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Working Capital Management on Cadila Healthcare Limited.

Submitted to

Gujarat University for the degree of

Master in Commerce

Faculty: Commerce

Subject: Working Capital Management on Cadila Healthcare Limited.

By

Moin A. Panja .

H. A .College of Commerce.

College Seat No. 36 Year 2014.

Exam Seat No. Year 2014.

Under the guidance of

Prof. P. C. Raval

H. A. College of Commerce.

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A first for the nation...

Cadila Healthcare Limited

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H. A. College of Commerce.

Near Law Garden,

Ahmedabad

CERTIFICATE

This is to certify that Mr. Moin A. Panja has worked and completed

his Project Work for the degree of MASTER IN COMMERCE in the

faculty of COMMERCE in the subject of ACCOUNTANCY on Title

of project work to be written “ Working Capital Management on

Cadila Healthcare Limited .” under my supervision. It is his own

work and facts reported by his personal findings and investigations.

Name & Signature of Guide Date of submission:

Name & Signature of Professor in Charge/ Director/Principal of theInstitute

Stamp of the Institute with date

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Declaration by student

I the undersigned Mr. Moin A. Panja here by, declare that this

project work entitled “Working Capital Management on Cadila

Healthcare Limited “is a result of my own research work and has not

been previously submitted to any other University for any other

examination.

I here by further declare that all information of this document has

been obtained and presented in accordance with academic rules and

ethical conduct.

College Seat No . 36 Year 2014 .

Exam Seat No. 784 Year 2014 .

Date Name & Signature

Moin A. Panja

Place : Ahmedabad ResearchScholar

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PREFACE

To start any business, First of all we need finance and the success of that business

entirely depends on the proper management of day-to-day finance and the

management of this short-term capital or finance of the business is called Working

capital Management.

Working Capital is the money used to pay for the everyday trading activities carried

out by the business - stationery needs, staff salaries and wages, rent, energy bills,

payments for supplies and so on.

I have tried to put my best effort to complete this task on the basis of skill that I have

achieved during the study of M.com in the institute.

I have tried to put my maximum effort to get the accurate statistical data. However

I would appreciate if any mistakes are brought to my by the reader.

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ACKNOWLEDGEMENT

In course of M.com my college had given me opportunity to prepare financial report

on Cadila Healthcare Limited. Therefore I was asked to prepare a project report on

Working Capital Management at Cadila Healthcare Limited.. Moreover by this way I

got an opportunity to be financial management practically. While preparation of this

report many people given me help and support. I would be happy to appreciate all of

them and give my thanks to all who help and give them support during preparation of

the report.

I thankful to the faculty that provide such great opportunity to get practical knowledge

about financial management and guide us in preparation of project so I would like to

thank Prof. P.C. Raval to provide us guideline for preparation of project report .

Date : 31-03-2014 Moin A. Panja

Place: Ahmedabad

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Chapter No. Title of Chapter Page No.

Chapter :- 1 Introduction 9

1.1 History of Indian Pharmaceutical industry 10

Chapter :- 2 Introduction to Cadila Healthcare Limited 22

2.1 History and development 24

2.2 Company profile 40

2.3 Stock performance history 44

2.4 Products plants 46

2.5 Products 47

Chapter :- 3 Research Methodology 50

3.1 Research Objective 51

3.2 Scope of Research 51

3.3 Data Type 51

3.4 Data Sources 51

3.5 Research Design 51

3.6 Tools used for analysis 51

3.7 Literature review 52

3.8 Limitations for the study 52

Chapter :- 4

Theoretical Framework of Working Capital

Management 53

4.1 Working capital Management 54

4.2 Concept of Working Capital 56

4.3 Classification of working capital 57

4.4 Importance or Advantage the Working Capital 59

4.5 Factors determining the working capital requirements 60

4.6 Sources of working capital 61

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4.7 Different aspects of Working capital management 64

4.8 Working capital analysis 70

Chapter :- 5 Data Analysis and interpretation 75

5.1 Working Capital Statement 76

5.2 Liquidity position 80

5.3 Comparative balance sheet statement 81

5.4 Trend Percentage 88

5.5 Ratio Analysis 91

Findings 106

Suggestion 106

Conclusion 107

Bibliography 108

Annexure

Balance sheet for Cadila Healthcare limited. 109

Profit and loss account of Cadila Healthcare limited 111

Cash flow statement 113

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CHAPTER :- 1

INTRODUCTION :

HISTORY OF INDIAN PHARMACEUTICAL INDUSTRY

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1.1 History of Indian Pharmaceutical industry

Industry Definition:-

“The Indian pharmaceutical industry is a success story providing employment for

millions and ensuring that essential drugs at affordable prices are available to the vast

population of this sub-continent.”

Richard Gerster

The Pharmaceutical industry in India is the world's third-largest in terms of volume.

According to Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers,

the total turnover of India's pharmaceuticals industry between 2008 and September

2009 was US$21.04 billion, while the domestic market was worth US$12.26 billion.

The industry holds a market share of $14 billion in the United States.

According to Brand India Equity Foundation, the Indian pharmaceutical market is

likely to grow at a compound annual growth rate (CAGR) of 14-17 per cent in

between 2012-16. India is now among the top five pharmaceutical emerging markets

of the world.

Exports of pharmaceuticals products from India increased from US$6.23 billion in

2006–07 to US$8.7 billion in 2008–09 a combined annual growth rate of 21.25%.

According to PricewaterhouseCoopers (PWC) in 2010, India joined among the league

of top 10 global pharmaceuticals markets in terms of sales by 2020 with value

reaching US$50 billion.

The government started to encourage the growth of drug manufacturing by Indian

companies in the early 1960s, and with the Patents Act in 1970. However, economic

liberalization in 90s by the former Prime Minister P.V. Narasimha Rao and the then

Finance Minister, Dr. Manmohan Singh enabled the industry to become what it is

today. This patent act removed composition patents from food and drugs, and though

it kept process patents, these were shortened to a period of five to seven years.

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The lack of patent protection made the Indian market undesirable to the multinational

companies that had dominated the market, and while they streamed out. Indian

companies carved a niche in both the Indian and world markets with their expertise in

reverse-engineering new processes for manufacturing drugs at low costs. Although

some of the larger companies have taken baby steps towards drug innovation, the

industry as a whole has been following this business model until the present.

India's biopharmaceutical industry clocked a 17 percent growth with revenues of Rs.

137 billion ($3 billion) in the 2009–10 financial year over the previous fiscal. Bio-

pharma was the biggest contributor generating 60 percent of the industry's growth at

Rs. 88.29 billion, followed by bio-services at Rs. 26.39 billion and bio-agri at Rs.

19.36 billion.

In 2013, there were 4,655 pharmaceutical manufacturing plants in all of India,

employing over 345 thousand workers.

Pharmaceutical industry today:-

The number of purely Indian pharma companies is fairly less. Indian pharma industry

is mainly operated as well as controlled by dominant foreign companies having

subsidiaries in India due to availability of cheap labor in India at lowest cost. In 2002,

over 20,000 registered drug manufacturers in India sold $9 billion worth of

formulations and bulk drugs. 85% of these formulations were sold in India while over

60% of the bulk drugs were exported, mostly to the United States and Russia. Most of

the players in the market are small-to-medium enterprises; 250 of the largest

companies control 70% of the Indian market. Thanks to the 1970 Patent Act,

multinationals represent only 35% of the market, down from 70% thirty years ago.

Most pharma companies operating in India, even the multinationals, employ Indians

almost exclusively from the lowest ranks to high level management. Homegrown

pharmaceuticals, like many other businesses in India, are often a mix of public and

private enterprise.

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In terms of the global market, India currently holds a modest 1–2% share, but it has

been growing at approximately 10% per year. India gained its foothold on the global

scene with its innovatively engineered generic drugs and active pharmaceutical

ingredients (API), and it is now seeking to become a major player in outsourced

clinical research as well as contract manufacturing and research. There are 74 US

FDA-approved manufacturing facilities in India, more than in any other country

outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications

(ANDA) to the FDA are expected to be filed by Indian companies. Growth in other

fields notwithstanding, generics are still a large part of the picture. London research

company Global Insight estimates that India’s share of the global generics market will

have risen from 4% to 33% by 2007. The Indian pharmaceutical industry has become

the third largest producer in the world and is poised to grow into an industry of $20

billion in 2015 from the current turnover of $12 billion

Patent:-

As it expands its core business, the industry is being forced to adapt its business

model to recent changes in the operating environment. The first and most significant

change was the 1 January 2005 enactment of an amendment to India’s patent law that

reinstated product patents for the first time since 1972. The legislation took effect on

the deadline set by the WTO’s Trade-Related Aspects of Intellectual Property Rights

(TRIPS) agreement, which mandated patent protection on both products and

processes for a period of 20 years. Under this new law, India will be forced to

recognize not only new patents but also any patents filed after 1 January 1995. Indian

companies achieved their status in the domestic market by breaking these product

patents, and it is estimated that within the next few years, they will lose $650 million

of the local generics market to patent-holders.

In the domestic market, this new patent legislation has resulted in fairly clear

segmentation. The multinationals narrowed their focus onto high-end patients who

make up only 12% of the market, taking advantage of their newly bestowed patent

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protection. Meanwhile, Indian firms have chosen to take their existing product

portfolios and target semi-urban and rural populations.

Product development:-

Indian companies are also starting to adapt their product development processes to the

new environment. For years, firms have made their ways into the global market by

researching generic competitors to patented drugs and following up with litigation to

challenge the patent. This approach remains untouched by the new patent regime and

looks to increase in the future. However, those that can afford it have set their sights

on an even higher goal: new molecule discovery. Although the initial investment is

huge, companies are lured by the promise of hefty profit margins and has a legitimate

competitor in the global industry. Local firms have slowly been investing more

money into their R&D programs or have formed alliances to tap into these

opportunities.

Small and medium enterprises:-

As promising as the future is for a whole, the outlook for small and medium

enterprises (SME) is not as bright. The excise structure changed so that companies

now have to pay a 16% tax on the maximum retail price (MRP) of their products, as

opposed to on the ex-factory price. Consequently, larger companies are cutting back

on outsourcing and what business is left is shifting to companies with facilities in the

four tax-free states – Himachal Pradesh, Jammu & Kashmir, Uttaranchal and

Jharkhand. Consequently a large number of pharmaceutical manufacturers shifted

their plant to these states, as it became almost impossible to continue operating in

non-tax free zones. But in a matter of a couple of years the excise duty was revised on

two occasions, first it was reduced to 8% and then to 4%. As a result the benefits of

shifting to a tax free zone was negated. This resulted in, factories in the tax free zones,

to start up third party manufacturing. Under this these factories produced goods under

the brand names of other parties on job work basis.

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As SMEs wrestled with the tax structure, they were also scrambling to meet the 1 July

deadline for compliance with the revised Schedule M Good Manufacturing Practices

(GMP). While this should be beneficial to consumers and the industry at large, SMEs

have been finding it difficult to find the funds to upgrade their manufacturing plants,

resulting in the closure of many facilities. Others invested the money to bring their

facilities to compliance, but these operations were located in non-tax-free states,

making it difficult to compete in the wake of the new excise tax.

Challenges:-

Even after the increased investment, market leaders such as Ranbaxy and Dr. Reddy’s

Laboratories spent only 5–10% of their revenues on R&D, lagging behind Western

pharmaceuticals like Pfizer, whose research budget last year was greater than the

combined revenues of the entire Indian pharmaceutical industry. This disparity is too

great to be explained by cost differentials, and it comes when advances in genomics

have made research equipment more expensive than ever. The drug discovery process

is further hindered by a dearth of qualified molecular biologists. Due to the disconnect

between curriculum and industry, pharma in India also lack the academic

collaboration that is crucial to drug development in the West and so far.

Relationship between pharmaceuticals and biotechnology:-

Unlike in other countries, the difference between biotechnology and pharmaceuticals

remains fairly defined in India. Bio-tech there still plays the role of pharma’s little

sister, but many outsiders have high expectations for the future. India accounted for

2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-

Pacific region and 11th in the world in number of biotech. In 2004-5, the Indian

biotech industry saw its revenues grow 37% to $1.1 billion. The Indian biotech

market is dominated by bio pharmaceuticals; 75% of 2004–5 revenues came from bio-

pharmaceuticals, which saw 30% growth last year. Of the revenues from bio-

pharmaceuticals, vaccines led the way, comprising 47% of sales. Biologics and large-

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molecule drugs tend to be more expensive than small-molecule drugs, and India hopes

to sweep the market in bio-generics and contract manufacturing as drugs go off patent

and Indian companies upgrade their manufacturing capabilities.

Most companies in the biotech sector are extremely small, with only two firms

breaking 100 million dollars in revenues. At last count there were 265 firms registered

in India, over 75% of which were incorporated in the last five years. The newness of

the companies explains the industry’s high consolidation in both physical and

financial terms. Almost 50% of all biotech are in or around Bangalore, and the top ten

companies capture 47% of the market. The top five companies were homegrown;

Indian firms account for 62% of the bio-pharma sector and 52% of the industry as a

whole.[4,46] The Association of Biotechnology-Led Enterprises (ABLE) is aiming to

grow the industry to $5 billion in revenues generated by 1 million employees by 2009,

and data from the Confederation of Indian Industry (CII) seem to suggest that it is

possible.

Comparison with the US:-

The Indian biotech sector parallels that of the US in many ways. Both are filled with

small start-ups while the majority of the market is controlled by a few powerful

companies. Both are dependent upon government grants and venture capitalists for

funding because neither will be commercially viable for years. Pharmaceutical

companies in both countries have recognised the potential effect that biotechnology

could have on their pipelines and have responded by either investing in existing start-

ups or venturing into the field themselves. In both India and the US, as well as in

much of the globe, biotech is seen as a hot field with a lot of growth potential.

