Kerala State Drugs and Pharmaceuticals

CHAPTER 1 INTRODUCTIONObjectives of the study Primary objectives comprise the study of organisation as a whole, and, To understand the functioning of each department of the firm. To analyse the financial position and profitability of the firm. To conduct SWOT analysis and make inferences.Scope The pharmaceutical industry is the sector that has been one of the pillars of industrialised economies and is increasingly recognised as an important sector in the developing world as well. It contributes to employment (direct, indirect or induced), trade (through imports and exports), expenditure on research and development and technological capacity building. It is also a necessary foundation for the existence of generic industry.Research Methodology Research in common parlance is the search for knowledge through objective and systematic method of finding solution to a problem. Research Methodology is a way to systematically solve the research problem.Methodology used in the study Primary dataPrimary data is collected from the employees directly by the researcher. The data required for the study is collected through;

Personal interviewEmployees were personally interviewed to get their opinion regarding functioning of the organisation.

Secondary data Secondary data are those data which are already collected and recorded. The relevant data for this study is collected from published sources like annual report of the company for past 3 years, past records of the firm and company website.

Limitation The study is limited to the extent of understanding by the researcher The opinions are mostly collected from the middle level managers Lack of interest from the part of workers due to heavy work schedule

CHAPTER 2INDUSTRY PROFILE Pharmacy is the art or practice of preparing and preserving drugs and of compounding and dispensing medicines according to prescriptions of physicians. Since the launch of the pharmaceutical industry in the 19th century, it has covered a long way and now it has become one of the most influential and successful industry in the world. History of pharmaceutical Industry The first known drugstore was opened by Arabian pharmacists in Baghdad, and many more soon began operating throughout the medieval Islamic world and eventually medieval Europe. By the 19th century many of the drugstores in Europe and North America had eventually developed into larger pharmaceutical companies. Most of todays pharmaceutical companies were founded in the late 19th century and early 20th centuries. The industry remained relatively small scale until the 1970s when it began to expand at a greater rate. Legislation allowing for strong patents, to cover both the process of manufacture and the specific products came into force in most countries. By the mid 1980s, small biotechnology firms were struggling for survival, which led to the formation of mutually beneficial partnerships with large pharmaceutical companies and a host of corporate buyouts of the smaller firms. Pharmaceutical manufacturing became concentrated, with a few large companies holding a dominant position throughout the world and with a few companies producing medicines within each country. The Indian Pharmaceutical sector has come a long way, being almost non- existent before 1970 to a prominent provider of healthcare products, meeting almost 95% of countrys pharmaceutical needs. The Industry today is in the front rank of Indias science based industries with wide ranging capabilities in the complex field of drug manufacture and technology. The Indian pharmaceutical industry, the most respected amongst the emerging nations, is one of the most sought after sectors from a global collaboration point of view. Having a strong macro and socio economic foundation, the driving factors are intrinsically deep-rooted in the Indian pharmaceutical sector and have not been deterred by recent speed breakers like quality issues faced by a few Indiancompanies. Recently in India, the Union Cabinet has proposed revision to the FIPB policy. If approved, the revised proposal states that 25 per cent of investment must be sanctioned towards R&D activities and if the projects deal with rare facilities and critical verticals, only 49 per cent FDI should be allowed post government approval. The key concern of the government is that high presences of multinational companies in India will negatively impact availability and affordability of off-patent medicines in India. One of the key characteristics of the Indian pharma industry is the fact that it is very fragmented. The largest domestic market shareholders hold about seven per cent of the Indian markets, while the top 10 companies command about 40 per cent of the market share.

The share of pharma companies of Indian origin is close to 73 per cent of the Indian market while multinational companies hold the remaining 27 per cent. This clearly indicates that the majority share of the Indian market is with domestic pharma companies and equally distributed amongst both large and small scale pharmaceutical companies. The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (330 in the organised sector). The top ten companies make up for more than a third of the market. Indias pharmaceutical sector will touch US$ 45 billion by 2020, according to a major study by global management and consulting firm, McKinsey & Company. The reasons for this optimism are well founded. In the period 20022012, the countrys healthcare sector grew three times in size, touching US$ 70 billion from US$ 23 billion. India's pharmaceutical market experienced a similar boom, reaching US$ 18 billion in 2012 from US$6 billion in 2005. The report further states that the Indian pharmaceutical market will be the sixth largest in the world by 2020. Besides the domestic market, Indian pharma companies also have a large chunk of their revenues coming from exports. While some are focusing on the generics market in the US, Europe and semi-regulated markets, others are focusing on custom manufacturing for innovator companies. Biopharmaceuticals is also increasingly becoming an area of interest given the complexity in manufacture and limited competition. The companies witnessed sluggish growth on the back of severe competition in the acute segment, increasing competition from unlisted players and so on. Though the Indian Pharma Industry grew by 14% (Dec 2012) vs. 15% in Dec 2011, large part of the growth was contributed by the chronic segment. Rupee depreciation was one important aspect which helped the industry especially those companies who had not hedged their receivables. The market is primarily driven by exports to regulated as well as semi-regulated markets. Currently, India exports drugs to more than 200 countries and vaccines and biopharmaceutical products to about 151 countries. Indian pharmaceutical industry is fairly fragmented with top 10 companies contributing to 41% of total sales. The next ten companies contribute to 22% of sales while the remaining companies contribute to 37% of the total sales. Urban regions (metros and tier I cities) contribute to about 60% of total sales while the remaining country contributes to the balance 40%. Market performance of global pharmaceutical sector The global pharmaceuticals market is worth US$300 billion a year, a figure expected to rise to US$400 billion within three years. The 10 largest drugs companies control over one-third of this market, several with sales of more than US$10 billion a year and profit margins of about 30%. Six are based in the United States and four in Europe. It is predicted that North and South America, Europe and Japan will continue to account for a full 85% of the global pharmaceuticals market well into the 21st century.Some of the major investments in the Indian pharmaceutical sector include the following:

