman"e" s#ares in t#e mar3et.
But in t#e (ollo/ing gra$# t#ere /as "ecrease in t#e t#e ratio (rom .. to ..& . But t#ere
/as slig#t rise in t#e year ..*.
< Boo3 :alue N Net /ort#
No. o( s#ares oHs
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 40
)atios 1... 1.' 1.%& ..*% ..*%
!nter$retation64
T#e Boo3 value is too #ig# in t#e year ..&.!t #as increase" (rom .. to ..*.But t#ere
/as "ecrease in t#e year ..' an" ..*.Bot# t#e years #ave a constant ratio.
%< PE )atio; Pros$ective< N 7ar3et $rice
EPS
Iear .. ..% ..& ..' ..*
)atios '.'*? 11'.&,? 1-.+.? ,'.&-? %'.+%?
BABASAB PATIL Page 41
!nter$retation64
T#e PHE )atio ;Pros$ective< /as #ig# in t#e year ..% . an" in t#e year ..& t#ere /as a
"rastic c#ange to 1-.+.? . !t increase" in t#e ..' an" again "ecrease" in ..* .t#is is only
because o( t#e c#anges in t#e mar3et $rice every year.
&< PE )atio
etros$ective< N 7ar3et $riceBoo3 value
Iear .. ..% ..& ..' ..*
)atios ,*.-? &-.,,? +..1%? 1*.? *,.*?
BABASAB PATIL Page 42
!nter$retation64
T#e PHE )atio ;retros$ective< is very #ig# in t#e year ..'. !t "ecrease" (rom year .. to
..% an" again increase" (rom ..& to ..' an" it "ecrease" in ..*.
CAB) ;sales< N ; Sales in .. <Q1H& @1..
Sales in ..*
BABASAB PATIL Page 43
N ,-&.% Q..' @1..
&-',+.1
N 1.,& .r 1,&?
CAB) ;EPS< N ;EPS in ..< Q1H&@1..
EPS in ..*
N ;%.&1<Q..'@1..
1.&1
N ..-'* or -.'*?
latility o( )OE N )ange o( )OE over a $erio" ..' to .. Average o( )OE over a $erio"
N %*.-, F -.&1
%.',
N 1.1*
5ecom$ose )OE N PB!T @ SALES @ PBT @ PAT @ ASSETS
SALES ASSETS PB!T PBT NETCO)TA
BABASAB PATIL Page 44
N .1%.* @ %'%**.' @ .1%.* @ %+.. @ 11%..-*
%'%**.' 11%..-* .1%.* .1%.* %++..1-
N ...'*- @ %.1&% @ 1@ 1.11 @ ..&
N ...+%1 O) +.%1?
Average )etention ratio N )etention ratio in last % years
%
N ..&. P ..&1 P ..1*
%
N ..%%%
Average $ayout N 1 F ..%%%
N ..*+**
Ex$ecte" gro/t# rate o( 5ivi"en" N Average retention ratio @ Average return on e>uity
!n last % years in last % years
N ..&. P ..&1 P ..1* @ 1.., P-.&1 P 1*.1-
% %
BABASAB PATIL Page 45
N ..%%% @ 1'.'*
N '..%?
PE )atio as $er Constant 5ivi"en" 7o"el N
Average $ayout ratio
Average retention ratio F Ex$ecte" Bro/t# )ate o( 5ivi"en"
N ..*+**
..&** F ...'.%
N ..*+**
..&1'+
N 1.*
:alue Anc#or N Ex$ecte" EPS @ PE )atio
@ 1.*
BABASAB PATIL Page 46
!ntro"uction to Ci$la64
T#e com$any /as (oun"e" in 1-%' by J#/a2a Ab"ul Aamie"0 an" its c#airman to"ay is
Iusu( Aamie" ;b. 1-%*<0 t#e (oun"er=s el"est son. Ci$la0 originally (oun"e" as T#e C#emical0
!n"ustrial 8 P#armaceutical Laboratories is a $rominent !n"ian $#armaceutical com$any0
best43no/n outsi"e its #ome country (or $ro"ucing lo/4cost anti4A!5S "rugs (or A!:4
$ositive $atients in "evelo$ing countries. Ci$la ma3es "rugs to treat car"iovascular "isease0
art#ritis0 "iabetes0 /eig#t control0 "e$ression an" many ot#er #ealt# con"itions0 an" its
$ro"ucts are "istribute" in more t#an 1,. countries /orl"/i"e.