Relationship with IT:-

Many analysts have observed that the hype around the biotech sector mirrors that of

the IT sector. Biotech colleges have been popping up around the country eager to

service the pools of students that want to take advantage of a growing industry. The

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International Finance Corporation, the private investment arm of the World Bank,

called India the "centerpiece of IFC’s global biotech strategy." Of the $110 million

invested in 14 biotech projects investment globally, the IFC has given $43 million to

4 projects in India. According to Dr. Manju Sharma, former director of the

Department of Biotechnology, the biotech industry could become the "single largest

sector for employment of skilled human resource in the years to come". British Prime

Minister Tony Blair was similarly impressed, citing the success of India’s biotech

industry as the reason for his own country’s own biotech opportunities. Malaysia is

also looking to India as an example for growing its own biotech industry.

Support Indian Government:-

The Indian government has been very supportive. It established the Department of

Biotechnology in 1986 under the Ministry of Science and Technology. Since then,

there have been a number of dispensations offered by both the central government and

various states to encourage the growth of the industry. India’s science minister

launched a program that provides tax incentives and grants for biotech start-ups and

firms seeking to expand and establishes the Biotechnology Parks Society of India to

support ten biotech parks by 2010. Previously limited to rodents, animal testing was

expanded to include large animals as part of the minister’s initiative. States have

started to vie with one another for biotech business, and they are offering such

goodies as exemption from VAT and other fees, financial assistance with patents and

subsidies on everything ranging from investment to land to utilities.

Foreign investment:-

The government has also taken steps to encourage foreign investment in its biotech

sector. An initiative passed earlier this year allowed 100% foreign direct investment

without compulsory licensing from the government. In April, a delegation headed by

the Kapil Sibal, the minister of science and technology and ocean development,

visited five cities in the US to encourage investment in India, with special emphasis

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on biotech. Just two months later, Sibal returned to the US to unveil India’s biotech

growth strategy at the BIO2005 conference in Philadelphia.

Challenges:-

The biotech sector faces some major challenges in its quest for growth. Chief among

them is a lack of funding, particularly for firms that are just starting out. The most

likely sources of funds are government grants and venture capital, which is a

relatively young industry in India. Government grants are difficult to secure, and due

to the expensive and uncertain nature of biotech research, venture capitalists are

reluctant to invest in firms that have not yet developed a commercially viable product.

The government has addressed the problem of educated but unqualified candidates in

its Draft National Biotech Development Strategy. This plan included a proposal to

create a National Task Force that will work with the biotech industry to revise the

curriculum for undergraduate and graduate study in life sciences and biotechnology.

The government’s strategy also stated intentions to increase the number of PhD

Fellowships awarded by the Department of Biotechnology to 200 per year. These

human resources will be further leveraged with a "Bio-Edu-Grid" that will knit

together the resources of the academic and scientific industrial communities, much as

they are in the US.

Development In India :-

The Indian Pharmaceutical Industry today is in the front rank of India’s science-based

industries with wide ranging capabilities in the complex field of drug manufacture and

technology.

Facts about the Role of Pharmaceutical Industry in Indian Gross Domestic Product

(GDP):

Indian Pharmaceutical Industry ranks fourth in the world, pertaining to the volume of

sales.

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The estimated worth of the Indian Pharmaceutical Industry is US$ 6 billion.

The growth rate of the industry is about 13% per year.

Almost most 70% of the domestic demand for bulk drugs is catered by the Indian

Pharma Industry.

The Pharma Industry in India produces around 20% to 24% of the global Generic

drugs.

The Indian Pharmaceutical Industry is one of the biggest producers of the Active

Pharmaceutical Ingredients (API) in the international arena.

The Indian Pharma sector leads the science-based industries in the country.

Around 40% of the total pharmaceutical produce is exported.

55% of the total exports constitute of formulations and the other 45% comprises of

bulk drugs.

The Indian Pharma Industry includes small scaled, medium scaled, large scaled

players, which totals nearly 300 different companies.

As per the present growth rate, the Indian Pharma Industry is expected to be a US$ 20

billion industry by the year 2015.

The Indian Pharmaceutical sector is also expected to be among the Top Ten Pharma

based markets in the world in the next ten years

The sales of the Indian Pharma Industry would worth US$ 43 billion within the next

decade.

The multinational companies, investing in research and development in India may

save up to 30% to 50% of the expenses incurred

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The cost of hiring a research chemist in the US is five times higher than its Indian

counterpart.

The manufacturing cost of pharmaceutical products in India is nearly half of the cost

incurred in US.

The cost of performing clinical trials in India is one tenth of the cost incurred in US.

The cost of performing research in India is one eighth of the cost incurred in US.

Following the de-licensing of the pharmaceutical industry, industrial licensing for

most of the drugs and pharmaceutical products has been done away with.

Manufacturers are free to produce any drug duly approved by the Drug Control

Authority. Technologically strong and totally self-reliant, the pharmaceutical industry

in India has low costs of production, low R&D costs, innovative scientific manpower,

strength of national laboratories and an increasing balance of trade. The

Pharmaceutical Industry, with its rich scientific talents and research capabilities,

supported by Intellectual Property Protection regime is well set to take on the

international market.

ADVANTAGE IN INDIA :-

Competent workforce: India has a pool of personnel with high managerial and

technical competence as also skilled workforce. It has an educated work force and

English is commonly used. Professional services are easily available.

Cost-effective chemical synthesis: Its track record of development, particularly in

the area of improved cost-beneficial chemical synthesis for various drug molecules is

excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk

drugs.

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Legal & Financial Framework: India has a 53 year old democracy and hence has a

solid legal framework and strong financial markets. There is already an established

international industry and business community.

Information & Technology: It has a good network of world-class educational

institutions and established strengths in Information Technology.

Globalization: The country is committed to a free market economy and globalization.

Above all, it has a 70 million middle class market, which is continuously growing.

Consolidation: For the first time in many years, the international pharmaceutical

industry is finding great opportunities in India. The process of consolidation, which

has become a generalized phenomenon in the world pharmaceutical industry, has

started taking place in India.

THE GROWTH SCENARIO:-

India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 percent

per year. It is one of the largest and most advanced among the developing countries.

Over 20,000 registered pharmaceutical manufacturers exist in the country. The

domestic pharmaceuticals industry output is expected to exceed Rs260 billion in the

financial year 2002, which accounts for merely 1.3% of the global pharmaceutical

sector. Of this, bulk drugs will account for Rs 54 bn (21%) and formulations, the

remaining Rs 210 bn (79%). In financial year 2001, imports were Rs 20 bn while

exports were Rs87 bn.

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The above graph shows the percentage of pharmaceutical products export by various

countries.

(SOURCE Competitiveness of the Indian pharmaceutical industry in the new product

patent regime a report by FICCI)

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CHAPTER :- 2

INTRODUCTION TO CADILA HEALTH CARE

LIMITED

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A first for the nation...

Cadila Healthcare Limited

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2.1 History and Development :-

The company history sections lists out major chronological events that happened to

the company.

1995The Company was incorporated as Cadila Healthcare Private Ltd. on May 15, under

the company act, 1956 and subsequently the Company was converted into a public

company and then renamed as Cadila Healthcare Ltd. effective from Juy 17, 1996.

The name "Cadila" shall be used only for "Cadila Healthcare Limited" (Zydus

Cadila), "Cadila Pharmaceuticals Limited" (CPL) and "Cadila Laboratories Limited"

(CLL).

The Company is flagship company of Zydus Cadila Group.

The Company's operations include pharmaceuticals (human formulations, veterinary

formulations and bulk drugs); diagnostics, herbal products, skin care products and

other OTC products.

- The Company has 6 subsidiaries Indon Healthcare Ltd., Zydus Pharmaceuticals Ltd.,

Zudus Aqrovet Ltd., Zoom Properties Pvt. Ltd., Zydus International Pvt. Ltd., Ireland

and Zydus Healthcare S.A. (Pvt) Ltd., South Africa.

- Zydus Cadila signed an agreement with Anda Biologicals, France, for Marketing

and distribution of diagnostic kits. Anda to appoint a max. of two distributors in India.

1996- Zydus Cadila signed an agreement with Centeon L.L.C., USA and Centeon Pharama

GMBH, Germany for Exclusive rights to sell and distribute plasma products in India

and Nepal.

- In May, Zydus Cadila signed an agreement with Acta Services Srl., Rome for

distribution of Diagnostic instrument Acto 1 Analyser manu. By Acta.

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- In June, Zydus Cadila signed an agreement with China Resources Gulin Pharma,

Works, China, for exclusive supply of Artesunate Granules to Zydus Cadila.

- In July, Zydus Cadila signed an agreement with Shimizu Chemical Corporation,

Japan, for Marketing of specified products by Zydus Cadila in India.

1997

- A Scheme of Arrangement and Amalgamation was sanctioned by honorable High

Court of Gujarat by order passed on May 2 issued on August 16th.

- Zydus Cadila would issued 1,48,423 fully paid-up equity shares of Rs 10/- each to

the shareholders of Patel Group in exchange for the assets transferred to them of

Transferor companies.

- Zydus Cadila has also tied-up with Regional Research Laboratory Jammu, to

develop Enzymatic Resolution for Paroxetine HCL and some other Enzymatic

products.

1998

- In February, Zydus Cadila signed an agreement with Apotex SA Pty. Ltd. for

manufacturer of Amoxycillin, Ampicillin, Co - trimoxazole, paracetamol.

- Zydus Cadila has also entered into a joint venture with Korea Green Cross

Corporation, Korea, to manufacture and market recombinant Hepatitis B vaccine in

India.

1999

- In April, Zydus Cadila signed an agreement with Ethical Holdings Plc, Beta Pharma,

and Ethical Pharma South America S.A. for Know-how Licence Agreement to

manufacture, marketing and sell transdermal pharmaceutical formulations.

- In September, Zydus Cadila signed an agreement with Cherry Valley Farms Ltd.,

UK for supply of vaccine eggs.

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- Zydus Cadila has entered into a 50:50 joint venture with Byk Gulden of Germany, a

renowned, research-oriented Pharma company of Germany and the world-wide patent

holder of the novel proton pump inhibitor, "Pantoprazole".

- During the year under report, the Company had issued 2,00,000 12% Cumulative

Redeemable Preference shares of Rs. 100/- each fully paid to the members of the

Company, which are redeemable at par on 1st July, 2001.

- During the year under report, Indon Healthcare Limited and Zydus Aqrovet Limited,

have become wholly owned subsidiaries of the company.

- During the year under report, the Company has undertaken to set up a new project

for manufacturing the bulk drug-Losartan at Ankleshwar.

- The Company laid the foundation for a new feed supplement plant, at Vatwa. The

feed supplement for poultry and cattle has been developed by tie company's R & D

bio-tech department.

- The Company has set up a joint venture company to manufacture the break-through

molecule Pantoprazole. The Company is also undertaking discovery research projects

with Byk Gulden as a pan of the Joint Venture.

- The Company has entered into a technical-cum-marketing tie-up with the Swiss

Serum and Vaccine Institute, Berne, Institute to launch a range of vaccines in India.

- The Company has entered into a joint venture with the Haffkine institute to

undertake research in the field of human vaccine and equine sera.

- A new State-of-Art Research & Development centre being set-up with the capital

cost of approximately Rs. 25.00 crores in the Village: Moraiya. Taluka:Sanand, Dist.:

Ahmedabad.

- During the year under report the Company has launched several new products in the

market : Vac Typh, HB Vac, Xylodac, Losartan, Losacar was the first to be launched

in India & Matergam P.

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- The Company has set up manufacturing premises to manufacture the feed

supplement - Improval at GIDC Vatwa.

- Shir Pranlal Bhogilal was appointed as an additional Director of the Company with

effect from 15th December, 1998 pursuant to Section 260 of the Companies Act,

1956.

- Shri Mukesh M. Patel Director of the Company retires by rotation and he is eligible

for reappointment.

- A new welfare policy has been introduced for employees of the Company.

2000

- The Company is setting up wholly owned subsidiaries abroad and plans to acquire

overseas companies to market products.

- The Company has entered into License Agreement for phased manufacture and

technical know-how transfer with Swiss Serum and Vaccine Institute, Switzerland for

the manufacture of Purified Cuck Embroy Vaccine.

- The Country's fifth largest pharmaceutical company, is considering offering stocks

to its employees through an employees' stock option scheme.

- The Company has launched two drugs for the treatment of human

immunodeficiency virus.

- The Bulk Drugs at Ankleshwar in Gujarat has an ISO 9002 certification for the

manufacture and supply of a number of molecules.

- Public Issue of 1,48,86,000 No. of Equity shares ("Issue") of Rs 5/- each issued for

cash at a premium of Rs [] per share aggregating Rs [] million. The Issue includes a

Book Built Portion of 1,33,97,400 No. of equity shares and a Fixed price portion of

14,88,600 No. of Equity Shares.

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- Authorised share capital of the Company is Rs 500 million divided into 9,00,00,000

No. of Equity Shares of Rs 5/- each and 5,00,000 Preference Shares of Rs 100/- each.

- During the year under report, the Company has been recognise as a "Prestigious

Unit" and granted adhoc eligibility for Sales Tax deferment by the Industries

Commissionerate, Gandhinagar, under New Incentive Policy - Capital Investment

Incentive to Premier/ Prestigious unit scheme 1995-2000.

- During the year under report Zydus Pharmaceuticals Limited and Zoom Properties

Limited have become Wholly Owned Subsidiaries of the Company.

- The Company has formed a JV Company in the name of Zydus Byk Healthcare

Limited with an equal participation in collaboration with Byk Gulden Lomberg

Chemische Fabrik GmbH, Germany, for manufacturing of Bulk Drugs, Formulations

and R & D.

- The Company has also formed a JV Company in the name of Sarabhai Zydus

Animal Health Ltd. in collaboration with Ambalal Sarabhai Enterprises Ltd., Baroda,

with an equal participation to carry on the business of animal health segments.

- The company has also entered into a technical collaboration with Ethical Holdings

of U.K. to manufacture and market transdermal patches in India.

- The Company launched block-buster molecules Atorvastatin (Atorva), Lamivudine

(Lamidac 100) and Celecoxib (Zycel), Meloxicam (Mel-OD) and Carvedilol (Carvil)

during the year.