GlaxoSmithKline Plc plans to invest Rs 864 crore (US$ 140.86 million) to set up a new factory in India. The plant, which is expected to be operational by 2017, will include a warehouse, site infrastructure and utilities to support the manufacturing and packing of the medicines.

Cadila Pharmaceuticals Ltd (CPL) plans to invest Rs 100 crore (US$ 16.30 million) on expansion, upgradation and modernisation of its manufacturing unit at Samba in Jammu district.

HLL Biotech Limited (HBL), a subsidiary of HLL Lifecare Ltd, has entered into a long-term supply and technology license agreement with the Institute of Immunology, Zagreb (IMZ), Croatia, for the manufacture of measles vaccine in India. Under the partnership agreement, IMZ will transfer the technology to manufacture bulk measles vaccine to HBL.

Ranbaxy Laboratories Ltd has received an approval from the Central Drugs Standard Control Organisation (CDSCO) to manufacture and market a new drug for the treatment of malaria in adults.

Cipla has acquired a majority stake in Uganda-based Quality Chemical Industries Ltd (QCIL), with the acquisition of an additional 14.5 per cent stake for US$ 15 million through its subsidiary, Meditab Holdings Ltd (MHL).

Dr Reddy's Laboratories Ltd has received approval from the USFDA for its Azacitidine injection. The drug is used for treatment of some types of cancer and disorders that affect the bone marrow.

Top ten players in Pharmaceutical industryRanbaxy laboratoriesIt operates in more than 150 countries in the world. The company which was established in 1961 and it is the largest pharmaceutical company in India With total net sales of Rs 7686.59 crore.CiplaIt is the second largest company in Indian pharmaceutical sector with total net sales of Rs 6,977.50 croreDr Reddy Laboratories It is the third company in Indian pharmaceutical sector with total net sales of Rs 6,686.30 crore.The company was established in 1984.LupinThe company was established in 1968. The company is in fourth position of Indian pharmaceutical sector with the total net sales of Rs 5,364.37croreAurbindo PharmaThe company is in 5th position of Indian pharmaceutical sector with total net sales of 4284.63 croreSun PharmaNet Sales revenues stood at Rs 4,015.56 crore makes it the sixth largest pharmaceutical company in IndiaCadila HealthCadila Health is the seventh largest pharma company with the total sales revenue of Rs 3,152.20 crore.Jubilant LifeEighth largest company has the total sale revenue at Rs 2,641.07 croreWockhardt Wockhardt has the total net sales of Rs 2,560.16 crore and the ninth largest pharmaceutical company in India.Ipca Laboratories Revenue of Rs 2,352.59 crore makes Ipca India's 10th largest pharma firm by sales.

CHAPTER 3COMPANY PROFILE Kerala State Drugs & Pharmaceuticals Ltd is a Kerala Government Undertaking. Since its inception in 1974, it has been manufacturing and supplying essential and life saving medicines to cater to the needs of the common patients resorting to Government Hospitals in the State of Kerala a leading State in Public Health Services. It is a wholly owned government company under the administrative control of the Industries Department. The board of directors and the chief executive of the company are appointed by the government.It is the only government company in Kerala manufacturing allopathic medicines. The company manufactures about 50 items of medicines. Manufacturing offices and registered offices are located at Kalavoor in Alappey district, Kerala. There are 270 employees currently in the organization, including executives, staff and officers.The company has been under constant pressure to achieve the best of Quality Standards due to this reason. The company logo is "Quality that Cures" with a Highly Dedicated Workforce and Professional Supervision and with the old tradition of providing appropriate coverage without fail. KSDP produce medicines that "CURE rather than TREAT".The authorized capital of the company is Rs 950 00 000 and aided capital amount to Rs 979 04 000.The modernization programs are now being implemented. The latest development in the company is the introduction of BETALACTUM PLANT. A new NABL accredited laboratory is also being setup. The work is progressing in the company. This plant is separated from other plants because the medicines in process in the company are highly powerful. Medicines like Penicillin are highly complicated and it may cause problems in the operation of general medicines like paracetamol and amoxilline. The Company has reached glorious heights in its way to thrive in this Hi-Tech era. The Product Development wing of the Company has made all efforts to bring out scores of new products in addition to the existing multiplicity of drug formulations to the tune of hundred odd products. The development work of new generation drugs are in progress. Now the Company is a major supplier of Quality drugs to Kerala State Medical Service Corporation Ltd (KMSCL), Thiruvananthapuram, which is a government of Kerala undertaking setup for supply of medical requirements to government hospitals and medical institutions. KSDP LTD., an enterprise fully owned by the Government of Kerala Manufacturing Quality Drugs of various formulations like Tablets, Capsules, Liquid Orals, External Preparations, Powders, ORS, Injectables etc. from 1974 onwards. The company has been manufacturing and supplying medicines to government hospitals for health care of the people of the state during the last 40years and social welfare is the main motive of the company. The company also supplies medicines to the government of Andra Pradesh. The accounts of the company are computerized and audited accounts are completed up to the year 2012 2013. The order procurement process is mainly done through e-tendering process and the payments are made to the suppliers through the electronic mode. The salaries and other incentives are paid to the employees by transferring it to the salary account opened for each employee with IDBI bank. Government of Kerala provides funds for operation of the business in the state budget allocations. The company also accounts for the welfare of employees through group gratuity scheme of LIC for providing eligible gratuity to employees on cessation of services, Provident Fund and Employee State Insurance Schemes. Company canteen provides meals to employees at a subsidized rate of Rs 6 and evening snacks and tea at the rate of Rs 2 and Rs 1 respectively. The raw materials for producing medicines are acquired from outside states like that of Maharashtra and Gujarat.