R1S
Among t#e #un"re"s o(
generic me"ications it $ro"uces (or international "istribution are atorvastatin0 amlo$i"ine0
(luoxetine0 venla(axine #y"roc#lori"e an" met(ormin.
To"ay ;..+<0 Ci$la is t#e /orl"=s largest manu(acturer o( antiretroviral "rugs ;A):s< to
(ig#t A!:HA!5S0 as measure" by units $ro"uce" an" "istribute" ;multinational bran"4name
BABASAB PATIL Page 47
"rugs are muc# more ex$ensive0 so in money terms Ci$la me"icines are $robably some/#ere
"o/n t#e list<. )oug#ly &.? o( A!:HA!5S $atients un"ergoing antiretroviral t#era$y
/orl"/i"e ta3e Ci$la "rugs. )an3e" t#ir" in Beneric mar3et s#are statistics in Sout# A(rican
Private Sector.
Because !n"ian la/ (rom 1-+ #as allo/e" no ;en"4$ro"uct< $atents on "rugs0 an" $rovi"e"
(or com$ulsory licensing0 Ci$la /as able to manu(acture me"icines /#ic# en2oy $atent
mono$oly in certain ot#er countries ;$articularly t#ose /#ere large0 multinational
$#armaceutical com$anies are base"<. By "oing so0 as /ell as by ma3ing
an executive "ecision not to ma3e $ro(its on A!5S me"ication0 Ci$la re"uce" t#e cost o(
$rovi"ing antiretrovirals to A!5S $atients (rom E10... an" beyon" ;mono$oly $rices
c#arge" by international $#arma conglomerates< "o/n to aroun" E%.. $er year. To"ay t#ey
are able to "o so (or un"er E1'. $er $atient $er year. C#ile t#is sum remains out o( reac# (or
many millions o( $eo$le in T#ir" Corl" countries0 government an" c#aritable sources o(ten
are in a $osition to ma3e u$ t#e "i((erence (or "estitute $atients.
T#e customary treatment o( A!5S consists o( a coc3tail o( t#ree "rugs. Ci$la $ro"uces an all4
in4one $ill calle" Triomune /#ic# contains all t#ree substances ;Lamivu"ine0 stavu"ine an"
Nevira$ine<0 somet#ing "i((icult else/#ere because t#e t#ree $atents are #el" by "i((erent
com$anies. One more $o$ular (ixe" "ose combination is t#ere0 /it# t#e name 5uovir4N. T#is
contains Lamivu"ine0 Ti"ovu"ine an" Nevira$ine
BABASAB PATIL Page 48
BABASAB PATIL Page 49
1< Current )atios N Current assets
Current liabilities
Iear .. ..% ..& ..' ..*
)atios 1.*.? 1.&-? .,+? .+'? .-+?
!nter$retation64
T#e current ratio o( t#e (irm measures t#e s#ort term solvency 0t#at is its ability to meet t#e
s#ort term obligations. !n t#e (ollo/ing gra$# /e can say t#at t#e (irm9s current is
increasing in (irst year an" #as increase" in t#ir" year an" again increase in t#e subse>uent
years . T#is s#o/s t#at t#e (irm #as t#e ability to meet its current obligations.
T#is s#o/s increase (rom ..& to ..* suse>uently.
T#is also means t#at t#e com$any is bloc3ing u$ t#e assets an" are not been utili1e" in t#e
ot#er investments.
BABASAB PATIL Page 50
< Ouic3 ratiosN Ouic3 assets
Current liabilities
Iear .. ..% ..& ..' ..*
)atios ..*1? ..*.? 1.%&? 1.1? 1.&&?
!nter$retation64
Ouic3 ratios are use" to measure t#e (irm9s ability to service its s#ort term liabilities .(rom
t#e (ollo/ing gra$# /e can say t#at t#e (irm #as lo/ liability servicing ca$acity in t#e (irst
year 0.but it #as increase" in next t/o years. An" t#ereby increase" in t#e subse>uent years.
T#is s#o/s t#at t#e com$any #as t#e ability to meet its liabilities.
%< !nventory turnover ratio N cost o( goo"s sol"
BABASAB PATIL Page 51
Average inventory
Iear .. ..% ..& ..' ..*
)atio ..%.? ..1? ..? ..1? ...?
!nter$retation64
T#is means t#at t#e inventory in t#e (irst year is been sol" very (ast. An" t#ere is an "ecrease
in t#e movement o( t#e inventories. T#is may be a ba" sign to t#e com$any inventory
movement in t#e next subse>uent years is very lo/.