- The company was the first to launch the anti-hypertensive drug Losartan in India.

- Currently ranked 6th largest pharmaceutical company in India, Cadila Healthcare is

one of the fastest growing pharmaceutical companies in the country.

- It has also entered into a technical collaboration with Ethical Holdings of the UK to

manufacture and market transdermal patches in India.

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29

- Zydus Cadilla has also entered into a technical collaboration with Ethical Holdings

of the UK to manufacture and market transdermal patches in India.

- Cadlia Healthcare (CHL) has signed an MoU with Rs 54 crore Recon Limited,

whereby it will acquire all the 8 formulation brands of the Bangalore based comapny,

as well as its distribution network.

- The new company, `Recon Healthcare Ltd' is now a subsidiary of Zydus Cadila with

Zydus holding 90 per cent stake.

- Cadila Healthcare Ltd is setting up wholly owned subsidiaries abroad and plans to

acquire overseas companies to market products.

- Cadila also launched zidovudine, which is imported and marketed under the brand

name Zydowin. Zidovudine, commonly called AZT, is an AIDS-retardant drug made

by Glaxo Wellcome.

- Zydus Alidac, the marketing arm of Cadila Healthcare Ltd., has launched

www.penegra.org.

-The Ahmedabad-based Cadoila Healthcare has completed the phase-III clinical trials

and the bioequivalence study of the wonder drug sildenafil citrate (Viagra).

2001

- Cadila Healthcare has signed a three year collaborative R&D agreement with Danish

biotech company Pantheco in the field of anti-bacterials.

- The neurosciences division launched by the company has introduced anxiolytic

paroxetine for the first time in the country.

- Cadila Healthcare Ltd has posted a 14.75 per cent increase in net profit at Rs 21.86

crore for the quarter ended September 30, 2001.YEAR EVENTS 1995

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- The Company was incorporated as Cadila Healthcare Private Ltd. on May 15, under

the company act, 1956 and subsequently the Company was converted into a public

company and then renamed as Cadila Healthcare Ltd. effective from Juy 17, 1996.

- The name "Cadila" shall be used only for "Cadila Healthcare Limited" (Zydus

Cadila), "Cadila Pharmaceuticals Limited" (CPL) and "Cadila Laboratories Limited"

(CLL).

- The Company is flagship company of Zydus Cadila Group.

- The Company's operations include pharmaceuticals (human formulations, veterinary

formulations and bulk drugs); diagnostics, herbal products, skin care products and

other OTC products.

- The Company has 6 subsidiaries Indon Healthcare Ltd., Zydus Pharmaceuticals Ltd.,

Zudus Aqrovet Ltd., Zoom Properties Pvt. Ltd., Zydus International Pvt. Ltd., Ireland

and Zydus Healthcare S.A. (Pvt) Ltd., South Africa.

- Zydus Cadila signed an agreement with Anda Biologicals, France, for Marketing

and distribution of diagnostic kits. Anda to appoint a max. of two distributors in India.

1996

- Zydus Cadila signed an agreement with Centeon L.L.C., USA and Centeon Pharama

GMBH, Germany for Exclusive rights to sell and distribute plasma products in India

and Nepal.

- In May, Zydus Cadila signed an agreement with Acta Services Srl., Rome for

distribution of Diagnostic instrument Acto 1 Analyser manu. By Acta.

- In June, Zydus Cadila signed an agreement with China Resources Gulin Pharma,

Works, China, for exclusive supply of Artesunate Granules to Zydus Cadila.

- In July, Zydus Cadila signed an agreement with Shimizu Chemical Corporation,

Japan, for Marketing of specified products by Zydus Cadila in India.

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1997

- A Scheme of Arrangement and Amalgamation was sanctioned by honorable High

Court of Gujarat by order passed on May 2 issued on August 16th.

- Zydus Cadila would issued 1,48,423 fully paid-up equity shares of Rs 10/- each to

the shareholders of Patel Group in exchange for the assets transferred to them of

Transferor companies.

- Zydus Cadila has also tied-up with Regional Research Laboratory Jammu, to

develop Enzymatic Resolution for Paroxetine HCL and some other Enzymatic

products.

1998

- In February, Zydus Cadila signed an agreement with Apotex SA Pty. Ltd. for

manufacturer of Amoxycillin, Ampicillin, Co - trimoxazole, paracetamol.

- Zydus Cadila has also entered into a joint venture with Korea Green Cross

Corporation, Korea, to manufacture and market recombinant Hepatitis B vaccine in

India.

1999

- In April, Zydus Cadila signed an agreement with Ethical Holdings Plc, Beta Pharma,

and Ethical Pharma South America S.A. for Know-how Licence Agreement to

manufacture, marketing and sell transdermal pharmaceutical formulations.

- In September, Zydus Cadila signed an agreement with Cherry Valley Farms Ltd.,

UK for supply of vaccine eggs.

- Zydus Cadila has entered into a 50:50 joint venture with Byk Gulden of Germany, a

renowned, research-oriented Pharma company of Germany and the world-wide patent

holder of the novel proton pump inhibitor, "Pantoprazole".

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- During the year under report, the Company had issued 2,00,000 12% Cumulative

Redeemable Preference shares of Rs. 100/- each fully paid to the members of the

Company, which are redeemable at par on 1st July, 2001.

- During the year under report, Indon Healthcare Limited and Zydus Aqrovet Limited,

have become wholly owned subsidiaries of the company.

- During the year under report, the Company has undertaken to set up a new project

for manufacturing the bulk drug-Losartan at Ankleshwar.

- The Company laid the foundation for a new feed supplement plant, at Vatwa. The

feed supplement for poultry and cattle has been developed by tie company's R & D

bio-tech department.

- The Company has set up a joint venture company to manufacture the break-through

molecule Pantoprazole. The Company is also undertaking discovery research projects

with Byk Gulden as a pan of the Joint Venture.

- The Company has entered into a technical-cum-marketing tie-up with the Swiss

Serum and Vaccine Institute, Berne, Institute to launch a range of vaccines in India.

- The Company has entered into a joint venture with the Haffkine institute to

undertake research in the field of human vaccine and equine sera.

- A new State-of-Art Research & Development centre being set-up with the capital

cost of approximately Rs. 25.00 crores in the Village: Moraiya. Taluka:Sanand, Dist.:

Ahmedabad.

- During the year under report the Company has launched several new products in the

market : Vac Typh, HB Vac, Xylodac, Losartan, Losacar was the first to be launched

in India & Matergam P.

- The Company has set up manufacturing premises to manufacture the feed

supplement - Improval at GIDC Vatwa.

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- Shir Pranlal Bhogilal was appointed as an additional Director of the Company with

effect from 15th December, 1998 pursuant to Section 260 of the Companies Act,

1956.

- Shri Mukesh M. Patel Director of the Company retires by rotation and he is eligible

for reappointment.

- A new welfare policy has been introduced for employees of the Company.

2000

- The Company is setting up wholly owned subsidiaries abroad and plans to acquire

overseas companies to market products.

- The Company has entered into License Agreement for phased manufacture and

technical know-how transfer with Swiss Serum and Vaccine Institute, Switzerland for

the manufacture of Purified Cuck Embroy Vaccine.

- The Country's fifth largest pharmaceutical company, is considering offering stocks

to its employees through an employees' stock option scheme.

- The Company has launched two drugs for the treatment of human

immunodeficiency virus.

- The Bulk Drugs at Ankleshwar in Gujarat has an ISO 9002 certification for the

manufacture and supply of a number of molecules.

- Public Issue of 1,48,86,000 No. of Equity shares ("Issue") of Rs 5/- each issued for

cash at a premium of Rs [] per share aggregating Rs [] million. The Issue includes a

Book Built Portion of 1,33,97,400 No. of equity shares and a Fixed price portion of

14,88,600 No. of Equity Shares.

- Authorised share capital of the Company is Rs 500 million divided into 9,00,00,000

No. of Equity Shares of Rs 5/- each and 5,00,000 Preference Shares of Rs 100/- each.

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- During the year under report, the Company has been recognise as a "Prestigious

Unit" and granted adhoc eligibility for Sales Tax deferment by the Industries

Commissionerate, Gandhinagar, under New Incentive Policy - Capital Investment

Incentive to Premier/ Prestigious unit scheme 1995-2000.

- During the year under report Zydus Pharmaceuticals Limited and Zoom Properties

Limited have become Wholly Owned Subsidiaries of the Company.

- The Company has formed a JV Company in the name of Zydus Byk Healthcare

Limited with an equal participation in collaboration with Byk Gulden Lomberg

Chemische Fabrik GmbH, Germany, for manufacturing of Bulk Drugs, Formulations

and R & D.

- The Company has also formed a JV Company in the name of Sarabhai Zydus

Animal Health Ltd. in collaboration with Ambalal Sarabhai Enterprises Ltd., Baroda,

with an equal participation to carry on the business of animal health segments.

- The company has also entered into a technical collaboration with Ethical Holdings

of U.K. to manufacture and market transdermal patches in India.

- The Company launched block-buster molecules Atorvastatin (Atorva), Lamivudine

(Lamidac 100) and Celecoxib (Zycel), Meloxicam (Mel-OD) and Carvedilol (Carvil)

during the year.

- The company was the first to launch the anti-hypertensive drug Losartan in India.

- Currently ranked 6th largest pharmaceutical company in India, Cadila Healthcare is

one of the fastest growing pharmaceutical companies in the country.

- It has also entered into a technical collaboration with Ethical Holdings of the UK to

manufacture and market transdermal patches in India.

- Zydus Cadilla has also entered into a technical collaboration with Ethical Holdings

of the UK to manufacture and market transdermal patches in India.

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- Cadlia Healthcare (CHL) has signed an MoU with Rs 54 crore Recon Limited,

whereby it will acquire all the 8 formulation brands of the Bangalore based comapny,

as well as its distribution network.

- The new company, `Recon Healthcare Ltd' is now a subsidiary of Zydus Cadila with

Zydus holding 90 per cent stake.

- Cadila Healthcare Ltd is setting up wholly owned subsidiaries abroad and plans to

acquire overseas companies to market products.

- Cadila also launched zidovudine, which is imported and marketed under the brand

name Zydowin. Zidovudine, commonly called AZT, is an AIDS-retardant drug made

by Glaxo Wellcome.

- Zydus Alidac, the marketing arm of Cadila Healthcare Ltd., has launched

www.penegra.org.

-The Ahmedabad-based Cadoila Healthcare has completed the phase-III clinical trials

and the bioequivalence study of the wonder drug sildenafil citrate (Viagra).

2001

- Cadila Healthcare has signed a three year collaborative R&D agreement with Danish

biotech company Pantheco in the field of anti-bacterials.

- The neurosciences division launched by the company has introduced anxiolytic

paroxetine for the first time in the country.

- Cadila Healthcare Ltd has posted a 14.75 per cent increase in net profit at Rs 21.86

crore for the quarter ended September 30, 2001.

2002

-Cadila Healthcare Ltd has informed BSE that at the meeting of the Board of

Directors of the company held on August 20, 2002 it has been decided to issue/allot

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36

Secured Redeemable Non Convertible Debentures for an aggregate face value of Rs

700 million by private placement basis at an interest rate of 8.40% p.a.

2003

-Mr.UpenShah has been designated as the Company Secretary and Compliance

Officer of Cadila Healthcare Ltd.

-Zydus Cadila, the ahmedabad based healthcare has bagged global marketing rights of

an anti-rabies vaccine of vaxirab a swiss company Berna Biotech.

-Cadila Healthcare receives Mumbai High court approval for the scheme of

amalgamation with German Remedies Ltd and Zoom Properties Ltd.

-Cadila Healthcare Ltd has acquired US base Alpharma Inc's French Subsidiary

Alpharma SAS France for a consideration of Euro 5.5 million.

-Mr.H.K.Bilpodiwala, Mr.H.Dhanarajgir and Mr.A.S Diwanji have been appointed as

the additional directors on the board of the company.

-Zydus Cadila Healthcare Ltd has signed a pact with Schering AG, Germany which

allows the Indian Pharmaceuticals major to market Schering's patented products in

India.

-Duphar Interfran, a subsidiary of Fermenta Biotech Ltd signed an agreement with

Cadila Ltd for the sale of FBL's global patents of Chiral Building blocks and process

teechnology for the manufacture of Lisinopril and Benazepril.

-Zydus forges marketing pact with Schering

2004

-Zydus Cadila sets up Zydus Pharmaceuticals USA, Inc

-Zydus Cadila inks strategic pact with Boehringer Ingelheim

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-Zyndus Altana Healthcare - the JV between Altana Pharma AG and Zyndus Cadila,

has been accredited with the ISO 9001-2000 certificate.

2005

- Zydus Cadila receives approval from the USFDA to market the anti-hypertensive

drug, Atenolol, and an anti-infective drug, Clindamycin on 31 Jan and 1 Feb.

-Zydus Cadila unveils 'Pitavastatin' to control cholesterol on February 21, 2005

-Cadila ties up with Tyco unit to sell generic drugs in US

- Launches NuPatch - India's first indigenously manufactured Diclofenac transdermal

patch for pain relief.

-Cadila Healthcare & Mayne signs agreement to set up JVC to manufacture specialty

oncology products

-Cadila Healthcare - German Remedies launches Fludara Oral for Lymphocytic

Leukaemia

-Zydus Cadila receives tentative approval for Divalproex Sodium DR Tablets from

US FDA

-Cadila Healthcare receives approval for Promethazine Tablets from USFDA

-Cadila Healthcare enters into JV with BSVL

2006

-Zydus Cadila forges alliance with French firm

-Zydus Cadila receives USFDA approval for Simvastatin Tablets

-Zydus Cadila to acquire Nutralite - India's largest selling cholesterol-free margarine

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-Sarabhai Zydus to roll out immuno-diagnostics kits

-Cadila Healthcare has given the Bonus in the Ratio of 1:1

2007

-Cadila Healthcare Ltd on April 19, 2007 has announced the acquisition of Nippon

Universal Pharmaceutical Ltd.