Product profileKSDP produces the following products at its plant in Alappuzha. CAPSULESAmoxycillin Capsules I.P.250mg.

Amoxycillin Capsules I.P.500mg.

Ampicillin Capsules I.P.250mg.

Cloxacillin Capsules I.P.250mg.

Doxycycline Capsules I.P.100mg

Omeprazole Capsules I.P.20mg.

TABLETSAcetylsalysalic Acid TabletsI.P.300mg.

Alprazolam Tablets I.P.0.5mg.

AmlodipineTablets I.P.2.5mg.

AmlodipineTablets I.P.5mg.

Amoxycillin Dispersible Tablets I.P.125mg.

AtenololTablets I.P.50mg.

AzithromycinTablets I.P.250mg.

AzithromycinTablets I.P.500mg.

CetrizineTablets I.P.10mg.

Ciprofloxacin Tablets I..P. .500mg.

Co-Trimoxazole Tablets I.P.160/800mg.

Chlorpheneramine MaleateTablets I.P.2mg.

Diethyl Carbamazine Citrate Tablets I.P.100mg.

Diazepam Tablets I.P. 5mg.

Diclofenac Sodium Tablet I.P. 50mg.

Dicyclomine HCL Tablets I.P.10mg.

Erythromycin StearateTablets I.P.250mg.

Folic AcidTablets I.P.5mg.

Frusemide Tablets I.P.40mg.

GlibenclamideTablets I.P.2.5mg.

Glibenclamide Tablets I.P.5mg.

Ibuprofen Tablets I.P.200mg.

IbuprofenTablets I.P.400mg.

MetforminTablets I.P.500mg.

MetoclopramideTablets I.P.10mg.

MetronidazoleTablets I.P.200mg.

Metronidazole Tablets I.P.400mg.

Nifedepine Tablets I.P.10mg.

Norfloxacin Tablets I.P.400mg.

Ofloxacin Tablets I.P.200mg.

Paracetamol Tablets I.P.500mg.

Phenobarbitone Tablets I.P.30mg.

Phenobarbitone Tablets I.P.60mg.

Salbutamol Tablets I.P.4mg.

Albendazole Tablets I.P.400mg.

Mefenamic Acid Tablets I.P.500mg.

LIQUIDS & DRY POWDERAmoxycillin Dry Syrup 60ml. Bottle125mg./5ml.

Benzyl Benzoate Application Bottle100ml.

Cephalexin Oral Suspension (Dry) Bottle30ml.

Chlorhexidine/Cetrimide SolutionBottle1LTR

Glycerin Bottle500mg.

Mixture Carminative Bottle500ml.

Turpentine Liniment Bottle100ml.

POWDERORS Packets WHO Formula20.5 gm.

Purified TalcPacket500mg.

Production Facility

K.S.D.P Formulation Division has got infrastructure facilities to manufacture Pharmaceutical Formulations in various dosage forms Tablets, Capsules, Powders, Liquid preparations, Injections Ampoules, Vials & Transfusions, Eye Drops etc.Tablets SectionPlain and Coated (Film and Sugar) Tablets could be manufactured in the section by usingmodern machinery.40 Lakhs Tablets could be produced in 3 Shift Operation.

Capsule SectionThe company has the facility to manufacture Beta Lactam, non Beta Lactam and gelatin capsules.

Powder SectionThey have facilities for both ORS and external powder like Prickly Heat powder Feeling freshin threeperfumes.

Liquids SectionThere are separate area for the manufacture of oral Preparations (Syrup & Mixtures) and External preparations.

Parenteral SectionThey are having the facility to manufacture Ampoules and Vials.

RepackingThe facility to repackraw materials, chemicals and Liquids

Packing SectionThere is facility to pack Tablets & Capsules Products in Bulk (Plastic Container)andinBlister or Strips.

CHAPTER 4ORGANISATION CHART

The chairman is the head of the organisation who is appointed by the government and the chairman is assisted by the Managing Director of the company. The chairman changes with the change in the government on power. The Managing Director is further assisted by senior managers both commercial and technical managers, under whom the finance manager, company secretary, personnel manager, marketing manager, manager in engineering, production, project and quality control. The managers are assisted by the deputy mangers of production, purchase, stores, planning, maintenance etc. The deputy managers are further assisted by the junior managers of different levels. The junior mangers of different departments are further assisted by the staffs and workers.