&< Bross $ro(it 7argin N gross $ro(it
Sales
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 52
)atios -.&%? %&.1%? %,..-? &&...? &&.-?
!nter$retation64
T#e gross $ro(it measures t#e relation bet/een t#e sales an" $ro(its .As t#ere /as increase in
t#e gross $ro(its (rom .. to ..* it /as a goo" sign to t#e com$any because t#ere is
subse>uent increase in t#e gross $ro(it
7argin.
'< Net $ro(it margin N $ro(it a(ter sales
Sales
Iear .. ..% ..& ..' ..*
)atios 1*.&'? 1'.&-? 1&.**? 1*.&-? 1,.++?
BABASAB PATIL Page 53
!nte$retation64
T#e net $ro(it margin is t#e in"icative o( t#e managements ability to o$erate t#e business
/it# su((icient success. !n t#e (ollo/ing gra$# /e can see t#at t#e net $ro(it increase" (rom
.. to ..* .it /as normal in ..&.But at t#e subse>uent years t#e net $ro(it increase" .
T#is is a goo" sign to t#e com$any as it can earn more return on investments as it #as #ig#
rate inventory turn over.
*< O$erating $ro(it ratio N EB!T
Sales
Iear .. ..% ..& ..' ..*
)atios 1.*'? 1-.'&? 1-.%? ..+? 1.-%?
BABASAB PATIL Page 54
!nter$retation64
T#e o$erating $ro(it ratio s#o/s t#e relation bet/een EB!T an" Sales .Aere (rom t#e
(ollo/ing gra$# /e can say t#at t#e o$erating ratio is increase" (rom .. to ..*
subse>uently.t#is is a goo" sign to t#e com$any as it #as increase its o$erating $ro(it ratio
/#ic# is be(ore tax.
+< Cost o( goo"s sol" ratio N cost o( goo"s sol" @1..
Net sales
Iear .. ..% ..& ..' ..*
)atios +.-? +.%? +..? *.%? *.1?
BABASAB PATIL Page 55
!nter$retation64
T#e cost o( goo"s sol" ratio s#o/s /#at $ercentage s#are o( sales is consume" by cost o(
goo"s sol" 0 an" /#at $ro$ortion is available (or meeting ex$enses .!n t#e (ollo/ing (igure
/e can see t#at t#e cost o( goo"s sol" ratio is continuously "ecreasing . So t#is is a goo"
sign to t#e com$any as t#ere is lo/ cost incurre" (or sales.
,< )eturn on Assets N PATP !nterest @1..
Average (ixe" assets
Iear .. ..% ..& ..' ..*
)atios 1.*? ,,.? *-...? *&.,*? *,.-'?
BABASAB PATIL Page 56
!nter$retation64
T#e )OA measures t#e $ro(itability o( t#e total (un"s .#ere in t#e (ollo/ing (igure /e can
say t#at $ercentage o( return on assets is gra"ually "ecreasing year a(ter year.
-< )eturn on ca$ital em$loye" N Pro(it a(ter tax @1..
Average total ca$ital em$loye"
Iear .. ..% ..& ..' ..*
)atios '.&&? %.+? %.%? '.&1? ,.-?
BABASAB PATIL Page 57
!nter$retation64
T#e )OCE is similar to t#e )OA .Aere t#e $ro(its are relate" to t#e total ca$ital em$loye".
Aig#er t#e ratio0 more e((icient is t#e use o( ca$ital em$loye" .But in t#e (ollo/ing gra$#
/e can say t#at t#e ratio is gra"ually increasing 0t#is means t#at t#e (irm utili1ing t#e ca$ital
e((iciently
1.< EPS N Net $ro(it available to t#e e>uity s#are#ol"ers @1..
Number o( or"inary s#ares outstan"ing
Iear .. ..% ..& ..' ..*
)atios %.- &.1 '..- 1%.* ..1-
BABASAB PATIL Page 58
!nter$retation64
T#e EPS in"icates t#e earnings o( a s#are .by t#e (ollo/ing gra$# it is clear t#at t#e EPS is
Totally increase" (rom .. to ..* .But t#ere /as a "rastic rise in t#e EPS in ..* an" .
t#is s#o/s t#at t#e s#are#ol"ers earn better "ivi"en"s
11< 5HE )atio N Total "ebt
S#are#ol"ers e>uity
Iear .. ..% ..& ..' ..*
)atios '&.1.? *&.*.? +..&? *.**? +..%&?