- Cadila Healthcare Ltd has announced that its second overseas acquisition this year,

the Company signed an agreement to acquire 100% stake in Quimica e Farmaceutica

Nikkho do Brasil Ltda.

-Zydus Cadila acquires Nippon Universal, strengthens its presence in Japan

-Zydus Cadila, the first to launch revolutionary anti-obesity drug Slimona in India

-Zydus Cadila acquires Brazilian Company Nikkho

2008

-Zylus Cadila, Karo Bio to jointly develop new drugs

-Zydus Cadila & Karo Bio of Sweden sign research agreement for a novel drug to

treat inflammatory diseases

-Zydus Cadila acquires Etna Biotech, a subsidiary of Crucell N.V.

-Zydus scores with first day launch of Venlafaxine Hydrochloride in the US

2009

-Zydus Cadila announces research collaboration to discover and develop new

cardiovascular medicines

-Zydus Research Centre Receives AAALAC Accreditation

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39

2010

-CHL announces Bonus Shares in the ratio of 1:2

- India unveiled its first indigenous H1N1 vaccine, which was developed by drug firm

Cadila Healthcare and this vaccine will provide immunity from the H1N1 virus strain

for one year.

2011

-Company has signed an Agreement with Bayer HealthCare to set up 50:50 Joint

Venture Company in the name of "Bayer Zydus Pharma

-Cadila gets USFDA nod for diabetes drug trial

-Cadila Health acquires Bremer Pharma from ICICI Venture

2012

-"Cadila Healthcare enters into a settlement and license agreement with Somaxon for

Silenor"

-Cadila Healthcare gets USFDA nod for Aripiprazole orally disintegrating tablets

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2.2 COMPANY PROFILE :-

Founder :- Late Mr. Raman Bhai B. Patel .

Key Executives :-

Chairman & Managing Director :- Pankaj R Patel

Deputy Managing Director :- Sharvil P Patel

Director :- Mukesh M Patel

Director :- H Dhanrajgir

Board Of Directors:-

Chairman & Managing Director :- Pankaj R Patel

Deputy Managing Director :- Sharvil P Patel

Director :- Mukesh M Patel

Director :- H Dhanrajgir

A S Diwanji

Company Secretary :- Upen H Shah

Director :- Nitin Raojibhai

Desai

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Bankers :-Bank of Baroda BNP Paribas Citibank N A Credit Agricole Cor & Inv Export-Import Bk of India HDFC Bank Ltd ICICI Bank Ltd IDBI Bank Standard Chartered Bank State Bank of India

Auditors :-

Mukesh M Shah & Co

Registered and corporate Offices :-Registered Address :-"Zydus Tower", Satellite Cross Roads,,Sarkhej Gandhinagar HighwayAhmedabad Gujarat 380015

Tel: 079-26868100 Fax: 079-26862365 079-26862366Email: investor.grievance@zyduscadila.comWebsite: http://www.zyduscadila.comGroup: Zydus Cadilla Group

Registrars:Sharepro Services India P LtdSamhita ComplexPlot No 13 ABSaki Naka Andheri(E)Mumbai-400072

Mission :-

A mission to create healthier communities

Zydus Cadila is dedicated to life…

In all its dimensions. Our world is shaped by a passion for innovation, commitment to partners and concern for people in an effort to create healthier communities, globally.

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Vision :-

A vision that unleashes value

To be a leading global healthcare provider with a robust product pipeline; Stepping beyond the billion, we shall achieve sales of over $3bn by 2015 and be a research-driven pharmaceutical company by 2020.

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Logo :-

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2.3 Stock performance history :-

Last one year stock performance of Cadila healthcare limited and comparison with Ranbaxy and sun pharma .

Stock performance Cadila healthcare limited of last one year and compare it with ranbaxy lab and sun pharma Cadila Health care has give completely upside of stock performance in last one year .

Pharmaceuticals company rank wise :-

NameLast Price Market Cap. Sales Net Profit

Total Assets

(Rs. cr.) TurnoverSun Pharma 630 130,483.33 1,657.78 133.25 7,832.01Dr Reddys Labs 2,624.40 44,643.37 8,434.01 1,265.47 9,372.50Lupin 973.4 43,644.90 7,122.51 1,260.43 5,402.00Cipla 401 32,197.15 8,202.42 1,507.11 9,835.33Cadila Health 1,015.35 20,789.14 3,364.22 466.64 4,557.00Ranbaxy Labs 467.35 19,805.31 5,612.92 -1,776.85 6,685.68

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As performance wise Cadila Healthcare limited is on 4th rank from other competitors .Peer Competition :-Company Name Net Sales (Rs. Cr ) Net Profit (Rs. Cr ) Total Assets (Rs. Cr)Dr Reddys Labs 8,434.00 1,265.47 9,372.50Cipla 8,202.42 1,507.11 9,835.33Lupin 7,122.51 1,260.43 5,402.00Ranbaxy Labs 6,303.54 -1,776.85 6,685.68Aurobindo Pharm 5,425.10 495.99 5,714.06Cadila Health 3,675.70 466.64 4,557.00Sun Pharma 2,432.14 133.25 7,832.01

-4000

-2000

0

2000

4000

6000

8000

10000

12000

Net Sales

Net Profit

Total Assets

Above Chart showing Cadila health care is stable in competition to other compeititor and net profit is also higher than others by considering net assets and net sales . It is sign of good and efficient management of Cadila Healthcare limited .

Dividend

Year End Dividend Per Share Dividend(%) Remark

11-Jun-13 7.5 150.0 Interim

26-Jul-12 7.5 150.0 Final

07-Jul-11 6.3 125.0 Final

15-Jul-10 5.0 100.0 Final

16-Jul-09 4.5 90.0 Final

10-Jul-08 4.5 90.0 Final

12-Jul-07 4.0 80.0 Final

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14-Jul-05 0.0 120.0 Final

BonusDate Ratio

05-Apr-10 1:2

30-Aug-06 1:1

2.4 Products plants :-

From nine pharmaceutical production operations in India as well as a Zydus Cadila

develops and manufactures a large range of pharmaceuticals as well as diagnostics,

herbal products, skin care products and other OTC products.

The company makes active pharmaceutical ingredients at three sites in India:

Ankleshwar plants – Zydus Cadila's plant complex at Ankleshwar in Bharuch

District of Gujarat, has been producing drug material since 1972. There are around 12

plants in the complex, which is ISO 9002 and ISO 14001 certified approved by the

U.S. Food and Drug Administration (FDA). Total plant capacity at Ankleshwar is

around 180 million tonnes.

Vadodara plant – Zydus Cadila's plant at Dhabhasa, in Vadodara District's Padra

taluka (in the eastern part of the district) in Gujarat, was commissioned in 1997 by a

company called Banyan Chemicals, and acquired by Zydus Cadila in 2002. The plant

has a 90 million tonne capacity. It is approved by the U.S. FDA and is also approved

to World Health Organization (WHO) good manufacturing practice (GMP)

guidelines.

Patalganga plant – Zydus Cadila acquired an API plant at Patalganga in Maharashtra

state, 70 km from Mumbai, about 859 km from Nagpur, in the 2001 German

Remedies deal. This plant operates to WHO GMP standards.

Others

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Navi Mumbai plant – This operation, at Navi Mumbai in Maharashtra, is a 50/50

joint venture with Nycomed Pharma of US, makes intermediates of the drug

pantoprazole.

Mumbai Business Office – This office houses Business Unit India - 2 or German

Remedies. This office belonged to German Remedies (I) Ltd. This company was

acquired in 2000. This was the biggest takeover in the History of Indian

Pharmacological Industry. German Remedies is now a Registered Trademark of

Cadila Healthcare Ltd.

Goa plants – The company's plants at Ponda in the southern Indian state of Goa do

formulation work as well as manufacture oncology drugs and a herbal laxative

branded Agiolax based on Psyllium seeds. These Plants belonged to German

Remedies (I) Ltd. too and now are part of Business Unit - Manufacturing of the

Company.

Baddi plant – In 2004 Zydus commissioned at formulation plant at Baddi, in

Himachal Pradesh state of northern India. The Baddi plant makes solid oral

pharmaceuticals.

Sikkim plant – In 2008 Zydus commissioned at formulation plant at Majhitar, in

Sikkim state of eastern India. The Sikkim plant makes solid oral pharmaceuticals and

hormones. This plant now caters almost all Domestic Formulation needs of the

Company.

In Gujarat, India

Dabhasa plant – Zydus Cadila's API/Bulk Drug Plant in a village about 20

kilometers South from Vadodara houses one of the largest process research (API)

centers in the country. This plant belonged to Banyan Chemicals which was acquired

by Zydus in 2003

Vatwa plant – Zydus Cadila's plant at Vatwa, an industrial suburb of Ahmedabad,

makes products for Animal Health care division of the company.

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Zyfine plant (Changodar) – Zydus Cadila's plant at Changodar, 20 kilometres from

Ahmedabad on the city's outskirts, manufactures fine chemicals. Zydus is current

constructing a facility at Changodar to make vaccines for hepatitis B and rabies.

Zydus Research Centre (ZRC) (Changodar) – Zydus's NCE, NME, MBE research

facility is the largest of its kind in Indian, with more than 500 post graduate scientists

it is working towards the prosperous future of the company and Indian Pharmaceutical

Industry.

Zydus Hospira Oncology Pvt. Ltd. (SEZ, Matoda) – Zydus's JV venture with

Hospira Inc. of US manufactures Anti Cancer Injectables at this plant. This plant is

also U.S. FDA approved and situated in Special Economy Zone, about 25 kilometers

from Ahmedabad. This SEZ is developed by Zydus Infrastructure Pvt. Ltd., another

group company of Zydus.

Zydus – BSV(SEZ, Matoda) – Zydus's JV with Bharat Serum and Vaccine Ltd.'s

Plant is another facility located in the same SEZ.

Zydus Technologies Ltd.(SEZ, Matoda) – Zydus's JV with Noveltech Inc.Plant is

another world class facility located in the same SEZ for Novel Drug Delivery

Systems.

Nutralite Manufacturing Fascility (Changodar) – Zydus manufactures and sells,

Nutralite - a health, butter substitute. This plant comes under the banner of Zydus

Wellness Ltd. This company also manufactures and sales, popular brands as

SugraFree, Everyouth, Everyouth Men'z and D'lite.

Corporate control :

Zydus Cadila's major shareholder remains the Patel family. Pankaj Patel (born 1951),

son of the founder, is CEO. In 2004 Pankaj Patel was included by Forbes magazine in

its annual List of India's richest people. Forbes estimated Patel's net worth at

US$510m, making him India's 26th richest person.[2] However in 2005 Patel dropped

off the Forbes list due to a fall in the stock price of Cadila Healthcare. Moreover,

there is a team of nine senior level executives, known as the Executive Committee,

who are heads of different operations look after the overall management processes.

None of the members except Pankaj Patel are on the Board of Directors. The Indian

pharmaceutical industry has become the third largest producer in the world and is

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poised to grow into an industry of $ 20 billion in 2015 from the current turnover of $

12 billion.

2.5 Products:-

Tablets

Bulk Drugs

Injections

Capsules

Dry Powder Injectibles

Liquids

Processing Charges

Ointments

Dry Syrup, Powder & Injectibles

Other Fiscal Benefits

Suppositories

Others

Cosmetics

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CHAPTER :- 3

RESEARCH AND METHODOLOGY

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3.1 RESEARCH OBJECTIVE:

Objective of research is to analyses financial position and performance of Cadila

Healthcare Limited by Analyzing working capital management .

3.2 SCOPE OF RESEARCH

I have studied working capital management, inventory management and cash

management of the Cadila Healthcare Limited by Analyzing their profit and loss

account and balance sheets for the year last four year.

3.3 DATA TYPE

Secondary Data

3.4 D ATA SOURCES:

Internet, Reference Books, Annual Reports, Audit Reports

3.5 RESEARCH DESIGN:

Exploratory Research.

3.6 TOOLS USED FOR ANALYSIS:

Working capital requirement Analysis

Financial Ratios

Liquidity position

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3.7 LITERATURE REVIEW

The idea of the topic of the research was drawn from the various mediums which I

gone through are as follows:

I have gone through the various books providing guidance regarding working

capital and inventory management like Pandey I.M., Khan & Jain and

Prasanna Chandra.

The various project reports which I have undergone namely working capital

and inventory management of Amul, Financial analysis of Hetro

Pharmaceuticals, financial analysis of Ranbaxy lab and Finanacial analysis of

VRN Ceramic ltd.

3.8 LIMITATIONS FOR THE STUDY

No proper response from the trade associations.

Primary data is limited

It is not possible to get cent percent correct information. The research was

made according to the information available from related departments and

through annual reports published.

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CHAPTER :- 4

THEORETICAL FRAMEWORK OF WORKING

CAPITAL MANAGEMENT

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4.1 Working Capital Management

Working capital refers to that part of the firm’s capital which is required

for financing short- term or current assets such as cash, marketable

securities, debtors & inventories. Funds, thus, invested in current assts

keep revolving fast and are being constantly converted in to cash and this

cash flows out again in exchange for other current assets. Hence, it is also

known as revolving or circulating capital or short term capital.

Working capital management is concerned with the problems arise in

attempting to manage the current assets, the current liabilities and the

inter relationship that exist between them.

The term current assets refers to those assets which in ordinary course of

business can be, or, will be, turned in to cash within one year without

undergoing a diminution in value and without disrupting the operation of

the firm. The major current assets are cash, marketable securities, account

receivable and inventory.

Current liabilities ware those liabilities which intended at there inception

to be paid in ordinary course of business, within a year, out of the current

assets or earnings of the concern. The basic current liabilities are account

payable, bill payable, bank over-draft, and outstanding expenses.

The goal of working capital management is to manage the firm’s current

assets and current liabilities in such way that the satisfactory level of

working capital is mentioned.

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Definition:-

According to Park & Gladson-

“The excess of current assets of a business (i.e. cash, accounts

receivables, inventories) over current items owned to employees and

others (such as salaries & wages payable, accounts payable, taxes owned

to Government)”.