CHAPTER 5DEPARTMENTAL ANALYSIS There are nine departments in the organisation which perform various activities to ensure the smooth functioning of its affairs.1. Marketing department2. Project department3. Purchase department4. Human resource department5. Production department6. Finance department7. Quality control8. Stores department9. Maintenance departmentMarketing department Marketing activities of the company is limited to sales aspect since it a public sector undertaking the marketing is not given much priority. The firm undertakes two kinds of sales; Government sales Open market salesGovernment sales The primary consumer is the KMSCL, Kerala Medical Service Corporation Ltd which performs the procurement and distribution function of the medicines manufactured by KSDP. The process starts while KMCL sends purchase order to KSDP as per the requirement of medicines in the government institutions under health department. With the purchase order KSDP prepares production plan and with reference to that the company purchase raw materials and packing materials for medicines and start the production. After the production process is completed the quality control department issue the quality analysis report. After the quality report is obtained the medicines are moved on to the stores and they are further dispatched from the stores to the 14 drugs warehouses of KMSCL as per the schedule of purchase order. Prior to the process of sending the medicines to warehouse the invoices are send to the warehouse and also fair copies of invoices are send to the KMSCL along with the test report. While receiving the invoices KMSCL will release the product from KSDP after completing the test formalities.Pricing Government supply price will be fixed at the L1 rate, which will be published by KMSCL after completing the tender formalities. Along with L1 rate a 15% price is added as per the store purchase manual of the government of Kerala. Purchase and production of medicines in KSDP happens when a letter of intent send by KMSCL every year. The production process at KSDP starts with the letter of intent, well in advance every year.Open Market Sales KSDP will get purchase orders from government institutions and local self government bodies like corporations, municipalities and punchayaths. Board and the cooperatives under the government of Kerala fix the price as government price + 5% margin. The sales are made to the private hospitals and relative cooperative hospitals.Pricing The government rate, as fixed and along with that a 30% margin rate is charged for the sales made to private hospitals and when the medicines are being sold to other states. The Drugs and customer act is followed while making sales.Department structure

Marketing Manager

Deputy Manager

Assistant manager (Sales)Assistant manager (Admn)

Junior Manager (Sales)Junior manager (Admn)

StenographerMedical RepresentativesSenior Assistant

TypistJunior Assistant

AttenderProject Department The project department performs the civil works including the construction of buildings facilities transportation etc. The department follows PERT and CPM techniques. The project department designs the production plant according to the anticipated production and as per the demand of production department. The size of the machinery is also considered before designing the plant which is done on the basis of anticipated orders. The plant needed to be designed in such a manner that it creates an environment acceptable for production, the plant need to be a sterile unit, which includes air lock rooms that facilitates the air and temperature. The air lock avoids the entrance of polluted air into the rooms and maintains a balanced temperature often at 20 degree Celsius. The design of plants also needs careful safety measures to avoid cross contamination. The betalactum plant of KSDP is separated from other production units due to this reason. The project department of KSDP is currently working on the renovation project, the company is planning to utilise the existing space efficiently for the production of non betalactum medicines. As its part the department expects to renovate the plant at a reduced cost of rupees 75laks on buildings which will otherwise costs for about Rs 22crore, resulting in a huge financial burden on the company. The facility cost is expected to reduce to 15 crore rupees which was otherwise expected to be, rupees 65 crore. The factors that are considered by the department before designing a plant are as follows; Location Availability of space Access to market Transportation facility Availability of raw materials Availability of skilled labour Requirement availability The company has already renovated one of its unutilised building spaces for the functioning of its quality control department. The Quality control department is one of the crucial departments in a pharmaceutical company, so the design of a QC unit needs equal considerations like that of production. The HVAC (Heat Ventilation and Air Conditioning and AHU (Air Handling Unit) are also essential facilities of a QC department. The project department accounts for the civil, electrical and mechanical works of the company. The site work of the department is carried out as a step by step process in the following way; Sub soil investigation Earth work Foundation Basement Superstructure Furnishing

Project Manager Department structure

Deputy Manager

Civil consultantPharma consultant

Supporting staff

Purchase Department Since its incorporation company produced generic drugs and the purchase department concentrates on availability of raw materials for production. The generic drugs that were produced in the company had low acceptance in the market due to the absence of a particular brand name as well as the lower cost of the product generated a question of quality in the minds of consumers. The purchase of raw materials by the company is through e- tendering where in the raw materials costing below one lakh is purchased through quotation. E tendering is done for purchasing raw materials costing above one lakh rupees. The e- tendering method had its own drawback, the small scale venders were hesitant to participate in the process due lack of expertise in e sector. So the government revised the process and at present, the e tendering is carried out only for the purchase of materials above 5lakh rupees and below 5 lakh the company go for quotation process. E tendering process The e tendering process starts with the formation of an e portal where the company publish an abstract of its tender. The public is free to participate in the tendering process and can accept the tender. The supplier will be selected through an automated process. This process is transparent since the selection process is automated. Every purchase in the company is carried out as per the store purchase manual. The company is bound to pay 80 % of its cost immediately at the receipt of goods while no advance payments will be made. The remaining 20% of the cost will be paid after the quality checking. All the payments for purchase will be made online. The purchase committee is involved in every purchase and after the bidding process the committee will conduct a meeting, the minutes of the meeting will be prepared and the purchase manager will issue the order.The Process The step by step process of purchase in the department; E tendering or tender invitation Tender opening Technical evaluation Selection of supplier Issue of purchase order While performing the technical evaluation, if the material is not of L1 price the second alternative L2 will be selected. L represents the lowest possible price of the product. The purchase committee makes the decision with regard to the L1 and L2 price and after the decision is being made that will be disposed to the purchase department for making the purchase. The materials can be purchased from the local market itself provided the cost is below 15000 rupees. The production was enhanced in the year 2009-2010 with sufficient orders from KMSCL and subsequently it came down in 2013-2014. The company has its drawback of loosing orders due to lack of efficiency in fulfilling the orders and especially on time.