BABASAB PATIL Page 59
!nter$retation64
T#e "ebt e>uity ratio is t#e relations#i$ bet/een t#e borro/e" (un"s an" t#e o/ner9s ca$ital.
Aere in t#e (ollo/ing gra$# it is clear t#at t#e "ebt e>uity ratio is increasing .it means t#at t#e
cre"itors are $utting less money o( t#eir o/n an" #ence it is a "anger sign to t#e com$any.
1< !nterest coverage N EB!T
!nterest
Iear .. ..% ..& ..' ..*
)atios 1&.+%? 1,..? %,.,+? *+.&1? *.1'?
BABASAB PATIL Page 60
!nter$retation64
T#is ratio measures t#e "ebt servicing ca$acity o( t#e (irm .(rom t#e (ollo/ing gra$# 0t#e
interest coverage ratio in more in t#e year .. but since t#en it /ent on gra"ually
increasing. T#is coul" be a goo" sign (or t#e (irm t#at it is not using excessive "ebt an" #ave
t#e ca$acity to assure $ayment o( t#e interest to t#e cre"itors .
1%< 5ivi"en" coverage N EAT
Pre(erence "ivi"en"
Iear .. ..% ..& ..' ..*
)atios 11.&*? +.&&? *.+%? '.+? *.+*?
BABASAB PATIL Page 61
!nter$retation64
T#is ratio measures t#e "ivi"en" $ayment ability o( t#e (irm /#ic# carry a state" rate o(
return to t#e s#are#ol"ers.Aig#er t#e ratio better /ill be to t#e s#are#ol"ers . but #ere t#e
"ivi"en" $ayment ability is "ecreasing gra"ually year a(ter year.
1&< 5ivi"en" $ayout ratio N 5ivi"en" $ai" @1..
EPS
Iear .. ..% ..& ..' ..*
)atios *.-? 1..1-? 11.+*? **..+? '1.-*?
BABASAB PATIL Page 62
!nter$retation64
T#is states t#e (irms ability to $ay t#e "ivi"en"s to t#e s#are#ol"ers.Aere t#e $ayment ratio is
increasing . T#e (irm #ere is able to $ay t#e "ivi"en"s .T#e $ayout ratio is increasing
gra"ually every year.
1'< Total assets turnover ratio N cost o( goo"s sol" @1..
Average total assets
Iear .. ..% ..& ..' ..*
)atios 1.1+? ..-*? ..-%? ..,? ..,1?
BABASAB PATIL Page 63
!nter$retation64
T#e assets turnover ratio measures t#e e((iciency o( t#e (irm in managing an" utili1ing t#e
assets. Aig#er t#e turnover more e((icient is t#e management. So (rom t#is gra$# /e can say
t#at t#e (irm is not e((icient in managing its assets as t#e ratio is "ecreasing every year.
1*< Fixe" assets turnover ratio N cost o( goo"s sol" @1..
Average (ixe" assets
Iear .. ..% ..& ..' ..*
)atios ..&1? ..%1? ..,? ..1? ..1-?
BABASAB PATIL Page 64
!nter$retation64
As t#e (igure s#o/s0 t#ere is "ecrease in t#e ratio o( assets turn over .Aence t#e (irm is not
e((icient in managing an" utili1ing t#e (ixe" assets.
!t is not a goo" sign to t#e com$any.
1+< Current assets turnover N cost o( goo"s sol" @1..
Average current assets
Iear .. ..% ..& ..' ..*
)atios ..1? ..1-? ..1? ..11? ..11?
BABASAB PATIL Page 65
!nter$retation64
T#e current assets turnover ratio measures t#at #o/ >uic3ly t#e s#ort term obligations can be
met. Aig# t#e ratio 0more e((icient is t#e (irm9s ability to meet t#e s#ort term obligations. !n
t#e (ollo/ing gra$# it is s#o/n t#at t#ere is "ecrease in t#e current assets turnover ratio. !n
t#e year .. to ..% t#ere increase in t#e ratios 0but t#ere is a "ecrease in t#e ratios (rom
..& on/ar"s.
1,< Ca$ital turnover ratio N cost o( goo"s sol"
Average ca$ital em$loye"
Iear .. ..% ..& ..' ..*
)atios 1...,? -.,.? ,.*? ,.&,? 1%.%*?