Capital required for a business can be classified under two main

categories via,

1) Fixed Capital 2) Working Capital

Every business needs funds for two purposes for its establishment and to

carry out its day- to-day operations. Long terms funds are required to

create production facilities through purchase of fixed assets such as p&m,

land, building, furniture, etc. Investments in these assets represent that

part of firm’s capital which is blocked on permanent or fixed basis and is

called fixed capital. Funds are also needed for short-term purposes for the

purchase of raw material, payment of wages and other day – to- day

expenses etc.

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4.2 CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

1. Gross working capital

2. Net working capital

The gross working capital is the capital invested in the total current

assets of the enterprises current assets are those assets which can

convert in to cash within a short period normally one accounting

year.

CONSTITUENTS OF CURRENT ASSETS

1) Cash in hand and cash at bank

2) Bills receivables

3) Sundry debtors

4) Short term loans and advances

5) Inventories of stock as:

a. Raw material

b. Work in process

c. Stores and spares

d. Finished goods

6. Temporary investment of surplus funds.

7. Prepaid expenses

8. Accrued incomes.

9. Marketable securities.

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In a narrow sense, the term working capital refers to the net working. Net

working capital is the excess of current assets over current liability, or,

say:

NET WORKING CAPITAL = CURRENT ASSETS – CURRENT

LIABILITIES.

Net working capital can be positive or negative. When the current assets

exceeds the current liabilities are more than the current assets. Current

liabilities are those liabilities, which are intended to be paid in the

ordinary course of business within a short period of normally one

accounting year out of the current assts or the income business.

CONSTITUENTS OF CURRENT LIABILITIES

1. Accrued or outstanding expenses.

2. Short term loans, advances and deposits.

3. Dividends payable.

4. Bank overdraft.

5. Provision for taxation, if it does not amt. to app. of profit.

6. Bills payable.

7. Sundry creditors.

4.3 CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to ways:

On the basis of concept

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On the basis of time.

On the basis of concept working capital can be classified as gross

working capital and net working capital. On the basis of time, working

capital may be classified as:

� Permanent or fixed working capital.

� Temporary or variable working capital

Amount of Working

Capital

Temporary capital

Permanent Capital

Time

PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required

to ensure effective utilization of fixed facilities and for maintaining the

circulation of current assets. Every firm has to maintain a minimum level

of raw material, work- in-process, finished goods and cash balance. This

minimum level of current assts is called permanent or fixed working

capital as this part of working is permanently blocked in current assets.

TEMPORARY OR VARIABLE WORKING CAPITAL

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Temporary or variable working capital is the amount of working capital

which is required to meet the seasonal demands and some special

exigencies. Variable working capital can further be classified as seasonal

working capital and special working capital. The capital required to meet

the seasonal need of the enterprise is called seasonal working capital.

Special working capital is that part of working capital which is required

to meet special exigencies such as launching of extensive marketing for

conducting research, etc.

4.4 IMPORTANCE OR ADVANTAGE OF ADEQUATE

WORKING CAPITAL

SOLVENCY OF THE BUSINESS:

Adequate working capital helps in maintaining the solvency of the

business by providing uninterrupted of production.

Goodwill:

Sufficient amount of working capital enables a firm to make prompt

payments and makes and maintain the goodwill.

Easy loans:

Adequate working capital leads to high solvency and credit standing

can arrange loans from banks and other on easy and favorable terms.

Cash Discounts:

Adequate working capital also enables a concern to avail cash

discounts on the purchases and hence reduces cost.

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Regular Supply of Raw Material:

Sufficient working capital ensures regular supply of raw material and

continuous production.

Regular Payment Of Salaries, Wages And Other Day TO Day

Commitments:

It leads to the satisfaction of the employees and raises the morale of its

employees, increases their efficiency, reduces wastage and costs and

enhances production and profits.

Ability to Face Crises:

A concern can face the situation during the depression.

4.5 FACTORS DETERMINING THE WORKING CAPITAL

REQUIREMENTS

1. NATURE OF BUSINESS:

The requirements of working is very limited in public utility undertakings

such as electricity, water supply and railways because they offer cash sale

only and supply services not products, and no funds are tied up in

inventories and receivables. On the other hand the trading and financial

firms requires less investment in fixed assets but have to invest large amt.

of working capital along with fixed investments.

2. SIZE OF THE BUSINESS:

Greater the size of the business, greater is the requirement of

working capital.

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3. PRODUCTION POLICY:

If the policy is to keep production steady by accumulating

inventories it will require higher working capital.

4. LENTH OF PRDUCTION CYCLE:

The longer the manufacturing time the raw material and other

supplies have to be carried for a longer in the process with

progressive increment of labor and service costs before the final

product is obtained. So working capital is directly proportional to

the length of the manufacturing process.

4.6 Sources of working capital

The company can choose to finance its current assets by

1. Long term sources

2. Short term sources

3. A combination of them.

Long term sources of permanent working capital include equity and

preference shares, retained earning, debentures and other long term debts

from public deposits and financial institution. The long term working

capital needs should meet through long term means of financing.

Financing through long term means provides stability, reduces risk or

payment and increases liquidity of the business concern. Various types of

long term sources of working capital are summarized as follow:

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1. Issue of shares:

It is the primary and most important sources of regular or permanent

working capital. Issuing equity shares as it does not create and burden on

the income of the concern. Nor the concern is obliged to refund capital

should preferably raise permanent working capital.

2. Retained earnings:

Retain earning accumulated profits are a permanent sources of regular

working capital. It is regular and cheapest. It creates not charge on future

profits of the enterprises.

3. Issue of debentures:

It crates a fixed charge on future earnings of the company. Company is

obliged to pay interest. Management should make wise choice in

procuring funds by issue of debentures.

Short term sources of temporary working capital

Temporary working capital is required to meet the day to day business

expenditures. The variable working capital would finance from short term

sources of funds. And only the period needed. It has the benefits of, low

cost and establishes closer relationships with banker.

Some sources of temporary working capital are given below:

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1. Commercial bank:

A commercial bank constitutes significant sources for short term or

temporary working capital. This will be in the form of short term loans,

cash credit, and overdraft and though discounting the bills of exchanges.

2. Public deposits:

Most of the companies in recent years depend on this source to meet their

short term working capital requirements ranging fro six month to three

years.

3. Various credits:

Trade credit, business credit papers and customer credit are other sources

of short term working capital. Credit from suppliers, advances from

customers, bills of exchanges, etc helps to raise temporary working

capital

4. Reserves and other funds:

Various funds of the company like depreciation fund. Provision for tax

and other provisions kept with the company can be used as temporary

working capital.The company should meet its working capital needs

through both long term and short term funds.

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SOURCES OF ADDITIONAL WORKING CAPITAL

Sources of additional working capital include the following-

1. Existing cash reserves

2. Profits (when you secure it as cash)

3. Payables (credit from suppliers)

4. New equity or loans from shareholder

5. Bank overdrafts line of credit

6. Long term loans

If we have insufficient working capital and try to increase sales, we can

easily over stretch the financial resources of the business. This is called

overtrading. Early warning signs include

1. Pressure on existing cash

2. Exceptional cash generating activities. Offering high discounts for

clear

cash payment

3. Bank overdraft exceeds authorized limit

4. Seeking greater overdrafts or lines of credit

5. Part paying suppliers or there creditor.

6. Management pre occupation with surviving rather than managing.

4.9 Different Aspects of Working Capital Management

�Management of Inventory

�Management of Receivables/Debtors

�Management of Cash

�Management of Payables/Creditors

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MANAGEMENT OF INVENTORY

Inventories constitute the most significant part of current assets of a large

majority of companies. On an average, inventories are approximately

60% of current assets. Because of large size, it requires a considerable

amount of fund. The inventory means and includes the goods and services

being sold by the firm and the raw material or other components being

used in the manufacturing of such goods and services.

Nature of Inventory:

The common type of inventories for most of the business firms may be

classified as raw-material, work-in-progress, finished goods.

�Raw material:

it is basic inputs that are converted into finished products through

the manufacturing process. Raw materials inventories are those

units which have been purchased and stored for future productions.

�Work–in–process:

Work-in-process is semi-manufactured products. They represent

products that need more work before them become finished

products for sale.

�Finished goods:

These are completely manufactured products which are ready for

sale. Stocks of raw materials and work-in-process facilitate

production, while stock of finished goods is required for smooth

marketing operations.

So operating cycle can be known as following:-

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Sales

Raw Material

Work in Progress

Cash Collection from Debtors

Finished Goods

Credit Sales Cash Sales

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Need to hold inventories

Maintaining inventories involves trying up of the company’s funds and

incurrence of storage and holding costs. There are three general motives

for holding inventories:

Transactions Motive: IT emphasizes the need to maintain inventories to

facilitate smooth production and sales operation.

Precautionary Motive: It necessitates holding of inventories to guard

against the risk of unpredictable changes in demand and supply forces

and other factors.

Speculative Motive: It influences the decision to increase or reduce

inventory levels to take advantage of price fluctuations.

Management of Receivables/Debtors

The Receivables (including the debtors and the bills) constitute a

significant portion of the working capital. The receivables emerge

whenever goods are sold on credit and payments are deferred by

customers. A promise is made by the customer to pay cash within a

specified period. The customers from whom receivable or book debts

have to be collected in the future are called trade debtors and represents

the firm’s claim or assets. Thus, receivable is s type of loan extended by

the seller to the buyer to facilitate the purchase process. Receivable

Management may be defined as collection of steps and procedure

required to properly weight the costs and benefits attached with the credit

policy. The Receivable Management consist of matching the cost of

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increasing sales (particularly credit sales) with the benefits arising out of

increased sales with the objective of maximizing the return on investment

of the firm.

Nature

The term credit policy is used to refer to the combination of three

decision variables:

1. Credit standards:

It is the criteria to decide the type of customers to whom goods could be

sold on credit. If a firm has more slow –paying customers, its investment

in accounts receivable will increase. The firm will also be exposed to

higher risk of default.

2. Credit terms:

It specifies duration of credit and terms of payment by Customer

Investment in accounts receivable will be high if customers are allowed

extended time period for making payments.

3. Collection efforts:

It determine the actual collection period. The lower the collection period,

the lower the investment in accounts receivable and vice versa.

Management of Cash

Cash management refers to management of cash balance and the bank

balance and also includes the short terms deposits. Cash is the important

current asset for the operations of the business. Cash is the basic input

needed to keep the business running on a continuous basis. It is also the

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ultimate output expected to be realized by selling the service or product

manufactured by the firm. The term cash includes coins, currency, and

cheque held by the firm and balance in the bank accounts.

Factors of Cash Management:

Cash management is concerned with the managing of

1. Cash flows into and out of the firm

2. Cash flows within the firm and

3. Cash balance held by the firm at a point of time by financing deficit or

investing surplus cash. Sales generate cash which has to be disbursed

out. The surplus cash has to be invested while deficit has to borrow. Cash

management seeks to accomplish this cycle at a minimum cost and it also

seeks to achieve liquidity and control.

Management of Payables/Creditors

Creditors are a vital part of effective cash management and should be

managed carefully to enhance the cash position. Purchasing initiates cash

outflows and an over-zealous purchasing function can create liquidity

problems. Consider the

Following:

�Who authorizes purchasing in our company-is it tightly managed or

spread among a number of people?

�Are purchase quantities geared to demand forecasts?

�Do we use order quantities which take account of stock-holding and

purchasing costs?

�Do we know the cost to the company of carrying stock?

�Do we have alternative source of supply?

�How many of ours suppliers have a returns policy?

�Are we in a position to pass on cost increases quickly through price

increase?

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MANAGEMENT OF WORKING CAPITAL

Management of working capital is concerned with the problem that arises

in attempting to manage the current assets, current liabilities. The basic

goal of working capital management is to manage the current assets and

current liabilities of a firm in such a way that a satisfactory level of

working capital is maintained, i.e. it is neither adequate nor excessive as

both the situations are bad for any firm. There should be no shortage of

funds and also no working capital should be ideal. WORKING CAPITAL

MANAGEMENT POLICES of a firm has a great on its probability,

liquidity and structural health of the organization. So working capital

management is three dimensional in nature as

It concerned with the formulation of policies with regard to

profitability, liquidity and risk.

It is concerned with the decision about the composition and

level of current assets.

It is concerned with the decision about the composition and

level of current liabilities.

4.10 WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the centre of a business.

Adequate amount of working capital is very much essential for the

smooth running of the business. And the most important part is the

efficient management of working capital in right time. The analysis of

working capital can be conducted through a number of devices, such as:

1. Ratio analysis

2. Fund flow analysis.

3. Budgeting.

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METHODS OF WORKING CAPITAL ANALYSIS

There are so many methods for analysis of financial statements but

Following techniques are used most .:-

Comparative size statements

Trend analysis

Cash flow statement

Ratio analysis

A detail description of these methods is as follows:-

COMPARATIVE SIZE STATEMENTS:-

When two or more than two years figures are compared to each other

than we called comparative size statements in order to estimate the future

progress of the business, it is necessary to look the past performance of

the company. These statements show the absolute figures and also show

the change from one year to another.

TREND ANALYSIS:-

To analyze many years financial statements uses this method. This

indicates the direction on movement over the long time and help in the

financial statements.

CASH FLOW STATEMENT:-

Cash flow statements are the statements of changes in the financial

position prepared on the basis of funds defined in cash or cash

equivalents. In short cash flow statement summaries the cash inflows and

outflows of the firm during a particular period of time..

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RATIO ANALYSIS:-

Ratio analysis is the process of the determining and presenting the

relationship of the items and group of items in the statements.

Types of ratio:-

Liquidity ratio: They indicate the firms’ ability to meet its

current obligation out of current resources.

Current ratio:- Current assets / Current liabilities

Quick ratio:- Liquid assets / Current liabilities

Liquid assets =Current assets – Stock -Prepaid expenses

Leverage or Capital structure ratio: This ratio discloses the

firms ability to meet the interest costs regularly and long term

solvency of the firm.