The movement of materials happens in firm in the following manner;

Quality ControlStock Stores Purchase

Finance departmentPurchase department

The materials move to stores immediately on purchase and they are kept as stock till it is moved on to the quality control department for the quality checking. After the quality analysis the department issues GRN (Goods Received Note) and the purchase document is made by the purchase department and is send to the finance department for the payment of money.

Deputy Manager Department Structure

Assistant Manager(Purchase & planning)

Assistant Manager (Purchase)

Engineering Trainee Sr. AssistantGraduate trainee

Attender

HR Department The HR department is responsible for the welfare of the employees. The department makes decision on the selection and recruitment of employees, their payroll mechanisms and the attendance rate. Other fringe benefits are provided to the employees with reference to the acts as well as after the discussion made with the District Labour Officer (DLO). The number of holidays and ESI benefits etc are decided by the HR department. The working hours is divided into four shifts of 8hours respectively, it contains a general shift along with shifts from 6:30-2:30, 2:30-9:30, 9:30-6:30. The company follows all national holidays and in every month the employees are awarded 3more days as holidays. Overtime work is given double the wage rate. The different kinds of employees include permanent staff, contract workers, casual workers and trainees. The company follows punching system and the attendance is the base for their pay. The ESI benefits are given to the employees. The employees with wage rate above Rs 15000 are excluded from the benefits. The recruitment process of the employees is through the Public Service Commission (PSC) basis. Whereas the last recruitment through PSC basis happened before 28 years and now the recruitment is done on contract basis as well as through employment exchanges and on daily wage basis.There are two approved trade unions functioning in the company, AITUC and CITU and are choosen through elections. The Voluntary Retirement Scheme (VRS) was given to the employees in two years 1994 and 2004. Vitamin A plant also lead to the transfer of employees. The Vitamin A plant and the KSDP had same Memorandum of Association and Articles of Association, so the managers in both plants are bound to work together and when the Vitamin A plant was closed most of the employees were appointed in KSDP. Vitamin A and KSDP plant had separate financial records. The Chairman and Managing Director of the company will be appointed by the government. The political parties have a major role in the appointment of people in the organisation. The employees are given 14 casual leaves along with holidays on Sunday and an average of 15holidays annually. The employees also have 33 earned leaves per yearDepartment structure

MANAGER, PERSONNEL AND ADMINISTRATION

PersonnelLegal consultantEOA establishment and office administration

Senior assistantSecurity officerHouse keeping

EDPGeneral assistantSecurity guardsAssistant Manager

StenographerJunior assistant

Section staff

Section staffGraduate trainee

Graduate trainee

DCP trainee

Attender

Senior assistant

Production Department Production is the functional area responsible for turning inputs into finished outputs through a series of production processes. The Production Manager is responsible for making sure that raw materials are provided and made into finished goods effectively. He or she must make sure that work is carried out smoothly, and must supervise procedures for making work more efficient and more enjoyable. There are four sub-divisions for production department which stands for the production of various products in KSDP.1. Tablet section2. Capsule section 3. Packing section4. Liquids/ORS section

Manager Production

ORS/ liquid section

Charge handForemanProduction ExecutiveForemanCharge handAssistant OperatorForemanCharge handOperatorPacking sectionAssistant OperatorCapsule SectionForemanOperatorSenior operator Charge handTablet section

Production executiveProduction ExecutiveAssistant Manager

Operator

Tablet Section Atabletis apharmaceuticaldosage form which comprises a mixture of active substances andexcipients, usually inpowderform, pressed or compacted from a powder into a solid dose. The excipients can include diluents, binders or granulating agents, glidants (flow aids) and lubricants to ensure efficient tableting; disintegrents to promote tablet break-up in the digestive tract; sweeteners or flavours to enhance taste; and pigments to make the tablets visually attractive. A polymer coating is often applied to make the tablet smoother and easier to swallow, to control the release rate of the active ingredient, to make it more resistant to the environment (extending its shelf life), or to enhance the tablet's appearance.Process

Capsule Section Capsule is the most versatile of all dosage forms. These are solid dosage forms in which one or more medicinal and inert ingredients are enclosed in a small shell or container usually made of gelatin.

Raw Material SamplingProcess QC not approved Raw material handlingQC Test QC approved

Raw Material Dispensing

Sifting

MixingMilling (if required) Granulation

Blending

IPQC Test IPQC not approved

Powder Filling

Polishing

Inspection Capsule filling Remove empty

Rejected CapsuleIPQC Test Capsule IPQC not approved IPQC approved Primary Packing

Inspection (if required)

Secondary Packaging

QC TestProduct Packing QC not approved repacking QC approved product There are two types of capsules, hard and soft. The hard capsule is also called two piece as it consists of two pieces in the form of small cylinders closed at one end, the shorter piece is called the cap which fits over the open end of the longer piece, called the body. The soft gelatin capsule is also called as one piece. Capsules are available in many sizes to provide dosing flexibility. Unpleasant drug tastes and odours can be masked by the tasteless gelatin shell. The administration of liquid and solid drugs enclosed in hard gelatin capsules is one of the most frequently utilized dosage forms.