BABASAB PATIL Page 66
!nter$retation64
T#is ratio measures t#e relations#i$ bet/een cost o( goo"s sol" an" average ca$ital
em$loye". An" #o/ (ast is t#e utili1ation o( t#e ca$ital. t#is also measures /#at is t#e cost
o( goo"s sol"..From t#e gra$# /e can say t#at t#ere is increase in t#e ratios (rom .. to
..* 0so it is a goo" sign to t#e com$any. !t is $er(orming $er(orm better .
1-< 5ebtors turnover ratio N Total sales
5ebtors
Iear .. ..% ..& ..' ..*
)atios '.*.? &.&-? &.1-? &.? %.*-?
BABASAB PATIL Page 67
!nter$retation64
T#e "ebtors turnover ratio measures t#e relation bet/een t#e total sales an" "ebtors.
!t means t#at t#e "ebtors are ex$ecte" to $ay /it#in t#e $rescribe" $erio" . #ig# t#e ratio
0more e((icient is t#e (irm in collecting t#e "ebt (rom t#e "ebtors. Aere in t#e (ollo/ing gra$#
/e can see t#at t#e ratio is #ig# in .. an" gra"ually "ecrease" in t#e subse>uent years .
t#is is not goo" on t#e $art o( t#e com$any.
.< )etention ratio N )etaine" earnings
PAT
Iear .. ..% ..& ..' ..*
)atios ..,,? ..,%? ..,1? ..+,? ..,?
BABASAB PATIL Page 68
!nter$retation64
T#e retention ratio is increase" (rom .. to ..& an" "ecrease" in t#e year ..' .but t#ere
/as again rise in t#e ratio in ..* .t#is s#o/s t#at t#e com$any is stable in retaining t#e
earnings even a(ter $aying taxes.
1< )eturn on e>uity N PAT @1..
)etaine" earnings
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 69
)atios 1.-+? +.,%? &.*? *.%*? %..*%?
!nter$retation64
T#e )eturn on e>uity s#o/s #o/ muc# returns is being earne" .t#is is ma"e (rom t#e $oint
o( vie/ o( t#e s#are#ol"ers .i( t#e return on e>uity is more t#en it is sai" to be t#e most
"eman"e" s#ares in t#e mar3et.
But in t#e (ollo/ing gra$# t#ere /as increase in t#e ratio (rom .. to ..* .
< Boo3 :alue N Net /ort#
No. o( s#ares oHs
Iear .. ..% ..& ..' ..*
BABASAB PATIL Page 70
)atios 1&.+- 1+.,& 1..+ '.1* *.'
!nter$retation64
From t#e (ollo/ing gra$# it is clear t#at t#e boo3 value o( t#e s#ares is "ecrease" (rom ..
to ..' . an" t#ere /as a slig#t rise in t#e boo3 value.it is because o( t#e increase in t#e
number o( s#ares.(rom ..' on/ar"s.
%< PE )atio; Pros$ective< N 7ar3et $rice
EPS
Iear .. ..% ..& ..' ..*
)atios .*. 1.+% .%, 1.' .%*
BABASAB PATIL Page 71
!nter$retation64
T#e PHE )atio ;$ros$ective< "ecrease" (rom .. to ..% .!t increase" in ..& an" again
t#ere /as "ecrease in ..' .!n ..* t#e ratio again increase".T#is is because o( t#e c#anges
in t#e mar3et $rices.
&< PE )atio
etros$ective< N 7ar3et $riceBoo3 value
Iear .. ..% ..& ..' ..*
)atios *,.+, &...1 ''.+1 &-.'+ 1...&-
BABASAB PATIL Page 72
!nter$retation64
T#e PHE )atio ;$ros$ective< "ecrease" (rom .. to ..& .An" again t#ere /as "ecrease in
..' .!n ..* t#e ratio again increase".T#is is because o( t#e c#anges in t#e mar3et $rices.
CAB) ;sales< N ; Sales in ..+ <Q1H& 41 @1..
Sales in ..%<
N ;%+*%.+< Q..' 41@1..
1'--...
BABASAB PATIL Page 73
N %.,*?
CAB) ;EPS< N ;EPS in ..+< Q1H&41@1..
EPS in ..%<
N ;1.&-<Q..'41@1..
&.11
N %..%?
latility o( )OE N )ange o( )OE over a $erio" ..+to ..% Average o( )OE over a $erio"
N 1.-+ 4*.%*
*.