Debt equity ratio:- Long term loans / Shareholders

funds or net Worth

Debt to total fund ratio:- Long terms loans/ share

holder funds +long term loan

Proprietary ratio:- Shareholders fund/ shareholders

fund+long term loan

Activity ratio or Turnover ratio:- They indicate the rapidity

with which the resources available to the concern are being used

to produce sales.

Stock turnover ratio:- Cost of good sold/Average stock

(Cost of good sold= Net sales/ Gross profit,

Average stock=Opening stock+closing stock/2)

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Debtors turnover ratio:- Net credit sales/ Average

debtors

+Average B/R

Average collection period:- Debtors+B/R /Credit sales

per

(Credit sales per day=Net credit sales of the year/365)

Creditors Turnover Ratio:- Net credit purchases/

Average

Creditors + Average B/P

Average Payment Period: - Creditors + B/P/ Credit

purchase per day.

Fixed Assets Turnover ratio:- Cost of goods sold/Net

fixed Assets

(Net Fixed Assets = Fixed Assets – depreciation)

Working Capital Turnover Ratio:- Cost of goods

sold/

Working Capital

(Working capital= current assets – current liability)

Profitability Ratios or Income ratios:- The main objective of

every business concern is to earn profits. A business must be

able to earn adequate profit in relation to the risk and capital

invested in it.

Gross profit ratio:- Gross profit / Net Sales * 100

(Net sales= Sales – Sales return)

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Net profit Ratio:- Net profit / Net sales * 100

(Operating Net Profit= operating net profit/ Net Sales

*100 or operating Net profit= gross profit – operating

expenses)

Operating Ratio :- Cost of goods sold + Operating

expenses/Net Sales * 100

(Cost of goods sold = Net Sales – Gross profit, Operating

expenses = office & administration expenses + Selling &

distribution expenses + discount + bad debts + interest on

short term loans)

Earning per share(E.P.S.) :- Net Profit – dividend on

preference share / No. of equity shares

Dividend per share (D.P.S.):- Dividend paid to equity

share Holders / No. of equity shares *100.

Dividend Payout ratio(D.P.) :- D.P.S. / E.P.S. *100

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CHAPTER :- 5

DATA ANALYSIS AND INTERPRETATION

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5.1 Working Capital statement of Cadila Healthcare Limited

of last four years ( in Rs. Cr ).

Statement of Changes in Woking Capital at Cadila Healthcare Limited . ( In Rs. Cr. )

Particulars 2009-10 2010-11 2011-12 2012-13

Inventories 380.8 464.5 501.2 587.2

Sundry Debtors 400.8 475.1 581.2 683

Cash and Bank Balance 7.6 14.1 118.3 91.6

Loans and Advances 395.9 537.2 799.6 947.4

Fixed Deposits 20.6 28.3 0 0

Total CA, Loans & Advances (A) 1,205.70 1,519.20 2,000.30 2,309.20

Deffered Credit 0 0 0 0

Current Liabilities 531.2 654 884.9 781

Provisions 151.7 180.4 227.1 212

Total CL & Provisions ( B) 682.9 834.4 1,112.00 993

Increase / Decrease in Working Capital ( A-B)

522.80 684.80 888.30 1,316.20

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Interpretation:-

2010-11 :-

Gross working capital is Rs 1519.20. Sundry debtor amount Rs 475.10 current

liabilities are Rs 654 and provisions are Rs 180.40 and net working capital is

Rs.684.8 . There has been increase of Rs 162 in the net working capital over the

previous year.

2011-12 :-

Gross working capital is Rs 2000.30. Sundry debtor amount Rs 581.20.current

liabilities are Rs 884.9 and provisions are Rs 227.10 and net working capital is

Rs.1112 . There has been increase of Rs 203.50 in the net working capital over the

previous year.

2012-13 :-

Gross working capital is Rs 2309.20. Sundry debtor amount Rs 683..current liabilities

are Rs 781. and provisions are Rs 212 .and net working capital is Rs.993 . There has

been increase of Rs 427.90 in the net working capital over the previous year.

From the above information its has been analyzed that Cadila Healthcare Lmited has

positive working capital means that the business is able to pay off its short-term

liabilities. Also, a high working capital can be a signal that the company might be able

to expand its operations

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Components of working capital Respective percentage :

YearInventory To Net Working

Debtors to Net working

Cash & Bank to net working

Loans & Advance to net working

2010 0.73 0.77 0.01 0.762011 0.67 0.69 0.02 0.782012 0.56 0.65 0.01 0.902013 0.44 0.51 0.07 0.72

0

0.2

0.4

0.6

0.8

1

2010 2011 2012 2013

Inventory To Net Working

Debtors to Net working

Cash & Bank to net working

Loans & Advance to net working

Interpretation :-

Above table depicts the proportion of components of current assets in the net working

capital. It shows that each component of current assets contribute how many

percentage in working capital

In The year 2010 inventory to net working capital ratio is 0.73 i.e. which change each

year due to change in the amount of inventory to 0.67, 0.56 & 0.44 in the year 2011,

2012 & 2013 respectively

Similarly, the contribution of debtors in working capital is highest in the year 2013 is

0.77 & lowest in 2010 is 0.51.This change takes place due to change in amount of

debtors every year

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Talking about cash & bank balance to working capital, it is 0.01 , 0.02, 0.01 and 0.07

respectively in 2010 , 2011 2012 and 2013 marginally fluctuation due to change in

amount of cash & bank balance

Likewise, loans & advance shows highest contribution to net working capital in the

year 2010 its 0.76 , in the year 2011 its marginally goes up with 0.78 , in the year

2012 its goes up 0.90 and in the year 2013 its comes down to 0.72 . This shows that in

the current year company has reduced their inventory, but debtors of the company has

increased maintaining cash balance in a proper manner because it shows reduction in

cash balance in the year 2012

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5.2 LIQUIDITY POSITION:

Liquidity position measures the ability of the from to meets its current obligation

liquidity position established relationship between current assets and current liabilities

of the company

Year C A C LNet Working.

CAmt

2010 1205.70 682.9 522.802011 1519.20 834.40 684.80 1622012 2000.30 1112. 888.30 203.502013 2309.20 993 1316.20 427.90

Total 7034.40 3622.30 3412.10 793.40

Mean 1758.60 905.575 853.03 198.35

Growth 25 % 25 % 25% 25 %

Interpretation :-

The above table shows liquidity position of the company for the different years.

It shows that current assets of the company is continuously increasing every year.

Similarly current liabilities of the company is also increasing.

But comparing current assets and current liabilities the current asstes of the company

is more than its current liabilities. The current assets of the company is increasing at a

faster than its current liabilities which can be known from the mean of the both. It

shows good liquidity position of the company.

Table also explain the company in the net working capital of the company.

Talking the year 2010 as the base year, working capital of the company is increasing

in the year 2011, similarly it also increases in the year 2012 and in the year 2013 as

compare to previous year.

It show that company is maintaining its working capital as & when required.

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5.3 COMPARATIVE BALANCE SHEET STATEMENTS

The effects of the conduct of a business are reflected in its balance sheet by increase

or decrease in assets, liabilities and proprietary capital. These changes can be known

by a comparison of the balance sheets of two or more different dates of previous

years. Knowledge of these changes is of considerable value in framing an operation

regarding the progress of the business unit. While a single balance sheet reveals the

financial status at a specific point of time, a comparative balance sheet analysis shows

the changes in it. These changes may be result operations, the conversion of assets

and liabilities and capital forms into other and the various interactions among assets,

liabilities and capital. In the comparative balance sheets not only absolute change (in

terms of rupees) but also relative changes (in percentage as rate of change) would be

studied in fact the relative change are more important than there to the analyst.

Information regarding relative changes must modify the analysis operation based on

absolute changes.

In the computation of percentages it should be noted that if a certain items has a value

in one year and does not exist the next year the percentage of decrease is 100% But if

the item has no value in the first year and has an value in the second no percentage

can be shown because if an number is divided zero the quotient is infinity.

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Comparative Statement of Balance Sheet for 2010-2011 ( In Rs. Cr. )

Comparative Statement of Balance Sheet for 2010-2011 ( In Rs. Cr. )Particulars 2010 2011 Increase/

DecreaseChange in %

Sources Of FundsTotal Share Capital 68.2 102.4 34.2 50.14662757Equity Share Capital 68.2 102.4Share Application Money 0 0Preference Share Capital 0 0Reserves 1,553.90 1,987.50 433.6 27.90398353Revaluation Reserves 0 0Networth 1,622.10 2,089.90 467.8 28.83915911Secured Loans 554.2 531.7 -22.5 -4.059906171Unsecured Loans 39.9 32.3 -7.6 -19.04761905Total Debt 594.1 564 -30.1 -5.066487123Total Liabilities 2,216.20 2,653.90 437.7 19.75002256

Mar '10 Mar '11

12 mths 12 mths

Application Of FundsGross Block 1,556.70 1,732.50 175.8 11.29312006Less: Accum. Depreciation 606.3 695.9 89.6 14.77816263Net Block 950.4 1,036.60 86.2 9.06986532Capital Work in Progress 142.9 233.7 90.8 63.54093772Investments 598.9 698.8 99.9 16.68058107Inventories 380.8 464.5 83.7 21.98004202Sundry Debtors 400.8 475.1 74.3 18.53792415Cash and Bank Balance 7.6 14.1 6.5 85.52631579Total Current Assets 789.2 953.7 164.5 20.84389255Loans and Advances 395.9 537.2 141.3 35.69083102Fixed Deposits 20.6 28.3 7.7 37.37864078Total CA, Loans & Advances 1,205.70 1,519.20 313.5 26.00149291Deffered Credit 0 0 0Current Liabilities 531.2 654 122.8 23.11746988Provisions 151.7 180.4 28.7 18.91891892Total CL & Provisions 682.9 834.4 151.5 22.18480012Net Current Assets 522.8 684.8 162 30.98699311Miscellaneous Expenses 1.2 0 -1.2 -100Total Assets 2,216.20 2,653.90 437.7 19.75002256

Contingent Liabilities 530.6 122.4 -408.2 -76.93177535Book Value (Rs) 118.84 102.07 -16.77 -14.1114103

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Interpretation :-

Total current assets and loan & advance of the company in 2010-11 are increased by

313.50 cr with compare to previous year and total current liabilities and provisions are

increased by 151.50 cr with compare to previous year. It shows net positive working

Capital increased by 437.70 cr with compare to previous year so that it seen that the

working capital position of the company is satisfactory but long term investment on

fixed assets is not possible from working capital fund .

The liquidity position of the company in also satisfactory as all current assets has

increased in 2010-11 .

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Comparative Statement of Balance Sheet for 2011-2012 ( In Rs. Cr. )Particulars 2011 2012 Increase/

DecreaseChange in %

Sources Of FundsTotal Share Capital 102.4 102.4 0Equity Share Capital 102.4 102.4Share Application Money 0 0Preference Share Capital 0 0Reserves 1,987.50 2,454.70 467.20 23.50691824Revaluation Reserves 0 0Networth 2,089.90 2,557.10 467.20 22.35513661Secured Loans 531.7 749.2 217.50 40.90652624Unsecured Loans 32.3 346.6 314.30 973.0650155Total Debt 564 1,095.80 531.80 94.29078014Total Liabilities 2,653.90 3,652.90 999.00 37.6427145

Mar '11 Mar '12

12 mths 12 mths

Application Of FundsGross Block 1,732.50 2,016.20 283.70 16.37518038Less: Accum. Depreciation 695.9 798.5 102.60 14.74349763Net Block 1,036.60 1,217.70 181.10 17.47057689Capital Work in Progress 233.7 334.7 101.00 43.2178006Investments 698.8 1,212.20 513.40 73.46880366Inventories 464.5 501.2 36.70 7.900968784Sundry Debtors 475.1 581.2 106.10 22.3321406Cash and Bank Balance 14.1 118.3 104.20 739.0070922Total Current Assets 953.7 1,200.70 247.00 25.89912971Loans and Advances 537.2 799.6 262.40 48.84586746Fixed Deposits 28.3 0 -28.30 -100Total CA, Loans & Advances

1,519.20 2,000.30 481.10 31.66798315

Deffered Credit 0 0 0.00 0Current Liabilities 654 884.9 230.90 35.3058104Provisions 180.4 227.1 46.70 25.88691796Total CL & Provisions 834.4 1,112.00 277.60 33.26941515Net Current Assets 684.8 888.3 203.50 29.71670561Miscellaneous Expenses 0 0 0.00 0Total Assets 2,653.90 3,652.90 999.00 37.6427145

0.00 0Contingent Liabilities 122.4 361.7 239.30 195.5065359

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Book Value (Rs) 102.07 124.89 22.82 22.35720584

Interpretation :-

Total current assets and loan & advance of the company in 2011-12 are increased by

481.10 cr with compare to previous year and total current liabilities and provisions are

increased by 277.60 cr with compare to previous year.. It shows net positive working

Capital increased by 203.50 cr with compare to previous year. so that it seen that the

working capital position of the company is satisfactory but long term investment on

fixed assets is not possible from working capital fund .

The liquidity position of the company in also satisfactory as all current assets has

increased in 2011-12 .