Packing section The packing section is responsible for the perfect and safe packaging of medicines. The capsules and tablets produced under the production department is moved on to the packing section where it is undergone stripping process which is considered to be the primary packing process and further the stripped medicines are packed in paper boxes and finally into the cartels. The packing section along with appropriate packing performs the function of sealing the manufacturing date, expiry period and net weight. The sealing process is done manually in the company and the secondary packing and tertiary packing is also done manually by the labourers. The primary packing is fully automated where the medicines are packed by the stripping machine itself. In the case of liquid medicines the bottling process is done by machines whereas the labelling and sealing is done manually. The capsules and tablets are packed in the proportion of 10*10*60 where each cartel contains a set of 60 boxes containing 10 strips of 10 capsules each.Liquid and ORS section The liquid and ORS section functions away from the tablet and capsule sections and the packing process is also done separately from the other two sections. The liquid medicines are prone to higher rate of risks and thus they are produced and packed there itself. The primary packing is bottling and there after the medicines will be undergoing the secondary packing process and finally they will be the tertiary process where the bottles will be stored in big cardboard boxes called cartels and further they are transported to the storage unit.Finance Department The finance department is responsible for the monetary transactions happening in the organisation with regard to production, purchase maintenance, project and other subsequent departments. The department follows double entry system of book keeping and the bank of the company is IDBI Bank where the transactions happen through the bank account opened in IDBI. The company had started with an Authorized capital of Rs 950, 00,000 and aided capital 979, 04000. The accounts of the company are computerized and audited accounts are completed up to the year 2012- 13. Procurement operations are mainly through e-tendering process. Payments are made to suppliers through the electronic mode. Companies salaries benefits are mainly paid to employees by transfer and crediting to salary account opened by each employee with IDBI bank. Government of Kerala provides funds for operation of the business by state budget allocations. The company also doing welfare activities to the employees, there is group of activity scheme of LIC for providing eligible gratuity to employees on cessation of services. All employees benefits from employees provident fund and employees state insurance schemes. Company canteen provides meals to employees as a subsidiary rate of RS 6. While analysing the financial department of the company it can be found out that there is no out flow of fund because the company has not even started repayment of term loans given in various from 1998 to 2013-14. If company pays the entire due amount it will affect the working capital of the company, so it is not willing to pay the amount. In 1994 company faced huge crises its history, they received letter of intent from KMSCL for supplying medicines. With that they purchased required raw materials but further KMSCL denied the issue of purchase order. They were unable to sell all those products manufactured and it blocked companies working capital. For the further operation of company has taken loans form government of Kerala. Another problem happened in 2002, when the companys Vitamin A Plant was closed. It happened because of improper planning. The plant was not viable and the company did not get any profit from of that. Due to this company had an offer for VRS to all those employees who were working there and it resulted in huge financial burden on the company. Company received its highest amount purchase order form KMSCL in 2010-11 with an amount of 39crores. The latest development, BETALACTAM PLANT, started with an initial investment of Rs 9crore in this project. In the financial year 2010-11 the company made a profit of RS 2, 71, 42,010. In the year 2011-12 company had a profit RS 2, 52, 79, 041 During the year 2011-12 company has received financial assistance of Rs 160 lakh from government of Kerala. In 2012 -13 company reported loss of Rs 189 lakh during the period under review against the profit of RS 253 lakh during the previous year, due to drastic decrease in revenue from operations. Accumulated loss of the company is RS 9312.35 lakh.

COMPARATIVE BALANCESHEETS FOR THE YEARS 2011, 2012 , 2013As on 31-3-2011As on 31-3-2012As on 31-3-2013

EQUITY AND LIABILITIESShare holders fundShare capital Reserve and surplus

TOTAL

Non Current LiabilitiesLong term borrowingDiffered tax liability (net)

Other long term liabilities

TOTAL NON-CURRENT LIABILITIES

Current LiabilitiesTrade payableOther current liabilitiesShort term provisions

TOTAL LIABILITIES ASSETS Non Current Assets Fixed assetstangible assetscapital work in progresslong term loans and advances

TOTAL NON-CURRENT ASSETSCurrent Assets Inventories Trade Receivables Cash and Bank Balances short term loans and advances other current assets

TOTAL CURRENT ASSETSTOTAL ASSETS

9,07,94,000

(93,76,12,220)

9,07,94,000

(91,23,33,179)

9,07,94,000

(93,12,34,857)

(84,68,18,220)(82,1539,179)(84,0440,857)

34,76,16,1386,48,9374,83,98,015

34,61,08,5677,09,6894,77,65,411

40,63,96,9968,09,4944,71,99,879

39,66,63,09039,45,83,66745,44,06,369

4,78,84,24671,32,91,98037,46,6344,17,02,85979,67,31,81125,45,6453,73,19,59382,13,51,67922,58,422