N 4..1*
BABASAB PATIL Page 74
5ecom$ose )OE N PB!T @ SALES @ PBT @ PAT @ ASSETS
SALES ASSETS PB!T PBT NETCO)TA
N '1&*.1& @ &,.,+ @ '1&*.1& @ &.-*.& @ 1,%%.++
&,.,+ 1,%%.++ '1&*.1& '1&*.1& 1''*.*%
N .. @ 1.%' @ 1@ ..+- @ 1.1+
N &.-'?
Average )etention ratio N )etention ratio in last % years
%
N ..,1 P..+, P ..,
%
N ..,.%
Average $ayout N 1 F ..,.%
N ..1-+
BABASAB PATIL Page 75
Ex$ecte" gro/t# rate o( 5ivi"en"N Avg reten ratio @ Avg return on e>
!n last % years in last % years
N ..,1 P..+, P.., @ &.* P*.%* P%..*%
% %
N ..,.% @ +..,
N 1.+&?
PE )atio as $er Constant 5ivi"en" 7o"el N
Average $ayout ratio
Average retention ratio F Ex$ecte" Bro/t# )ate o( 5ivi"en"
BABASAB PATIL Page 76
N ..1-+
..,& F ..1+&
N ..1-+
..*.**
N %.%+?
:alue Anc#or N Ex$ecte" EPS @ PE )atio
N 1*&.-1@ %.&+
N '%.'& mar3et $rice
BABASAB PATIL Page 77
Consoli"ate" )atios o( )anbaxy
Iear
)atios .. ..% ..& ..' ..*
Current )atios
%.*.? &.1*? .++? %.11? %.&*?
Ouic3 )atios
1.*&? ..--? ..-,? 1.*? 1.&-?
!nventory T.O
)atios
&..%? %.,&? %.*+? %.*.? %.+%?
Bross $ro(it
margin
'.,? ,.&1? 1-.-'? ,.--? 1&.-,?
Net $ro(it
margin
11.%. .&- 1&.* *.% -.%+
O$erating $ro(it
margin
&.*,? +.**? 1+.%,? '.*-? 1..-1?
Cost o( goo"s
sol" ratio
+-.--? +&.&%? ,.+1? -.? ,1.,%?
)eturn on Assets
+.*&? -*..,? *,.1.? &..+? %%.%%?
)eturn on
ca$ital em$loye"
%&.',? %+.''? 1.1'? +.%-? ,.'1?
EPS
%.&%? ..'&? &.++? 1.1,? 1.1?
5HE )atio
&%.%%? &,.-+? '-.+%? -1.%+? 1,,.%'?
BABASAB PATIL Page 78
!nterest coverage
)atio
%'.1%? &.'? *'.*+? 1..%? 1..&.?
5ivi"en"
coverage )atio
%.',? .,'? 1.*+? ..+.? 1..?
5ivi"en" $ayout
)atio
'..*? '.1'? *.*? .*,? .*1?
Total assets
turnover )atio
.1,? .*? .-*? .,*? .+%?
Fixe" assets
turnover )atio
.1&? %.'? .'? ..1? 1.+'?
Current assets
turnover )atio
1.'-? .%,? 1.++? 1.+? 1.+.?
Ca$ital
turnover)atio
..+-? 1.,.? 1.'? 1.1*? ..-?
5ebtors
turnover )atio
%.,%? +..%? &.&'? &.? %.-1?
)etention )atio
+.1? *&.--? &..&? &1.&'? 1*.+*?
)eturn on
E>uity
%*.-,? %&.*? 1..,? -.&1? 1*.1-?
Boo3 :alue
1... 1.' 1.%& ..*% ..*%
PHE )atio
;$ros$ective<
'.'*? 11'.&,? 1-.+.? ,'.&-? %'.+%?
BABASAB PATIL Page 79
Consoli"ate" )atios o( Ci$la
Iear
)atios .. ..% ..& ..' ..*
Current )atios
1.*.? 1.&-? .,+? .+'? .-+?
Ouic3 )atios
..*1? ..*.? 1.%&? 1.1? 1.&&?
!nventory T.O
)atios
..%.? ..1? ..? ..1? ...?
Bross $ro(it
margin
-.&%? %&.1%? %,..-? &&...? &&.-?
Net $ro(it
margin
1*.&'? 1'.&-? 1&.**? 1*.&-? 1,.++?
O$erating $ro(it
margin
1.*'? 1-.'&? 1-.%? ..+? 1.-%?