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Comparitive Statement of Balance Sheet for 2012-2013 ( In Rs. Cr. )Particulars 2012 2013 Increase/

DecreaseChange in %

Sources Of FundsTotal Share Capital 102.4 102.4 0 0Equity Share Capital 102.4 102.4Share Application Money 0 0Preference Share Capital 0 0Reserves 2,454.70 2,809.10 354.40 14.43760948Revaluation Reserves 0 0Networth 2,557.10 2,911.50 354.40 13.85945016Secured Loans 749.2 1,052.50 303.30 40.48318206Unsecured Loans 346.6 593 246.40 71.09059435Total Debt 1,095.80 1,645.50 549.70 50.16426355Total Liabilities 3,652.90 4,557.00 904.10 24.75019847

2012 201312 mths 12 mths

Application Of FundsGross Block 2,016.20 2,125.50 109.30 5.421089178Less:Accum. Depreciation

798.5 628.4 -170.10 -21.3024421

Net Block 1,217.70 1,497.10 279.40 22.94489612Capital Work in Progress 334.7 463.8 129.10 38.57185539Investments 1,212.20 1,279.90 67.70 5.584886982Inventories 501.2 587.2 86.00 17.15881883Sundry Debtors 581.2 683 101.80 17.5154852Cash and Bank Balance 118.3 91.6 -26.70 -22.569738Total Current Assets 1,200.70 1,361.80 161.10 13.41717332Loans and Advances 799.6 947.4 147.80 18.48424212Fixed Deposits 0 0 0.00 0Total CA, Loans & Advances

2,000.30 2,309.20 308.90 15.4426836

Deffered Credit 0 0 0.00 0Current Liabilities 884.9 781 -103.90 -11.7414397Provisions 227.1 212 -15.10 -6.64905328Total CL & Provisions 1,112.00 993 -119.00 -10.7014388Net Current Assets 888.3 1,316.20 427.90 48.17066306Miscellaneous Expenses 0 0 0.00 0Total Assets 3,652.90 4,557.00 904.10 24.75019847

0.00 0Contingent Liabilities 361.7 1,238.10 876.40 242.3002488

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Book Value (Rs) 124.89 142.2 17.31 13.86019697

Interpretation :-

Total current assets and loan & advance of the company in 2012-13 are increased by

308.90 cr with compare to previous year and total current liabilities and provisions are

decreased by -119 cr with compare to previous year.. It shows net positive working

Capital increased by 427.90 cr with compare to previous year. so that it seen that the

working capital position of the company is satisfactory but long term investment on

fixed assets is not possible from working capital fund .

In the year 2012-2013 current liabilities and provision is decreased and current assets

and advances is increase so liquidity position of company is also satisfactory .

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5.4 TREND PERCENTAGES

Trend percentages are immensely helpful in making a comparative study of financial

statements for several years. The method of calculating trend percentages involves the

calculation of percentages relationships that each item bears to the same item in base

year. Any year may be taken as the base year. It is usually the earliest year. Any

intervening year may also be taken as the base year. Each item of base year is taken

as 100 and the percentages for each of the items of each of the years are calculated

these percentages can also be taken as index numbers showing relative changes in the

financial data resulting with passage of time.

The method of trend percentages is useful analytical devices for the management

since by substitution of percentages for large amounts the brevity and readability are

achieved. However percentages are not calculated for all the items in the financial

statements. They are usually calculated only for major items since the purpose is to

highlight important changes. But there is a danger of over emphasis being given to

percentages. In the case where the base is a small number a slight change might be

greatly exaggerated by percentages of change.

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89

Statement Showing Trend Percentage in Assets During 2009-2013 ( In Rs. Cr )

Trend Percentage Particulars 2009-10 2010-11 2011-12 2012-13 2009-10 2010-11 2011-12 2012-13

Current Assets 789.2 953.7 1,200.7 1,361.80 100 120.844 125.8991 113.417

Inventories 380.8 464.5 501.2 587.2 100 121.98 107.901 117.159

Sundry

Debtors

400.8 475.1 581.2 683 100 118.538 122.3321 117.515

Cash and Bank

Balance

7.6 14.1 118.3 91.6 100 1.85 8.39. 7.74

Loans and

Advances

395.9 537.2 799.6 947.4 100 135.691 148.8459 118.484

Fixed Deposits 20.6 28.3 0 0 100 137.379 0 0

Investments 598.9 698.8 1,212.20 1,279.90 100 116.681 173.4688 105.585

Statement Showing Trend Percentage in liabilities During 2009-2013

Trend PercentageParticulars 2009-10 2010-11 2011-12 2012-13 2009-10 2010-11 2011-12 2012-13

Secured Loans 554.2 531.7 749.2 1,052.50 100 95.9401 140.9065 140.483

Unsecured Loans 39.9 32.3 346.6 593 100 80.9524 1073.065 171.091

Reserves 1,553.90 1,987.50 2,454.70 2,809.10 100 127.904 123.5069 114.438

Total Share

Capital

68.2 102.4 102.4 102.4 100 150.147 100 100

Current

Liabilities

531.2 654 884.9 781 100 123.117 135.3058 88.2586

Provisions 151.7 180.4 227.1 212 100 118.919 125.8869 93.3509

Contingent

Liabilities

530.6 122.4 361.7 1,238.10 100 23.0682 295.5065 342.3

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Analysis of Trend Percentages :-

Interpretation :-

The above trend analysis revels that the inventories have been in decreasing trend and

the percentage increase is the highest in 2010-11 at 121.98 when compared with

2011-12. debtors has also been increasing trend except in the year 2013 . The

percentage decrease in 2013 is 117.515. cash and bank balances are also increase in

all the years percentage increase in 2011-12 is highest at 8.39. This has also registered

highest percentage increase in comparison with all the other current assets. Loans and

advances is also an increasing trend and the highest percentage increase in 2011-12 is

148.84 .

Current liabilities and provision have been increasing trend except in the year 2013 the

percentage in 2013 is 88.25 . Capital has increased 100 in 2010 and 100 in 2012 and

100 in 2013 it shows for that the company didn’t go for additional capital. The

reserves of the company are also on an increasing trend it shows a healthy profitability

position of the company, the percentage increase in reserves is highest in 2010-11 at

150.40 times .

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5.5 RATIO ANALYSIS

CURRENT RATIO

The Current Ratio is the ratio of total Current assets to total current

liabilities. It is a measure of the firms short term solvency i.e., its ability

to meet short term obligations. The higher the current ratio the larger the

amount of rupees available for rupee of current liability conventionally a

current ratio of 2 is considered satisfactory. A higher current ratio may

indicative of slack management .

Table showing the details of Current Ratio in Rs. Cr :

Particulars 2009-10 2010-11 2011-12 2012-13

Current Assets 789.2 953.7 1,200.70 1,361.80

Current

Liabilities 531.2 654 884.9 781

Current Ratio 1.48 1.46 1.36 1.74

00.20.40.60.8

11.21.41.61.8

2009-10 2010-11 2011-12 2012-13

Current Ratio

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Interpretation :-

This ratio attempts to measure the utilization and effectiveness of the use current

assets and current liabilities. This ratio reveals the relationship between the current

assets and current liabilities. In the year 2010 this ratio was 1.48 times but in the year

2011 it come down to 1.46 times. In year 2012 this ratio was again come down 1.36

times and in year 2013 it has decreased to 1.74 times, this was due to increase in

current liabilities.

Generally, companies would aim to maintain a current ratio of at least 1 to ensure that

the value of their current assets cover at least the amount of their short term

obligations. However, a current ratio of greater than 1 provides additional cushion

against unforeseeable contingencies that may arise in the short term , Here is Current

ratio is more than one and its maintain by Cadila healthcare limited .

From 2010-2012 current ratio is in a decreasing trend in the current ratio may suggest

a deteriorating liquidity position of the business or a leaner working capital cycle of

the company through the adoption of more efficient management practices

In 2013, Current ratio is increase 1.36 to 1.74 which suggest improved liquidity of the

company or a more conservative approach to working capital management .

This ratio is stable with minor fluctuations. It has marginally improved but not

satisfactorily.

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Quick ratio :-

An indicator of a company’s short-term liquidity. The quick ratio measures a

company’s ability to meet its short-term obligations with its most liquid assets. For

this reason, the ratio excludes inventories from current assets, and is calculated as

follows:

Quick ratio = (current assets – inventories) / current liabilities, or

= (cash and equivalents + marketable securities + accounts

receivable)/current liabilities

The quick ratio measures the rupee amount of liquid assets available for each payment

of current liabilities. Thus, a quick ratio of 1.5 means that a company has Rs.1.50 of

liquid assets available to cover each Rs.1 of current liabilities. The higher the quick

ratio, the better the company's liquidity position. Also known as the “acid-test ratio"

or "quick assets ratio."

Table showing the details of Quick ratio:

Particulars 2009-10 2010-11 2011-12 2012-13Quick Ratio 1.16 1.23 1.31 1.73

00.20.40.60.8

11.21.41.61.8

2009-10 2010-11 2011-12 2012-13

Quick Ratio

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Interpretation :-

It establishes the relationship between quick or liquid assets and liabilities. An assets

is liquid if it can be converted into cash immediately without loss. A ratio 1:1 is

considered ideal. In the year 2010, this ratio was 1.23 this was marginally increased to

1.23 in the year 2011 and had increased in 2012 and reached 1.31 and in the year

2013, it goes up to 1.73. Here Quick ratio is increasing manner over period of time

which shows efficiency of management. Quick Ratio is satisfactory

Cash Ratio :-

The ratio of a company's total cash and cash equivalents to its current liabilities. The

cash ratio is most commonly used as a measure of company liquidity. It can therefore

determine if, and how quickly, the company can repay its short-term debt. A strong

cash ratio is useful to creditors when deciding how much debt, if any, they would be

willing to extend to the asking party.

The cash ratio is generally a more conservative look at a company's ability to cover its

liabilities than many other liquidity ratios. This is due to the fact that inventory and

accounts receivable are left out of the equation. Since these two accounts are a large

part of many companies, this ratio should not be used in determining company value,

but simply as one factor in determining liquidity.

Particulars Formula 2009-10 2010-11 2011-12 2012-13Cash

Cash/ Current Liabilities

7.6 14.1 118.3 91.6Current Liabilities 531.2 654 884.9 781Cash Ratio 0.014 0.02 0.13 0.12

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

2010 2011 2012 2013

Cash Ratio

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Interpretation :-

This ratio is also known as absolute liquid ratio. This ratio will reveal how much

percentage of current liabilities is held in cash. 3% or 0.03 is considered as ideal. In

the year 2010 company’s cash ratio was 0.014, In the year 2011, it slightly increased

to 0.02. In 2012 and 2013 is 0.13 and 0.12

Company’s cash ratio is satisfactory and is stable. Improvement was seen.

ACTIVITY RATIOS :-

WORKING CAPITAL TURNOVER RATIOWorking Capital Turnover Ratio indicates the velocity of utilization of net working

capital. It indicates the number of times net W.C., is turned over in the course of a

year. It is a measure of the firm’s efficiency to utilize its working capital. A higher

ratio indicates efficient utilization of working capital and a low ratio indicates

otherwise. However a very high ratio is not a good situation for any firm and hence

care must be taken while interpreting the ratio.

Particulars Formula 2009-10 2010-11 2011-12 2012-13Working Capital Turnover Ratio

Sales/ 1,885.60

2,179.10

3,152.20

3,675.70

Working Capital 522.8 684.8 888.3 1,316.20

Ratios 3.6 3.18 3.54 2.79

0

0.5

1

1.5

2

2.5

3

3.5

4

2009-10 2010-11 2011-12 2012-13

Working Capitalturnover Ratio

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Interpretation :-

This ratio indicates the velocity of utilization of net working capital. The main

purpose of computing this ratio is to find out to what extent the working capital is

rotated in the business with in a period of one year. In the year 2010, this ratio was

3.60. But in the year 2011, it has decreased to 3.18. In the year 2012, it marginally

increased to 3.54 and in the year 2013 it further decreased to 2.79 times.

It indicates the firm’s ability to generate sales per rupee of working capital. In

general, higher the ratio, the more efficient the management and utilization of

working capital.

Management Efficiency Ratios

Inventory Turnover Ratio :-A ratio showing how many times a company's inventory is sold and replaced over a

period. The days in the period can then be divided by the inventory turnover formula

to calculate the days it takes to sell the inventory on hand or "inventory turnover

days."

Although the first calculation is more frequently used, COGS (cost of goods sold)

may be substituted because sales are recorded at market value, while inventories are

usually recorded at cost. Also, average inventory may be used instead of the ending

inventory level to minimize seasonal factors.

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This ratio should be compared against industry averages. A low turnover implies poor

sales and, therefore, excess inventory. A high ratio implies either strong sales or

ineffective buying.

High inventory levels are unhealthy because they represent an investment with a rate

of return of zero. It also opens the company up to trouble should prices begin to fall.

Things to Remember A low turnover is usually a bad sign because products tend to

deteriorate as they sit in a warehouse. Companies selling perishable items have very high turnover. For more accurate inventory turnover figures, the average

inventory figure, ((beginning inventory + ending inventory)/2), is used when computing inventory turnover. Average inventory accounts for any seasonality effects on the ratio.

Particulars 2009-2010 2010-20112011-2012 2012-2013

Inventory Turnover Ratio 5.48 5.17 6.99 6.26

0

1

2

3

4

5

6

7

2009-10 2010-11 2011-12 2012-13

Inventory Turnover Ratio

Interpretation :-

It establishes the relationship between Net Sales during a given period and the

average amount of inventory held during that period. It refers to the number of times

the stock is turned into receivable through sales. In 2010, company’s inventory turn

over ratio was 5.48 times. It is good. In 2011, it has came down to 5.17 times. Then

It increased to 6.99 times in 2012 and at last in 2013, it has decreased and reached to

6.26 times. Company’s inventory turnover ratio is fluctuated; this shows that it has

efficient inventory management policy

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Debtors Turnover Ratio :-

Debtor turnover ratio is the relationship between net sales and average debtors. It is

also called account receivable turnover ratio because we debtor and bill receivables'

total is used for following formula

= Net Credit Sales / Average Debtors ( sundry debtors + bill receivables)

Average Debtors = Opening balance of debtors + closing balance of debtors / 2

Net Credit Sales = Total sales - sales return - cash sales

If net credit sales is $50000 and average debtors are $ 10000, then debtor turnover

ratio is 5 times. It means, net sales is 5 times of total debtors. We issue new stock for

sale which is 5 times of its debtors. It means, our average debtors 5 times are

converted into cash. We collected cash from our debtors and then we sell the more

goods.

Particulars 2009-10 2010-11 2011-12 2012-13Debtors Turnover Ratio 4.82 4.98 5.97 5.82

0

1

2

3

4

5

6

2009-10 2010-11 2011-12 2012-13

Debtors Turnover Ratio

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Interpretation :-

It establishes the relationship between Net Sales during a given period and the

average amount of debtors held during that period. In simple words it indicates the

number of times average debtors are trued over during a year. In 2010, company’s

debtors turn over ratio was 4.82 times. It is good. And, in 2011, it has increased to

4.98 times. It has increased to 5.97 times in 2012 and at last in 2013, it has further

marginally decreased and reached to 5.82 times. Company’s Debtors turnover ratio is

good; this shows that it has efficient credit management .