76,49,22,86084,09,80,31586,09,29,694

31,47,67,73041,40,24,80247,48,95,206

1,24,60,8888,27,33,9791,17,44,015

11,97,38,3809,33,30989,34,776

10,88,45,0592,03,06,9633,26,97,451

10,69,38,88212,96,06,46516,18,49,473

5,76,41,9924,25,91,2098,70,60,0032,05,35,644-

7,15,20,86110,43,47,3779,32,19,6371,45,30,5057,99,957

10,20,59,0416,38,00,77112,97,38,9391,65,15,3829,31,600

20,78,28,84828,44,18,33731,30,45,733

31,47,67,73041,40,24,80247,4895,206

Inference from the balance sheet The Balance Sheet of the company shows a negative reserve and surplus. In 31-3-2013 Balance Sheet showed an increase of Rs 6,02,88,429 as compared to previous year in long term borrowings of the company. Tangible assets of the company decreased by 1,08,93,321 as compared 31-3-2012 in 31-3-2013. There was an increase of total non- current assets of Rs.32243008 in 31-3-2013 as compared to 31-3-2012. The Balance Sheet shows a decreasing cash & bank balance the last three years

Capital Structure of KSDP limited The company has an authorized capital of Rs. 9,50,00,000 of Rs 100 each. The company have only one class of shares Equity Share The shares are held wholly by governor of Kerala and his nominee

Ratio AnalysisCurrent Ratio: This ratio establishes a relationship between current assets and current liabilities. The objective of computing this ratio is to measure the ability of the firm to meet its short term obligations and to reflect the short-term financial strength or solvency of a firm.

Current ratio = Current Assets Current LiabilitiesCurrent Ratio Analysis;Particulars/year ended31-3-201131-3-201231-3-2013

Current Assets20,78,28,84828,44,18,33731,30,45,733

Current Liabilities76,49,22,86084,09,80,31586,09,29,694

Current ratio.26.33.36

Interpretation: The ratio indicates that the companies liability is more than its assets. As compared to 31-3-2011 the company improved its current assets but the companys current liabilities are still more than the current assets.

Profitability RatioThe primary objective of a business undertaking is to earn profit. Profitability ratios are calculated to measure the overall objective of the business.

Net profit RatioThis ratio is used to measure the relationship between net profit and net sales.Net Profit Ratio = Net Profit Net Sales

Net Profit Ratio Analysis;Particulars/year ended31-3-201131-3-201231-3-2013

Net Profit2,71,42,0102,52,79,041-1,89,01,678

Net Sales28,91,47,59033,25,08,09613,43,62,902

Net Profit ratio 0.090.076-0.14

Interpretation: By analyzing the table we can understand company made profit in the years 2010-2011& 2011-2012. But the profit is showing a decreasing tendency. In 2012-2013, the company incurred a loss of Rs 1, 89, 01,678. During this year companys sales also decreased.

Department Structure

Finance manager

Junior AssistantCashierSenior AssistantSenior AccountantGraduate TraineeSenior AssistantProvident FundAccounts

Quality control Department The QC is important department in every manufacturing organisation, especially in KSDP, being a medicine manufacturing firm the quality constraints need to be followed to a higher extent since the quality of medicines matters in the life of individuals. The QC has its role in every stage of production where from the purchase of raw materials till the output is generated, at every stage of production the quality checking is done by the QC department. The quality of the raw materials being transported from other states is examined before making the payment itself, thereafter while the production process starts the quality checking is done just before the production and in each stage the samples are collected and sent for quality checking. The company functions with the certifications from different organisations. The Drug manufacturing certificate issued by the drugs control office is the prime among them. Good Manufacturing Practise (GMP) certificate is also issued by the drug control office and the company is bound to follow the GMP standards. The GLP certificate or the Good Laboratory Practise certificate, Rectified certificate to store spirits, Fire and Safety certificates, Pollution Control certificates are some of the quality certifications that are issued to the company for its facilities.

Stores Department The store is the place where the materials are stored before and after the commencing of production activities. The store department collects the raw materials and stores it till it is subjected to quality checking facilitated by the quality control department. The activities in the stores are regulated by the stores manual. The department also takes care of the output generated out of the production department. The store regulates the flow of materials in and out of the firm. The firm follows FIFO method or first in first out method where the raw materials that are entered into the firm first will be sending to the production process and likewise the output as well. The record is kept in this regard and is evaluated periodically.

Maintenance Department The maintenance department does the maintenance activities of the entire firm, be it the production or other aspects. The maintenance work is classified under electrical and mechanical section. The equipment maintenance is performed as specified in the purchase manual of respective machines and the firm as such follows a pattern of preventive maintenance. The lubrications are done periodically so as to keep the machines working without any failure. The department keeps spare equipments and parts so as to ensure continuous flow of production without any hindrance. The machines will be replaced as soon as they are found damaged. Those equipments that are found completely damaged are sold out in auction.

Department structure

Electrical sectionMechanical section

Assistant managerManager

ElectricalAir conditioner

AC MechanicForemenBoilerVehicle

Water treatmentChargehandMechanical

Driver

OperatorForemen

OperatorCharge hand

Mechanic

CHAPTER 6SWOT ANALYSISStrengths

Public sector undertaking Quality Medicines Orders from neighbouring states Low cost

Weaknesses

Slow decision making Outdated technology Political interference Absence of proper recognition Change in government policies Old Production plants following GMP standards as on establishment Absence of proper waste treatment mechanisms Improper storage

Opportunities

Availability of space Availability of plant and other facilities Retail outlets facilitating direct sales near hospitals Takeover by Hindustan Latex New Betalactum plant

Threats

Competitors strategy Bulk wastage on cancellation of orders by buyers Delay in disposal of expired medicines

InterpretationStrengths The company has the strength of being a public sector undertaking. The government acts a financing agent for the company, providing sufficient funds for its operations through loans and by other means. The loans provided are interest loans and it has the advantage of flexibility in repayment. Being a government firm, the medicines produced in the company has the advantage of sales to the government hospitals and KMSCL acquires the medicines in bulk and makes sales. The production of quality medicines is strength of KSDP where the medicines are made fulfilling the quality specifications are met at a lower cost. The costs of the medicines are much lower than that of its competitors. The company acquires purchase order form its neighbouring states like Andhra Pradesh and they are stable in making the purchase.