Cost o( goo"s
sol" ratio
+.-? +.%? +..? *.%? *.1?
)eturn on
Assets
1.*? ,,.? *-...? *&.,*? *,.-'?
)eturn on
ca$ital
em$loye"
'.&&? %.+? %.%? '.&1? ,.-?
EPS
%.- &.1 '..- 1%.* ..1-
5HE )atio
'&.1.? *&.*.? +..&? *.**? +..%&?
!nterest
1&.+%? 1,..? %,.,+? *+.&1? *.1'?
BABASAB PATIL Page 80
coverage )atio
5ivi"en"
coverage )atio
11.&*? +.&&? *.+%? '.+? *.+*?
5ivi"en" $ayout
)atio
*.-? 1..1-? 11.+*? **..+? '1.-*?
Total assets
turnover )atio
1.1+? ..-*? ..-%? ..,? ..,1?
Fixe" assets
turnover )atio
..&1? ..%1? ..,? ..1? ..1-?
Current assets
turnover )atio
..1? ..1-? ..1? ..11? ..11?
Ca$ital
turnover)atio
1...,? -.,.? ,.*? ,.&,? 1%.%*?
5ebtors
turnover )atio
'.*.? &.&-? &.1-? &.? %.*-?
)etention )atio
..,,? ..,%? ..,1? ..+,? ..,?
)eturn on
E>uity
1.-+? +.,%? &.*? *.%*? %..*%?
Boo3 :alue
1&.+- 1+.,& 1..+ '.1* *.'
PHE )atio
;$ros$ective<
.*.? 1.+%? .%,? 1.'? .%*?
BABASAB PATIL Page 81
PHE )atio
;retros$ective< *,.+,? &...1? ''.+1? &-.'+? 1...&-?
Fin"ings64
? current ratio is increasing in (irst t/o years an" #as "ecrease" in t#ir" year an" again
increase in t#e subse>uent years . T#is s#o/s t#at t#e (irm #as t#e ability to meet its
current obligations.
? t#e (irm #as #ig# liability servicing ca$acity as it #as t#e ability to meet its
liabilities
? As t#ere /as increase in t#e gross $ro(its (rom .. to ..% it /as a goo" sign to
t#e com$any
? 5ecrease in t#e net $ro(it margin is a goo" sign to t#e com$any as it can earn more
return on investments i( it #as #ig# rate inventory turn over.
? T#e cost o( goo"s sol" ratio is continuously increasing in case o( )anbaxy.
? Percentage o( return on assets is gra"ually "ecreasing year a(ter year.
? t#e )OCE ratio is gra"ually "ecreasing 0t#is means t#at t#e (irm is not utili1ing t#e
ca$ital e((iciently
? T#ere /as a "rastic rise in t#e EPS in ..&0 an" again t#ere /as "ecrease in t#e
subse>uent years.
? T#e "ebt e>uity ratio is increasing .it means t#at t#e cre"itors are $utting less money
o( t#eir o/n an" #ence it is a "anger sign to t#e com$any.
BABASAB PATIL Page 82
? T#e interest coverage ratio in more in t#e year .. but since t#en it /ent on
gra"ually "ecreasing. T#is coul" be a "anger sign (or t#e (irm t#at it is using
excessive "ebt an" "oes not #ave t#e ca$acity to assure $ayment o( t#e interest to t#e
cre"itors .
? T#e "ivi"en" $ayment ability is "ecreasing gra"ually year a(ter year.
? T#e (irm #ere.is not able to $ay t#e "ivi"en"s .t#e $ayout ratio is "ecreasing
gra"ually every year
? more e((icient in managing its assets as t#e ratio is increasing every year.
? t#ere is "ecrease in t#e ratio o( assets turn over .Aence t#e (irm is not e((icient in
managing an" utili1ing t#e (ixe" assets.
? increase in t#e current assets turnover ratio /#ere t#e (irm can meet its current
obligations.
? "ecrease in t#e ca$ital turnover ratios 0so it is not a goo" sign to t#e com$any.
? "ecrease" in "ebtors turnover ratios t#e subse>uent years is not goo" on t#e $art o(
t#e com$any.
? com$any is sai" to be "istributing t#e "ivi"en"s /it#out retaining any reserves. !t is
a"vantageous (rom t#e $oint o( vie/ o( s#are#ol"ers.
? T#e PHE )atio ;Pros$ective< /as #ig# in t#e year ..% . an" in t#e year ..& t#ere
/as a "rastic c#ange to 1-.+.?