AVERAGE COLLECTION PERIOD

Particulars Formula 2009-10 2010-11 2011-12 2012-13

Average collection

period

No.of days in

year /

365 365 365 365

debtors turnover

ratio

4.82 4.98 5.97 5.82

Average collection

period

75.72 73.29 61.13 62.71

Interpretation :-

It establishes the relationship between during a given year and the debtor’s turnover

ratio held during that period. In simple words it indicates average collection period are

trued over during a year. In 2010, average collection period company’s was 75.72

times. It is good. And, in 2011, it has increased to 73.29 times. It has decreased to

61.13 times in 2012 and at last in 2013, it has further marginally increased and

reached to 62.71 times. Company’s average collection period inecreased this shows

that it has good credit management policy

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Fixed Asset Turnover ratio :-

A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a

company's ability to generate net sales from fixed-asset investments - specifically

property, plant and equipment (PP&E) - net of depreciation. A higher fixed-asset

turnover ratio shows that the company has been more effective in using the

investment in fixed assets to generate revenues. The fixed-asset turnover ratio is

calculated as:

This ratio is often used as a measure in manufacturing industries, where major

purchases are made for PP&E to help increase output. When companies make these

large purchases, prudent investors watch this ratio in following years to see how

effective the investment in the fixed assets was.

Particulars 2009-10 2010-11 2011-12 2012-13

Fixed Assets Turnover Ratio 1.4 1.42 1.75 1.76

00.20.40.60.8

11.21.41.61.8

2009-10 2010-11 2011-12 2012-13

Fixed Assets TurnoverRatio

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Interpretation :-

This ratio establishes the relationship between net sales and fixed assets. This ratio

indicates the extent to which the investments and fixed assets contribute towards the

sales. In the year 2010, ratio was 1.4 times, it will generate in the year 2011, this

ratio was 1.42, in 2012 it was 1.75 and in 2013 this ratio was at 1.76. This ratio

shows that fixed assets have been efficiently utilized.

This ratio is more fluctuating due to fluctuations in investments made in fixed assets

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Current Asset turnover ratio :-

Current assets turnover ratio shows the relationship between net sales and current

assets. When we divide the net sales with current assets and multiply with 100, we

find that value net sale which has been possible due to Rs. 100 investment of current

assets.

Particulars Formula 2009-10 2010-11 2011-12 2012-13

Current Net Sales/ 1,885.60 2,179.10 3,152.20 3,675.70

Asset Current 789.2 953.7 1,200.70 1,361.80

Turnover Assets

Ratio 2.38925 2.28489 2.6253 2.69915

2

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2009-10 2010-11 2011-12 2012-13

Current Assets Turnover Ratio

Interpretation :-

This ratio attempts to measure the utilization and effectiveness of the use current

assets. This ratio reveals the relationship between the cost of sales and current assets.

In the year 2010 this ratio was 2.39 times but in the year 2011 it decreased to 2.28

times . In year 2012 this ratio was 2.62 times and in year 2013 it has decreased to

2.70 times .

The ratio has maintained a high level and is stable. There are not much fluctuations

and improvement is also less.

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Other Financial Ratio :-

Key Financial Ratios of Cadila Healthcare

2009-2010 2010-11 2011-12 2012-13

Investment Valuation Ratios

Face Value 5 5 5 5

Dividend Per Share 5 6.25 7.5 7.5

Operating Profit Per Share (Rs) 8.41 -1.63 33.14 34.5

Net Operating Profit Per Share (Rs) 138.14 106.43 153.95 179.52

Free Reserves Per Share (Rs) 98.37 86.33 107.91 --

Bonus in Equity Capital 56.95 71.26 71.26 71.26

Profitability Ratios

Operating Profit Margin(%) 6.08 -1.52 21.52 19.21

Profit Before Interest And Tax Margin(%)

1 -4.38 16.84 15.81

Gross Profit Margin(%) 1.31 -5.97 18.09 16.03

Cash Profit Margin(%) 25.81 22.82 24.53 16.5

Adjusted Cash Margin(%) 25.81 22.82 24.53 16.5

Net Profit Margin(%) 20.39 20.57 19.41 13.37

Adjusted Net Profit Margin(%) 20.39 20.57 19.41 13.37

Return On Capital Employed(%) 27.39 24.75 22.02 14.09

Return On Net Worth(%) 31.05 29.2 25.71 17.12

Adjusted Return on Net Worth(%) 33.75 27.75 28.25 17.12

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Return on Assets Excluding Revaluations

118.75 102.07 124.89 142.2

Return on Assets Including Revaluations

118.75 102.07 124.89 142.2

Return on Long Term Funds(%) 28.52 25.22 24.82 17.33

Liquidity And Solvency Ratios

Current Ratio 1.4 1.63 1.22 1.03

Quick Ratio 1.16 1.23 1.31 1.73

Debt Equity Ratio 0.37 0.27 0.43 0.57

Long Term Debt Equity Ratio 0.31 0.25 0.27 0.27

Debt Coverage Ratios

Interest Cover 16.02 19.21 12.42 5.79

Total Debt to Owners Fund 0.37 0.27 0.43 0.57

Financial Charges Coverage Ratio 16.18 19.08 13.21 6.84

Financial Charges Coverage Ratio Post Tax

14.77 18.91 12.08 6.54

Management Efficiency Ratios

Inventory Turnover Ratio 5.48 5.17 6.99 6.26

Debtors Turnover Ratio 4.82 4.98 5.97 5.82

Investments Turnover Ratio 5.48 5.17 6.99 6.26

Fixed Assets Turnover Ratio 1.4 1.42 1.75 1.76

Total Assets Turnover Ratio 0.94 0.89 0.92 0.81

Asset Turnover Ratio 0.88 0.89 1 0.9

Average Raw Material Holding 92.87 131.55 96.53 --

Average Finished Goods Held 30.46 29.04 30.73 --

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Number of Days In Working Capital 99.81 134.69 117.27 139.03

Profit & Loss Account Ratios

Material Cost Composition 42.75 42.89 36.72 36.66

Imported Composition of Raw Materials Consumed

25.32 28.54 26.42 21.96

Selling Distribution Cost Composition

14.48 16.62 9.82 --

Expenses as Composition of Total Sales

54.81 59.73 46.43 44.17

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 22.65 20.96 23.36 30.8

Dividend Payout Ratio Cash Profit 19.21 18.09 20.06 24.95

Earning Retention Ratio 79.17 77.94 78.75 69.2

Cash Earning Retention Ratio 82.11 81.1 81.52 75.05

AdjustedCash Flow Times 0.93 0.83 1.32 2.67

Mar '10 Mar '11 Mar '12 Mar '13

Earnings Per Share 36.87 29.81 32.11 24.35

Book Value 118.84 102.07 124.89 142.2

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106

FINDINGS :-

Working capital position of the company is satisfactory.

Due to increase in turnover and subsequent increase in inventory and sundry

debtors the working capital too has increase from 2007-2011.

The liquidity position of the company in also satisfactory as all current assets

has increased in 2010-13

Fixed assets have been efficiently utilized.

Company’s average collection period decreased this shows that it has good

credit management policy.

Inventory turnover ratio has decreased from 2010 to 2013; this shows that it

has efficient inventory management policy.

The company has been maintaining sufficient amount of working capital in all

the years.

Company’s cash ratio is satisfactory and is stable. Improvement was seen

every year from 2010 -2013.

Suggestions :-

Suggested the company should follow the present working capital.

The company spends reasonable amount on inventory so that it should be

followed for the further years.

The quick ratio of the company is found satisfactory. The company should try

to maintain the same ratio in future keeping in view of the safe liquidity

position of the company.

The company should tighten its credit policies so that receivables are collected

soon there by reducing sundry debtors and improving cash position.

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107

Conclusion:

Since the beginning of the 20th century the pharmaceutical industry has taken

different shapes. The government has recognized this industry is a knowledge

based industry and the government has liberalized many if are policies it has

also signed GATT agreement this made industry to changes its policies and

started to concentrate more on research and development. Joint venture and

technology agreement.

Cadila Healthcare limited have identified the future problem at on early stage

and given more major and importance to R&D.

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108

BIBLIOGRAPHY :

www.zyudscadila.com

www.google.com

www.wikipedia.com

www.moneycontrol.com

www.forexpros.com

www.kotaksecurities.com

www.inidainfoline.com

www.nseindia.com

www.bloomberg.com

www.marketwatch.com

Finance management book of I.M.Pandey .

Finance management reference book of IPCC of ICAI .

No. of other website and external sources of information used during making

of project .

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109

Annexure :-

Balance Sheet of Cadila Healthcare ( In Rs Cr . ) Last four years .

Balance Sheet of Cadila Healthcare

------------------- in Rs. Cr. -------------------

Particulars Mar '10 Mar '11 Mar '12 Mar '13

12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 68.2 102.4 102.4 102.4

Equity Share Capital 68.2 102.4 102.4 102.4

Share Application Money 0 0 0 0

Preference Share Capital 0 0 0 0

Reserves 1,553.90 1,987.50 2,454.70 2,809.10

Revaluation Reserves 0 0 0 0

Networth 1,622.10 2,089.90 2,557.10 2,911.50

Secured Loans 554.2 531.7 749.2 1,052.50

Unsecured Loans 39.9 32.3 346.6 593

Total Debt 594.1 564 1,095.80 1,645.50

Total Liabilities 2,216.20 2,653.90 3,652.90 4,557.00

Mar '10 Mar '11 Mar '12 Mar '13

12 mths 12 mths 12 mths 12 mths

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110

Application Of Funds

Gross Block 1,556.70 1,732.50 2,016.20 2,125.50

Less: Accum. Depreciation 606.3 695.9 798.5 628.4

Net Block 950.4 1,036.60 1,217.70 1,497.10

Capital Work in Progress 142.9 233.7 334.7 463.8

Investments 598.9 698.8 1,212.20 1,279.90

Inventories 380.8 464.5 501.2 587.2

Sundry Debtors 400.8 475.1 581.2 683

Cash and Bank Balance 7.6 14.1 118.3 91.6

Total Current Assets 789.2 953.7 1,200.70 1,361.80

Loans and Advances 395.9 537.2 799.6 947.4

Fixed Deposits 20.6 28.3 0 0

Total CA, Loans & Advances

1,205.70 1,519.20 2,000.30 2,309.20

Deffered Credit 0 0 0 0

Current Liabilities 531.2 654 884.9 781

Provisions 151.7 180.4 227.1 212

Total CL & Provisions 682.9 834.4 1,112.00 993

Net Current Assets 522.8 684.8 888.3 1,316.20

Miscellaneous Expenses 1.2 0 0 0

Total Assets 2,216.20 2,653.90 3,652.90 4,557.00

Contingent Liabilities 530.6 122.4 361.7 1,238.10

Book Value (Rs) 118.84 102.07 124.89 142.2

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Profit and loss account of Cadila Healthcare ( In Rs Cr . ) Last four years .

Profit & Loss account of Cadila Healthcare

------------------- in Rs. Cr. -------------------

Particulars Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 3,675.70 3,194.00 2,213.70 1,908.00

Excise Duty 0 41.8 34.6 22.4

Net Sales 3,675.70 3,152.20 2,179.10 1,885.60

Other Income 52.9 169.2 806.9 538.6

Stock Adjustments 9 57.1 34.6 11.2

Total Income 3,737.60 3,378.50 3,020.60 2,435.40

Expenditure

Raw Materials 1,347.70 1,157.80 934.8 806.2

Power & Fuel Cost 116.5 94 71.9 57.9

Employee Cost 522.5 455 371.1 266.9

Other Manufacturing Expenses 0 49.1 48.7 38.9

Selling and Admin Expenses 0 762.2 746.1 554

Miscellaneous Expenses 991.7 12.7 74.4 58.1

Preoperative Exp Capitalised 0 0 0 0

Total Expenses 2,978.40 2,530.80 2,247.00 1,782.00

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112

Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths

Operating Profit 706.3 678.5 -33.3 114.8

PBDIT 759.2 847.7 773.6 653.4

Interest 111 69.1 39.5 43.1

PBDT 648.2 778.6 734.1 610.3

Depreciation 116.8 108.2 96.9 90

Other Written Off 0 0 0 0

Profit Before Tax 531.4 670.4 637.2 520.3

Extra-ordinary items 0 0 10.6 0

PBT (Post Extra-ord Items) 531.4 670.4 647.8 520.3

Tax 32.8 12.9 37.4 17

Reported Net Profit 498.6 657.5 610.4 503.3

Total Value Addition 1,630.70 1,373.00 1,312.20 975.8

Preference Dividend 0 0 0 0

Equity Dividend 153.6 153.6 128 102.4

Corporate Dividend Tax 19.8 17 14.6 11.6

Per share data (annualised)

Shares in issue (lakhs) 2,047.49 2,047.49 2,047.49 1,364.99

Earning Per Share (Rs) 24.35 32.11 29.81 36.87

Equity Dividend (%) 150 150 125 100

Book Value (Rs) 142.2 124.89 102.07 118.84

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113

Cash Flow statement of Cadila Healthcare ( In Rs Cr . ) Last four years .

Cash Flow of Cadila Healthcare In Rs. Cr

Particulars Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 531.4 670.4 637.2 520.3

Net Cash From Operating Activities 444.7 371.7 549.4 513.5

Net Cash (used in)/from -767.6 -815.2 -357.5 -213.2

Investing Activities

Net Cash (used in)/from Financing Activities

250.2 519.4 -177.7 -297.7

Net (decrease)/increase In Cash and Cash Equivalents

-72.7 75.9 14.2 2.6

Opening Cash & Cash Equivalents 164.3 42.4 28.2 25.6

Closing Cash & Cash Equivalents 91.6 118.3 42.4 28.2