WeaknessesThe decision making within the firm is slow as it has to fulfil the norms of government. Making a purchase for the company takes lot of time and effort to fulfil its formalities and requirements and to get sanction from government. The technical developments are not visible in the production plants since the firm still works with older technology. Political interference is another drawback where the political parties and trade unions play a major role in the firm. They are both beneficial and at times it is a weakness since the political parties has the power of recommending people for job and thus the appointment of labourers is under its influence since incorporation. Changing government and its policies affect the company, the Chairman and Managing Director of the company are appointed at the interest of the political parties in power, and the efficient people within the company are not referred for the post. Other than government hospitals generally people dont prefer to use the medicines since they are not well recognised in the market. Opportunities The company has vast opportunities for its revival and growth. It has sufficient space for advancement, proper facilities and well equipped buildings are available. There is huge warehouse which is being kept closed that has the capacity of over 3 times the capacity of the existing storage unit. The old Vitamin A plant is being kept unutilised and the machines are rusting, the company can make use of the plant and make sales of the machineries before further damage and get the money for its functioning. The company is planning to open its outlets near to every hospital facilitating its direct sales. This is a plan of higher chances of success. The Hindustan Latex is planning for the takeover of firm, enabling it to upgrade to a Central government firm. The new betalactum plant is another growth opportunity for the firm. Threats The production plant following the GNP standards existed from the time of its incorporation is a threat to the firm. The absence of a proper waste treatment mechanism is one of the major threats to the firm. The effluent treatment plant is not working and the waste is not treated. The delayed disposal of wasted medicines is the result of lengthy procedures for getting government approval for disposing the medicines. The competitors charge high price on the medicines but their strategy of sales make them unbeatable for other companies and as KSDP is concerned, the firm cannot spend more to improve the sales while the competitors spend large amounts as for doctors to prescribe their medicines. The unexpected cancellation of orders lead to bulk wastage of medicines and it is a threat since the company invest on the production and it end as mere waste if the sales did not happen within the expiry period. The storage of the medicines are not proper since the capacity of the store is less, the medicines are kept in the plant itself till it is being transported.

CHAPTER 7FINDINGS, SUGGESTIONS AND CONCLUSIONFindings The liquidity position of the company is unfavourable as the current liabilities exceeds its current assets

The comparison of profitability ratios of past 3 years shows that the net profit of the company is showing decreasing trend over the years

The company has reported a loss of Rs 189lakh during the financial year 2012-2013 against a profit of Rs 253 lakh due to decrease in revenue from operation

There is an increase in the long term borrowing of the company and it has not started repayment of loans given in various years from 1998 to 2012-2013

The accumulated loss of the company is Rs 9312.35 lakh which is more than 50 % of its net worth

The absence of a proper waste disposal system and a sewage treatment plant is a drawback for the company

Old manufacturing unit where the production process is still carried out is following the GMP standards as on its establishment

Suggestions

The company should maintain proper balance with under the reserves and surplus as soon as it earns some amount of profit in future so as to improve the liquidity position.

The sales need to be maximised despite of its limitations. A proper marketing strategy is to be followed.

As found out by the Principal Secretary ,the annual report mentions that, the loss of the company is understand due to non provision of contingent liabilities and non provision in capital account, thus proper provisions need to be maintained.

The company can repay its debt to a certain extend by the sale of equipments in Vitamin A plant and its facilities.

The company should maintain proper records on fixed assets and physical verification should be done periodically.

The company need to concentrate more on its functioning ensuring economy in all spheres of activities.

The waste disposal and waste management system need to be implemented.

Conclusion The Kerala State Drugs and Pharmaceuticals is a government undertaking which was established with a mission cure for all with its logo stating quality that cures. The company functions with its mission of cure for all and they provide quality medicines to the government hospitals, targeting the poor patients. The medicines are distributed at a lower rate at the hospitals by the Kerala State Medical Service Corporation. The KSDP is in path of revival. Despite of its accumulated loss and diminishing performance standard, the company goes for advancement. It has found its own survival techniques, the investment on new BETALACTUM plant is one among them. The unutilised buildings and facilities are planned to be restructured so as to make it available for production purpose. The company is planning to expand its market niche by introducing its retail outlets near the government hospitals all over the state thereby facilitating improved sales and profit margin. The Hindustan Latex a Central Government firm is planning a takeover of the firm and thus converting it into a Central Government undertaking. Many workers who have been working there on contract basis for long are expecting a permanent job thereby and the company as such is expecting a future, a prosperous life ahead, while accepting the proposal for takeover of the firm. It has the potential and a history of glorious life with its Vitamin A plant in 1980s, the only plant producing vitamin A in Kerala. The company is in its path to regain its glory of past and as such its highly dedicated workforce.