? T#e PHE )atio ;retros$ective< is very #ig# in t#e year ..'.
BABASAB PATIL Page 83
Fin"ings;Ci$la<64
? T#e (irm9s current is increasing in (irst year an" #as increase" in t#ir" year an" again
increase in t#e subse>uent years
? T#e (irm #as lo/ liability servicing ca$acity in t#e (irst year 0.but it #as increase" in
next t/o years. An" t#ereby increase" in t#e subse>uent years. T#is s#o/s t#at t#e
com$any #as t#e ability to meet its liabilities.
? t#ere is a "ecrease in t#e movement o( t#e inventories. T#is may be a ba" sign to t#e
com$any inventory movement in t#e next subse>uent years is very lo/.
? increase in t#e gross $ro(its (rom .. to ..* is /as a goo" sign to t#e com$any
? t#e net $ro(it increase" (rom .. to ..* .it /as normal in ..&.But at t#e
subse>uent years t#e net $ro(it increase" . T#is is a goo" sign to t#e com$any as it can
earn more return on investments as it #as #ig# rate inventory turn over
? t#e o$erating ratio is increase" (rom .. to ..* subse>uently.t#is is a goo" sign to
t#e com$any as it #as increase its o$erating $ro(it ratio /#ic# is be(ore tax.
? t#e cost o( goo"s sol" ratio is continuously "ecreasing
? $ercentage o( return on assets is gra"ually "ecreasing year a(ter year.
? T#e )OCE ratio is gra"ually increasing 0t#is means t#at t#e (irm utili1ing t#e ca$ital
e((iciently
? EPS is Totally increase" (rom .. to ..* .But t#ere /as a "rastic rise in t#e EPS in
..* an" . t#is s#o/s t#at t#e s#are#ol"ers earn better "ivi"en"s
BABASAB PATIL Page 84
? t#e "ebt e>uity ratio is increasing .it means t#at t#e cre"itors are $utting less money
o( t#eir o/n an" #ence it is a "anger sign to t#e com$any.
? t#e interest coverage ratio in more in t#e year .. but since t#en it /ent on gra"ually
increasing. T#is coul" be a goo" sign (or t#e (irm t#at it is not using excessive "ebt
an" #ave t#e ca$acity to assure $ayment o( t#e interest to t#e cre"itors .
? T#e "ivi"en" $ayment ability is "ecreasing gra"ually year a(ter year.
? T#e (irm is able to $ay t#e "ivi"en"s .T#e $ayout ratio is increasing gra"ually every
year.
? t#e (irm is not e((icient in managing its assets as t#e ratio is "ecreasing every year.it is
not a goo" sign to t#e com$any.
? t#ere is "ecrease in t#e current assets turnover ratio. !n t#e year .. to ..% t#ere
increase in t#e ratios 0but t#ere is a "ecrease in t#e ratios (rom ..& on/ar"s.
? t#ere is increase in t#e ca$ital turnover ratios (rom .. to ..* 0so it is a goo" sign
to t#e com$any. !t is $er(orming $er(orm better .
? t#e "ebtors turnover ratio is #ig# in .. an" gra"ually "ecrease" in t#e subse>uent
years . t#is is not goo" on t#e $art o( t#e com$any.
? T#e retention ratio is increase" (rom .. to ..& an" "ecrease" in t#e year ..' .but
t#ere /as again rise in t#e ratio in ..*
? But in t#e (ollo/ing gra$# t#ere /as increase in t#e return on e>uity ratio (rom ..
to ..* .
? t#e boo3 value o( t#e s#ares is "ecrease" (rom .. to ..' . an" t#ere /as a slig#t
rise in t#e boo3 value.it is because o( t#e increase in t#e number o( s#ares.(rom ..'
on/ar"s.
BABASAB PATIL Page 85
? T#e PHE )atio ;$ros$ective< "ecrease" (rom .. to ..% .!t increase" in ..& an"
again t#ere /as "ecrease in ..'
? T#e PHE )atio ;$ros$ective< "ecrease" (rom .. to ..& .An" again t#ere /as
"ecrease in ..' .!n ..* t#e ratio again increase".T#is is because o( t#e c#anges in
t#e mar3et $rices.
Bibliogra$#y64
nsein"ia.com
bsein"ia.com
)anbaxy.com
Ci$la.com
BABASAB PATIL Page 86
doc_847052108.doc